BILL ANALYSIS �
AB 566
Page 1
( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 566 (Wieckowski)
As Amended September 11, 2013
Majority vote
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|ASSEMBLY: |51-25|(May 30, 2013) |SENATE: |22-12|(September 12, |
| | | | | |2013) |
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Original Committee Reference: JUD.
SUMMARY : Requires, until January 1, 2020, a court to comply
with specified requirements before contracting out services
currently or customarily performed by that court's trial court
employees. Specifically, this bill :
1)Provides that, until January 1, 2020, if a trial court seeks
to contract for services currently or customarily, as defined,
performed by that court's trial court employees, all of the
following apply:
a) The contract may not be approved if, in light of the
services provided by the 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.
b) The court clearly demonstrates that the contract will
result in actual, overall cost savings to the court,
considering specified factors, as provided.
c) The contract savings are not the result of lower
contractor pay rates or benefits, provided the contract is
eligible for approval if the contractor's wages are at the
industry standard and do not materially undercut trial
court pay rates.
d) The contract does not cause existing trial court
employees to lose employment, as provided.
e) The contract is awarded through a competitive bidding
process.
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f) The contract provides for qualified staff, and the
contractor's hiring practices are nondiscriminatory.
g) The contract allows for immediate termination by the
trial court, without penalty, for material breach.
h) For contracts over $100,000, requires the contract to i)
disclose specified information, ii) provide measurable
performance standards; and iii) require a performance audit
and a cost audit be done and considered prior to any
contract renewal.
i) The contract may only be awarded if the savings clearly
justify the size and duration of the contracting agreement.
2)Provides that the provisions in 1) above, do not apply to:
a) Contracts between a trial court and another trial court
or a government entity for services to be performed by
employees of that trial court or government entity;
b) Contracts for a new trial court function for which the
Legislature has specifically mandated or authorized the
performance of the services by independent contractors;
c) Services contracted for that are of such a highly
specialized or technical nature that necessary expertise
are not available from court employees;
d) Services incidental to a contract for purchase of
property, except for contracts to operate equipment or
computers (other than service or maintenance agreements);
e) Contracts needed to protect against conflict of interest
or ensure independent unbiased findings;
f) Emergency situations;
g) Training courses when qualified instructors not
available from court employees;
h) Services that are of such an urgent, temporary or
occasional nature that delay in hiring employees would
frustrate their very purpose, but this provision does not
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apply to court reporters, except individual pro tempore
court reporters may be used as appropriate;
i) Contracts for services with individuals with
developmental disabilities pursuant to rehabilitation
programs; and
j) Contracts for services of court interpreters.
3)Does not preclude a trial court or the Judicial Council from
adopting more restrictive rules regarding contracting of court
services.
4)Applies to any contract entered into, renewed or extended
after the bill's effective date.
5)Requires each trial court that enters into a personal services
contract between July 1, 2013, and the effective date of the
bill, with a term beyond March 1, 2014, to report to the
Legislature by February 1, 2014, on the contract, as provided.
States the intent of the Legislature to consider reducing
future budget appropriations to a trial court if such a
contract would not have been allowed under the terms set forth
in 1) and 2), above.
6)Contains a severability clause.
The Senate amendments add the sunset, delete the retroactive
effect of the bill, define customarily, add seven new exemptions
to contracting restrictions and require trial courts to report
to the Legislature on specified contracts.
EXISTING LAW :
1)Provides that employees of the state be appointed through the
civil service system.
2)Limits personal service contracts (contracting out) for work
done by state employees to when specified conditions are
satisfied, including:
a) The contracting state agency clearly demonstrates actual
overall savings.
b) The contract savings are not the result of lower
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contractor pay rates or benefits, provided the contract is
eligible for approval if the contractor's wages are at the
industry standard and do not undercut existing pay rates.
c) The contract does not cause displacement of state civil
service employees.
d) The amount of the savings clearly justifies the
agreement.
e) The contract is awarded through a competitive bidding
process.
f) The potential for future economic risk for the state
from the contractor is minimal.
g) The potential economic advantage of contracting out is
not outweighed by the public's interest in having a
particular function performed directly by the state.
3)Permits contracting out of work done by state employees in
limited specified situations, including new state functions,
services that cannot be performed within civil service, and
emergency situations.
4)Prevents a school district or community college district from
contracting out services currently or customarily performed by
classified employees, unless conditions similar to those set
out in 2) above, are satisfied.
5)Prevents, until January 1, 2019, a city or library district
from withdrawing from a county free library system and
operating libraries with a private contractor, unless
conditions similar to 2) above, are satisfied.
6)Allows a county to contract out for "special services," as
provided.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)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
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for existing court services, including but not limited to
court reporting.
2)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.
3)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.
4)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.
5)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)
COMMENTS : Nearly all government entities in California are
restricted from contracting out functions customarily done by
public employees, unless specified conditions are satisfied.
These requirements are designed to ensure that not only is work
done cost-effectively, but that the public interest in
government activities remains paramount. As a general rule,
work performed for the state must be done by state employees
unless the proposed contract for personal services meets
specified criteria, including a clear demonstration of cost
savings. Schools and community college districts are also
required to comply with the same standards that apply to state
departments. Just two years ago, the Legislature passed, and
the Governor signed, almost identical provisions to limit the
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privatization of public libraries in AB 438 (Williams), Chapter
611, Statutes of 2011. This bill, jointly sponsored by the
Service Employees International Union (SEIU) and the American
Federation of State, County and Municipal Employees (AFSCME),
seeks to extend these same due diligence protections to the
trial courts in a pilot program.
The author writes that this bill is necessary not only to ensure
that scarce court resources are used as effectively and
efficiently as possible, but also to protect the very integrity
of the court process: "AB 566 is consistent with the law today
for the state, school districts, community colleges, and our
libraries. This bill simply puts the trial courts on par with
other important government functions by ensuring that our tax
dollars are accountable and that the public's interest in fair
and judicious courts is considered before privatizing critical
court functions."
The due diligence requirements in this bill are very similar to
requirements today that apply to all state agencies, as well as
schools, community colleges and libraries. Like the courts,
these entities, with the exception of the libraries, receive the
bulk of their funding from and through the state.
Historically, trial courts in California were county entities,
funded by the counties, but in 1997, after significant problems
came to light with the county-based court funding model, the
Legislature passed the Lockyer-Isenberg Trial Court Funding Act,
AB 233 (Escutia and Pringle), Chapter 850, Statutes of 1997.
Under that bill, the state assumed responsibility for funding
the courts and helping ensure equal access to a quality judicial
system statewide. After the state took over funding, the courts
received significant funding increases and historically
underfunded courts saw greater increases. Unfortunately, the
recession forced significant reductions in state General Fund
support for the courts, but "one-time" fixes, backfills and new
revenues have, to date, spared the court system some of the
General Fund reductions.
Nevertheless the state's trial courts and their employees, and
all court users in the state, have been experiencing tragic
reductions in court services and basic access to justice. Trial
courts have been taking dramatic and painful steps to address
the budget cuts, including 1) closing courthouses and
courtrooms, some on selected days and others completely; 2)
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laying off or furloughing employees; and 3) reducing services,
including substantial cuts to self-help and family law
facilitator assistance, and providing fewer court reporters and
court interpreters. While the trial courts have received an
additional $60 million this year, some of the one-time fixes are
set to expire. As a result, it is anticipated that courts may
be looking for additional ways to reduce expenditures. Courts
may therefore understandably be tempted to consider contracting
out important court functions in an attempt to reduce expenses.
If this is the case, it is important to ensure that such
contracting out will actually save the courts money and continue
to strongly protect the integrity of the judicial system.
According to the author, this bill proposes to do exactly that.
The Placer Superior Court has reportedly gone so far as to lay
off all its court reporters and contract out all of their work
to private court reporters. The Placer Court states that the
contract will result in $600,000 in anticipated savings in the
2013-14 fiscal year. However, according to the sponsors, court
employees agreed to reduce their wages and benefits to the level
of the private contract and attain the $600,000 savings, but the
Placer Court nevertheless pursued the private contract even
though there were no longer savings. Moreover, the contract has
not increased either the number or type of cases for which court
reporters are present. Thus, court reporting in all cases in
Placer County, including juvenile court cases which are closed
to the public, will now be performed by a private, for-profit
company. This bill would help ensure that future contracts of
this sort not only actually save money for the courts, but also
are, most importantly, in the public's interest.
Analysis Prepared by : Leora Gershenzon / JUD. / (916)
319-2334
FN:
0002647