BILL ANALYSIS �
SB 1401
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Date of Hearing: June 6, 2012
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
SB 1401 (Lieu) - As Amended: May 30, 2012
SENATE VOTE : 26-9
SUBJECT : Education and workforce investment systems: sector
strategies.
SUMMARY : Makes a number of changes to existing state law
related to workforce investment to emphasize a "sector strategy"
approach. Specifically, this bill :
1)Defines "sector strategies" to mean methods of prioritizing
investments in competitive and emerging industry sectors and
industry clusters on the basis of labor market and other
economic data indicating strategic growth potential,
especially with regard to jobs and income, as specified.
2)Establishes the following six guiding principles for the
state's workforce investment system:
a) Workforce investment programs and services shall be
responsive to the needs of employers, workers and students
by accomplishing the following:
i) Preparing California's students and workers with the
skills necessary to successfully compete in the global
economy.
ii) Producing greater numbers of individuals who obtain
industry-recognized certificates and degrees in
competitive and emerging industry sectors and filling
critical labor market skills gaps.
iii) Adapting to rapidly changing local and regional
labor markets as specific workforce skill requirements
change over time.
iv) Preparing workers for good-paying jobs that foster
economic security and upward mobility.
b) State and local workforce investment boards are
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encouraged to collaborate with other public and private
institutions to better align resources and build a
well-articulated workforce investment system by
accomplishing the following:
i) Adopting local and regional training and education
strategies that build on the strengths and fill the gaps
in the education and workforce development pipeline in
order to address the needs of job seekers, workers, and
employers within regional labor markets by supporting
"sector strategies."
ii) Leveraging resources across education and workforce
training delivery systems to build career pathways and
fill critical skills gaps.
c) Workforce investment programs and services shall be data
driven and evidence based when setting priorities,
investing resources and adopting practices.
d) Workforce investment programs and services shall develop
string partnerships with the private sector, ensuring
industry involvement in needs assessment, planning, and
program evaluation.
e) Workforce investment programs and services shall be
outcome oriented and accountable, measuring results for
program participants, including, but not limited to,
outcomes related to program completing, employment and
earnings.
f) 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
employment.
3)Requires the state to develop a California Industry Sector
Initiative that will serve as the cornerstone of the
California Workforce Investment Board (CWIB's) state plan and
provide for a framework for state workforce investments and
support for sector strategies.
4)Requires the CWIB to annually identify industry sectors and
industry clusters, new dynamic emergent industry sectors and
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industry clusters, and a skills-gap analysis, as specified.
In performing these functions, the CWIB shall consider the
expertise of local workforce investment boards, as provided.
5)Requires the CWIB to establish initial and subsequent
eligibility criteria for the state's 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,
particularly those facing a shortage of skilled workers.
6)Specifies that the division of labor for making initial and
subsequent eligibility determinations for the ETPL shall be
modeled on federal law and include input from local workforce
investment boards and other stakeholders, as specified. Local
boards shall have the authority to place and retain training
providers on the list, as specified.
7)Makes other related and conforming changes.
FISCAL EFFECT : Unknown
COMMENTS : This bill is intended to establish additional
requirements of the California Workforce Investment Board (CWIB)
that proponents contend will better align education and
workforce investment training systems to meet the needs of
today's economy and workforce, primarily through an emphasis on
"sector strategies."
Brief Background on the California Workforce Investment Board
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
CWIB and charged 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.
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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.
Existing law requires the CWIB, 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.
The CWIB 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 CWIB
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.
Among its other responsibilities, the CWIB 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.
Background on the Eligible Training Provider List (ETPL):
California's Eligible Training Provider List (ETPL) was
established in compliance with the Workforce Investment Act.
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
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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.
Recent 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 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 CWIB
to develop a strategic workforce plan to serve as a
framework for public policy, fiscal investment, and state
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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 CWIB 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 CWIB 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 CWIB 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 CWIB 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 CWIB, and EDD
agreed with the recommendations. The CWIB is currently working
on the strategic workforce plan and intends to have it finalized
by this summer.
"Sector Strategies"
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
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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.
California has taken initial steps to adopt sector strategies by
directing a portion of discretionary funds to job training
programs for nurses and workers in allied health fields.
Proponents contend that 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 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.
ARGUMENTS IN SUPPORT :
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
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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 CWIB.
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.
PRIOR RELATED LEGISLATION :
SB 698 (Lieu) of 2011 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 required the Governor
and the Legislature, in consultation
with the California Workforce Investment Board, to reserve
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specified federal discretionary funds
for high-performing local WIBs.
SB 734 (DeSaulnier) of 2011 required 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 required 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 enacted the California Green Collar Jobs
Act of 2008, which create
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.
REGISTERED SUPPORT / OPPOSITION :
Support
California Labor Federation, AFL-CIO
California Manufacturers and Technology Association
California Teachers Association
California Workforce Association
City and County of San Francisco
Insight Center for Community Economic Development
Jewish Vocational Services of Los Angeles
Jewish Vocational Services of San Francisco
John Muir Health
Los Angeles Area Chamber of Commerce
National Skills Coalition
San Francisco Foundation
State Building and Construction Trades Council
Opposition
None on file.
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Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091