BILL ANALYSIS �
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THIRD READING
Bill No: AB 566
Author: Wieckowski (D), et al.
Amended: 9/11/13 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-2, 6/25/13
AYES: Evans, Corbett, Jackson, Leno, Monning
NOES: Walters, Anderson
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/30/13
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
ASSEMBLY FLOOR : 51-25, 5/30/13 - See last page for vote
SUBJECT : Courts: personal services contracting
SOURCE : American Federation of State, County and Municipal
Employees
Service Employees International Union
DIGEST : This bill establishes standards for the use of
contracts for all services currently or customarily performed by
trial court employees, as specified; restricts 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, requires measurable
performance standards and audits for personal services contracts
in excess of $100,000 annually, and sunsets on January 1, 2020.
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Senate Floor Amendments of 9/6/13 remove a contracting exception
and add a definition for "services that are customarily
performed," and make technical and clarifying changes.
ANALYSIS :
Existing law:
1.Provides that "civil service" includes every officer and
employee of the state, except as otherwise provided in the
California Constitution. That article also specifies that
certain employees are exempt from civil service, including
among others, officers and employees appointed or employed by
councils, commissions or public corporations in the judicial
branch or by a court of record or officer thereof.
2.Permits a state agency to contract out for personal services
only if specified standards are satisfied, including, among
other things, that:
A. The contracting agency clearly demonstrates actual
overall cost savings, as specified;
B. Proposals to contract out work are not approved solely
on the basis that savings will result from lower contractor
pay rates or benefits, except that 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;
C. The contract does not cause the displacement of civil
service employees, as specified;
D. The savings must be large enough to ensure that they
will not be eliminated by cost fluctuations that could
normally be expected during the contracting period;
E. The amount of savings clearly justify the size and
duration of the agreement;
F. The contract is awarded through a publicized,
competitive bidding process;
G. The potential for future economic risk to the state from
potential contractor rate increases is minimal; and
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H. The potential economic advantage of contracting is not
outweighed by the public's interest in having a particular
function performed directly by state government.
1.Provides that in determining whether the proposed contract
will result in actual savings to the state, in comparing
costs, the contracting agency must clearly demonstrate actual
overall cost savings as follows:
A. The state's additional cost of providing the same
service as proposed by a contractor, including the salaries
and benefits of additional staff that would be needed and
the cost of additional space, equipment, and materials
needed to perform the function must be included;
B. The state's indirect overhead costs, as defined, must
not be included unless these costs can be attributed solely
to the function in question and would not exist if that
function was not performed in state service; and
C. In the cost of a contractor providing a service, any
continuing state costs (such as inspection, supervision,
and monitoring) that would be directly associated with the
contracted function must be included.
1.Exempts personal services contracting from the above
requirements if, among other things:
A. The functions contracted are exempt from civil service
under the California Constitution;
B. The contract is for a new state function and the
Legislature has specifically mandated or authorized the
performance of the work by independent contractors;
C. The services contracted are not available within civil
service, cannot be performed satisfactorily by civil
service employees, or are of such a highly specialized or
technical nature that the necessary expert knowledge,
experience, and ability are not available through the civil
service system;
D. The legislative, administrative, or legal goals and
purposes cannot be accomplished through the utilization of
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persons selected pursuant to the regular civil service
system, such as where there is a conflict of interest or to
insure independent and unbiased findings in cases where
there is a clear need for a different, outside perspective
(e.g., obtaining expert witnesses in litigation);
E. The nature of the work is such that specified existing
law standards for emergency appointments apply;
F. The contractor will provide equipment, materials,
facilities, or support services that the state could not
feasibly provide in the location where the services are to
be performed; or
G. The services are of such an urgent, temporary, or
occasional nature that the delay incumbent in their
implementation under civil service would frustrate their
very purpose.
1.Provides similar requirements and exceptions for personal
service contracting for school districts, community college
districts, and libraries.
This bill:
1.Provides 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, all of the following must be met:
A. The trial court clearly demonstrates 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.
B. 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
materially undercut trial court pay rates.
C. The contract cannot cause an existing trial court
employee to incur a loss of his/her employment or
employment seniority, a reduction in wages, benefits, or
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hours, or an involuntary transfer to a new location
requiring a change in residence.
D. 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.
E. The contract must be awarded through a publicized,
competitive bidding process.
F. 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.
G. 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.
H. The contract shall be awarded only if the amount of the
savings clearly justifies the size and duration of the
contracting agreement.
I. 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:
(1) All charges, claims, or complaints filed against
the contractor with a federal, state, or local
administrative agency during the prior 10 years.
(2) All civil complaints filed against the contractor
in a state or federal court during the prior 10 years.
1.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.
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2.Provides that the provisions of this 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.
3.With the exception of the services of official court
reporters, provides that the provisions of this 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.
Individual reporters pro tempore may be used by a trial court
under these circumstances.
4.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/her
employment or seniority, a reduction in wages, benefits, or
hours, or an involuntary transfer to a new location requiring
a change in residence.
5.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.
6.Defines "services that are customarily performed" as services
that have been historically performed by that trial court's
employees.
7.Makes technical and conforming changes.
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Unknown, significant loss of future cost savings potentially
in the millions of dollars (Trial Court Trust Fund (TCTF)) 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.
Unknown, significant costs potentially in the millions of
dollars (TCTF) to the extent the standards established in this
bill limit the courts' ability to negotiate contracts for
services.
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Ongoing significant administrative costs (TCTF) 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.
SUPPORT : (Verified 9/11/13)
American Federation of State, County and Municipal Employees
(co-source)
Service Employees International Union (co-source)
Association for Los Angeles Deputy Sheriffs
California Court Reporters Association
California Labor Federation
California Official Court Reporters Association
California Professional Firefighters
California Public Defenders Association
California School Employees Association
Deposition Reporters Association of California
East Bay Developmental Disabilities Legislative Coalition
Glendale City Employees Association
Laborers' Locals 777 & 792
Los Angeles County Probation Officers Union, Local 685
Organization of SMUD Employees
Professional and Technical Engineers, IFPTE Local 21
Professional Engineers in California Government
Public Employees Local Union #1
Riverside Sheriffs' Association
San Bernardino Public Employees Association
San Diego County Court Employees Association
San Luis Obispo County Employees Association
Santa Rosa City Employees Association
State Building and Construction Trades Council
OPPOSITION : (Verified 9/9/13)
California Chamber of Commerce
California Judges Association
California Judicial Council
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Superior Courts of California for the Counties of, Alameda,
Amador, Butte, Calaveras, Contra Costa, El Dorado, Fresno,
Glenn, Imperial, Inyo, Kern, Kings, Lake, Lassen, Los Angeles,
Marin, Mariposa, Mendocino, Merced, Modoc, Monterey, Napa,
Nevada, Orange, Placer, Plumas, Riverside, Sacramento, San
Benito, San Bernardino, San Diego, San Joaquin, San Luis
Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz,
Shasta, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Trinity,
Tulare, Tuolumne, Ventura and Yolo.
ARGUMENTS IN SUPPORT : According to the author:
Historically, trial courts in California were county
entities, funded by the counties and thus subject to the
privatization restrictions that applied to counties. But
in 1997, the Legislature passed the Lockyer-Isenberg Trial
Court Funding Act, AB 233 (Escutia and Pringle, Chapter
850, Statutes of 1997) and shifted the responsibility for
funding from the counties to the state. Subsequently, many
of the laws that had previously applied to the trial courts
no longer applied once they were removed from the counties'
jurisdictions, such as open meetings, access to public
records, whistleblower protections, public contract code
requirements for contracting purposes and provisions
relating to privatization.
As a result of recent budget cuts to the trial courts, some
courts have sought alternative ways to provide critically
important services to the public, including privatizing
some of the most sensitive services that help preserve the
integrity of our impartial trial court system.
Alternatives being considered include privatizing the
handling and maintenance of private, confidential and
sensitive information contained in official court records.
The American Federation of State, County and Municipal
Employees, a co-sponsor of this bill, writes that "Assembly
Bill 566 provides an efficient way of evaluating whether
privatizing trial court jobs is in the best interests of
the state. These specific standards in this bill protect
trial court services, and all contracts must pay working
wages and cannot undercut current employees' wages. This
bill is important because it protects trial court employees
and stops automatic privatization of these public sector
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jobs."
ARGUMENTS IN OPPOSITION : The Judicial Council writes that it
"Remains opposed to AB 566 which would severely hamper the trial
courts' ability to contract with private entities for services.
The Council appreciates the recent amendments, which add a few
more instances in which trial courts may enter into personal
service contracts. However, neither July 2, 2013 amendments nor
the July 9, 2013 amendments address the substantial concerns the
Council continues to raise with the author. Further, the July
2, 2013 amendments created additional problems that will have
severe fiscal consequences for the trial courts. The Council
remains committed to working with the author to reduce the
extreme and undue burden AB 566 continues to place on the trial
courts' ability to enter into personal service contracts."
"AB 566 continues to require trial courts to demonstrate actual
cost savings for the duration of every personal services
contract but does not allow this cost savings to be achieved
through lower contractor pay rates or benefits. Further, the
contract cannot cause any existing trial court employee to lose
their job or seniority, or experience a reduction in wages,
benefits, hours, or an involuntary transfer requiring a change
in residence. In other words, AB 566 requires courts to use
court employees to perform many services even if it would be
more cost effective for courts to contract for these services.
AB 566 also imposes audit requirements on courts that do not
enter into private contracts that are far more extensive and
costly than requirements placed on other government entities."
ASSEMBLY FLOOR : 51-25, 5/30/13
AYES: Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra,
Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Chesbro, Cooley, Daly, Dickinson, Eggman, Fong,
Fox, Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray,
Hall, Roger Hern�ndez, Jones-Sawyer, Lowenthal, Medina,
Mitchell, Mullin, Muratsuchi, Nazarian, Pan, Perea, V. Manuel
P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Weber, Wieckowski, Williams, John A. P�rez
NOES: Achadjian, Allen, Bigelow, Ch�vez, Conway, Dahle,
Donnelly, Beth Gaines, Gorell, Grove, Harkey, Jones, Levine,
Linder, Logue, Maienschein, Mansoor, Melendez, Morrell,
Nestande, Olsen, Patterson, Wagner, Waldron, Wilk
NO VOTE RECORDED: Hagman, Holden, Yamada, Vacancy
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AL:ej 9/12/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
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