BILL ANALYSIS Ó 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 --