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Lawmakers and advocates clash over proposed $400 million loan from Labor & Workforce Development Fund
Summary
The May revision proposes a $400 million loan from the Labor and Workforce Development Fund to the General Fund; lawmakers and worker-outreach groups pushed back, saying the fund supports wage-theft enforcement and the California Worker Outreach Project.
The administration proposed a $400 million loan from the Labor and Workforce Development Fund to help close a projected $12 billion May revision shortfall, prompting sustained pushback from legislators and community groups that said the fund supports wage-theft enforcement and the California Worker Outreach Project (CWAP).
Grace Henry of the Department of Finance summarized Labor Agency-related May revision items and said the administration is available to answer questions. Jay Sturgis of the Labor and Workforce Development Agency said the current proposal does not affect programs supporting wage-theft enforcement, that a separate Labor Enforcement and Compliance Fund primarily funds those activities, and that the loan would leave roughly $120 million in reserves. He confirmed there is a repayment schedule for prior loans.
Committee members and dozens of public commenters representing unions, community-based worker outreach organizations and immigrant-worker groups urged the panel to reject the loan. Speakers said CWAP and related outreach programs deliver multilingual education, recover stolen wages and reduce costs to other state agencies by resolving workplace issues proactively. Multiple organizations gave examples of outreach work that identified wage theft and improved workplace safety.
Several senators asked DOF and the Labor Agency for documentation showing prior loan schedules and the fund's historical receipts and expenditures, and asked for options that would preserve radio, ADA or other safety funding if the committee restored items impacted by the May revision. Staff requested that the administration provide additional detail about the fund's original intent, the prior $100 million loan and the current reserve level within roughly 30 days.
Why it matters: The Labor & Workforce Development Fund is a special fund intended for enforcement, outreach and related activities; using it as a General Fund loan raises statutory and policy questions and would reduce funds available for those programs in a tight budget climate.
What’s next: Finance and the Labor Agency agreed to provide the committee with historical accounting and repayment schedules and to clarify program funding sources; the committee said it would consider alternatives and requested additional documentation on fund balances and program impacts.
