BILL ANALYSIS Ó
SB 376
Page 1
Date of Hearing: August 26, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 376
(Lara) - As Amended August 18, 2015
-----------------------------------------------------------------
|Policy |Higher Education |Vote:|9 - 3 |
|Committee: | | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| |Accountability and | |6 - 3 |
| |Administrative Review | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| | | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill requires bidders on University of California (UC)
contracts for specified types of personal services to certify
that their employees' total compensation does not undercut the
SB 376
Page 2
compensation of UC employees doing comparable work.
Specifically, this bill:
1)Applies the cost standard described above to the following
types of contracts: building maintenance, cleaning or
custodial services, call centers services, clerical services,
dining and food service, gardening, grounds keeping, and plant
nursery services, laborer services, mailroom services,
parking, shuttle bus, truck driving or transportation
services, security services, storekeeper services, patient
care technical employee services, patient billing services,
medical transcribing services, patient escort services, or
nursing assistance services.
2)Requires a bidder to certify that its total employee
compensation package, including fringe benefits and valued on
a per-employee basis, does not materially undercut UC's total
compensation for employees doing comparable work at the
relevant campus, medical center, or laboratory.
3)Requires UC to include in its request for proposals, a
calculation of the average per-employee value of total
compensation for UC employees relevant to a particular
contract, and to incorporate all known cost escalators for
projecting the rate of growth of average per-employee
compensation.
4)Stipulates that the current requirement that UC service
contracts-other than for personal or professional
services-involving expenditures of $100,000 or more annually
be awarded to the lowest responsible bidder, includes the
renewal or extension of such contracts.
FISCAL EFFECT:
SB 376
Page 3
UC estimates that, of its total annual spending on service
contracts ($1.2 billion), about $120 million (10%) are for the
specific types of services that would be subject to the
requirements of this bill. Assuming a 30% increase in costs
related to providing parity in benefits, total annual costs
would be $36 million. The additional costs to provide wage
parity, assuming a 10% to 20% cost impact, would be $12 million
to $24 million. This impact should diminish over time due to
implementation of UC's Fair Wage/Fair Work plan (See Comment
#2), which will be applied to new contracts and as existing
contracts are renewed/extended. These costs will come from a
variety of UC fund sources, including the State General Fund,
federal funds, auxiliary funds, and enterprise funds, such as
from the medical centers.
COMMENTS:
1)Purpose. According to the author, this bill "seeks to address
the growing challenge to California of the use of contingent
workers to replace employees, and the consequential effect it
has on wages and worker protections." The author further
states that "these arrangements are bad for workers, who
receive lower wages and less workplace protections, bad for
taxpayers as government shoulders the burden of providing
benefits and support to these employees, and bad for
conscientious employers who are placed at a competitive
disadvantage in the market."
This bill is supported by the American Federation of State,
County, and Municipal Employees (AFSCME), and by the
California Labor Federation, which argues that UC continues to
contribute to the problem of regularly relying on "a
SB 376
Page 4
subcontracted worker model, risking the jobs and putting
downward pressure on wages of direct hire employees."
2)Opposition. In July UC announced its Fair Wage/Fair Work plan,
which will establish the minimum wage for contract workers at
$13 per hour starting October 2015, increasing to $15 per hour
as of October 1, 2017. This plan will also involve a
monitoring and compliance program to ensure contractors are
complying with UC policies and all federal, state, and local
laws. Finally, the program will include annual compensation
audits of all contracts and spot audits of selected contracts.
UC contends that this plan "substantially addresses the
concerns that prompted the introduction of SB 376, in a way
that is financially feasible to the university."
UC argues that, in addition to increasing costs, the bill will
create administrative burdens, in part by requiring an
analysis to determine per-employee compensation for every type
of contract and factoring in all known cost escalators to
project future per-employee costs. UC also asserts the bill
will hinder its ability to make its contracting more efficient
by using systemwide rather than site-specific contracts.
Finally, UC notes that some of its collective bargaining
agreements contain provisions stating that the UC will not
contract out for services solely on the basis that savings
will result from lower contractor pay rates and benefits for
services customarily performed by bargaining unit employees or
that result in layoff of bargaining unit employees. These
agreements specify the instances in which UC may contract out
for services including, when there is a need for special
expertise or experience, for short-term or temporary staffing
needs, for special services and equipment that are not
available internally, or for services at a leased facility
where the services are provided by the owner.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081
SB 376
Page 5