BILL ANALYSIS
AB 1827
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Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1827 (Arambula) - As Amended: April 6, 2010
Policy Committee:
InsuranceVote:11-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the Employment Development Department (EDD)
to provide in-person unemployment benefit assistance at all
comprehensive one-stop career centers and department workforce
service offices prior to July 1, 2011. Specifically, the bill:
1)Requires customer service personnel at one-stop centers to be
fully trained regarding the policy, laws, and regulations
governing eligibility, claims processing, and procedures for
the payment of unemployment insurance (UI) benefits.
2)Requires printed information regarding eligibility and the
process for filing claims for unemployment compensation
benefits to be available at the one-stop centers and
department workforce offices.
3)Requires services established in this bill to be funded within
existing resources.
4)Sunsets the requirements of this bill on December 31, 2014.
FISCAL EFFECT
1)EDD indicates 600 to 1,000 staff are required to support the
requirements of this bill in 150 comprehensive one-stop career
centers and 14 workforce service offices statewide. According
to EDD these staff cost between $60 million (federal) and $100
million (federal). These costs would consume up to 30% of
federal administrative funding EDD receives. Additional
one-time costs of several million dollars to provide training
and space in one-stop centers to accommodate added services.
AB 1827
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2)The EDD cost estimate assumes five staff and a supervisor in
164 settings where in-person services are provided according
to the requirements of this bill. Actual costs may be less
with fewer staff in each center. For example, three staff in
each setting generates costs of $36 million (federal) to $60
million (federal).
3)If this bill were implemented, major resources would be
redirected away from EDD's core workload regarding the timely
processing of electronic claims, responding to inquires by
phone or online, and performing adjudication work. The time to
process claims electronically is substantially less than
in-person processing of claims. An additional workload backlog
and delay in claims payment would therefore occur,
exacerbating current queuing problems.
4)The California UI trust fund is insolvent due to the chronic
underfunding of the UI system. The system is financed by
unemployment tax contributions paid by employers. Recent
estimates show a $7 billion deficit in the 2009 calendar year,
rising to $18 billion in 2010 and $27 billion in 2011.
California has borrowed about $4 billion, permitting
California to make benefit payments to UI claimants without
interruption. Federal loans lasting more than one year
generally accumulate interest charges of about five percent
per year on the outstanding balance.
COMMENTS
1)Rationale . This bill is sponsored by SEIU Local 1000 and
requires in-person staffing to increase the availability and
expertise of EDD staff supporting unemployed Californians.
Most UI beneficiaries file for benefits online. Others require
in-person assistance with benefit acquisition and employment
searches. According to the author this bill will reduce the
barriers unemployed Californians face. According to recent
data, tens of millions of phone calls to EDD have gone
unanswered in recent years. In addition, many individuals who
arrive in person to receive support at one-stop centers have
been directed to phone lines within the one-stop center. This
bill will shift individuals from phone calls to in-person
services.
2)UI Benefits . The UI program is a federal-state program that
provides weekly UI payments to eligible workers who lose jobs
through no fault of their own. The UI program is financed by
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unemployment tax contributions paid by employers for each
worker. During relatively low rates of unemployment, eligible
individuals receive weekly UI payments for up to 26 weeks. Due
to current high rates of unemployment the federal government
has provided emergency extensions to these benefits.
California, a state with one of the highest unemployment rates
nationally (now over 12%) has qualified for the lengthiest
extension of benefits available to states.
3)UI Trust Fund Deterioration . Due to chronic underfunding of
the UI Trust Fund, California faces UI insolvency for the
foreseeable future. The UI program is financed by employers
who pay taxes each year on wages paid up to $7,000 for each
employee. California's tax rate for UI is the lowest allowed
by federal law and has not been increased since the 1980s.
Other large states have taxable wage bases that range up to
$12,500. Almost 20 states have a taxable wage base of more
than $15,000 and range up to $35,000. Taxable wages in
California are neither indexed nor inflation-adjusted. These
factors and the major increases in unemployment have generated
the UI Trust Fund insolvency.
4)Related Legislation . AB 857 (Galgiani) in 2009 was similar to
this bill and was held on the Suspense File of the Senate
Appropriations Committee.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081