January 22, 2020

The 2020-21 Budget

Overview of 2020‑21 Labor and Employment Programs


The 2020‑21 Governor’s Budget includes 18 budget proposals related to labor and employment programs. This post provides a high-level overview of these proposals. Our office plans to evaluate several of these proposals more closely in the coming weeks.

Background

California’s major labor and employment programs provide work-related services and benefits to its residents, enforce its employment laws, oversee its workers’ compensation system, and regulate its workplace safety and health. Many of the work-related services and benefits are funded or required by the federal government, including unemployment insurance benefits and federal workforce training programs. The labor and employment programs are administered at the state level by the Employment Development Department (EDD), the Department of Industrial Relations (DIR), the California Workforce Development Board (CWDB), and the Agricultural Labor Relations Board (ALRB). The state’s Labor and Workforce Development Agency oversees these entities and works to set policy and coordinate programs.

Labor and Employment Program Budget. As shown in Figure 1, the Governor’s budget proposes a total of $1 billion in state funding for labor and employment programs, including $148 million from the General Fund and $887 million from various state special funds.

Figure 1

Labor and Employment Departmental Budget Summary

2020‑21 Governor’s Budget, General Fund and Special Funds (In Millions)

Program

2019‑20
Estimated

2020‑21
Proposed

Change

Amount

Percent

Labor and Workforce Development Agency

$3

$4

$2

77%

Employment Development Department

97

121

25

26

California Workforce Development Board

52

12

‑40

‑76

Department of Industrial Relations

12

‑12

Agricultural Labor Relations Board

10

10

Totals, General Fund

$173

$148

‑$25

‑15%

Labor and Workforce Development Agency

$3

$12

$9

290%

Employment Development Department

280

298

17

6

California Workforce Development Board

102

50

‑52

‑51

Department of Industrial Relations

629

664

35

6

Agricultural Labor Relations Board

11

12

1

5

Totals, All State Funds

$1,025

$1,035

$10

1%

Labor and Employment Budget Proposals

As shown in Figure 2, the budget proposes a total of $127 million in new funding and 407 new staff positions within various labor and employment programs. Most of the proposed funding and positions are within EDD and DIR, the two largest labor and employment departments. In addition, most of the proposals are either ongoing program augmentations or three-year proposals. Overall funding for these proposals comes from a variety of sources, as shown in Figure 3, including $40 million from the General Fund, $26 million in disability program payroll taxes paid by employees, $25 million in increased workers’ compensation insurance assessments paid by employers, and $20 million in proceeds from Private Attorneys General Act lawsuit settlements.

Figure 2

2020‑21 Governor’s Budget Labor and Employment Proposals

Proposal

Positions

Cost
(In Millions)

Fund Source

Duration

Labor and Workforce Development Agency

Create “Department of Better Jobs and Higher Wages”

10

$2.4

General Fund

One time

Labor Agency Strategic Outreach

24

20.0

Private Attorneys General Act settlementsa

Three years

34

$22.4

Department of Industrial Relations

Worker Status—AB 5 Implementation

104

$17.5

Workers’ Comp assessmentsb

Three years

Wage Claim Adjudication Staff

15

2.3

Workers’ Comp assessments

Three years

Victims of Wage Theft

No funding—Awaiting Trailer Bill

Unknown

Financial and Administrative Compliance

33

8.7

Various

Three years

Health and Safety Legal Workload

7

1.2

Workers’ Comp assessments

Ongoing

Increased Office Security

2.3

Workers’ Comp assessments

Ongoing

Amusement Ride Inspections

3

0.6

Workers’ Comp assessments

Ongoing

Implementation of Recent Legislation

16

3.3

Various

Ongoing

Update Workers’ Compensation Case Management

2

0.9

Workers’ Comp assessments

Ongoing

Safety and Health Appeals Board Staff

2

0.5

Workers’ Comp assessments

Ongoing

181

$37.2

Employment Development Department

Benefit Systems Modernization (Information Technology)

148

$46.0

General Fund and Disability Fundc

Ongoing project

Worker Status—AB 5 Implementation

24

3.4

General Fund

Three years

Accounting and Business Services

14

3.0

Disability Fund

Ongoing

Paid Family Leave Small Business Grants

1.0

General Fund

Ongoing

Implementation of Proposition 64: Cannabis

7

3.6

Cannabis Tax Fund

Ongoing

193

$57.0

California Workforce Development Board

Entrepreneurship Pathways Grant Program

­—

$10.0

General Fund

One time

Total, Labor and Employment Proposals

407

$127.0

aThe Private Attorneys General Act allows employees to recovery penalties for labor code violations. The state collects a portion of these settlements.

bAnnual assessments paid by businesses based on a percentage of their workers’ compensation insurance premium cost.

cUnemployment Compensation Disability Fund, the fund used to finance the state’s temporary disability and paid family leave benefits.

Figure 3

Funding Sources—Labor and Employment Proposals

2020‑21 Proposals (Dollars in Millions)

Fund

Amount

Share

General Fund

$40

32%

Unemployment Compensation Disability Fund

26

21

Workers’ Compensation premium assessments

25

20

Private Attorneys General Act settlement funds

20

16

Various mixed funding

12

9

Cannabis Tax Fund

4

3

Totals

$127

100%