BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: April 27, 2011 20011-2012 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: SB 776
Author: DeSaulnier
Version: As introduced February 18, 2011
SUBJECT
Local workforce investment boards: funding
KEY ISSUE
Of the funds received by California's Local Workforce Investment
Boards (Local WIBs) from the federal Workforce Investment Act
(WIA), should the Legislature establish a statutory minimum
percentage to be spent on workforce training programs?
Should the Legislature encourage Local WIBs to spend more of
their WIA funding on training programs by establishing a 50
percent statutory minimum?
PURPOSE
To require Local WIBs to spend a certain percent of available
federal WIA funds for adults and dislocated workers on specified
services and programs.
ANALYSIS
The federal Workforce Investment Act (WIA) 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 California
Workforce Investment Board (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 law requires the local chief elected officials in a
local workforce development area to form, pursuant to specified
guidelines, a Local Workforce Investment Board (Local WIB) to
plan and oversee the workforce investment system at the local
level. There are currently 49 local WIBs in the state. Each
local workforce area also created one or more One-Stop Centers,
which provide access to career information, counseling, funding
for education, training and supportive services.
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 Local
WIBs 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 (15% discretionary
funds) are allocated to the state for a variety of discretionary
uses.
Under WIA , there are three tiers of employment services and job
training programs provided to workers and job seekers. The first
two tiers of service are known as "core" and "intensive"
employment services and the third consists of "job training."
Core services include job search and placement
assistance, the provision of labor market information,
workplace counseling, and preliminary skills assessments.
Intensive services include comprehensive skills
assessments, group counseling, individual career
counseling, case management, and short-term prevocational
services on how to interview and prepare resumes.
o Both core and intensive employment
services are typically designed to match workers
Hearing Date: April 27, 2011 SB 776
Consultant: Alma Perez Page 2
Senate Committee on Labor and Industrial Relations
with employers in a relatively short period of time
and are both provided through California's more than
200 One-Stop Career Centers.
Job training programs include classroom training,
customized training, and on-the-job training (also known
as incumbent worker training). Training funds are often
distributed through vouchers to job seekers to enroll in
eligible training programs. Local WIBs determine which
training programs are eligible to receive the vouchers.
o 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.
This Bill would require Local Workforce Investment Boards to
spend a certain percent of available federal WIA funds for
adults and dislocated workers on direct client services,
workforce training programs, and supportive services in a manner
consistent with federal law, as prescribed.
Specifically, this bill would:
Require that at least 50% of funds provided to Local
WIBs for adults and dislocated workers under WIA be spent
on workforce training programs and supportive services for
persons enrolled in training, as specified.
Require that at least 75% of funds provided to Local
WIBs for adults and dislocated workers be spent on direct
client services, as defined. Direct client services
includes core, intensive and training services.
COMMENTS
1. Need for this bill?
Hearing Date: April 27, 2011 SB 776
Consultant: Alma Perez Page 3
Senate Committee on Labor and Industrial Relations
The California Workforce Investment Board 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. And 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 local WIBs 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 local WIBs set local policies and allocate
resources to respond to local markets to help struggling
unemployed and underemployed workers get and retain good jobs.
According to a memorandum conducted by the Senate Office of
Research (SOR) using data provided to the Legislature by the
Employment Development Department per the requirements of SB
302 (Ducheny), Chapter 376, Statutes of 2008, in California,
most Local WIBs invest little of their federal funds into
workforce training, spending substantially more of their
federal funds on other "employment services" provided for
through the state's 200-plus local One-Stop Career Centers.
In some Local Workforce Investment Areas, the local boards
spend less on training than they do on either administrative
costs or other operating expenses not directly related to
client services. According to SOR, most boards spend less
than 25 percent of their federal appropriations on job
training.
According to the Senate Office of Research memorandum
reviewing policy literature on the efficacy of job training
programs, there is a broad consensus that better educated and
trained workers are more productive and more successful in
labor markets. Moreover, the benefits of training and
education do not accrue only to the individual receiving the
training, but also to the firms that employ the workers, and
the economies in which the workers are employed.
This bill would require that Local WIBs spend a minimum of 50%
of available federal funds for adults and dislocated on
workforce training programs and supportive services.
Hearing Date: April 27, 2011 SB 776
Consultant: Alma Perez Page 4
Senate Committee on Labor and Industrial Relations
2. Similar efforts in other states :
Federal law provides states significant latitude to adjust WIA
and align it with a broader economic vision. This allows
Governors the opportunity to hold local WIBs accountable to
additional performance requirements and statewide standards
consistent with building a high performing and integrated
workforce development system. Several States have addressed
the need to hold local WIBs to higher standards through a
process of a second-tier certification process delineating
high-performance WIBs. In addition, several states have also
implemented minimum training expenditures policies in an
effort to improve employment and earnings potential of
workers.
Illinois:
In 2007, the state of Illinois implemented a minimum 40
percent training expenditure of WIA Title I programs funds
(not including administrative expenditures). The expenditure
requirement was phased-in before sanctions would be imposed.
According to a 2009 report conducted by the Office of
Community College Research and Leadership at the University of
Illinois, initial results from the implementation of this
policy in 2007 showed that the number of Local Workforce
Investment Areas meeting the 40 percent level had increased
dramatically. In addition, the overall training expenditure
rat had increased from about 31% in 2006 to over 45% in 2007.
(Harmon, T. & Rodriguez, J. (2009). Training policy in
Illinois: A minimum training expenditure requirement for WIA
Title I. Champaign, IL: Office of Community College Research
and Leadership, University of Illinois)
Florida:
In the state of Florida, at least 50 percent of WIA Title I
funds for adults and dislocated workers that are passed
through to regional workforce boards are required to be
allocated to individual training accounts unless a regional
workforce board obtains a waiver. Tuition and fees are
included in the training account expenditure.
Wisconsin:
The state of Wisconsin recognized that with a loss of over
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Senate Committee on Labor and Industrial Relations
79,700 manufacturing jobs in their state since 2007, many of
which were unskilled, training and re-training of the workers
who lost their jobs was essential. To ensure that critical
resources were being focused on preparing more people for
higher wage jobs, and recognizing the strong connection of
training to a "ready" workforce, the Department of Workforce
Development, Division of Employment and Training, set a goal
of spending 35% of formula allocated WIA funds for the adult
and dislocated worker training beginning in PY 2009.
3. Proponent Arguments :
According to the author, with declining state revenues and
pressure on public resources it is crucial that every dollar
of federal workforce funds are invested in high quality
employment services that connect workers to good jobs. The
author argues that despite the need for targeted and effective
training, Employment Development Department data has shown
that Local WIBs spend very little of our local WIA funds on
skills training. According to the author, on average, local
WIBs in California invest just 20% of their federal funds on
training services and a third spend less than 11% on training,
while many invest nothing.
According to the author, federal law provides states with
significant latitude to adjust WIA and align it with a broader
economic vision, something California has failed to take
advantage of. Proponents argue that a vast majority of funds
are going to support relatively less effective short-term
"core" services (such as job search assistance) provided
through a costly network of nearly 150 comprehensive One-Stop
centers. The author and proponents believe that this bill is
the first step in re-evaluating how these dollars are spent
and ensuring that more money is invested in training programs
that are effective and align with a the State plan for
economic growth. In addition, proponents argue that the
objective behind this legislation is not to displace anyone
that might be currently providing job services through the
One-Stop Centers, but instead redirecting our overall efforts
toward more effective training programs that result in
permanent jobs for all displaced workers.
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Consultant: Alma Perez Page 6
Senate Committee on Labor and Industrial Relations
In addition, proponents argue that other states like Florida,
Illinois, Michigan and Wisconsin have all adopted policies
that help drive more local WIA funds towards training.
According to proponents, Florida already requires that WIBs
spend at least 50% of their WIA funds on training. Proponents
also argue that many will need a skilled workforce to replace
the retiring baby boomer generation and to meet the demands of
new emerging industries. This bill would increase the share
of local WIA resources that are committed to providing
effective, longer-term job training. Proponents believe that
this bill is yet another step toward ensuring that public
dollars are spent appropriately and that more individuals are
trained for these jobs.
4. Opponent Arguments :
According to opponents, if passed, this bill would close
career centers throughout the state, return the public
workforce system to an antiquated model of funding streams,
and limit much needed services to job seekers and businesses
during this recession. Opponents believe that this bill
interferes with core tenants of the legislation, namely, local
control and individual empowerment.
Opponents argue that by imposing a 50 percent training
threshold, this bill would:
Force the closure of one-stop career centers, at a
time when California's unemployment rate exceeds 12%;
Likely result in putting fewer people into
training to meet the training threshold;
Exclude the most vulnerable populations, including
homeless, at risk youth, and others who can't afford to
be in training;
Usurp the authority of the local workforce
investment boards to set policy within their local
areas;
Eliminate much needed career counseling and job
search assistance;
Impede the ability of the local boards to support
the delivery of an array of services needed by area
residents as identified in their local plans.
Interfere with the ability of the boards to meet
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Senate Committee on Labor and Industrial Relations
the mandated requirement to establish and ensure the
operation of a one-stop service delivery system.
Limit the ability to leverage multiple funding
sources.
5. Related Legislation :
SB 698 (Lieu) of 2011: Currently in Senate Appropriations
Committee
This bill would require the Governor to establish, through the
California Workforce Investment Board, standards for
certification of high-performance Local Workforce Investment
Boards in accordance with specified criteria. This bill
passed out of this Committee on April 13, 2011.
AB 1115 (Lara) of 2011: Currently in Assembly Labor and
Employment Committee
This bill would authorize individuals who are eligible to
receive training services under WIA to have the opportunity to
select any of the eligible training providers from any of the
local areas in the state. This bill would also require the
California Workforce Investment Board to establish a procedure
for use by Local WIBs in determining the eligibility of a
provider of training services, as specified.
SUPPORT
California Labor Federation - Co-Sponsor
California Manufacturers and Technology Association - Co-Sponsor
State Building and Construction Trades Council - Co-Sponsor
California Teachers Association
OPPOSITION
California Workforce Association (CWA)
Hearing Date: April 27, 2011 SB 776
Consultant: Alma Perez Page 8
Senate Committee on Labor and Industrial Relations
Hearing Date: April 27, 2011 SB 776
Consultant: Alma Perez Page 9
Senate Committee on Labor and Industrial Relations