(a) (1) Beginning program year 2012, an amount equal to at least 25 percent of funds available under Title I of the federal Workforce Innovation and Opportunity Act of 2014 (Public Law 113-128) provided to local workforce investment boards for adults and dislocated workers shall be spent on workforce training programs. This minimum may be met either by spending 25 percent of those base formula funds on training or by combining a portion of those base formula funds with leveraged funds as specified in subdivision (b).

(2) Beginning program year 2016, an amount equal to at least 30 percent of funds available under Title I of the federal Workforce Innovation and Opportunity Act of 2014 (Public Law 113-128) provided to local workforce development boards for adults and dislocated workers shall be spent on workforce training programs. This minimum may be met either by spending 30 percent of those base formula funds on training or by combining a portion of those base formula funds with leveraged funds as specified in subdivision (b).

(3) Except as provided in subdivision (b), expenditures that shall count toward the minimum percentage of funds shall include only training services as defined in Section 3174(c)(3)(D) of Title 29 of the United States Code and the corresponding sections of the Code of Federal Regulations, including all of the following:

(A) Occupational skills training, including training for nontraditional employment.

(B) On-the-job training.

(C) Programs that combine workplace training with related instruction, which may include cooperative education programs.

(D) Training programs operated by the private sector.

(E) Skills upgrading and retraining.

(F) Entrepreneurial training.

(G) Incumbent worker training in accordance with Section 3174(d)(4) of Title 29 of the United States Code.

(H) Transitional jobs in accordance with Section 3174(d)(5) of Title 29 of the United States Code.

(I) Job readiness training provided in combination with any of the services described in subparagraphs (A) to (H), inclusive.

(J) Adult education and literacy activities provided in combination with services described in any of subparagraphs (A) to (G), inclusive.

(K) Customized training conducted with a commitment by an employer or group of employers to employ an individual upon successful completion of the training.

(b) (1) Local workforce development boards may receive a credit of up to 10 percent of their adult and dislocated worker formula fund base allocations for public education and training funds and private resources from industry and from joint labor-management trusts that are leveraged by a local workforce development board for expenditure on training and supportive services. This credit may be applied toward the minimum training requirements in paragraphs (1) and (2) of subdivision (a).

(A) Leveraged funds that may be applied toward the credit allowed by this subdivision shall only include the following:

(i) Federal Pell Grants established under Title IV of the federal Higher Education Act of 1965 (20 U.S.C. Sec. 1070 et seq.).

(ii) Programs authorized by the federal Workforce Innovation and Opportunity Act of 2014 (Public Law 113-128).

(iii) Trade adjustment assistance.

(iv) Department of Labor National Emergency Grants.

(v) Match funds from employers, industry, and industry associations.

(vi) Match funds from joint labor-management trusts.

(vii) Employment training panel grants.

(viii) Supportive services as defined by the federal Workforce Innovation and Opportunity Act of 2014 (Public Law 113-128) and the corresponding sections of the Code of Federal Regulations, but only for those individuals enrolled in training services for occupations in demand by industry, as defined in Section 3174(c)(3)(D) of Title 29 of the United States Code and the corresponding sections of the Code of Federal Regulations. Supportive services may include, but are not limited to, the costs of trainees’ or students’ books, safety and lab equipment, tools and any payment of costs permitted under the rules of the federal Workforce Innovation and Opportunity Act of 2014 and corresponding regulations pertaining to supportive services expenditures, including the rule that these supportive services costs are necessary for the individual to participate in training.

(ix) Temporary Assistance for Needy Families (TANF) funds spent on supportive services as defined by the federal Workforce Innovation and Opportunity Act of 2014 (Public Law 113-128) and the corresponding sections of the Code of Federal Regulations, for TANF enrolled individuals coenrolled in and receiving training services for occupations in demand by industry through the federal Workforce Innovation and Opportunity Act of 2014. Supportive services may include, but are not limited to, the costs of trainees’ or students’ books, safety and lab equipment, tools and any payment of costs permitted under the rules of the federal Workforce Innovation and Opportunity Act of 2014 and corresponding regulations pertaining to supportive services expenditures, including the rule that these supportive services costs are necessary for the individual to participate in training.

(x) Temporary Assistance for Needy Families (TANF) funds spent on transitional and subsidized employment for TANF enrolled individuals coenrolled in and receiving training services through the federal Workforce Innovation and Opportunity Act of 2014.

(xi) Any other local, state, or federal funds spent on training or supportive services for individuals enrolled in training, provided the individuals receiving the training are enrolled in the federal Workforce Innovation and Opportunity Act of 2014 for performance reporting and tracking purposes.

(xii) With the approval of the state board, any other public or private funds source not identified in this subparagraph that is used to provide training or supportive services for individuals who are also enrolled in training provided the individuals receiving the relevant services are enrolled in the federal Workforce Innovation and Opportunity Act of 2014 for performance reporting and tracking purposes.

(B) Credit for leveraged funds shall only be given if the local workforce development board keeps records of all training and supportive services expenditures it chooses to apply to the credit. Training and supportive services expenditures may only be applied to the credit if the relevant training costs can be independently verified by the Employment Development Department and, without exception, training participants must be coenrolled in the federal Workforce Innovation and Opportunity Act of 2014 performance monitoring system.

(2) The use of leveraged funds to partially meet the training requirements specified in paragraphs (1) and (2) of subdivision (a) is the prerogative of a local workforce development board. A local workforce development board shall annually provide data to the Employment Development Department on the amount of leveraged funds used to partially meet the requirements of subdivision (a). This data shall disaggregate and report separately, the amount spent on both training and supportive services. Costs arising from the recordkeeping required to demonstrate compliance with the leveraging requirements of this subdivision are the responsibility of the local board.

(c) (1) At the end of each program year, the Employment Development Department shall calculate for each local workforce development board whether the local workforce development board met the expenditure requirements of this section.

(2) The Employment Development Department shall provide to each local workforce development board its individual calculations with respect to the expenditure requirements of this section.

(3) The Employment Development Department shall report annually to the Governor, the Legislature, and the California Workforce Development Board, on or before November 30, regarding the training and supportive services expenditures made by local workforce development boards pursuant to the expenditure requirements of this section.

(4) Consistent with the definitions and regulations of the federal Workforce Innovation and Opportunity Act of 2014, the Employment Development Department shall specify which expenditures qualify as training and supportive services expenditures. The annual report shall specify the total amount of federal funding provided to the state and to each of the local workforce development areas for the adult and dislocated persons programs and the amount of these federal Workforce Innovation and Opportunity Act of 2014 funds expended for training services.

(5) Consistent with calculations required by paragraph (1), the report shall also include, for each local workforce development area, the total amount of leverage funds utilized as training expenditure allowances authorized by subdivision (b) to meet the expenditure requirements of this section. The report shall specify the share of leverage funds that were expended on both training and supportive services for each Local Workforce Development Area.

(6) A report submitted pursuant to this section shall comply with Section 9795 of the Government Code.

(d) A local workforce development area that does not meet the requirements of subdivision (a) shall submit a corrective action plan to the Employment Development Department that provides reasons for not meeting the requirements and describes actions taken to address the identified expenditure deficiencies. A local workforce development area shall provide a corrective action plan to the Employment Development Department pursuant to this section within 90 days of receiving the calculations described in subdivision (c).

(e) For the purpose of this section, “program year” has the same meaning as provided in Section 667.100 of Title 20 of the Code of Federal Regulations.

(Amended by Stats. 2017, Ch. 324, Sec. 2. (AB 1149) Effective January 1, 2018. See conditional termination clause in Section 14007.)