BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 682 (Leno) - Courts
          
           ----------------------------------------------------------------- 
          |                                                                 |
          |                                                                 |
          |                                                                 |
           ----------------------------------------------------------------- 
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Version: May 5, 2015            |Policy Vote: JUD. 5 - 1         |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Urgency: No                     |Mandate: No                     |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Hearing Date: May 18, 2015      |Consultant: Jolie Onodera       |
          |                                |                                |
           ----------------------------------------------------------------- 

          This bill meets the criteria for referral to the Suspense File. 

          

          Bill  
          Summary:  SB 682 would establish standards for the use of contracts by  
          the trial courts for any services currently or customarily  
          performed by that trial court's employees, as specified. This  
          bill would restrict the use of personal services contracts to  
          those resulting in actual overall cost savings to the trial  
          court, permitting contracts only if specified conditions are  
          met.


          Fiscal  
          Impact:  
           Potentially significant loss of future cost savings in the  
            millions of dollars (General Fund*) per year to the extent the  
            provisions of this measure restrict the ability of courts to  
            transition to the use of technology-based services for  
            existing court services. 
           Unknown, significant costs potentially in the millions of  
            dollars (General Fund*) to the extent the standards  
            established in this bill limit the courts' ability to  







          SB 682 (Leno)                                          Page 1 of  
          ?
          
          
            negotiate contracts for services prospectively, including  
            contracts with non-local governmental agencies.

          *Trial Court Trust Fund (TCTF)


          Background:  Under existing law, most governmental entities are authorized  
          to utilize personal services contracts to achieve cost savings  
          only if specified standards are satisfied, chief among them  
          being that the entity clearly demonstrates actual overall cost  
          savings based upon certain information. These entities include  
          executive branch agencies, public schools, community colleges,  
          and libraries.

          In response to significant budget reductions experienced by the  
          courts several years ago, many courts have sought alternative  
          ways to provide services to the public with limited resources,  
          including the use of personal services contracts. Examples of  
          services that trial courts currently contract out for include  
          court reporters, court interpreters, child custody evaluations,  
          probate investigations, family law facilitators, minors' counsel  
          in dependency cases, child custody mediation services, security  
          guards, personnel services, payroll, information services,  
          collections, labor negotiation services, and transcripts for  
          electronically recorded proceedings. 

          This bill seeks to authorize the use of service contracts  
          subject to specified contracting standards such as competitive  
          bidding and performance standards.


          Proposed Law:  
           This bill would provide that if a trial court intends to enter  
          into a contract for any services that are currently or  
          customarily performed by that trial court's employees, all of  
          the following requirements shall apply:
                 The trial court shall clearly demonstrate that the  
               contract will result in actual overall cost savings to the  
               court, as specified.
                 The contract shall not be approved solely on the basis  
               that savings will result from lower contractor pay rates or  
               benefits, except contracts are eligible for approval if the  
               contractor's wages are at the industry level and do not  
               significantly undercut trial court pay rates.








          SB 682 (Leno)                                          Page 2 of  
          ?
          
          
                 The contract cannot cause an existing trial court  
               employee to incur a loss of his or her employment or  
               employment seniority, a reduction in wages, benefits, or  
               hours, or an involuntary transfer to a new location  
               requiring a change in residence.
                 The contract must be awarded through a publicized,  
               competitive bidding process.
                 The contract must include specific provisions pertaining  
               to the qualifications of the staff that will perform the  
               work under the contract, as well as assurances that the  
               contractor's hiring practices meet applicable  
               nondiscrimination standards.
                 The contract must provide that it may be terminated at  
               any time by the trial court without penalty if there is a  
               material breach of the contract and notice is provided  
               within 30 days of termination.
                 Provides that the bill's provisions do not preclude a  
               trial court or the Judicial Council from adopting more  
               restrictive rules regarding the contracting of court  
               services.

          This bill provides that the provisions of the bill do not apply  
          to a contract under specified circumstances such as if the  
          contract is between a trial court and another trial court or a  
          local government entity, or the contract is for a new trial  
          court function and the Legislature has specifically mandated or  
          authorized the performance of the services by independent  
          contractors. Additional exemptions from the above requirements  
          include:
                 If the services contracted for cannot be satisfactorily  
               performed by trial court employees, or are of such a highly  
               specialized or technical nature that the necessary expert  
               knowledge, experience, and ability cannot be obtained from  
               the court's trial court employees.
                 Exempts "service agreements," including agreements to  
               service or maintain office equipment or computers that are  
               leased or rented, but contract agreements to operate  
               equipment or computers, except as necessary to service or  
               maintain that equipment, are not exempt.
                 With the exception of the services of official court  
               reporters, provides that the provisions of the bill do not  
               apply to a contract if the services are of such an urgent,  
               temporary, or occasional nature that the delay incumbent in  
               their implementation through the process for hiring trial  








          SB 682 (Leno)                                          Page 3 of  
          ?
          
          
               court employees would frustrate their very purpose.  
               Authorizes the use of court reporters pro tempore when the  
               criteria of the paragraph are met.
                 Authorizes the use of personal services contracts  
               developed pursuant to rehabilitation programs or programs  
               vendored or contracted through a regional center or the  
               Department of Developmental Services, and the contract will  
               not cause an existing trial court employee to incur a loss  
               of his or her employment or seniority, a reduction in  
               wages, benefits, or hours, or an involuntary transfer to a  
               new location requiring a change in residence.
                 Exempts contracts for services of court interpreters, as  
               specified. 
                 Requires each trial court to provide a report, as  
               specified, no later than February 1, 2016, to the  
               chairpersons of specified legislative committees if the  
               trial court enters into a contract between July 1, 2015,  
               and December 31, 2015, for services provided or customarily  
               provided by its trial court employees if the contract  
               extends beyond March 31, 2016. 


          Prior  
          Legislation:  AB 2332 (Wieckowski) 2014 was substantially similar to this  
          measure. This bill was held on the Suspense File of this  
          Committee.

          AB 566 (Wieckowski) 2013 was similar to this bill and was vetoed  
          by the Governor with the following message:

          I am returning Assembly Bill 566 without my signature. I agree  
          with the author that decisions to change the way court services  
          are provided should be carefully evaluated to ensure they are  
          both fair and cost-effective. However, this measure goes too  
          far. It requires California's courts to meet overly detailed and  
          - in some cases - nearly impossible requirements when entering  
          into or renewing certain contracts. Other provisions are unclear  
          and will lead to confusion about what services may or may not be  
          subject to this measure. 

          The courts, like many of our governmental agencies, are under  
          tremendous funding pressure and face the challenge of doing  
          their work at a lower cost. I am unwilling to restrict the  
          flexibility of our courts, as specified in this bill, as they  








          SB 682 (Leno)                                          Page 4 of  
          ?
          
          
          face these challenges.


          Staff  
          Comments:  The Judicial Council has indicated the provisions of  
          this bill will require the trial courts to potentially convert  
          existing contracts that expire after the effective date of this  
          measure to court employees as these contracts come up for  
          extension and renewal, at a statewide cost potentially in the  
          range of $10 million to $15 million (General Fund).  
          Additionally, greater impacts could be incurred prospectively as  
          opportunities to increase operating efficiencies are discouraged  
          due to the contracting restrictions outlined in the bill.

          The Judicial Council has indicated that some courts have moved  
          to contracts for a variety of services including court  
          reporting, guardianship and conservatorship investigations,  
          mediations, information technology, collections, data entry, and  
          janitorial services. To the extent these services contracts  
          could potentially be prohibited once the existing contracts  
          expire, any of these services identified as customarily  
          performed by court employees could potentially be subject to the  
          restrictions in the bill. Also, given the absence of a  
          definition of the word "customarily" and no affirmative language  
          in the bill specifying that the bill does not apply to the  
          renewal or extension of contracts for services that are already  
          in place, it is very difficult to determine the full scope and  
          fiscal impact of the bill, particularly how many existing  
          services will be impacted.

          Staff notes that in the absence of specified language limiting  
          the prospective application of contracts entered into, whether  
          new, renewals, or extensions, after the enactment date of the  
          bill, contracts for specified services in place prior to the  
          bill's enactment date would potentially be subject to the bill's  
          contracting standards and guidelines once the existing contract  
          term expires.

          SB 1419 (Alarcon) Chapter 894/2002 which established personal  
          services contracting standards for schools and community college  
          districts, addressed this issue by including the following  
          language to limit the prospective application of contracting  
          standards for these entities. In essence, it narrowed the  
          prospective application of the contracting standards only for  








          SB 682 (Leno)                                          Page 5 of  
          ?
          
          
          limited contracts: 

          "This section shall apply to personal service contracts entered  
          into after January 1, 2003. This section shall not apply to the  
          renewal of personal services contracts subsequent to January 1,  
          2003, where the contract was entered into before January 1,  
          2003, irrespective of whether the contract is renewed or rebid  
          with the existing contractor or with a new contractor."

          Further, the Judicial Council has indicated that many courts  
          cannot comprehensively collect delinquent debt, procure services  
          and supplies, or undertake janitorial or building maintenance.  
          Many of these courts have contracted with other trial courts and  
          county entities for these services. Many courts and counties,  
          however, contract with private entities that do not satisfy the  
          terms of the bill, which specifically states that contracts  
          between trial courts and local government entities must be for  
          work performed by the employees of the trial court or local  
          government entity. In some cases, the counties have also  
          contracted out the work-these contracts would be prohibited when  
          they are due for renewal or extension. To the extent this  
          restriction prohibits trial courts to contract with the Judicial  
          Council or other state entities, such as the Franchise Tax  
          Board, to collect delinquent court-ordered debt, could result in  
          additional costs.

          While modeled upon existing statutes requiring governmental  
          entities (executive branch agencies, public K-12 schools,  
          community colleges, libraries) to meet specified standards  
          before executing personal service contracts, this bill differs  
          from existing statutes under specified provisions, including the  
          following:
                 GC  19130 states that the purpose of the article is to  
               establish standards for the use of personal services  
               contracts by state agencies. Under this bill, the purpose  
               is to establish standards for the use of contracts for any  
               services that are currently or customarily performed by  
               that trial court's employees. This appears to be a  
               different standard than applied to state agencies, as there  
               is no reference to services "that have been customarily  
               performed" by civil service employees. As "customarily" is  
               not defined in the bill, it is also unclear how this  
               provision will be interpreted and applied.
                 Under GC  19130(b)(3), personal services contracting is  








          SB 682 (Leno)                                          Page 6 of  
          ?
          
          
               permissible if the services contracted are not available  
               within civil service, cannot be performed satisfactorily by  
               civil service employees, or are of such a highly  
               specialized or technical nature that the necessary expert  
               knowledge, experience, and ability are not available  
               through the civil service system. Under this bill's  
               provisions, contracting is permissible only if the services  
               contracted for cannot be satisfactorily performed by trial  
               court employees, or are of such a highly specialized or  
               technical nature that the necessary expert knowledge cannot  
               be obtained from the court's trial court employees. This  
               provision appears to be a more restrictive standard for  
               trial courts to adhere to than the standards imposed on  
               state agencies, as the trial courts would not be able to  
               contract out for services in the cases where (1) the  
               services contracted are not available through the trial  
               courts, or (2) the services are of such a highly  
               specialized or technical nature that the necessary expert  
               knowledge, experience, and ability are not available  
               through the trial courts. It could be argued that trial  
               court employees "could obtain" the necessary expert  
               knowledge, experience, and ability through training,  
               thereby limiting the ability of trial courts to contract  
               out for these types of services.
                 Under GC  19130(b)(4), personal services contracting is  
               permissible if the services are incidental to a contract  
               for the purchase or lease of real or personal property.  
               Contracts under this criterion are known as "service  
               agreements" and include, but are not limited to, agreements  
               to service or maintain office equipment or computers that  
               are leased or rented. Under this bill's provisions,  
               "services agreements" do not include contracts to operate  
               equipment or computers for purposes other than service or  
               maintenance. This appears to be a more restrictive standard  
               for trial courts to adhere to than imposed on state  
               agencies.
                 This bill creates an exception to the contracting  
               standards if the contract is between a trial court and  
               another trial court or a local government entity, but does  
               not provide a similar exception for state and federal  
               governmental entities. To the extent this provision  
               restricts a court's ability to contract with other state or  
               federal agencies could result in increased costs.









          SB 682 (Leno)                                          Page 7 of  
          ?
          
          
          To the extent the contracting restrictions expose the trial  
          courts to legal action from persons or groups contesting whether  
          the specified conditions were met, additional costs could also  
          be incurred. 

                                      -- END --