BILL ANALYSIS �
SB 698
Page 1
Date of Hearing: June 22, 2011
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
SB 698 (Lieu) - As Amended: May 31, 2011
SENATE VOTE : 39-0
SUBJECT : Workforce development: high-performance boards.
SUMMARY : Requires the establishment of standards and
incentives for "high-performance" local workforce investment
boards. Specifically, this bill :
1)Requires the Governor, through the California Workforce
Investment Board (CWIB), to establish standards for the
certification of "high-performance" local workforce investment
boards.
2)Specifies that the CWIB shall engage in a specified
stakeholder process in determining the standards for
certification as a "high-performance" local workforce
investment board.
3)Specifies that these standards shall be implemented on or
before January 1, 2013, and the first certification of
"high-performance" boards shall occur on or before July 1,
2013.
4)Provides that, in order to meet the standards for
certification, a "high-performance" local workforce investment
board shall meet specified criteria and perform specified
activities.
5)Requires (beginning in the 2013-14 fiscal year) the Governor
and the Legislature to annually set aside a portion of the 15
percent discretionary funds made available pursuant to the
federal Workforce Investment Act (WIA) for the purpose of
providing performance incentives to "high-performance" local
workforce investment boards.
6)Provides that only a local workforce investment board that has
been certified as "high-performance" shall be eligible to
receive these set-aside funds.
SB 698
Page 2
7)Provides that a local workforce investment board that has not
been certified as "high-performance" shall not receive any
portion of these set-aside funds or any portion of the state's
15 percent discretionary WIA funds.
8)Specifies that the requirement to set aside WIA discretionary
funds shall not apply in years when the federal government
significantly reduces the share of WIA discretionary funds
below the federal statutory amount of 15 percent.
FISCAL EFFECT : According to the Senate Appropriations
Committee, under this bill only high-performance local workforce
investment boards would qualify for receipt of the 15 percent
discretionary WIA funds, thus reducing or eliminating funds
received currently by local workforce investment boards or local
community groups.
COMMENTS : This bill would require the Governor to establish,
through the CWIB, standards for certification of
"high-performance" local workforce investment boards in
accordance with specified criteria. In addition, this bill
would require a portion of the WIA 15 percent discretionary
funds to be set aside for "high performance" boards.
Brief Background on the Federal Workforce Investment Act (WIA)
of 1998
The federal Workforce Investment Act of 1998 provides for
activities and programs for job training and employment
investment in which states may participate, including work
incentive and employment training outreach programs. Following
passage of the federal WIA, the state established the CWIB and
charged the board with the responsibility of developing a
unified, strategic planning process to coordinate various
education, training, and employment programs into an integrated
workforce development system that supports economic development.
Existing federal law requires the local chief elected officials
in a local workforce development area to form, pursuant to
specified guidelines, a local workforce investment board (LWIB)
to plan and oversee the workforce investment system at the local
level. There are currently 49 LWIBs in the state. Each local
SB 698
Page 3
workforce area also created one or more One-Stop Centers, which
provide access to career information, counseling, funding for
education, training and supportive services.
Existing law further requires the Governor to certify one local
board for each local area in the state once every 2 years. This
certification is granted as long as the local WIB meets minimum
federal requirements for performance and board composition.
Under the federal law, WIA funds are distributed to the states
based on formulas that consider unemployment rates and other
economic and demographic factors. California and its 49 LWIBs
receive WIA formula funding from the U.S. Department of Labor
through three revenue streams: Adult, Youth, and Dislocated
Workers. Under federal law, 85 percent of Adult and Youth
formula funds, and 60 percent of Dislocated Worker formula funds
are distributed to LWIBs. Fifteen percent of Adult, Youth, and
Dislocated Worker formula funds are allocated to the state for a
variety of discretionary uses.
This Bill Proposes to "Raise the Bar"
The CWIB is responsible for assisting the Governor in the
development, oversight, and
continuous improvement of California's workforce investment
system. California receives between $400 and $500 million in
federal WIA dollars annually. In 2008-09, the state received
an additional $488.6 million from the American Recovery and
Reinvestment Act of 2009. The majority of these funds (85%) are
formula allocated to the 49 LWIBs which set policy for how funds
are invested locally and provide oversight of employment
services delivered. The rest of the funds (15%) are
disseminated at the Governor's discretion.
California's 49 LWIBs set local policies and allocate resources
to respond to local markets to help struggling unemployed and
underemployed workers get and retain good jobs.
Currently, LWIBs are certified by the Governor every two years,
but this certification process merely requires them to meet
minimum federal requirements. Although many LWIBs provide high
quality services, the system does not adhere to any coherent
state standards, leaving workers and businesses to face widely
varying levels of quality and effectiveness across the state's
49 local WIB jurisdictions.
SB 698
Page 4
Therefore, this bill would require the Governor to establish,
through the CWIB, standards for certification of
"high-performance" LWIBs, in accordance with specified criteria.
In addition, this bill would require the CWIB, in consultation
with the Governor, to allocate special reserved federal
discretionary funds to "high-performance" LWIBs only.
Not So Fast! - Recent Federal Budget Action
As noted by the Senate Appropriations Committee in analyzing
this bill, recent federal budget action reduced the 15 percent
discretionary funds to five percent and directed the ten percent
difference to be allocated directly to the LWIBs.
Therefore, the most recent amendments to the bill provide that
the requirements regarding setting aside WIA discretionary funds
shall not apply "in years when the federal government
significantly reduces the share of federal Workforce Investment
Act of 1998 funds appropriated to the state for statewide
discretionary purposes below the federal statutory amount of 15
percent."
ARGUMENTS IN SUPPORT :
According to the author, workers in California are experiencing
a recession like never before that
has left us with a shattered job market and a record setting
unemployment rate. Nonetheless,
proponents argue that employers will soon need a skilled
workforce to replace the retiring baby
boomer generation and meet the demands of new emerging
industries. According to the author
and proponents, now more than ever, it is crucial that every
dollar of federal workforce funds
that our state receives is invested in high quality employment
services that connect workers to
good paying jobs.
According to proponents, federal law provides Governors the
authority to certify LWIBs every
two years, however, this certification must be granted as long
as LWIBs meet minimum federal
requirements for performance and board composition. Proponents
argue that federal
performance measures are largely inadequate for ensuring that
SB 698
Page 5
local WIA dollars provide
quality service that lead workers to good jobs. In addition,
proponents argue that the
performance of California's local WIBs has been inconsistent
throughout the state and lacks a
unified goal.
Proponents believe that this bill will raise the bar statewide
for performance and quality outcomes for California's federally
funded workforce investment system by outlining a high
performance standard that the LWIBs can strive for in order to
be eligible for additional funding. In addition, proponents
argue that it is essential that there be a direct correlation
between the training workers receive and the jobs available.
According to proponents, this bill will create an incentive by
which LWIBs can strive to meet a high performance standard which
meets federal performance criteria, develops stronger local
workforce initiatives, and establishes a business service plan
that together can create a unified goal to provide quality
services that connect workers to good paying jobs.
REGISTERED SUPPORT / OPPOSITION :
Support
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Labor Federation, AFL-CIO (co-sponsor)
California Manufacturers & Technology Association (co-sponsor)
California Official Court Reporters Association
California Teachers Association
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore and Warehouse Union
Professional and Technical Engineers, Local 21
State Building and Construction Trades Council (co-sponsor)
UNITE HERE!
United Food and Commercial Workers - Western States Conference
Opposition
None on file.
SB 698
Page 6
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091