New DeSaulnier Laws Address Budget, Work Force, Corporate Responsibility

Three of the most significant bills authored by state Sen. Mark DeSaulnier have been signed into law and will take effect Jan. 1. They include:

Bill will direct more job training money into -- job training.

Turns out not all the money intended for job training is used for that purpose. A third of the state's Workforce Investment Boards invest less than 11 percent in job training, and some invest nothing at all.

SB 734  changes that, prioritizing the spending of Workforce Investment Act (WIA) money for quality job training programs and services for unemployed workers.

California receives almost $500 million annually in WIA dollars for job training and employment services for adult and dislocated workers and youth. The majority of this money (85%) is allocated to 49 local Workforce Investment Boards (WIBs) which develop policies for how local WIA dollars are invested.

Despite the need for targeted and effective training, local WIBs in California spend very little WIA funds on skills training. On average they invest just 20% of their federal funds on job training services. A third of them spend less than 11% on training and many invest nothing at all.  Faced with a similar problem, other states, including Florida, Illinois, Michigan and Wisconsin, have all adopted policies that require more local WIA funds to be dedicated to training.  For example, Florida requires that local WIBs spend at least 50% of their WIA funds on training.

The new law will require local WIBs to increase spending of their Adult and Dislocated Workers Fund on quality programs and services that provide workers with job training.  Under SB 734, spending will increase to a minimum of 30% of the WIA funds by 2016 and thereafter.

Enabling corporations to pursue socially conscious goals without fear of shareholder lawsuits

SB 201, also known as the Corporate Flexibility Act of 2011, would authorize and regulate the formation and operation of a new form of corporate entity known as a “flexible purpose corporation.”

Under current law in California and most other states, companies can be sued by their shareholders or investors for taking environmental or social measures that negatively affect shareholders’ financial returns. The proposed bill would enable a new form of for-profit corporation, encouraging and expressly permitting companies to pursue other things besides simply making money

Under SB 201, any company that sets up shop in the state can negotiate to include a social or environmental goal equal or even greater to its profit mission.

SB 201 doesn’t proscribe what a company must do. Still, large corporations – those that come under fire for failing to be socially responsible – aren’t likely to adopt the new legal form. Analysts say that may take a next step – a deep tax break, for instance, or other benefits.

Moving from a single to a multi-year budget

SB 15 -- passed unanimously by the state Senate – provides for a multi-year approach to state budgeting, instead of dealing with only one year at a time as it does now.

The new law requires the California governor’s draft budget documents to provide estimates for anticipated revenues and expenditures for the three fiscal years succeeding the budget year.  These documents would be provided as part of the Jan. 10 proposal, the May Revision, and the final budget summary upon enactment of the Budget Bill.

It also requires the governor to submit legislative language needed to implement budget provisions and the five-year infrastructure plan when the budget is submitted on or before Jan. 10th.

California Forward, which proposed the legislation, says it would bring critical performance-based budgeting and transparent multi-year fiscal planning to the budget process, but would spur collaboration and problem solving among lawmakers. Would that it were that easy.