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State of Arkansas As Engrossed: H3/12/07 S3/27/07

86th General Assembly A Bill

Regular Session, 2007 HOUSE BILL 2536
By: Representative Burris

For An Act To Be Entitled

AN ACT TO AMEND THE EXISTING WORKFORCE TRAINING ACT TO UPDATE DEFINITIONS; TO FURTHER DEFINE THE ROLE OF THE DEPARTMENT OF ECONOMIC DEVELOPMENT; TO INCREASE THE HOURLY RATE FOR TRAINING; AND FOR OTHER PURPOSES.


Subtitle

AN ACT TO AMEND THE EXISTING WORKFORCE

TRAINING ACT.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:


SECTION 1. Arkansas Code § 6-50-702 is amended to read as follows:

6-50-702. Definitions.

As used in this subchapter, unless the context otherwise requires:

(1) "Basic skills training" means those math, reading, English, listening, oral and written communication, and computer literacy skills that a person can reasonably be expected to have attained by the end of the twelfth grade except in the instance of potential new workforce training;

(2) "Classroom training" means instructor-led training that is provided outside the process of the production of goods or the delivery of a service;

(3) "Company" means an entity currently operating in the state that has filed a corporate income tax return for the year prior to the year in which the application was submitted and that is classified in one (1) of the following ways:

(A) Manufacturers classified in North American Industry Classification System codes 31-33, as in effect January 1, 2003, including semiconductor and microelectronic manufacturers;

(B)(i) Computer firms primarily engaged in providing computer programming services; the design and development of or in designing and developing prepackaged software; businesses engaged in digital content production; computer processing and data preparation services; information retrieval services; computer and data processing consultants and developers.

(ii) All firms in this group must derive at least seventy-five percent (75%) of their revenue from out-of-state sales and not be engaged in retail sales to the general public; or

(C) Firms primarily engaged in commercial physical and biological research, North American Industry Classification System code 541710, as in effect January 1, 2003;

(4)(3)(A) "Consortium" means a group of companies that includes at least three (3) eligible companies as defined in subdivision (3)(4) of this section and which for fiscal purposes is either a private, not-for-profit corporation or an organized group that has a coordinating board or committee and a mission statement, that has or is in the process of developing bylaws, and that is establishing a bank account requiring at least two (2) consortium members' signatures.

(B) Consortia may have members that are not eligible companies so long as at least three (3) of the consortium member companies are eligible companies.

(C) Fifty percent (50%) of the eligible participants completing each course must be employees of eligible companies;

(4)(A) “Eligible company” means an entity currently operating in the state that has filed a corporate income tax return for the year prior to the year in which the application was submitted and is classified in one (1) of the following ways:

(i) Manufacturers classified in sectors 31-33 under the North American Industrial Classification System as it existed on January 1, 2007.

(ii) Manufacturers classified in sectors 20-39 according to the Standard Industrial Classification standards as they existed on January 1, 2007 but which are classified in another sector under the North American Industrial Classification System as it existed on January 1, 2007;

(iii)(a) Businesses primarily engaged in the design and development of prepackaged software, digital content production and preservation, computer processing and data preparation services, or information retrieval services.

(b) All businesses under subdivision (4)(A)(ii)(a) shall derive at least seventy-five percent (75%) of their sales revenue from out of state;

(iv)(a) Businesses primarily engaged in motion picture productions.

(b) All businesses under subdivision (4)(A)(iii)(a) shall derive at least seventy-five percent (75%) of their sales revenue from out of state;

(v) An intermodal facility or distribution center, if seventy-five percent (75%) of its sales revenue is from out of state;

(vi) An office sector business if seventy-five percent (75%) of its sales revenue is from out of state;

(vii) Firms primarily engaged in commercial, physical and biological research as classified under the North American Industry Classification System code 541710 as it existed on January 1, 2003;

(viii) A national or regional corporate headquarters as classified under North American Industry Classification System code 551114 as it existed on January 1, 2003, if the national or regional headquarters serves more than one (1) state;

(ix)(a) A scientific and technical services business.

(b)(1) All businesses under subdivision (4)(A)(ix)(a) shall derive at least seventy-five percent (75%) of their sales revenue from out of state.

(2)(A) The average hourly wages paid by businesses in this group shall not exceed one hundred fifty percent (150%) of the county average hourly wage or the state average hourly wage, whichever is less.

(B) The average hourly wage threshold determined at the signing of the financial incentive agreement shall be the threshold for the term of the agreement;

(x)(a) All building trade industries classified under North American Industry Classification System codes 236 and 238 as they existed on January 1, 2003.

(b) A business classified under North American Industry Classification System code 23899 shall not qualify as a building trade industry; and

(xi) Air transport businesses primarily engaged in aircraft maintenance, repair services, and aircraft testing as classified under North American Industry Classification System code 488190 as it existed on January 1, 2007.

(B) The Director of the Department of Economic Development may classify a nonretail business as an eligible company if:

(i) The business receives at least seventy-five percent (75%) of its sales revenue from out of state; and

(ii) The business proposes to pay wages in excess of one hundred ten percent (110%) of the county average hourly wage or state average hourly wage, whichever is less;

(5) "Eligible recipient" means a full-time permanent employee of an Arkansas company or consortium who is subject to the Arkansas personal income tax;

(6) "Full-time instructor or trainer" means a person who works a minimum of thirty (30) hours per week on at least a nine-month contract and has the normal fringe benefit package available to any employee the institution considers to be a full-time employee;

(7)(6) "Governing council" means the directors or their designees of the Department of Economic Development, the Department of Higher Education, and the Department of Workforce Education;

(8)(7) "Internal training" means classroom training provided to company employees by company trainers who may be either full-time employees of the company or consultants paid by the company; and

(8) “Potential new workforce” means two (2) or more eligible companies with common job skill requirements requiring a minimum of fifteen (15) new employees and conducting a minimum of fifteen (15) hours of preemployment training, thereby allowing prospective employees and employers an opportunity to evaluate one another before making employment commitments; and

(9)(A) "State-supported educational institution" means a secondary or postsecondary Arkansas educational institution that receives the majority of its funding from state or local tax revenues.

(B) However, for purposes of this subchapter, Texarkana College may be considered a state-supported educational institution for the purpose of delivering training services to eligible companies located in Miller County, if Texarkana College continues to waive out-of-state tuition for residents of Arkansas.
SECTION 2. Arkansas Code § 6-50-703(b), concerning the Arkansas Existing Workforce Training Program, is amended to read as follows:

(b) The primary purpose of the program shall be to provide financial assistance to Arkansas business and industry for upgrading the knowledge and skills of the existing work force or a potential new workforce and to increase the capacity of state-supported educational institutions to supply the ongoing training needs of Arkansas companies.


SECTION 3. Arkansas Code § 6-50-704 is amended to read as follows:

6-50-704. Rules and regulations for program.

(a) The Department of Economic Development shall promulgate rules and regulations in accord with under the Arkansas Administrative Procedure Act, § 25-15-201 et seq., for implementation of this subchapter by the department.

(b) Rules and regulations shall include, but not be limited to, the following:

(1) Training shall be conducted for the purpose of meeting specific business goals and performance objectives;

(2) As part of the application process, a company or consortium shall be responsible for determining that participants involved in the training program possess the appropriate prerequisite literacy skills;

(3)(A) The amount of financial support a company or consortium receives shall be determined and approved by the department, approved by the governing council, and set forth in writing prior to any funds' being committed and distributed or prior to any tax credits' being approved.

(B) For companies or consortia that use state-supported educational institutions to deliver classroom training to their employees, the amount of support shall be the lesser of:

(i) One-half (1/2) of the amount paid by the company to the state-supported educational institution for the training;

(ii)(a) The instructional hour rate established by the governing council, not to exceed sixty dollars ($60.00) eighty dollars ($80.00) per instructional hour, times the number of instructional hours delivered by a full-time instructor or trainer with fifty percent (50%) or more of the eligible participants completing the course.

(b) For companies that use company employees or company-paid consultants to deliver classroom training to their employees, the amount of the tax credit shall not be more than fifteen dollars ($15.00) twenty-five dollars ($25.00) per instructional hour.

(c) The minimum class size needed to receive full benefits is five (5) trainees. For classes smaller than five (5), the amount of support will be reduced proportionally;

(iii) The instructional hour rate established by the governing council, not to exceed fifty dollars ($50.00) per instructional hour, times the number of instructional hours by adjunct or part-time instructors or trainers with fifty percent (50%) or more of the eligible participants completing each course;

(iv)(iii) The instructional hour rate established by the governing council, not to exceed thirty-five dollars ($35.00) per instructional hour, times the number of instructional hours for safety-related training; or

(v)(iv) The instructional hour rate established by the governing council, not to exceed thirty-five dollars ($35.00) per instructional hour, times the number of instructional hours for all courses with less than fifty percent (50%) of the eligible participants completing each course;

(4) Training delivered by means other than traditional classroom training may be considered by the governing council. For approved training delivered by means other than traditional classroom training, a flat rate of reimbursement will be established by the governing council;

(5) Applications for tax credits afforded by this subchapter shall be available on and after January 1, 2000;

(6) The maximum amount of total tax credits allowed by the department pursuant to this subchapter shall not exceed four hundred fifty thousand dollars ($450,000) per year;

(7) Neither grant funds nor tax credits shall be used to support any training, including remedial basic skills training, that is authorized under any other state or federal program; and

(8) Neither grant funds nor tax credits shall be used to support any training that is mandated by any state or federal law or regulation without a unanimous vote of the governing council.


SECTION 4. The provisions of this act shall not be effective until the Chief Fiscal Officer of the State certifies that additional funding has been provided to state general revenues from other funding sources and is available for use during fiscal year 2008 and fiscal year 2009 in an amount sufficient to replace the general revenue reduction for each of the fiscal years 2008 and 2009 that would result from the adoption of this act.
/s/ Burris
APPROVED: 4/3/2007



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