BILL ANALYSIS Ó
AB 2183
Page 1
ASSEMBLY THIRD READING
AB
2183 (Gatto)
As Amended May 31, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Higher |9-4 |Medina, Bloom, Irwin, |Baker, Chávez, |
|Education | | |Levine, Olsen |
| | | | |
| | | | |
| | |Jones-Sawyer, Linder, | |
| | |Low, Santiago, Weber, | |
| | |Williams | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |14-6 |Gonzalez, Bloom, |Bigelow, Chang, |
| | |Bonilla, Bonta, |Gallagher, Jones, |
| | |Calderon, Daly, |Obernolte, Wagner |
| | |Eggman, Eduardo | |
| | |Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Quirk, Santiago, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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AB 2183
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SUMMARY: Establishes standards for the use of personal services
contracts by the California State University (CSU) Trustees.
Specifically, this bill:
1)Specifies if the CSU Trustees enter into a new contract, or
renew or extend an existing contract, for services that are
currently or customarily performed by CSU employees, 11
conditions must be met in order for any personal services
contract to be permissible, which among others, include:
a) Clear demonstration that the proposed contract will
result in actual overall savings to the state, considering
specific elements that can/cannot be included when
comparing contract and in-state costs;
b) Proposals to contract out shall not be approved solely
on the basis that savings will result from lower contractor
pay rates or benefits; and,
c) The contract does not cause the displacement of
university employees.
2)Permits personal services contracts when any of nine
conditions can be met, which among others, include: a) that
the services are not available within the university; b)
cannot be performed satisfactorily by university employees; c)
are of an urgent, temporary, or occasional nature such that
delaying implementation through the hiring of university
employees would frustrate their very purpose; and, d) or are
of such a highly technical nature that is not available from
the pool of university employees.
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3)Defines "indirect overhead costs" as the pro rata share of
existing administrative salaries and benefits, rent, equipment
costs, utilities, and materials.
4)Defines "firm" as a corporation, partnership, nonprofit
organization, or sole proprietorship.
EXISTING LAW:
1)Authorizes the CSU Trustees to enter into agreements with any
public or private agency, officer, person, or institution,
corporation, association, or foundation for the performance of
acts or the furnishing of services, facilities, materials,
goods, supplies, or equipment by or for the Trustees or for
the joint performance of an act or function or the joint
furnishing of services and facilities by the Trustees and the
other party to the agreement. Specifies that the Trustees
shall prescribe policies and procedures for the acquisition of
services, facilities, materials, goods, supplies, or
equipment; and, said policies shall include competitive bids
or proposals as, specified (Education Code Section 89036).
2)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).
3)Establishes the State Civil Service Act (Act) and establishes
the State Personnel Board, as a five member body appointed by
the Governor and approved by the Senate, to enforce and
administer civil service statutes. The Constitution
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establishes several exemptions from the civil service,
including officers and employees of the University of
California and the CSU (Article 7 of the California
Constitution).
FISCAL EFFECT: According to the Assembly Appropriations
Committee, CSU will have one-time and ongoing costs of around
$100,000 to establish and implement the new process, including
establishing new policy followed by training of procurement
personnel throughout the system.
COMMENTS: Need for the measure. According to the author, the
CSU is not subject to some of the same standards of
accountability that apply to other state agencies regarding
personal service contracts. The author contends that this has,
"resulted in several debunk contracts, including: a CSU that
ended a three-year agreement with its employees and entered into
a five-year contract with a private and external custodial firm,
which resulted in displacement of those other custodial
employees."
This measure seeks to align the CSU's practice of contracting
out with those required by other state agencies.
State Civil Service Act. Provisions of the Act specifically
exclude officers and employees of the CSU from state civil
service. Additionally, the Legislature has granted the CSU
other exemptions from provisions within the Act, including: 1)
exclusion from Public Contract Code provisions regarding the
acquisition of goods and services; and, 2) authority to
promulgate regulations without having to utilize the procedures
outlined in the Administrative Procedures Act.
This measure is modeled after the State Civil Service Act used
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to govern personal services contracting within the state. It is
unclear whether or not, due to the existing exemptions the
Legislature has conferred upon the CSU, if it is warranted for
the CSU to now have to align their personal services contracting
provisions under the Act.
Personal services contract. A personal services contract is any
contract, requisition, purchase order, etc. (except public works
contracts) under which labor or personal services is a
significant, separately identifiable element. The business or
person performing these contractual services must be an
independent contractor that does not have status as an employee
of the State.
A cost-savings based personal services contract is a personal
services contract proposed to achieve cost savings and subject
to the provisions of existing law.
Collective bargaining. Provisions regarding contracting out are
addressed in Article 3 of the California State University
Employees Union (CSUEU) and Article 4 of the State Employees
Trades Council (SETC) 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 CSUEU all existing relevant information,
including requests for proposals, copies of bids received, and
any cost analysis used to evaluate the need for contracting out.
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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 Steward is required prior to
the start of any such contracted work.
Previous legislation. SB 669 (Pan) of 2015, which never had a
vote in the Senate Education Committee, is very similar in
nature to this measure.
SB 943 (Beall) of 2014, which failed to receive enough votes for
passage out of the Senate Education Committee, was similar to
this bill; and, SB 943 assigned the State Personnel Board
oversight of CSU contracting practices.
AB 2225 (Lowenthal) of 2002, which was held in the Senate
Education Committee, proposed similar personal services
contracting standards for the CSU.
Analysis Prepared by:
Jeanice Warden / HIGHER ED. / (916) 319-3960
FN: 0003278
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