Concurrence in Senate Amendments — AB 1457 (Cervantes and Reyes), As Amended August 25, 2020
Summary
Concurrence in Senate Amendments analysis of AB 1457 (Cervantes and Reyes), as amended August 25, 2020, majority vote. The analysis states that AB 1457 establishes a pilot project, administered through the Employment Training Panel (ETP), using the state's network of Community College Contract Education Centers to provide short term training courses to new and incumbent workers, and that the Senate amendments delete the contents of the bill and insert the pilot project provisions. Its comments cite a McKinsey report from April 2020 on the effects of the coronavirus pandemic on small businesses and workers. The fiscal section says CCC would require two half-time positions at a total annual General Fund cost of $120,000, and the votes section records a Senate floor vote of 38-0-2.
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“Concurrence in Senate Amendments — AB 1457 (Cervantes and Reyes), As Amended August 25, 2020.”
Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2020-08-25-ab-1457-jede-concurrence-analysis-e32ad5072f/
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AB 1457
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1457 (Cervantes and Reyes)
As Amended August 25, 2020
Majority vote
SUMMARY:
AB 1457 establishes a pilot project, administered through the Employment Training Panel
(ETP), to leverage the expertise of the state's regionally focused statewide network of
Community College Contract Education Centers to provide short term training courses to new
and incumbent workers. Business training needs are identified through direct consultation with
local businesses and a regional skills gap analysis to be developed by the Community College
Centers of Excellence.
The Senate Amendments:
Delete the contents of the bill and insert the pilot project provisions.
COMMENTS:
1) Worker and Small Business Challenges During the Coronavirus Pandemic: Economic
developers, finance professionals, and even the Office of the Legislative Analyst agree that
small businesses and their workers have been particularly impacted by the coronavirus
pandemic. According to a national survey and separate report on the impacts of COVID-19
on small and medium-size businesses and their workers, both published by McKinsey in
April 2020:
a) 70% of businesses are delaying purchases, reducing current spending, and holding back
on making major investments. [While not an unexpected outcome, this level of delayed
spending has significant multiplier effects as its impacts move throughout the economy.]
b) 50% of workers at small businesses with less than 100 employees are at risk of losing
their jobs due to the pandemic. This is a higher percentage of job losses than those
projected for larger private sector employers.
c) 40% of the vulnerable small business jobs fall within two occupational categories: food
service, and customer service and sales.
d) 60% of the vulnerable small business jobs do not require a four-year degree, meaning that
displaced workers will likely not have formally recognized skills to help them get their
next job.
e) 55% of businesses felt that the economic impacts of the coronavirus were going to last
over one year, with 29% responding the impacts were going to be felt for three years.
f) 25% of businesses said they would be filing for bankruptcy within six months.
The McKinsey report ranks California among the top states in which small businesses are
and will be impacted by the COVID-19 emergency. The report finds that 92% of workers in
small businesses engaged in the accommodation and food sectors are at risk. For workers at
AB 1457
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small construction firms, the report states that 54% are vulnerable, which is still a significant
impact.
2) California Unemployment During the Pandemic: According to the most recent Employment
Development Department data, California's seasonally adjusted unemployment rate for July
2020 was 13.3% with an estimated 2.5 million people unemployed, representing a 225%
increase in unemployment from the prior year.
Even with this high level of unemployment, unemployment was significantly higher among
certain population groups. July 2020 unemployment among Blacks (9.2%) and Latinx
(8.6%) were substantially higher than the comparable statewide rate of 7.7%. Based on age,
individuals between 16 and 19 (21.1%) and 20 and 24 (12.9%) years of age experienced the
highest rates of unemployment. EDD uses a not seasonally adjusted 12-month moving
average when reporting unemployment by race, ethnicity, and age in its monthly California
Labor Market Review.
3) Background on ETP: The ETP currently contracts with 10 Contract Education Centers to
support upskilling of new and incumbent workers in certain businesses that are mandated to
pay a special payroll tax. These Contract Education Centers are part of local Community
Colleges who then partner with another 19 to 24 Community Colleges to provide training
across the state.
AB 1457 will enhance these activities by both (1) Allowing other businesses and nonprofits
to participate in training activities, and (2) Expanding the types of training available, industry
sectors served, and number of businesses and workers who can receive training.
The type of training provided will be determined by regional occupation skills gap
assessments, reflective of our current COVID-19 economic situation. By building on the
existing ETP program, this bill will also support small businesses that have been especially
hard hit in this pandemic by strengthening the relationship between the Contract Education
Centers and the state's network of 80+ small business technical assistance centers, including
Small Business Development Centers, Women's Business Centers, and Minority Business
Development Centers, among others.
The goal of AB 1457 is to train unemployed and underemployed workers to fill vacancies of
in-demand jobs in essential industry sectors during the COVID-19 pandemic and in the
emerging and dominant industry sectors in the post COVID-19 economy.
According to the Author:
AB 1457 establishes a pilot project to support the enhancement of a regional training center
network, which can work hand-in-hand with business owners, small business service providers,
and other workforce partners to get people back to work.
Over 8.6 million unemployment assistance claims were filed in California between March 14 and
August 15, 2020. Many of the industry sectors most impacted during the pandemic are not
expected to return to pre-pandemic levels of economic activity for several years, including
businesses in the hospitality, accommodation, and tourism sectors. Even in those industry
sectors that are anticipated to recover more quickly, many lower skill jobs will be permanently
replaced or significantly modified through automation and e-commerce business models.
AB 1457
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A significant number of the individuals who have experienced negative economic impacts due to
the pandemic are women and people of color with limited education and training beyond high
school. AB 1457 leverages an existing program and competencies to respond to these COVID-
19 unemployment challenges quickly and help get people back to work.
Arguments in Support:
Generally, the 80+ supporters of this bill maintain that the pilot project "will provide short-term
training programs that will help workers displaced due to COVID- 19 obtain the skills necessary
to succeed in essential and emerging industries."
In regard to the concern raised by the opposition about duplicating services, the authors point out
that amendments adopted after their letter was submitted specifically state that the pilot is to
avoid duplication, and to supplement and expand only where needed to meet employer training
needs.
In regard to the concern raised by the opposition regarding duplicative planning efforts, the
authors highlight that those workforce planning efforts will 1) not begin until sometime in the
spring of 2021, 2) those regional plans will not be identifying skill gaps – only
occupation/industry-level changes, and 3) amendments taken after the letter was submitted
require all data used to identify the regional skill gaps be shared with local workforce boards.
Arguments in Opposition:
The California Workforce Association writes in opposition: "this bill…may result in fiscal
pressures on existing workforce development and Employment Training Program programs. AB
1457's regional skills mapping provision implements a duplicative planning processes that
unnecessarily replicates existing LWDB initiatives and publications, and wastes valuable time
and resources during an unprecedented budget situation."
According to the California Workforce Association, the bill also "does not take into account the
costs of existing valuable regional planning processes. During this time of unprecedented
economic conditions, direct partnership between workforce entities must be clear, and AB 1457
provides no guidance as to how this new, unfunded integration will roll out."
FISCAL COMMENTS – EXCERT FROM SENATE APPROPRIATIONS
COMMITTEE ANALYSIS:
1) ETP and LWDA's fiscal impacts from the bill are still be determined; however, these costs
would likely be significant (Employment Training Fund), especially for ETP as the lead
agency on the pilot project.
2) CCC would require two half-time positions, for a total annual General Fund cost of
$120,000, to implement its provisions in the bill.
3) GO-Biz and EDD would incur minor and absorbable costs.
VOTES:
ASM LOCAL GOVERNMENT: Vote not relevant
YES:
ABS, ABST OR NV:
AB 1457
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ASM TRANSPORTATION: Vote not relevant
YES:
ABS, ABST OR NV:
ASM APPROPRIATIONS: Vote not relevant
YES:
ABS, ABST OR NV:
ASSEMBLY FLOOR: Vote not relevant
YES:
NO:
ABS, ABST OR NV:
SENATE FLOOR: 38-0-2
YES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dahle,
Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Grove, Hertzberg, Hill, Hueso, Hurtado,
Jackson, Leyva, McGuire, Melendez, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan,
Portantino, Roth, Rubio, Skinner, Umberg, Wieckowski, Wiener, Wilk
ABS, ABST OR NV: Jones, Stern
UPDATED:
VERSION: August 25, 2020
CONSULTANT: Toni Symonds / J., E.D., & E. / (916) 319-2090 FN: 0003622
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