PRIVATE INDUS. COUNCIL OF SOUTHEAST LOS ANGELES, INC. v. Employment Dev. Dept.

Opinion

JOHNSON, J.

The California Employment Development Department, which dispenses federal job training funds under the Job Training Partnership Act (JTPA) issued a directive requiring local job training agencies to

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spend at least 80 percent of the funds allocated to them in a given year or “face recapture” of the funds. Petitioner contends this directive is invalid and unenforceable because it was not promulgated as a regulation under the Administrative Procedures Act and because it conflicts with a controlling provision of the JTPA which gives agencies three years to spend all the job training funds allocated in a given year. We agree with petitioner’s contention the directive is invalid because it violates binding federal law. We do not reach the Administrative Procedures Act issue.

Facts and Proceedings Below

Petitioner Private Industry Council of Southeast Los Angeles County, Inc. (Council) is a nonprofit corporation created to administer federal job training funds in southeast Los Angeles County pursuant to the JTPA, 29 United States Code section 1501 et seq.

Respondent Employment Development Department (EDD) is the state agency charged with the duties of establishing regulations for implementing the JTPA (Unemp. Ins. Code, § 15051) and allocating JTPA funds to local job training agencies such as the Council (Unemp. Ins. Code, § 15053).

In 1993 EDD issued Interim Directive No. 93-15 (the directive) which requires local job training agencies to spend at least 80 percent of the summer youth and older worker job training funds during the program year in which those funds were allocated. The directive further provides if the required 80 percent is not spent, EDD will recapture the unspent portion by reducing the agency’s allocation of funds.

1.

Recapture of 1993-1994 Older Worker Job Training Funds

Pursuant to the directive, EDD notified the Council in September 1994 it had failed to spend 80 percent of its available older worker funds for the 1993-1994 program year. Therefore, the notice stated, the Council’s future older worker funds would be reduced by $47,600, the difference between the amount of funds spent and 80 percent of the funds available in the 1993-1994 program year. An EDD review panel upheld the decision to recapture the funds.