BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 682 (Leno) - Courts
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|Version: May 5, 2015 |Policy Vote: JUD. 5 - 1 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 18, 2015 |Consultant: Jolie Onodera |
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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
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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.
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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
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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
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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
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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
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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.
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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.
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