BILL ANALYSIS �
SB 776
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Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 776 (DeSaulnier) - As Amended: August 15, 2011
Policy Committee: Labor and
Employment Vote: 5-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
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)
20% beginning with the 2012 federal program year and (b) 25%
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.
3)Requires the Employment Development Department (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.
4)Requires a LWIA board that does not meet the requirement of
this bill to submit a corrective action plan, within 90 days
of receiving its calculation, to EDD that provides reasons for
not meeting the requirements and describes actions taken to
address the identified expenditure deficiencies.
5)Prohibits a LWIA investment area that does not meet the
requirements of this bill from being eligible to receive any
portion of the state's 15% discretionary fund authorized under
federal law.
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6)Provides the California Workforce Investment Board (CWIA) with
the authority to raise the statutory minimum percent rate
required to be spent on training.
FISCAL EFFECT
1)Federal local WIA fund reallocation of between $45.5 million
and $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 this measure.
COMMENTS
1)Background . The WIA was established by federal law in 1998
for purposes of job training and workforce development. It
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 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
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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
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 formula 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
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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
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)Why provide CWIA with the authority to raise the statutory
minimum percent rate requirements specified in this bill ? The
bill currently requires LWIA boards to spend 20% of their
funds on training, beginning with the 2012 federal program
year, and 25% of their funds, beginning in the 2016 federal
program year.
This measure authorizes CWIA to raise these percentages at any
time. These percentages are established in statute and do not
fully take effect for several years. By opening the door for
the percentages to be changed, the bill creates uncertainty
for LWIA boards in their planning process for use of their
funds. Furthermore, it may be appropriate to provide CWIA
with discretion to review implementation of these percentages;
this discretion, however, should also authorize the ability of
the state board to lower percentages as well as increase
depending on outcome data. The committee may wish to consider
allowing a period of time to elapse before CWIA can increase
or decrease the percentages established in this bill.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081
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