BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: January 11, 2012 20011-2012 Regular
Session
Consultant: Andrew Chen Fiscal:Yes
Urgency: No
Bill No: SB 912
Author: Ted Lieu
As Introduced/Amended: January 4, 2012
SUBJECT
Employment Development Department: Training Expenditure Reports
KEY ISSUE
Should the Legislature require that the Employment Development
Department (EDD) change the way they report the job training
expenditures of local Workforce Investment Boards (Local WIBs)
in order to provide more accurate and up-to date information to
the state?
PURPOSE
To better align the Employment Development Department's reports
on job training expenditures of Local WIBs with the timeframe in
which federal Workforce Investment Act funds are appropriated in
order to gain a more accurate picture of how Local WIBs spend
these funds.
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 Local Workforce Investment Boards to use
at least 25 percent of their funds available under Title I of
the federal Workforce Investment Act for adults and displaced
workers on workforce training programs, as defined in the United
States Code and the Code of Federal Regulations, beginning in
program year 2012. This percentage increases to 30 percent
beginning in program year 2016.
In order to verify these expenditures, existing law also
requires the director of the EDD to annually report to the
Governor, the Legislature and the California Workforce
Investment Board, no later than November 30, detailing, as
specified, the training expenditures made by local workforce
investment boards in the prior fiscal year. Under current law,
this report must specify (UI Code � 9600.5):
1. What types of expenditures qualify as training
expenditures;
2. The total amount of federal funds provided to the state
and to each Local WIB for adult and dislocated persons
programs; and
3. The amount within each program spent on job training.
This Bill would change the timeframe for which the Employment
Development Department must report Local WIB training
expenditures to better align with the schedule in which Local
WIBs receive their funding from the federal government.
Specifically, this bill would:
1. No longer require the EDD to annually report
regarding the training expenditures made by local
workforce investment boards in the prior fiscal year.
Instead, the department would report these expenditures
within six months after the end of the two-year period of
availability for federal WIA funds.
2. Consequently, the report will contain expenditures
from the previous two program years.
Hearing Date: January 11, 2012 SB 912
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Senate Committee on Labor and Industrial Relations
3. In repealing Section 9600.5 of the Unemployment
Insurance Code, the bill also removes language giving the
EDD the specific authority to establish what expenditures
qualify as training expenditures. This language is no
longer necessary as a result of the enactment of UI Code
�14211 �SB 734 (DeSaulnier) of 2011, Chapter 498] which
specifically details what expenditures shall count as
training services.
Finally, the bill further requires that the report specify the
amount of any leveraged funds, as defined in Unemployment
Insurance Code �14211, expended by the Local WIBs for training
services in addition to the amount of funds spent on adult and
dislocated persons programs.
COMMENTS
1. Background/Need for this bill?
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. 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.
Local Workforce Investment Boards (LWIBs) generally employ two
types of programs to place participants in jobs: job training
programs and One-Stop Employment Centers. One-Stop Centers
are "work first" programs, focusing primarily on finding
immediate employment for their participants by offering a
variety of services including training referrals, career
counseling, and r�sum� workshops. These programs have had
some positive effect on placing people in jobs; however,
current research suggests that "work first" programs are
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Senate Committee on Labor and Industrial Relations
generally less effective than direct job training programs in
terms of benefits accrued to the long term employability and
salaries of their participants. A February 2011 report from
the Senate Office of Research concluded that Local WIBs
generally spend significantly less on job training programs
than they do in running One-Stop Employment Centers and
covering administrative costs.
California's local WIBs receive federal WIA dollars in
two-year cycles of funding availability. However, these Local
WIBs must report their expenditures on job training programs
on an annual basis. As a portion of these WIA dollars is
typically carried forward from one fiscal year to the next,
statistical analysis of the reports could present incomplete
expenditure figures. Thus, gathering data from the two-year
period of funding availability as this bill requires will
allow for a more accurate analysis of how Local WIBs are
spending their funds.
2. Proponent Arguments :
According to the author, over the last twenty years, research
on job training programs in the United States has shown that
workers who have participated in publicly sponsored job
training programs have generally experienced positive but
modest gains in their employability and earnings. The author
states that several states, including Pennsylvania,
Massachusetts, Wisconsin, New York, and Michigan, have
attempted to improve the efficacy of these programs by
adopting "sector strategies" initiatives that direct more
resources towards nascent job training programs and growing
industries on local and regional levels.
According to the author, these efforts have shown encouraging
preliminary results suggesting that such programs not only
help their participants become more skilled and effective
employees, but also bring benefits to the firms that employ
them and the larger economies they work in. Research suggests
that encouraging the expansion of job training programs in
Local WIBs will not only be a more cost-effective use of WIA
dollars, but will also result in higher salaries and greater
working skills for California's unemployed. The author argues
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Senate Committee on Labor and Industrial Relations
that this bill, in providing an accurate account of job
training expenditures, will contribute to continued
improvements in the expenditure of WIA funding.
3. Opponent Arguments :
None Received.
4. Prior/Related Legislation :
SB 302 (Ducheny) of 2008: Chapter 376, Statutes of 2008
This bill added �9600.5 to the Unemployment Insurance Code
requiring the director of the EDD to report annually to the
Governor, the Legislature, and the California WIB regarding
the training expenditures of Local WIBs.
SB 734 (DeSaulnier) of 2011: Chapter 498, Statutes of 2011
This bill requires (beginning program year 2012) that at least
25 percent of federal Workforce Investment Act (WIA) funds
provided to local workforce investment boards (WIBs) be spent
on workforce training programs. This percentage increases to
30 percent in program year 2016.
SB 698 (Lieu) of 2011: Chapter 497, Statutes of 2011
This bill requires the Governor to establish standards for
certification of high-performance Local WIBs. It also
requires the Governor and the Legislature to reserve specified
federal discretionary funds for these high-performance Local
WIBs. The bill also requires the California Workforce
Investment Board, which would develop these standards in
conjunction with the Governor, to establish a policy for the
allocation of these reserved funds.
SUPPORT
None received
OPPOSITION
Hearing Date: January 11, 2012 SB 912
Consultant: Andrew Chen Page 5
Senate Committee on Labor and Industrial Relations
None received
Hearing Date: January 11, 2012 SB 912
Consultant: Andrew Chen Page 6
Senate Committee on Labor and Industrial Relations