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AB-2670 California Regional Initiative for Social Enterprises Program.(2021-2022)



Current Version: 04/07/22 - Amended Assembly

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AB2670:v98#DOCUMENT

Amended  IN  Assembly  April 07, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 2670

Introduced by Assembly Member McCarty

February 18, 2022

An act to add Chapter 7.3 (commencing with Section 11788) to Part 1 of Division 3 of Title 2 of the Government Code, relating to workforce development.


LEGISLATIVE COUNSEL'S DIGEST


AB 2670, as amended, McCarty. California Regional Initiative for Social Enterprises Program.
Existing law establishes the Government Operations Agency, which consists of various entities, including the Department of General Services and the Department of Human Resources.
Existing law requires, as part of the California Workforce Innovation and Opportunity Act, the California Workforce Development Board to, among other things, identify opportunities for “earn and learn” job training opportunities that meet the industry’s workforce demands and that are in high road, high-demand jobs. Under existing law, “earn and learn” programs include subsidized employment with an employer of record, which may include, but not be limited to, an employment social enterprise, as defined, or a worker cooperative, as defined, particularly for individuals with barriers to employment.
This bill would require, upon appropriation by the Legislature, the Government Operations Agency to establish the California Regional Initiative for Social Enterprises Program for purposes of creating a statewide effort to support employment social enterprises, as described. The bill would declare the intent of the Legislature to enact legislation that would expand on the framework for the program. to provide grants that expand the capacity of small business technical assistance centers, as defined, to provide consulting and training to employment social enterprises, as defined, and to expand the capacity of employment social enterprises in the state, through competitive subgrants administered by small business technical assistance centers. Successful subapplicant employment social enterprises would be eligible for grants of up to $250,000 annually, and technical assistance during the duration of the grant period. The bill would describe the eligibility criteria and application requirements for the small business technical assistance centers. The bill would require the agency to issue a notice to the small business technical assistance centers upon approval of an award, as provided, and would require the small business technical assistance centers to provide a final written performance and financial report to the agency consistent with specified requirements.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Small businesses form the core of the California economy and it is in the interest of the state to increase opportunities to improve access to businesses and technical resources for entrepreneurs, the self-employed, and microbusiness and small business owners, particularly those in underserved business groups, including employment social enterprises.
(b) Nonprofit, community-based 501(c)(3) organizations, often funded by financial institutions, corporations, universities and colleges, corporate social responsibility programs, and philanthropy, have emerged to fill the gaps in entrepreneurial education and training for employment social enterprises and social entrepreneurs in underserved business groups, and play a critical role in the local small business ecosystem.
(c) Employment social enterprises, as defined in Section 14005 of the Unemployment Insurance Code, are businesses that achieve transformative social impact by providing jobs, training, and support to people who are breaking through barriers to employment. There are more than 700 employment social enterprises across the country and an estimated 200 employment social enterprises in the state.
(d) Employment social enterprises deliberately provide jobs, income, training, and supportive services to talented individuals, both adults and youth, who are often overlooked by employers and who are overcoming workforce barriers. Employment social enterprises deliberately employ individuals who the traditional public workforce system often does not serve, or does not serve effectively, including individuals who have experienced incarceration, homelessness, mental illness, or addiction. Because these experiences are often caused and compounded by structural racism, the majority of people employment social enterprises serve are people of color.
(e) Employment social enterprises help their participants retain employment and earn increased incomes by providing a paycheck, work experience, on-the-job training, and crucial wraparound supports, such as housing, access to childcare, mental health services, coaching, help with business attire or work uniforms, and much more. An employment social enterprise job can often be the first job for employees, and an employment social enterprise helps its employees to find their next job, along with providing employees access to their career pathway.
(f) In addition to creating jobs and improving lives, employment social enterprises decrease taxpayer costs by reducing rates of incarceration, recidivism, and homelessness and by increasing economic self-sufficiency. The employment social enterprise model leads to greater economic security and mobility for its employees and yields a social return on investment of $2.23 in benefits for every $1.00 invested.
(g) Employment social enterprises are at the intersection of both workforce and economic development, and anchor businesses in communities across the state. Employment social enterprises focus on low-income communities, and their double bottom lime mission makes them ideal candidates for the kind of incentives that have long been provided to level the playing field for businesses owned by women, people of color, veterans, and others, in the areas of regulatory requirements, access to capital, competition for contracts, and marketing of goods and services. To fulfill the employment social enterprise social mission, the cost of doing business includes on-the-job training for a labor force that is largely composed of individuals who are overcoming significant barriers to employment. In most employment social enterprises, business profits are reinvested into the training and support of employees and into business growth to create more jobs. In nonprofit employment social enterprises, there are only social, not financial, returns to management. In for-profit employment social enterprises, some of the financial returns that would normally flow to owners are instead invested in the training and support of employees. It is also common for employment social enterprises to leverage additional public and private resources to support the additional cost of workforce training.
(h) Employment social enterprises consist of the following elements:
(1) A nonprofit or for-profit business that sell goods or services.
(2) A mission to employ low-income people who are overcoming multiple barriers to employment.
(3) Wage-paid employment that combines real work, on-the-job training, and skill development, and supportive services for the individuals on the payroll who are overcoming barriers to employment.
(4) Training and supportive services that may include one or more of the following:
(A) Experience and supervision that reinforces workplace norms and general behaviors that facilitate success in any work environment, often referred to as “soft” or “essential” skills.
(B) Worksite supervision that includes feedback on performance and coaching to help participants become work ready and to transition to traditional, unsupported employment.
(C) Linking participants to, or direct provision of, services that can help them stabilize their lives, avoid relapse of behaviors such as drug or alcohol abuse or criminal behavior, and obtain supports for work-related needs such as childcare or housing.
(D) Promotion and support of the completion of industry-recognized certificates.
(E) Connections and enrollment support to community colleges, educational institutions, vocational training and certificate programs, preapprenticeship and apprenticeship programs, or other opportunities to pursue career and educational advancement.
(F) Job search, development, and placement services to prepare resumes and cover letters, identification of job openings, preparation for and scheduling of interviews, and followup with employers after a participant has an interview.
(G) Job retention services that include followup with beneficiaries or employers to support job retention and advancement.
(i) It is in the interest of the state to collaborate with the California Regional Initiative for Social Enterprises Program to provide an economic environment in which employment social enterprises can be successful, including participation in a seamless network of state and nonprofit programs, services, and activities that benefit employment social enterprises.

SECTION 1. SEC. 2.

 Chapter 7.3 (commencing with Section 11788) is added to Part 1 of Division 3 of Title 2 of the Government Code, to read:
CHAPTER  7.3. California Regional Initiative for Social Enterprises Program

11788.
 For purposes of this chapter, all of the following terms shall have the following meanings:
(a) “Agency” means the Government Operations Agency.
(b) “Applicant” means a small business technical assistance center as defined in subdivision (e).
(c) “Employment social enterprise” has the same meaning as in Section 14005 of the Unemployment Insurance Code.
(d) “Program” means the California Regional Initiative for Social Enterprise Program created pursuant to, and administered in accordance with, this chapter.
(e) “Small business technical assistance center” includes a federal small business technical assistance center, a community development financial institution, as defined in Section 1805.104 of Title 12 of the United States Code, or any established nonprofit community-based organization that is exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code, the mission of which includes grantmaking and technical assistance to support economic empowerment of underserved microbusinesses or small businesses and entrepreneurs, and that operates entrepreneurial or small business development programs that provide free or low-cost services to California’s underserved businesses and social entrepreneurs to enable their launch and sustained growth.
(f) “Subapplicant” means an employment social enterprise, as defined in subdivision (c).

11788. 11788.1
 (a) Upon appropriation by the Legislature, the Government Operations Agency shall establish the California Regional Initiative for Social Enterprises Program pursuant to this chapter for purposes of creating a statewide effort to support employment social enterprises in developing an inclusive workforce development system by providing targeted, specialized, trauma-informed employment services designed to serve individuals with barriers to employment. chapter.
(b) The agency shall administer the program to provide grants to accomplish both of the following:
(1) Expand the capacity of small business technical assistance centers in the state, including other nonprofit small business technical assistance centers, that provide consulting and training to employment social enterprises in this state.
(2) Expand the capacity of employment social enterprises in the state through subgrants administered by small business technical assistance centers.
(c) In implementing the program, the agency shall consult with local, regional, federal, and other state public and private entities that share a similar mission to support the needs of employment social enterprises in the state.
(d) In order to accelerate economic mobility and inclusion for individuals that experience employment barriers, the purpose of the program shall be to provide technical and financial assistance to employment social enterprises by entering into grant agreements with one or more small business technical assistance centers.
(e) The technical assistance offered by a small business technical assistance center to an employment social enterprise shall consist of evaluating the readiness of an employment social enterprise for sustainable growth across five areas: business model, program model, fundraising, operations, and human capital. Through a competitive grant process, employment social enterprises shall be eligible for grant funds administered by a small business technical assistance center to provide grants of up to two hundred and fifty thousand dollars ($250,000) annually, and technical assistance during the duration of the grant period to grow employment social enterprises, and underserved small business groups that are facing capital and opportunity gaps.
(f) An applicant pursuant to this chapter shall be a small business technical assistance center operating as a group, including a regional or statewide network, or as an individual center. A small business technical assistance center operating as a group consisting of a center organized under a coordinating administrative or fiscal entity shall apply by submitting a single coordinated application to the agency.
(g) A subapplicant pursuant to this chapter shall be an employment social enterprise. Paired with technical assistance, the subapplicant shall receive a grant of sufficient size and scope to enable the employment social enterprise to build their capacity to generate revenue and provide jobs, training, and support to employees, develop data and learning systems, or replicate or expand within their community or to other California communities.

11788.2.
 (a) An applicant shall be eligible to participate in the program if the agency determines that the applicant meets all of the following criteria:
(1) The applicant shall document the existence of at least one private funding source with similar intent to expand the capacity of employment social enterprises.
(2) The amount of funding that the applicant is requesting is less that the total amount of private funding documented pursuant to paragraph (1) and is greater than five hundred thousand dollars ($500,000).
(3) The applicant is seeking funding for between one and five years in duration.
(4) The applicant is, or has, a fiscal agent that is able to receive nonfederal funds.
(5) The applicant is able to connect state and local agencies, including, but not limited to, agencies in the workforce, social and health services, homelessness, and justice systems to better serve high-barrier populations and ensure greater system collaboration.
(6) The applicant shall provide information describing the transparent, competitive process by which it will select employment social enterprises, subapplicants, to receive the subgrants. The subapplicants shall have a demonstrated track record of achieving specific outcomes related to economic inclusion, stability, and mobility that meets the following criteria:
(A) A clear and strong business model that demonstrates revenue growth and potential for further growth and scale.
(B) A comprehensive and data-driven program model that supports a quality employment social enterprise job that prioritizes long-term outcomes for its employees and demonstrates strong results.
(C) Strong leadership that presents a vision for the employment social enterprise that encompasses realistic growth, expansion, and deepening impact and demonstrates commitment to racial equality in the employment social enterprise.
(D) It is in a stable financial position, and possesses the capacity to work with a small business technical assistance center and to implement recommendations that are offered by a small business technical assistance center.
(b) The applicant shall agree that if an employment social enterprise is selected to receive a subgrant by more than one small business technical assistance center, the small business technical assistance centers involved will defer to the decision of the employment social enterprise as to which small business technical assistance center it chooses to work with.
(c) The applicant shall provide information about its experience in providing technical assistance to employment social enterprises, advising on data evaluation and learning approaches and systems, assessing applicants for grants, and assessing the performance of employment social enterprises that receive grants.
(d) The applicant shall provide a description of its plan for providing technical assistance, in addition to financial assistance, to employment social enterprises that will increase the ability of the employment social enterprise to achieve sustainable growth in its business model, program model, fundraising, operations, and human capital.

11788.3.
 To be eligible to receive a grant pursuant to this chapter, a small business technical assistance center shall submit an application to the agency, at the time and in the manner specified by the agency, containing information that the agency deems necessary, including, but not limited to, assurance that the small business technical assistance center will do all of the following:
(a) Issue a request for proposals from employment social enterprises for subgrants grants under the program that may contain the following information:
(1) The eligibility requirements.
(2) The available funding range.
(3) The availability of private funding described in paragraph (1) of subdivision (a) of Section 11788.2.
(4) Operational capacity described in Section 11788.2.
(5) The duration of the program.
(6) The start date of the program.
(7) Narrative requirements.
(8) Reporting requirements.
(9) Required attachments.
(10) Submission requirements.
(11) Application evaluation criteria.
(b) (1) Evaluate subapplicants based upon the following factors:
(A) The proposed use of the requested funding, including the specificity, measurability, and ability of the applicant to document and achieve the goals and objectives identified in its application.
(B) The proposed management strategy of the subapplicant to achieve the goals and objectives identified in its subapplication.
(C) The subapplicant’s ability to complement and leverage the work of other local, state, federal, and nonprofit or private business technical assistance resource providers.
(D) The subapplicant’s historical performance with private funding sources and the strength of its fiscal controls.
(2) The center shall prioritize funding for subapplicants that best meet the criteria listed in paragraph (1) and give preference to employment social enterprises that also satisfy the following:
(A) Are located in regions of the state with characteristics like those of the Inland Empire and the Central Valley.
(B) Are led by people of color or with leadership teams or boards that are majority people of color.
(C) Are led by people with lived experience, including, but not limited to, having been incarcerated, homeless, or engaged in substance misuse.

11788.4.
 (a) Upon approval of a grant award pursuant to this article, the agency shall issue a notice to the small business technical assistance center that includes all of the following:
(1) The amount of the award.
(2) A requirement that the small business technical assistance center periodically provide a performance report that includes all of the following information:
(A) The number of employment social enterprises consulted and trained.
(B) The amount of funds awarded to employment social enterprises.
(C) The size of employment social enterprises assisted based upon the number of employees at the time that those businesses were assisted, as reported by those assisted businesses, categorized based upon the size of the assisted business, as determined by the agency.
(D) The city and county in which any assisted employment social enterprises are located.
(E) A narrative description of the system collaboration with state and local government agencies that the small business technical assistance center has developed to better serve people breaking through barriers to employment.
(F) Industry sectors of the employment social enterprises assisted, as reported by those businesses.
(G) A narrative description of how the funds awarded were used to expand services to employment social enterprises and to help employment social enterprises to expand, facilitate investment, and create jobs in California, including in rural communities, low-income communities, and disaster-impacted areas included in a state or federal emergency declaration or proclamation.
(H) The demographics of employment social enterprise leaders supported, including their race.
(I) The number of jobs created.
(J) The number of individuals employed and the demographics of social enterprise employees, including race and gender.
(3) A requirement that the small business technical assistance center periodically provide a financial report that includes all of the following information:
(A) The name of any business consultant employed.
(B) The hourly rates of any business consultant employed.
(C) The cost of employment social enterprise training.
(D) The cost of administration and marketing.
(E) The duration of the assistance provided by the small business technical assistance center.
(F) The start date of the assistance provided by the small business technical assistance center.
(b) Each small business technical assistance center shall accept the performance and financial reporting requirements in this section as a condition of receiving the grant.
(c) No more than 60 days following the completion of an agreement term pursuant to this chapter, a small business technical assistance center shall provide a final written performance and financial report to the agency consistent with the requirements of this section.

SEC. 2.

It is the intent of the Legislature to enact legislation that would expand on the framework for the California Regional Initiative for Social Enterprises Program, as established in this measure.