Arizona Promise and Workforce Development Act

Jan 27

"Arizona Promise and Workforce Development Act."

AN ACT

AMENDING TITLE 15, ARIZONA REVISED STATUTES, BY ADDING CHAPTER 16, ARTICLE 8; AMENDING TITLE 43, ARIZONA REVISED STATUTES, BY ADDING CHAPTER 10, ARTICLE 6; APPROPRIATING MONIES; RELATING TO WORKFORCE DEVELOPMENT.

Be it enacted by the Legislature of the State of Arizona:

SECTION 1. SHORT TITLE

This Act shall be known and may be cited as the "Arizona Promise and Workforce Development Act."

SECTION 2. LEGISLATIVE FINDINGS AND DECLARATIONS

The Legislature finds and declares that:

1. Arizona faces critical shortages in both professional and trade occupations essential to its economic future, including healthcare, information technology, construction, manufacturing, renewable energy, and education.

2. A highly educated and technically skilled workforce is critical to Arizona's economic competitiveness and prosperity, and the state has a compelling governmental interest in developing and retaining this workforce.

3. The rising cost of postsecondary education and vocational training creates significant barriers to access and completion for Arizona residents, undermining the state's economic interests and perpetuating inequality.

4. Retaining educated and skilled talent within Arizona is essential for building strong communities and sustainable economic growth, serving a direct and substantial public purpose.

5. Providing educational benefits in exchange for post-graduation residency and employment constitutes valid contractual consideration that provides direct, tangible benefits to the state, satisfying constitutional requirements under Article 9, Section 7 of the Arizona Constitution.

6. Establishing fair compensation standards for positions supported by state expenditures serves the public purposes of improving service quality, reducing turnover costs, stimulating local economies through increased household spending, and reducing taxpayer costs for public assistance programs.

7. Employees earning below one hundred thirty-eight percent of the Federal Poverty Level are statistically likely to qualify for public assistance programs, creating significant costs for Arizona taxpayers.

8. Measuring workforce economic self-sufficiency through verifiable wage levels rather than benefit program participation avoids federal preemption issues, protects employee privacy, and advances Arizona's interest in reducing poverty.

9. Entrepreneurship among college graduates creates disproportionate economic benefits for Arizona, with each successful graduate entrepreneur creating an average of 5.2 additional jobs, generating approximately $250,000 in annual economic activity, and yielding a 3:1 return on public investment through increased tax revenues within five years.

10. Graduates of Arizona institutions possess unique knowledge of local markets, needs, and opportunities, making them particularly effective entrepreneurs for Arizona. Without intervention, approximately 40% of Arizona graduates with entrepreneurial aspirations leave the state within three years of graduation.

11. The state has a compelling interest in retaining entrepreneurial talent that might otherwise leave Arizona, as demonstrated by economic impact studies from the Kauffman Foundation and Arizona Office of Economic Opportunity.

12. Performance-based grants to graduates starting businesses provide direct, measurable public benefits exceeding the value of the grants, including job creation, economic diversification, increased tax base, and community development, constituting adequate consideration under Article 9, Section 7 of the Arizona Constitution.

13. Limiting eligibility to Arizona graduates serves the rational government purpose of rewarding educational investment, ensuring familiarity with Arizona markets, and creating a measurable return on the state's educational investment.

14. Arizona faces acute, documented shortages in specific professional and trade occupations that immediately threaten public health, safety, infrastructure, and economic competitiveness. A limited, conditional pathway to recruit exceptional non-resident talent into these critical fields, only after all Arizona residents are served and when resident applicant pools are insufficient to meet documented workforce deficits, serves as a vital emergency manpower response tool that provides heightened consideration to the state proportional to the urgency of the need.

15. Team-based entrepreneurship and cooperative business models demonstrate statistically higher success rates, create more jobs, and generate greater economic impact than solo ventures. Enabling Arizona Promise graduates to form partnerships, limited liability companies, corporations, and cooperatives with collective ownership by graduates serves Arizona's economic interests by fostering collaborative innovation and shared risk.

16. The primary purpose of this Act is workforce development, not debt creation. Loan conversion mechanisms are safety measures of last resort, not revenue generators. The state's interest is best served by ensuring program participants become productive, self-sufficient contributors to Arizona's economy, not by creating a class of indebted individuals unable to contribute meaningfully to the state's prosperity.

17. Uniform, consistent interpretation of this Act is essential for program integrity, efficient administration, and equal treatment of all Arizona residents. Centralized judicial review prevents conflicting rulings, promotes judicial economy, and ensures all constitutional challenges receive comprehensive, expert consideration.

18. Arizona has a proud tradition of supporting military service members, veterans, and their families. Providing reasonable accommodations for military service, accompanied tours, and other legitimate national service obligations demonstrates Arizona's commitment to those who serve while maintaining the program's workforce development objectives.

19. The transition from education to employment involves multiple systemic barriers including licensure processing delays, employer hiring cycles, geographic relocation challenges, and labor market fluctuations. Realistic, tiered employment commencement timelines supported by comprehensive transition services are essential to ensure participant success while maintaining program accountability and workforce development goals.

20. Rural Arizona faces unique challenges including workforce depopulation, geographic isolation, limited infrastructure, and acute shortages in essential services. Targeted provisions addressing rural transportation barriers, digital access limitations, small institution capacity, and industry concentration are essential to ensure equitable program access and maximize economic impact across all regions of the state.

21. Arizona's economy is subject to unpredictable market forces, industry disruptions, natural disasters, and global economic shocks. Participants in workforce development programs must be protected from penalties resulting from unforeseeable job loss, employer decisions, or macroeconomic events beyond their control. Comprehensive economic shock protections and proactive resilience planning are essential to maintain program fairness and prevent the creation of debt traps during economic downturns.

22. Arizona's unemployment insurance system provides the lowest maximum benefits in the United States, creating inadequate support during job transitions that may force skilled workers to leave the state. Supplemental workforce security benefits for Arizona Promise participants are necessary to ensure program success and demonstrate the economic value of adequate transition support.

23. This Act represents a unified economic development strategy where each component provides direct public benefits that justify public expenditures, creating a virtuous cycle of investment in human capital that yields returns through increased economic activity, reduced social service costs, and enhanced quality of life for all Arizonans.

SECTION 3. TITLE 15, CHAPTER 16, ARTICLE 8

A new Article 8 is added to Title 15, Chapter 16, Arizona Revised Statutes, to read:

ARTICLE 8. ARIZONA PROMISE PROGRAM

15-1691. DEFINITIONS

In this Article, unless the context otherwise requires:

1. "ACCOMPANIED TOUR" means official military orders that authorize a service member's dependents to reside with them at the duty station outside Arizona.

2. "ACTIVE DUTY" means full-time duty in the active military service of the United States, including full-time training duty, annual training duty, and attendance while in the active military service at a school designated as a service school by law or by the Secretary of the military department concerned.

3. "APPRENTICESHIP PROGRAM" means a state-registered apprenticeship program registered with the United States Department of Labor or the Arizona Department of Administration that provides at least two thousand hours of on-the-job training and at least one hundred forty-four hours of related technical instruction annually.

4. "BRIDGE SUPPORT STIPEND" means temporary financial assistance provided to participants during the employment search period following program completion, as specified in § 15-1694.01.

5. "CAREER RESILIENCE PLAN" means a comprehensive plan developed by participants to prepare for economic uncertainty and job market disruptions, as specified in § 15-1694.01(H).

6. "COMMISSION" means the Arizona Commission for Postsecondary Education established pursuant to § 15-1851.

7. "COOPERATIVE" means a business organization owned and democratically controlled by its members, which may include worker cooperatives, consumer cooperatives, producer cooperatives, or multi-stakeholder cooperatives, organized under Arizona law.

8. "CRITICAL WORKFORCE SHORTAGE LIST" means the annual list of occupational fields designated by joint resolution of the Legislature pursuant to § 15-1692.01, subsection B.

9. "DIGITAL ACCESS GRANT" means funding provided to eligible institutions and students to address technology and broadband access barriers, as specified in § 15-1699.04.

10. "ECONOMIC HARDSHIP" means a financial circumstance where a borrower's monthly loan payment would exceed fifteen percent of their monthly gross income, as defined by Commission rule.

11. "ECONOMIC SHOCK RESPONSE FUND" means the fund established under § 15-1699.05 to support participants experiencing unforeseeable job loss and market disruptions.

12. "ELIGIBLE INSTITUTION" means any of the following:

(a) A community college district established pursuant to Title 15, Chapter 12.

(b) A university under the jurisdiction of the Arizona Board of Regents.

(d) A state-registered apprenticeship program.

(e) A private trade or technical school licensed by the State Board for Private Postsecondary Education that meets all of the following criteria:

(i) Offers programs in high-demand fields as designated by the Arizona Office of Economic Opportunity pursuant to § 41-1541.

(ii) Maintains a graduation rate of at least seventy percent and a job placement rate of at least eighty percent for graduates as verified by independent audit.

(iii) Participates in the federal William D. Ford Federal Direct Loan Program and maintains a cohort default rate below fifteen percent.

13. "ELIGIBLE PROGRAM" means any of the following:

(a) A certificate program requiring completion of at least six hundred clock hours or sixteen credit hours.

(b) An associate degree program.

(d) A state-registered apprenticeship program of at least one year in duration.

14. "EXTREME CIRCUMSTANCE" means a situation beyond a borrower's control that permanently prevents fulfillment of the residency commitment, including but not limited to: permanent disability rendering the borrower unable to work in their trained field; death; catastrophic natural disaster destroying the borrower's Arizona residence and livelihood; or other circumstances defined by Commission rule.

15. "FEDERAL POVERTY LEVEL" means the poverty guidelines updated annually in the Federal Register by the United States Department of Health and Human Services pursuant to 42 United States Code § 9902(2).

16. "FORCE MAJEURE EVENT" means an extraordinary event or circumstance beyond the control of the parties, including but not limited to: acts of God, war, terrorism, pandemics, declared public health emergencies, economic depressions, industry collapses, natural disasters, government actions, or other events making performance impossible or impracticable.

17. "HIGH-DEMAND FIELD" means an occupational field designated annually by the Arizona Office of Economic Opportunity pursuant to § 41-1541 as having either above-average growth projections, significant unmet workforce needs, or critical importance to Arizona's economic development priorities, including but not limited to construction trades, advanced manufacturing, healthcare support, information technology, transportation, and renewable energy technicians.

18. "INVOLUNTARY JOB LOSS" means termination of employment through no fault of the employee, including but not limited to: employer bankruptcy, closure, or permanent cessation of operations; mass layoff; position elimination; or constructive discharge as defined by applicable employment law.

19. "LAST-DOLLAR ASSISTANCE" means financial aid that covers the remaining cost of tuition, mandatory fees, and required program-specific tools, equipment, and uniforms for an eligible student after all other federal, state, and institutional gift aid grants have been applied.

20. "MASS LAYOFF" means an employment loss at a single site of employment during any 30-day period for: (a) at least 50 employees representing at least 33 percent of the active workforce, excluding part-time employees; or (b) at least 500 employees, excluding part-time employees.

21. "MILITARY SPOUSE" means the spouse of a member of the United States Armed Forces serving on active duty.

22. "NATIONAL SERVICE PROGRAM" means a federally-recognized service program including but not limited to AmeriCorps, Peace Corps, Public Health Service Commissioned Corps, and National Oceanic and Atmospheric Administration Commissioned Officer Corps.

23. "PARTICIPATING STUDENT" means a student who meets the eligibility criteria prescribed in § 15-1692 or § 15-1692.01 and receives an award under this Article.

24. "PREVAILING COMPENSATION WAGE" means a wage or salary that meets or exceeds the higher of either:

(a) The national average wage for the specific occupational classification, as reported by the United States Bureau of Labor Statistics Occupational Employment and Wage Statistics program for the most recent full year; or

(b) The local average wage for the specific occupational classification in the relevant Arizona metropolitan or nonmetropolitan area, as reported by the same data source, multiplied by a Local Cost-of-Living Adjustment Factor calculated annually by the Arizona Office of Economic Opportunity.

25. "RE-EMPLOYMENT GUARANTEE PROGRAM" means the program established under § 15-1694(J)(7) to provide temporary employment placement for participants experiencing qualifying job loss.

26. "RESIDENCY COMMITMENT PERIOD" means continuous residence and employment in an Arizona-based position related to the field of study, or operation of a qualifying Arizona-based business, for a period equal to the duration of enrollment in the eligible program, but for not less than one year and not more than four years following program completion. For non-resident participants under § 15-1692.01, this period is governed by the enhanced terms of that section.

27. "RURAL COUNTY" means any county with a population under two hundred thousand persons according to the most recent United States Census.

28. "RURAL STUDENT" means a participating student whose primary residence is located in a rural county at the time of application.

29. "TEAM-BASED ENTREPRENEURSHIP" means a business venture owned and operated by two or more Arizona Promise graduates who collectively meet the ownership requirements specified in § 15-1699.01.

30. "TOOLS AND EQUIPMENT ALLOWANCE" means an additional grant of up to one thousand five hundred dollars per program for students enrolled in eligible trade programs requiring specialized tools or safety equipment.

31. "TRANSPORTATION ALLOWANCE" means funding provided to rural students to address transportation barriers to education access, as specified in § 15-1692, subsection D.

32. "VETERAN" means a person who served in the active military, naval, or air service and who was discharged or released therefrom under conditions other than dishonorable.

33. "WORKFORCE SECURITY BENEFIT" means the supplemental unemployment benefit provided to Arizona Promise participants experiencing qualifying job loss, as specified in § 15-1694(K).

15-1692. ARIZONA PROMISE PROGRAM; ELIGIBILITY REQUIREMENTS

A. To be eligible for the Arizona Promise Program, a student must satisfy all of the following requirements:

1. Be a legal resident of this state, as defined by the Commission by rule, for at least twelve consecutive months immediately preceding application, except as provided in paragraph 7.

2. Meet one of the following criteria:

(a) Graduate of an Arizona high school or have received a high school equivalency diploma in this state; OR

(b) Demonstrate commitment to establishing long-term residency in Arizona through documentation of employment, property ownership, family connections, or other substantial ties to the state; OR

(c) Be a current resident of Arizona who has demonstrated academic achievement and commitment to completing an eligible program.

3. Be admitted to and enroll in an eligible program at an eligible institution on at least a half-time basis, or on a full-time basis for apprenticeship programs.

4. For trade programs requiring physical capacity, demonstrate the ability to perform essential job functions through a program-approved assessment conducted in accordance with the Americans with Disabilities Act.

5. Complete a Free Application for Federal Student Aid or an Arizona state financial aid application and accept all federal, state, and institutional gift aid offered.

6. Maintain satisfactory academic progress as defined by the eligible institution.

7. MILITARY AND VETERAN RESIDENCY WAIVER: For military veterans, active duty service members, and military spouses, the 12-month residency requirement in paragraph 1 may be waived if the applicant meets any of the following criteria:

(a) Served on active duty while stationed in Arizona for at least twelve months; OR

(b) Is an Arizona native returning to the state after military service; OR

(d) Received an honorable discharge from military service and establishes Arizona residency within six months of separation.

B. The Commission shall establish by rule procedures to evaluate residency commitment for students not meeting traditional residency criteria, with priority given to applicants demonstrating the strongest likelihood of remaining in Arizona after program completion.

C. Priority for awards shall be given in the following order:

1. Students enrolled in programs designated as high-demand fields.

2. Students enrolled in state-registered apprenticeship programs.

3. Students with demonstrated financial need as determined by federal methodology.

4. First-generation college students.

5. Military veterans and active duty service members.

6. Students demonstrating strong commitment to long-term Arizona residency.

D. RURAL ACCESS CONSIDERATIONS:

1. RURAL STUDENT PRIORITY: Rural students shall receive priority consideration for Arizona Promise awards regardless of field of study, recognizing the unique barriers to postsecondary access in rural communities.

2. TRANSPORTATION ALLOWANCE: Rural students who must travel more than thirty miles one-way to attend their eligible institution may receive a transportation allowance of up to one thousand dollars per semester to cover:

(a) Fuel costs for personal vehicles;

(b) Public transportation expenses;

(d) Vehicle maintenance directly related to educational travel.

3. DISTANCE LEARNING ACCOMMODATIONS: For rural students where in-person attendance is geographically prohibitive, the Commission shall:

(a) Allow participation in approved distance learning programs that meet quality standards;

(b) Provide digital access grants for necessary technology and broadband connectivity;

(d) Develop partnerships with local high schools, libraries, or community centers to serve as distance learning hubs with reliable internet access.

4. RURAL INSTITUTION SUPPORT: Eligible institutions located in rural counties may receive additional administrative funding through Rural Implementation Grants under § 15-1699.04 to ensure adequate capacity to serve Arizona Promise students.

[Sections 15-1692.01 through 15-1694(J) remain unchanged from previous version - maintaining all previously established provisions including Critical Workforce Recruitment Pathway, awards, academic progress, and economic shock protections through §15-1694(J)]

K. WORKFORCE SECURITY BENEFIT FOR PROGRAM PARTICIPANTS:

1. PURPOSE AND LEGISLATIVE FINDING: Recognizing that Arizona's standard unemployment insurance benefits are the lowest in the United States and provide inadequate support for skilled workforce retention during job transitions, this section establishes a supplemental Workforce Security Benefit specifically for Arizona Promise participants to ensure program success and demonstrate the economic value of adequate transition support.

2. BENEFIT AMOUNT AND DURATION:

(a) Arizona Promise participants who experience qualifying involuntary job loss as defined in §15-1694(J)(2) shall receive a Workforce Security Benefit of five hundred dollars ($500) per week for up to 26 weeks, or until securing new qualifying Arizona employment, whichever comes first.

(b) This benefit is IN ADDITION TO any unemployment insurance benefits for which the participant qualifies under Title 23, Arizona Revised Statutes.

(i) The statewide unemployment rate exceeds 6.5%; OR

(ii) The participant's industry sector has experienced 25%+ job loss in Arizona; OR

(iii) The participant is enrolled in an approved retraining program for a high-demand field.

3. FUNDING SOURCE: The Workforce Security Benefit shall be funded through the Workforce Security Benefit Fund established in Section 5(P) of this Act, with annual replenishment based on utilization rates and economic conditions.

4. ELIGIBILITY REQUIREMENTS: To receive the Workforce Security Benefit, participants must:

(a) Have lost employment through no fault of their own as defined in §15-1694(J)(2);

(b) Be actively seeking qualifying Arizona employment (minimum 3 job applications per week documented);

(d) Maintain Arizona residency throughout the benefit period;

(e) Not have refused suitable employment offers without good cause;

(f) Comply with all reporting requirements and eligibility verifications.

5. APPLICATION PROCESS:

(a) Participants must apply for both standard unemployment insurance benefits through the Arizona Department of Economic Security AND the Workforce Security Benefit through the Commission.

(b) The Commission shall establish a unified application portal that allows simultaneous application for:

(i) Unemployment insurance (Title 23 benefits);

(ii) Workforce Security Benefit (this section);

(iii) Economic Shock Response Fund support (§15-1699.05);

(iv) Re-employment Guarantee Program (§15-1694(J)(7)).

(c) Applications must be submitted within 30 days of job loss, with emergency processing available within 72 hours for participants facing immediate financial crisis.

(d) The Commission shall verify job loss through employer confirmation, layoff notices, unemployment claim filings, or other documentation.

6. COORDINATION WITH OTHER BENEFITS:

(a) Time spent receiving Workforce Security Benefits while actively seeking Arizona employment shall count toward residency commitment fulfillment at 100% credit.

(b) Participants receiving Workforce Security Benefits shall have automatic eligibility for:

(i) Supplemental Economic Shock Response grants for emergency needs;

(ii) Retraining scholarships through the Economic Shock Response Fund;

(iii) Priority placement in the Re-employment Guarantee Program;

(iv) Enhanced career counseling and job search support.

(c) The Workforce Security Benefit shall be structured to NOT disqualify participants from other means-tested benefits (SNAP, Medicaid, etc.) through careful income calculation methodologies.

7. RURAL PARTICIPANT ENHANCEMENTS:

(a) Participants in rural counties may receive an additional $100 per week Rural Supplement recognizing:

(i) Limited local job opportunities requiring longer search periods;

(ii) Higher transportation costs for job search activities;

(iii) Geographic isolation increasing relocation needs.

(b) Rural participants may access telework setup grants up to $1,500 to establish home offices for remote employment opportunities.

(c) Rural participants may receive extended benefit duration up to 52 weeks if demonstrable job opportunities in their field are unavailable within 50 miles.

8. RETRAINING INCENTIVES:

(a) Participants who enroll in approved retraining programs for high-demand Arizona fields may receive:

(i) Continued Workforce Security Benefits throughout retraining period;

(ii) Tuition coverage for retraining programs up to $7,500;

(iii) Completion bonus of $1,000 upon successful program completion.

(b) Approved retraining programs must:

(i) Lead to occupations on the High-Demand Fields list or Critical Workforce Shortage List;

(ii) Be completed within 12 months;

(iii) Have documented job placement rates of 75%+ in Arizona.

9. PARTIAL EMPLOYMENT SUPPORT:

(a) Participants who secure part-time employment (less than 30 hours/week) may receive pro-rated Workforce Security Benefits to supplement income.

(b) Benefit calculation: $500 × (1 - [hours worked/40]) = weekly benefit.

10. SPOUSAL AND FAMILY SUPPORT:

(a) Participants with dependents may receive additional $100 per week per dependent (up to 3 dependents).

(b) Participants who are primary caregivers may access:

(i) Childcare subsidies up to $400/month during job search;

(ii) Flexible job search requirements accommodating caregiving responsibilities;

(iii) Family counseling services through Economic Shock Response Fund.

11. HEALTHCARE CONTINUATION SUPPORT:

(a) Participants who lose employer-sponsored health insurance may receive:

(i) COBRA premium assistance up to 75% of costs for 6 months;

(ii) Medicaid application assistance through coordinated services;

(iii) Access to Arizona Promise group health plan at subsidized rates.

(b) Healthcare support prevents medical debt that could force participants to leave Arizona.

12. MENTAL HEALTH AND WELLBEING SUPPORT:

(a) Recognizing that job loss causes significant stress, participants receiving Workforce Security Benefits shall have access to:

(i) Free counseling services through Commission partners;

(ii) Stress management workshops specifically for job transition;

(iii) Financial counseling to prevent crisis during transition;

(iv) Peer support groups with other participants in transition.

(b) Mental health services shall be confidential, stigma-free, and accessible both in-person and virtually.

13. EMPLOYER NOTIFICATION AND COORDINATION:

(a) The Commission shall notify the participant's former employer of Workforce Security Benefit approval (without disclosing benefit amount).

(b) Employers who laid off Arizona Promise participants shall receive:

(i) Priority notification when participant completes retraining;

(ii) Incentives to rehire participants through enhanced tax credits;

(iii) Mediation services if wrongful termination claims arise.

14. FRAUD PREVENTION AND COMPLIANCE:

(a) The Commission shall implement robust verification systems including:

(i) Cross-referencing with unemployment insurance databases;

(ii) Employer confirmation of job separation reasons;

(iii) Job search activity tracking through Talent Portal;

(iv) Periodic eligibility reviews every 4 weeks.

(b) Participants found to have committed fraud shall:

(i) Repay all improperly received benefits plus 10% penalty;

(ii) Be disqualified from further Arizona Promise benefits;

(iii) Face potential loan conversion for program awards received.

15. APPEALS AND DUE PROCESS:

(a) Participants denied Workforce Security Benefits may appeal to an independent Administrative Law Judge within 30 days.

(b) Appeals shall be heard within 45 days, with emergency expedited review available.

(d) Legal assistance shall be provided for appeals through Arizona Promise Legal Aid Program.

16. SUNSET AND EVALUATION:

(a) The Workforce Security Benefit program shall be evaluated after 5 years of operation by the Joint Legislative Budget Committee.

(b) Evaluation criteria shall include:

(i) Participant retention in Arizona during job transitions;

(ii) Re-employment speed and quality;

(iii) Economic impact analysis;

(iv) Fraud prevention effectiveness;

(v) Return on investment calculations.

(i) Net positive fiscal impact for Arizona;

(ii) 80%+ participant retention during job transitions;

(iii) Fraud rates below 2%;

(iv) Significant improvement over standard unemployment outcomes.

17. DEMONSTRATION FOR BROADER REFORM:

(a) The Workforce Security Benefit program shall serve as a demonstration project showing the economic value of adequate transition support.

(b) The Commission shall collect and publish data comparing outcomes for Arizona Promise participants versus similar workers without these benefits.

(c) Annual reports shall include recommendations for broader unemployment insurance reform in Arizona based on program findings.

L. COORDINATION WITH UNEMPLOYMENT INSURANCE SYSTEM:

1. INTEGRATED APPLICATION SYSTEM: The Commission shall develop and maintain an integrated application system that allows Arizona Promise participants to simultaneously apply for:

(a) Standard unemployment insurance benefits under Title 23;

(b) Workforce Security Benefits under this section;

(d) Re-employment Guarantee Program placement.

The system shall feature single sign-on, shared documentation uploads, and coordinated eligibility determinations.

2. DATA SHARING AGREEMENTS: The Commission shall enter into data sharing agreements with the Arizona Department of Economic Security to:

(a) Verify unemployment insurance claims and benefit amounts;

(b) Coordinate job search requirements and documentation;

(d) Streamline reporting for participants.

3. UNIFIED CASE MANAGEMENT: Each Arizona Promise participant receiving transition support shall be assigned a unified case manager who can:

(a) Navigate both unemployment insurance and Arizona Promise benefit systems;

(b) Provide comprehensive support across all available programs;

(d) Advocate for participant needs across agencies.

4. AUTOMATED BENEFIT CALCULATION: The integrated system shall automatically calculate:

(a) Standard unemployment insurance benefit amount (Title 23);

(b) Workforce Security Benefit supplement (this section);

(d) Eligibility for additional support programs.

5. COORDINATED FRAUD PREVENTION: The Commission and DES shall establish joint fraud prevention efforts including:

(a) Shared databases of fraudulent claims;

(b) Coordinated investigation units;

(d) Unified reporting systems.

6. LEGISLATIVE REPORTING ON UI ADEQUACY: The Commission shall include in its annual report to the Legislature:

(a) Comparison of Workforce Security Benefit outcomes versus standard UI outcomes;

(b) Analysis of the economic impact of adequate versus inadequate transition support;

(d) Cost-benefit analysis of expanding adequate transition support to all Arizona workers.

[Sections 15-1694.01 through 15-1699.05 remain unchanged from previous version - maintaining all previously established provisions including Transition Program, OER, Trade Council, Entrepreneurship, Rural Implementation, and Economic Shock Response Fund]

SECTION 4. TITLE 43, CHAPTER 10, ARTICLE 6

A new Article 6 is added to Title 43, Chapter 10, Arizona Revised Statutes, with all provisions unchanged from previous version.

SECTION 5. APPROPRIATIONS

A. ARIZONA PROMISE PROGRAM: The sum of $75,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to the Arizona Commission for Postsecondary Education for the purposes of implementing the Arizona Promise Program established by Title 15, Chapter 16, Article 8.

B. ENTREPRENEURSHIP PILOT PROGRAM: The sum of $5,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to the Arizona Commission for Postsecondary Education for the purposes of implementing the PILOT PHASE of the Entrepreneurship Pathway Program established by § 15-1699.01.

C. INNOVATION FUND: The sum of $5,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to establish the Arizona Promise Innovation Fund.

D. REVOLVING LOAN FUND: The sum of $10,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to establish the Arizona Graduate Entrepreneur Revolving Loan Fund.

E. PROGRAM ADMINISTRATION: The sum of $15,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to the Arizona Commission for Postsecondary Education for program administration, technical assistance, and implementation costs.

F. TAX CREDIT ADMINISTRATION: The sum of $5,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to the Arizona Department of Revenue for the purposes of administering the tax credits established by Title 43, Chapter 10, Article 6.

G. STUDENT SUPPORT AND FORGIVENESS FUND: The sum of $10,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to establish the "Promise Preservation Fund" to cover loan forgiveness costs and student support services as prescribed in § 15-1699, subsection C and § 15-1693.01.

H. MILITARY AND VETERAN SUPPORT INITIATIVE: The sum of $2,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to establish the "Military and Veteran Promise Support Program" to provide specialized services for military participants, including deferment administration, transition assistance, and veteran entrepreneurship support.

I. EMPLOYMENT TRANSITION SUPPORT: The sum of $10,500,000 is appropriated from the state General Fund in fiscal year 2029-2030 to implement the Realistic Employment Transition Program under § 15-1694.01, including:

1. Bridge Support Stipend Program: $5,000,000

2. Relocation Assistance Program: $3,000,000

3. Job Search Support System: $2,500,000

4. Licensure Expediting Implementation: $1,000,000 (one-time funding)

J. RURAL IMPLEMENTATION PROGRAM: The sum of $15,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to establish the Rural Promise Implementation Program under § 15-1699.04, including:

1. Rural Implementation Grants: $8,000,000

2. Digital Access Grants: $4,000,000

3. Mobile Training Unit Grants: $2,000,000

4. Rural Partnership Development: $1,000,000

K. ECONOMIC SHOCK RESPONSE FUND: The sum of $25,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to establish the "Arizona Promise Economic Shock Response Fund" under § 15-1699.05 to support participants experiencing unforeseeable job loss and market disruptions, with annual replenishment of $10,000,000 in subsequent years.

L. CAREER RESILIENCE PROGRAM: The sum of $5,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to establish the "Career Resilience Planning and Training Program" under § 15-1694.01(H) to help participants develop skills and plans for economic uncertainty.

M. RE-EMPLOYMENT GUARANTEE PROGRAM: The sum of $8,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to fund the Re-employment Guarantee Program under § 15-1694(J)(7), including wage subsidies and administrative costs.

N. WORKFORCE SECURITY BENEFIT FUND: The sum of $50,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to establish the "Workforce Security Benefit Fund" to provide supplemental unemployment benefits to Arizona Promise participants as specified in § 15-1694(K), with annual replenishment of $25,000,000 based on utilization rates and economic conditions.

O. INTEGRATED BENEFITS ADMINISTRATION SYSTEM: The sum of $7,000,000 is appropriated from the state General Fund in fiscal year 2027-2028 to develop and implement the integrated benefits administration system specified in § 15-1694(L), including technology development, staff training, and inter-agency coordination with the Arizona Department of Economic Security.

P. CONTINGENT EXPANSION APPROPRIATION: An additional $35,000,000 is conditionally appropriated for fiscal year 2029-2030, contingent upon:

1. Legislative reauthorization following review of pilot program outcomes;

2. Certification by the Joint Legislative Budget Committee that the pilot program met performance criteria, with specific attention to rural impact, economic shock resilience, and workforce security effectiveness;

3. Absence of any court order enjoining program implementation.

Q. These appropriations are exempt from the provisions of § 35-190 relating to lapsing of appropriations.

SECTION 6. FISCAL IMPACT AND ECONOMIC ANALYSIS

A. PROGRAM COSTS (YEAR 5 - PROJECTED FOR 2032):

1. Arizona Promise Program: $120,000,000 annually

2. Entrepreneurship Program: $25,000,000 annually

3. Tax Credits: $22,500,000 annually

4. Administrative Costs: $20,000,000 annually

5. Student Support and Forgiveness Fund: $15,000,000 annually

6. Military and Veteran Support: $2,000,000 annually

7. Employment Transition Support: $10,500,000 annually

8. Rural Implementation Program: $15,000,000 annually

9. Economic Shock Response Fund: $10,000,000 annually (replenishment)

10. Career Resilience Program: $5,000,000 annually

11. Re-employment Guarantee Program: $8,000,000 annually

12. Workforce Security Benefit Fund: $25,000,000 annually (replenishment)

13. Integrated Benefits Administration: $3,000,000 annually

TOTAL COSTS: $281,000,000

B. ECONOMIC BENEFITS (YEAR 5 - PROJECTED FOR 2032):

1. Increased Tax Revenue: $145,900,000 annually

2. Reduced Public Assistance: $72,800,000 annually

3. Economic Multiplier Effects: $145,000,000 annually

4. Entrepreneurship Returns: $32,000,000 annually

5. Reduced Student Loan Defaults (State Savings): $16,000,000 annually

6. Military Talent Retention Benefits: $8,000,000 annually

7. Reduced Administrative Appeals/Non-Compliance: $8,000,000 annually

8. Higher Long-Term Retention Rates: $25,000,000 annually

9. Rural Economic Revitalization: $30,000,000 annually

10. Reduced Rural Depopulation Costs: $18,000,000 annually

11. Economic Shock Resilience Savings: $28,000,000 annually (avoided unemployment, retraining, social services)

12. Increased Workforce Stability: $22,000,000 annually

13. Workforce Security ROI: $45,000,000 annually (faster re-employment, higher retention, reduced poverty)

14. Demonstration Value for Broader Reform: $15,000,000 annually (policy innovation value)

TOTAL BENEFITS: $609,700,000

C. NET ANNUAL IMPACT (YEAR 5): +$328,700,000

D. 10-YEAR CUMULATIVE IMPACT (2028-2037): +$3,287,000,000

E. WORKFORCE SECURITY BENEFIT SPECIFIC ANALYSIS:

1. COMPARATIVE BENEFIT LEVELS:

- Arizona standard UI maximum: $240/week ($12,480 annual)

- Workforce Security Benefit: $500/week ($26,000 annual)

- Combined maximum (UI + WSB): $740/week ($38,480 annual)

- Result: Moves participants from poverty-level support to meaningful transition support

2. RETENTION IMPACT PROJECTION:

- Without WSB: Estimated 45% of participants leave Arizona during job loss

- With WSB: Projected 85% retention during job transitions

- Net retention gain: 40% more skilled workers retained

3. RE-EMPLOYMENT SPEED:

- National average job search: 8.5 months

- Arizona average with standard UI: 9.2 months (due to financial desperation forcing suboptimal jobs)

- Projected with WSB: 4.5 months (adequate support allows targeted search)

- Time savings: 4.7 months faster re-employment

4. JOB QUALITY PRESERVATION:

- Participants maintaining employment in trained field: 35% without WSB vs. 75% with WSB

- Wage preservation: Average 12% wage drop without WSB vs. 3% with WSB

- Career trajectory preservation: Significant long-term earnings impact

5. ECONOMIC MULTIPLIER:

- Every $1 in Workforce Security Benefits generates $2.10 in economic activity

- Higher than standard UI multiplier ($1.64) due to higher benefit amount circulating in economy

- Rural multiplier even higher ($2.40) due to limited economic leakage

6. SOCIAL COST AVOIDANCE:

- Reduced homelessness among skilled workers

- Reduced mental health crises

- Reduced family instability

- Reduced intergenerational poverty transmission

F. DEMONSTRATION VALUE FOR BROADER REFORM:

1. POLICY INNOVATION: Creates test case for adequate unemployment support

2. DATA GENERATION: Provides Arizona-specific data on transition support effectiveness

3. EMPLOYER ENGAGEMENT: Demonstrates business benefits of stable workforce

4. FEDERAL FUNDING OPPORTUNITIES: Potential for demonstration project grants

5. NATIONAL LEADERSHIP: Positions Arizona as innovator in workforce policy

SECTION 7. CONCURRENT UNEMPLOYMENT INSURANCE REFORM RECOMMENDATION

A. LEGISLATIVE FINDINGS ON UI INADEQUACY:

1. Arizona's unemployment insurance system provides the lowest maximum benefit in the United States at $240 per week.

2. This inadequate benefit level fails to provide meaningful economic security during job transitions, undermining Arizona's economic competitiveness.

3. The current system creates financial desperation that may force skilled workers to leave Arizona or accept suboptimal employment, representing lost human capital investment.

4. Modernizing Arizona's unemployment insurance system is an essential complement to the Arizona Promise Program and broader economic development strategy.

B. RECOMMENDED UI REFORM LEGISLATION:

The Legislature strongly recommends the concurrent introduction of legislation to amend Title 23, Arizona Revised Statutes, to:

1. Increase the maximum weekly unemployment benefit to 55% of the state average weekly wage, phased in over three years, with automatic annual adjustments thereafter.

2. Extend benefit duration during economic downturns through automatic triggers tied to state unemployment rates (e.g., 13-week extension when unemployment exceeds 6.5%).

3. Modernize eligibility criteria to cover part-time workers, gig economy participants, and workers in non-traditional employment arrangements.

4. Increase the wage base for employer contributions from $7,000 to $15,000 to ensure sustainable funding, phased in over four years.

5. Implement a "Work Share" program allowing employers to reduce hours rather than lay off workers, with partial UI benefits for reduced hours.

6. Create a "Rapid Retraining" benefit for workers in declining industries to access training while receiving unemployment benefits.

7. Establish an "Arizona Workforce Stabilization Fund" to supplement UI during major economic downturns.

C. COORDINATION WITH ARIZONA PROMISE PROGRAM:

1. The Workforce Security Benefit established in §15-1694(K) shall serve as a demonstration project informing broader UI reform.

2. Data from Arizona Promise participants' experiences with adequate transition support shall be used to model broader reform impacts.

3. The Commission shall provide annual reports to the Legislature comparing outcomes for Arizona Promise participants versus similar workers without adequate transition support.

4. Successful elements of the Arizona Promise economic shock protections may be incorporated into broader UI reform legislation.

D. FISCAL NOTE ON UI REFORM:

1. Increasing Arizona's UI maximum to 55% of average weekly wage would raise the maximum to approximately $385 per week based on current wage data.

2. This increase would move Arizona from 51st to approximately 35th among states in UI generosity.

3. Estimated annual cost of comprehensive reform: $120-150 million, funded through:

(a) Modest increases to employer premium rates (average 0.3% increase);

(b) Federal matching opportunities for modernization;

4. Economic benefit analysis shows every $1 in adequate UI benefits generates $1.64 in economic activity during recessions and preserves $3.20 in human capital value.

E. IMPLEMENTATION TIMELINE:

1. Year 1 (2028): Introduce UI reform legislation alongside Arizona Promise implementation

2. Year 2 (2029): Begin phased increase in benefit maximums

3. Year 3 (2030): Implement Work Share program

4. Year 4 (2031): Complete transition to 55% wage replacement

5. Year 5 (2032): Evaluate combined impact of Arizona Promise and UI reform

SECTION 8. SEVERABILITY

A. If any provision of this Act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

B. If any court finds any provision of this Act unconstitutional, it shall sever only the minimal unconstitutional portion while preserving the maximum constitutional operation of the Act. The court shall not enjoin the entire program unless it finds the program cannot function without the unconstitutional provision.

C. The Legislature declares that it would have enacted this Act and each provision thereof irrespective of the fact that any one or more provisions be declared invalid or unconstitutional.

SECTION 9. EFFECTIVE DATE

This Act is effective from and after December 31, 2027, except that:

1. The Arizona Promise Program applies to students first enrolling in an eligible program in the fall semester of the 2028-2029 academic year.

2. The Entrepreneurship Pathway Program shall commence as a pilot program on July 1, 2028, contingent upon the Commission adopting administrative rules for program implementation by March 31, 2028.

3. The Critical Workforce Recruitment Pathway under § 15-1692.01 shall not commence until July 1, 2029, and only after:

(a) The Commission certifies the Arizona resident program is fully implemented;

(b) The Legislature has approved the first Critical Workforce Shortage List by joint resolution; and

4. Full implementation of the entrepreneurship program beyond the pilot phase is contingent upon legislative reauthorization following review of pilot outcomes.

5. The tiered employment commencement deadlines in § 15-1692.01(E)(3) shall take effect on July 1, 2029, following a one-year data collection period during which the Commission shall track actual employment transition timelines for early program cohorts.

6. The Bridge Support Stipend program in § 15-1694.01(C)(1) shall be funded beginning in fiscal year 2029-2030, with a preliminary phase starting July 1, 2029.

7. The licensure expediting requirements in § 15-1692.01(E)(3)(c) shall be implemented through memoranda of understanding between the Commission and all relevant licensing boards, to be executed by December 31, 2028.

8. The Rural Promise Implementation Program under § 15-1699.04 shall commence on July 1, 2028, with priority given to institutions in counties with the highest documented barriers to postsecondary access.

9. The Economic Shock Response Fund under § 15-1699.05 shall be established on January 1, 2028, with initial staffing and systems development, becoming fully operational by July 1, 2028.

10. Career Resilience Planning under § 15-1694.01(H) shall be phased in beginning with the 2029-2030 academic year, with all participants required to complete resilience plans by 2031.

11. The Workforce Security Benefit program under § 15-1694(K) shall become operational on January 1, 2029, allowing time for system development, rulemaking, and coordination with the Arizona Department of Economic Security.

12. The Integrated Benefits Administration System under § 15-1694(L) shall be developed in 2028 with full implementation by January 1, 2029.

13. If any court other than Maricopa County Superior Court purports to enjoin any provision of this Act, implementation may continue pending appeal unless the Arizona Supreme Court specifically orders otherwise. The Commission shall establish an escrow account for funds potentially affected by litigation until constitutional questions are resolved.

fred slawson

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