BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 566 (Wieckowski) - Courts: personal services contracting.
Amended: July 9, 2013 Policy Vote: Judiciary 5-2
Urgency: No Mandate: No
Hearing Date: August 12, 2013
Consultant: Jolie Onodera
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 566 would establish standards for the use of
personal services contracts for all services currently or
customarily performed by trial court employees, or that were
performed or customarily performed by those employees as of July
1, 2012, as specified. This bill would restrict the use of
personal services contracts for the purpose of achieving cost
savings, permitting contracts only if specified conditions are
met, and, among other provisions, would require measurable
performance standards and audits for personal services contracts
in excess of $100,000 annually.
Fiscal Impact: The Judicial Council indicates the bill will
require the trial courts to convert existing contracts to court
employees rather than renewing or extending existing contracts
due to the retroactive cut-off date of July 1, 2012, at a
statewide cost of nearly $2 million (General Fund*), and that
greater impacts could be incurred prospectively as opportunities
to increase operating efficiencies are discouraged due to the
contracting restrictions, as follows:
In the absence of an exception for contracting out for court
reporter services, the Judicial Council estimates additional
costs of $4.4 million (General Fund*) annually based on
information provided by 20 courts.
Ongoing significant administrative costs to the courts to
demonstrate that a decision to contract out for services is
allowable under the bill's parameters, and to provide the
specified additional information and performance audits for
contracts exceeding $100,000.
To the extent the contracting restrictions expose the trial
courts to legal action from persons or groups contesting
whether the specified conditions were met, additional costs
could be incurred. Courts may additionally claim that because
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the bill limits their ability to negotiate personal services
contracts that may result in savings, they will incur
increased costs.
*Trial Court Trust Fund (TCTF)
Background: Under existing law, most governmental entities are
authorized to utilize personal services contracts to achieve
cost savings only if specified standards are satisfied, chief
among them being that the entity clearly demonstrates actual
overall cost savings based upon certain information. These
entities include executive branch agencies, public schools,
community colleges, and libraries.
In response to significant budget reductions experienced by the
courts over the past five years, many courts have sought
alternative ways to provide services to the public with limited
resources, including the use of personal services contracts.
Examples of services that trial courts currently contract out
for include court reporters, court interpreters, child custody
evaluations, probate investigations, family law facilitators,
minors' counsel in dependency cases, child custody mediation
services, security guards, personnel services, payroll,
information services, collections, labor negotiation services,
and transcripts for electronically recorded proceedings.
This bill seeks to authorize the use of service contracts
subject to specified contracting standards such as competitive
bidding, performance standards, and financial audits.
Proposed Law: This bill would provide that if a trial court
intends to enter into a contract, or renew or extend an existing
contract, for any services that are currently or customarily
performed by that trial court's employees, or that were
performed or customarily performed by that court's employees as
of July 1, 2012, all of the following must be met:
The trial court must clearly demonstrate that the
contract will result in actual overall cost savings to the
court for the duration of the entire contract as compared
with the court's actual costs of providing the same
services, as specified.
The contract must not be approved solely on the basis
that savings will result from lower contractor pay rates or
benefits, except contracts are eligible for approval if the
contractor's wages are at the industry level and do not
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undercut trial court pay rates.
The contract cannot cause an existing trial court
employee to incur a loss of his or her employment or
employment seniority, a reduction in wages, benefits, or
hours, or an involuntary transfer to a new location
requiring a change in residence.
The contract cannot be approved if, in light of the
services provided by trial courts and the special nature of
the judicial function, it would be inconsistent with the
public interest to have the services performed by a private
entity.
The contract must be awarded through a publicized,
competitive bidding process.
The contract must include specific provisions pertaining
to the qualifications of the staff that will perform the
work under the contract, as well as assurances that the
contractor's hiring practices meet applicable
nondiscrimination standards.
The contract must provide that it may be terminated at
any time by the trial court without penalty if there is a
material breach of the contract and notice is provided
within 30 days of termination.
The term of the contract shall not be more than five
years from the date on which the trial court approves the
contract.
If the contract is for services over $100,000 annually,
the trial court must meet certain auditing requirements and
measurable performance standards, as specified, and a
requirement that the contractor disclose a description of
all of the following as part of its bid, application, or
answer to a request for proposal:
o All charges, claims, or complaints filed
against the contractor with a federal, state, or local
administrative agency during the prior 10 years.
o All civil complaints filed against the
contractor in a state or federal court during the
prior 10 years.
Provides that the bill's provisions do not preclude a
trial court or the Judicial Council from adopting more
restrictive rules regarding the contracting of court
services.
Provides that the provisions of the bill do not apply to
a contract under specified circumstances such as if the
contract is between a trial court and another trial court
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or a local government entity, or the contract is for a new
trial court function and the Legislature has specifically
mandated or authorized the performance of the services by
independent contractors.
With the exception of the services of official court
reporters, provides that the provisions of the bill do not
apply to a contract if the services are of such an urgent,
temporary, or occasional nature that the delay incumbent in
their implementation through the process for hiring trial
court employees would frustrate their very purpose.
Authorizes the use of personal services contracts
developed pursuant to rehabilitation programs or programs
vendored or contracted through a regional center or the
Department of Developmental Services, and the contract will
not cause an existing trial court employee to incur a loss
of his or her employment or seniority, a reduction in
wages, benefits, or hours, or an involuntary transfer to a
new location requiring a change in residence.
Requires each trial court to provide a report no later
than February 1, 2014, to the chairpersons of specified
legislative committees if the trial court enters into a
contract between July 1, 2013, and January 1, 2014, for
services provided or customarily provided by its trial
court employees if the contract extends beyond March 31,
2014. Provides that it is the intent of the Legislature to
consider the reduction of future budget appropriations to
each trial court by the amount of any contract analyzed
pursuant to this bill if the Legislature concludes that the
contract would not have been permissible under the new
standards.
Related Legislation: AB 438 (Williams) Chapter 611/2011 imposes
requirements, until January 1, 2019, on a city or library
district that intends to withdraw from a county free library
system and operate libraries with a private contractor.
SB 1419 (Alarcon) Chapter 894/2002 established standards for the
use of personal service contracts in California school districts
and community college districts.
AB 3336 (Ryan) Chapter 1057/1982 established standards for the
use of personal service contracts in California executive branch
agencies.
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Staff Comments: The Judicial Council indicates this bill will
require the trial courts to convert existing contracts to court
employees rather than renewing or extending existing contracts
due to the retroactive cut-off date of July 1, 2012, at a
statewide cost of nearly $2 million (General Fund), and that
greater impacts could be incurred prospectively as opportunities
to increase operating efficiencies are discouraged due to the
contracting restrictions outlined in the bill.
This bill creates a list of circumstances under which the
contract requirements of the bill do not apply. One such
exception includes services of a temporary, occasional, or
urgent nature such that the delay incumbent in their
implementation through the process for hiring trial court
employees would frustrate their very purpose. This bill also
creates an exception to this allowance, and states that this
exception does not apply to the services of official court
reporters. In the absence of an exception for contracting out
for court reporter services, the Judicial Council estimates
additional costs of $4.4 million annually based on information
provided by 20 courts. Combined with the impact on existing
contracts retroactive to July 1, 2012, the direct fiscal impact
of this bill on the trial courts is estimated at $6.4 million
annually.
This bill requires the trial courts to demonstrate that a
decision to contract out for services is allowable under the
bill's parameters, and to provide specified additional
information and performance audits for contracts exceeding
$100,000. These provisions of the bill are estimated to result
in ongoing significant administrative costs to the trial courts.
While modeled upon existing statutes requiring governmental
entities (executive branch agencies, public K-12 schools,
community colleges, libraries) to meet specified standards
before executing personal service contracts, this bill differs
from existing statutes under specified provisions, including the
following:
Under Government Code (GC) � 19130(a)(2), government
agency proposals to contract out work are eligible for
approval if the contractor's wages are at the industry's
level and do not significantly undercut state pay rates.
Under the provisions of this bill, trial court contracts
are eligible for approval only if the contractor's wages
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are at the industry's level and do not undercut trial court
pay rates. This provision appears to be a more restrictive
standard for trial courts to adhere to than other
governmental agencies (with the exception of libraries).
The following exception is included in other personal
services contracting statutes (GC � 19130(b)(8), EC �
45103.1(b)(6), and EC � 88003.1(b)(6)), but is not included
as an exception for the trial courts: "The contractor will
provide equipment, materials, facilities, or support
services that could not feasibly be provided by the state
in the location where the services are to be performed."
To the extent the contracting restrictions expose the trial
courts to legal action from persons or groups contesting whether
the specified conditions were met, additional costs could also
be incurred. Courts may additionally claim that because the bill
limits their ability to negotiate personal services contracts
that may result in savings, they will incur increased costs.