Existing law provides for the payment of unemployment compensation benefits and extended duration benefits to eligible persons who meet specified requirements. Existing law prohibits the payment of unemployment benefits to educational institution employees of a public entity, as defined, including teachers, researchers, and administrators for the period between 2 academic years when there is a reasonable assurance that the employee will perform his or her regular services in the subsequent academic year, except as specified. Existing law similarly prohibits the payment of unemployment benefits to specified educational institution employees of a public entity other than teachers, researchers, or administrators between 2 academic years, except as specified, but provides a procedure for this 2nd category of educational employees, under certain conditions, to seek payment of retroactive unemployment benefits for the period between 2 academic years. Existing law requires specified notice regarding reasonable assurance of employment in the following academic term be sent to employees before the end of the current academic term.

This bill would delete the prohibition on the payment of unemployment benefits to education employees of a public school, other than teachers, researchers, and administrators, as specified, between 2 academic years. The bill would phase in up to 8 weeks of benefits available to those specified employees over a 4-year timeframe contingent on funds being appropriated for that purpose in the annual Budget Act.

Because this bill would expand the categories of people who could receive benefits from the Unemployment Fund, a continuously appropriated fund, it would make an appropriation.

Existing law provides for the payment of unemployment compensation benefits and extended duration benefits to eligible persons who meet specified requirements. Existing law prohibits the payment of unemployment benefits to educational institution employees of a public entity, as defined, including teachers, researchers, and administrators for the period between 2 academic years when there is a reasonable assurance that the employee will perform his or her regular services in the subsequent academic year, except as specified. Existing law similarly prohibits the payment of unemployment benefits to specified educational institution employees of a public entity other than teachers, researchers, or administrators, administrators between 2 academic years, except as specified, but provides a procedure for this 2nd category of educational employees, under certain conditions, to seek payment of retroactive unemployment benefits for the period between 2 academic years. Existing law requires specified notice regarding reasonable assurance of employment in the following academic term be sent to employees before the end of the current academic term. Existing law also authorizes payment of unemployment insurance benefits, using funds from the State Department of Education, to the 2nd category of educational employees at specified schools between academic terms in circumstances where benefits would otherwise be denied.

This bill would delete the prohibition on the payment of unemployment benefits to education employees of a public school, other than teachers, researchers, and administrators, as specified, between 2 academic years. The bill would phase in up to 8 weeks of benefits available to those specified employees over a 4-year timeframe and would make conforming changes, including eliminating the provisions for payment of unemployment benefits to these employees at specified schools. contingent on funds being appropriated for that purpose in the annual Budget Act.

Because this bill would expand the categories of people who could receive benefits from the Unemployment Fund, a continuously appropriated fund, it would make an appropriation.

Existing law provides for the payment of unemployment compensation benefits and extended duration benefits to eligible persons who meet specified requirements. Existing law prohibits the payment of unemployment benefits to educational institution employees of a public entity, as defined, including teachers, researchers, and administrators for the period between 2 academic years when there is a reasonable assurance that the employee will perform his or her regular services in the subsequent academic year, except as specified. Existing law similarly prohibits the payment of unemployment benefits to specified educational institution employees of a public entity other than teachers, researchers, or administrators, between 2 academic years, except as specified, but provides a procedure for this 2nd category of educational employees, under certain conditions, to seek payment of retroactive unemployment benefits for the period between 2 academic years. Existing law requires specified notice regarding reasonable assurance of employment in the following academic term be sent to employees before the end of the current academic term. Existing law also authorizes payment of unemployment insurance benefits, using funds from the State Department of Education, to the 2nd category of educational employees at specified schools between academic terms in circumstances where benefits would otherwise be denied.

This bill would delete the prohibition on the payment of unemployment benefits to education employees of a public school, other than teachers, researchers, and administrators, as specified, between 2 academic years. The bill would phase in up to 8 weeks of benefits available to those specified employees over a 4-year timeframe and would make conforming changes, including eliminating the provisions for payment of unemployment benefits to these employees at specified schools.

Because this bill would expand the categories of people who could receive benefits from the Unemployment Fund, a continuously appropriated fund, it would make an appropriation.

Existing law establishes within the state disability insurance program, a family temporary disability insurance program, also known as the paid family leave program, for the provision of wage replacement benefits to workers who take time off work to care for a seriously ill family member or to bond with a minor child within one year of birth or placement, as specified. Existing law conditions eligibility for these benefits upon the individuals inability to perform his or her regular or customary work for a 7-day waiting period during each disability benefit period.

Existing law authorizes an employer to require an employee to take up to 2 weeks of earned but unused vacation before, and as a condition of, the employees initial receipt of these benefits during any 12-month period in which the employee is eligible for them. Existing law requires that portion of the vacation leave that does not exceed one week to be applied to the 7-day waiting period.

This bill would delete the requirement that vacation leave be applied to the 7-day waiting period.

GOVERNOR'S VETO

GV Bill Id:AB 2197

Author:(Cristina Garcia)

As Enrolled Ver:August 30, 2016

2/3 vote

SUMMARY: Allows classified school employees to collect unemployment insurance (UI) benefits between school years. Specifically, this bill:

1. Exempts classified public school employees from the prohibition on educational employees collecting UI benefits.
2. Increases the maximum duration of UI benefits for classified public school employees as follows:
   1. Two weeks effective July 1, 2017
   2. Four weeks effective July 1, 2018
   3. Six weeks effective July 1, 2019
   4. Seven weeks effective July 1, 2020
3. Provides that UI benefits for classified public school employees will only be provided if funds are appropriated for that purpose in the annual budget act.

EXISTING LAW:

1. Provides UI benefits to employees who lose their job through no fault of their own.
2. Requires employers to pay state and federal taxes to pay the costs of administering and providing UI benefits.
3. Permits public employers to provide UI benefits to their employees on a reimbursement basis in lieu of paying payroll taxes.
4. Prohibits employees of public and private non-profit educational institutions from collecting UI benefits between academic years if they have been given reasonable assurance by the employer of being employed in the next academic term.
5. Permits non-professional employees of public and non-profit educational institutions to collect UI benefits retroactively should they not be employed in the next academic term after receiving reasonable assurance of future employment.
6. Requires employers to provide documentation of the reasonable assurance when that notice is given.
7. Prohibits, as a matter of federal law, providing UI benefits to professional employees between academic years.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. This bill is contingent on a budget appropriation for the purpose of implementation. A 2015 report by the Economic Roundtable projects extending UI to classified employees over summer months would result in $153.1 million of benefit payments annually, representing an increase in UI expenditures of 76% for schools, at full implementation in year 2020-21 (School Employees Fund). To the extent a budget appropriation was made for this purpose, it would have to augment the SEF commensurate with the increase. Schools are responsible for funding their own UI costs through the SEF.
2. There could also be a direct cost impact to the UI Trust Fund, if some charter school employees receive benefits through this fund instead of the School Employees Fund (SEF). Employment Development Department (EDD) does not track which charters rely on UI Trust Fund versus those that use a different reimbursement method, but reports that only a quarter of charters participate in SEF, meaning benefits paid to employees of the remaining three-quarters would potentially impact the UI Trust Fund (though it is unclear how many schools participate in the tax-rated methodology that impacts the UI Trust Fund. The remainder of charters reimburse the UI Trust Fund directly for costs incurred to provide benefits to their employees.)

COMMENTS:

1. Purpose. According to the sponsor, classified school employees do the essential work that keeps our public schools up and running. These workers keep our campuses safe, clean, and efficient. Most importantly, they strive to improve the daily lives of our students. Despite the important and hard work of classified school employees, many struggle to support their families with incomes that are often inadequate to pay for food, housing, and health care. And while certified school employees, such as administrators, teachers, librarians, and nurses, earn middle class incomes and benefits that can last through the summer breaks, classified school employees do not. Unlike other employees who receive UI benefits during their regular seasonal breaks, classified school employees are ineligible to receive those same benefits. The only option for classified school employees to support their families during the summer is to find another job. Yet classified school employees are often unable to find work during the summer because employers are reluctant to hire and invest in a short-term employee. Thus, a classified school employee's only real option for summer employment is a job with a summer school program, but those jobs are scarce. Being excluded from UI benefits creates a serious financial hardship for a classified school employee that does not exist for their fellow education workers.
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. Public Agency Costs. This bill would likely have relatively minor impact to the Unemployment Insurance Trust Fund (trust fund) that pays for most UI 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 districts, and charter schools participate in the SEF. The SEF had fund balance of over $582 million at the end of the 2014-15 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 passed on to the participating schools.

Opponents note that the bill would result in significant cost increases for K-12 school districts and other local educational agencies. Last year the Assembly Appropriations Committee provided the following estimate for AB 399 (Ridley-Thomas) of 2015, which was substantially similar to this bill:

There are approximately 250,000 classified, non-certificated employees throughout the state. If 60% of those employees received the maximum allotment of weeks of UI during summer vacation each year, it would cost an additional $90 million per year, each year for four years, until the cost reached approximately $360 million in fiscal year in 2019-20 (School Employees Fund). Costs to the School Employees Fund are funded by school districts, county offices of education, community college districts, and some charter schools, whose employees receive UI benefits through this fund instead of through the UI Trust Fund.

1. 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 UI benefits from the end of the prior school year.
2. Previous Legislation.

In 2015, this committee passed AB 399 (Ridley-Thomas) which is identical to this bill. AB 399 was held on the Assembly Appropriations Committee Suspense File.

In 2014, this committee passed AB 1638 (Bocanegra) which was nearly identical to AB 615. The bill was held on the Assembly Appropriations Committee Suspense File.

In 2013, this committee passed AB 615 (Bocanegra) which proposed to extend UI benefits to classified school employees. The bill was held on the Assembly Appropriations Committee Suspense File.

GOVERNOR'S VETO MESSAGE:

This bill allows classified school employees to collect unemployment insurance benefits between school years.

This bill creates several conformity issues with the federal Unemployment Insurance laws, which could result in sanctions from the federal government, including the loss of significant tax credits for California's employers.

Analysis Prepared by: Paul Riches / INS. / (916) 319-2086 FN: 0005121

 THIRD READING  

Bill No: AB 2197

Author:

:

Vote:

SENATE LABOR & IND. REL. COMMITTEE: 4-1, 6/22/16

AYES: Mendoza, Jackson, Leno, Mitchell

NOES: Stone

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 51-27, 6/2/16 - See last page for vote

SUBJECT:

SOURCE: Service Employees International Union

DIGEST: This bill permits classified school employees to be eligible to collect unemployment insurance (UI) benefits between school years with or without a reasonable assurance of being employed in the next academic year.

ANALYSIS:

Existing law:

1. Vests the Employment Development Department (EDD) with the responsibility of ensuring employers remit appropriate UI contributions and to collect the employee wage deductions to the Disability Fund. EDD uses these funds to finance the Unemployment Insurance and Disability Insurance (DI) Programs. (Unemployment Insurance Code §§ 301, 976, 984, 1025-1037, 1555-1562, and 3001-3015)
2. Prohibits employees of public and private non-profit educational institutions from collecting UI benefits between academic years if they have been given reasonable assurance by the employer of being employed in the next academic term. (Unemployment Insurance Code §1253.3)
3. Permits non-professional employees of public and non-profit educational institutions to collect UI benefits retroactively should they not be employed in the next academic term after receiving reasonable assurance of future employment. (Unemployment Insurance Code §1253.3)
4. Requires employers to provide documentation of the reasonable assurance when that notice is given. (Unemployment Insurance Code §1253.3)

This bill allows employees of a public school who are not teachers, researchers, or administrators to be eligible for UI benefits in the period between two academic years on the following schedule:

1. Two weeks of benefits during 2017, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act.
2. Four weeks of benefits during 2018, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act.
3. Six weeks of benefits during 2019, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act.
4. Eight weeks of benefits during 2020, and each year thereafter, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act.

Comments

1) Need for this bill?

The sponsor notes that, while classified employees do the essential work our public schools up and running, classified employees are not permitted to collect UI benefits during the summer recess. This places significant hardship on the classified employee and his or her family, and it requires the classified employee finds short-term employment for the summer recess. However, the sponsor argues that classified school employees are often unable to find work during the summer because employers are reluctant to hire and invest in a short-term employee. Additionally, the sponsor argues that a classified school employee’s only real option for summer employment is a job with a summer school program, but those jobs are scarce.

AB 2197 addresses this by allowing classified employees to collect UI benefits through a stepped schedule that would begin in 2017 and top out in 2020.

2) “Reasonable Assurance” and UI

In Ross v. CUIAB (1981), 178 Cal. Rptr. 421, the Court of Appeals defined “reasonable assurance” as “an agreement which contemplated the re-employment of the affected school employee but which he or she could not enforce.” This concept has been concretized in statute and regulation, and statute also requires that a notice of reasonable assurance be in writing. Once an educational district gives a worker a notice of reasonable assurance, that worker cannot request UI unless they are not employed in the following year as the notice of reasonable assurance assured.

In the case of a tenured teacher, he or she would likely have an option through the governing collective bargaining agreement to have his or her wages extended through the summer recess. In the case of classified employees, however, this is not the case, as many are paid hourly, rather than on a salary. Additionally, in some cases such an extension of wages through the summer recess could push wages below the minimum wage, violating existing wage and hour law.

3) School Employees Fund (SEF)

From the Assembly Insurance Committee analysis:

“This bill would likely have relatively minor impact to the Unemployment Insurance Trust Fund (trust fund) that pays for most UI 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 districts, and charter schools participate in the SEF. The SEF had fund balance of over $582 million at the end of the 2014-15 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 passed on to the participating schools.”

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee, the EDD indicates that their information technology systems would need to be reprogrammed to allow an administrative function to trigger benefit payments on or off depending on the Budget Act appropriation, manage multiple floating claim awards to track disbursement of benefits across multiple claims and fiscal years, and collect new eligibility information when new or additional claims are filed. EDD estimates related one-time costs to be approximately $3.9 million.

SUPPORT: (Verified 8/23/16)

Service Employees International Union (source)

American Federation of State, County and Municipal Employees, AFL-CIO

California School Employees Association

California School Teachers Association

California Teachers Association

LIUNA Local, 777

OPPOSITION: (Verified 8/12/16)

California Association of School Business Officials

Orange County Department of Education

Riverside County Superintendent of Schools

Small School Districts’ Association

ARGUMENTS IN SUPPORT: The proponents argue that classified employees keep our campuses safe, clean, and efficient. Most importantly, they strive to improve the daily lives of our students. Despite the important and hard work of classified school employees, many struggle to support their families with incomes that are often inadequate to pay for food, housing, and health care. And while certified school employees, such as administrators, teachers, librarians, and nurses, earn middle class incomes and benefits that can last through the summer breaks, classified school employees do not. Yet classified school employees are often unable to find work during the summer because employers are reluctant to hire and invest in a short-term employee. AB 2197 removes this serious financial hardship by making classified employees eligible for UI benefits during the summer recess.

ARGUMENTS IN OPPOSITION: Opponents argue that, despite its phased-in approach, AB 2197 will result in a significant fiscal impact on school districts. Specifically, opponents note that district unemployment accounts are funded through a combination of payroll taxes and quarterly local experience charges. By expanding UI benefit eligibility, AB 2197 will result in decreased School Employers Fund balances, increased local experience charges, and increases in the unemployment insurance payroll tax rate. Opponents also note that districts are not reimbursed for UI expenses as they had been in the past, leaving them to absorb the increased costs associated with the requirements of AB 2197. Opponents therefore argue that, noting there is no budget appropriation in this year’s budget, they must oppose AB 2197.

ASSEMBLY FLOOR: 51-27, 6/2/16

AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Weber, Williams, Wood, Rendon

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk

NO VOTE RECORDED: Linder, Ting

Prepared by:

8/23/16 9:40:22

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 2197 (Cristina Garcia) - Unemployment insurance: classified employees

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 2197 would permit classified school employees to be eligible to collect unemployment insurance (UI) benefits between school years with or without a reasonable assurance of being employed in the subsequent academic year.

Fiscal Impact:

The Employment Development Department (EDD) indicates that this bill would result in increased UI costs for all school employers. Because of insufficient data related to the split between classified and non-classified workers, the magnitude of the increase is unknown. However, EDD expects that any increase in the amount of UI benefits paid as a result of this bill would likely be nominal.

Additionally, the bill would also require EED’s IT systems to be reprogrammed to allow an administrative function to trigger benefit payments on or off depending on the Budget Act appropriation, manage multiple floating claim awards to track disbursement of benefits across multiple claims and fiscal years, and collect new eligibility information when new or additional claims are filed. EDD estimates related one-time costs to be approximately $3.9 million.

Background:

Current law provides unemployment insurance benefits to employees who lose their job through no fault of their own. However, employees of public and private non-profit schools are precluded from collecting benefits when school is out of session if they have reasonable assurance that they will be employed in the subsequent school year.

Classified education workers comprise dozens of different occupational titles and job descriptions that help our schools function, including paraprofessional teaching assistants, nurses’ aides, office secretaries, clerical staff, custodians, bus drivers, and cafeteria workers. Most are lower-wage workers.

Proposed Law:

This bill would allow employees of a public school who are not teachers, researchers, or administrators to be eligible for unemployment insurance benefits in the period between two academic years on the following schedule: (1) two weeks of benefits during 2017, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act, (2) four weeks of benefits during 2018, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act, (3) six weeks of benefits during 2019, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act, and (4) eight weeks of benefits during 2020, and each year thereafter, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act.

Related Legislation:

AB 399 (Ridley-Thomas) (2015) was nearly identical to this bill, and was held under submission on the Suspense File of the Assembly Appropriations Committee.

Staff Comments:

The US Department of Labor has notified EDD that there are three federal conformity issues with this bill, which may have implications for employers’ Federal Unemployment Tax Act (FUTA) credits. Employers are generally given a FUTA credit of up to 5.4 percent; however, if this bill is enacted as written and the federal government sanctions the State for nonconformity, California employers could be liable for the full 6 percent FUTA rate and the state could lose its federal UI administrative grant.

-- END --

SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS

Senator Tony Mendoza, Chair

2015 - 2016 Regular

Bill No: AB 2197 Hearing Date: June 22, 2016

Subject: Unemployment insurance: classified employees

KEY ISSUE

Should the Legislature permit classified school employees to be eligible to collect unemployment insurance (UI) benefits between school years with or without a reasonable assurance of being employed in the next academic year?

ANALYSIS

Existing law:

1. Vests the Employment Development Department (EDD) with the responsibility of ensuring employers remit appropriate Unemployment Insurance (UI) contributions and to collect the employee wage deductions to the Disability Fund. EDD uses these funds to finance the Unemployment Insurance and Disability Insurance (DI) Programs.
   (Unemployment Insurance Code §§ 301, 976, 984, 1025-1037, 1555-1562, & 3001-3015)
2. Prohibits employees of public and private non-profit educational institutions from collecting UI benefits between academic years if they have been given reasonable assurance by the employer of being employed in the next academic term. (Unemployment Insurance Code §1253.3)
3. Permits non-professional employees of public and non-profit educational institutions to collect UI benefits retroactively should they not be employed in the next academic term after receiving reasonable assurance of future employment.
   (Unemployment Insurance Code §1253.3)
4. Requires employers to provide documentation of the reasonable assurance when that notice is given. (Unemployment Insurance Code §1253.3)

This bill would allow employees of a public school who are not teachers, researchers, or administrators to be eligible for unemployment insurance benefits in the period between two academic years on the following schedule:

1. Two weeks of benefits during 2017, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act.
2. Four weeks of benefits during 2018, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act.
3. Six weeks of benefits during 2019, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act.
4. Eight weeks of benefits during 2020, and each year thereafter, beginning July 1, provided that funds are appropriated for that purpose in the annual Budget Act.

COMMENTS

1. Need for this bill?

The sponsor notes that, while classified employees do the essential work our public schools up and running, classified employees are not permitted to collect UI benefits during the summer recess. This places significant hardship on the classified employee and his or her family, and it requires the classified employee finds short-term employment for the summer recess. However, the sponsor argues that classified school employees are often unable to find work during the summer because employers are reluctant to hire and invest in a short-term employee. Additionally, the sponsor argues that a classified school employee’s only real option for summer employment is a job with a summer school program, but those jobs are scarce.

AB 2197 would address this by allowing classified employees to collect UI benefits through a stepped schedule that would begin in 2017 and top out in 2020.

2. “Reasonable Assurance” and Unemployment Insurance:

In Ross v. CUIAB (1981), 178 Cal. Rptr. 421, the Court of Appeals defined “reasonable assurance” as “an agreement which contemplated the re-employment of the affected school employee but which he or she could not enforce.” This concept has been concretized in statute and regulation, and statute also requires that a notice of reasonable assurance be in writing. Once an educational district gives a worker a notice of reasonable assurance, that worker cannot request unemployment insurance unless they are not employed in the following year as the notice of reasonable assurance assured.

In the case of a tenured teacher, he or she would likely have an option through the governing collective bargaining agreement (CBA) to have his or her wages extended through the summer recess. In the case of classified employees, however, this is not the case, as many are paid hourly, rather than on a salary. Additionally, in some cases such an extension of wages through the summer recess could push wages below the minimum wage, violating existing wage and hour law.

3. School Employees Fund (SEF):

From the Assembly Insurance Analysis:

“This bill would likely have relatively minor impact to the Unemployment Insurance Trust Fund (trust fund) that pays for most UI 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 districts, and charter schools participate in the SEF. The SEF had fund balance of over $582 million at the end of the 2014-15 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 passed on to the participating schools.”

3. Proponent Arguments:

The proponents argue that classified employees keep our campuses safe, clean, and efficient. Most importantly, they strive to improve the daily lives of our students. Despite the important and hard work of classified school employees, many struggle to support their families with incomes that are often inadequate to pay for food, housing, and health care. And while certified school employees, such as administrators, teachers, librarians, and nurses, earn middle class incomes and benefits that can last through the summer breaks, classified school employees do not. Yet classified school employees are often unable to find work during the summer because employers are reluctant to hire and invest in a short-term employee. AB 2197 removes this serious financial hardship by making classified employees eligible for unemployment insurance benefits during the summer recess.

4. Opponent Arguments:

Opponents argue that, despite its phased-in approach, AB 2197 would result in a significant fiscal impact on school districts. Specifically, opponents note that district unemployment accounts are funded through a combination of payroll taxes and quarterly local experience charges. By expanding unemployment insurance (UI) benefit eligibility, AB 2197 would result in decreased School Employers Fund balances, increased local experience charges, and increases in the unemployment insurance payroll tax rate. Opponents also note that districts are not reimbursed for unemployment insurance expenses as they had been in the past, leaving them to absorb the increased costs associated with the requirements of AB 2197. Opponents therefore argue that, noting there is no budget appropriation in this year’s budget, they must oppose AB 2197.

5. Prior Legislation:

AB 399 (Ridley-Thomas) (2015) was nearly identical to this bill. AB 399 was held on the Assembly Appropriations Committee Suspense File.

SUPPORT

American Federation of State, County and Municipal Employees, AFL-CIO

California School Employees Association

OPPOSITION

California Association of School Business Officials

Orange County Department of Education

Riverside County Superintendent of Schools

Small School Districts’ Association

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2197

Author:(Cristina Garcia)

As Amended Ver:

Majority vote

SUMMARY: Allows classified school employees to collect unemployment insurance (UI) benefits between school years. Specifically, this bill:

1. Exempts classified public school employees from the prohibition on educational employees collecting UI benefits.
2. Increases the maximum duration of UI benefits for classified public school employees as follows:
   1. 2 weeks effective July 1, 2017
   2. 4 weeks effective July 1, 2018
   3. 6 weeks effective July 1, 2019
   4. 8 weeks effective July 1, 2020
3. Provides that UI benefits for classified public school employees will only be provided if funds are appropriated for that purpose in the annual budget act.

EXISTING LAW:

1. Provides UI benefits to employees who lose their job through no fault of their own.
2. Requires employers to pay state and federal taxes to pay the costs of administering and providing UI benefits.
3. Permits public employers to provide UI benefits to their employees on a reimbursement basis in lieu of paying payroll taxes.
4. Prohibits employees of public and private non-profit educational institutions from collecting UI benefits between academic years if they have been given reasonable assurance by the employer of being employed in the next academic term.
5. Permits non-professional employees of public and non-profit educational institutions to collect UI benefits retroactively should they not be employed in the next academic term after receiving reasonable assurance of future employment.
6. Requires employers to provide documentation of the reasonable assurance when that notice is given.
7. Prohibits, as a matter of federal law, providing UI benefits to professional employees between academic years.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. This bill is contingent on a budget appropriation for the purpose of implementation. A 2015 report by the Economic Roundtable projects extending UI to classified employees over summer months would result in $153.1 million of benefit payments annually, representing an increase in UI expenditures of 76% for schools, at full implementation in year 2020-21 (School Employees Fund (SEF)). To the extent a budget appropriation was made for this purpose, it would have to augment the SEF commensurate with the increase. Schools are responsible for funding their own UI costs through the SEF.
2. There could also be a direct cost impact to the UI Trust Fund, if some charter school employees receive benefits through this fund instead of the SEF. EDD does not track which charters rely on UI Trust Fund versus those that use a different reimbursement method, but reports that only a quarter of charters participate in SEF, meaning benefits paid to employees of the remaining three-quarters would potentially impact the UI Trust Fund (though it is unclear how many schools participate in the tax-rated methodology that impacts the UI Trust Fund. The remainder of charters reimburse the UI Trust Fund directly for costs incurred to provide benefits to their employees.)

COMMENTS:

1. Purpose. According to the sponsor, classified school employees do the essential work that keeps our public schools up and running. These workers keep our campuses safe, clean, and efficient. Most importantly, they strive to improve the daily lives of our students. Despite the important and hard work of classified school employees, many struggle to support their families with incomes that are often inadequate to pay for food, housing, and health care. And while certified school employees, such as administrators, teachers, librarians, and nurses, earn middle class incomes and benefits that can last through the summer breaks, classified school employees do not. Unlike other employees who receive UI benefits during their regular seasonal breaks, classified school employees are ineligible to receive those same benefits. The only option for classified school employees to support their families during the summer is to find another job. Yet classified school employees are often unable to find work during the summer because employers are reluctant to hire and invest in a short-term employee. Thus, a classified school employee's only real option for summer employment is a job with a summer school program, but those jobs are scarce. Being excluded from UI benefits creates a serious financial hardship for a classified school employee that does not exist for their fellow education workers.
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. Public Agency Costs. This bill would likely have relatively minor impact to the Unemployment Insurance Trust Fund (trust fund) that pays for most UI 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 districts, and charter schools participate in the SEF. The SEF had fund balance of over $582 million at the end of the 2014-15 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 passed on to the participating schools.

Opponents note that the bill would result in significant cost increases for K-12 school districts and other local educational agencies. Last year the Assembly Appropriations Committee provided the following estimate for AB 399 (Ridley-Thomas) of 2015, which was substantially similar to this bill:

There are approximately 250,000 classified, non-certificated employees throughout the state. If 60% of those employees received the maximum allotment of weeks of UI during summer vacation each year, it would cost an additional $90 million per year, each year for four years, until the cost reached approximately $360 million in fiscal year in 2019-20 (School Employees Fund). Costs to the School Employees Fund are funded by school districts, county offices of education, community college districts, and some charter schools, whose employees receive UI benefits through this fund instead of through the UI Trust Fund.

1. 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 UI benefits from the end of the prior school year.
2. Previous Legislation.

In 2015, this committee passed AB 399 (Ridley-Thomas) of the current legislative session, which is identical to this bill. AB 399 was held on the Assembly Appropriations Committee Suspense File.

In 2014, this committee passed AB 1638 (Bocanegra) which was nearly identical to AB 615. The bill was held on the Assembly Appropriations Committee Suspense File.

In 2013, this committee passed AB 615 (Bocanegra) which proposed to extend UI benefits to classified school employees. The bill was held on the Assembly Appropriations Committee Suspense File.

Analysis Prepared by: Paul Riches / INS. / (916) 319-2086 FN: 0003394

Date of Hearing: May 11, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2197

Author:(Cristina Garcia) – As Amended Ver:April 21, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill allows classified school employees to collect unemployment insurance (UI) benefits between school years. Specifically, this bill:

1. Exempts classified public school employees from the prohibition on educational employees collecting UI benefits.
2. Increases the maximum duration of UI benefits for classified public school employees as follows:
   1. 2 weeks effective July 1, 2017.
   2. 4 weeks effective July 1, 2018.
   3. 6 weeks effective July 1, 2019.
   4. 8 weeks effective July 1, 2020.

FISCAL EFFECT:

1. If 150,000 classified, non-certificated employees received the maximum allotment of weeks of UI during summer vacation each year, it would cost an additional $90 million per year, each year for four years, until the cost reached approximately $360 million in fiscal year in 2020-21 (School Employees Fund).

The SEF would have to be augmented commensurate with the increase. Since schools are responsible for funding their own UI costs through the SEF, this either results in cost pressure on the GF to backfill the budget hole created by the increased costs to schools, or a reduction in school resources for other activities, or a combination.

1. There could also be a direct cost impact to the UI Trust Fund, if some charter school employees receive benefits through this fund instead of the SEF. The Employment Development Department (EDD) does not track which charters rely on UI Trust Fund versus those that use a different reimbursement method, but it reports that only a quarter of charters participate in SEF, meaning benefits paid to employees of the remaining three-quarters would potentially impact the UI Trust Fund (though it is unclear how many schools participate in the tax-rated methodology that impacts the UI Trust Fund. The remainder of charters reimburse the UI Trust Fund directly for costs incurred to provide benefits to their employees.)

Furthermore, EDD has previously noted increased expenditures from the UI Trust Fund could potentially trigger an increase in federal UI taxes due to temporary conditions placed on the state as a result of the insolvency of the UI Trust Fund. If that were to occur as a result of this legislation now, however, the increase would be marginal due to the improving condition of the UI Trust Fund will be greater.

1. Since this bill will result in such a large overall increase in UI benefits being paid out to school employees, there may be an indirect effect on UI Trust Fund solvency. Schools that currently do not use a tax-rated UI Trust Fund methodology may be financially better off to move to such a methodology, as the maximum tax rates for UI are capped at 6.2% of the first $7,000 of wages, a total of $434 per employee. That rate could be less than what they would end up paying through the SEF. If more schools choose to move to a tax-rated methodology under this level of benefit expenditure, the impact on the UI Trust Fund will be greater.
2. EDD also warns this bill may not conform to federal law, as it treats public school employees different than employees of nonprofits. Sanctions for non-conformity include withholding of a state’s grant for administration of the UI program, and the loss of a federal tax credit for a state’s employers.

COMMENTS:

1. Purpose. According to the author, thousands of classified school employees find the months between academic years to be a stressful period financially. Existing law prohibits certain education employees from receiving benefits during months in which school is not in session, unless they meet very specific criteria. The only option for classified school employees to support their families during the summer is to find another job. Yet classified school employees are often unable to find work during the summer because employers are reluctant to hire and invest in a short-term employee. Thus, the employee’s only real option for summer employment is a job with a summer school program, but those jobs are scarce. This bill would relieve financial stress for workers.
2. Federal Law. Federal law generally requires equal treatment for the payment of UI benefits 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 workers 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 or term.

States must deny UI benefits to professional school employees between and within the academic years or terms when a contract or reasonable assurance exists. However, states have the option of providing UI benefits to nonprofessional school employees between and within the academic years or terms when a contract or reasonable assurance exists.

1. 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 UI benefits from the end of the prior school year.
2. School Employees Fund (SEF). Public school employers, K-12 and community colleges may elect to participate in the SEF, which is a pooled-risk fund administered by EDD that collects quarterly contributions based upon a percentage of total wages paid by public schools and community college districts. Employers who participate in the SEF may also have to pay an additional quarterly Local Experience charge if they have higher UI costs charged to their individual accounts. Contributions deposited in the SEF are used to reimburse the UI Trust Fund for the cost of UI benefits paid to former employees.
3. Support. This bill is sponsored by the Service Employees International Union, California and supported by the California Federation of Teachers.
4. Opposition. This bill is opposed by the Association of California School Administrators and the California School Boards Association.
5. Prior Legislation. AB 399 (Ridley-Thomas) of 2015, AB 1638 (Bocanegra) of 2014, and AB 615 (Bocanegra) of 2013 were similar to this bill, and were all held on the Suspense File of this committee.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: April 20, 2016

ASSEMBLY COMMITTEE ON INSURANCE

Tom Daly, Chair

ABPCA Bill Id:AB 2197 (

Author:Cristina Garcia) – As Amended Ver:March 28, 2016

SUBJECT: Unemployment insurance: classified employees

SUMMARY: Allows classified school employees to collect unemployment insurance (UI) benefits between school years. Specifically, this bill:

1. Exempts classified public school employees from the prohibition on educational employees collecting UI benefits.
2. Increases the maximum duration of UI benefits for classified public school employees as follows:
   1. 2 weeks effective July 1, 2016
   2. 4 weeks effective July 1, 2017
   3. 6 weeks effective July 1, 2018
   4. 8 weeks effective July 1, 2019

EXISTING LAW:

1. Provides UI benefits to employees who lose their job through no fault of their own.
2. Requires employers to pay state and federal taxes to pay the costs of administering and providing UI benefits.
3. Permits public employers to provide UI benefits to their employees on a reimbursement basis in lieu of paying payroll taxes.
4. Prohibits employees of public and private non-profit educational institutions from collecting UI benefits between academic years if they have been given reasonable assurance by the employer of being employed in the next academic term.
5. Permits non-professional employees of public and non-profit educational institutions to collect UI benefits retroactively should they not be employed in the next academic term after receiving reasonable assurance of future employment.
6. Requires employers to provide documentation of the reasonable assurance when that notice is given.
7. Prohibits, as a matter of federal law, providing UI benefits to professional employees between academic years.

FISCAL EFFECT: Undetermined

COMMENTS:

1. Purpose. According to the sponsor, classified school employees do the essential work that keeps our public schools up and running. These workers keep our campuses safe, clean, and efficient. Most importantly, they strive to improve the daily lives of our students. Despite the important and hard work of classified school employees, many struggle to support their families with incomes that are often inadequate to pay for food, housing, and health care. And while certified school employees, such as administrators, teachers, librarians, and nurses, earn middle class incomes and benefits that can last through the summer breaks, classified school employees do not. Unlike other employees who receive UI benefits during their regular seasonal breaks, classified school employees are ineligible to receive those same benefits. The only option for classified school employees to support their families during the summer is to find another job. Yet classified school employees are often unable to find work during the summer because employers are reluctant to hire and invest in a short-term employee. Thus, a classified school employee’s only real option for summer employment is a job with a summer school program, but those jobs are scarce. Being excluded from UI benefits creates a serious financial hardship for a classified school employee that does not exist for their fellow education workers.
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. Public Agency Costs. This bill would likely have relatively minor impact to the Unemployment Insurance Trust Fund (trust fund) that pays for most UI 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 districts, and charter schools participate in the SEF. The SEF had fund balance of over $582 million at the end of the 2014-15 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 passed on to the participating schools.

Opponents note that the bill would result in significant cost increases for K-12 school districts and other local educational agencies. Last year the Assembly Appropriations Committee provided the following estimate for AB 399 (Ridley-Thomas), which was substantially similar to this bill:

"There are approximately 250,000 classified, non-certificated employees throughout the state. If 60% of those employees received the maximum allotment of weeks of UI during summer vacation each year, it would cost an additional $90 million per year, each year for four years, until the cost reached approximately $360 million in fiscal year in 2019-20 (School Employees Fund). Costs to the School Employees Fund are funded by school districts, county offices of education, community college districts, and some charter schools, whose employees receive UI benefits through this fund instead of through the UI Trust Fund."

1. 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 UI benefits from the end of the prior school year.
2. Suggested Amendment. The bill provides that UI benefits be provided beginning July 1, 2016. The bill should be amended to begin implementation on July 1, 2017. The amendments should also defer the repeals of Sections 1451, 1452, and 1453 of Unemployment Insurance Code until July 1, 2017 to conform with the later implementation date.
3. Previous Legislation.

In 2015, this committee passed AB 399 (Ridley-Thomas) which is identical to this bill. AB 399 was held on the Assembly Appropriations Committee Suspense File.

In 2014, this committee passed AB 1638 (Bocanegra) which was nearly identical to AB 615. The bill was held on the Assembly Appropriations Committee Suspense File.

In 2013, this committee passed AB 615 (Bocanegra) which proposed to extend UI benefits to classified school employees. The bill was held on the Assembly Appropriations Committee Suspense File.

REGISTERED SUPPORT / OPPOSITION:

Support

Service Employees International Union, California (sponsor)

California Federation of Teachers (CFT)

Opposition

Association of California School Administrators

California School Boards Association

Riverside County Superintendent of Schools

Analysis Prepared by: Paul Riches / INS. / (916) 319-2086