Office of House Bill AnalysisH.B. 3657
By: Oliveira
Economic Development


Currently, the smart jobs fund provides grants to employers for customized
training.  In fiscal year 1998, smart jobs grants totaled nearly $55
million to train workers for almost 43,000 existing jobs. Key factors in
establishing the grants are the companies' qualifications as established
businesses and first-time grantees offering major employee benefits and
technical skills training.  Under the program, the business provides a 10
percent match to grants in participant's wages, benefits, and facilities
during the training period.  H.B. 3657 establishes a rainy day fund to
address situations of severe economic dislocation within the state, and
provide a financial cushion to fund the program. This bill also calls for a
performance evaluation to assess the success of the program. 


It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Texas Workforce Commission in
SECTION 4 (Section 481.154, Government Code)of this bill, and the
rulemaking authority previously delegated to the policy board is
transferred to the governing board of the smart jobs fund program also in
SECTION 3 (Section 481.153, Government Code) of this bill 


SECTION 1  Amends Section 481.151, Government Code, to add definitions for
"county average weekly wage," "large business," and "medium business."
Redefines "existing employer," "microbusiness," and "small business," and
deletes definitions for "demand occupation," "emerging occupation,"
"family-wage job," "manufacturing occupation," and "state average weekly

SECTION 2.  Amends Section 481.152, Government Code, to provide that the
smart jobs program (program) is created to enhance employment opportunities
for residents of this state and to increase the competitiveness of the
existing workforce, rather than meet the needs of existing and new
industries, in this state.  Requires the program to give priority to the
creation and retention of jobs in targeted industries that pay  more than
the county average weekly wage and provide health care benefits, rather
than focus on employers in industries that promote high skill, high wage
jobs in technology areas and on demand occupations that provide those jobs.
Makes a conforming change.  

SECTION 3. Amends Section 481.153, Government Code, to substitutes
"governing" for "policy" as the name of the board required to adopt rules
to implement to program. 

SECTION 4.  Amends Section 481.154, Government Code, by amending the
heading and adding Subsections (d), (e), (f), (g), and (h), as follows: 

Sec. 481.154.  New title: FUNDING; RAINY DAY FUND.

(d) Provides that the smart jobs rainy day fund (RD-fund) is established as
a special trust in the custody of the comptroller separate from all public
money or funds of this state. Provides that the RD-fund is composed of
money transferred to the RD-fund as provided by Section 204.123 (Transfer
to Smart Jobs Fund and Compensation Fund), Labor Code, money returned by
employers or recouped by the program under Section 481.159(d) (Contracts),
and any other money received by the governing board for deposit in the
(e) Authorizes the governing board to authorize the executive director of
the program (director) to use money in the RD-fund if it determines, after
consulting with the comptroller, that the smart jobs fund is insufficient
to cover the legislature's appropriation to operate the program, and the
Texas Workforce Commission (commission) has determined that the
unemployment rate in this state is 125 percent of the average rate during
the previous three years, or a severe economic dislocation is occurring in
a specific region of this state. 

(f) Requires the commission by rule to define "severe economic
dislocation."  Requires the commission to consider employment-related
factors including the number of jobs lost in the region compared to the
region's usual employment rate, and massive layoffs in a region of this
state caused by the closure of military bases, the effect of the
implementation of the North American Free Trade Agreement, employer
relocation, or other analogous situations. 

(g) Authorizes the director to use the money allocated from the RD-fund
solely for projects located in the affected region, if the governing board
approves use of money from the RD-fund because of severe economic
dislocation in a specific region. 

(h) Prohibits the total combined amount spent in any fiscal year from
exceeding the amount appropriated by the legislature for the operation of
the program. 

(i)  Makes conforming and nonsubstantive changes.

SECTION 5.  Amends Section 481.155(a), (d), and (g), Government Code, to
require the director to award the grants through a competitive process and
develop and use a scoring system that evaluates grant applications.
Deletes conditions under which the director may award grants to a single
employer in excess of $1,500,000 or at greater than 10 percent of the
annual wages of new or existing jobs created or retained.  Prohibits a
grant from being awarded under this section unless each employer certifies
that the starting wage will be equal or greater than the county average
weekly wage for the county in which the job or project is located, rather
than the prevailing wage for that occupation in the local labor market
area.  Makes conforming and nonsubstantive changes. 

SECTION 6.  Amends Section 481.156(c) and (e), Government Code, to
authorize the Texas Department of Economic Development (department) to
provide technical assistance to applicants in formulating the required
business and training programs.  Requires the department to notify the
applicant as to whether the application is complete no later than the fifth
business day after the application is received by the department.  Makes
conforming changes. 

SECTION  7.  Amends Section 481.159, Government Code, by adding Subsection
(d), to provide that each contract must state the term of the grant award.
Requires a recipient who does not use all money awarded under the grant for
the prescribed purpose within the allotted time to reimburse the program by
submitting the appropriate amount to the executive director no later than
the 30th day after the expiration of term of the grant award.  Requires the
executive director to remit money received under this section to the
comptroller for deposit in the smart jobs rainy day fund. 

SECTION 8.  Amends Section 481.160(b), Government Code, to make conforming
and nonsubstantive changes. 

SECTION 9.  Amends Subchapter J, Chapter 481, Government Code, by adding
Section 481.1605, as follows: 

Sec. 481.1605.  PERFORMANCE EVALUATION. (a) Requires the governing board to
provide for the implementation of a biennial performance evaluation of the
program, which must include: 

(1) an analysis of the wage levels of trainees one and three years after
completion of the program; 
 (2) information related to the number of trainees employed in the same
occupation after one and three years; 
(3) a survey and analysis of program satisfaction from former grant
(4) a description of the impact of the program on the state generally and
on economically distressed areas in particular; and 
(5) any additional information determined by the governing board to be
necessary to analyze the impact and performance of the program. 

(b) Authorizes the governing board to contract with the comptroller or
another agency to perform the evaluation and submit requests for proposals
to contract with private vendors to perform the evaluation.  Authorizes the
governing board to enter into contracts, memoranda of understanding, or
interagency agreements to implement this section. 

(c) Requires the person performing the evaluation to analyze the efficiency
of the program and the use of administrative funds by the program in
performing the evaluation, 

(d) Requires the department, the commission, and the State Occupational
Information Coordinating Committee to cooperate with the person performing
the evaluation. 

(e) Requires the governing board to pay the costs of the evaluation from
money authorized under Section 481.154(c) (permitting smart job fund money
to be used for administrative purposes).  Authorizes no additional funds to
be spent on the performance evaluation. 

SECTION 10.  Amends Section 481.161, Government Code, to provide that this
subchapter (Business Development - Smart Jobs Fund Program) expires
December 31, 2001, rather than 1999. 

SECTION 11.  Amends Section 204.0065, Labor Code, to make a conforming

SECTION 12.  Amends Section 204.0625, Labor Code, to make a conforming

SECTION 13.  Amends Section 204.123, Labor Code, to require the commission
to transfer from the holding fund 80 percent of the amount in the holding
fund to the smart jobs fund, and 20 percent of the amount in the holding
fund to the RD-fund.  Makes conforming and nonsubstantive changes. 

SECTION 14. Amends Section 204.124, Labor Code, to make a conforming change.

SECTION 15.  Makes application of Section 481.155, Government Code, as
amended by this Act prospective, beginning January 1, 2000. 

SECTION 16.  Effective date: September 1, 1999.

SECTION 17.  Emergency clause.