BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 523 (Correa) - Public Employment: Merit System
Amended: April 1, 2013 Policy Vote: PE&R 3-2
Urgency: No Mandate: No
Hearing Date: May 23, 2013 Consultant: Maureen Ortiz
SUSPENSE FILE.
Bill Summary: SB 523 prohibits the Department of Human Resources
(CalHR) from granting any administrative waivers in Orange
County if an audit finds the county to be out of compliance with
a merit-based personnel system.
Fiscal Impact:
Unknown potentially significant costs to CalHR (General)
Unknown, potentially significant costs to Orange County for
transitioning to an Interagency Merit System (Local)
It is likely that CalHR will incur significant costs in relation
to transitioning Orange County from Approved Local Merit System
Standards to the State's Merit System Regulation, updating
regulations, increased audits, and for the additional workload
associated with overseeing Orange County's personnel activities.
Background: Existing law, under the California Constitution,
creates the State Personnel Board (SPB) which is responsible for
administering the state employee civil service system. The
Governor's Reorganization Plan 1 consolidated the SPB with the
Department of Personnel Administration (DPA) into a new agency -
California Department of Human Resources (CalHR). The SPB
retained jurisdictional oversight with regard to hearing matters
related to the merit principle for state civil service
employees, and the new CalHR is responsible for administering
merit systems for local government agencies in instances where
programs receive certain state and federal funds.
Local agencies are permitted to establish their own merit
systems comprising of personnel standards but they are subject
to approval and review by CalHR to the extent necessary to
qualify for federal funding. CalHR may waive administration of
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all or part of a local agency merit system after the approval of
a legally binding memorandum of understanding negotiated between
the local agency governing board and an employee organization.
All merit system standards waivers are subject to periodic
audit, approval, or revocation by CalHR.
CalHR is vested with the responsibility of administering merit
systems for local government agencies where such merit systems
of employment are required as a condition of a state funded
program or a federal grant-in-aid program. Contracted by CalHR,
Cooperative Personnel Services performs periodic audits of merit
departments (social services, health, and child support
services) to review the personnel practices and procedures in
order to ensure continued adherence to Local Agency Personnel
Standards.
Proposed Law: SB 523 provides that Orange County will not be
entitled to an administrative waiver of all or part of a local
agency merit system by CalHR if the county is found to be out of
compliance with a merit-based personnel system pursuant to an
audit by the county or by CalHR. The standards that shall not
be waived include, but are not limited to, those related to
certification, appointment and other transactions, layoff and
reinstatement, position classifications, compensation standards,
and disciplinary actions.
Staff Comments: Over the past decade, the Orange County Human
Resources Department has been reviewed several times by entities
such as the Orange County Grand Jury, consultants, CalHR
(formerly DPA), and the County's Internal Audit Department. The
audits have uncovered numerous instances where classifications
and compensation standards were not properly adhered to, or
salary adjustments were granted that were inconsistent with best
practices.
It is unclear whether the result of SB 523 would require CalHR
to administer all of Orange County's 17,000 employees. If so,
this would be costly and problematic because the department
currently does not have jurisdiction or authority over areas
where merit systems of employment are not required as a
condition of a state funded program or a federal grant-in-aid
program established under the Society Security Act, the Public
Health Service Act, or the Federal Civil Defense Act.
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Cooperative Personnel Services, contracted by the state,
performed an audit in Orange County in 2010. However, the audit
was specific and limited to county departments receiving federal
funds for programs within the departments of Social Services and
Child Support Services. The purpose of the audit is to assess
whether the county continues to maintain a personnel system that
conforms to its own local merit system and federal merit
principles.
Recommended Amendments: Staff recommends a technical amendment
to change references to the "State Personnel Board" to the
"Department of Human Resources" in Section 1 of the bill in
order to conform to a recent consolidation pursuant to GRP 1.