BILL ANALYSIS �
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 37|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 37
Author: Perea (D)
Amended: 8/12/13 in Senate
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE : 5-0, 6/25/14
AYES: Hueso, Wyland, Leno, Padilla, Mitchell
SENATE APROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : Not relevant
SUBJECT : Unemployment insurance: reporting requirements:
status of funds
SOURCE : Author
DIGEST : This bill requires that, if the Unemployment Fund
indicates a negative balance, the Employment Development
Department (EDD) must include in the annual report to the
Legislature what the estimated cost impact on employers from the
changes in the Federal Unemployment Tax Act (FUTA) tax credit
and the estimated amount the state is expected to pay in
interest charges on any outstanding loan to the federal
government; and exempts this annual report from the four-year
repeal requirement for legislative reports.
ANALYSIS :
Existing law:
CONTINUED
AB 37
Page
2
1.Vests EDD with the responsibility of ensuring employers remit
appropriate Unemployment Insurance contributions and to
collect the employee wage deductions to the Disability Fund.
EDD uses these funds to finance the Unemployment Insurance and
Disability Insurance Programs.
2.Requires that EDD collects appropriate data in order to carry
out the responsibilities listed above. This information
includes the employer's name and address, the number and
contact information of employees employed by an employer, the
wages paid to those employees, and any independent contractors
that have performed services for an employer.
3.Requires that EDD submits to the Legislature in May and
October, of each year a report on the status of the
Unemployment Fund and the Unemployment Compensation Disability
Fund. Each report shall include both actual and forecasted
information on the fund balances, receipts, disbursements,
claim data, tax rates, and employment levels.
4.Requires that a bill introduced or amended in the Legislature
which would require a state agency to submit a report on any
subject to either house of the Legislature shall include a
provision that repeals the reporting requirement, or makes the
requirement inoperative, no later than a date four years
following the date upon which the bill, as enacted, becomes
operative.
This bill:
1.Requires that, if the Unemployment Fund indicates a negative
balance, EDD must include in the annual report to the
Legislature what the estimated cost impact on employers from
the changes in the FUTA tax credit and the estimated amount
the state is expected to pay in interest charges on any
outstanding loan to the federal government.
2.Exempts this annual report from the four-year repeal
requirement for legislative reports.
Comments
As a joint state-federal program, California's unemployment
CONTINUED
AB 37
Page
3
insurance system is funded through two employer taxes. The FUTA
charges a tax for the administration of the program, while the
state unemployment insurance tax pays for benefits and is set by
the state. The FUTA tax is largely offset by a federal tax
credit, but this credit is only awarded if the state's
unemployment insurance fund is solvent and the state's
unemployment insurance system is in compliance with federal law.
If a state's unemployment insurance fund is not solvent and
therefore, borrowing funds from the federal government, the FUTA
tax credit is diminished, with the increased tax revenues going
to repaying the borrowed federal funds.
In the May 2014 report, EDD discussed the impact of the
declining FUTA tax credit. Specifically, the EDD report
estimated the impact on employers as $928.6 million in 2014 and
$1.3 billion in 2015. The report also detailed interest
payments due in 2014 ($218.5 million) and 2015 ($187.3 million).
The current balance (as of April 2014) of California's
unemployment insurance fund remains negative at
$(9,930,033,454.07).
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
PQ:e 8/4/14 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
**** END ****
CONTINUED