ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

ASSEMBLY, No. 2369

with committee amendments

STATE OF NEW JERSEY

DATED:  JUNE 24, 2024

      The Assembly Appropriations Committee reports favorably and with committee amendments Assembly Bill No. 2369.

      As amended, this bill, titled the “New Jersey Works Act,” incentivizes businesses to establish pre-employment and work readiness training programs together with certain types of educational institutions or with nonprofit organizations.  Under the bill, a business may receive a credit against the corporation business tax or gross income tax for 100 percent of the financial assistance provided to support a qualified pre-employment and work readiness training program approved by the Department of Labor and Workforce Development (department).  Businesses engaged in a construction trade are excluded from participating in the bill’s training programs.

      The bill authorizes the award of $2 million in tax credits per State fiscal year to taxpayers that have established an approved pre-employment and work readiness training program with an institution of higher education, a comprehensive high school, a vocational school, or a nonprofit organization. 

      The bill requires an educational institution or nonprofit organization, which has entered into an agreement with a business entity to establish a training program, to submit a proposed pre-employment and work readiness and training plan to the department for approval.  At a minimum, each pre-employment and work readiness training program must offer 12 weeks of paid training, at the minimum wage for each participant, and include, but not be limited to, instruction and training in the following areas:  basic math and English literacy, communication skills, critical thinking, leadership, life skills, and job readiness skills training, such as conflict management, finance concepts, resume preparation, problem solving, self-awareness, and management, and any other training deemed necessary by the department.  A single pre-employment training plan may be submitted by multiple educational institutions or nonprofit organizations, but the plan must designate one entity as the lead organization with responsibility for the plan.

      Under the bill, program participants are required to be a minimum of 16 years old.  An educational institution or nonprofit organization may not determine a trainee’s eligibility for participation in the training program based on the trainee’s possession of either a high school diploma or a high school equivalency.  Each program would offer trainees employment with a business entity which has provided funding for a qualified pre-employment and work readiness training program.

      The bill requires the department to review each proposed pre-employment and work readiness training plan to make an initial determination of whether the proposed training program qualifies for financial assistance based on whether the program:

      (1) consists of pre-employment and work readiness training activities to benefit low- and moderate-income households and persons in need of mid-career skills training or vocational retraining; and

      (2) is reasonably designed to accomplish its intended purpose and further the purposes of the proposed training plan.

      Additionally, the educational institution or nonprofit organization would be required to: demonstrate that it has the capacity to implement the plan; ensure that financial assistance will be expended exclusively to implement the plan; and provide documentation of its completion rates.

      If the department makes an initial determination that a proposed plan qualifies under the program guidelines, the department would refer the proposal to the Director of the Division of Taxation for final approval, and the director would notify the department of a final approval.

      The bill requires the Department of State to conduct a study of the efficacy of the training programs and tax credits following two years from the date of enactment of the bill and report the findings to the Governor and the Legislature.

      The bill appropriates $1 million from the General Fund to the department to effectuate its purposes.

COMMITTEE AMENDMENTS:

      The committee amendments modify the definition of “comprehensive high school” to mean a public or non-public high school located in the State that may grant a State-endorsed diploma to students and offers approved career and technical education programs of study.  As introduced, the bill defined a “comprehensive high school” as a public or non-public high school located in the State that may grant a State-endorsed diploma to students and offers vocational education.

      The committee amendments also modify certain requirements concerning pre-employment and work readiness training programs established pursuant to the bill.  The committee amendments provide that the purpose of each pre-employment and work readiness training program is to recruit, prepare, and educate individuals for in-demand jobs with long-term career potential in labor demand occupations through paid training programs.  As introduced, the bill provided that the purpose of each pre-employment and work readiness training program is to recruit, prepare, and educate individuals for entry-level jobs with long-term career potential through paid training programs. 

      The committee amendments provide that each pre-employment and work readiness training program is required to follow all child labor laws and regulations, including, but not limited to, N.J.A.C.12:58-1, N.J.A.C.12:56-18, and N.J.A.C.6A:19-4.  The bill, as introduced, does not include this requirement.

      The committee amendments require each entity that establishes a pre-employment and work readiness training program to be included on the State Eligible Training Provider List maintained by the department.

      The bill, as introduced, requires the department to determine that a proposed plan for a pre-employment and work readiness training program meets certain standards in order to qualify for assistance.  The committee amendments add to this list of standards the requirement that the educational institution or nonprofit organization ensures supervision and placement by a trained work-based learning coordinator, if the student is enrolled in a secondary education school-sponsored and work-based learning experience.

      The committee amendments also add provisions to the bill that: (1) require the department to consult with the Department of Education regarding the development of pre-employment and work readiness training programs for students enrolled in secondary education school-sponsored work-based learning experiences; and (2) and authorize the department to consult with the Department of Education regarding the approval and implementation of pre-employment and work readiness training programs for students enrolled in secondary education school-sponsored work-based learning experiences.

      The committee amendments reduce, from $12 million to $2 million, the amount of tax credits that may be awarded annually to taxpayers that provide assistance for an approved pre-employment and work readiness training program.

      The committee amendments provide that tax credits may be awarded beginning in State fiscal year 2025.  As introduced, the bill allows tax credits to be awarded beginning in State fiscal year 2024,

      As introduced, the bill requires the Commissioner of Labor and Workforce Development, in consultation with the Director of the Division of Taxation, to adopt rules and regulations pursuant to the “Administrative Procedure Act” to effectuate the purposes of the bill.  The committee amendments require the Commissioner of Labor and Workforce Development to also consult with the Commissioner of Education in adopting these rules and regulations.

      The committee amendments reduce, from $3 million to $1 million, the General Fund appropriation to the department to effectuate the purposes of the bill.

FISCAL IMPACT:

      The Office of Legislative Services (OLS) concludes that this bill will result in an annual net decrease in State revenues.  Several factors, such as the amount of assistance provided to pre-employment and work readiness training programs and the number of participants that receive employment following program completion, will impact the specific magnitude of the direct and indirect State revenue effects of the bill.

      The direct State revenue loss may be partially offset by the indirect State revenue effects catalyzed through new training and employment opportunities, such as additional State revenues from program participants hired by business entities that provide assistance to pre-employment and work readiness training programs.  In contrast, the fiscal effects generated by employment opportunities by credit receiving businesses that will be created irrespective of the tax credit award cannot be attributed to the bill.

      The bill appropriates $1 million to effectuate the purposes of the bill.  If the full $1 million is not expended in the first year the bill is in effect, the remaining amount will be spent in future years until all funding is exhausted.