BILL ANALYSIS �
AB 923
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Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 923 (Fong) - As Introduced: February 18, 2011
Policy Committee: Labor and
Employment Vote: 5-1
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill establishes The Lifelong Learning Accounts (LLA)
Initiative program within the Employment Development Department
(EDD), for the purpose of providing grants to employers and
employees to establish individual lifelong learning accounts for
the deposit of funds for lifelong education and training.
Specifically, this bill:
1)Requires EDD to establish a grant program to provide grants
for lifelong education and training (LET), and specifies that
employees contributing to these accounts are eligible to
receive a grant fund match of up to 50% of the first $500 the
employee contributes into his or her LLA for a maximum amount
not to exceed $250.
2)Authorizes EDD to contract with an individual, nonprofit
organization, or other business to administer and implement
the grant program. Requires EDD to make support services
available to employees and provide technical assistance to
employers. Authorizes EDD to use grant funds to offset the
costs of these requirements.
3)Establishes within the State Treasury, a Lifelong Learning
Program Fund to receive contributions from individuals,
foundations, nonprofits, businesses and the federal government
to be used for the program.
4)Requires EDD to prepare and submit a report to specified
legislative committees at least 20 days prior to the date the
Legislature reconvenes in the second year of the 2015-16
regular session.
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5)Requires EDD, after consultation with the treasurer and the
Scholarshare Investment Board, to adopt rules and regulations
that are necessary to implement and administer this program.
6)States that the program shall only be implemented if the
Director of Finance (DOF) determines sufficient funds are
available from sources other than the GF to implement the
program.
FISCAL EFFECT
1)Unknown, potentially significant state cost pressure to
establish an LLA Initiative program, as specified. As an
example, a pilot program involving 10,000 employees could
result in up to $5 million in matching grants. This bill
specifies the LLA Initiative program will only be implemented
if DOF makes a written determination there are sufficient
funds available from sources other than the GF for that
purpose.
2)Significant, substantial costs, likely between $2 million and
$4 million, to EDD to administer the LLA Initiative program,
including between 30 and 40 staff and facility costs. These
costs assume full implementation of this program by EDD.
EDD notes the bill is unclear as to its role and
responsibility for this new program. For example, is EDD
acting as a "pass-through" entity (i.e., forwarding
information to the trustee, custodian, fiduciary, or other
persons under the program.) If this is the case, these costs
do not reflect costs related to enforcement activities
(including audit activities). If EDD does not act as a
"pass-through" entity, costs to administer this grant program
would be significantly higher.
This bill specifies the LLA Initiative program may only be
implemented if DOF makes a written determination that there
are sufficient funds available from sources other than the GF
for that purpose. It is unclear if this includes
administrative costs.
COMMENTS
1)Rationale . In recent years, several bills have been proposed
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- but not passed - by Congress that would create Lifelong
Learning Accounts. As envisioned in federal legislation, the
lifelong learning accounts are intended to be tax-preferred,
employer-matched educational savings accounts, much like
401(k) plans, which can be used to finance workers' education
and training. Numerous pilot projects involving
matching-grants for lifelong learning accounts have been
adopted across the nation, but generally for a limited numbers
of workers and/or industries.
Proponents of this measure (Council for Adult and Experiential
Learning) contends these worker-owned, employer-matched
accounts put learning opportunities within reach of adults who
have entered the workforce but may not have the skill to
compete in the changing economy.
2)Previous legislation . AB 1320 (Fong), similar to this
measure, was held on the Senate Appropriations Committee's
suspense file in August 2010.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081