BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: April 25, 2012 20011-2012 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: SB 1401
Author: Lieu
As Introduced/Amended: April 18, 2012
SUBJECT
Unemployment insurance: education and workforce investment
systems
KEY ISSUES
Should the Legislature direct state workforce development
resources towards in-demand and emerging industries that will
have a significant economic impact?
Should the Legislature require the state to conduct annual
studies that identify skills-gaps and industries with a
competitive economic advantage, in order to direct resources
towards those industries and meet our workforce needs?
Should the Legislature require the state to establish initial
and subsequent eligibility criteria for training providers to
effectively direct training resources towards successful outcome
oriented programs?
PURPOSE
To establish additional requirements of the California Workforce
Investment Board that better align education and workforce
investment training systems to meet the needs of the 21st
century economy and workforce.
ANALYSIS
The federal Workforce Investment Act (WIA) of 1998 provides
funding 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. There are 49 Local
Workforce Investment Boards that plan and oversee the workforce
investment system at the local level. Each local workforce also
has one or more One-Stop Centers, which provide access to career
information, counseling, funding for education, training and
supportive services.
Existing law requires the board, in collaboration with specified
state and local partners, and the local WIBs to develop a
strategic workforce plan, updated at least every 5 years, to
address the state's economic, demographic, and workplace needs.
Among its other responsibilities, the State Board develops
protocols to ensure that policies are developed with full public
input and discussion. The CWIB is also responsible for
establishing criteria for development of 1) the formulae to be
used for allocating funds to the local areas, 2) dissemination
of the Governor's 15% WIA discretionary funding, and 3)
certification and re-certification of local WIBs. The State
Board also provides recommendations to the Governor on policy
and vision for the statewide employment statistics system.
This Bill would additionally provide that the California
Workforce Investment Board is also responsible for assisting the
Governor in aligning the education and workforce investment
systems to the needs of the 21st century economy and workforce
as well as promoting and developing a well-educated and highly
skilled workforce to meet those needs.
Specifically, this bill would establish six principles to guide
the state's workforce investment system that include:
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Senate Committee on Labor and Industrial Relations
1. Programs and services must be responsive to the needs of
employers, workers, and students by:
a. preparing students and workers with the skills
necessary to successfully compete in the global
economy;
b. producing greater number of workers with
industry-recognized certificates and degrees in
competitive and emerging industries to fill labor
market skills gaps;
c. adapting to local and regional labor market
changes;
d. preparing workers for good-paying jobs that
foster economic security and upward mobility.
2. State and local WIBs are encouraged to collaborate with
other public and private institutions (including
businesses, career technical and adult education programs,
and community college programs, among others) to adopt
local and regional training and education strategies that
better align resources across education and training
service delivery systems and build a well-articulated
workforce investment system, as specified.
3. Workforce investment programs and services shall be data
driven and evidence based when setting priorities,
investing resources, and adopting practices.
4. Workforce investment programs and services shall develop
strong partnerships with the private sector, ensuring
industry involvement in needs assessment, planning, and
program
evaluation.
5. Workforce investment programs and services shall be
outcome oriented and accountable, measuring results through
outcomes related to program completion, employment, and
earnings.
6. Programs and services shall be accessible to employers,
workers, and students who may benefit from their operation,
including individuals with employment barriers, such as
persons with economic, physical, or other barriers to
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employment.
Additionally, this bill would also direct the State WIB to,
among other things:
1. Target resources towards high-wage competitive and
emerging industry sectors that have a significant economic
impact on the state, have immediate education and workforce
development needs, and have documented career
opportunities.
2. As part of its strategic workforce plan, create a
California Industry Sector Initiative to provide a
framework for state workforce investments and support for
sector strategies.
3. By considering the expertise of local WIBs, annually
identify industry sectors with a competitive economic
advantage and annually conduct skills-gap analyses
enumerating occupational and skills shortages in the
industries identified as having strategic importance to the
state.
4. Establish, with input from local WIBs and other
stakeholders, initial and subsequent eligibility criteria
for the Workforce Investment Act Eligible Training Provider
List (ETPL) that effectively directs training resources
into training programs leading to employment in
high-demand, high-priority, and high-wage occupations, as
specified.
5. Provide definitions for specific terms used in the bill,
including, "career pathways," "sector strategies,"
"industry sectors" and "economic security," among others.
COMMENTS
1. Background on the CA Workforce Investment Board:
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Senate Committee on Labor and Industrial Relations
Under federal law, Workforce Investment Act 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 WIBs. Fifteen percent of Adult, Youth, and Dislocated
Worker formula funds (15% discretionary funds) are allocated
to the state for a variety of discretionary uses.
The State WIB is charged with developing a unified, strategic
planning process to coordinate various education, training,
and employment programs into an integrated workforce
development system that supports economic development. As
such, the State WIB has adopted Sector Strategies as the
statewide framework for workforce development, and is working
closely with the Economic Strategy Panel, other State Agencies
and departments and its 49 local Workforce Investment Boards
to support the emergence of effective statewide and regionally
driven sector initiatives.
All members of the CWIB are appointed by the Governor and
represent the many facets of workforce development - business,
labor, public education, higher education, economic
development, youth activities, employment and training, as
well as the Legislature. Through its broad membership, the
state board encourages collaboration among both state and
local public and private entities. This collaboration is
further enhanced through its committee structure. The board
engages state and local partners through its Special
Committees which address four policy priorities outlined in
the State WIB's Strategic Plan. The Special Committees
include the Green Collar Jobs Council, the Special Committee
on Issues and Policies, the State Youth Vision Team, and the
Health Workforce Development Council.
2. Background on the Eligible Training Provider List (ETPL):
California's Eligible Training Provider List (ETPL) was
established in compliance with the Workforce Investment Act.
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Senate Committee on Labor and Industrial Relations
The purpose of the ETPL is to provide customer-focused
employment training for adults and dislocated workers.
Training providers who are eligible to receive Individual
Training Accounts (ITAs) through WIA Title I-B funds are
listed on the ETPL. California's statewide list of qualified
training providers offers a wide range of educational
programs, including classroom, correspondence, Internet,
broadcast, and apprenticeship programs.
Existing law requires the establishment of two separate
procedures for the ETPL: initial eligibility and subsequent
eligibility. California has been granted a waiver of the
requirement for subsequent eligibility specified in WIA
Section 122(c)(5) and Title 20 of the Code of Federal
Regulations (CFR) Section 663.530. This current federal
waiver allows providers and programs to remain on the State
ETPL indefinitely as long as their initial eligibility is
still valid.
According to an Employment Development Department (EDD)
information notice to the workforce development community, it
was notated that the current ETPL contained more than 5,000
program/providers that never had a WIA client referred to
them, nor had the programs been validated for at least two
years. In an effort to meet the terms of the waiver
pertaining to subsequent eligibility, the Workforce Services
Division had to deactivate all existing ETPL programs that
were more than two years old (i.e. initial approval date prior
to January 1, 2010) and did not have a single WIA client
referred to them during their tenure on the ETPL. (WSIN11-45,
March 27, 2012). However, if the local board determines that
an unused program/provider should be reactivated and remain on
the ETPL, a verification must be done at the local level to
ensure that the data on the inactive ETPL is valid and that
this program/provider is a not a duplication of an existing
program/provider on the ETPL.
3. California State Auditor Report on Federal Workforce
Investment Act:
A March 2012 report, "Federal Workforce Investment Act: More
Effective State Planning and Oversight Is Necessary to Better
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Help California's Job Seekers Find Employment," evaluated the
state's administration of WIA funding.
Among its finding, the audit revealed that:
� More than five years after state law required the
State WIB to develop a strategic workforce plan to serve
as a framework for public policy, fiscal investment, and
state labor programs to address workforce needs; it has
failed to do so and thus, has not provided sufficient
guidance to its workforce development partners.
� Both EDD and the state board can do more to assess
the quality of services - neither has a mechanism to
evaluate whether an appropriate match exists between a
participant's skills, education, and experience and the
employment the participant attains.
� Although the state board is building partnerships
with various entities to coordinate workforce investment
planning, it has done little to ensure that the one-stop
delivery system does not duplicate services for program
participants.
The State auditor made several recommendations in the report,
including one that the Legislature consider establishing a due
date for the state board to develop a strategic workforce
plan, and clarify the roles and responsibilities of the state
board and EDD. According to the auditor, without this plan,
we cannot ensure that our workforce investment system provides
life-long learning, promotes self-sufficiency, links education
and training to economic development, and prepares California
to compete successfully in the global economy as the
Legislature intended. The State auditor also made
recommendations to the state board aimed at developing,
overseeing, and continuously improving California's workforce
investment system by collaborating with state and local
workforce partners and clearly defining terminology and
identifying state-specific performance measures.
According to the report, the Labor Agency, the state board,
and EDD agreed with the recommendations. The State WIB is
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Senate Committee on Labor and Industrial Relations
currently working on the strategic workforce plan and intends
to have it finalized by this summer.
4. Sector Strategies and Need for this bill?
There is broad consensus that better educated and trained
workers are more productive and more successful in labor
markets. However, targeting these efforts towards the jobs
sectors that are best positioned to make gains if investments
are made is essential and requires the use of current economic
and labor market data to determine what those sectors are.
"Sector strategies" are policy initiatives designed to promote
the economic growth and development of a state's competitive
industries using strategic workforce investments to boost
labor productivity. The strategic focus of sectors is on
prioritizing investments where overall economic returns are
likely to be highest, specifically in those sectors that will
generate significant gains in terms of jobs and income or in
industries facing a shortage of skilled workers.
When done successfully, sector strategies can lead to mutually
beneficial outcomes for business, labor, and the state by
increasing competitiveness and growth, improving worker
employability and income, and reducing the need for social
services while also bolstering government revenues generated
by both business and workers. According to a 2010 study of
three sector focused training programs in Wisconsin,
Massachusetts, and New York, it was found that participants in
the relevant training programs earned more and were employed
at higher rates than were members of the study's control
group. (Tuning Into Local Labor Markets: Findings from the
Sectoral Employment Impact Study, Public/Private Ventures,
2010)
Sector strategies have been adopted in several states,
including Pennsylvania, Michigan, Washington and
Massachusetts. In California, we have taken initial steps to
adopt sector strategies by directing portion of discretionary
funds to job training programs for nurses and workers in
allied health fields. This bill would help move our state
towards a more strategic approach of training for our future
workforce needs. The author believes that this bill would
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Senate Committee on Labor and Industrial Relations
help break down the barriers of communication between the
various training entities by encouraging collaboration to
better align resources across workforce education and training
service delivery systems. Furthermore, this bill would help
address some of the concerns raised by the State Auditor's
office in the recent audit of the federal WIA.
5. Proponent Arguments :
According to the author, workers in California are facing the
toughest jobs crisis in over 50 years and, unfortunately, at a
time when workers, families and communities need more support,
states are facing unprecedented budget challenges. The author
argues that now more than ever, it is crucial that every
dollar of workforce funds is invested in high quality
employment services that connect workers with good paying
jobs.
Proponents argue that despite the state's high unemployment
rate, job openings in key industries are going unfilled
because employers cannot find workers with the necessary
credentials and training for these jobs. In addition, many of
these openings are "middle-skill" jobs, which require
education and training past high school. According to
proponents, 47 percent of jobs in California's labor market
are middle-skill, but only 38 percent of Californians likely
have the credentials and training for these jobs. This bill
takes important steps to close this skills gap by providing
new principles to guide the work of the State WIB.
Proponents contend that this bill will greatly enhance and
strengthen our job training infrastructure, but more
importantly, will also measurably improve job prospects and
training outcomes for California's unemployed workers.
Additionally, proponents state that over 30 states and the
District of Columbia have implemented statewide sector
strategies. According to proponents, Pennsylvania stands at
the forefront of this work. Since 2005, Pennsylvania has
helped to support 76 partnerships; with 6,300 employers
actively involved, who have contributed $75 million in private
sector funds. Over 100,000 workers have been served, resulting
in higher wages and retention rates.
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Senate Committee on Labor and Industrial Relations
6. Opponent Arguments :
None received.
7. Prior Legislation :
SB 698 (Lieu) of 2011: Chaptered
SB 698 requires the Governor to establish, through the
California Workforce Investment Board, standards for
certification of high-performance local WIBs, in accordance
with specified criteria. The bill also requires the Governor
and the Legislature, in consultation with the California
Workforce Investment Board, to reserve specified federal
discretionary funds for high-performing local WIBs.
SB 734 (DeSaulnier) of 2011: Chaptered
SB 734 requires local WIBs to spend a certain percentage of
available WIA funds (25% now and increased to 30% in 2016) on
workforce training programs in a manner consistent with
federal law and allows the boards to leverage specified funds
to meet this requirement. This bill also requires a local WIB
that does not meet the expenditure to provide the EDD with a
corrective action plan regarding those expenditures.
AB 3018 (Nunez) of 2008: Chaptered
AB 3018 enacted the California Green Collar Jobs Act of 2008,
which created the Green Collar Jobs Council within the State
WIB to perform specified tasks related to addressing the green
economy workforce needs of the state. Specifically, the bill
requires the council to develop a comprehensive array of
programs, strategies, and resources to address the state's
growing green economy.
SUPPORT
California Labor Federation
California Teachers Association
Insight Center for Community Economic Development
Jewish Vocational Services, Los Angeles
Jewish Vocational Services of San Francisco
Los Angeles Area Chamber of Commerce
Hearing Date: April 25, 2012 SB 1401
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Senate Committee on Labor and Industrial Relations
National Skills Coalition
State Building and Construction Trades Council, AFL-CIO
The San Francisco Foundation
California Workforce Association - Support if amended
OPPOSITION
None received
Hearing Date: April 25, 2012 SB 1401
Consultant: Alma Perez Page 11
Senate Committee on Labor and Industrial Relations