1-1     By:  Oliveira (Senate Sponsor - Sibley)               H.B. No. 1528

 1-2           (In the Senate - Received from the House May 7, 1997;

 1-3     May 8, 1997, read first time and referred to Committee on Economic

 1-4     Development; May 18, 1997, reported adversely, with favorable

 1-5     Committee Substitute by the following vote:  Yeas 6, Nays 0;

 1-6     May 18, 1997, sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR H.B. No. 1528                  By:  Sibley

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to the smart jobs fund program.


1-12           SECTION 1.  Section 481.151, Government Code, is amended to

1-13     read as follows:

1-14           Sec. 481.151.  DEFINITIONS. In this subchapter:

1-15                 (1)  "Business development" includes relocation,

1-16     expansion, turnover, diversification, or technological change.

1-17                 (2)  "Demand occupation" means an occupation in which,

1-18     as a result of business development, there are or will be positive

1-19     growth-to-replacement ratios within the next 12 to 24 months,

1-20     according to the best available sources of state and local labor

1-21     market information.

1-22                 (3)  "Emerging occupation" means an occupation that

1-23     arises from forces related to technological changes in the

1-24     workplace and the work of which cannot be performed by workers

1-25     from other occupations without at least two months of customized

1-26     education or training.

1-27                 (4)  "Employee" means an individual who performs

1-28     services for another under a contract of hire, whether express or

1-29     implied, or oral or written.

1-30                 (5) [(4)]  "Employer" means a person that employs one

1-31     or more employees.

1-32                 (6) [(5)]  "Executive director" means the executive

1-33     director of the department.

1-34                 (7) [(6)]  "Existing employer" means an employer that:

1-35                       (A)  has been liable to pay contributions under

1-36     Subtitle A, Title 4, Labor Code ([the] Texas Unemployment

1-37     Compensation Act) [(Article 5221b-1 et seq., Vernon's Texas Civil

1-38     Statutes)] for more than one year;

1-39                       (B)  has employees; and

1-40                       (C)  is in compliance with the reporting and

1-41     payment requirements of that Act, as determined by the Texas

1-42     Workforce [Employment] Commission.

1-43                 (8) [(7)]  "Family wage job" means a job that offers:

1-44                       (A)  wages equal to or greater than the state

1-45     average weekly wage;

1-46                       (B)  benefits, such as vacation leave, sick

1-47     leave, and insurance coverage;

1-48                       (C)  reasonable opportunities for continued skill

1-49     development and career path advancement; and

1-50                       (D)  a substantial likelihood of long-term job

1-51     security.

1-52                 (9) [(8)]  "In-kind contribution" means a noncash

1-53     contribution of goods and services provided by an employer as all

1-54     or part of the employer's matching share of a grant or project.

1-55                 (10) [(9)]  "Job" means employment on a basis

1-56     customarily considered full-time for the applicable occupation and

1-57     industry.

1-58                 (11)  "Manufacturing occupation" means an occupation

1-59     that is involved in the mechanical or chemical transformation of

1-60     materials or substances into new products.

1-61                 (12)  "Micro-business" means an eligible business with

1-62     not more than 20 employees.

1-63                 (13) [(10)]  "Minority employer" means a business

1-64     entity at least 51 percent of which is owned by minority group

 2-1     members or, in the case of a corporation, at least 51 percent of

 2-2     the shares of which are owned by minority group members and that:

 2-3                       (A)  is managed and, in daily operations, is

 2-4     controlled by minority group members; and

 2-5                       (B)  is a domestic business entity with a home or

 2-6     branch office located in this state and is not a branch or

 2-7     subsidiary of a foreign corporation or other foreign business

 2-8     entity.

 2-9                 (14) [(11)]  "Minority group members" include:

2-10                       (A)  African-Americans;

2-11                       (B)  American Indians;

2-12                       (C)  Asian-Americans; [and]

2-13                       (D)  Mexican-Americans and other Americans of

2-14     Hispanic origin; and

2-15                       (E)  women.

2-16                 (15) [(12)]  "Program" means the smart jobs fund

2-17     program created under this subchapter.

2-18                 (16) [(13)]  "Project" means a specific employment

2-19     training project developed and implemented under this subchapter.

2-20                 (17) [(14)]  "Provider" means a person that provides

2-21     employment-related training.  The term includes employers, employer

2-22     associations, labor organizations, community-based organizations,

2-23     training consultants, public and private schools, technical

2-24     institutes, junior or community colleges, senior colleges,

2-25     universities, and proprietary schools, as defined by Section

2-26     132.001, Education Code.

2-27                 (18)  "Small business" has the meaning assigned that

2-28     term by Section 481.101.

2-29                 (19) [(15)]  "State average weekly wage" means the

2-30     annual average of the average weekly wage of manufacturing

2-31     production workers in this state as of September 1 of each year, as

2-32     determined by the Texas Workforce [Employment] Commission [under

2-33     Section 3(b), Texas Unemployment Compensation Act (Article 5221b-1,

2-34     Vernon's Texas Civil Statutes)], adjusted for regional variances.

2-35                 (20) [(16)]  "Targeted industry" means an industry that

2-36     promotes high-skill, high-wage jobs using Texas-available material

2-37     and human resources, as determined by the department.

2-38                 (21) [(17)]  "Trainee" means a participant in a project

2-39     funded under this subchapter.

2-40                 (22) [(18)]  "Wages" means all forms of compensation or

2-41     remuneration, excluding benefits, payable for a specific period to

2-42     an employee for personal services rendered by that employee.

2-43           SECTION 2.  Section 481.154, Government Code, is amended to

2-44     read as follows:

2-45           Sec. 481.154.  FUNDING.  (a)  The smart jobs fund is

2-46     established as a special trust fund in the custody of the state

2-47     treasurer separate and apart from all public money or funds of this

2-48     state.  The fund is composed of:

2-49                 (1)  money transferred into the fund under Section

2-50     204.123, Labor Code [9e, Texas Unemployment Compensation Act

2-51     (Article 5221b-1 et seq., Vernon's Texas Civil Statutes)];

2-52                 (2)  gifts, grants, and other donations received by the

2-53     department for the fund; and

2-54                 (3)  any amounts appropriated by the legislature for

2-55     the program.

2-56           (b)  The program is funded through the smart jobs fund.

2-57           (c)  Money in the smart jobs fund may be used for program

2-58     administration, marketing expenses, and evaluation of the program.

2-59     These costs of the department in any fiscal year may not exceed

2-60     five percent of the total amount appropriated for the program for

2-61     [funds deposited in the smart jobs fund in] that year.

2-62           (d)  If, during any three consecutive months, the balance in

2-63     the smart jobs fund exceeds 0.15 percent of the total taxable wages

2-64     for the four calendar quarters ending the preceding June 30, as

2-65     computed under Section 204.062(c), Labor Code [7(c)(8), Texas

2-66     Unemployment Compensation Act (Article 5221b-5, Vernon's Texas

2-67     Civil Statutes)], the executive director shall immediately transfer

2-68     the excess to the Unemployment Compensation Fund created under

2-69     Section 203.021, Labor Code [9(a), Texas Unemployment Compensation

 3-1     Act (Article 5221b-7, Vernon's Texas Civil Statutes)].

 3-2           SECTION 3.  Section 481.155, Government Code, is amended to

 3-3     read as follows:

 3-4           Sec. 481.155.  Grants.  (a)  The executive director may award

 3-5     grants for projects that meet the requirements of this chapter.  It

 3-6     is the intent of the legislature that, to the greatest extent

 3-7     practicable, money from the smart jobs fund shall be spent in all

 3-8     areas of the state.  The executive director may award a grant or a

 3-9     combination of grants in any fiscal year to a single employer in

3-10     excess of $1,500,000 or at a rate greater than 10 percent of the

3-11     annual wages of the new or existing job being created or retained

3-12     with the grant only if:

3-13                 (1)  the employer locates or expands in an enterprise

3-14     zone;

3-15                 (2)  the employer locates or expands in an adversely

3-16     affected defense-dependent community;

3-17                 (3)  the employer locates or expands in an area having

3-18     an unemployment rate 1-1/2 times greater than the statewide average

3-19     at the time of the application;

3-20                 (4)  the employer locates or expands in a county with a

3-21     population of less than 75,000;

3-22                 (5)  at least 25 percent of the employees hired or

3-23     retained by the employer are economically disadvantaged individuals

3-24     as defined by Section 2303.402(c), Government Code; or

3-25                 (6)  the employer is a small business or a

3-26     micro-business.

3-27           (b)  The executive director shall attempt to ensure that at

3-28     least 20 percent of the total dollar amount of grants awarded under

3-29     the program are awarded to minority employers.

3-30           (c) [(b)]  The program is job-driven.  A grant may not be

3-31     awarded unless each employer participating in the project certifies

3-32     that:

3-33                 (1)  a job or job opening exists or will exist at the

3-34     end of the project for which the grant is sought; and

3-35                 (2)  the job or job opening will be filled by a

3-36     participant in the project.

3-37           (d) [(c)]  A grant may not be awarded for a project under

3-38     this section unless each employer participating in the project

3-39     certifies that the starting wage for a new job created through the

3-40     project will be equal to or greater than the prevailing wage for

3-41     that occupation in the local labor market area [greater than 66 2/3

3-42     percent of the state average weekly wage] and that the wage for a

3-43     job existing on the date that the project is scheduled to begin

3-44     will be increased to the greater of:

3-45                 (1)  three [10] percent for a small business or five

3-46     percent for a business that is not a small business over the wage

3-47     in effect on the day before the date on which the project is

3-48     scheduled to begin for that job; or

3-49                 (2)  100 percent of the prevailing wage for that

3-50     occupation in the local labor market area [75 percent of the state

3-51     average weekly wage].

3-52           (e) [(d)]  An employer may apply for a grant under this

3-53     chapter, and an employer who is a micro-business may request a

3-54     modification of the requirements provided by Subsection (d) and

3-55     Section 481.159(c), if:

3-56                 (1)  the employer is required to reduce or eliminate

3-57     the employer's work force because of reductions in overall

3-58     employment within an industry;

3-59                 (2)  [or]  a substantial change in the skills required

3-60     to continue the employer's business exists because of technological

3-61     changes; or

3-62                 (3)  other reasonable factors, as determined by [.  In

3-63     awarding a grant under this subsection,] the executive director,

3-64     exist [may modify the requirements of Subsection (c)].

3-65           (f)  Grants awarded under this section [subsection] for which

3-66     the executive director has modified the requirements of Subsection

3-67     (d) [(c)] may not, in any fiscal year, exceed 10 percent of the

3-68     total dollar amount of grants awarded under the program in that

3-69     year.

 4-1           (g) [(e)]  Unless modified by the executive director under

 4-2     rules adopted by the policy board, a grant may not be awarded for a

 4-3     project unless each employer participating in the project certifies

 4-4     that it will continue to spend on nonmanagerial training an amount

 4-5     from private sources equal to the average amount spent by that

 4-6     employer on such training for the most recent two-year period.

 4-7           (h) [(f)]  A grant may not be awarded for a project if the

 4-8     project will impair existing contracts for services or collective

 4-9     bargaining agreements, except that a project inconsistent with the

4-10     terms of a collective bargaining agreement may be undertaken with

4-11     the written concurrence of the collective bargaining unit and the

4-12     employer or employers who are parties to the agreement.

4-13           (i) [(g)]  During each state fiscal year the executive

4-14     director shall attempt to ensure that at least 50 percent of the

4-15     total dollar amount of grants awarded under this section is awarded

4-16     to small businesses, as defined by Section 481.101.

4-17           (j) [(h)]  In awarding a grant under this section, the

4-18     executive director shall give priority to a project that is located

4-19     in an enterprise zone as defined by Section 2303.003.

4-20           SECTION 4.  Section 481.156(a), Government Code, is amended

4-21     to read as follows:

4-22           (a)  The following may apply for a grant under this

4-23     subchapter:

4-24                 (1)  one or more employers to secure training for

4-25     demand occupations, emerging occupations, or manufacturing

4-26     occupations [in a particular industry];

4-27                 (2)  one or more employers acting in partnership with

4-28     an employer organization, labor organization, or community-based

4-29     organization to secure training for demand occupations, emerging

4-30     occupations, or manufacturing occupations [in a particular

4-31     industry]; or

4-32                 (3)  one or more employers acting in partnership with a

4-33     consortium composed of [one or] more than one provider [providers]

4-34     to secure training for demand occupations, emerging occupations, or

4-35     manufacturing occupations [in a particular industry].

4-36           SECTION 5.  Sections (b) and (c) of 481.159, Government Code,

4-37     is amended to read as follows:

4-38           (b)  Reimbursable costs in the contract may include only

4-39     those expenses related to direct training in job-related basic

4-40     skills, including literacy skills, job-related vocational skills,

4-41     and administrative costs.  Total administrative costs for any

4-42     single employer [particular] project may not exceed 10 percent of

4-43     the project's expenditures.  Total administrative costs for a

4-44     consortium project may not exceed 15% of the project's

4-45     expenditures.

4-46           (c)  Each contract must provide a schedule for payment of

4-47     smart jobs fund money.  Twenty-five percent of allowable

4-48     expenditures [the grant award] shall be withheld by the department

4-49     for 90 days after  the date of completion of the contract

4-50     [project].  If at least 85 percent [all] of the trainees in the

4-51     project have been retained in  employment for that 90-day period

4-52     and have successfully achieved the skills and competencies, wage

4-53     requirements, and other contractual obligations, the amount of

4-54     allowable expenditures [the grant award] withheld shall be remitted

4-55     to the employer.  [For each trainee who is not retained in

4-56     employment for that 90-day period, the amount withheld shall be

4-57     reduced by the amount of the training costs for that trainee that

4-58     is derived from grant money, and any balance shall be remitted to

4-59     the employer.]  If there is a negative balance, the employer is

4-60     liable for the amount of the negative balance and shall remit that

4-61     amount to the department not later than the 30th day after the date

4-62     on which the employer is notified of the negative balance by the

4-63     department.

4-64           SECTION 6.  Section 481.160(b), Government Code, is amended

4-65     to read as follows:

4-66           (b)  The annual report must include for that fiscal year:

4-67                 (1)  the number of employers receiving grants under the

4-68     program;

4-69                 (2)  the total amount of grants awarded;

 5-1                 (3)  the value, expressed in dollars and as a

 5-2     percentage of total training expenditures, of matching

 5-3     contributions made by employers;

 5-4                 (4)  the number of small businesses, as defined by

 5-5     Section 481.101(3), that receive grants under the program and the

 5-6     total amount of the grants awarded to those businesses;

 5-7                 (5)  the number of businesses located in enterprise

 5-8     zones, as that term is defined by Chapter 2303, that receive grants

 5-9     under the program and the total amount of the grants awarded to

5-10     those businesses;

5-11                 (6)  the geographical distribution of employers

5-12     receiving grants under the program;

5-13                 (7)  the total number of jobs created, enhanced, or

5-14     retained under the program, reported by region of the state and by

5-15     occupation;

5-16                 (8)  the wage levels of trainees entering or returning

5-17     to the work force, broken down by current employees undergoing

5-18     retraining and new hires, at three months and[,] one year[, and

5-19     three years] after the conclusion of their training;

5-20                 (9)  the number and percentage of participating

5-21     employers that provide workers' compensation insurance coverage and

5-22     the number and percentage of employees covered;

5-23                 (10)  the number and percentage of participating

5-24     employers that offer health care insurance coverage and the number

5-25     and percentage of employees covered;

5-26                 (11)  the number and percentage of women employers and

5-27     minority employers receiving grants under the program and the total

5-28     amount of the grants awarded, broken out by group;

5-29                 (12)  the number and percentage of women, minority

5-30     group members, and disabled individuals participating as trainees

5-31     in training projects, broken out by group; and

5-32                 (13)  the number and percentage of women private

5-33     providers and private providers who are minority group members

5-34     utilized by employers in training projects, broken out by group.

5-35           SECTION 7.  This Act takes effect September 1, 1997.

5-36           SECTION 8.  The importance of this legislation and the

5-37     crowded condition of the calendars in both houses create an

5-38     emergency and an imperative public necessity that the

5-39     constitutional rule requiring bills to be read on three several

5-40     days in each house be suspended, and this rule is hereby suspended.

5-41                                  * * * * *