BILL ANALYSIS Ó SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 906 Jim Beall, Chair HEARING DATE: July 8, 2013 AB 906 (Pan) as amended 7/3/13 FISCAL: YES STATE CIVIL SERVICE: PERSONAL SERVICES CONTRACTS HISTORY : Sponsor: American Federation of State, County, and Municipal Employees, AFL-CIO (AFSCME) Other legislation:AB 334 (Gomez) 2013 Currently on the Senate Floor AB 149 (Lara) 2011 Died in Senate Appropriations Committee AB 556 (Conway) 2009 Died in Assembly Judiciary Committee ASSEMBLY VOTES : PER & SS 5-2 4/24/13 Appropriations 12-5 5/24/13 Assembly Floor 49-27 5/29/13 SUMMARY : AB 906 provides that no state agency personal services contracts of an emergency, urgent, temporary, or occasional nature shall have a term greater than two years. The bill prohibits all state agencies from executing any personal service contracts, as specified, until the State Personal Board (SPB) has contacted all organizations that represent state employees who perform the type of work to be contracted for an opportunity both to comment on the proposed contracts and to request that SPB review the contracts for compliance with statutory standards. The bill exempts certain contracts relating to peace officer training and opportunities for the developmentally disabled, as specified, from these requirements. The bill also expands the kind of authorized counterparties to a state agency personal services contract by adding limited liability companies (LLCs) to the definition of a Glenn A. Miles Date: July 2, 2013 Page 1 "firm." BACKGROUND AND ANALYSIS : 1)Existing law : a) requires that services provided by state agencies generally be performed by state civil service employees, but allows certain services to be provided through personal service contracts if they meet statutorily prescribed standards. b) specifies cost savings criteria for personal service contracts and defines standards under which state agencies may execute personal service contracts, including that the contracts may be used for emergency appointments or for work of an urgent, temporary, or occasional nature. c) requires a state agency proposing to execute a personal service contract to notify the State Personnel Board (SPB) of its intention. Upon notification, SPB must immediately contact all organizations that represent state employees who perform the type of work to be contracted and anyone who has filed a request to be similarly noticed. d) allows an employee organization, within 10 days of receiving notice of a proposed contract, to request that SPB review the contract for compliance with the statutory standards. e) requires state agency personal service contracts to be with a "firm," which is defined as a corporation, partnership, nonprofit organization, or sole proprietorship but does not include limited liability companies (LLCs). 1)This bill : a) adds LLCs to the definition of a "firm" as an authorized counterparty to a state agency's personal services contract. Glenn A. Miles Date: July 2, 2013 Page 2 b) provides that no state agency personal services contracts of an emergency, urgent, temporary, or occasional nature, as specified, shall have a term greater than two years. Exempts from this limitation those personal service contracts developed to provide, as specified, occupational opportunities to developmentally disabled persons. c) prohibits any state agency from executing any personal service contract, as specified, until the SPB has contacted all organizations that represent state employees who perform the type of work to be contracted for an opportunity both to comment on the proposed contracts and to request that SPB review the contracts for compliance with statutory standards. d) creates a specific category of permissible personal service contracts for services of an irregular, unpredictable, or occasional duration that are necessary to carry out instructional training by the Commission on Peace Officer Standards and Training (POST). FISCAL : According to the Assembly Appropriations Committee, AB 906 would result in "(s)ignificant state employment costs, conservatively in the hundreds of thousands of dollars, potentially in the tens of millions of dollars each year. COMMENTS : 1)Argument in Support : The sponsor states that "privatization contracts are often unnecessary and violate state constitutional and statutory prohibitions against overspending on service contracts. A March 2009 study conducted by the Service Employees International Union, Local 1000, found that the state could Glenn A. Miles Date: July 2, 2013 Page 3 save approximately $350 million annually by utilizing civil service employees instead of unnecessary and wasteful privatization contracts. This bill will provide the increased transparency and oversight needed for those savings to be realized." 2)Argument in Opposition : According to the California Chamber of Commerce, the "time restrictions on personal services contracts under AB 906 will deter any private companies from bidding on these contracts, as the cost of proposing a bid may be too high for the limited contract available." 3)SUPPORT : American Federation of State, County, and Municipal Employees (AFSCME), AFL-CIO, Sponsor AFSCME, Local 2620, AFL-CIO California Attorneys, Administrative Law Judges and Hearing Officers in State Employment (CASE) California Correctional Peace Officers Association (CCPOA) Professional Engineers in California Government (PECG) Service Employees International Union (SEIU), Local 1000 Union of American Physicians and Dentists (UAPD)/AFSCME-Local 206 4)OPPOSITION : Association of Regional Center Agencies (ARCA) California Chamber of Commerce Natoma Technologies, Inc. (Natoma) ##### Glenn A. Miles Date: July 2, 2013 Page 4