BILL ANALYSIS �
AB 615
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Date of Hearing: April 24, 2013
ASSEMBLY COMMITTEE ON INSURANCE
Henry T. Perea, Chair
AB 615 (Bocanegra) - As Introduced: February 20, 2013
SUBJECT : Unemployment Insurance: Educational Employees
SUMMARY : Allows employees of government and non-profit
educational institutions who are not in an instructional or
administrative role to collect unemployment insurance
compensation (UIC) benefits between school years.
EXISTING LAW :
1)Provides UIC benefits to employees who lose their job.
2)Requires employers to pay state and federal taxes to pay the
costs of administering and providing UIC benefits through
payroll taxes.
3)Permits public employers to provide UIC benefits to their
employees on a reimbursement basis in lieu of payroll taxes.
4)Prohibits employees of public and private non-profit
educational institutions from collecting UIC benefits between
academic years if they have reasonable assurance of being
employed in the next academic term.
5)Permits non-professional employees of public and non-profit
educational institutions to collect UIC benefits retroactively
should they not be employed in the next academic term after
receiving reasonable assurance of future employment.
6)Requires employers to, when providing reasonable assurance of
re-employment to non-professional employees, provide
documentation of the reasonable assurance.
7)Prohibits, as a matter of federal law, providing UIC benefits
to professional employees between academic years.
FISCAL EFFECT : Unknown
COMMENTS :
AB 615
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1)Purpose . According to the author, for thousands of schools
employees the months between academic years can be a stressful
period financially. Existing law prohibits certain education
employees-those who are not teachers, researchers, or
administrators-from receiving benefits during months in which
school is not in session, unless they meet very specific
criteria. Unfortunately, many school employees rely on summer
school to maintain a reliable income source. Since 2007,
however, budget cuts the have led to the elimination of summer
school in many districts, leaving tens of thousands of
education employees without steady income and unemployment
insurance benefits.
2)Federal Law . Federal law generally requires equal treatment
for the payment of UI benefits on the basis of service to
certain nonprofit organizations, Indian tribes, and state and
local government workers in the same amount, on the same
terms, and subject to the same conditions, as other service
subject to state law. An exception to the equal treatment
requirement pertains to the denial of UI for "professional"
and "nonprofessional" employees of educational institutions
during a period between or within academic years or terms when
there is a contract or reasonable assurance that the employee
will go back to work in the same or similar capacity in the
ensuing academic year/term. State law must deny UI benefits
to professional school employees between and within the
academic years or terms when a contract or reasonable
assurance exists. State law may deny UI benefits to
nonprofessional school employees between and within the
academic years or terms when a contract or reasonable
assurance exists.
3)Costs . This bill would likely have little or no impact to the
Unemployment Insurance Trust Fund (trust fund) that pays for
most UIC benefits because public K-12 school districts and
community colleges commonly elect to participate in the School
Employees Fund (SEF) in lieu of paying payroll taxes. The SEF
is a special reimbursable financing method administered by the
Employment Development Department which collects contributions
based upon a percentage of total wages paid by public schools
and community college districts. Money deposited in the SEF
is used to reimburse the trust fund for the cost of benefits
paid to former employees. All 72 community college districts
and 1,298 county offices of education, public school
AB 615
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districts, and charter schools participate in the SEF. The
SEF has a projected fund balance of over $550 million at the
end of the 2012-13 fiscal year. The costs of paying for
these additional benefits from this bill will be borne by the
SEF, and the SEF costs will have to be reimbursed by the
participating schools.
Opponents note that the bill would result in significant cost
increases for K-12 school districts and other local
educational agencies that have experienced dramatic budget
cuts in recent years and continue to operate within very tight
budgets.
4)Retroactive Benefits . School employees expect to not work at
school (and generally not be paid) during the break between
academic years. In recognition of this reality, current law
provides a mechanism for classified employees to receive
unemployment benefits retroactively should they not be
employed at the next school year. This ensures that a
classified employee who expected to be employed in the next
school year, but was not, can collect UIC benefits from the
end of the prior school year.
5)School Employee Costs . School employers are facing increases
in other employee costs in the coming years. The California
Public Employee Retirement System (CalPERS) recently changed
the rules governing contribution levels for the pension fund
that are expected to increase pension costs by nearly 50%.
Classified school employees participate in CalPERS. In
addition, the California State Teachers Retirement System
(CalSTRS) has been significantly underfunded for a number of
years. Last year the Legislature approved Senate Concurrent
Resolution 105 that expressed the intent of the Legislature to
pass legislation to address the underfunding of CalSTRS in the
2013-14 legislative session. In response, CalSTRS completed
an analysis that provided a preferred approach that would have
the effect of increasing CalSTRS contribution rates by 80%.
Existing law requires that the overwhelming majority of the
increased contributions to be absorbed by school districts and
the state.
6)Technical Amendments . The author has agreed to adopt several
technical amendments suggested by the committee.
REGISTERED SUPPORT / OPPOSITION :
AB 615
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Support
California School Employees Association (CSEA), AFL-CIO
California Teachers Association
Service Employees International Union
Opposition
California Association of School Business Officials
Riverside County Superintendent of Schools
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086