BILL ANALYSIS �
SB 1401
Page 1
Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1401 (Lieu) - As Amended: August 6, 2012
Policy Committee: Labor and
Employment Vote: 5-1
Jobs, Econ. Dev. & the Economy 4-2
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill makes several changes to statute governing workforce
investment in order to emphasize a "sector strategy."
FISCAL EFFECT
Unknown costs, likely $150,000 to $250,000, to the Employment
Development Department (EDD) to develop additional data
indicators to comply with this measure. It is unclear the data
currently being collected from local workforce investment boards
is sufficient to meet the requirements of this bill. If it is
sufficient, the costs will be minor, absorbable.
SUMMARY CONTINUED
1)Defines sector strategy as methods of prioritizing investments
in competitive and emerging industry sectors and industry
clusters on the basis of the labor market and other economic
data indicating strategic growth potential, especially with
regards to jobs and income, as specified.
2)Requires the state to develop a California Industry Sector
Initiative to serve as the cornerstone of the California
Workforce Investment Board (CWIB) and provide a framework for
the state workforce investments and support for sector
strategies.
3)Defines industry sector as those firms that produce similar
products or provide similar services using somewhat similar
business processes, and are closely linked by workforce needs,
SB 1401
Page 2
within a regional labor market.
4)Defines industry clusters as a geographic concentration or
emerging concentration of independent industries with direct
service, supplier, and research relationships, or independent
industries that share common resources in a given regional
economy or labor market, as specified.
5)Requires CWIB to work collaboratively with state and local
partners to identify ways to eliminate statewide barriers and
better align and leverage federal, state, and local WIA
funding streams, as specified. Further requires the
California Workforce Investment Act (CWIA) to do the following
to meet this requirement:
a) Annually identify industry sectors and industry clusters
that have a competitive economic advantage and demonstrated
economic importance to the state and its regional
economies, as specified.
b) Annually identify new dynamic emergent industry sectors
and industry clusters with substantial potential to
generate new jobs and income growth for the state and its
regional economies.
c) Provide an annual skills gap analysis enumerating
occupational and skills shortages in the industry sectors
and clusters identified as having strategic importance to
the state's economy and its regional economies.
d) Establish eligibility criteria for the federal WIA
eligible training provider list (ETPL) that effectively
directs training resources into training programs leading
to employment in high-demand, high-priority, and
occupations that provide economic security, as specified.
Further specifies criteria, to the extent feasible, measure
provider performance, including program completion and
employment placement and retention.
6)Specifies 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.
COMMENTS
SB 1401
Page 3
1)Background . The WIA was established by federal law in 1998
for purposes of job training and workforce development. It
requires states to form state workforce investment boards, and
requires governors to designate local workforce investment
areas and oversee local workforce investment boards to
coordinate and distribute job training funds.
In California, WIA funds are provided through the state CWIB
and 49 local boards. The state board receives 15% of the
state's WIA allocation, and the remaining 85% is allocated to
the local boards. CWIB works with the governor to provide
policy guidance on how to spend these funds. Likewise, each
board determines how they spend their funds in accordance with
the workforce needs of their areas.
WIA funds are distributed to the states based on formulas that
consider unemployment rates and other economic and demographic
factors. California and its 49 local workforce investment
boards (LWIBs) formula funding from the U.S. Department of
Labor through three revenue streams: adult, youth, and
dislocated workers. Under federal law, 85% of adult and youth
formula funds and 60% of dislocated worker formula funds are
distributed to local boards. Fifteen percent of adult, youth,
and dislocated worker formula 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 LWIBs to develop
a strategic workforce plan, updated at least every five 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.
2)Rationale . In March 2012, the State Auditor (SA) released a
report entitled: Federal Workforce Investment Act: More
Effective State Planning and Oversight Is Necessary to Better
Help California's Job Seekers Find Employment. This report
SB 1401
Page 4
concluded 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. According to the SA, "Without
a strategic workforce plan, the State cannot ensure that its
workforce investment system provides life-long learning for
all Californians, 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 SA's report made several recommendations, including the
following:
a) "To assist the governor in the development, oversight,
and continuous improvement of California's workforce
investment system, the state board should collaborate with
state and local entities involved in workforce investment
programs or activities to develop and implement a strategic
workforce plan, as state law requires.
b) To assist the state board and other entities involved in
workforce investment programs and activities in developing
and implementing performance measures specific to
California, EDD should ensure that it works with the state
board to develop procedures for approving the addition of
data elements to its Web-based system and for the exchange
of data between EDD and the state board."
3)Previous legislation . AB 698 (Lieu), Chapter 697, Statutes of
2011, required the establishment of standards and incentives
for high-performance LWIBs.
SB 1401
Page 5
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081