JKM H.B. 1528 75(R)BILL ANALYSIS ECONOMIC DEVELOPMENT H.B. 1528 By: Oliveira 4-08-97 Committee Report (Amended) BACKGROUND The Smart Jobs program was created during the 73rd Legislature as an employer-driven approach to supporting the expansion and relocation of business in Texas. Smart Jobs awards direct grants to businesses that train workers for jobs that exist or will exist with the businesses. The program was designed to achieve these goals while targeting small and minority businesses, businesses in rural areas in Enterprise Zones, and consortiums with two or more employers applying together. After operating for 3 1/2 years, it has become necessary to make changes to improve the program and to allow for its continued creation of jobs and expansion of business in Texas. PURPOSE This bill makes changes in the criteria that determine which businesses are qualified to receive smart jobs funding; modifies criteria for jobs produced by the program; recalculates the amount available for administrative costs; and modifies performance standards for the program. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 481.151 of the Government Code. Defines "emerging occupation" as caused by demands in the workplace resulting from technological changes that can not be addressed by existing workers without additional training. Makes conforming changes in the definition of "existing employer." Defines "manufacturing occupation" as an occupation that is involved with transforming materials or substances into new products through mechanical or chemical means. Adds "women" to the definition of "minority group members." Defines "small business" using definitions from Section 481.101. Makes conforming changes to the definition of "state average weekly wage," and renumbers subsequent subsections. SECTION 2. Amends 481.154 (a) of the Government Code to make a conforming change. Amends Subsection (c) so that the amount of money the program uses from the fund for administration, marketing expenses, and evaluation of the program may not exceed five percent of the total amount appropriated for the program in a fiscal year. Amends subsection (d) to make conforming change. SECTION 3. Amends Section 481.155 (c),Government Code, to receive a grant under this section, an employer must certify that the wage for a job that exists on the date the program is scheduled to begin must be increased to the greater of (1) three percent for a small business or five percent for a business that is not a small business over the state average weekly wage or (2) is 75 percent of the state average weekly wage. Subsection (d) is amended so that an employer may apply for a grant and request a modification of the requirements in Subsection (c) if: substantial changes in the skills required in the employer's business are caused by technological changes, the executive director determines that other reasonable factors exist. Makes conforming changes and renumbers subsequent subsections. SECTION 4. Amends Section 481.156 (a) of the Government Code. (1) Adds "emerging occupations," and "manufacturing occupations" to the list of occupations for which employers may apply for grants. SECTION 5. Amends Section 481.159 (c) of the Government Code. Twenty-five percent of the allowable expenditures shall be withheld by the department for 90 days after the contract is completed. If at least 85 percent of the trainees in the contract remain in employment during this time and meet the requirements for skills, wages, and other obligations, the amount of allowable expenditures withheld shall be remitted to the employer. SECTION 6. Amends Section 481.160 (b) of the Government Code, by removing the requirement that the annual report include the wage levels of trainees three years after the training is concluded. SECTION 7. This Act takes effect September 1, 1997. SECTION 8. Emergency clause. EXPLANATION OF AMENDMENTS AMENDMENT #1 This amendment adds language to specify that it is the intent of the legislature that smart jobs money be spent in all areas of the state, the total amount a company can receive through a grant or a combination of grants is capped at $1,000,000 or at a rate not greater than $1,500 per new or existing job, the standard of new wages is changed from "greater than 66 2/3 percent of the state average weekly wage" to "equal to or greater than the prevailing wage for that occupation in the local labor market", and the wages for existing jobs increase by the greater of (a) three percent for a small business or five percent for a business that is not a small business or (b) 100 percent of the prevailing wage for that occupation in the local labor market. AMENDMENT #2 Adds a definition of "micro-business," and allows a micro-business to request a modification of the wage requirements and the requirement concerning the number of trainees that may leave employment during training. The Texas Department of Commerce believes that the change will help micro-businesses access Smart Jobs money.