SRC-DBM H.B. 3657 76(R) BILL ANALYSIS
Senate Research Center H.B. 3657
By: Oliveira (Sibley)
Economic Development
5/10/1999
Engrossed
DIGEST
Currently, the smart jobs fund program provides grants to employers for
customized training. The program is administered by the Texas Department
of Economic Development (TDED) and is set to expire December 31, 1999.
H.B. 3657 reauthorizes the program until TDED's 2001 sunset date. The bill
also creates a rainy day fund to provide a financial cushion for the
program during economic slowdowns, directs new funding to the skills
development fund from the unemployment insurance trust fund, modifies the
wage requirement necessary to access the program, modifies the information
included in the annual report, and requires the performance of a biennial
evaluation of the program.
PURPOSE
As proposed, H.B. 3657 sets forth provisions for the continuation, funding,
and operation of certain workforce development programs.
RULEMAKING AUTHORITY
Rulemaking authority is granted to the governing board of the Texas
Department of Economic Development in SECTIONS 1.02 , 1.03 and 1.08
(Sections 481.152(d), 481.153, and 481.157(b), Government Code) and the
TexasWorkforce Commission in SECTION 1.04 (Section 481.154(f), Government
Code) of this bill.
SECTION BY SECTION ANALYSIS
ARTICLE 1. SMART JOBS FUND PROGRAM
SECTION 1.01. Amends Section 481.151, Government Code, to define "county
average weekly wage," "group health benefit plan," "high impact development
project," "large business," "medium business," and "minimally qualified
job;"to redefine "employee," "micro-business," and "small business;" and to
delete the definitions of "business development," "demand occupation,"
"emerging occupation," "family wage job," "manufacturing occupation,"
"state average weekly wage," and "targeted industry."
SECTION 1.02. Amends Section 481.152, Government Code, as follows:
Sec. 481.152. New heading: SMART JOBS FUND PROGRAM; PURPOSE;
ADMINISTRATION. Provides that the smart jobs fund program (program) is
created in the Texas Department of Economic Development (department) as a
work force development incentive program to enhance employment
opportunities for residents of this state and to increase the job skills of
the existing work force by providing job training assistance to businesses
operating in, or locating to, this state, rather than meet the needs of
existing and new industries in this state. Requires the program to award
grants for the creation and retention of jobs that pay more than the county
average weekly wage and are covered by a group health benefit plan for
which the business pays at least 80 percent of the premiums or other
charges assessed for employee-only coverage under the plan. Requires the
program to specifically give priority to high impact development project
and job training designed to improve the skills of the existing work force
in this state. Requires the governing board of the Texas Department of
Economic Development (governing board) to develop and adopt, by rule, a
scoring system that evaluates the economic impact of grant applications and
reflects the criteria set forth in this subchapter. Requires the executive
director of the Texas Department of Economic Development (executive
director) and the governing board to use the scoring system and a
competitive process to award grants. Sets forth the intent of the
legislature. Requires at least 70 percent of the money, rather than 60
percent, spent under the program to be used for projects that assist
existing employers located in this state by training or retraining
employees. Requires the balance of the money spent under the program to be
used for high impact development projects. Requires the governing board to
determine appropriate means to accomplish the goals of the program.
Authorizes the governing board, as necessary to implement those goals, to
work in conjunction with the Texas Workforce Commission and the comptroller
of public accounts (comptroller). Requires the department, in implementing
provisions under this subchapter regarding the classification of this state
into regions, to use the information service regions established by the
comptroller under Section 120, Article V, Chapter 19, Acts of the 72nd
Legislature, 1st Called Session, 1991 (the General Appropriations Act).
Deletes text requiring the program to give priority to the creation and
retention of family wage jobs and on employers in industries that promote
high skill, high wage jobs in high technology areas and on demand
occupations that provide those jobs.
SECTION 1.03. Amends Section 481.153, Government Code, to require the
governing board, rather than the policy board, to adopt rules as necessary
to implement the program.
SECTION 1.04. Amends Section 481.154, Government Code, as follows:
Sec. 481.154. New heading: FUNDING; RAINY DAY FUND. Sets forth the
composition of the fund, including any amounts appropriated by the
legislature for the program from the general revenue fund. Prohibits
certain department costs from exceeding the lesser of five percent of the
total amount appropriated for the program for that fiscal year, or $1.5
million in any fiscal year. Provides that the smart jobs rainy day fund is
established as a special trust fund in the custody of the comptroller
separate and apart from all public money or funds of this state. Sets
forth the composition of the smart jobs rainy day fund. Authorizes the
governing board to authorize the executive director to use money in the
smart jobs rainy day fund under certain conditions. Requires the Texas
Workforce Commission (commission), by rule, to define "severe economic
dislocation," for purposes of Subsection (e). Sets forth the information
to be considered by the commission in adopting a definition. Authorizes
the executive director to use the money allocated in the affected region,
if the governing board approves the use of money from the smart jobs rainy
day fund because of a severe economic dislocation occurring in a specific
region of the state. Prohibits, notwithstanding any other provision of
this section, the total combined amount spent in any fiscal year from the
smart jobs fund and the smart jobs rainy day fund from exceeding the amount
appropriated by the legislature for that fiscal year for the operation of
the smart jobs fund program. Requires the executive director to
immediately transfer an excess from the applicable fund to the Unemployment
Compensation Fund, if during any three consecutive months, the balance in
the smart jobs fund or the smart jobs rainy day fund exceeds a certain
amount.
SECTION 1.05. Amends Section 481.155, Government Code, to authorize the
executive director and the governing board to award grants for projects
that meet the requirements of this chapter. Requires the governing board to
make the final award decision for a grant application regarding a high
impact development project or requesting an award of at least $250.000.
Prohibits a grant from being awarded unless each employer participating in
the project certifies that each job under the project is covered by a group
health benefit plan for which the business pays at least 80 percent of the
premiums or other charges assessed for employee-only coverage under the
plan. Prohibits a grant from being awarded for a certain project unless
each employer participating in the project certifies that the starting wage
for a new job created through the project will be equal to or greater than
the county average weekly wage for the county in which the job or project
is located, rather than for that occupation in the local labor market area,
and that the wage for a job existing on a certain date will be increased to
the greater of: three percent for a micro-business or small business or
five percent for a business that is not a micro-business or small business
over a certain wage before a certain date; or 100 percent of the county
average weekly wage for the county in which the job or project is located.
Authorizes an employer to request a modification of the requirements
provided by Subsection (e), rather than Subsection (d), and Section
481.159(c), if reasonable factors exist for the modification. Deletes text
requiring money from the smart jobs fund to be spent in all areas of the
state. Deletes text authorizing the executive director to award certain
grants at certain times in certain amounts under certain conditions.
Deletes text requiring the executive director to make a certain ensurance.
Deletes text regarding the program being job driven. Deletes existing
subsections (d) (1) and (2), (i), and (j).
SECTION 1.06. Amends Section 481.156, Government Code, as follows:
Sec. 481.156. New heading: GRANT APPLICATION; AWARDING OF GRANTS.
Authorizes an employer to apply for a grant under this subchapter.
Requires the executive director to establish multiple application review
and grant award tracks as provided by this subsection. Sets forth the
entities to which the department is authorized to award grants, including
one or more employers to secure training. Requires applications submitted
by medium and large businesses to include a complete business and training
plan. Requires the executive director to establish a quarterly competitive
application process for certain grant applications. Requires the governing
body to ensure that the complexity of the application process appropriately
corresponds to the size of the business and the amount of funds awarded
under the grant. Requires the executive director to establish a simplified
application process for grant applications from small businesses and
micro-businesses and to ensure that the application process for small
businesses and micro-businesses is an open and ongoing process. Authorizes
the department to provide assistance with the application process to all
applicants and to give priority to assisting applicants who are small
business or microbusinesses. Requires the department to minimize the
length of the application form and to simplify as much as possible the
review process for grant applications. Requires the department to notify
each applicant as to whether the application is complete within a certain
time period. Requires the executive director to act on a completed
application requesting an award of less than $250,000 not later than the
30th day after the date on which the department notifies the applicant that
the application is complete. Makes conforming changes.
SECTION 1.07. Amends Chapter 481J, Government Code, by adding Section
481.1565, as follows:
Sec. 481.1565. CONFIDENTIALITY REQUIREMENTS. Provides that information
provided by an applicant in a grant application is confidential information
for purposes of Chapter 552 only as provided by this section. Provides
that information provided by an applicant whose application is denied is
confidential information for purposes of Chapter 552. Provides that
information provided by an applicant whose application is granted and who
accepts an award is confidential information for purposes of Chapter 552
only if the information would otherwise be confidential under the terms of
that chapter. Requires the department to make a good faith effort to
notify an applicant whose application is granted and who accepts an award
of each request for information regarding the applicant that is determined
by the department to be a request for information that is not confidential
under this subsection and that the department will release to the person
requesting the information.
SECTION 1.08. Amends Section 481.157(b), Government Code, authorizes the
governing board, rather than the policy board, to adopt rules modifying the
requirement of Subsection (a) for employers that are small business or
micro-businesses, rather than for employers with fewer than 50 employees.
SECTION 1.09. Amends Section 481.159, Government Code, by amending
Subsections (a) and (c), and adding Subsection (d) to authorize the
executive director or governing board, as applicable, to approve any
project that meets the requirements of this subchapter. Requires the
department to enter into a contract with a grant applicant and with each
employer participating in the project, if a project is approved and funds
are available. Requires the amount of allowable expenditures withheld to
be remitted to the employer, if a certain percent of project trainees,
other than trainees who leave the employment voluntarily for better-paying
jobs. Requires each contract to state the term of the grant award.
Requires a grant recipient who does not use all money awarded under the
grant for the prescribed purpose within the allotted term to reimburse the
program by taking certain action within a certain time period. Requires
the executive director to remit money received under this subsection to the
comptroller for deposit in the smart jobs rainy day fund.
SECTION 1.10. Amends Section 481.160, Government Code, by amending
Subsection (b), and adding Subsection (c), as follows:
Sets forth certain information to be included in the annual report.
Requires the department, in addition to the information required under
Subsection (b), to include in the annual report, for each region of the
state in which a grant is awarded, the percentage paid by employers in that
region of the total amount of unemployment insurance contributions paid by
employers during the preceding calendar year. Deletes existing subsection
(b) (5), (6), (12), and (13). Makes conforming changes.
SECTION 1.11. Amends Chapter 481J, Government Code, by adding Section
481.1605, as follows:
Sec. 481.1605. PERFORMANCE EVALUATION. Requires the governing board to
provide for the implementation of a biennial performance evaluation of the
smart jobs program. Sets forth the information to be included in the smart
jobs program evaluation. Authorizes the governing board to contract with
the comptroller or another state agency to perform the evaluation and to
submit requests for proposals to contract with a private vendor for
performance of the evaluation. Authorizes the governing board to enter
into contracts, memoranda of understanding, or interagency agreements as
necessary to implement this section. Requires the person performing the
evaluation to also analyze the efficiency of the program and the use of
administrative funds by the program in performing the evaluation required
by this section. Requires the department, the Texas Workforce Commission,
and the State Occupational Information Coordinating Committee to cooperate
with the person who performs the evaluation in implementing this section.
Requires the governing board to pay the costs of the evaluation from money
authorized under Section 481.154(c). Prohibits any additional funds from
being spent on the performance evaluation.
SECTION 1.12. Amends Section 481.161, Government Code, to provide that
this chapter expires December 31, 2001, rather than December 31, 1999.
ARTICLE 2. SKILLS DEVELOPMENT FUND
SECTION 2.01. Amends Section 303.003(a), Labor Code, to set forth the
composition of the skills development fund.
ARTICLE 3. CONFORMING AMENDMENTS
SECTION 3.01. Amends Section 204.0065, Labor Code, to provide that this
section expires December 31, 2001, rather than December 31, 1999.
SECTION 3.02. Amends Section 204.0625, Labor Code, to provide that this
section expires December 31, 2001, rather than December 31, 1999.
SECTION 3.03. Amends Section 204.123, Labor Code, as follows:
Sec. 204.123. New heading: TRANSFER TO SMART JOBS FUNDS, SKILLS,
DEVELOPMENT FUND, AND COMPENSATION FUND. Requires the Texas Workforce
Commission (commission) if, on September 1 of a year, the commission
determines a certain compensation fund amount, to transfer from the holding
fund created under Section 204.122: 50 percent of the amount in the holding
fund to the smart jobs fund created under Section 481.154(a), rather than
481.154, Government Code; 30 percent of the amount in the holding fund to
the skills development fund created under Section 303.003; and 20 percent
of the amount in the holding fund to the smart jobs rainy day fund created
under Section 481.154(d), Government Code. Requires the commission to
transfer any remaining balance in the holding fund to the smart jobs fund,
the skills development fund, and the smart jobs rainy day fund in the
percentages prescribed by Subsection (a). Requires the commission,
notwithstanding Subsection (a), if, on September 1, 1999, the commission
determines that the amount in the compensation fund will exceed 100 percent
of its floor as computed under Section 204.061 on the next October 1
computation date, to transfer certain percentage amounts from the holding
fund created under Section 204.122. Provides that Subsection (c) and this
subsection expire October 2, 1999.
SECTION 3.04. Amends Section 204.124, Labor Code, to provide that this
subsection expires December 31, 2001, rather than December 31, 1999.
ARTICLE 4. TRANSITION; EFFECTIVE DATE; EMERGENCY
SECTION 4.01. Makes application of this Act prospective.
SECTION 4.02. Effective date: September 1, 1999.
SECTION 4.03.Emergency clause.