BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 776 (DeSaulnier)
Hearing Date: 5/9/2011 Amended: As Introduced
Consultant: Bob Franzoia Policy Vote: L&IR 6-0
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BILL SUMMARY: SB 776 would require local workforce investment
boards (LWIBs) to spend a certain percent of available federal
funds for adults and dislocated workers on direct client
services, workforce training programs, and supportive services
in a manner consistent with federal law.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Cost shift of program Unknown, major cost pressure in
LWIBsFederal/*
funding to backfill lost funding in order to
address General
local needs
- administration $15 $31 $31 Federal
* Workforce Investment Act (WIA) of 1998
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
This bill would require at least 75 percent of federal Workforce
Investment Act funds provided to local workforce investment
board (LWIBs) for adults and dislocated workers shall be spent
on direct client services. Additionally, at least 50 percent of
these funds provided to LWIBs for adults and dislocated workers
shall be spent on workforce training programs and supportive
services for persons enrolled in training.
Requiring at least 50 percent of available funds to be spent on
workforce training programs and supportive services for persons
enrolled in training may have unintended consequences.
Requiring a specified percentage of expenditures for training
may result in closures of some One-Stop Career Centers whose
customers may seek services other than training. For some,
expanded career counseling and job search assistance may be the
priority. The highest priority services sought in One-Stop
Career Centers vary depending upon the area economic conditions
and needs of the local workforce, and may not be training
programs.
SB 776 (DeSaulnier)
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Self-reported expenditure data provided by LWIBs to the
Employment Development Department (EDD). LWIBs provide
quarterly expenditure data for training, core and intensive
services, administrative costs, and other operating costs to
EDD, using EDD's Job Training Automation system. EDD regularly
provides policy direction to the LWIBs on how to classify
various types of expenditures using federal guidelines and
definitions.
Since no data exists on cost effectiveness of the operation of
One-Stop Career Centers, an important step would be to assess
One-Stop Career Centers to determine training expenditures and
related area economic needs of the customer base.
Overall, the state mandated requirements for expenditures of
federal money on direct client services and training would
impair the Local Workforce Investment Boards' flexibility in
providing services to their local populations.
Administrative costs for EDD are an estimated $31,000 annually
for staff to monitor and report LWIB expenditures.
A breakdown of the expenditure requirements placed on LWIBs if
this bill is enacted is as follows:
Fiscal Year 2010-11
WIA Formula Funds to LWIBs
Adult: $111,928,088
Dislocated Worker: $115,447,810
Total: $227,375,898
Minimum expenditures to meet 75 percent requirement for direct
client services to adults and dislocated workers: ($227,375,898
x 0.75) = $170,531,926.
Minimum expenditures to meet 50 percent requirement for
workforce training program and supportive services to adults and
dislocated workers: ($227,375,898 x 0.50) = $113,687,949.
Expenditures by percentage for training, core, and intensive
services vary widely by LWIB. A one size fits all funding
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formula that prioritizes training services over core services
and intensive services to a significant degree would likely
prevent LWIBs from responding to needs of local workers and
place pressures on other funding sources to meet those needs.
Staff notes the bill does not provide a mechanism for EDD to
enforce its provisions.