BILL ANALYSIS �
SB 776
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Date of Hearing: June 22, 2011
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
SB 776 (DeSaulnier) - As Amended: June 15, 2011
SENATE VOTE : 35-3
SUBJECT : Local workforce investment boards: funding.
SUMMARY : Imposes requirements related to the expenditure of
Workforce Investment Act (WIA) funds on job training programs.
Specifically, this bill :
1)Establishes threshold requirements for the percentage of WIA
funds provided to local workforce investment boards to be
spent on training programs, support services, and specified
bridge services as follows:
a) Beginning federal program year 2012 - at least 20
percent.
b) Beginning federal program year 2014 - at least 30
percent.
c) Beginning federal program year 2016 - at least 40
percent.
2)Requires the Employment Development Department (EDD) to
monitor compliance, as specified, and requires a local
workforce investment board that does not meet these
requirements to submit a corrective action plan to EDD.
3)Specifies that the expenditures that shall count towards the
above requirement shall include the following:
a) Services defined as training under specified federal
law.
b) Supportive services as defined under federal law,
including needs related payments for books, training
materials and tuition relevant to training programs, as
specified.
c) Academic remediation and English-as-a-second-language
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services.
d) Pre-vocational services offered in combination with
occupational skills, including occupational bridge programs
that blend workplace competencies, career exploration, and
basic literacy in an occupational context, as specified.
e) Work-experience and internships.
f) The amount paid from WIA dislocated worker and adult
formula funds for competitively bid innovative sector
training contracts, involving multiple partners, including
but not limited to, business, labor and public education
entities.
4)Requires the California Workforce Investment Board to conduct
an evaluation of these requirements in federal program year
2015.
FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill will result in unknown, major cost pressure
in local workforce investment boards to backfill lost funding in
order to address local needs.
COMMENTS : This bill is co-sponsored by the California Labor
Federation, AFL-CIO, the State Building and Construction Trades
Council, and the California Manufacturers and Technology
Association. The main question raised by this proposal is
whether the Legislature should establish a statutory minimum
percentage of WIA funds to be spent on workforce training
programs.
Brief Background on the Workforce Investment Act (WIA) and Job
Training
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.
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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 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 local workforce investment boards.
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."
1) Core services include job search and placement
assistance, the provision of labor market information,
workplace counseling, and preliminary skills assessments.
2) 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.
Both core and intensive employment services
are typically designed to match workers with employers
in a relatively short period of time and are both
provided through California's more than 200 One-Stop
Career Centers.
1) Job training programs include classroom training,
customized training, and on-the-job training (also known
as incumbent worker training). Training funds are often
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distributed through vouchers to job seekers to enroll in
eligible training programs. Local WIBs determine which
training programs are eligible to receive the vouchers.
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.
The Recent Senate Office of Research Report
In May, the Senate Office of Research issued a report entitled,
"The Workforce Investment Act: How is Federal Funding Being
Spent?" Specifically, the report analyzed the percentage of WIA
funds spent by local workforce investment boards on job training
(compared to general employment services). The report stated:
"In California, most Local Workforce Investment Boards have
reported investing little of their federal funds into
workforce training and instead have spent a substantial
amount on other employment services provided by One-Stop
Career Centers throughout the state. In some Local
Workforce Investment Areas, the boards have reported
spending less on training than on administrative costs and
other operating expenses not directly related to client
services?
?Of the $125 million in Workforce Investment Act adult<1>
formula funds appropriated to the LWIBs for the 2008
federal program year (which includes transfers between
funding streams made by the LWIBs), approximately $25
million (20 percent) was reported as being spent on job
training during state fiscal years 2008-09 and 2009-10. A
much larger share of the funds was spent on One-Stop
Employment Services than on job training; about $79 million
(63 percent) was spent on core and intensive employment
services provided at the One-Stop Career Centers, and
LWIBs, in the aggregate, also reported spending about $21
million (17 percent) on administrative and other operating
expenses combined?
-------------------------
<1> Similarly, the report also indicated that with respect to
WIA dislocated-worker formula funds, 19 percent ($16 million)
was spent on job training, 67 percent ($56 million) was spent on
employment services, and 14 percent ($12 million) was spent on
administrative and other operating costs.
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?The data show that most LWIBs reported spending less than
25 percent 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 percent of their
funds on job training. .. �S]ome LWIBs reported spending
more on administrative and other operating expenses
(combined) than they did on job training?Boards that
reported spending more on administrative costs and other
operating expenses combined than on job training typically
reported spending less than 10 percent of their funds on
job training. Some of these boards spent upward of 20
percent of the relevant funds on administrative costs and
other operating expenses combined."
According to the Senate Office of Research report (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.
Finally, the Senate Office of Research report noted the
following:
"Policy makers need to recognize that increased job
training funding may come at the expense of reduced WIA
expenditures for the One-Stop Career Centers and an overall
reduction in the number of clients served depending on the
cost-sharing agreements in place at the One-Stops; however,
directing more funds to job training may lead to a higher
return of investment."
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
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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 raet had increased from about
31 percent in 2006 to over 45 percent 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 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 percent of formula allocated WIA funds for the adult and
dislocated worker training beginning in PY 2009.
� Michigan - Michigan's No Worker Left Behind program has
raised the share of formula funds expended on job training
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to more than 50 percent by steering WIA funds into job
training programs that focus on in-demand occupations.
ARGUMENTS IN SUPPORT :
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 of which
California has failed to take
advantage. 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 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.
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
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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.
This bill is also supported by the City of Los Angeles Workforce
Investment Board and the Los Angeles County Workforce Investment
Board.
ARGUMENTS IN OPPOSITION :
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 specific, state-wide 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 the
mandated requirement to establish and ensure the operation
of a one-stop service delivery system.
Limit the ability to leverage multiple funding sources.
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The California State Association of Counties, writing in
opposition to this bill, states:
"�W]e are concerned that the provisions of �this bill]
assume all counties' employment needs are the same. In
reality, vast differences exist between various regions of
the state, including the employment and educational needs
of local residents. While many unemployed and
under-employed Californians require skilled training
services, other need basic job search assistance and career
assessments provided at local one-stop centers, many of
which are likely to close if �this bill] becomes
law?Prescribing a certain threshold of funding to be
applied to workforce training will not permit local
workforce investment board members to make decisions that
recognize and reflect local needs."
COMMITTEE STAFF COMMENT :
The policy questions raised by this bill touch on some broader
philosophical questions that are important to keep in mind in
considering the overall context of this bill.
First, this bill raises questions and debate about "local
control" with respect to WIA funds. Opponents of this bill
contend generally that the idea of a statewide and state-imposed
training threshold "interferes with core tenants of the
�federal] legislation, namely, local control and individual
empowerment." Proponents counter that, while WIA gives local
WIBs administrative control (with certain limits), policy
development, guidance and system oversight are shared between
states and the local WIBs, and ultimate authority rests with the
Governor. Moreover, some critics in recent years have lamented
the fact that the state (and the CWIB) does not play a more
active role in providing policy guidance and direction over the
workforce development system. This bill raises those questions
explicitly - should the state (via the Legislature) play a role
in prioritizing investments of WIA expenditures or should those
questions be left to "local control?"
Second, this bill addresses larger questions about the best use
of WIA funds. Some opponents have argued generally that job
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training is not necessarily the most effective or necessary
service required by each individual who seeks service in a
one-stop center. Especially in a down economy, many individuals
need unemployment assistance, other support, or help finding a
job as soon as possible to provide support for themselves or
their families. Some critics have alleged that this approach
has sometimes resulted in a "jobs first" mentality within the
workforce development system. They contend that many one-stop
centers primarily engage in low-intensity employment services
aimed at rapid labor-market attachment. However, they argue
that this is particularly inappropriate for low-skill, low-wage
workers and that churning such individuals through low-wage,
dead-end jobs is a cynical response to poverty. They argue that
workers instead need longer-term vocational skills training and
support services to allow them to succeed in quality skills
training and move into self-sustaining employment and further
educational attainment.
An important question to consider is whether this bill imposes a
mutually exclusive choice between the two. Some opponents
appear to contend that in fact would be the practical effect of
the bill - that mandating certain training percentages would
result in the closure of one-stop centers and eliminate
much-needed other employment services. On the other hand,
proponents of this bill contend that it seeks simply to place a
priority on expenditures that may lead to a higher return on
investment. They point out that currently, many local WIBs
invest a high percentage of their WIA funding on training while
maintaining multiple one-stop centers - so the choice is not
mutually exclusive. Therefore, they contend that the policy
question raised by this bill, rather than an either/or choice,
is whether spending more on job training would lead to better
policy outcomes (in terms of higher earnings and long-term
employment) for WIA service recipients.
REGISTERED SUPPORT / OPPOSITION :
Support
California Labor Federation, AFL-CIO (co-sponsor)
California Manufacturers and Technology Association (co-sponsor)
California Teachers Association
City of Los Angeles Workforce Investment Board
Los Angeles County Workforce Investment Board
Service Employees International Union
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State Building and Construction Trades Council (co-sponsor)
Support if amended
Council of California Goodwill Industries
Opposition
Ahn Fielding
Brawley Inn
Bus-Ed Partners, Inc.
California State Association of Counties
California Steel Industries, Inc.
California Workforce Association
City of Azuza
City of Covina
City of Glendora
Colusa County One Stop
Community Career Development, Inc.
County of San Bernardino
Edwin Smith
Exchange Bank
Henkels and McCoy, Inc.
Hub Cities Consortium
Huntington Beach Chamber of Commerce
Imperial County Workforce Development Board
Joseph Derthick, SELACO WIB Business Representative
Jewish Vocational Services
Kaiser Permanente Santa Rosa Medical Center
Marin County Board of Supervisors
Merced County Office of Education
Merced County Workforce Investment Board
New Horizons
Orange County Board of Supervisors
P&L Specialties
Pacific Asian Consortium in Employment-PACE
Performance, Productivity and Profit Consulting
Rainier Properties, LLC
Redondo Beach Chamber of Commerce & Visitors Bureau
Regional Council of Rural Counties
Riverside County Board of Supervisors and Economic Development
Agency
Riverside County Workforce Investment Board
San Diego Workforce Partnership
Santa Cruz County Workforce Investment Board
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SHN Consulting Engineers and Geologists, Inc.
Solano County Workforce Investment Board
Sonoma County Board of Supervisors
Sonoma County Employment and Training Division
South Bay Association of Chambers of Commerce
Southeast Area Social Services Funding Authority
Southeast Los Angeles County Workforce Investment Board
Southern California Workforce Partnership
Stonewood Center
Supervisor Peter Huebner, Sierra County Board of Supervisors
Supervisor Wendy Otto, Trinity County Board of Supervisors
Tom Beard Company
Tuolumne County Board of Supervisors
Urban Counties Caucus
Vietnam Veterans of California, Inc.
Violette Magique
Watts Labor Community Action Committee
Workforce Institute
Yap & Little, Inc.
Oppose unless amended
Chicana Service Action Center
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091