By Sibley                                              S.B. No. 321
         77R1030 JMG-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the continuation and functions of the Texas Department
 1-3     of Economic Development and the operation, funding, and
 1-4     administration of the smart jobs fund program.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6         ARTICLE 1.  CONTINUATION AND FUNCTIONS OF TEXAS DEPARTMENT
 1-7                           OF ECONOMIC DEVELOPMENT
 1-8           SECTION 1.01. Section 481.001, Government Code, is amended by
 1-9     adding Subdivision (5) to read as follows:
1-10                 (5)  "Council" means the Texas Tourism Coordinating
1-11     Council.
1-12           SECTION 1.02. Section 481.003, Government Code, is amended to
1-13     read as follows:
1-14           Sec. 481.003.  SUNSET PROVISION. The Texas Department of
1-15     Economic Development is subject to Chapter 325 (Texas Sunset Act).
1-16     Unless continued in existence as provided by that chapter, the
1-17     department is abolished and this chapter expires September 1, 2003
1-18     [2001].
1-19           SECTION 1.03.  Subchapter A, Chapter 481, Government Code, is
1-20     amended by adding Section 481.0031 to read as follows:
1-21           Sec. 481.0031.  OVERSITE OF DEPARTMENT.  (a)  The following
1-22     criteria shall be used to determine if the department has
1-23     successfully implemented the proper management and oversight
1-24     controls of the state's economic development efforts:
 2-1                 (1)  effective development and implementation of a
 2-2     strategic plan that:
 2-3                       (A)  ensures a clear focus and direction for the
 2-4     department, including a proper needs assessment that incorporates
 2-5     information from local economic development entities;
 2-6                       (B)  focuses activities based on the policy
 2-7     directives of the governing board;
 2-8                       (C)  details the methodology of how the
 2-9     department plans to implement the strategies in the strategic plan;
2-10     and
2-11                       (D)  explains how individual division actions
2-12     contribute to the department's desired results;
2-13                 (2)  establishment of subcommittees relating to the key
2-14     administrative and programmatic functions of the department to
2-15     allow governing board members to develop the expertise necessary to
2-16     make informed decisions about and ensure accountability to the
2-17     department and its programs;
2-18                 (3)  establishment of effective, department-wide
2-19     contracting standards and methodologies;
2-20                 (4)  effective development and implementation of
2-21     consistent, department-wide policies, procedures, and controls over
2-22     daily operations, including budgeting, contracting, and travel;
2-23                 (5)  effective development and implementation of a
2-24     centralized information and accounting system that will provide
2-25     single management reports for key areas so that management can
2-26     determine a true financial position of the department; and
2-27                 (6)  effective use of the department's internal audit
 3-1     function that ensures management responses to internal audit
 3-2     reports are actually implemented.
 3-3           (b)  The department shall report to the Sunset Advisory
 3-4     Commission by September 1, 2002, on the status of the criteria set
 3-5     out in Subsection (a) as part of the reevaluation of the
 3-6     department.
 3-7           (c)  This section expires September 1, 2003.
 3-8           SECTION 1.04.  Section 481.004, Government Code, is amended
 3-9     to read as follows:
3-10           Sec. 481.004.  GOVERNING BOARD.  (a)  The governing board is
3-11     composed of nine public members appointed by the governor with the
3-12     advice and consent of the senate, which members shall be appointed
3-13     to give geographical representation on the governing board to all
3-14     regions of the state.
3-15           (b)  Members of the governing board serve for six-year terms
3-16     with the terms of three members expiring February 1 of each
3-17     odd-numbered year.
3-18           (c)  Appointments to the governing board shall be made
3-19     without regard to the race, color, handicap, sex, religion, age, or
3-20     national origin of the appointees.
3-21           (d)  In making appointments under this section, the governor
3-22     shall attempt to include members of different minority groups
3-23     including females, African Americans, Hispanic Americans, Native
3-24     Americans, Asian Americans, and persons who are disabled.
3-25           [(e)  At least one member of the governing board must be a
3-26     resident of a county with a population of less than 30,000, at
3-27     least one other member must have experience in international trade,
 4-1     at least one other member must have experience in tourism, and at
 4-2     least one other member must be an economic development
 4-3     practitioner.]
 4-4           SECTION 1.05. Section 481.0041(c), Government Code, is
 4-5     amended to read as follows:
 4-6           (c)  If the executive director has knowledge that a potential
 4-7     ground for removal exists, the executive director shall notify the
 4-8     presiding officer of the governing board of the ground.  The
 4-9     presiding officer shall then notify the governor that a potential
4-10     ground for removal exists.  If the potential ground for removal
4-11     involves the presiding officer, the executive director shall notify
4-12     the next highest ranking officer of the governing board, who shall
4-13     then notify the governor and the attorney general that a potential
4-14     ground for removal exists.
4-15           SECTION 1.06. Section 481.0044, Government Code, is amended
4-16     by adding Subsection (e) to read as follows:
4-17           (e)  The governing board shall develop and implement policies
4-18     that clearly separate the policymaking responsibilities of the
4-19     governing board and the management responsibilities of the
4-20     executive director and staff of the department.
4-21           SECTION 1.07. Subchapter A, Chapter 481, Government Code, is
4-22     amended by adding Section 481.0045 to read as follows:
4-23           Sec. 481.0045.  TRAINING. (a)  A person who is appointed to
4-24     and qualifies for office as a member of the governing board may not
4-25     vote, deliberate, or be counted as a member in attendance at a
4-26     meeting of the governing board until the person completes a
4-27     training program that complies with this section.
 5-1           (b)  The training program must provide the person with
 5-2     information regarding:
 5-3                 (1)  the legislation that created the department and
 5-4     the governing board;
 5-5                 (2)  the programs operated by the department;
 5-6                 (3)  the role and functions of the department;
 5-7                 (4)  the rules of the department with an emphasis on
 5-8     the rules that relate to disciplinary and investigatory authority;
 5-9                 (5)  the current budget for the department;
5-10                 (6)  the results of the most recent formal audit of the
5-11     department;
5-12                 (7)  the requirements of:
5-13                       (A)  the open meetings law, Chapter 551;
5-14                       (B)  the public information law, Chapter 552;
5-15                       (C)  the administrative procedure law, Chapter
5-16     2001; and
5-17                       (D)  other laws relating to public officials,
5-18     including conflict-of-interest laws; and
5-19                 (8)  any applicable ethics policies adopted by the
5-20     department or the Texas Ethics Commission.
5-21           (c)  A person appointed to the governing board is entitled to
5-22     reimbursement, as provided by the General Appropriations Act, for
5-23     the travel expenses incurred in attending the training program
5-24     regardless of whether the attendance at the program occurs before
5-25     or after the person qualifies for office.
5-26           SECTION 1.08. Section 481.0066, Government Code, is amended
5-27     by adding Subsection (i) to read as follows:
 6-1           (i)  In carrying out its duties, the commission may not
 6-2     deliberate the purchase, exchange, lease, or value of real
 6-3     property, deliberate the appointment, employment, evaluation,
 6-4     reassignment, duties, discipline, or dismissal of an officer or
 6-5     employee of the department, or hear a complaint or charge against
 6-6     an officer or employee of the department.
 6-7           SECTION 1.09. Section 481.007, Government Code, is amended to
 6-8     read as follows:
 6-9           Sec. 481.007.  ADVISORY COMMITTEES. (a)  The executive
6-10     director or the governing board may appoint advisory committees to
6-11     assist the executive director or the governing board in the
6-12     performance of their duties.  A member of an advisory committee
6-13     appointed by the executive director or the governing board may not
6-14     receive compensation for service on the advisory committee.  A
6-15     member appointed under this section is entitled to receive
6-16     reimbursement, subject to any applicable limitation on
6-17     reimbursement provided by the General Appropriations Act, for
6-18     actual and necessary expenses included in performing service as a
6-19     member of the advisory committee.
6-20           (b)  An advisory committee:
6-21                 (1)  must provide independent, external expertise on
6-22     department functions;
6-23                 (2)  may not be involved in setting department policy
6-24     or managing the department's actual operations; and
6-25                 (3)  may not include a board member as a member of the
6-26     advisory committee.
6-27           SECTION 1.10. Section 481.010, Government Code, is amended by
 7-1     adding Subsection (i) to read as follows:
 7-2           (i)  The executive director or the executive director's
 7-3     designee shall provide to department employees information and
 7-4     training on the benefits and methods of participation in the state
 7-5     employee incentive program.
 7-6           SECTION 1.11. Section 481.012, Government Code, is amended by
 7-7     amending Subsection (b), adding a new Subsection (c), and
 7-8     redesignating current Subsections (c) and (d) as Subsections (d)
 7-9     and (e), respectively, to read as follows:
7-10           (b)  The department shall keep an information file about each
7-11     complaint filed with the department that the department has
7-12     authority to resolve.  If a written complaint is filed with the
7-13     department that the department has authority to resolve, the
7-14     department, at least quarterly and until final disposition of the
7-15     complaint, shall notify the parties to the complaint of the status
7-16     of the complaint unless the notice would jeopardize an undercover
7-17     investigation.  The file must include:
7-18                 (1)  the name of the person who filed the complaint;
7-19                 (2)  the date the complaint is received by the
7-20     department;
7-21                 (3)  the subject matter of the complaint;
7-22                 (4)  the name of each person contacted in relation to
7-23     the complaint;
7-24                 (5)  a summary of the results of the review or
7-25     investigation of the complaint; and
7-26                 (6)  an explanation of the reason the file was closed,
7-27     if the department closed the file without taking action other than
 8-1     to investigate the complaint.
 8-2           (c)  The department shall provide to the person filing the
 8-3     complaint and to each person who is a subject of the complaint a
 8-4     copy of the department's policies and procedures relating to
 8-5     complaint investigation and resolution.
 8-6           (d) [(c)]  The governing board shall prepare and maintain a
 8-7     written plan that describes how a person who does not speak English
 8-8     can be provided reasonable access to the department's programs. The
 8-9     governing board shall also comply with federal and state laws for
8-10     program and facility accessibility.
8-11           (e) [(d)]  The governing board by rule shall establish
8-12     methods by which consumers and service recipients are notified of
8-13     the name, mailing address, and telephone number of the department
8-14     for the purpose of directing complaints to the department.
8-15           SECTION 1.12. Section 481.021(c), Government Code, is amended
8-16     to read as follows:
8-17           (c)  The department shall deposit contributions from private
8-18     sources in a separate fund kept and held in escrow and in trust by
8-19     the comptroller for and on behalf of the department as funds held
8-20     outside the treasury under Section 404.073, and the money
8-21     contributed shall be used to carry out the purposes of the
8-22     department and, to the extent possible, the purposes specified by
8-23     the donors.  The comptroller may invest and reinvest the money,
8-24     pending its use, in the fund in investments authorized by law for
8-25     state funds that the comptroller considers appropriate. The
8-26     department shall adopt rules that:
8-27                 (1)  require the department to account for all general
 9-1     revenue money contributed to projects supported by money held
 9-2     outside the treasury and provide that the department shall be fully
 9-3     reimbursed for those contributions as money becomes available; and
 9-4                 (2)  require the department to account for all staff
 9-5     time spent on fund-raising activities associated with private
 9-6     donations.
 9-7           SECTION 1.13. Subchapter L, Chapter 481, Government Code, is
 9-8     amended by adding Sections 481.175, 481.176, and 481.177 to read as
 9-9     follows:
9-10           Sec. 481.175.  TEXAS TOURISM COORDINATING COUNCIL. (a)  The
9-11     Texas Tourism Coordinating Council consists of one representative
9-12     from each of the following:
9-13                 (1)  the department;
9-14                 (2)  the Texas Department of Transportation;
9-15                 (3)  the Parks and Wildlife Department;
9-16                 (4)  the Texas Commission on the Arts;
9-17                 (5)  the Texas Historical Commission;
9-18                 (6)  the General Land Office;
9-19                 (7)  the Texas Department of Public Safety;
9-20                 (8)  the Department of Agriculture;
9-21                 (9)  Texas A&M University;
9-22                 (10)  the Music, Film, Television, and Multimedia
9-23     Office; and
9-24                 (11)  the State Preservation Board.
9-25           (b)  The council shall designate a presiding officer from
9-26     among its members.
9-27           (c)  The council shall receive administrative support from
 10-1    the entities the members represent.
 10-2          (d)  The council members shall develop, maintain, and enter
 10-3    into a memorandum of understanding for the administration of this
 10-4    subchapter.
 10-5          Sec. 481.176.  MEETINGS. (a)  The council shall meet as often
 10-6    as necessary to perform its duties.
 10-7          (b)  Eight members of the council, including the presiding
 10-8    officer, constitute a quorum.  If a quorum is present, the council
 10-9    may act on any matter that is within its jurisdiction by a majority
10-10    vote.
10-11          (c)  The council shall keep complete minutes of each meeting.
10-12          Sec. 481.177.  POWERS AND DUTIES. The council shall:
10-13                (1)  analyze tourism functions of various state
10-14    agencies;
10-15                (2)  identify and address tourism coordination
10-16    problems;
10-17                (3)  ensure that council members comply with the
10-18    required memorandum of understanding;
10-19                (4)  implement a coordinated marketing plan;
10-20                (5)  work with the department's Tourism Advisory
10-21    Committee, as necessary, to ensure comment and recommendations from
10-22    the other state agencies responsible for specific tourism areas
10-23    such as recreational, nature, heritage, and cultural tourism; and
10-24                (6)  report to the legislature biennially on all
10-25    agencies' progress and actions taken to coordinate tourism efforts
10-26    in this state, including the state resources dedicated to and the
10-27    outcomes of recreational, cultural, historical, nature, and other
 11-1    types of tourism.
 11-2          SECTION 1.14. (a)  The Texas Economic Development Corporation
 11-3    is abolished.  Section 481.024, Government Code, is repealed.
 11-4          (b)  The Texas Department of Economic Development shall adopt
 11-5    the rules required by Section 481.021(c), Government Code, as
 11-6    amended by this Act, on or before December 1, 2001.
 11-7           ARTICLE 2.  FUNDING AND ADMINISTRATION OF SMART JOBS
 11-8                               FUND PROGRAM
 11-9          SECTION 2.01. Subtitle B, Title 4, Labor Code, is amended by
11-10    adding Chapter 310 to read as follows:
11-11                   CHAPTER 310.  SMART JOBS FUND PROGRAM
11-12          Sec. 310.001.  DEFINITIONS. In this chapter:
11-13                (1)  "Commission" means the Texas Workforce Commission.
11-14                (2)  "County average weekly wage" means the average
11-15    weekly wage paid by all employers in a county that are covered by
11-16    unemployment compensation insurance, as determined by the
11-17    commission for the most recent period for which data is available.
11-18                (3)  "Division" means the division of workforce
11-19    development at the commission.
11-20                (4)  "Employee" means an individual who performs
11-21    services for another under a contract of hire, whether express or
11-22    implied, or oral or written.
11-23                (5)  "Employer" means a person that employs one or more
11-24    employees.
11-25                (6)  "Executive director" means the executive director
11-26    of the commission.
11-27                (7)  "Existing employer" means an employer that:
 12-1                      (A)  has been liable to pay contributions under
 12-2    Subtitle A for more than one year;
 12-3                      (B)  has employees; and
 12-4                      (C)  is in compliance with the reporting and
 12-5    payment requirements of Subtitle A, as determined by the
 12-6    commission.
 12-7                (8)  "Group health benefit plan" means:
 12-8                      (A)  a health plan provided by a health
 12-9    maintenance organization established under the Texas Health
12-10    Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance
12-11    Code);
12-12                      (B)  a health benefit plan approved by the
12-13    commissioner of insurance; or
12-14                      (C)  a self-funded or self-insured employee
12-15    welfare benefit plan that provides health benefits and is
12-16    established in accordance with the Employee Retirement Income
12-17    Security Act of 1974 (29 U.S.C. Section 1001 et seq.), as amended.
12-18                (9)  "In-kind contribution" means a noncash
12-19    contribution of goods and services provided by an employer as all
12-20    or part of the employer's matching share of a grant or project.
12-21                (10)  "Job" means employment on a basis customarily
12-22    considered full-time for the applicable occupation and industry.
12-23                (11)  "Large business" means a business entity that
12-24    employs at least 500 employees.
12-25                (12)  "Medium business" means a business entity that
12-26    employs more than 99 but fewer than 500 employees.
12-27                (13)  "Micro-business" means a business entity that
 13-1    employs not more than 20 employees.
 13-2                (14)  "Minority employer" means a business entity at
 13-3    least 51 percent of which is owned by minority group members or, in
 13-4    the case of a corporation, at least 51 percent of the shares of
 13-5    which are owned by minority group members and that:
 13-6                      (A)  is managed and, in daily operations, is
 13-7    controlled by minority group members; and
 13-8                      (B)  is a domestic business entity with a home or
 13-9    branch office located in this state and is not a branch or
13-10    subsidiary of a foreign corporation or other foreign business
13-11    entity.
13-12                (15)  "Minority group members" include:
13-13                      (A)  African Americans;
13-14                      (B)  American Indians;
13-15                      (C)  Asian Americans;
13-16                      (D)  Mexican Americans and other Americans of
13-17    Hispanic origin; and
13-18                      (E)  women.
13-19                (16)  "Program" means the smart jobs fund program
13-20    created under this chapter.
13-21                (17)  "Project" means a specific employment training
13-22    project developed and implemented under this chapter.
13-23                (18)  "Provider" means a person that provides
13-24    employment-related training.  The term includes employers, employer
13-25    associations, labor organizations, community-based organizations,
13-26    training consultants, public and private schools, technical
13-27    institutes, junior or community colleges, senior colleges,
 14-1    universities, and proprietary schools, as defined by Section
 14-2    132.001, Education Code.
 14-3                (19)  "Qualified job" means a job for which an
 14-4    application has been submitted and that:
 14-5                      (A)  pays at least 100 percent of the county
 14-6    average weekly wage; and
 14-7                      (B)  is covered by a group health benefit plan
 14-8    for which the business offers to pay at least 50 percent of the
 14-9    premiums or other charges assessed for employee-only coverage under
14-10    the plan, regardless of whether an employee may voluntarily waive
14-11    the coverage.
14-12                (20)  "Small business" means a business entity that
14-13    employs more than 20 but fewer than 100 employees.
14-14                (21)  "Trainee" means a participant in a project funded
14-15    under this chapter.
14-16                (22)  "Wages" means all forms of compensation or
14-17    remuneration, excluding benefits, payable for a specific period to
14-18    an employee for personal services rendered by that employee.
14-19          Sec. 310.002.  SMART JOBS FUND PROGRAM; PURPOSE;
14-20    ADMINISTRATION. (a)  The smart jobs fund program is created in the
14-21    division as a workforce development incentive program to enhance
14-22    employment opportunities for residents of this state and to
14-23    increase the job skills of the existing workforce by providing job
14-24    training assistance to businesses operating in, or relocating to,
14-25    this state.
14-26          (b)  The program shall award grants for the creation and
14-27    retention of qualified jobs.  At least 60 percent of the money
 15-1    spent under the program shall be used for projects that assist
 15-2    existing employers.  At least 20 percent shall be used for
 15-3    employers that relocate operations to this state.
 15-4          (c)  The commission by rule shall develop and adopt a scoring
 15-5    system that evaluates the economic impact of grant applications and
 15-6    reflects the criteria set forth in this chapter.  The executive
 15-7    director shall use the scoring system and a competitive process to
 15-8    award grants.  It is the intent of the legislature that, to the
 15-9    greatest extent practicable:
15-10                (1)  money from the smart jobs fund be spent:
15-11                      (A)  in all areas of this state; and
15-12                      (B)  in approximate proportion to each region's
15-13    share of the state's population, civilian labor force, unemployed,
15-14    and submission of grant applications for qualified jobs; and
15-15                (2)  grants shall be awarded to micro-businesses, small
15-16    businesses, medium businesses, large businesses, and minority
15-17    employers in a manner proportionate to the number of persons
15-18    employed by those categories of businesses.
15-19          (d)  The commission shall determine appropriate means to
15-20    accomplish the goals of the program.  As necessary to implement
15-21    those goals, the commission may work in conjunction with the
15-22    comptroller.
15-23          (e)  The division shall administer the program.
15-24          (f)  The executive director may employ personnel as necessary
15-25    to administer the program.
15-26          (g)  In implementing provisions under this chapter regarding
15-27    the classification of this state into regions, the division shall
 16-1    use the uniform service regions established by the comptroller
 16-2    under Section 120, Article V, Chapter 19, Acts of the 72nd
 16-3    Legislature, 1st Called Session, 1991 (the General Appropriations
 16-4    Act).
 16-5          Sec. 310.003.  RULES. The commission shall adopt rules as
 16-6    necessary to implement the program.
 16-7          Sec. 310.004.  FUNDING; RAINY DAY FUND. (a)  The smart jobs
 16-8    fund is established as a special trust fund in the custody of the
 16-9    comptroller separate and apart from all public money or funds of
16-10    this state.  The fund is composed of:
16-11                (1)  money transferred into the fund under Section
16-12    204.123;
16-13                (2)  gifts, grants, and other donations received by the
16-14    division for the fund; and
16-15                (3)  any amounts appropriated by the legislature for
16-16    the program from the general revenue fund.
16-17          (b)  The program is funded through the smart jobs fund.
16-18          (c)  Money in the smart jobs fund may be used for program
16-19    administration, marketing expenses, and evaluation of the program.
16-20    These costs of the division in any fiscal year may not exceed the
16-21    lesser of:
16-22                (1)  five percent of the total amount appropriated for
16-23    the program for that fiscal year; or
16-24                (2)  $1.5 million.
16-25          (d)  The smart jobs rainy day fund is established as a
16-26    special trust fund in the custody of the comptroller separate and
16-27    apart from all public money or funds of this state.  The smart jobs
 17-1    rainy day fund is composed of:
 17-2                (1)  money transferred to that fund as provided by
 17-3    Section 204.123;
 17-4                (2)  money returned by employers or recouped by the
 17-5    program under Section 310.011(d); and
 17-6                (3)  any other money received by the division for
 17-7    deposit in that fund.
 17-8          (e)  The commission may authorize the executive director to
 17-9    use money in the smart jobs rainy day fund if:
17-10                (1)  the commission determines, after consulting with
17-11    the comptroller, that the smart jobs fund contains insufficient
17-12    money to cover the amounts appropriated by the legislature to
17-13    operate the program; and
17-14                (2)  the commission has determined that:
17-15                      (A)  the unemployment rate in this state is 125
17-16    percent of the average unemployment rate in this state during the
17-17    preceding three years; or
17-18                      (B)  a severe economic dislocation is occurring
17-19    in a specific region of this state.
17-20          (f)  The commission by rule shall define "severe economic
17-21    dislocation" for purposes of Subsection (e).  In adopting a
17-22    definition, the commission shall consider employment-related
17-23    factors, including:
17-24                (1)  massive layoffs in a region of this state caused
17-25    by:
17-26                      (A)  the closure of military bases;
17-27                      (B)  the effect of the implementation of the
 18-1    North American Free Trade Agreement;
 18-2                      (C)  employer relocations; or
 18-3                      (D)  other analogous situations; and
 18-4                (2)  the number of jobs lost in a region compared to
 18-5    the region's usual rates of employment.
 18-6          (g)  If the commission approves the use of money from the
 18-7    smart jobs rainy day fund because of a severe economic dislocation
 18-8    occurring in a specific region of the state, the executive director
 18-9    may use the money allocated from the smart jobs rainy day fund
18-10    solely for projects located in the affected region.
18-11          (h)  Notwithstanding any other provision of this section, the
18-12    total combined amount spent in any fiscal year from the smart jobs
18-13    fund and the smart jobs rainy day fund may not exceed the amount
18-14    appropriated by the legislature for that fiscal year for the
18-15    operation of the program.
18-16          (i)  If, during any three consecutive months, the balance in
18-17    the smart jobs fund or the smart jobs rainy day fund exceeds 0.15
18-18    percent of the total taxable wages for the four calendar quarters
18-19    ending the preceding June 30, as computed under Section 204.062(c),
18-20    the executive director shall immediately transfer the excess from
18-21    the applicable fund to the unemployment compensation fund created
18-22    under Section 203.021.
18-23          Sec. 310.005.  DESIGNATION OF PROGRAM FUNDS FOR ECONOMIC
18-24    DEVELOPMENT. A percentage of money in the smart jobs fund
18-25    determined by the General Appropriations Act shall be transferred
18-26    to the Texas Department of Economic Development for the purpose of
18-27    attracting businesses for economic development through the use of
 19-1    the program.  The department shall determine the qualified
 19-2    recipients of the money for the purpose of attracting businesses to
 19-3    the state in accordance with commission rules and requirements for
 19-4    smart jobs grants.  The resulting smart jobs grants are exempt from
 19-5    Section 310.002(c) and administered by the division.
 19-6          Sec. 310.006.  GRANTS. (a)  The executive director may award
 19-7    grants for projects that meet the requirements of this chapter.
 19-8          (b)  A grant may not be awarded unless each employer
 19-9    participating in the project certifies that:
19-10                (1)  a job or job opening exists or will exist at the
19-11    end of the project for which the grant is sought; and
19-12                (2)  the job or job opening will be filled by a
19-13    participant in the project.
19-14          (c)  Except as otherwise provided by this subsection, a grant
19-15    may not be awarded unless each employer participating in the
19-16    project certifies that each job under the project is covered by a
19-17    group health benefit plan for which the business pays at least 50
19-18    percent of the premiums or other charges assessed for employee-only
19-19    coverage under the plan.  The executive director may waive the
19-20    coverage requirement for a particular job if the affected employee
19-21    voluntarily waives the coverage in the manner prescribed by rules
19-22    adopted by the commission.
19-23          (d)  A grant may not be awarded for a project under this
19-24    section unless each employer participating in the project certifies
19-25    that the starting wage for a new job created through the project
19-26    will be equal to or greater than the county average weekly wage for
19-27    the county in which the job or project is located and that the wage
 20-1    for a job existing on the date that the project is scheduled to
 20-2    begin will be increased to the greater of:
 20-3                (1)  three percent for a micro-business or small
 20-4    business or five percent for a business that is not a
 20-5    micro-business or small business over the wage in effect on the day
 20-6    before the date on which the project is scheduled to begin for that
 20-7    job; or
 20-8                (2)  100 percent of the county average weekly wage for
 20-9    the county in which the job or project is located.
20-10          (e)  An employer may apply for a grant under this chapter.
20-11    An employer may request a modification of the requirements provided
20-12    by Subsection (d) and Section 310.009, if reasonable factors exist
20-13    for the modification, as determined by the executive director.
20-14          (f)  Grants awarded under this section for which the
20-15    executive director has modified the requirements of Subsection (d)
20-16    may not, in any fiscal year, exceed 10 percent of the total dollar
20-17    amount of grants awarded under the program in that year.
20-18          (g)  Unless modified by the executive director under rules
20-19    adopted by the commission, a grant may not be awarded for a project
20-20    unless each employer participating in the project certifies that it
20-21    will continue to spend on nonmanagerial training an amount from
20-22    private sources equal to the average amount spent by that employer
20-23    on such training for the most recent two-year period.
20-24          (h)  A grant may not be awarded for a project if the project
20-25    will impair existing contracts for services or collective
20-26    bargaining agreements, except that a project inconsistent with the
20-27    terms of a collective bargaining agreement may be undertaken with
 21-1    the written concurrence of the collective bargaining unit and the
 21-2    employer or employers who are parties to the agreement.
 21-3          Sec. 310.007.  GRANT APPLICATION; AWARDING OF GRANTS. (a)
 21-4    The following may apply for a grant under this chapter:
 21-5                (1)  one or more employers to secure training;
 21-6                (2)  one or more employers acting in partnership with
 21-7    an employer organization, labor organization, or community-based
 21-8    organization to secure training; or
 21-9                (3)  one or more employers acting in partnership with a
21-10    consortium composed of more than one provider to secure training.
21-11          (b)  A grant application must be filed with the division in a
21-12    form approved by the executive director and, except as provided by
21-13    Subsection (c), must include a complete business and training plan,
21-14    including:
21-15                (1)  the number and kind of jobs available;
21-16                (2)  the skills and competencies required for the
21-17    identified jobs;
21-18                (3)  the wages to be paid to trainees on successful
21-19    completion of the project;
21-20                (4)  the goals, objectives, and outcome measures for
21-21    the project;
21-22                (5)  the proposed curriculum for the project; and
21-23                (6)  the projected cost per person enrolled, trained,
21-24    hired, and retained in employment.
21-25          (c)  The commission by rule may exempt a micro-business from
21-26    the requirement to submit a business and training plan that
21-27    complies with Subsection (b).  The commission by rule shall
 22-1    establish a simplified application process for grant applications
 22-2    from micro-businesses.
 22-3          (d)  The division may provide assistance with the application
 22-4    process to all applicants and shall give priority to assisting
 22-5    applicants who are small businesses or micro-businesses.
 22-6          (e)  The division shall minimize the length of the
 22-7    application form and shall simplify as much as possible the review
 22-8    process for grant applications.
 22-9          (f)  The division shall notify each applicant as to whether
22-10    the application is complete not later than the fifth business day
22-11    after the date on which the application is received by the
22-12    division.
22-13          Sec. 310.008.  PARTICIPATION IN ADDITIONAL PROGRAMS;
22-14    APPLICATION REQUIREMENTS. (a)  A business may not apply both for a
22-15    grant under this chapter and to a public community or technical
22-16    college for customized training and assessment from the college
22-17    through a grant issued to the college under the skills development
22-18    fund program established under Chapter 303 unless the business and
22-19    the college file an application for concurrent participation in
22-20    both programs.
22-21          (b)  The commission by rule shall establish the requirements
22-22    for an application subject to this section.
22-23          Sec. 310.009.  MATCHING REQUIREMENTS; EXEMPTIONS. (a)  Money
22-24    provided under a grant for a project must be matched by private
22-25    funds provided by the employer benefiting from the project in an
22-26    amount at least equal to the amount provided by the grant.
22-27          (b)  The commission may adopt rules modifying the
 23-1    requirements of Subsection (a) for employers that are small
 23-2    businesses or micro-businesses and may also adopt rules modifying
 23-3    the requirements of Subsection (a) for projects that provide
 23-4    significant economic benefits to an entire region of the state.
 23-5          (c)  Employer matches may include documented in-kind
 23-6    contributions as well as wages paid to trainees during the training
 23-7    period.
 23-8          Sec. 310.010.  TRAINEES. The program shall give priority to
 23-9    residents of this state, including residents formerly sentenced to
23-10    the institutional division or the state jail division of the Texas
23-11    Department of Criminal Justice.
23-12          Sec. 310.011.  CONTRACTS. (a)  The executive director may
23-13    approve any project that meets the requirements of this chapter.
23-14    If a project is approved and funds are available, the division
23-15    shall enter into a contract with the grant applicant and with each
23-16    employer participating in the project.  The contract must specify
23-17    those skills and competencies to be gained as a result of the
23-18    project.
23-19          (b)  Reimbursable costs in the contract may include only
23-20    those expenses related to direct training in job-related basic
23-21    skills, including literacy skills, job-related vocational skills,
23-22    and administrative costs. Total administrative costs for any
23-23    particular project may not exceed 10 percent of the project's
23-24    expenditures.
23-25          (c)  Each contract must provide a schedule for payment of
23-26    smart jobs fund money.  Twenty-five percent of allowable
23-27    expenditures shall be withheld by the division for 90 days after
 24-1    the date of completion of the contract.  If at least 85 percent of
 24-2    the trainees in the project have been retained in employment for
 24-3    that 90-day period, other than trainees who leave the employment
 24-4    voluntarily for better-paying jobs, and have successfully achieved
 24-5    the skills and competencies, wage requirements, and other
 24-6    contractual obligations, the amount of allowable expenditures
 24-7    withheld shall be remitted to the employer.  The commission by rule
 24-8    shall establish procedures as necessary to verify that a trainee
 24-9    has left the employment for a better-paying job.  If there is a
24-10    negative balance, the employer is liable for the amount of the
24-11    negative balance and shall remit that amount to the division not
24-12    later than the 30th day after the date on which the employer is
24-13    notified of the negative balance by the division.
24-14          (d)  Each contract must state the term of the grant award.  A
24-15    grant recipient who does not use all money awarded under the grant
24-16    for the prescribed purpose within the allotted term shall reimburse
24-17    the program by submitting the appropriate amount to the executive
24-18    director not later than the 30th day after the expiration date of
24-19    the term of the grant award.  The executive director shall remit
24-20    money received under this subsection to the comptroller for deposit
24-21    in the smart jobs rainy day fund.
24-22          Sec. 310.012.  SMART JOBS PROGRAM CONTRACT PROVISIONS. The
24-23    commission shall by rule require each smart jobs contract to have:
24-24                (1)  clearly defined goals, outputs, and measurable
24-25    outcomes that directly relate to program objectives;
24-26                (2)  clearly defined sanctions for noncompliance with
24-27    contract terms; and
 25-1                (3)  clearly specified accounting, reporting, and
 25-2    auditing requirements for funds received under program contracts.
 25-3          Sec. 310.013.  SMART JOBS PROGRAM MONITORING PRACTICES. The
 25-4    commission by rule shall adopt program monitoring practices that
 25-5    include:
 25-6                (1)  risk-assessment to determine which contracts have
 25-7    the highest risk for fraud and abuse; and
 25-8                (2)  a method to obtain and evaluate program cost
 25-9    information to ensure all costs, including administrative costs,
25-10    are reasonable and necessary to achieve program objectives.
25-11          Sec. 310.014.  ANNUAL REPORT. (a)  The commission shall
25-12    report to the governor and the legislature at the end of each
25-13    fiscal year on the status of the program.
25-14          (b)  The annual report must include for that fiscal year:
25-15                (1)  the total number of applications submitted, the
25-16    total number of applications approved, and the total number of
25-17    applications rejected, reported by region of the state and by size
25-18    of business;
25-19                (2)  the number of employers receiving grants under the
25-20    program reported by region of the state and the percentage that
25-21    number represents of the total number of employers receiving grants
25-22    under the program on a statewide basis;
25-23                (3)  the total amount of money awarded in each region
25-24    of the state and the percentage that amount represents of the total
25-25    amount of money awarded on a statewide basis;
25-26                (4)  a comparison of the percentage of total dollars
25-27    awarded to each region versus each region's percentage of:
 26-1                      (A)  the state's population;
 26-2                      (B)  the civilian labor force;
 26-3                      (C)  the number of unemployed persons; and
 26-4                      (D)  the number of eligible grant applications
 26-5    for qualified jobs submitted to the division;
 26-6                (5)  the value, expressed in dollars and as a
 26-7    percentage of total training expenditures, of matching
 26-8    contributions made by employers;
 26-9                (6)  the number of businesses, classified by
26-10    micro-businesses, small businesses, medium businesses, and large
26-11    businesses, that receive grants under the program reported by
26-12    region of the state and business size and the percentage that
26-13    number represents of the total number of each of those categories
26-14    of businesses receiving grants under the program on a statewide
26-15    basis;
26-16                (7)  the total amount of money awarded to
26-17    micro-businesses, small businesses, medium businesses, and large
26-18    businesses, reported by region of the state and business size, and
26-19    the percentage that amount represents of the total amount of money
26-20    awarded to those businesses on a statewide basis;
26-21                (8)  the number of businesses located in enterprise
26-22    zones, as that term is defined by Chapter 2303, Government Code,
26-23    that receive grants under the program and the total amount of the
26-24    grants awarded to those businesses;
26-25                (9)  the total number of jobs created, enhanced, or
26-26    retained under the program:
26-27                      (A)  by region of the state;
 27-1                      (B)  by occupation, classified by the applicable
 27-2    two-digit standard industrial classification;
 27-3                      (C)  by wage level; and
 27-4                      (D)  whether attributable to:
 27-5                            (i)  relocation of businesses to this
 27-6    state, including the percentage the number attributable to the
 27-7    relocation of businesses represents of the total number of jobs
 27-8    created, enhanced, or retained under the program on a statewide
 27-9    basis; or
27-10                            (ii)  training or retraining of employees
27-11    of existing employers, including the percentage that the number
27-12    attributable to the training or retraining of employees of existing
27-13    employers represents of the total number of jobs created, enhanced,
27-14    or retained under the program on a statewide basis;
27-15                (10)  the average and median weekly wage levels of
27-16    trainees entering or returning to the workforce, broken down by
27-17    current employees undergoing retraining and new hires, at three
27-18    months and one year after the conclusion of their training;
27-19                (11)  the number and percentage of participating
27-20    employers that provide workers' compensation insurance coverage and
27-21    the number and percentage of employees covered;
27-22                (12)  the number and percentage of employees covered by
27-23    the group health benefit plan offered by the employer;
27-24                (13)  the number and percentage of women, disabled
27-25    persons, and minority group members receiving grants under the
27-26    program as employers, participating as trainees in training
27-27    projects, or participating in the program as providers, broken out
 28-1    by group;
 28-2                (14)  a list of modifications granted under Section
 28-3    310.006(e), the name of the project for which the modification was
 28-4    granted, and the reason the executive director granted the
 28-5    modification; and
 28-6                (15)  the number of trainees who have left employment
 28-7    with a grant recipient because the trainee has obtained a
 28-8    better-paying job, as verified under Section 310.011(c).
 28-9          (c)  In addition to the information required under Subsection
28-10    (b), the commission shall include in the annual report, for each
28-11    region of the state in which a grant is awarded, the percentage
28-12    paid by employers in that region of the total amount of
28-13    unemployment insurance contributions paid by employers during the
28-14    preceding calendar year.
28-15          SECTION 2.02. Section 19.011(a), Education Code, is amended
28-16    to read as follows:
28-17          (a)  In order to achieve the goals stated in Section 19.003,
28-18    the district with the cooperation of the Health and Human Services
28-19    Commission, the Council on Workforce and Economic Competitiveness,
28-20    the division of workforce development at the Texas Workforce
28-21    Commission [Texas Department of Commerce], and the department shall
28-22    provide persons confined or imprisoned in the department:
28-23                (1)  information from local workforce and development
28-24    boards on job training and employment referral services;
28-25                (2)  information on the tax refund voucher program
28-26    under Subchapter H [D], Chapter 301 [31], Labor [Human Resources]
28-27    Code; and
 29-1                (3)  information on the smart jobs fund program under
 29-2    Chapter 310, Labor Code.
 29-3          SECTION 2.03. Section 403.351(a), Government Code, is amended
 29-4    to read as follows:
 29-5          (a)  The comptroller shall perform a biennial performance
 29-6    evaluation of:
 29-7                (1)  the smart jobs fund program established under
 29-8    [Subchapter J,] Chapter 310, Labor Code [481]; and
 29-9                (2)  the skills development fund program established
29-10    under Chapter 303, Labor Code.
29-11          SECTION 2.04. Section 2308.308, Government Code, is amended
29-12    to read as follows:
29-13          Sec. 2308.308.  PUBLIC COMMUNITY COLLEGE. A public community
29-14    college shall promptly provide workforce training and services that
29-15    are requested:
29-16                (1)  by a board if the need for the training and
29-17    services is based on the labor market information system available
29-18    for the area;
29-19                (2)  by employers located in the college's taxing
29-20    district when the request is presented directly to the college by
29-21    the employers or through the board; or
29-22                (3)  as part of economic development incentives
29-23    designed to attract or retain an employer, including incentives
29-24    offered under the smart jobs fund program under [Subchapter J,]
29-25    Chapter 310, Labor Code [481].
29-26          SECTION 2.05. Section 204.123(a), Labor Code, is amended to
29-27    read as follows:
 30-1          (a)  If, on September 1 of a year, the commission determines
 30-2    that the amount in the compensation fund will exceed 100 percent of
 30-3    its floor as computed under Section 204.061 on the next October 1
 30-4    computation date, the commission shall transfer from the holding
 30-5    fund created under Section 204.122:
 30-6                (1)  50 percent of the amount in the holding fund to
 30-7    the smart jobs fund created under Section 310.004(a) [481.154(a),
 30-8    Government Code];
 30-9                (2)  30 percent of the amount in the holding fund to
30-10    the skills development fund created under Section 303.003; and
30-11                (3)  20 percent of the amount in the holding fund to
30-12    the smart jobs rainy day fund created under Section 310.004(d)
30-13    [481.154(d), Government Code].
30-14          SECTION 2.06. Section 302.021(a), Labor Code, is amended to
30-15    read as follows:
30-16          (a)  The following job-training, employment, and
30-17    employment-related educational programs and functions are
30-18    consolidated under the authority of the division:
30-19                (1)  adult education programs under Subchapter H,
30-20    Chapter 29, Education Code;
30-21                (2)  proprietary school programs under Chapter 132,
30-22    Education Code;
30-23                (3)  apprenticeship programs under Chapter 133,
30-24    Education Code;
30-25                (4)  postsecondary vocational and technical
30-26    job-training programs that are not a part of approved courses or
30-27    programs that lead to licensing, certification, or an associate
 31-1    degree under Chapters 61, 130, and 135, Education Code, Subchapter
 31-2    E, Chapter 88, Education Code, and Subchapter E, Chapter 96,
 31-3    Education Code;
 31-4                (5)  employment programs under Chapter 31, Human
 31-5    Resources Code;
 31-6                (6)  the senior citizens employment program under
 31-7    Chapter 101, Human Resources Code;
 31-8                (7)  the work and family policies program under Chapter
 31-9    81;
31-10                (8)  job-training programs funded under the Job
31-11    Training Partnership Act (29 U.S.C. Section 1501 et seq.) and under
31-12    the Workforce Investment Act of 1998 (29 U.S.C. Section 2801 et
31-13    seq.);
31-14                (9)  the job counseling program for displaced
31-15    homemakers under Chapter 304;
31-16                (10)  the reintegration of offenders program under
31-17    Chapter 306;
31-18                (11)  the smart jobs fund program under Chapter 310
31-19    [the inmate employment counseling program under Section 499.051(f),
31-20    Government Code];
31-21                (12)  the continuity of care program under Section
31-22    501.095, Government Code;
31-23                (13)  a literacy program from state, local, federal,
31-24    and private funds available to the state for that purpose;
31-25                (14)  the employment service;
31-26                (15)  the community service program under the National
31-27    and Community Service Act of 1990 (42 U.S.C. Section 12501 et
 32-1    seq.);
 32-2                (16)  the trade adjustment assistance program under
 32-3    Part 2, Subchapter II, Trade Act of 1974 (19 U.S.C. Section 2271 et
 32-4    seq.);
 32-5                (17)  education, employment, employment support,
 32-6    training services, activities and programs funded under Temporary
 32-7    Assistance for Needy Families (42 U.S.C. Section 601 et seq.);
 32-8                (18)  the food stamp employment and training program
 32-9    authorized under 7 U.S.C. Section 2015(d); and
32-10                (19)  the functions of the State Occupational
32-11    Information Coordinating Committee.
32-12          SECTION 2.07. Section 303.005, Labor Code, is amended to read
32-13    as follows:
32-14          Sec. 303.005.  PARTICIPATION IN ADDITIONAL PROGRAMS;
32-15    APPLICATION REQUIREMENTS. An employer may not apply both to a
32-16    public community or technical college for customized training and
32-17    assessment from the college through a grant issued to the college
32-18    under the skills development fund program established under this
32-19    chapter and for a grant under the smart jobs fund program
32-20    established under [Subchapter J,] Chapter 310 [481, Government
32-21    Code,] unless the employer and the college file an application for
32-22    concurrent participation in both programs that complies with
32-23    Section 310.008 [481.1565, Government Code].
32-24          SECTION 2.08. Section 306.007(a), Labor Code, is amended to
32-25    read as follows:
32-26          (a)  To assist in the reintegration into the labor force of
32-27    persons formerly sentenced to the institutional division or the
 33-1    state jail division, the commission through Project RIO shall
 33-2    provide:
 33-3                (1)  to those persons:
 33-4                      (A)  information from local workforce development
 33-5    boards on job training and employment referral services;
 33-6                      (B)  information from the Texas Commission on
 33-7    Alcohol and Drug Abuse on substance abuse treatment services;
 33-8                      (C)  information from the Texas Department of
 33-9    Housing and Community Affairs on housing services;
33-10                      (D)  information from the Texas Veterans
33-11    Commission on services for veterans; and
33-12                      (E)  information from the Texas Department of
33-13    Human Services on tax refund voucher programs under Subchapter D,
33-14    Chapter 31, Human Resources Code; and
33-15                (2)  to the employers and potential employers of those
33-16    persons:
33-17                      (A)  information from the Texas Department of
33-18    Economic Development [Commerce] on the enterprise zone program;
33-19                      (B)  information from the division of workforce
33-20    development at the Texas Workforce Commission on the [and] smart
33-21    jobs fund program; and
33-22                      (C) [(B)]  information from local workforce
33-23    development boards on services listed in Section 2308.304,
33-24    Government Code.
33-25          SECTION 2.09. Subchapter J, Chapter 481, Government Code, is
33-26    repealed.
33-27          SECTION 2.10. (a)  On the effective date of this Act, all
 34-1    powers, duties, obligations, rights, contracts, records, employees,
 34-2    property, and unspent and unobligated appropriations and other
 34-3    funds of the Texas Department of Economic Development that are used
 34-4    by that agency on the effective date of this Act to administer the
 34-5    smart jobs fund program are transferred to the Texas Workforce
 34-6    Commission.
 34-7          (b)  All rules, policies, procedures, and decisions that
 34-8    affect the smart jobs fund program are continued in effect until
 34-9    superseded by a rule or other appropriate action of the Texas
34-10    Workforce Commission.
34-11          (c)  Any action or proceeding before the Texas Department of
34-12    Economic Development relating to the smart jobs fund program is
34-13    transferred without change in status to the Texas Workforce
34-14    Commission, and the Texas Workforce Commission assumes, without
34-15    change in status, the position of the Texas Department of Economic
34-16    Development in any action or proceeding relating to the smart jobs
34-17    fund program to which the Texas Department of Economic Development
34-18    is a party.
34-19          (d)  The smart jobs fund program established under Subchapter
34-20    J, Chapter 481, Government Code, is abolished on the effective date
34-21    of this Act.  The Texas Department of Economic Development may not
34-22    award a grant under that program on or after that date. All
34-23    unobligated and unexpended balances in the smart jobs fund created
34-24    under Section 481.154, Government Code, as that section existed
34-25    before repeal by this Act, are transferred on the effective date of
34-26    this Act to the smart jobs fund created under Section 310.004,
34-27    Labor Code, as added by this Act.
 35-1          (e)  The Texas Workforce Commission shall adopt rules to
 35-2    implement Chapter 310, Labor Code, as added by this Act, not later
 35-3    than December 31, 2001.
 35-4                         ARTICLE 3. EFFECTIVE DATE
 35-5          SECTION 3.01. This Act takes effect September 1, 2001.