BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 566 (Wieckowski) - Courts: services contracting.
Amended: July 9, 2013 Policy Vote: Judiciary 5-2
Urgency: No Mandate: No
Hearing Date: August 30, 2013
Consultant: Jolie Onodera
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: AB 566 would establish standards for the use of
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 (as proposed to be amended):
Unknown, significant loss of future cost savings potentially
in the millions of dollars (General Fund*) per year to the
extent the provisions of this measure restrict the ability of
courts to transition to the use of technology-based services
for existing court services, including but not limited to
court reporting.
The amendment removing the July 1, 2012, retroactive provision
but adding the services of court reporters more broadly to be
subject to the contracting standards could still result in the
potential fiscal impact of nearly $2 million as previously
indicated by the Judicial Council. To the extent the inclusion
of court reporter services impacts additional courts that have
been utilizing electronic court reporting in limited cases,
the potential fiscal impact could potentially be greater.
Unknown, significant costs potentially in the millions of
dollars (General Fund*) to the extent the standards
established in this bill limit the courts' ability to
negotiate contracts for services, including but not limited to
for extended contracts (limits contract terms to five years),
pay rates, and contracts with non-local governmental agencies.
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(See Staff Comments)
Ongoing significant administrative costs (General Fund*) 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.
*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
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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
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.
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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
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
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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.
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 for state civil service contracts under
specified provisions, including but not limited to the
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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
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."
Existing law authorizes contracts in which the amount of
savings clearly justifies the size and duration of the
contracting agreement. The provisions of this measure
restrict the trial courts to contracts of not more than
five years, and do not include the consideration of any
such factors.
This bill creates an exception to the contracting
standards if the contract is between a trial court and
another trial court or a local government entity, but does
not provide a similar exception for state and federal
governmental entities.
Existing law authorizes an exception to contracting
standards if the services cannot be performed
satisfactorily by state employees, or are of such a highly
specialized or technical nature that the necessary
expertise, experience, and ability are not available
through the civil service system. The provisions of this
bill appear to significantly narrow this exception by
providing an exception to the contracting standards for
such services only if the necessary knowledge, experience,
and ability cannot be obtained from trial court employees.
It could potentially be argued that will the appropriate
level of training provided to trial court employees, the
necessary ability could be obtained by trial court
employees in order to perform these services.
Existing law provides an exception to contracting
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standards if the services are incidental to a contract for
the purchase or lease of real or personal property (service
agreements). These service agreements include agreements to
service or maintain office equipment. Under the provisions
of this bill, contracts that include agreements to operate
equipment or computers are not included, which would
significantly reduce the ability to qualify for this
exception.
To the extent the contracting restrictions expose the trial
courts to legal action from persons or groups contesting whether
the specified requirements and/or criteria for an exception were
met, additional costs could also be incurred.
The proposed author amendments do the following:
Remove the July 1, 2012, retroactive provision.
Specify that the services of court reporters are to be
subject to the contracting requirements specified in the
bill.
Clarify the ability to use court reporters pro tempore
when the services meet the criteria of being of such an
urgent, temporary, or occasional nature that the delay
incumbent in their implementation through the process for
hiring employees would frustrate their very purpose.
Provide an exception for contracts for the services of
court interpreters, as specified.