Legislative Analyst's Office

Analysis of the 2001-02 Budget Bill

Department of Industrial Relations (8350)

The mission of the Department of Industrial Relations is to protect the workforce of California, improve working conditions, and advance opportunities for profitable employment. These responsibilities are carried out through three major programs: the adjudication of workers' compensation disputes; the prevention of industrial injuries and deaths; and the enforcement of laws relating to wages, hours, and working conditions. In addition, the department regulates self-insured workers' compensation insurance plans, provides workers' compensation payments to injured workers of uninsured employers and other special categories of employees, offers conciliation services in labor disputes, and conducts and disseminates labor force research.

The Governor's budget proposes expenditures totaling $268 million for the department in 2001-02. This is 3 percent more than estimated expenditures for the current year. The request includes $175 million from the General Fund, 4 percent more than 2000-01 estimated expenditures.

Budget Realignment

We recommend the Legislature delete $1.3 million from the General Fund and $320,000 from special funds because the department has not justified the need for additional resources to fund existing salaries. (Reduce Item 8350-001-0001 by $1.3 million and Item 8350-001-0223 by $320,000.)

The budget includes $1.3 million from the General Fund and $320,000 from the Workers' Compensation Administration Revolving Fund in order to fund salaries within the Division of Workers' Compensation. According to the department, judicial and administrative positions within the division have routinely been held vacant in order to fund salaries for other employees. This request would provide additional resources to eliminate the need to hold positions vacant. However, in the budget year, the Department of Finance (DOF) deleted a total of 17 vacant positions from the division but left the associated funds in the division's budget. It is not clear why the department still reports a need to hold additional positions vacant to fund existing staff salaries.

In addition, this request is based on an evaluation of one particular area of the division. However, this division has a $101 million budget and more than 1,000 authorized positions. The department should evaluate the overall budget and workload for the division to determine if additional resources are needed. For these reasons, we recommend the Legislature delete the requested $1.6 million.

Staff Redirected From Garment Manufacturing Program

We recommend the Legislature not redirect 11 positions from the garment industry wage claim resolution program because (1) insufficient workload information is available to justify the redirection, (2) the impact on the garment industry regulatory process has not been identified, and (3) the shift is inconsistent with previous legislative actions. (Reduce Item 8350-001-0001 by $565,000 and increase Item 8350-001-3004 by $565,000.)

The budget proposes to redirect 11 previously authorized administrative staff positions (and $565,000 from the General Fund) from the garment wage claim resolution program to other areas within the Division of Labor Standards Enforcement (DLSE). These 11 positions were authorized on a two-year limited-term basis for DLSE in the 2000-01 Budget Act in order to administer a new wage claim resolution process for the garment industry established by Chapter 554, Statutes of 1999 (AB 633, Steinberg). Funding for the positions was authorized from fees collected under the program.

Last year, the department indicated that the 11 positions were necessary in order for the department to meet the legislative mandates and process wage claims in a timely manner. This proposal would now shift the positions away from the garment industry program to several other areas of the division (such as the Public Works unit). The department has not shown why these positions are needed in these other areas or what impact this redirection would have on the wage claim resolution process. In addition, because the garment program is self-funded, the department agreed last year to assess a sufficient level of fees to fund the authorized positions and administer the program. This proposal would instead fund the positions from the General Fund. The department also indicates it is their intent to administratively reestablish the 11 positions for the garment program during the budget year.

Due to insufficient justification of the proposal and previous expression of legislative intent, we recommend the Legislature not approve the redirection of 11 positions. (Reduce Item 8350-001-0001 by $565,000 and increase Item 8350-001-3004 by $565,000.)

Workers' Safety Training Grant Program

We recommend the Legislature delete $2.5 million and three positions from the General Fund to administer a new workers' safety training grant program because of insufficient information on how the program will be administered. (Reduce Item 8350-001-0001 by $2.5 million.)

The budget includes $2.5 million from the General Fund and three positions to administer a new workers' safety training grant program. The proposal would target high-hazard industries—including construction, agriculture, and government (excluding federal)—by awarding grants to employers for safety training programs. According to the department, these industries have higher rates of nonfatal occupational injuries than other industries.

While the new program targets worker safety, this proposal raises a number of policy issues that may be more appropriate to consider in separate legislation. The department reports that the Division of Occupational Safety and Health will be responsible for (1) evaluating and approving the program administration, (2) determining which employers would qualify for funding, and (3) evaluating the effectiveness of the program. The proposal, however, does not detail how eligibility for grants will be determined, what types of programs could qualify for funding, or what measures will be used to determine the effectiveness of the programs at reducing workplace hazards.

In view of the lack of information, we recommend the Legislature delete $2.5 million under Item 8350-001-0001.

Increased Employer Education

We recommend the Legislature delete $1.7 million from the General Fund for increased public information because the department (1) currently has sufficient resources for printing additional materials, (2) has Information Technology staff authorized to develop Internet-based information, and (3) has not prepared a Feasibility Study Report. (Reduce Item 8350-001-0001 by $1,736,000.)

The Governor's budget includes $1.7 million from the General Fund and one position to (1) prepare and mail informational packets four times a year to 130,000 employers statewide regarding the state's labor laws and (2) fund a private consultant to develop new Internet-based informational resources for the department. According to the department, it received a total of $1.3 million in the 2000-01 Budget Act for printing services to prepare written documents and publications. (As of January 2001, the department had spent a total of $173,000 on printing services, including public information brochures.) This request would nearly double the department's printing services budget to $2.5 million.

With regard to the information packet, it is not clear how effective the proposed 130,000 additional quarterly mailings would be at increasing workplace safety or decreasing industrial hazards. Instead of mailing 520,000 additional documents annually, the department could instead, on a priority basis, use existing resources to mail a smaller number of packets and assess the value of this approach. A future request would warrant legislative consideration if the department could demonstrate the value of such a program.

The department also has requested $350,000 to fund a web-development consultant ($300,000) and to conduct informational surveys ($50,000). However, the department already has 77 authorized information technology positions, including 4 positions specifically dedicated to Internet web development. It is not clear why these positions could not implement the department's proposal. Furthermore, the department has not prepared a Feasibility Study Report, required for all such information technology projects, which would detail the business problem, the proposed solution, management plan, and economic analysis of alternatives. This is a document departments routinely prepare for information technology requests which must be reviewed by DOF and the Department of Information Technology. This document would also allow the Legislature to fully evaluate the problem identified and the solution proposed. This document should be prepared before funds are requested to implement this technology development project.

Based on the issues discussed above, we recommend the Legislature delete $1.7 million under Item 8350-001-0001.

Amusement Ride Regulatory Process

We recommend the department report to the Legislature at the time of budget hearings regarding the status of the new amusement ride regulatory process established by Chapter 585, Statutes of 1999 (AB 850, Torlakson).

In 1999, the Legislature approved, and the Governor signed into law, Chapter 585 (AB 850, Torlakson), which initiated a new inspection and regulatory process for permanent amusement rides administered through the Division of Occupational Safety and Health. The 2000-01 Budget Act included a total of 26.5 personnel-years and $2.2 million for the program—the same levels proposed in the budget year. The program is funded by fees collected through the regulatory process.

As of January 2001, the department had not finalized the regulations necessary to implement the program. Given the delays in implementing the program, we recommend the department report to the Legislature at the time of budget hearings regarding the status of the amusement ride inspection program and the development of administrative regulations.

Return to General Government Table of Contents, 2001-02 Budget Analysis