1Urging the Department of Community and Economic Development to
2establish an employee ownership program to promote business
3retention and growth in this Commonwealth.

4WHEREAS, In the Employee Retirement Income Security Act of
51974 (Public Law 93-406, 88 Stat. 892), the United States
6Congress codified a technique of corporate finance which
7utilizes employee stock ownership, officially named an Employee
8Stock Ownership Plan (ESOP); and

9WHEREAS, ESOPs serve the dual purpose of providing retirement
10savings and stock ownership for employees as well as being a
11financing method for businesses; and

12WHEREAS, According to the National Center for Employee
13Ownership (NCEO), there are about 12,000 ESOP-owned companies or
14similar trust-based plans that cover 11 million participants;
15and

16WHEREAS, It is estimated that Pennsylvania has 500 companies
17with ESOPs or similar trust-based plans covering about 900,000
18participants; and

1WHEREAS, Research shows that employee ownership increases
2employment, productivity, wages and sales; and

3WHEREAS, Employee ownership keeps businesses and jobs in
4state, and

5WHEREAS, According to NCEO, ESOP companies are 25% more
6likely to stay in business and employee-owners are four times
7less likely to be laid off during the recent recession; and

8WHEREAS, ESOPs have a number of tax benefits including making
9company contributions and dividend payments tax-deductible; and

10WHEREAS, Business owners may be unaware of ESOPs or lack
11clear understanding about such plans, how they operate and the
12advantages associated with them; and

13WHEREAS, ESOPs could provide an effective tool for companies
14going through ownership transition by preserving their companies
15and jobs through employee ownership rather than closing or
16selling them to out-of-state or foreign buyers; and

17WHEREAS, Increased use of employee ownership plans can
18substantially increase the income and financial security of the
19citizens of Pennsylvania; therefore be it

20RESOLVED, That the Senate urge the Department of Community
21and Economic Development to establish an employee ownership
22program to promote business retention and growth in this
23Commonwealth; and be it further

24RESOLVED, That the program should include:

25(1) education and outreach to inform employees,
26employers and entrepreneurs about the possibility and benefit
27of employee ownership;

28(2) technical assistance to assist efforts to form and
29transition to employee-owned businesses, to enable employers
30and employees to explore and assess the feasibility of

1transferring full or partial ownership to employees and to
2encourage employees and employers to start new employee-owned
3businesses;

4(3) training employees and employers with respect to
5methods of employee participation in such open-book
6management, work teams, committees and other approaches for
7seeking greater employee input; and

8(4) developing partnerships with the State System of
9Higher Education, State-related universities and a business
10and industry trade association in order to host educational
11events to promote awareness and understanding of employee
12ownership of businesses.