BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Carol Liu, Chair
                                2015 - 2016  Regular 

          Bill No:             SB 669             
          |Author:    |Pan                                                  |
          |Version:   |April 14, 2015                             Hearing   |
          |           |Date:     April 22, 2015                             |
          |Urgency:   |No                     |Fiscal:     |Yes             |
          |Consultant:|Kathleen Chavira                                     |
          |           |                                                     |
          Subject:  Civil service:  personal services contracts:   
          California State Universities

          This bill establishes standards for the use of personal services  
          contracts by the California State University (CSU).  

          Current law provides standards for the use of personal service  
          contracts by state agencies with specific criteria for  
          contracting outside state service.  These criteria  
          include demonstration of cost savings, definition of costs, and  
          requirements that work not be contracted out solely on the basis  
          of lower pay rates or benefits, and justification of savings  
          based on the size and duration of the contract. 
          (Government Code  19130)

          Article 7 of the California Constitution establishes the State  
          Civil Service and establishes the State Personnel Board, a 5  
          member body appointed by the Governor and approved by the  
          Senate, to enforce and administer civil service statutes.  The  
          Constitution establishes several exemptions from the civil  
          service, including officers and employees of the University of  
          California and the California State University.    
          This bill establishes nearly identical requirements and review  


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          processes for personal services contracting by the CSU as those  
          that exist for State agencies. It:

          1.   Specifies that use of personal services contracting to  
               achieve costs savings is permissible when the CSU clearly  
               demonstrates that the contract will result in overall cost  
               savings and: 

                    A.             Prescribes the specific costs to be  
                    included/excluded in the calculation.

                    B.             Prohibits approval solely on the basis  
                    of savings from lower contractor pay rates or  
                    benefits, and requires that wages be at the industry's  
                    level and that they do not significantly undercut  
                    university pay rates.  

                    C.             Displacement of university employees,  
                    as specified, is not caused by the contract.

                    D.             It does not affect nondiscrimination  
                    efforts, savings are large enough to be maintained  
                    during cost fluctuations, are clearly justified by  
                    size and duration, contracts are publicly and  
                    competitively bid, and various other requirements. 

          2.   Restricts personal services contracting, unless the  
               following conditions are met:

                    A.             The Legislature mandates or authorizes  
                    work be performed by independent contractors, and the  
                    contract is for a new university function.

                    B.             Services are unavailable or unable to  
                    be satisfactorily performed within the university or  
                    by university employees. 

                    C.             Services are incidental to a purchase  
                    or lease contract.

                    D.             The legislative, administrative, or  
                    legal goals/purposes cannot be accomplished through  
                    the regular or ordinary hiring process. 


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                    E.             University employees cannot feasibly  
                    supply the equipment, materials, facilities, or  
                    support services provided by the contractor.  
                    F.             The contract is for the provision of  
                    training courses for which qualified university  
                    employees are not available.

                    G.             The contract is for services of an  
                    urgent, temporary, or occasional nature.

          1.   Need for the bill. According to the author, the intent of  
               this bill is to provide the California State University  
               (CSU) employees the same contracting out protections that  
               apply to state workers.

          2.   Current CSU practice. According to the CSU, in 2012-13 it  
               had over 7,000 personal services contracts valued at a cost  
               of over $500 million for various services within the  
               University.  These contracts are for services that include  
               animal boarding, agricultural chemicals, archaeologists,  
               portable toilet suppliers, demolition contractors,  
               stonemasons, furniture suppliers, fire protection  
               providers, pest and vermin control, hazardous waste  
               disposal providers, and more.  The CSU contends that, per  
               the requirements of Higher Education Employer-Employee  
               Relations Act (HEERA), the University meets and confers  
               with unions and negotiations have resulted in provisions in  
               collective bargaining agreements that outline the  
               conditions and processes to be followed regarding  
               contracting out.

          3.   Collective Bargaining. Provisions regarding contracting out  
               are an element of both the California State University  
               Employees Union - CSUEU (Article 3) and State Employees  
               Trades Council - SETC (Article 4) collective bargaining  
               agreements.  The CSUEU agreement authorizes contracting out  
               provided that it does not displace bargaining unit  
               employees, and defines displacement to include layoff,  
               demotion, involuntary transfer to a new classification, or  
               to a new satellite campus location, or a location requiring  
               a change of residence, and involuntary time base  


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               reductions.  The California State University (CSU) is  
               required to notify the Union when contracting out is to be  
               on a long-term basis and the Union is authorized to request  
               to meet and confer on the impacts of long-term contracting  
               out work.  Prior to meeting, the CSU is required to provide  
               the California State University Employees Union (CSUEU) all  
               existing relevant information, including RFPs, copies of  
               bids received, and any cost analysis used to evaluate the  
               need for contracting out. The State Employees Trades  
               Council (SETC) agreement, prior to contracting out,  
               requires a campus to consider the availability of SETC  
               employees to perform the work, whether they have the  
               special skills and licensure necessary, whether the work  
               can be completed within time constraints applicable to the  
               project, the availability of required materials and/or  
               equipment, and the cost involved in performing the work  
               in-house versus contracting out.  Notification of the Chief  
               Campus Steward is required prior to the start of any such  
               contracted work.  

               Should the Legislature insert itself in a matter which it  
               appears is already being addressed through collective  

          4.   Civil Service exemption. This bill is modeled on State  
               Civil Service Act language used to govern personal services  
               contracting within the state.  

               Provisions of the California Constitution specifically  
               exclude officers and employees of the CSU from state civil  
               service, and the Legislature has granted the CSU other  
               exemptions from Civil Service provisions, including:

                  A.        Exclusion from Public Contract Code provisions  
                    regarding the acquisition of goods and services 

                  B.        Authority to promulgate regulations without  
                    having to utilize the procedures outlined in the  
                    Administrative Procedures Act, thereby exempting CSU  
                    from Office of Administrative Law review.    

               Do the CSU's current contracting out practices rise to a  
               level of concern that warrants the CSU being subject to  
               civil service-like provisions?  


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          1.   Purview of the Trustees?  The provisions of this bill are  
               substantively similar to the requirements outlined for  
               state agencies under the Civil Service Act.  However,  
               unlike state agencies, statute extends the authority to  
               administer the CSU and to adopt rules and regulations  
               consistent with the laws of the state, to the CSU Trustees,  
               a body appointed by the Governor and confirmed by the  

          If the Committee believes there is a need for greater clarity  
          around the use of personal services contracts at the CSU, staff  
          recommends the bill be amended to delete its current contents  
          and to amend Education Code section 89036, which outlines the  
          power of the Trustees to enter into agreements, to authorize the  
          Trustees to enter into personal services contracts and to  
          require the Trustees to establish standards and conditions for  
          their use.

          2.   Related and prior legislation.

          SB 943 (Beall, 2014) was substantively similar to this bill. In  
          addition it assigned the State Personnel Board oversight of CSU  
          contracting practices.  SB 943 was heard by this Committee on  
          April 30, 2014 and failed passage in the Committee by a vote of  

          AB 2225 (Lowenthal, 2002) proposed similar personal services  
          contracting standards for the CSU.  AB 2225 was heard by this  
          Committee in June 2002, and was held without recommendation. 

          California Labor Federation
          California State University Employees Union (CSUEU/SEIU)
          Service Employees International Union (SEIU)

           California State University
          California State University East Bay
          California State University Long Beach

                                      -- END --


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