By: Montford, Ellis S.B. No. 130
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the establishment of an employment training program,
1-2 the levy of an assessment for employment training purposes,
1-3 establishing a holding fund, establishing an employment training
1-4 fund, reducing the replenishment tax rate, reducing the entry level
1-5 tax rate, and declaring an emergency.
1-6 BE IT ENACTED BY THE LEGISLATURE OF TEXAS:
1-7 PREAMBLE
1-8 The Texas Legislature finds:
1-9 (a) The development and expansion of business, commerce, and
1-10 industry are essential to the economic growth of the state and to
1-11 the full employment, welfare, and prosperity of its citizens.
1-12 (b) The number of people seeking jobs in Texas exceeds the
1-13 number of available jobs.
1-14 (c) Despite the large number of unemployed job seekers, many
1-15 employers in new and expanding industries are having difficulty
1-16 finding the skilled workers they need. A similar problem exists in
1-17 industries where overall employment may not be expanding but where
1-18 there is an acute need for skilled workers in particular
1-19 occupations.
1-20 (d) Studies have shown that the availability of an educated,
1-21 skilled work force is the single most important factor in an
1-22 employer's decision to relocate or expand its operations.
1-23 (e) The Texas economy is today being challenged by
2-1 competition from other states and overseas. Our success in meeting
2-2 that challenge will depend largely on our ability to maintain and
2-3 improve a skilled and productive work force. Employers, workers,
2-4 organized labor, and government need to work together to ensure
2-5 that Texas's labor force is prepared to succeed in the economic
2-6 environment of the next century.
2-7 (f) The emergence of a global economy and the possible
2-8 creation of the world's largest market through the North American
2-9 Free Trade Agreement create opportunities for economic growth and
2-10 social prosperity from which Texas can only benefit if its work
2-11 force is educated, skilled, and prepared to excel.
2-12 (g) The changes in the global economy and the shifts in
2-13 policy regarding the defense industry, with the potential for
2-14 continued reductions in force, will require new training and
2-15 retraining initiatives.
2-16 ARTICLE I.
2-17 SECTION 1.01. Section 481.076, Texas Government Code, is
2-18 amended to read as follows:
2-19 Section 481.076. Smart Jobs Fund <Work Force Development
2-20 Incentive> Program
2-21 (a) <After consultation with the Adult Education Advisory
2-22 Committee of the State Board of Education and the Central Education
2-23 Agency, the department shall develop> CREATION. The Smart Jobs
2-24 Fund program is created in the department as a work force
2-25 development incentive program to enhance employment opportunities
3-1 and to meet the needs of existing and new industries in this state.
3-2 (b) DEFINITIONS. In this section:
3-3 (1) "demand occupation" means an occupation in which
3-4 there are or will be positive growth-to-replacement ratios within
3-5 the next twelve (12) to twenty-four (24) months as a result of
3-6 business development, which may include relocation, expansion,
3-7 turnover, diversification, or technological change, according to
3-8 data developed by regional Quality Workforce Planning Committees.
3-9 (2) "department" means the Texas Department of
3-10 Commerce.
3-11 (3) "employee" means a person in the service of
3-12 another under any contract of hire, whether express or implied, or
3-13 oral or written.
3-14 (4) "employer" means an individual, corporation,
3-15 organization, business trust, estate, trust, partnership,
3-16 association or other legal entity that employs one or more
3-17 employees.
3-18 (5) "executive director" means the Executive Director
3-19 of the Texas Department of Commerce or his or her designee.
3-20 (6) "existing employer" means an employer that has
3-21 been registered with the Texas Employment Commission as a liable
3-22 employer, as defined in the Texas Unemployment Compensation Act,
3-23 for more than one year and currently has persons in employment and
3-24 is in compliance with the reporting and payment of all sums dues
3-25 under that Act.
4-1 (7) "family wage job" means a job which offers:
4-2 (A) wages greater than or equal to the state
4-3 average weekly wage, adjusted for regional variances;
4-4 (B) other benefits, such as workers'
4-5 compensation and health care insurance coverage;
4-6 (C) opportunity for continued skill development
4-7 and career path advancement; and
4-8 (D) substantial likelihood of long-term job
4-9 security.
4-10 (8) "job" means employment on a basis customarily
4-11 considered full-time for the occupation and industry.
4-12 (9) "policy board" means the policy board of the Texas
4-13 Department of Commerce.
4-14 (10) "program" means the Smart Jobs Fund program
4-15 created by this section.
4-16 (11) "project" means a specific employment training
4-17 program developed and implemented by an employer under this
4-18 section.
4-19 (12) "provider" means a person or entity that provides
4-20 employment-related training, including certified proprietary
4-21 schools as defined in Section 32.11 of the Education Code and
4-22 public and private schools, technical institutes, junior colleges,
4-23 colleges and universities.
4-24 (13) "state average weekly wage" means the annual
4-25 average of the average weekly wage in this state as of September 1
5-1 of each year, as determined by the Texas Employment Commission.
5-2 (14) "targeted industry" means an industry that
5-3 promotes high-skill, high-wage jobs using Texas-available material
5-4 and human resources, as defined by the Texas Department of
5-5 Commerce.
5-6 (15) "trainee" means a participant in a project funded
5-7 under this section.
5-8 (16) "wages" means every form of compensation or
5-9 remuneration, excluding benefits, payable for a given period to an
5-10 employee for personal services rendered.
5-11 (c) RULES. The policy board shall adopt rules governing the
5-12 Smart Jobs Fund program. Such rules shall implement the following
5-13 policies:
5-14 (1) The program shall give priority to the creation
5-15 and retention of "family wage jobs" as defined in this section. It
5-16 will focus on employers in industries that promote manufacturing
5-17 and technical jobs in current and new high-technology areas and on
5-18 demand occupations that provide such jobs;
5-19 (2) The program shall be job-driven. No grant shall
5-20 be awarded unless the employer certifies that a family wage job
5-21 opening exists or will exist at the end of the project for which
5-22 the grant is sought and further certifies that the family wage job
5-23 opening will be filled by a participant in the project.
5-24 (3) No grants shall be awarded for a project under
5-25 this section unless an employer certifies that the starting wage
6-1 for a new job shall be greater than sixty-six and two thirds
6-2 percent (66 2/3%) of the state average weekly wage and the wage for
6-3 an existing job shall be increased to the greater of ten percent
6-4 (10%) over the then-current wage for that job or seventy-five
6-5 percent (75%) of the state average weekly wage;
6-6 (4) An employer may apply for a grant under this
6-7 section if the employer will have to reduce or eliminate its
6-8 workforce because of reductions in overall employment within an
6-9 industry or a substantial change in the skills required to continue
6-10 the employer's business because of technological change or other
6-11 factors. In awarding a grant under this subpart, the executive
6-12 director may waive the requirements of Subpart (3) of this
6-13 subsection.
6-14 (5) The program shall give priority to individuals who
6-15 meet the following qualifications, in descending order of priority
6-16 with (A) having the highest priority:
6-17 (A) Texas residents receiving financial or other
6-18 aid through Unemployment Compensation (42 U.S.C. Section 501 et
6-19 seq.);
6-20 (B) Texas residents who are currently employed
6-21 and whose employers are expanding, upgrading or relocating their
6-22 operations in Texas;
6-23 (C) unemployed Texas residents; and
6-24 (D) all other Texas residents;
6-25 (6) At least <40> 50 percent of the money expended
7-1 under the program shall be used for work force training projects to
7-2 assist existing <businesses> employers in the state<.>;
7-3 (7) Money provided for a training project <costing
7-4 more than $250,000> must be matched by funds provided by the
7-5 <company> employer benefiting from the project in an amount at
7-6 least equal to <twice> the amount provided by the state. The
7-7 policy board may adopt rules exempting employers of less than 50
7-8 employees from the requirements of this subpart. The policy board
7-9 may adopt rules exempting projects that provide significant
7-10 economic benefits to an entire region from the requirements of this
7-11 subpart. Employer matches may include documented in-kind
7-12 contributions of goods and services as well as wages paid to
7-13 trainees during the training period.
7-14 (8) No grants shall be awarded for a project under
7-15 this section if the project will impair existing contracts for
7-16 services or collective bargaining agreements, except that a project
7-17 inconsistent with the terms of a collective bargaining agreement
7-18 may be undertaken with the written concurrence of the collective
7-19 bargaining unit and the employer or employers who are parties to
7-20 the agreement.
7-21 (d) APPLICATION. (1) The following may apply for a grant
7-22 under this section:
7-23 (A) one or more employers;
7-24 (B) an employer organization, labor organization
7-25 or community-based organization, acting in partnership with one or
8-1 more employers to secure training for demand occupations in a
8-2 particular industry; or
8-3 (C) a consortium composed of one or more
8-4 providers, acting in partnership with one of more employers to
8-5 secure training for demand occupations in a particular industry.
8-6 (2) The application, in a form to be approved by the
8-7 executive director, shall include a complete business and training
8-8 plan for each employer, including:
8-9 (A) the number and kind of jobs available;
8-10 (B) the skills and competencies required for the
8-11 identified jobs;
8-12 (C) the wages to be paid to trainees upon
8-13 successful completion of the project;
8-14 (D) the goals, objectives, and outcome measures
8-15 for the project;
8-16 (E) the proposed curriculum for the project; and
8-17 (F) the projected cost per person enrolled,
8-18 trained, hired and retained in employment.
8-19 (e) CONTRACTS. (1) The executive director shall approve
8-20 any project that meets all of the requirements of this section and,
8-21 if funds are available, enter into a contract with the applicant
8-22 and, if the applicant is other than an employer, with the
8-23 participating employer or employers. The contract shall specify
8-24 those skills and competencies to be gained as a result of the
8-25 project.
9-1 (2) Reimbursable costs in the contract shall include
9-2 only those expenses related to direct training in job-related basic
9-3 skills (including literacy skills), job-related vocational skills,
9-4 and administrative costs. Total administrative costs for any
9-5 particular project may not exceed ten percent (10%) of the grant
9-6 award.
9-7 (3) If the applicant subcontracts for the provision of
9-8 employment and training services, no more than ten percent (10%) of
9-9 the moneys received by any provider shall be expended on indirect
9-10 costs of providing the employment and training services. Indirect
9-11 costs shall include any administrative or overhead expense of the
9-12 provider and shall be considered in calculating the total
9-13 administrative costs under Subpart (2) of this subsection.
9-14 (4) The contract shall provide a schedule for payment
9-15 of Smart Jobs Fund moneys, with no less than twenty-five percent
9-16 (25%) of the grant being withheld until the trainees have been
9-17 retained in employment for ninety (90) days after the completion of
9-18 training.
9-19 <(b) In developing and conducting the program, the
9-20 department shall:>
9-21 <(1) use existing educational facilities available
9-22 through public school districts, technical institutes, public
9-23 junior colleges, and public universities;>
9-24 <(2) solicit and receive the cooperation of the Texas
9-25 Higher Education Coordinating Board, the Central Education Agency,
10-1 the Texas Department of Human Services, and the Texas Employment
10-2 Commission;>
10-3 <(3) Whenever acting in cooperation with another state
10-4 agency to obtain recommendations of persons who meet the employee
10-5 training needs of employers and where feasible, give priority to
10-6 individuals who meet the following qualifications, in descending
10-7 order of priority with (A) having the highest priority:>
10-8 <(A) Texas residents having financial or other
10-9 aid through a state or federal assistance program such as, but not
10-10 limited to, Aid to Families with Dependent Children (42 U.S.C.
10-11 Section 601 et seq.), Food Stamps (7 U.S.C. Section 2011 et seq.),
10-12 and Unemployment Compensation (42 U.S.C. Section 501 et seq.);>
10-13 <(B) unemployed Texas residents; and>
10-14 <(C) all other Texas residents;>
10-15 <(4) attempt to maximize the availability and use of
10-16 federal matching funds; and>
10-17 <(5) >
10-18 (f) ADMINISTRATION. (1) The executive director of the
10-19 department shall administer the Smart Jobs Fund program. The
10-20 executive director may employ other employees necessary to
10-21 administer the program.
10-22 (2) Moneys in the Smart Jobs Fund may be used for the
10-23 administration, marketing and evaluation of the program. These
10-24 costs may not exceed five percent (5%) of the total available
10-25 expenditures of the program in any year.
11-1 (3) The executive director shall report to the
11-2 governor and the legislature at the end of each fiscal year on the
11-3 status of the program, including the following information for that
11-4 year:
11-5 (A) the number of employers receiving grants
11-6 under the program, and the total amount of the grants awarded;
11-7 (B) the number of small businesses as defined in
11-8 Section 481.101(3) of the Texas Government Code receiving grants
11-9 under the program, and the total amount of the grants awarded;
11-10 (C) the number of businesses in enterprise zones
11-11 as defined in Article 5190.7, Vernon's Texas Civil Statutes,
11-12 receiving grants under the program, and the total amount of the
11-13 grants awarded;
11-14 (D) the geographical distribution of employers
11-15 receiving grants under the program;
11-16 (E) the total number of jobs created, enhanced
11-17 or retained under the program;
11-18 (F) the number of individuals employed <served>,
11-19 by category, in the priority groups specified in <Subdivision (3)>
11-20 Subpart (c)(5) of this <subsection.> section, as a results of this
11-21 program;
11-22 (G) the wage levels of trainees entering or
11-23 returning to the workforce, broken down by current employees
11-24 undergoing retraining and new hires, both at three months and at
11-25 one year after the conclusion of their training;
12-1 (H) the number and percentage of participating
12-2 employers that provide workers' compensation insurance, and the
12-3 number and percentage of employees covered;
12-4 (I) the number and percentage of participating
12-5 employers that offer health care insurance coverage, and the number
12-6 and percentage of employees covered;
12-7 (J) the number and percentage of women- and
12-8 minority-owned employers receiving grants under the program, and
12-9 the total amount of the grants awarded;
12-10 (K) the number and percentage of women and
12-11 minority trainees participating in training projects; and
12-12 (L) the number and percentage of historically
12-13 underutilized private providers utilized by employers in training
12-14 projects.
12-15 <c The department, after consultation with the Central
12-16 Education Agency, may;>
12-17 <(1) provide preemployment and developmental training
12-18 to provide employment opportunities in new or expanding industries;>
12-19 <(2) provide preemployment and developmental training
12-20 to provide civilian employment opportunities with federal military
12-21 reservations in this state;>
12-22 <(3) conduct industrial training seminars in
12-23 conjunction with public or private employers;>
12-24 <(4) provide skill upgrades in conjunction with public
12-25 or private employers for currently employed work force that are
13-1 necessary for the members of the work force to retain their jobs;
13-2 and>
13-3 <(5) adopt rules or take other actions considered
13-4 necessary by the department to fully implement this section.>
13-5 <(d) A public secondary school, technical institute, junior
13-6 college, or university may request the department to establish at
13-7 the educational institution industrial training courses that are
13-8 designed to meet the employee training needs of employers,
13-9 including federal military reservations, located in the geographic
13-10 area of the institution. The department may exercise its
13-11 discretion in determining whether to establish a course. To
13-12 qualify for the creation of a course, the institution must
13-13 reasonably foresee a hiring requirement in the specific skill to be
13-14 taught.>
13-15 <(e)>(g) The department may not exercise the powers or
13-16 perform the duties provided by this section unless <the legislature
13-17 specifically appropriates funds for that purpose> there is a
13-18 balance in the Smart Jobs Fund as provided by Section 9-E(c) of the
13-19 Texas Unemployment Compensation Act (Article 5221b-1 et seq.,
13-20 Vernon's Texas Civil Statutes).
13-21 ARTICLE II.
13-22 SECTION 2.01. The Texas Unemployment Compensation Act
13-23 (Article 5221b-1 et seq., Vernon's Texas Civil Statutes) is amended
13-24 by adding Section 9-E to read as follows:
13-25 Section 9-E. In addition to any taxes imposed by this Act,
14-1 there is hereby levied on each regular taxed employer a separate
14-2 and additional assessment of 0.1 percent of wages as defined by
14-3 Subsection 19(n) of this Act. The assessment shall be known as the
14-4 Employment Training Investment Assessment and shall be deposited by
14-5 the Commission into the Holding Fund created in Subsection (a) of
14-6 this section. The assessment shall be due at the same time, shall
14-7 be collected in the same manner, and shall be subject to the same
14-8 penalties and interest as the Unemployment Tax.
14-9 (a) The Holding Fund is established. The Holding Fund is a
14-10 special trust fund in the custody of the State Treasurer separate
14-11 and apart from all public moneys or funds of this State. Interest
14-12 accruing in the Holding Fund shall be deposited on a quarterly
14-13 basis directly into the Unemployment Compensation Fund.
14-14 (b) The Smart Jobs Fund is established. The Smart Jobs Fund
14-15 is a special trust fund in the custody of the State Treasurer
14-16 separate and apart from all public moneys or funds of this State.
14-17 Interest accruing in the Smart Jobs Fund shall be deposited on a
14-18 quarterly basis directly into the Unemployment Compensation Fund.
14-19 (c) If on September 1 of any calendar year it appears to the
14-20 Commission that the amount in the Unemployment Compensation Fund
14-21 will be above one hundred percent (100%) of its floor as computed
14-22 in paragraph 7(c)(6)(B) of this Act on the next October 1
14-23 computation date, the Commission shall deposit the amount in the
14-24 Holding Fund in the Smart Jobs Fund in Subsection (b) of this
14-25 section and this amount shall be used for the purposes described in
15-1 Section 481.076 of the Texas Government Code.
15-2 (d) If on September 1 of any calendar year it appears to the
15-3 Commission that the amount in the Unemployment Compensation Fund
15-4 will be at or below one hundred percent (100%) of its floor as
15-5 computed in paragraph 7(c)(6)(B) of this Act on the next October 1
15-6 computation date, the Commission shall deposit as much of the
15-7 amount in the Holding Fund as is necessary to raise the amount in
15-8 the Unemployment Compensation Fund to one hundred percent (100%) of
15-9 its floor, up to and including the entire amount in the Holding
15-10 Fund. The Commission shall deposit any balance remaining in the
15-11 Holding Fund in the Smart Jobs Fund and this amount shall be used
15-12 for the purposes described in Section 481.076 of the Texas
15-13 Government Code.
15-14 (e) If during any three consecutive months the balance in
15-15 the Smart Jobs Fund exceeds 0.15 percent of the total taxable wages
15-16 for the four calendar quarters ending the preceding June 30, the
15-17 executive director of the Department of Commerce shall immediately
15-18 transfer the excess to the Unemployment Compensation Fund.
15-19 SECTION 2.02. Subdivision (8), Subsection (c), Section 7,
15-20 the Texas Unemployment Compensation Act (Article 5221b-5(c)(8),
15-21 Vernon's Texas Civil Statutes) is amended to read as follows:
15-22 (8) In addition to the general rate provided by Subdivision
15-23 (6) of this subsection, each employer entitled to an experience
15-24 rate shall pay a replenishment tax at a rate, equal to a
15-25 percentage, stated to the nearest hundredth, computed in <derived
16-1 from> the following manner. <numerator and denominator. The
16-2 numerator is an> An amount equal to one-half of the amount of
16-3 benefits paid during the twelve (12) months ending the preceding
16-4 September 30 that are not charged to an employer's account, that
16-5 are charged to employers' accounts after the employers have reached
16-6 maximum liability because of the maximum tax rate, or that are
16-7 charged but considered not collectible<. The denominator> is
16-8 divided by an amount equal to the total taxable wages for the four
16-9 quarters ending the preceding June 30. The quotient thus computed
16-10 shall be diminished by subtracting .1. The remainder shall be the
16-11 replenishment tax rate.
16-12 SECTION 2.03. Subsection (b), Section 7, the Texas
16-13 Unemployment Compensation Act (Article 5221b-5(b), Vernon's Texas
16-14 Civil Statutes) is amended to read as follows:
16-15 (b) Rate of contributions: Each employer shall pay
16-16 contributions equal to <two and seven tenths percentum (2 7/10%)>
16-17 two and six tenths percent (2 6/10%) of wages paid by him with
16-18 respect to employment, except as provided in subsection (c) of this
16-19 Section.
16-20 SECTION 2.04. Subdivision (1), Subsection (c), Section 7,
16-21 the Texas Unemployment Compensation Act (Article 5221b-5(b)(1),
16-22 Vernon's Texas Civil Statutes) is amended to read as follows:
16-23 (1) <As of October 1 of each year, the Commission shall
16-24 establish by industry an average contribution rate for the
16-25 immediately succeeding calendar year fort each Major Group listed
17-1 in the Standard Industrial Classification Manual published by the
17-2 United States Office of Management and Budget. The Commission
17-3 shall establish the annual contribution rate paid by employers for
17-4 a particular industry by computing the contribution rates paid by
17-5 employers in that industry over the preceding year ending
17-6 September 30, based on the employment records maintained by the
17-7 Commission. The Commission shall assign each employer to a Major
17-8 Group in accordance with the definitions contained in the manual.
17-9 An employer shall pay contributions for the calendar year in which
17-10 the person becomes an employer at the rate established for that
17-11 year for the Major Group to which the employer is assigned, or at
17-12 two and seven tenths percent (2.7%) of the taxable wages paid by
17-13 the employer, whichever rate is greater,> Each employer's
17-14 contribution rate shall be two and six tenths percent (2.6%) until
17-15 his account has been chargeable with benefits throughout each
17-16 calendar month of the four (4) consecutive calendar quarters
17-17 immediately preceding the date as of which such employer's rate is
17-18 determined. The contribution rate of each employer who has had at
17-19 least four (4) such calendar quarters of compensation experience
17-20 shall be determined as provided below.<; except that the
17-21 contribution rate of any employing unit which becomes an employer
17-22 for the first time during the calendar year 1972, other than one
17-23 which first becomes an employer because of the provisions of
17-24 subsection 19(f)(2) of this Act, shall be one percent (1%) rather
17-25 than two and seven tenths percent (2.7%) until such time as his
18-1 account has been chargeable with benefits for four (4) consecutive
18-2 calendar quarters and an experience rate is computed for him in
18-3 accordance with this Act.>
18-4 ARTICLE III.
18-5 SECTION 3.01. EFFECTIVE DATES. Article I of this Act takes
18-6 effect on June 1, 1994. Article II of this Act takes effect on
18-7 September 1, 1993, and the assessment imposed in Section 2.01
18-8 applies to wages paid on or after January 1, 1994.
18-9 SECTION 3.02. TRANSITION. (a) Balances remaining in the
18-10 Workforce Development Incentive program after the effective date of
18-11 Article I of this Act will remain under the control of the Texas
18-12 Department of Commerce until such time as they are fully obligated
18-13 and expended.
18-14 (b) If on June 1, 1994, it appears to the Commission that
18-15 the amount in the Unemployment Compensation Fund will be above one
18-16 hundred percent (100%) of its floor as computed in paragraph
18-17 7(c)(6)(B) of the Texas Unemployment Compensation Act (Article
18-18 5221b-1 et seq., Vernon's Texas Civil Statutes) on the next
18-19 October 1 computation date, the Commission shall immediately
18-20 transfer from the Holding Fund established in Section 2.01 of this
18-21 Act into the Smart Jobs Fund established in Section 2.01 of this
18-22 Act an amount equal to twenty-five percent (25%) of the anticipated
18-23 balance in the Holding Fund as of September 1, 1994.
18-24 SECTION 3.03. Unless continued in existence by an act of the
18-25 Legislature, this Act expires September 1, 1999.
19-1 SECTION 3.03. EMERGENCY. The importance of this legislation
19-2 and the crowded condition of the calendars in both houses create an
19-3 emergency and an imperative public necessity that the
19-4 constitutional rule requiring bills to be read on three several
19-5 days in each house be suspended, and this rule is hereby suspended.