BILL ANALYSIS Ó
SB 331
Page 1
SENATE THIRD READING
SB
331 (Mendoza)
As Amended August 17, 2015
Majority vote
SENATE VOTE: 25-14
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Local |5-4 |Gonzalez, Alejo, |Maienschein, |
|Government | |Chiu, Gordon, Holden |Cooley, Linder, |
| | | |Waldron |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |12-5 |Gomez, Bloom, Bonta, |Bigelow, Chang, |
| | |Calderon, Nazarian, |Gallagher, Jones, |
| | |Eggman, Eduardo |Wagner |
| | |Garcia, Holden, | |
| | |Quirk, Rendon, Weber, | |
| | |Wood | |
| | | | |
| | | | |
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SUMMARY: Requires local agencies that have adopted a Civic
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Openness in Negotiations (COIN) ordinance for their labor
contracts to use a similar process to evaluate, negotiate, and
approve specified contracts for goods or services valued at
$250,000 or more. Specifically, this bill:
1)Enacts the Civic Reporting Openness in Negotiations Efficiency
Act, or CRONEY.
2)Provides that CRONEY applies only to a city, county, city and
county, or special district that has adopted a COIN ordinance,
which is effective and operative. CRONEY shall not apply if
the city, county, city and county, or special district
suspends, repeals, or revokes its COIN ordinance.
3)Provides that CRONEY shall not apply to a contract if the
contract is required to respond to, recover from, or mitigate
the effects of any of the following:
a) A temporary public safety emergency declared by the
chief law enforcement officer of a city, county, city and
county, or special district; and,
b) A state of war emergency, state of emergency, or local
emergency, as specified.
4)Provides that CRONEY shall not apply to a renewal of a
contract if the employees performing the services are covered
by a collective bargaining agreement that is governed by the
National Labor Relations Act, as specified.
5)Provides that CRONEY shall apply to any contracts with a value
of at least $250,000, and to any contracts with a person or
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entity, or related person or entity, with a cumulative value
of at least $250,000 within the fiscal year of the city,
county, city and county, or special district, being negotiated
between the city, county, city and county, or special
district, and any private person or entity that seeks to
provide services or goods to the city, county, city and
county, or special district, in the following areas:
accounting, financing, hardware and software maintenance,
health care, human resources, human services, information
technology, telecommunications, janitorial maintenance, legal
services, lobbying, marketing, office equipment maintenance,
passenger vehicle maintenance, property leasing, public
relations, public safety, social services, transportation, or
waste removal.
6)Requires the city, county, city and county, or special
district to designate an unbiased independent auditor to
review the cost of any proposed contract, who 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.
7)Requires the report specified above to comply with the
following:
a) The report shall include a recommendation regarding the
viability of the contract, including any supplemental data
upon which the report is based, and shall determine the
fiscal impacts attributable to each term and condition of
the contract;
b) The report shall 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
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approve or disapprove the contract by the governing body;
and,
c) Any proposed changes to the contract after it has been
approved by the governing body shall adhere to the same
approval requirements as the original contract. The
changes shall not go into effect until all of the
requirements of 6) and 7) above, are met.
8)Requires the city, county, city and county, or special
district to disclose all offers and counteroffers to the
public within 24 hours on its Internet Web site (website).
9)Requires, before approving any contract, the city, county,
city and county, or special district to 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.
10)Requires representatives of the governing body to advise the
governing body of all offers, counteroffers, information, or
statements of position discussed by the contracting person or
entity and city, county, city and county, or special district
representatives participating in negotiations regarding any
contract.
11)Requires each governing body member and staff members of
governing body offices to 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
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representative of the private entity within 24 hours after the
communication occurs.
12)Requires a final governing body determination regarding
approval of any contract to 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.
13)Finds and declares that Section 1 of the bill furthers,
within the meaning of paragraph (7) of subdivision (b) of
Section 3 of Article I of the California Constitution, the
purposes of that constitutional section as it relates to the
right of public access to the meetings of local public bodies
or the writings of local public officials and local agencies,
and declares, pursuant to paragraph (7) of subdivision (b) of
Section 3 of Article I of the California Constitution, that
the Legislature makes the following findings:
This act ensures 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 city, county,
city and county, or special district that has adopted
a civic openness in negotiations (COIN) ordinance,
thereby furthering the purposes of Section 3 of
Article I of the California Constitution.
14)Provides that no reimbursement is required by this bill
because the only costs that may be incurred by a local agency
or school district under this bill would result from a
legislative mandate that is within the scope of paragraph (7)
of subdivision (b) of Section 3 of Article I of the California
Constitution.
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15)Defines "civic openness in negotiations ordinance" or "COIN
ordinance" to mean an ordinance adopted by a city, county,
city and county, or special district that requires any of the
following as a part of any collective bargaining process
undertaken pursuant to the Meyers-Milias-Brown Act (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
organization, as defined in existing law governing local
public employee organizations;
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
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employee organization and communicated during that closed
session; or,
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.
EXISTING LAW:
1)Authorizes the legislative body of any public or municipal
corporation or district to contract with and employ any
persons for the furnishing to the corporation or district
special services and advice in financial, economic,
accounting, engineering, legal, or administrative matters if
the persons are specially trained and experienced and
competent to perform the special services required.
2)Enacts the MMBA, which governs the relations between local
governments and their employees. The MMBA applies to
counties, cities, and special districts.
3)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
process.
4)Enacts the Ralph M. Brown Act (Brown Act), which requires
local agencies' meetings to be "open and public," with
specific exceptions.
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5)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.
6)Requires the approval of an agreement concluding labor
negotiations with represented employees to be publicly
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.
7)Requires public agencies, pursuant to the California Public
Records Act (CPRA), to make their records available for public
inspection and, upon request, to provide a copy of a public
record, unless the record is exempt from disclosure, and
allows a public agency to charge to the requester the direct
cost of producing the electronic public record.
8)Provides, pursuant to the California Constitution, that the
people have the right of access to information concerning the
conduct of the people's business, and, therefore, the meetings
of public bodies and the writings of public officials and
agencies shall be open to public scrutiny.
9)Provides, pursuant to the California Constitution (as amended
by Proposition 42 in 2014), that in order to ensure public
access to the meetings of public bodies and the writings of
public officials and agencies, each local agency is required
to comply with the CPRA and the Brown Act, and with any
subsequent statutory enactment amending either act, enacting a
successor act, or amending any successor act that contains
findings demonstrating that the statutory enactment furthers
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the purposes of the California Constitution that govern public
access to the meetings of public bodies and the writings of
public officials and agencies.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
1)Unknown, but likely significant costs to impacted local
agencies for independent auditor reviews and required reports
for each impacted contract. These mandated costs are
potentially reimbursable by the state, but may fall under
Proposition 42. Should local agencies seek reimbursement from
the Commission on State Mandates and prevail, the cost to the
state is potentially in the millions of dollars (GF)
statewide.
2)Unknown, non-reimbursable costs to local agencies to comply
with new public disclosure and meeting requirements. These
costs would likely fall under Proposition 42 and, therefore,
are not reimbursable.
COMMENTS:
1)Bill Summary. This bill requires local agencies that have
adopted a COIN ordinance for their labor contracts to use a
similar process to evaluate, negotiate, and approve contracts
for goods or services valued at $250,000 or more in the
following areas: accounting, financing, hardware and software
maintenance, health care, human resources, human services,
information technology, telecommunications, janitorial
maintenance, legal services, lobbying, marketing, office
equipment maintenance, passenger vehicle maintenance, property
leasing, public relations, public safety, social services,
transportation, or waste removal.
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The requirements of this bill would not apply if the city,
county, city and county, or special district suspends,
repeals, or revokes its COIN ordinance. In addition, the bill
would not apply to a contract if the contract is required to
respond to, recover from, or mitigate the effects of any of
the following:
a) A temporary public safety emergency declared by the
chief law enforcement officer of a city, county, city and
county, or special district; and,
b) A state of war emergency, state of emergency, or local
emergency, as specified.
The bill also does not apply to a renewal of a contract if the
employees performing the services are covered by a collective
bargaining agreement that is governed by the National Labor
Relations Act, as specified. This bill is sponsored by the
American Federation of State, County and Municipal Employees,
AFL-CIO, and the Orange County Employees Association.
2)Background. Several local governments have recently approved
COIN ordinances or similar legislation in a stated attempt to
increase public awareness and involvement in their labor
contract negotiations. The City of Costa Mesa in 2012 was the
first jurisdiction to adopt a COIN ordinance, driven in part
by its unfunded pension obligations. Orange County also has a
COIN ordinance and the cities of Beverly Hills, Fullerton and
Palos Verdes have similar ordinances in place. Similar
ordinances have been considered in the cities of Gilroy,
Sunnyvale and Yorba Linda, in Marin County, and by the Orange
County Fire Authority.
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A COIN ordinance usually requires the local government to do
several things in the course of its labor contract
negotiations, including:
a) Hiring an independent negotiator;
b) Obtaining an analysis of the costs of contract
proposals;
c) Requiring public disclosure of offers and counter-offers
made during negotiations;
d) Disclosing communications between elected local
government officials and representatives of recognized
employee organizations; and,
e) Disclosing a proposed contract before it is placed on an
agenda for approval by a local legislative body.
Proponents of COIN ordinances argue that these requirements
are necessary to provide opportunities for the public to be
informed about labor contract negotiations before they are
approved by their elected officials.
Opponents of COIN ordinances argue that these 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.
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3)Author's Statement. According to the author, "SB 331 will
increase transparency in public contracting by establishing
the Civic Reporting Openness in Negotiations Efficiency Act.
The bill applies to local jurisdictions where a Civic Openness
in Negotiations Ordinances (COIN) has been approved and will
ensure that the same openness requirements apply to all
contracts whether they are labor contracts or contracts with
private entities for goods and services.
"Under the bill, a local jurisdiction where a COIN ordinance
exists will be required to expand transparency to all
contracts with private entities for goods and
services?Transparency in public contracting is needed in ALL
public contracting, and can't be effectively directed at just
one interest group."
4)COIN in Orange County. Orange County's COIN ordinance was
proposed and approved last year amid heated controversy.
Proponents argued that there was a long history of labor
negotiations being held in closed session and then contracts
being approved immediately thereafter, depriving constituents
and voters of any input into the County's labor contracts.
Opponents criticized Orange County's Board of Supervisors for
failing to have the COIN ordinance cover all government
contracting, including contracts with private companies. They
cited an Orange County Grand Jury report, entitled "Improving
the County of Orange Government's Multi-Billion Dollar
Contracting Operations," which found that most of the county's
budget, or $3.1 billion out of $5.4 billion, is spent on
private sector contracts. In
response, proponents of COIN noted that the process and dollar
amounts for labor contracts are dramatically different from
negotiations for other kinds of contracts. The Association of
Orange County Deputy Sheriff's also alleged that the ordinance
was unconstitutional and that its language and timing
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constituted an unfair labor practice.
5)COIN Case at the Public Employment Relations Board. In July
of 2014, three of Orange County's recognized employee
organizations filed unfair practice charges with California's
Public Employment Relations Board (PERB). In November 2014,
PERB issued complaints in all three cases alleging that Orange
County's adoption of its COIN ordinance violated the MMBA and
PERB regulations.
PERB issued its proposed decision on June 16, 2015, finding
that some components of Orange County's COIN ordinance, as
well as the process by which it was introduced and adopted,
violate the MMBA and PERB regulations. PERB ordered Orange
County to do the following: rescind from its COIN ordinance
those components found to violate the MMBA and PERB
regulations; cease and desist from activities found to violate
the MMBA and PERB regulations; and, post notices of PERB's
orders.
Orange County on July 13, 2015, filed an exception to PERB's
proposed decision, which initiates PERB's appeal process. It
is unknown when PERB will finalize its decision.
6)Proposition 42. Proposition 42, approved by voters on June 3,
2014, amended the California Constitution by requiring all
local governments to comply with the CPRA and the Brown Act,
and with any subsequent changes to those Acts. Proposition 42
also eliminated reimbursement to local agencies for the costs
of complying with the CPRA and the Brown Act.
This bill contains language stating that the Legislature finds
and declares that Section 1 of the bill furthers the purpose
of the California Constitution as it relates to the right of
public access to the meetings of local public bodies or the
writings of local public officials and local agencies. The
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bill also includes a finding, pursuant to paragraph (7) of
subdivision (b) of Section 3 of Article I of the Constitution
(which was added by Proposition 42), that states, "This act
ensures 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 city,
county, city and county, or special district that has adopted
a civic openness in negotiations (COIN) ordinance, thereby
furthering the purposes of Section 3 of Article I of the
California Constitution."
Section 3 of the bill specifies that no reimbursement for
local agencies to implement the bill's provisions is necessary
because "the only costs that may be incurred by a local agency
or school district?would result from a legislative mandate
that is within the scope of paragraph (7) of subdivision (b)
of Section 3 of Article I of the California Constitution."
That said, the provisions of this bill have been placed in the
Public Contract Code, rather than the statutes that contain
the CPRA and the Brown Act. It is unclear whether the
provisions of this bill would fall under the requirements of
Proposition 42.
7)Policy Considerations. The Legislature may wish to consider
the following:
a) Pending PERB Decision. As noted above, a COIN ordinance
decision is pending with PERB. The Legislature may wish to
consider whether it is premature to enact legislation
affecting this issue before this decision is finalized, and
whether a more appropriate remedy at that time might be to
prohibit COIN ordinances from containing any provisions
that PERB found to violate the MMRA and PERB regulations.
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b) Applying COIN Provisions to Non-Labor Contracts. The
Senate Governance and Finance Committee analysis of this
bill notes, "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."
8)Previous Legislation. AB 1333 (Roger Hernández) of 2013 would
have required a local legislative body to adopt a resolution
to either exercise, or decline to exercise, an option to
rescind an "evergreen" contract or memorandum of understanding
with a total annual value of $250,000. AB 1333 was held in
the Senate Governance and Finance Committee.
AB 834 (Roger Hernández) of 2011 was similar to AB 1333. AB
834 failed passage on the Assembly Floor.
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9)Arguments in Support. The American Federation of State,
County and Municipal Employees, AFL-CIO, co-sponsor of this
measure, writes, "While some transparency measures are already
present during many of the labor contracts in California, even
in the absence of COIN, private companies contracting with
cities and counties for public dollars are rarely held to the
same standard. If municipalities are contracting with private
entities for public services, then taxpayers have a right to
know how their money is being used in private contracts; if
taxpayers are going to trust a for-profit company to provide
vital services, that company should be able to prove it can be
trusted. SB 331 is a piece of municipal legislation that
would bring maximum transparency to contract negotiations with
private entities for public services, which have a
long-standing and increasing history of being done outside of
public view."
10)Arguments in Opposition. The Orange County Board of
Supervisors, in opposition, states, "SB 331 imposes far
greater restrictions on the Board's ability to conduct its
business than what is required of collective bargaining under
COIN, the most egregious of which would prohibit approval of
any contracts for no less than sixty days. This proposed
state mandate on a local government would essentially stifle
the Board's primary responsibility to fund critical contracts
that keep county operations functioning? The mandates proposed
in SB 331 will only lead to increased costs due to delays in
the contracting process and unreasonable administrative
burdens. Most importantly, this bill punishes two groups:
the people who work here, and the people relying on the timely
provision of County services. While transparency is a worthy
policy goal, the size, scope and structure of this bill
demonstrates that it is more about retribution than it is a
sweeping policy aimed at transparency and openness."
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Analysis Prepared by:
Angela Mapp / L. GOV. / (916) 319-3958 FN:
0001609