BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 331|
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UNFINISHED BUSINESS
Bill No: SB 331
Author: Mendoza (D)
Amended: 8/17/15
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 5-1, 4/29/15
AYES: Hertzberg, Beall, Hernandez, Lara, Pavley
NOES: Nguyen
NO VOTE RECORDED: Moorlach
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SENATE FLOOR: 25-14, 5/22/15
AYES: Allen, Beall, Block, Cannella, De León, Galgiani, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara,
Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan,
Pavley, Wieckowski, Wolk
NOES: Anderson, Bates, Berryhill, Fuller, Gaines, Huff,
Moorlach, Morrell, Nguyen, Nielsen, Roth, Runner, Stone, Vidak
ASSEMBLY FLOOR: 48-29, 9/8/15 - See last page for vote
SUBJECT: Public contracts: local agencies: negotiations
SOURCE: American Federation of State, County & Municipal
Employees
AFL-CIO
Orange County Employees Association
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.
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Assembly Amendments 1) exempt contracts that meet specified
conditions from the bill's provisions, 2) increase the value of
contracts that are subject to the bill's provisions from $50,000
to $250,000, and 3) specify 19 types of goods and service
contracts that are subject to the bill's provisions.
ANALYSIS:
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
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
process.
3)Enacts the Ralph M. Brown Act (Brown Act) which requires local
agencies' meetings to be "open and public," with specific
exceptions.
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
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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
government.
2)Directs that its provisions do 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.
b) A state of war emergency, state of emergency, or local
emergency, as those terms are defined in Section 8558 of
the Government Code.
3)Exempts the renewal of a contract if the employees performing
the services are covered by a collective bargaining agreement
that is governed by a specified federal law.
4)Specifies that its provisions apply to local governments'
contracts of a value of $250,000 or more and to any contracts
with a person or entity (or any related person or entity) of a
cumulative value of $250,000 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
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government if the services or goods fall within one of 19
specified categories.
5)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
organization.
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
session.
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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.
6)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
following:
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
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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.
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.
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7)States that its provisions do not apply in a local government
that suspends, repeals, or revokes its COIN ordinance.
8)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.
Background
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
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, whose members argue that the
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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.
Comments
1)Purpose of this bill. This bill 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. This bill 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
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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, this bill 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)Timing is everything. 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. In light of the
ongoing PERB complaint process, it is unclear whether this
bill's changes to state law governing COIN ordinances are
premature.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Assembly Appropriations Committee:
Unknown, but likely significant costs to impacted local
agencies for independent auditor reviews and required reports
for each impacted contract. These mandated costs are
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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.
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.
SUPPORT: (Verified9/8/15)
American Federation of State, County & Municipal Employees
AFL-CIO (co-source)
Orange County Employees Association (co-source)
Association of Deputy District Attorneys
Association of Orange County Deputy Sheriffs
AFSCME District Council 36
CA Association of Professional Employees
California Professional Firefighters
California Teachers Association
Glendale City Employees Association
International Union of Operating Engineers, Local 501, AFL-CIO
In the Public Trust
LIUNA Local 777
LIUNA Local 792
Orange County Professional Firefighters Association IAFF Local
3631
Organization of SMUD Employees
Peace Officers Research Association of CA
San Bernardino Public Employees Association
San Diego County Court Employees Association
San Luis Obispo County Employees Association
United Domestic Workers of America, AFSCME Local 3930, AFL-CIO
OPPOSITION: (Verified9/8/15)
California Chamber of Commerce
City of Huntington Beach
Inland Empire Disposal Association
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League of California Cities
League of California Cities, Orange County Division
Los Angeles County Waste Management Association
Orange County Board of Supervisors
Rural County Representatives of California
Sandra Hutchens, Sheriff-Coroner, Orange County Sheriff's
Department
Solid Waste Association of Orange County
ASSEMBLY FLOOR: 48-29, 9/08/15
AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon,
Campos, Chau, Chiu, Chu, Dababneh, Daly, Dodd, Frazier,
Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez,
Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin,
Jones-Sawyer, Lopez, Low, McCarty, Medina, Mullin, Nazarian,
O'Donnell, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams,
Wood, Atkins
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Cooley, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper,
Jones, Kim, Lackey, Levine, Linder, Maienschein, Mathis,
Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth,
Wagner, Waldron, Wilk
NO VOTE RECORDED: Chávez, Cooper, Eggman
Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
9/9/15 9:43:30
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