Relating to workforce compensation and training, unemployment insurance, and other functions and programs of the department of workforce development, the workforce development board, and local government entities, and including effective date provisions

Sponsored by the Senate Appropriations (successor To Ssb 1068) (companion To Hf 722 By Committee on Labor and Workforce) Committee

Proposed by the Department of Workforce Development · their explanation · all agency proposals

Topics:State government Jobs & workers Taxes

Same legislation: HSB 68, SSB 1068, SF 222, HF 722

Write your legislators about itWhat changed before it passed

Official bill page Lobbyist declarations One-pager to print

Where it is now

Done: IntroducedFebruary 6, 2025
Done: SubcommitteeFebruary 11, 2025
Done: Senate committeeFebruary 6, 2025
Done: Passes the SenateMarch 12, 202548–0
Done: House committeeMarch 18, 2025
Done: Passes the HouseMarch 18, 202564–34
Done: To the GovernorMarch 28, 2025
Done: Signed into lawMarch 28, 2025

Signed into law What’s a funnel?

What’s in it

AI summary This bill changes how the Department of Workforce Development handles certain job training programs and reports. It moves the responsibility for reporting on some workforce training programs from the department to the college student aid commission. Additionally, it changes how employers pay unemployment insurance taxes by only counting wages paid within Iowa if another state has a similar agreement.¹

Read the official explanation

This bill relates to workforce training, unemployment insurance, and other functions and programs of the department of workforce development (department), the workforce development board, and local workforce development boards. DIVISION I —— FUNCTIONS OF DEPARTMENT OF WORKFORCE DEVELOPMENT, WORKFORCE DEVELOPMENT BOARD, AND LOCAL WORKFORCE DEVELOPMENT BOARDS. This division strikes department duties relating to administering a statewide employment skills assessment, selection of service providers, establishing a job posting system of education-related job openings, and functions no longer under the department pursuant to 2023 Iowa Acts, Senate File 514. The division repeals Code provisions for the Iowa conservation corps, the workforce investment program, the statewide mentoring program, the new employment opportunity program, and the nursing workforce data clearinghouse. The division generally transfers duties relating to compiling an annual report for submission to the governor and general assembly on various workforce training programs from the department to the college student aid commission. The division strikes requirements for the department to collaborate with specified education-related entities when performing certain duties. The division strikes detailed language relating to duties of the workforce development board concerning standing committees, public availability of information, comprehensive state workforce development plans, recommendations on the use of federal funds, and various other duties. The division generally provides that such duties shall be carried out as required by federal law. The division similarly modifies duties of local workforce development boards relating to local workforce development plans. DIVISION II —— UNEMPLOYMENT INSURANCE —— TAXABLE WAGES. This division modifies the definition of “taxable wages” for purposes of unemployment insurance taxes on employers by eliminating the wages paid to an employee from another state from the calculation of wages upon which an employer is required to contribute to the unemployment compensation fund when the other state extends a like comity (reciprocity) to Iowa for employment purposes. The division specifies that only wages paid in Iowa can constitute taxable wages.

Changed since by amendment H-1106; see Amendments.

Full bill text · What changed before it passed²

Fiscal note

More revenue: up to $394,000 Compare with other bills

AI summary This bill changes how Iowa Workforce Development operates, modifies how unemployment insurance taxes are calculated for certain employers, and limits the ability of local governments to set apprenticeship requirements for contractors. It is estimated to increase revenue to the Unemployment Compensation Trust Fund by $394,000 annually. The fiscal impact on the state for other parts of the bill is not anticipated, though it may affect financial assistance received by counties, cities, and school districts.³

Read the fiscal note

Description

Senate File 603 has three divisions.

Division I eliminates and modifies various programs and duties under Iowa Workforce Development (IWD). The Division also transfers certain responsibilities between IWD and the Department of Education.

Division II modifies the definition of “taxable wages” for purposes of unemployment insurance taxes on employers to exclude wages paid by Iowa employers to employees who work in another state if the other state extends reciprocity to Iowa for employment purposes. This eliminates the taxable wage credit.

Division III prevents State agencies and political subdivisions from imposing additional requirements related to apprenticeship training on contractors, except as required by State law. Counties, cities, and school districts may not impose requirements on contractors related to a contractor’s employee compensation or training except as required by State law. This Division takes effect upon enactment.

Senate File 626 (Federal Block Grant Appropriations Bill) amended Division III of SF 603 to allow cities to receive incentives contingent upon compliance with contractor employee compensation or training restrictions if required under federal law.

Background

Under current law, taxable wages include the wages paid by an Iowa employer to an employee who works in Iowa and to an employee who works in another state that extends reciprocity to Iowa for employment purposes. In Iowa, the taxable wage credit applies the wages earned in another state by an employee to the taxable wage base for that employee in a given year.

Assumptions

2.5% of employers in Iowa use the taxable wage credit.
Federal funding related to unemployment insurance programs will not change.
The full-time equivalent (FTE) positions associated with the taxable wage credit may be reassigned to other unemployment insurance activities.

Fiscal Impact

Division I is not anticipated to have a fiscal impact.

Division II is estimated to increase revenue to the Unemployment Compensation Trust Fund by $394,000 annually due to the elimination of the taxable wage credit. There are 3.0 FTE positions at an annual cost of $195,000 that administer the taxable wage credit and are paid from federal funds.

Division III is not anticipated to have a fiscal impact to the State. The Division may impact financial assistance received by counties, cities, and school districts.