BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: SB 943
AUTHOR: Beall
AMENDED: April 22, 2014
FISCAL COMM: Yes HEARING DATE: April 30, 2014
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : California State University Personal Services
Contracting.
SUMMARY
This bill establishes standards for the use of personal
services contracts by the California State University
(CSU).
BACKGROUND
Current law provides standards for the use of personal
service contracts by state agencies with specific criteria
for contracting outside state service. These criteria
include demonstration of cost savings, definition of costs,
and requirements that work not be contracted out solely on
the basis of lower pay rates or benefits, and justification
of savings based on the size and duration of the contract.
(Government Code Section 19130)
Current law requires that a state agency that intends to
execute a personal services contract must notify the State
Personnel Board, which must then contact all organizations
representing state employees that perform the type of work
to be contracted so that they may be given a reasonable
opportunity to comment on the contract. Upon request, the
State Personnel Board is required to review the contract to
determine whether it complies with the requirements of GC
§19130.
The Public Employment Relations Board (PERB) is a
quasi-judicial agency which is charged with administering
the collective bargaining statutes covering employees of
California's public schools, colleges, and universities,
employees of the State of California, employees of
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California local public agencies (cities, counties and
special districts), trial court employees and supervisory
employees of the Los Angeles County Metropolitan
Transportation Authority. The PERB administers the
relevant collective bargaining statutes, ensures their
consistent implementation and application, and adjudicates
disputes between the parties subject to them. The statutes
administered by PERB include the Higher Education
Employer-Employee Relations Act (HEERA) of 1976, which
established collective bargaining at the University of
California, Hastings College of Law, and the California
State University.
Article 7 of the California Constitution establishes the
State Civil Service and establishes the State Personnel
Board, a 5 member body appointed by the Governor and
approved by the Senate, to enforce and administer civil
service statutes. The Constitution establishes several
exemptions from the civil service, including officers and
employees of the University of California and the
California State University.
ANALYSIS
This bill establishes nearly identical requirements and
review processes for personal services contracting by the
CSU as those that exist for State agencies. It:
1) Specifies that use of personal services contracting to
achieve costs savings is permissible when the CSU
clearly demonstrates that the contract will result in
overall cost savings and:
a) Prescribes the specific costs to
be included/excluded in the calculation.
b) Prohibits approval solely on the
basis of savings from lower contractor pay rates
or benefits, and requires that wages be at the
industry's level and that they do not
significantly undercut university pay rates.
c) Displacement of university
employees, as specified, is not caused by the
contract.
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d) It does not affect
nondiscrimination efforts, savings are large
enough to be maintained during cost fluctuations,
are clearly justified by size and duration,
contracts are publicly and competitively bid, and
various other requirements.
2) Restricts personal services contracting, unless the
following conditions are met:
a) The Legislature mandates or
authorizes work be performed by independent
contractors, and the contract is for a new
university function.
b) Services are unavailable or unable
to be satisfactorily performed within the
university or by university employees.
c) Services are incidental to a
purchase or lease contract.
d) The legislative, administrative,
or legal goals/purposes cannot be accomplished
through the regular or ordinary hiring process.
e) University employees cannot
feasibly supply the equipment, materials,
facilities, or support services provided by the
contractor.
f) The contract is for the provision
of training courses for which qualified
university employees are not available.
g) The contract is for services of an
urgent, temporary, or occasional nature.
3) Requires that persons who provide services under
conditions that the State Personnel Board determines
constitute an employment relationship be retained
under regular university employment procedures.
4) Extends personal services contract review and
enforcement authority over the CSU to the State
Personnel Board. Specifically it:
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a) Requires that the CSU notify the
State Personnel Board (Board) if they propose to
execute a personal services contract.
b) Requires the Board to immediately
contact all organizations representing university
employees who perform the type of work to be
contracted, and any other person who has filed a
request for notice, so that they have an
opportunity to comment on the proposed contract.
c) Authorizes an employee
organization to request the Board to review a
contract proposed or executed and requires the
Board to do so, as specified.
d) Authorizes the Board to disapprove
any contract that does not comply with the
standards established by the bill.
e) Requires the Board to review the
adequacy of a personal services contract upon the
request of an employee organization that
represents CSU employees.
f) Prohibits the execution of a
personal services contract until the University
has notified all organizations representing
university employees who perform that type of
work, unless the contract is necessary due to an
occurrence that poses a clear and imminent
danger.
g) Requires the CSU to immediately
discontinue any contract disapproved by the Board
and establishes several related notice
requirements and related penalties.
STAFF COMMENTS
1) Need for the bill . According to the author, the intent
of this bill is to provide CSU employees the same
contracting out protections that apply to state
workers.
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2) Current CSU practice . According to the CSU, it has
over 7,000 personal services contracts for various
services within the University. These contracts are
for services that include animal boarding,
agricultural chemicals, archaeologists, portable
toilet suppliers, demolition contractors, stonemasons,
furniture suppliers, fire protection providers, pest
and vermin control, hazardous waste disposal
providers, and more. The CSU contends that, per the
requirements of HEERA, the University meets and
confers with unions and negotiations have resulted in
provisions in collective bargaining agreements that
outline the conditions and processes to be followed
regarding contracting out.
3) Collective Bargaining . Provisions regarding
contracting out are an element of both the California
State University Employees Union - CSUEU (Article 3)
and State Employees Trades Council - SETC (Article 4)
collective bargaining agreements.
The CSUEU agreement authorizes contracting out
provided that it does not displace bargaining unit
employees, and defines displacement to include layoff,
demotion, involuntary transfer to a new
classification, or to a new satellite campus location,
or a location requiring a change of residence, and
involuntary time base reductions. The CSU is required
to notify the Union when contracting out is to be on a
long-term basis and the Union is authorized to request
to meet and confer on the impacts of long-term
contracting out work. Prior to meeting the CSU is
required to provide the CSUEU all existing relevant
information, including RFPs, copies of bids received,
and any cost analysis used to evaluate the need for
contracting out.
The SETC agreement, prior to contracting out, requires
a campus to consider the availability of SETC
employees to perform the work, whether they have the
special skills and licensure necessary, whether the
work can be completed within time constraints
applicable to the project, the availability of
required materials and/or equipment, and the cost
involved in performing the work in-house versus
contracting out. Notification of the Chief Campus
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Steward is required prior to the start of any such
contracted work.
Should the Legislature insert itself in a matter which
it appears is already being addressed through
collective bargaining?
4) Civil Service exemption . This bill is modeled on State
Civil Service Act language used to govern personal
services contracting within the state.
Provisions of the California Constitution specifically
exclude officers and employees of the CSU from state
civil service, and the Legislature has granted the CSU
other exemptions from Civil Service provisions,
including:
a) Exclusion from Public Contract Code
provisions regarding the acquisition of goods and
services
b) Authority to promulgate regulations without
having to utilize the procedures outlined in the
Administrative Procedures Act, thereby exempting
CSU from Office of Administrative Law review.
Do the CSU 's current contracting out practices rise
to a level of concern that warrants the CSU being
subject to civil service provisions and oversight of
its contracting practices by an entity charged with
enforcement and administration of civil service
statutes?
5) Related costs . The CSU estimates that appeals to an
oversight entity for half of their over 7,000 personal
services contracts, at an estimated cost of $35,000
per contract, would create new costs for the CSU of
over $122 million. The State Personnel Board would
also require additional funding to meet the
administrative costs for complying with the bill's
provisions.
6) Prior legislation . AB 2225 (Lowenthal, 2002) proposed
similar personal services contracting standards for
the CSU. AB 2225 was heard by this committee in June
2002, and was held without recommendation.
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SUPPORT
American Federation of State, County and Municipal
Employees (AFSCME), AFL-CIO
California State University Employees Union (CSUEU/SEIU)
Service Employees International Union (SEIU)
Union of American Physicians and Dentists/AFSCME - Local
206
OPPOSITION
California State University