BILL ANALYSIS �
SB 1401
Page 1
Date of Hearing: July 3, 2012
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel P�rez, Chair
SB 1401 (Lieu) - As Amended: May 30, 2012
SENATE VOTE : 26-9
SUBJECT : California Workforce Investment Act
SUMMARY : Modifies the California Workforce Investment Act (WIA) to
add guiding principles, emphasizing a "sector strategy" approach,
among other changes. Specifically, this bill :
1)Adds to the duties of the California Workforce Investment Board
(CWIB), aligning the state education and workforce investment
systems to the needs of the 21st century economy and workforce.
2)Establishes the following six guiding principles for the state's
workforce investment system:
a) Workforce investment programs and services are required to 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 encouraged to
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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 are required to be
data driven and evidence based when setting priorities,
investing resources, and adopting practices.
d) Workforce investment programs and services are required to
develop strong partnerships with the private sector, ensuring
industry involvement in needs assessment, planning, and program
evaluation.
e) Workforce investment programs and services are required to be
outcome oriented with accountable, measurable results for
program participants, including, but not limited to, outcomes
related to program completion, employment, and earnings.
f) Programs and services required to 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)Defines a number of economic and workforce development terms
including, but not limited to:
a) "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.
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b) "Career pathways," "career ladders," or "career lattices" to
mean an identified series of positions, work experiences, or
educational benchmarks or credentials with multiple access
points that offer occupational and financial advancement within
a specified career field or related fields over time.
c) "Cluster-based sector strategies" to mean methods of focusing
workforce and economic development on those sectors that have
demonstrated a capacity for economic growth and job creation in
a particular geographic area.
4)Requires the state to develop a California Industry Sector
Initiative that will serve as the cornerstone of the CWIB's state
plan and provide a framework for state workforce investments and
support for sector strategies.
5)Requires the CWIB to annually identify industry sectors and
industry clusters, new emergent industry sectors and industry
clusters, and undertake a skills-gap analysis, as specified. In
performing these functions, the CWIB shall consider the expertise
of local workforce investment boards, as provided.
6)Requires the CWIB to establish initial and subsequent eligibility
criteria for the state's eligible training provider list 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.
7)Makes other related and conforming changes.
EXISTING LAW :
1)Establishes the CWIB, comprised of members appointed by the
Governor and the appropriate presiding officers of each house of
the Legislature, and specifies that the executive director of the
CWIB report to the Secretary of the California Labor and Workforce
Development Agency. The CWIB is responsible for assisting the
state in meeting the requirements of the federal Workforce
Investment Act of 1998, as well as assisting the Governor in the
development, oversight, and continuous improvement of California's
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workforce investment system.
2)Requires each local workforce investment board to establish at
least one full service one-stop career center in the local
workforce investment area. One-Stop career centers are required to
include a specified group of job search related entities and
provide jobseekers with integrated employment, education, training,
and job search services. Employers can also be provided with
access to career and labor market information, job placement
assistance, and other such services as businesses in the community
may require.
FISCAL EFFECT : This measure was referred from the Senate Committee
on Appropriations pursuant to Senate Rule 28.8.
COMMENTS :
1)Purpose of the Bill : This bill is intended to establish additional
requirements of the 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." 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.
2)Double Referral : This measure was previously heard in the Assembly
Committee on Labor and Employment, where it received a 5 to 1 vote.
3)California Workforce Investment Board : The federal Workforce
Investment Act of 1998 provides funding for job training and
employment investment activities and programs in which states may
participate, including work incentive and employment training
outreach programs.
Implementation of the federal WIA required significant reforms to
California's job training system. These reforms emphasized private
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sector involvement, improved customer service, a better alignment
of public sector resources, and the integration of education,
workforce, and economic development programs in order to help both
workers and employers compete and succeed in the global economy.
Among its primary duties, the CWIB provides guidance to local
workforce investment boards (LWIB) and development of a unified,
strategic plan to coordinate various education, training, and
employment programs that result in an integrated workforce
development system that supports economic development. This plan
is required to be updated at least every 5 years in order to
address the state's changing economic, demographic, and workplace
needs.
There are 49 LWIBs that plan for and oversee the workforce
investment system at the local level. Each LWIB also has one or
more One-Stop Centers, which provide access to career information,
counseling, and funding for education, training and supportive
services.
WIA funding is distributed to states based on a set formula which
includes specified economic and demographic data and flows to the
state through three primary programs: Adult, Youth and Dislocated
Worker. California's WIA allocation from the U.S. Department of
Labor has declined over the years from a high of $630 million in
2000-01 to $426 million in 2009-10. Federal law dictates that 85%
of Adult and Youth formula funds, and 60% of Dislocated Worker
formula funds, are distributed to local WIBs. Funding for the
state's activities is derived from the 15% WIA discretionary funds.
In 2009-10 LWIBs received $363 million, while the state received
about $63 million in discretionary moneys. Budget actions in prior
years redirected portions of state discretionary moneys to offset
General Fund employment and training costs at the California
Department of Corrections and Rehabilitation or the California
Conservation Corp.
Among 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) allocation of the 15% WIA discretionary
funding, and 3) certification and re-certification of LWIBs. The
State Board also provides recommendations to the Governor on policy
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and vision for the statewide employment statistics system.
As such, the CWIB has adopted "sector strategies" as the statewide
framework for workforce development and is working with other state
agencies and departments and its 49 LWIBs to support the emergence
of effective regionally driven sector initiatives.
4)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 findings, 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 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, there is no assurance that the
state 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.
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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 the
summer of 2012.
1)California Economy : Historically, the state's significance in the
global marketplace resulted from a variety of factors, including:
its strategic west coast location that provides direct access to
the growing markets in Asia; its economically diverse regional
economies; its large, ethnically diverse population, representing
both a ready workforce and significant consumer base; its access to
a wide variety of venture and other private capital; its broad base
of small- and medium-sized businesses; and its culture of
innovation and entrepreneurship, particularly in the area of high
technology.
The chart below (not included in electronic version, contact the
committee for chart), California Employment by Sector (2009), shows
total reported California employment by industry sector.
As noted above, California's dominance in many industry sectors is
based, in part, on the significant role small businesses play in
global supply chains, providing specialized services and products
to meet niche markets, and their ability to create jobs while
providing a means of wealth creation for an increasingly diverse
entrepreneur class. Businesses with fewer than 100 employees
comprise nearly 98% of all businesses and are responsible for
employing more than 37% of all workers in the state. The
Committee may wish to amend the guiding principles to more
specifically include the varying employer needs of microenterprises
and small businesses, as well as supporting the training needs of
prospective entrepreneurs.
2)Regional Economies and Sector Strategies : California is not only
one of the largest economies in the world, but it is also one of
the most economically diverse. The state's economy is comprised of
a variety of industry clusters. While many of these clusters are
linked through extended economic value chains across the state and
world, in general, industry clusters operate within their own
regional micro-economies.
Economic developers like to use sector strategies to better
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understand the interconnections between related businesses,
workforce capabilities, and available infrastructure. When done
successfully, sector strategies at the regional level provide
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 Sectorial Employment Impact Study,
Public/Private Ventures, 2010).
SB 1401 proposes to use industry sector strategies to guide state
investments and activities related to workforce development
including targeting resources to dominant and emerging industries.
In general, the bill supports the need for regional analysis of
industry sectors. The Committee may, however, wish to further
clarify that priorities should be based on regional significance,
as well as overall dominance of an industry within the state.
Without clarification, state funding priorities could
insufficiently address the economic and workforce development needs
of rural areas.
3)Strengthening Linkages between Education and Training System : As
California slowly moves out of the recession, it is clear that the
next economy will require new and more agile thinking about
resources and deployment of human, physical and financial capital.
Economic researchers has identified several key emerging trends,
including that nations and states will become less significant and
that regions will be the more dominant drivers of economic growth.
Job growth will be driven by smaller size companies that are able
to connect and access expanding global markets through the
deployment of new technologies that can cost effectively increase
productivity and meet changing market demands. Due to scarcity and
rising prices the emerging economy will also be power by lower
carbon fuels. All these new market realities will need to be
accomplished with a workforce that is substantially smaller, more
diverse, and historically underinvested.
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This new workplace environment will require integrated and
well-articulated career pathways between the K-12, the state's
higher education systems, and workforce training providers. SB
1402 currently specifies several specific operational tools for
implementing sector strategies including stackable certificate
programs, which could be offered through the California Community
College System's Economic and Workforce Development Program. The
Committee may wish to also specify the importance of linking CWIB
and LWIB activities with of high school career preparation
programs, including regional occupation programs and nonprofit
career thematic academies.
4)Related Legislation : Below is a list of related legislation.
a) SB 698 (Lieu) High Performance Boards : This bill required 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 specified federal discretionary
funds for high-performing local WIBs. Status: The bill was
signed by the Governor, Chapter 497, Statutes of 2011.
b) SB 734 (DeSaulnier) Mandated Training Expenditures : This
bill 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. The bill also required a local WIB that does
not meet the expenditure to provide the EDD with a corrective
action plan regarding those expenditures. Status: The bill was
signed by the Governor, Chapter 498, Statutes of 2011.
c) AB 3018 (Nunez) Green Collar Jobs Council : This bill 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 required
the Council to develop a comprehensive array of programs,
strategies, and resources to address the state's growing green
economy. Status: The bill was signed by the Governor, Chapter
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312, Statutes of 2008.
REGISTERED SUPPORT / OPPOSITION :
Support
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Hospital Association
California Labor Federation
California Teachers Association
California Teamsters Public Affairs Council
California Workforce Association
City and County of San Francisco
Council of Goodwill Industries
Engineers and Scientists of California
International Longshore & Warehouse Union
Jewish Vocational Services of San Francisco
Professional & Technical Engineers, Local 221
The California Manufacturers & Technology Association
UNITE HERE
United Food and Commercial Workers Union
Utility Workers Union of America, Local 132
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090