BILL ANALYSIS                                                                                                                                                                                                    Ó




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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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