BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |SB 331 |Hearing |4/29/15 |
| | |Date: | |
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|Author: |Mendoza |Tax Levy: |No |
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|Version: |4/22/15 |Fiscal: |Yes |
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|Consultant|Weinberger |
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LOCAL GOVERNMENTS' CONTRACT NEGOTIATIONS
Requires counties and cities that have adopted a COIN ordinance,
as defined, to comply with specified disclosure requirements
relating to contract negotiations with private entities.
Background and Existing Law
The Meyers-Milias-Brown Act governs the relations between local
governments and their employees. The Act applies to counties,
cities, and special districts, but not school districts (AB
2375, Brown, 1961). The Meyers-Milias-Brown Act establishes the
framework under which local agencies' employees who are
represented by unions can collectively bargain over wages,
hours, and terms and conditions of employment through a
specified meet and confer process.
The Ralph M. Brown Act requires local agencies' meetings to be
"open and public," with specific exceptions. The Brown Act
allows local governments' legislative bodies to meet in closed
sessions for some aspects of labor negotiations. For example, a
legislative body may meet in closed session to instruct its
bargaining representatives, which may be one or more of its
members, on employee salaries and fringe benefits for both union
and non-union employees. The approval of an agreement
concluding labor negotiations with represented employees must be
reported after the agreement is final and has been accepted or
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ratified by the other party. The report must identify the item
approved and the other party or parties to the negotiation.
In response to the confidentiality that surrounds local
governments' labor contract negotiations, several California
local governments recently have adopted "Civic Openness in
Negotiation" (COIN) ordinances that impose requirements on local
governments' contract negotiations with represented employees'
bargaining units. The ordinances typically require the local
government to:
Hire an independent negotiator.
Obtain an independent analysis of the costs of contract
proposals.
Require public disclosure, within 24 hours, of offers
and counteroffers made during the negotiations.
Disclose communications that elected local government
officials have with representatives of recognized employee
organizations.
Public disclosure of a proposed contract before it is
placed on an agenda for approval by a local legislative
body.
Ordinances imposing some or all of these requirements have been
adopted by Orange County, the cities of Cost Mesa, Fullerton,
and Beverly Hills, and the East Bay Municipal Utility District.
The COIN ordinances' proponents argue that the local
requirements are necessary because the secrecy that shields
labor contract negotiations results in labor agreements' being
approved by elected officials without sufficient opportunities
for the public scrutiny.
Local COIN ordinances have been opposed by local governments'
recognized employee organizations, arguing that the ordinances
unfairly focus only on labor contracts, while failing to extend
similar provisions to local governments' contract negotiations
for goods and services provided by private third-parties.
Unions representing local government employees want the
Legislature to require that any community in which COIN
ordinance requirements are imposed on labor negotiations must
also impose similar requirements on other contract negotiations.
Proposed Law
Senate Bill 331 requires a city, county, city and county, or
special district that has adopted a COIN ordinance that is
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effective and operative to comply with requirements related to
contracts that the local government negotiates with any private
person or entity that seeks to provide services or goods to the
local government.
Specifically, SB 331's provisions apply to local governments'
contracts of a value of $50,000 or more and to any contracts
with a person or entity (or any related person or entity) of a
cumulative value of $50,000 or more in any fiscal year being
negotiated between the local government and any private person
or entity that seeks to provide services or goods to the local
government.
SB 331 defines a "civic openness in negotiations ordinance" or
"COIN ordinance" as an ordinance adopted by a local government
that requires any of the following as a part of any collective
bargaining process undertaken pursuant to the
Meyers-Milias-Brown Act:
The preparation of an independent economic analysis
describing the fiscal costs of benefit and pay components
currently provided to members of a recognized employee
organization.
The completion of the independent economic analysis
prior to the presentation of an opening proposal by the
public employer.
Availability for review by the public of the independent
economic analysis before presentation of an opening
proposal by the public employer.
Updating of the independent economic analysis to reflect
the annual or cumulative costs of each proposal made by the
public employer or recognized employee organization.
Updating of the independent economic analysis to reflect
any absolute amount or change from the current actuarially
computed unfunded liability associated with the pension or
postretirement health benefits.
The report from a closed session of a meeting of the
public employer's governing body of offers, counteroffers,
or supposals made by the public employer or the recognized
employee organization and communicated during that closed
session.
The report from a closed session of a meeting of the
public employer's governing body of any list of names of
persons in attendance during any negotiations session, the
date of the session, the length of the session, the
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location of the session, or pertinent facts regarding the
negotiations that occurred during a session.
SB 331 requires a local government that has adopted a COIN
ordinance to comply with the following requirements for all
contracts being negotiated between the local government and any
private person or entity that seeks to provide services or goods
to the local government:
The city, county, or city and county must designate an
unbiased independent auditor to review the cost of any
proposed contract. The independent auditor must prepare a
report on the cost of the contract and provide the report
to all parties and make it available to the public before
the governing body takes any action to approve or
disapprove the contract. The report must comply with the
following:
o The report must include a recommendation
regarding the viability of the contract, including any
supplemental data upon which the report is based, and
must determine the fiscal impacts attributable to each
term and condition of the contract.
o The report must be made available to the
public at least 30 days before the issue can be heard
before the governing body and at least 60 days before
any action to approve or disapprove the contract by
the governing body.
o Any proposed changes to the contract after it
has been approved by the governing body must adhere to
the same approval requirements as the original
contract. The changes must not go into effect until
all of the requirements of this subdivision are met.
The local government must disclose all offers and
counteroffers to the public within 24 hours on its Internet
Web site.
Before approving any contract, the local government must
release a list of names of all persons in attendance,
whether in person or by electronic means, during any
negotiation session regarding the contract, the date of the
session, the length of the session, the location where the
session took place, and any pertinent facts regarding the
negotiations that occurred in that session.
Representatives of the governing body must advise the
governing body of all offers, counteroffers, information,
or statements of position discussed by the private entity
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and local government representatives participating in
negotiations regarding any contract.
Each governing body member and staff members of
governing body offices must disclose publicly all verbal,
written, electronic, or other communications regarding a
subject matter related to the negotiations or pending
negotiations they have had with any official or unofficial
representative of the private entity within 24 hours after
the communication occurs.
A final governing body determination regarding approval
of any contract must be undertaken only after the matter
has been heard at a minimum of two meetings of the
governing body wherein the public has had the opportunity
to review and comment on the matter.
SB 331 states that its provisions do not apply in a local
government that suspends, repeals, or revokes its COIN
ordinance.
The bill declares that the statutes that it enacts chapter shall
be known, and may be cited, as the Civic Reporting Openness in
Negotiations Efficiency Act, or CRONEY.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . SB 331 advances the cause of
transparency in public contracting. Greater public scrutiny of
contracts negotiated by public agencies can improve outcomes.
However, some local governments have adopted "COIN" ordinances
that focus transparency requirements only on labor contracts
negotiated through the collective bargaining process. Problems
resulting from conflicts-of interest, unexpected costs, and
ill-considered contract provisions certainly are not exclusive
to local governments' labor contracts. As a result,
transparency requirements should not be limited to a single
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interest group. SB 331 will establish parity in local
governments' contract transparency requirements by ensuring that
a jurisdiction that imposes openness requirements on labor
negotiations must apply a similar degree of openness to its
negotiations of contracts for goods and services provided by
private third-parties.
2. Elevating form over function . In theory, applying roughly
similar transparency requirements to all local government
contract negotiations may seem fair. However, in practice, it
is problematic to apply one-size-fits-all requirements to a wide
variety of contract negotiations that are not alike. The
exemptions from statutory open meeting requirements that state
law grants to labor contract negotiations do not apply to most
other types of local government contracts for goods and
services. This is not to suggest that favoritism, payoffs, or
bad judgment can't influence local governments' contract awards
for goods and services. But, the problems with those contract
negotiations may not relate to a lack of public notice or
discussion in public hearings. For example, in contrast with
the collective bargaining process, the details of solicitations
for public works contracts are circulated well in advance of the
bidding process and contracts are typically awarded to the
lowest responsible bidder through a public process, with minimal
opportunities to alter the details of the contract. By applying
similar openness requirements on all local government contracts,
SB 331 may only achieve parity in form, while failing to address
the different policy responses that may be necessary to respond
to different types of undesirable contract negotiation
practices.
3. Mandate . The Legislative Counsel's Office says that SB 331
would impose a state-mandated local program because it requires
local government officials to perform additional duties related
to negotiating contracts. The California Constitution generally
requires the state government to reimburse the costs of new or
expanded state mandated local programs. However, on June 3,
2014, California voters approved Proposition 42, which amended
the California Constitution to require local agencies to comply
with the California Public Records Act. Proposition 42 also
requires local agencies to comply with any subsequent statutory
enactment amending the Public Records Act that contains
specified findings that the newly enacted statute furthers
specified constitutional provisions guaranteeing public access
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to public agency meetings and records. SB 331 contains
legislative findings that the bill furthers the purpose of
Section 3 of Article I of the California Constitution by
ensuring that members of the public have the opportunity to be
informed of, and meaningfully participate in, the negotiation
and approval of contracts for goods and services by a local
government that has adopted a civic openness in negotiations
(COIN) ordinance. As a result, SB 331 disclaims the state's
responsibility for reimbursing local governments' costs of
complying with the bill's requirements.
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Support and
Opposition (4/23/15)
Support : American Federation of State, County, and Municipal
Employees; California Association of Professional Employees;
California Professional Firefighters; Association of Deputy
District Attorneys; Glendale City Employees Association; LIUNA
Local 777; LIUNA Local 792; Association for Los Angeles Deputy
Sheriffs; Los Angeles Probation Officers' Union; Los Angeles
Police Protective League; Orange County Employees Association;
Organization of SMUD Employees; Peace Officers Research
Association of California; Riverside Sheriffs Association; San
Bernardino Public Employees Association; San Diego County Court
Employees Association; San Luis Obispo County Employees
Association.
Opposition : Unknown.
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