BILL ANALYSIS
AB 2188
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Date of Hearing: April 28, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2188 (Bradford) - As Amended: April 13, 2010
Policy Committee: InsuranceVote:9-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires Employment Development Department contracts
with vendors for electronic payments of Unemployment Insurance
(UI) and Disability Insurance (DI) benefits to meet several
criteria. Requirements established in the bill include
prohibitions on specified fees charged to beneficiaries, the
availability of customer service, and the assurance of financial
privacy. This bill requires the State Auditor to complete an
evaluation of the implementation of electronic UI and DI benefit
payment and report to the Legislature within 18 months of
implementation.
FISCAL EFFECT
1)A one-time cost in the range of $200,000 GF to the Bureau of
State Audits to complete an evaluation of the implementation
of electronic benefit payments.
2)An unknown federal cost pressure to the Employment Development
Department (EDD) to modify a process already underway to
convert to electronic payment.
The EDD recently released an RFP to procure a vendor for the
conversion to electronic payments. According to the sponsor of
this bill, initial results of the procurement process will be
available in May 2010. The current effort is funded with $1.8
million from the federal American Recovery and Reinvestment
Act.
COMMENTS
AB 2188
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1)Rationale . This bill is sponsored by the California Labor
Federation, AFL-CIO to provide specific beneficiary
protections to a process already underway at EDD to convert
benefits to electronic payment including direct deposit and
the use of paycards for UI and DI. This bill is based on
direction from the federal Department of Labor for states to
modernize payment systems. The bill increases beneficiary
protections when California transitions to more modern payment
mechanisms and requires evaluation of the transition efficacy.
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
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.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081