BILL ANALYSIS C.S.H.B. 2858 By: Raymond April 18, 1995 Committee Report (Substituted) BACKGROUND Worker training is important to the success of a business, according to businesses across Texas and the nation. Texas businesses need state training to help employees upgrade their skills so they can compete in a global marketplace. There is no federal worker program to assist them in competitive training because all federal programs assist unemployed workers only. Local communities in Texas need an alternative to offering local-taxpayer-financed incentives, such as tax abatements, give-aways and permit fee waivers in their efforts to convince companies to move, expand, or consolidate their operations in Texas. Working Texans and unemployed Texans need retraining and new skills development to give themselves a better opportunity to attain high skill, high wage jobs. In 1993, the Texas Legislature passed S.B. 130 which created the Smart Jobs Fund Program to help Texas businesses provide training for their workers and help create a high skill, high quality Texas workforce. PURPOSE The purpose is to clarify and simplify Smart Jobs Fund services based on implementation of S.B. 130 enacted by the 73rd Texas Legislature. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends the heading to Subchapter J, Chapter 481, Government Code, to read Smart Jobs Fund. SECTION 2. Amends Section 481.151, Government Code, as follows: Sec. 481.151. DEFINITIONS. Adds and changes the definitions to "emerging occupation," "existing employer," "family wage job," "manufacturing occupation," "minority group members," "smart job," and "state average weekly wage." Deletes the definition of "targeted industry." Renumbers accordingly. SECTION 3. Amends Sections 481.152(a) and (b), Government Code, as follows: (a) The smart jobs fund is created in the department as a business incentive to enhance employment opportunities. (b) Provides that the program give priority for funding to projects that offer family wage jobs and that at least 60 percent of money spent under the program be used for projects that assist existing employers. SECTION 4. Amends Section 481.155(c), (d) and adds (e), Government Code, as follows: (c) Requires the employer, before a grant is awarded for a project, to certify that by the end of the project, wages will be greater than 75 percent of the state weekly wage. Requires the wage for a job existing on the date the project is scheduled to begin that already pays a wage at or greater than 75 percent of the state average weekly wage. The employer must certify a five percent increase in the amount of the wage for the date on which the project ends. (d) Provides that an employer may apply for a grant, and sets forth guidelines by which an employer may request a modification of a requirement imposed under Subsection (c) if other factors occur that the executive director determines reasonable to warrant a modification. (e) Provides that the executive director may modify the requirements of Subsection (c) in awarding a grant under Subsection (d). Requires that grants awarded under this subsection for which the executive director has modified the requirements of Subsection (c) may not exceed five percent of the total dollar amount of grants awarded in any fiscal year. This section is relettered accordingly. SECTION 5. Amends Sections 481.156(a) and (e), Government Code, as follows: (a) Sets forth those persons or groups who may apply for a grant under this subchapter, including one or more employers to secure training for demand occupations, emerging occupations, or manufacturing occupations. (e) Requires the executive director to act on a completed application no later than the 30th business day after the application is filed with the department. SECTION 6. Amends Section 481.157(b), Government Code, as follows: (b) Authorizes the policy board to adopt rules modifying the requirements of Subsection (a) for employers with fewer than 100 employees and projects that provide significant economic benefits to an entire region of the state. SECTION 7. Amends Section 481.159(b), Government Code, as follows: (b) Requires reimbursable costs to include only those expenses related to direct training in job-related basic skills, job-related vocational skills, and administrative costs. Prohibits total administrative costs for any particular project from exceeding 10 percent of the project's direct training-related costs. SECTION 8. Amends Section 481.160(b), Government Code, by deleting subsection (b)(3) and (13) and amending as follows: (6) the total number of jobs created, enhanced, or retained under the program, reported by region of the state and by industry; (7) the wage levels of trainees entering or returning to the work force, broken down by current employees undergoing retaining and new hires, at three months and one year after the conclusion of their training; This section is renumbered accordingly. SECTION 9. Effective date is September 1, 1995. SECTION 10. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute removes from the original bill, under the definition of "smart job", means a job that may reasonably be considered to be in high demand. The original bill removed from the definition of "wages" "excluding benefits" and adds that the term includes the reasonable value of any benefits associated with the employment. The substitute removes all changes made to "wages" and leaves it as current language. The substitute removes from the original bill that the executive director shall encourage consortiums of small business and minority business. The original bill provided for a grant not to be awarded for a project unless each employer participating in the project certifies that the wage for a new job created through the project will be greater than 75 percent of the state average weekly wage by the end of the project and on the date the project is scheduled to begin, pays a wage at or greater than 75 percent of the state average weekly wage will be increased to five percent over the wage in effect on the day before the date which the project is scheduled to begin for that job. The substitute changes the language so that a grant may not be awarded for a project unless each employer participating in the project certifies that, by the end of the project, wages will be greater than 75 percent of the state average weekly wage. And, that for a job existing on the date that the project is scheduled to begin that already pays a wage at or greater than 75 percent of the state average weekly wage, the employer must certify a five percent increase in the amount of the wage for the date on which the project ends. The original bill provided that the total administrative cost for any particular project may not exceed 10 percent of the project's direct training-related costs. The substitute changes the language to provide that the total administrative costs may not exceed 10 percent of direct training-related costs. The original bill specified the requirements for an annual report that must include the wage level of trainees entering or returning to the work force, broken down by current employees undergoing retaining and new hires, at three months, one year, and three years after the conclusion of their training. The substitute removes the three year requirement and leaves the rest of the language the same. SUMMARY OF COMMITTEE ACTION H.B. 2858 was considered by the committee in a public hearing on April 10, 1995. Testifying on the bill was Richard Hall, representing the Texas Department of Commerce. No one testified against the bill. The committee considered a complete substitute for H.B. 2858. One amendment was offered to the substitute. H.B. 2858 and the proposed substitute and amendment was left pending in committee. H.B. 2858 was reconsidered by the committee in a formal meeting on April 11, 1995. The committee reconsidered the complete substitute for H.B. 2858. Two more amendments were offered to the substitute. Of the three amendments offered, one of the amendments was adopted without objection and one was adopted by a record vote of 6 ayes, 2 nays, 0 pnv, 1 absent. The substitute as amended was adopted by a record vote of 8 ayes, 0 nays, 0 pnv, 1 absent. H.B. 2858 was reported favorably as substituted, with the recommendation that it do pass and be printed, by a record vote of 8 ayes, 0 nays, 0 pnv, 1 absent.