BILL ANALYSIS �
SB 1402
Page 1
Date of Hearing: July 3, 2012
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel P�rez, Chair
SB 1402 (Lieu) - As Amended: June 26, 2012
SENATE VOTE : 38-0
SUBJECT : California Community Colleges Economic and Workforce
Development Program
SUMMARY : Recasts and revises the California Community Colleges
Economic and Workforce Development Program (EWD Program) to more
closely align with economic and workforce best practices and
extends the program's sunset date from January 1, 2013 to
January 1, 2018. Specifically, this bill :
1)Requires the EWD Program to operate according to a new set of
principles:
a) Be responsive to the needs of employers, workers, and
students;
b) Collaborate with other public institutions, aligning
resources to foster cooperation across workforce education
and service delivery systems, and building well-articulated
career pathways;
c) Make data driven and evidence based decisions, investing
resources and adopting practices on the basis of what
works;
d) Develop strong partnerships with the private sector,
ensuring industry involvement in needs assessment,
planning, and program evaluation;
e) Be outcome oriented and accountable, measuring results
for program participants, including students, employers,
and workers; and
f) Be accessible to employers, workers, and students who
may benefit from its operation.
2)Revises the mission of the EWD Program to:
a) Advance California's economic growth and global
competitiveness;
b) Advance California's economic and jobs recovery and
sustain economic growth through labor market-aligned
education workforce training services, and sector
strategies;
c) Use labor market information to advise on the workforce
SB 1402
Page 2
needs of the state's competitive and emerging industry
sectors and industry clusters;
d) Provide technical assistance and logistical, technical,
and communications infrastructure support that results in
alignment between the career technical education programs
of the California Community College (CCC) system and the
needs of California's competitive and emerging industry
sectors and industry clusters;
e) Collaborate and coordinate investment with other state,
regional, or local agencies involved in education and
workforce training;
f) Identify, acquire, and leverage community college and
other financial and in-kind public and private resources to
support economic and workforce development and career
technical education programs; and
g) Work with representatives of business, labor, and
professional trade associations on how to assist incumbent
workers in the state's competitive and emerging industry
sectors.
This proposed mission removes the more prescribed set of
strategic priority areas (advanced transportation,
biotechnology, small business, etc.) and, instead directs the
program to remain more current and base its priorities on
current labor market analysis and appropriate sector
strategies for dominant and emerging industries.
3)Continues to authorize the CCC Board of Governors to award
project funds and competitive grants to districts for
leadership in accomplishing the mission and goals of the
program, provided that funds are appropriated for this purpose
in the annual Budget Act. The advisory committee is also
retained as a key advisor with an expanded program assessment
role. Funding under AB 1402, however, is required to be more
specifically aligned to the ever changing market conditions.
4)Maintains a similar grant evaluation process, with additional
requirements for ensuring that the grant is relevant to the
current market needs, relevant to a region's competitive and
emerging industry sectors, industry clusters or skills
shortages in the state or regional economies. The bill
provides for additional assessment of projected outcomes
including the following:
a) For grants providing direct services to an employer, a
SB 1402
Page 3
group of employers, or an industry sector or industry
cluster, an assessment of the purported beneficial impacts
of the grant on the relevant businesses, measuring such
things as, increased profitability, increased labor
productivity, reductions in worker injuries, and employer
cost savings resulting from improved business processes.
b) For grants involving direct education and training
services provided to workers and students, an assessment of
the educational and training goals of the grant, the
projected numbers of students and workers served and the
projected rates of course and program completion or
transfer-readiness, the projected rate of skills attainment
for certificates and degrees, and the projected wages and
rate of employment placement for those entering the labor
market.
c) For technical assistance and logistical support
projects, a concrete enumeration of the ways the project
will collaborate with the Chancellor's Office to advance
sector strategies, regional development, accountability
based on performance data, and the adoption of effective
workforce and economic development practices.
5)Maintains the requirement for the Chancellor's Office to
provide system-wide oversight and evaluation of the grants and
adds a requirement to evaluate whether grantees achieved their
stated objectives. Unsuccessful grantees may be terminated by
the Chancellor, pursuant to new direct authority in SB 1402.
6) Updates and adds definitions to reflect current practices
including, but not limited to:
a) Adding the definition of "career pathways" and "career
ladders" or "career lattices" to mean an identified series
of positions, work experiences, or educational benchmarks
or credentials that offer occupational and financial
advancement within a specific career field or related field
over time;
b) Updating the definition of "industry cluster" to mean a
group of employers closely linked by a common product or
services, workforce needs, similar technologies, and supply
chains in a given regional economy or labor market;
c) Removing the definition of "living wage" and adding a
SB 1402
Page 4
definition of "economic security" to mean that a worker
earns a wage sufficient to adequately support a family and
to, over time, save money for emergency expenses and
adequate retirement income;
d) Defining sector strategies to mean prioritizing
investments in competitive and emerging industry sectors
and industry clusters on the basis of labor market and
other economic data that indicate strategic growth
potential. Sector strategies focus workforce investments
toward programs that are likely to lead to high-wage jobs
or to entry-level jobs with well-articulated career
pathways into high-wage jobs.
Sector strategies may be implemented using articulated
career pathways and a system of stackable credentials.
Sector strategies often target underserved communities,
disconnected youth, incumbent workers, and recently
separated military veterans.
7)Retains the California Community Colleges Business Resource
Assistance and Innovation Network Trust Fund in the State
Treasury.
8)Updates the role of the Economic and Workforce Development
Program Centers to focus on activities that contribute to
workforce skill development common to competitive and emerging
industry sectors and clusters within a region.
9)Adds specificity to the CCC's annual reporting requirements on
the EWD Program including, but not limited to, measuring (a)
program completion, including certification, degree and
program study rates; (b) employment placement or measurable
educational progression; and (c) a quantitative assessment of
impacts on business receiving services under the program.
10)Re-establishes the requirement to have an independent
evaluation on the effectiveness of the EWD Program. The new
date of the report is set at January 1, 2015 with findings to
the Legislature by no later than March 1, 2016.
11)Repeals the provisions of the bill on January 1, 2018.
EXISTING LAW :
SB 1402
Page 5
1)Establishes the EWD Program within the CCC System, for the
purpose of advancing California's economic growth and global
competitiveness through high quality education and services
focusing on continuous workforce improvement, technology
deployment, and business development, consistent with the
current needs of the state's regional economies.
2)Establishes the Governor's Office of Business and Economic
Development (GO-Biz), which serves as the lead entity for
economic strategy and the marketing of California on issues
relating to business development, private sector investment,
and economic growth. In this capacity, GO-Biz recommends to
the Governor and the Legislature: (a) new state policies,
programs, and actions to advance statewide economic goals and
respond to emerging economic problems and opportunities, and
(b) ensures that all state policies and programs conform to
the adopted state economic and business development goals.
FISCAL EFFECT : According to the Senate Appropriations
Committee analysis, implementation of the measure would result
in annual expenditures of $22.9 to $46.7 million. The bill
language specifies that funding is subject to appropriation in
the Budget Act, which is consistent with the terms of the
current EWD Program.
COMMENTS :
1)Purpose of the Bill : According to the author's office, the
revised program would improve the functions of the EWD Program
in three primary ways: (a) Making the program more nimble and
better able to respond to changing economic conditions; (b)
Making the program more accountable for investments and
performance by strengthening the evaluation framework for EWD
grants and programs; and (c) Encouraging better integration
and communication of EWD programs with CTE programs.
2)The EWD Program : The purpose of the EWD Program is to advance
California's economic growth and global competitiveness
through education and services that contribute to continuous
workforce improvement, technology deployment, and business
development and are consistent with the current needs of the
state's regional economies. Local colleges and business
partners form consortia to identify regional workforce needs
and priorities, providing assistance to small businesses in
the region through local Economic and Workforce Development
SB 1402
Page 6
Centers and train workers. The partnerships enable colleges
to develop curricula that address the training needs of local
industry.
Codified in 1991, the EWD Program formalized earlier efforts to
coordinate statewide technical training and programs for small
businesses and economic development. SB 1809 (Polanco,
Chapter 1057, Statues of 1996) further clarified the
legislative intent of the EWD Program, defined regional
planning, priority setting and coordination and added
accountability and audit requirements. The 1996 legislation
also made economic development and continuous workforce
improvement a primary mission of the CCC.
The 2010-11 EWD Annual Report shows that community colleges play
an integral role in helping California build its workforce
despite budget cuts and stagnant economic growth. The report
noted that during the reporting period, 929 people received a
job through an EWD program, while an additional 9,475 people
were able to retain their jobs through EWD services. A
one-time return-on-investment report conducted by Time
Structures, Inc. found that from 2002-2009 the EWD Program
assisted an average of 41,000 businesses, 107,000 students and
trainees, and placed 4,300 individuals in jobs. The report
revealed that it cost the state of California an average of
$589 to train each worker in a highly concentrated one-time
course. Each newly trained worker earned a higher wage,
subsequently paying an additional $450 in state and local
taxes over the next three years. The report indicated that
the workers' higher tax payments returned almost 80% of the
state's costs for the training.
3)Regional Economies and Sector Strategies : California's $1.9
trillion economy is not only one of the largest 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
understand the interconnections between related businesses,
workforce capabilities, and available infrastructure. When
done successfully, sector strategies at the regional level
SB 1402
Page 7
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 Sectoral
Employment Impact Study, Public/Private Ventures, 2010).
SB 1402 and its companion measure, SB 1401 (Lieu), are
proposing a significant statutory shift in state workforce and
economic development policy by broadly applying a mandate to
assess, prioritize and allocate funding based on sector
strategies in competitive and emerging industry sectors.
While regional and local workforce practices have been
transitioning at an uneven pace, these measures, if enacted,
could be the catalyst for bringing into alignment federal
workforce training dollars, state education funding, and
regional economic and workforce development activities.
4)Strengthening Workforce Linkages : 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 have 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
need to be powered 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.
This new workplace environment will require integrated,
data-driven strategies within well-articulated career pathways
between K-12 and the state's higher education systems. SB
SB 1402
Page 8
1402 currently specifies several specific operational tools
for codifying these linkages including the use of stackable
certificate programs within industry sector strategies. The
Committee may wish to add the use of articulation agreements
between K-12 and the EWD Program.
From the state's perspective, articulation agreements would
support many dominant and emerging industry sectors by
providing a dependable and qualified workforce pipeline. High
school students also benefit from articulation agreements by
ensuring they are receiving relevant and transferable
educational experiences. Further, articulation agreements
could possibly increase the number of students who choose to
go on to higher education as the next step in their personal
career path.
5)GO-Biz and EWD Program : Existing law specifies GO-Biz as the
lead state government entity relative to state policy and
actions related to economic development �AB 29 (John A. P�rez)
Chapter 475, Statutes of 2011]. The decision to make GO-Biz
lead was based on the assessment and recommendations from the
Little Hoover Commission and Legislative hearings and
discussions with stakeholder groups since the previous lead
entity, the Technology, Trade and Commerce Agency, was
eliminated in 2003.
Among its key duties, GO-Biz is tasked with making
recommendations to the Governor and the Legislature on state
policies, programs, and actions for the purpose of progressing
statewide economic goals and responding to emerging economic
problems and opportunities. GO-Biz is also responsible for
coordinating the development of federal grants administered or
directly expended by state government to ensure that statewide
economic goals and objectives are advanced.
In approving the reauthorization of the EWD Program, the
Committee may want clarify the role of the EWD Program,
relative to GO-Biz. During the current authorization period,
there were several situations where the EDW Program appeared
to be exerting "independent" authority relative to the state's
overall economic development framework. In one instance, the
EWD Program requested the federal Small Business
Administration transfer administrative authority for
California's portion of the federal Small Business Development
Center Program. In another example, EWD requested an
SB 1402
Page 9
amendment to AB 1137 (V. Manuel P�rez), relating to an
international trade marketing and finance program, that would
codify EWDs authority to independently apply for California's
share of federal trade funds.
Language to address this potential issue should clarify that
in re-authorizing the EWD Program that the Legislature is not
approving a restructuring of the state's economic development
hierarchy. GO-Biz is the state's lead economic development
entity and seeking federal funding in instances where there
can only be one state applicant, should only be done with the
specific approval of the Governor.
6)Related Legislation : Below is a list of related legislation.
a) SB 1070 (Steinberg) Career Technical Education Pathways :
This bill extends the sunset date for the Career Technical
Education Pathways Initiative component of the current EWD
Program. Status: The bill is pending in Assembly Higher
Education Committee.
b) SB 1401 (Lieu) Workforce Investment Boards and Sector
Strategies : This bill establishes additional requirements
of the California Workforce Investment Board (CWIB) by
emphasizing the use of sector strategies. Status: This
bill is pending in the Assembly Committee on Jobs, Economic
Development and the Economy.
c) SB 1550 (Wright) Career Technical Education : This bill
requires the CCC Chancellor's office to establish a
voluntary pilot program involving up to five CCC districts
for the purposes of authorizing a district to establish and
maintain an extension program offering career and workforce
training credit courses, as defined, at fee levels that
cover the actual cost of maintaining those courses, and
requires the Legislative Analyst's Office (LAO) to report
to the Legislature on this pilot program by June 30, 2016.
Status: The bill is pending in Assembly Committee on
Higher Education.
7)Double Referral : This bill is double referred to the Assembly
Committee on Higher Education (HE) and the Assembly Committee
on Jobs, Economic Development, and the Economy (JEDE). The
order of the hearings has been switched to accommodate
legislative deadlines. Should SB 1402 pass JEDE, it will be
SB 1402
Page 10
referred to HE for further policy consideration.
REGISTERED SUPPORT / OPPOSITION :
Support
Aerospace Dynamics International, Inc.
Barstow Community College
Bayless Engineering & Manufacturing
Biotechnology Initiative of the California Community Colleges
Board of Governors of the California Community Colleges
Boston Scientific
Butte-Glenn Community College District
California Asian Pacific Chamber of Commerce
California Association for Local Economic Development
California Chamber of Commerce
California Community College Association of Occupational
Education
California Hospital Association
California Manufacturers & Technology Association
California State Association of Electrical Workers
California Workforce Association
Cerritos Community College District
Chaffey College Community College District
City of Santa Clarita
Coachella Valley Economic Partnership
Coast Community College District
College of the Canyons
College of the Desert
Community College League of California
Council of Goodwill Industries
Cuesta College-Business & Entrepreneurship Center
Envision Education
Faculty Association of California Community Colleges
John A. Cascamo
Los Angeles/Orange County Biotechnology Center
Los Rios Community College District
Mendocino College Nursing Program
Montclair Hospital Medical Center
Mt. San Antonio College Center for Excellence
National Electrical Contractors Association - California
Chapters
North Orange County Community College District
Ohlone Community College District
SB 1402
Page 11
Palomar Pomerado Health
Powder Coating Plus
Prosperity Research Institute
Saddleback College
San Bernardino Community College District
Santa Clarita Community College District
Santa Clarita Valley Economic Development Corporation
Shasta-Tehama-Trinity Joint Community College District
Sierra College
Silicon Valley Leadership Group
South Orange County Community College District
Southern California Biotechnology Center at San Diego Miramar
College
Southern California Regional Transit Training Consortium
State Building and Construction Trades Council of California
State Center Community College District
Valley Industry Association of Santa Clarita
Ventura County Community College District
Wright Engineering, Inc.
Yosemite Community College District
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090