BILL REQ. #:  S-1088.1 

Read first time 02/01/2005.   Referred to Committee on International Trade & Economic Development.

     AN ACT Relating to small business and entrepreneurial development; amending RCW 28C.18.060, 43.162.020, and 50.20.095; adding a new section to chapter 50.20 RCW; adding new sections to chapter 43.330 RCW; creating new sections; repealing RCW 28B.30.530 and 28B.30.533; and making appropriations.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature finds that the encouragement of entrepreneurial development and business ownership is necessary if the state's opportunities for economic growth and job creation are to be realized. Recent research shows that new job growth comes primarily from start-up firms and that entrepreneurial training and technical assistance to small businesses and self-employed individuals can increase the survival and success rate of new businesses.
     The legislature further finds that: The state's current mechanisms for encouraging and supporting entrepreneurship is inadequate; training and technical support for small businesses and entrepreneurial development is fragmented; no comprehensive plan guides the different entities providing services; and there is no single point of leadership and responsibility.
     It is the intention of the legislature to increase job creation in the state by providing a comprehensive network of technical assistance, training, and support services to entrepreneurs and start-up firms; encouraging self-employment, and coordinating private and public support to entrepreneurs and start-up firms. It is the purpose of this act to create a coordinated, efficient, responsive, and accountable system to support small business and entrepreneurial development.

NEW SECTION.  Sec. 2   The Washington entrepreneurial assistance center is created in the department of community, trade, and economic development.
     (1) The center shall have a director who shall be appointed by the director of the department of community, trade, and economic development.
     (2) The center shall have an advisory board composed of small business owners and advocates, the chair of the economic development commission, the director of the work force training and education coordinating board, the executive director of the state board for community and technical colleges, the commissioner of the employment security department, representatives of the University of Washington business school and the Washington state university college of business and economics, and staff from small business development centers. Each member of the advisory board may appoint a designee to function in his or her place.

NEW SECTION.  Sec. 3   The Washington entrepreneurial assistance center shall:
     (1) Develop and maintain a state comprehensive plan for small business and entrepreneurial development. The plan shall include but not be limited to setting measurable goals, objectives, and priorities for (a) encouraging and supporting small business and entrepreneurial development in the state; and (b) the coordination and delivery of small business and entrepreneurial training and technical assistance;
     (2) In conjunction with the work force training and education coordinating board, (a) establish and maintain an inventory of the entrepreneurial training and technical assistance services and programs available in the state; (b) disseminate information about available entrepreneurial development services and programs via in-person presentations and electronic and printed materials; and (c) undertake other activities to raise awareness of entrepreneurial training and assistance offerings;
     (3) Evaluate the extent to which existing entrepreneurial training and technical assistance programs in the state are effective and represent a consistent, integrated approach to meeting the needs of start-up and existing entrepreneurs;
     (4) Establish and administer small business development centers consistent with the comprehensive plan developed in subsection (1) of this section and provide a comprehensive system of client services through the small business development centers to meet regional small business, start-up, and entrepreneurial needs.
     (5) Apply for federal and private funding to support the small business development centers and other Washington entrepreneurial assistance center functions;
     (6) Advocate for the state's small business and entrepreneurial development system and for meeting the needs of small start-ups and existing entrepreneurs;
     (7) Work with the department of community, trade, and economic development, the work force training and education coordination board, the employment security department, and the state board for community and technical colleges to integrate the small business development centers with other state economic development and work force development programs and facilitate the development of interinstitutional entrepreneurial training and assistance programs;
     (8) Identify policies to reduce administrative and other barriers to efficient delivery and coordination of entrepreneurial assistance;
     (9) Develop with appropriate public and private entities entrepreneurial instructional materials and curricula including materials that meet the particular needs of rural and low-income communities;
     (10) Distribute awards for excellence in entrepreneurial training and assistance;
     (11) Report to the governor, the economic development commission, the work force training and education coordinating board, and the appropriate legislative committees its recommendations for statutory changes necessary to enhance operational efficiencies or enhance coordination.

NEW SECTION.  Sec. 4   The services to be provided by the small business development centers may be performed by independent contractors, private nonprofit corporations, public institutions, and local governments. Contracts shall be awarded on a competitive basis by a request for proposal process. Small business development centers may charge reasonable fees for services as approved by the Washington entrepreneurial assistance center director.

NEW SECTION.  Sec. 5   (1) The legislature finds that small technology-based firms are the source of approximately one-half of the economy's major innovations and that it is in the interest of the state to increase participation by Washington state small businesses in the federal small business innovation research program by assisting them in becoming small business innovation research program grant recipients.
     The legislature further finds that many small business innovators lack the grant-writing skills necessary to prepare a successful small business innovation research program proposal, and the federal program that funded grant-writing assistance has stopped operations. Nearly fifty percent of small businesses trained under the federal program won grants compared to less than ten percent of those that did not receive training.
     (2) As used in this section:
     (a) "Small business innovation research program" means the program, enacted pursuant to the small business innovation development act of 1982, P.L. 97-219, that provided funds to small businesses to conduct innovative research having commercial application.
     (b) "Small business" means a corporation, partnership, sole proprietorship, or individual, operating a business for profit, with two hundred fifty employees or fewer, including employees employed in a subsidiary or affiliated corporation, that otherwise meets the requirements of the federal small business innovation research program.
     (3) The Washington entrepreneurial assistance center shall establish a small business innovation research program proposal review process to train and assist Washington small businesses to win phase I small business innovation research program awards.
     (a) Each phase I application submitted to the Washington entrepreneurial assistance center shall be reviewed by a previous small business innovation research program participant or by a two-member team composed of either two previous small business innovation research program participants or an experienced grant writer and a previous small business innovation research program participant. Each reviewer or team shall provide such oral or written training and assistance to an applicant as is appropriate.
     (b) The Washington entrepreneurial assistance center shall give priority to first-time small business innovation research program applicants, new businesses, and firms with fewer than ten employees.
     (c) The Washington entrepreneurial assistance center may charge a fee for this service that is contingent upon the small business's receipt of a phase I award.
     (d) The Washington entrepreneurial assistance center may provide a stipend to each reviewer or team participant providing training or assistance.

Sec. 6   RCW 28C.18.060 and 1996 c 99 s 4 are each amended to read as follows:
     The board, in cooperation with the operating agencies of the state training system and private career schools and colleges shall:
     (1) Concentrate its major efforts on planning, coordination evaluation, policy analysis, and recommending improvements to the state's training system.
     (2) Advocate for the state training system and for meeting the needs of employers and the work force for work force education and training.
     (3) Establish and maintain an inventory of the programs of the state training system, and related state programs, and perform a biennial assessment of the vocational education, training, and adult basic education and literacy needs of the state; identify ongoing and strategic education needs; and assess the extent to which employment, training, vocational and basic education, rehabilitation services, and public assistance services represent a consistent, integrated approach to meet such needs.
     (4) Develop and maintain a state comprehensive plan for work force training and education, including but not limited to, goals, objectives, and priorities for the state training system, and review the state training system for consistency with the state comprehensive plan. In developing the state comprehensive plan for work force training and education, the board shall use, but shall not be limited to: Economic, labor market, and populations trends reports in office of financial management forecasts; joint office of financial management and employment security department labor force, industry employment, and occupational forecasts; the results of scientifically based outcome, net-impact and cost-benefit evaluations; the needs of employers as evidenced in formal employer surveys and other employer input; and the needs of program participants and workers as evidenced in formal surveys and other input from program participants and the labor community.
     (5) In consultation with the higher education coordinating board, review and make recommendations to the office of financial management and the legislature on operating and capital facilities budget requests for operating agencies of the state training system for purposes of consistency with the state comprehensive plan for work force training and education.
     (6) Provide for coordination among the different operating agencies and components of the state training system at the state level and at the regional level.
     (7) Develop a consistent and reliable data base on vocational education enrollments, costs, program activities, and job placements from publicly funded vocational education programs in this state.
     (8) Establish standards for data collection and maintenance for the operating agencies of the state training system in a format that is accessible to use by the board. The board shall require a minimum of common core data to be collected by each operating agency of the state training system.
     The board shall develop requirements for minimum common core data in consultation with the office of financial management and the operating agencies of the training system.
     (9) Establish minimum standards for program evaluation for the operating agencies of the state training system, including, but not limited to, the use of common survey instruments and procedures for measuring perceptions of program participants and employers of program participants, and monitor such program evaluation.
     (10) Every two years administer scientifically based outcome evaluations of the state training system, including, but not limited to, surveys of program participants, surveys of employers of program participants, and matches with employment security department payroll and wage files. Every five years administer scientifically based net-impact and cost-benefit evaluations of the state training system.
     (11) In cooperation with the employment security department, provide for the improvement and maintenance of quality and utility in occupational information and forecasts for use in training system planning and evaluation. Improvements shall include, but not be limited to, development of state-based occupational change factors involving input by employers and employees, and delineation of skill and training requirements by education level associated with current and forecasted occupations.
     (12) Provide for the development of common course description formats, common reporting requirements, and common definitions for operating agencies of the training system.
     (13) Provide for effectiveness and efficiency reviews of the state training system.
     (14) In cooperation with the higher education coordinating board, facilitate transfer of credit policies and agreements between institutions of the state training system, and encourage articulation agreements for programs encompassing two years of secondary work force education and two years of postsecondary work force education.
     (15) In cooperation with the higher education coordinating board, facilitate transfer of credit policies and agreements between private training institutions and institutions of the state training system.
     (16) ((Participate in the development of)) Develop policy objectives for the work force investment act, P.L. 105-220, or its successor; develop coordination criteria for activities under the ((job training partnership)) act with related programs and services provided by state and local education and training agencies; and ensure that entrepreneurial training opportunities are available through programs of each local work force investment board in the state.
     (17) Make recommendations to the commission of student assessment, the state board of education, and the superintendent of public instruction, concerning basic skill competencies and essential core competencies for K-12 education. Basic skills for this purpose shall be reading, writing, computation, speaking, and critical thinking, essential core competencies for this purpose shall be English, math, science/technology, history, geography, and critical thinking. The board shall monitor the development of and provide advice concerning secondary curriculum which integrates vocational and academic education.
     (18) Establish and administer programs for marketing and outreach to businesses and potential program participants.
     (19) Facilitate the location of support services, including but not limited to, child care, financial aid, career counseling, and job placement services, for students and trainees at institutions in the state training system, and advocate for support services for trainees and students in the state training system.
     (20) Facilitate private sector assistance for the state training system, including but not limited to: Financial assistance, rotation of private and public personnel, and vocational counseling.
     (21) Facilitate the development of programs for school-to-work transition that combine classroom education and on-the-job training, including entrepreneurial education and training, in industries and occupations without a significant number of apprenticeship programs.
     (22) Include in the planning requirements for local work force investment boards a requirement that the local work force investment boards specify how entrepreneurial training is to be offered through the one-stop system required under the work force investment act, P.L. 105-220, or its successor.
     (23) Encourage and assess progress for the equitable representation of racial and ethnic minorities, women, and people with disabilities among the students, teachers, and administrators of the state training system. Equitable, for this purpose, shall mean substantially proportional to their percentage of the state population in the geographic area served. This function of the board shall in no way lessen more stringent state or federal requirements for representation of racial and ethnic minorities, women, and people with disabilities.
     (((23))) (24) Participate in the planning and policy development of governor set-aside grants under P.L. 97-300, as amended.
     (((24))) (25) Administer veterans' programs, licensure of private vocational schools, the job skills program, and the Washington award for vocational excellence.
     (((25))) (26) Allocate funding from the state job training trust fund.
     (((26))) (27) Work with the director of community, trade, and economic development to ensure coordination between work force training priorities and that department's economic development and entrepreneurial development efforts.
     (((27))) (28) Adopt rules as necessary to implement this chapter.
     The board may delegate to the director any of the functions of this section.

Sec. 7   RCW 43.162.020 and 2003 c 235 s 3 are each amended to read as follows:
     The Washington state economic development commission shall perform the following duties:
     (1) Review and periodically update the state's economic development strategy, including implementation steps, and performance measures, and perform an annual evaluation of the strategy and the effectiveness of the state's laws, policies, and programs which target economic development;
     (2) Provide policy, strategic, and programmatic direction to the department of community, trade, and economic development regarding strategies to:
     (a) Promote business retention, expansion, and creation within the state;
     (b) Promote the business climate of the state and stimulate increased national and international investment in the state;
     (c) Promote products and services of the state;
     (d) Enhance relationships and cooperation between local governments, economic development councils, federal agencies, state agencies, and the legislature;
     (e) Integrate economic development programs, including work force training, technology transfer, entrepreneurial development, and export assistance; and
     (f) Make the funds available for economic development purposes more flexible to meet emergent needs and maximize opportunities;
     (3) Identify policies and programs to assist Washington's start-up firms and small businesses;
     (4) Assist the department of community, trade, and economic development with procurement and deployment of private funds for business development, retention, expansion, and recruitment as well as other economic development efforts;
     (5) Meet with the chairs and ranking minority members of the legislative committees from both the house of representatives and the senate overseeing economic development policies; and
     (6) Make a biennial report to the appropriate committees of the legislature regarding the commission's review of the state's economic development policy, the commission's recommendations, and steps taken by the department of community, trade, and economic development to implement the recommendations. The first report is due by December 31, 2004.

NEW SECTION.  Sec. 8   A new section is added to chapter 50.20 RCW to read as follows:
     (1) The legislature finds that the establishment of a self-employment assistance program would assist unemployed individuals and create new businesses and job opportunities in Washington state. The commissioner is directed to inform individuals identified as likely to exhaust regular unemployment benefits of the opportunity to enroll in commissioner-approved self-employment assistance programs.
     (2) An unemployed individual is eligible to participate in a self-employment assistance program if it has been determined that he or she:
     (a) Is otherwise eligible for regular benefits as defined in RCW 50.22.010;
     (b) Has been identified as likely to exhaust regular unemployment benefits under a profiling system established by the commissioner as defined in P.L. 103-152; and
     (c) Is enrolled in a self-employment assistance program that is approved by the commissioner, and includes entrepreneurial training, business counseling, technical assistance, and requirements to engage in activities relating to the establishment of a business and becoming self-employed.
     (3) Individuals participating in a self-employment assistance program approved by the commissioner are eligible to receive their regular unemployment benefits.
     (a) The requirements of RCW 50.20.010 and 50.20.080 relating to availability for work, active search for work, and refusal to accept suitable work are not applicable to an individual in the self-employment assistance program for the first fifty-two weeks of the individual's participation in the program.
     (b) An individual who meets the requirements of this section is considered to be "unemployed" under RCW 50.04.310 and 50.20.010.
     (4) An individual who fails to participate in his or her approved self-employment assistance program as prescribed by the commissioner is disqualified from continuation in the program.
     (5) The commissioner shall take all steps necessary in carrying out this section to assure collaborative involvement of interested parties in program development, and to ensure that the self-employment assistance programs meet all federal criteria for withdrawal from the unemployment fund. The commissioner may approve, as self-employment assistance programs, existing self-employment training programs available through community colleges, work force investment boards, or other organizations and is not obligated by this section to expend any departmental funds for the operation of self-employment assistance programs, unless specific funding is provided to the department for that purpose through federal or state appropriations.
     (6) The commissioner may adopt rules as necessary to implement this section.

Sec. 9   RCW 50.20.095 and 1980 c 74 s 4 are each amended to read as follows:
     Any individual registered at an established school in a course of study providing scholastic instruction of twelve or more hours per week, or the equivalent thereof, shall be disqualified from receiving benefits or waiting period credit for any week during the school term commencing with the first week of such scholastic instruction or the week of leaving employment to return to school, whichever is the earlier, and ending with the week immediately before the first full week in which the individual is no longer registered for twelve or more hours of scholastic instruction per week: PROVIDED, That registration for less than twelve hours will be for a period of sixty days or longer. The term "school" includes primary schools, secondary schools, and "institutions of higher education" as that phrase is defined in RCW 50.44.037.
     This disqualification shall not apply to any individual who:
     (1) Is in approved training within the meaning of RCW 50.20.043; ((or))
     (2) Is in an approved self-employment assistance program under section 8 of this act; or
     (3) Demonstrates to the commissioner by a preponderance of the evidence his or her actual availability for work, and in arriving at this determination the commissioner shall consider the following factors:
     (a) Prior work history;
     (b) Scholastic history;
     (c) Past and current labor market attachment; and
     (d) Past and present efforts to seek work.

NEW SECTION.  Sec. 10   (1) The small business development center is hereby abolished and its powers, duties, and functions are hereby transferred to the Washington entrepreneurial assistance center.
     (2)(a) All reports, documents, surveys, books, records, files, papers, or written material in the possession of the small business development center shall be delivered to the custody of the Washington entrepreneurial assistance center. All cabinets, furniture, office equipment, motor vehicles, and other tangible property employed by the small business development center shall be made available to the Washington entrepreneurial assistance center. All funds, credits, or other assets held by the small business development center shall be assigned to the Washington entrepreneurial assistance center.
     (b) Any appropriations made to the small business development center shall, on the effective date of this section, be transferred and credited to the Washington entrepreneurial assistance center.
     (c) If any question arises as to the transfer of any personnel, funds, books, documents, records, papers, files, equipment, or other tangible property used or held in the exercise of the powers and the performance of the duties and functions transferred, the director of financial management shall make a determination as to the proper allocation and certify the same to the state agencies concerned.
     (3) All employees of the small business development center are transferred to the jurisdiction of the Washington entrepreneurial assistance center. All employees classified under chapter 41.06 RCW, the state civil service law, are assigned to the Washington entrepreneurial assistance center to perform their usual duties upon the same terms as formerly, without any loss of rights, subject to any action that may be appropriate thereafter in accordance with the laws and rules governing state civil service.
     (4) All rules and all pending business before the small business development center shall be continued and acted upon by the Washington entrepreneurial assistance center. All existing contracts and obligations shall remain in full force and shall be performed by the Washington entrepreneurial assistance center.
     (5) The transfer of the powers, duties, functions, and personnel of the small business development center shall not affect the validity of any act performed before the effective date of this section.
     (6) If apportionments of budgeted funds are required because of the transfers directed by this section, the director of financial management shall certify the apportionments to the agencies affected, the state auditor, and the state treasurer. Each of these shall make the appropriate transfer and adjustments in funds and appropriation accounts and equipment records in accordance with the certification.
     (7) Nothing contained in this section may be construed to alter any existing collective bargaining unit or the provisions of any existing collective bargaining agreement until the agreement has expired or until the bargaining unit has been modified by action of the personnel resources board as provided by law.

NEW SECTION.  Sec. 11   The following acts or parts of acts are each repealed:
     (1) RCW 28B.30.530 (Small business development center -- Services--Use of funds) and 1984 c 77 s 1; and
     (2) RCW 28B.30.533 (Construction of RCW 28B.30.530 -- Conflict with federal requirements) and 1984 c 77 s 2.

NEW SECTION.  Sec. 12   The sum of nine hundred thousand dollars, or as much thereof as may be necessary, is appropriated from the general fund to the department of community, trade, and economic development for the biennium ending June 30, 2007, to carry out the purposes of this act.

NEW SECTION.  Sec. 13   The sum of forty-five thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2007, from the general fund to the department of community, trade, and economic development for the purposes of section 5 of this act.

NEW SECTION.  Sec. 14   The Washington entrepreneurial assistance center fund is created in the state treasury to receive program income from small business development centers and such private and public funds as are received to support small business development centers and other Washington entrepreneurial assistance center functions. Expenditures from the fund may only be used to support small business development centers and other Washington entrepreneurial assistance center functions, consistent with the Washington entrepreneurial assistance center comprehensive plan.

NEW SECTION.  Sec. 15   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 16   If any part of this act is found to be in conflict with federal requirements that are a prescribed condition to the allocation of federal funds to the state or the eligibility of employers in this state for federal unemployment tax credits, the conflicting part of this act is inoperative solely to the extent of the conflict, and the finding or determination does not affect the operation of the remainder of this act. Rules adopted under this act must meet federal requirements that are a necessary condition to the receipt of federal funds by the state or the granting of federal unemployment tax credits to employers in this state.

NEW SECTION.  Sec. 17   Sections 1 through 5 and 14 of this act are each added to chapter 43.330 RCW.