BILL ANALYSIS �
SB 734
Page 1
Date of Hearing: September 6, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 734 (DeSaulnier) - As Amended: September 2, 2011
Policy Committee: N/A Vote:N/A
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires specified minimum amounts of federal
Workforce Investment Act (WIA) funds provided to local WIA
(LWIA) boards to be spent on workforce training programs, as
specified. Specifically, this bill:
1)Requires the following minimum amounts of WIA funds provided
to local boards be spent on workforce training programs: (a)
25% beginning with the 2012 federal program year and (b) 30%
beginning with the 2016 federal program year.
2)Requires expenditures on training services (as defined under
federal WIA statute) to be counted toward the minimum
percentage requirements, as specified. Authorizes the LWIA
boards to achieve the above minimum amounts by utilizing
leveraged funds in combination with WIA training funds, as
specified.
3)Authorizes LWIA boards to receive a credit of up to 10% of
their adult and dislocated worker base formula allocations for
public education and training funds and private resources that
are leveraged by a local board to be counted toward meeting
the minimum percentage requirements for expenditure on
workforce training, as specified.
4)Requires credit for leveraged funds to only be given if an
LWIA board keeps records of all training expenditures it
chooses to apply to the 10% credit. Further specifies these
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leveraged funds can only be applied to the credit if the costs
can be independently verified by the Employment Development
Department (EDD), as specified.
5)Requires the EDD, beginning with the 2012 program year, to
calculate whether each LWIA board met the expenditure
requirements of this bill, as specified. Further requires EDD
to provide each LWIA board with its individual calculations.
6)Requires a LWIA board that does not meet the requirement of
this bill to submit a corrective action plan to EDD, within 90
days of receiving its calculation, that provides reasons for
not meeting the requirements and describes actions taken to
address the identified expenditure deficiencies.
FISCAL EFFECT
1)Federal local WIA fund reallocation of $45.5 million to $56.8
million in order to meet the requirements of this bill. To
the extent local WIA boards are currently meeting the minimum
expenditure requirement for training (20% and 25%), this cost
may be reduced.
2)Minor absorbable costs to EDD to implement the requirements
related to the review of corrective action plans. To the
extent, however, LWIA boards choose to use leveraged funds to
meet the minimum percentages specified in this bill, EDD may
incur significant administrative costs, likely in the hundreds
of thousands. Increases in administrative costs are due to
EDD's potential redesign of database systems to track the use
of leveraged funds, as specified.
COMMENTS
1)Background . The WIA was established by federal law in 1998
for purposes of job training and workforce development. It
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requires states to form state workforce investment boards, and
requires governors to designate local workforce investment
areas and oversee local workforce investment boards to
coordinate and distribute job training funds.
In California, WIA funds are provided through the state
Workforce Investment Board (CWIB) and 49 local boards. The
state board receives 15% of the state's WIA allocation, and
the remaining 85% is allocated to the local boards. CWIB
works with the governor to provide policy guidance on how to
spend these funds. Likewise, each board determines how they
spend their funds in accordance with the workforce needs of
their areas.
2)Purpose . The Senate Office of Research (SOR) published a
report in May 2011 entitled: WIA: How is the Federal Funding
Being Spent, which states: "The data show that most LWIBs
reported spending less than 25% of their federal funds on job
training and instead spent substantially more of their federal
funds on core and intensive services provided through the more
than 200 One Stop Career Centers in the state. A third of the
boards reported spending less than 15% of their funds on job
training."
SOR's report also reveals that other states require their LWIA
boards to invest significantly in job training. Specifically,
the report provides information that Florida mandates its
local boards spend at least 50% of their funding on job
training and Illinois requires its local boards to spend at
least 40% of their funds on job training.
The California Labor Federation, sponsor of this bill, state:
"Workers in California face the toughest jobs crisis since the
Great Depression. With the declining state revenues and
pressure on public resources, it is crucial that every dollar
of federal workforce funds is invested in high quality
employment services that connect workers to good jobs."
This bill requires, beginning with the 2012 federal program
year, specified minimum amounts of federal WIA funds provided
to LWIA boards to be spent on workforce training programs, as
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specified.
3)Opposition . Opponents of this measure (Los Angeles County
Board of Supervisors, California State Association of
Counties, Los Angeles County Workforce Investment Board, the
Southern California Workforce Partnership, and the California
Workforce Association) contend this measure limits LWIA
boards' authority to best serve the needs of workers in their
area. Specifically, the Los Angeles County Board of
Supervisors states: "�This legislation] would have serious
unintentional consequences and could result in the elimination
of services and closure of various One Stop Career Centers,
which serve more than 161,000 universal access clients with
essential services to help gain employment in the county's
workforce investment area."
4)LWIA boards and use of WIA funds . WIA funds are distributed to
the states based on formulas that consider unemployment rates
and other economic and demographic factors. California and
its 49 Local LWIA boards receive funding from the U.S.
Department of Labor through three revenue streams: adult,
youth, and dislocated workers. Under federal law, 85% of adult
and youth formula funds and 60% of dislocated worker formula
funds are distributed to local boards. Fifteen percent of
adult, youth, and dislocated worker formula funds are
allocated to the state for a variety of discretionary uses.
LWIA boards are required to provide core and intensive
employment services, which are designed to help workers find
employment quickly. These services consist of job
search/placement, workplace counseling, skills assessment, and
individual career counseling, and case management. In order
to provide these services, each local workforce area created
one or more One Stop Centers, which provide access to career
information, counseling, funding for education, training and
supportive services. Federal law does allow more than one One
Stop Center to operate within each workforce area. According
to SOR's report, more than 200 centers operate in California.
Federal law also requires LWIA boards to provide job training
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services, which includes classroom training, customized
training, and on-the-job training (also known as incumbent
worker training). Training funds are designed to aid workers
in gaining new skills or upgrade existing skills. Funds are
often distributed through vouchers to job seekers to enroll in
eligible training programs. Likewise, WIA funds used for
training can also be used for supportive services that are
used to enable a participant to attend and complete training,
such as subsidized child care and transportation vouchers.
5)Related legislation . SB 776 (DeSaulnier), similar to this
bill, failed passage in this committee on August 25, 2011.
The difference between SB 776 and this bill is the following:
a) SB 734 authorizes LWIA boards to utilize specified
leveraged funds to meet the minimum percentage requirements
expended for workforce training. Specifically, local
boards are allowed to utilize up to 10% of leveraged funds
to meet these requirements.
b) SB 734 increases the minimum training requirements from
20% to 25% in 2012 and 25% to 30% in 2016.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081