BILL ANALYSIS �
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THIRD READING
Bill No: SB 912
Author: Lieu (D)
Amended: 1/4/12
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMM. : 5-0, 1/11/12
AYES: Lieu, DeSaulnier, Leno, Padilla, Yee
NO VOTE RECORDED: Wyland, Runner
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Employment Development Department: training
expenditure
reports
SOURCE : Author
DIGEST : This bill changes the timeframe for which the
Employment Development Department (EDD) must report Local
Workforce Investment Board (WIB) training expenditures to
better align with the schedule in which Local WIBs receive
their funding from the federal government. Specifically,
this bill (1) no longer requires the EDD to annually report
regarding the training expenditures made by local workforce
investment boards in the prior fiscal year. Instead, the
EDD would report these expenditures within six months after
the end of the two-year period of availability for federal
Workforce Investment Act funds; (2) consequently, the
report will contain expenditures from the previous two
program years; (3) in repealing Unemployment Insurance Code
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Section 9600.5, 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 Unemployment
Insurance Code Section 14211 �SB 734 (DeSaulnier), Chapter
498, Statutes of 2011] which specifically details what
expenditures shall count as training services; and (4)
further requires that the report specify the amount of any
leveraged funds, as defined in Unemployment Insurance Code
Section 14211, expended by the Local WIBs for training
services in addition to the amount of funds spent on adult
and dislocated persons 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 WIB 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 WIBs to use at least 25 percent
of their funds available under Title I of the federal WIA
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 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:
What types of expenditures qualify as training
expenditures;
The total amount of federal funds provided to the state
and to each Local WIB for adult and dislocated persons
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programs; and
The amount within each program spent on job training.
This bill changes the timeframe for which the EDD 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:
1. No longer requires the EDD to annually report regarding
the training expenditures made by local workforce
investment boards in the prior fiscal year. Instead,
the EDD 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.
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 Unemployment Insurance Code Section 14211
�SB 734 (DeSaulnier), Chapter 498, Statutes of 2011]
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 Section 14211, expended by the
Local WIBs for training services in addition to the amount
of funds spent on adult and dislocated persons programs.
Comments
The California WIB 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 percent) 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
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rest of the funds (15 percent) are disseminated at the
Governor's discretion.
Local WIBs 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 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.
Prior/Related Legislation
SB 302 (Ducheny), Chapter 376, Statutes of 2008, added
Section 9600.5 to the Unemployment Insurance Code requiring
the Director of EDD to report annually to the Governor, the
Legislature, and the California WIB regarding the training
expenditures of Local WIBs.
SB 734 (DeSaulnier), Chapter 498, Statutes of 2011,
requires (beginning program year 2012) that at least 25
percent of federal WIA funds provided to Local WIBs be
spent on workforce training programs. This percentage
increases to 30 percent in program year 2016.
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SB 698 (Lieu), Chapter 497, Statutes of 2011, 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.
Requires the California WIB, which would develop these
standards in conjunction with the Governor, to establish a
policy for the allocation of these reserved funds.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 1/18/12)
California Labor Federation
State Building and Trades Council
ARGUMENTS IN SUPPORT : According to the author's office,
over the last 20 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's office
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's office, 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's office argues that this bill, in
providing an accurate account of job training expenditures,
will contribute to continued improvements in the
expenditure of WIA funding.
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PQ:mw 1/18/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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