BILL ANALYSIS                                                                                                                                                                                                    

          |SENATE RULES COMMITTEE            |                        SB 331|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |

                                   THIRD READING 

          Bill No:  SB 331
          Author:   Mendoza (D)
          Amended:  4/22/15  
          Vote:     21  

           SENATE GOVERNANCE & FIN. COMMITTEE:  5-1, 4/29/15
           AYES:  Hertzberg, Beall, Hernandez, Lara, Pavley
           NOES:  Nguyen
           NO VOTE RECORDED:  Moorlach


           SUBJECT:   Public contracts:  local agencies:  negotiations

          SOURCE:    Author

          DIGEST:  This bill requires counties and cities that have  
          adopted a civic openness in negotiating (COIN) ordinance, as  
          defined, to comply with specified disclosure requirements  
          relating to contract negotiations with private entities.


          Existing law:

          1)Enacts the Meyers-Milias-Brown Act (MMBA) which governs the  
            relations between local governments and their employees.  The  
            MMBA applies to counties, cities, and special districts, but  


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            not school districts.

          2)Establishes, under the MMBA, 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  

          3)Enacts the Ralph M. Brown Act (Brown Act) which requires local  
            agencies' meetings to be "open and public," with specific  

          4)Allows, under the Brown Act, 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.  

          5)Requires the approval of an agreement concluding labor  
            negotiations with represented employees must be reported after  
            the agreement is final and has been accepted or ratified by  
            the other party.  The report must identify the item approved  
            and the other party or parties to the negotiation.

          This bill:

          1)Requires a city, county, city and county, or special district  
            that has adopted a COIN ordinance that is 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  

          2)Specifies that its 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  


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            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  

          3)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 MMBA:

             a)   The preparation of an independent economic analysis  
               describing the fiscal costs of benefit and pay components  
               currently provided to members of a recognized employee  

             b)   The completion of the independent economic analysis  
               prior to the presentation of an opening proposal by the  
               public employer.

             c)   Availability for review by the public of the independent  
               economic analysis before presentation of an opening  
               proposal by the public employer.

             d)   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.

             e)   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.

             f)   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  


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             g)   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  
               location of the session, or pertinent facts regarding the  
               negotiations that occurred during a session.

          4)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:

             a)   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  

               i)     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.

               ii)         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.

               iii)        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  


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                 requirements of this subdivision are met.

             b)   The local government must disclose all offers and  
               counteroffers to the public within 24 hours on its Internet  
               Web site.

             c)   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.

             d)   Representatives of the governing body must advise the  
               governing body of all offers, counteroffers, information,  
               or statements of position discussed by the private entity  
               and local government representatives participating in  
               negotiations regarding any contract.

             e)   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.

             f)   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. 

          5)States that its provisions do not apply in a local government  
            that suspends, repeals, or revokes its COIN ordinance.


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          6)Declares that the statutes that it enacts shall be known, and  
            may be cited, as the Civic Reporting Openness in Negotiations  
            Efficiency Act, or CRONEY.


          In response to the confidentiality that surrounds local  
          governments' labor contract negotiations, several California  
          local governments recently have adopted 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  

                 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  

                 Public disclosure of a proposed contract before it is  
               placed on an agenda for approval by a local legislative  

          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  


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          for the public scrutiny.

          Local COIN ordinances have been opposed by local governments'  
          recognized employee organizations, whose members argue 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.


          1. Purpose of this 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  
          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  


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          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  

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes

          SUPPORT:   (Verified5/19/15)

          AFSCME District Council 36
          American Federation of State, County, and Municipal Employees
          Association for Los Angeles Deputy Sheriffs
          Association of Deputy District Attorneys
          Association of Orange County Deputy Sheriffs
          California Association of Professional Employees
          California Professional Firefighters
          Glendale City Employees Association
          In the Public Trust
          International Union of Operating Engineers, Local 501, AFL-CIO
          LIUNA Local 777
          LIUNA Local 792
          Los Angeles Police Protective League
          Los Angeles Probation Officers' Union
          Orange County Employees Association
          Orange County Professional Firefighters Association IAFF Local  
          Organization of SMUD Employees
          Peace Officers Research Association of California
          Riverside Sheriffs Association
          San Bernardino Public Employees Association


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          San Diego County Court Employees Association
          San Luis Obispo County Employees Association
          United Domestic Workers of America, AFSCME Local 3930, AFL-CIO

          OPPOSITION:   (Verified5/19/15)

          California Chamber of Commerce

          Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
          5/20/15 17:16:09

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