BILL ANALYSIS                                                                                                                                                                                                    






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          |SENATE RULES COMMITTEE            |                        SB 682|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 


          Bill No:  SB 682
          Author:   Leno (D)
          Amended:  5/5/15  
          Vote:     21  

           SENATE JUDICIARY COMMITTEE:  5-1, 4/28/15
           AYES:  Jackson, Hertzberg, Leno, Monning, Wieckowski
           NOES:  Anderson
           NO VOTE RECORDED:  Moorlach

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 5/28/15
           AYES: Lara, Beall, Hill, Leyva, Mendoza
           NOES: Bates, Nielsen
           
           SUBJECT:   Courts


           SOURCE:    American Federation of State, County and Municipal  
                     Employees, AFL-CIO 
                     Laborers' Locals 777 and 792 
                     Orange County Employees Association 
                      Service Employees International Union


          DIGEST:  This bill requires a trial court to meet certain  
          standards if it intends to enter into a contract for any  
          services that are currently or have been customarily performed  
          by that trial court's employees, except as specified.


          ANALYSIS:   










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          Existing law:


          1)Permits a state agency to contract out for personal services  
            only if specified standards are satisfied, such as: 


                 The agency clearly demonstrates actual overall cost  
               savings, as specified;
                 Proposals to contract out are not approved solely on the  
               basis that savings will result from lower contractor pay  
               rates or benefits, except that proposals to contract out  
               work are eligible for approval if the contractor's wages  
               are at the industry's level and do not significantly  
               undercut state pay rates;
                 The contract does not displace civil service employees,  
               as specified;
                 The savings are large enough to ensure they will not be  
               eliminated by cost fluctuations that could normally be  
               expected during the contracting period;
                 The amount of savings clearly justify the size and  
               duration of the agreement;
                 The contract is awarded through a publicized,  
               competitive bidding process;
                 The potential economic advantage of contracting is not  
               outweighed by the public's interest in having a particular  
               function performed directly by state government.   
               (Government Code Section 19130)


          1)Exempts personal services contracting from the above  
            requirements if:


                 The functions contracted are exempt from civil service  
               under the state constitution; 
                 The contract is for a new state function and the  
               Legislature has specifically mandated or authorized the  
               performance of the work by independent contractors;
                 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  







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               service system;
                 The services are incidental to a contract for the  
               purchase or lease of real or personal property;
                 The legislative, administrative, or legal goals and  
               purposes cannot be accomplished through the utilization of  
               persons selected pursuant to the regular civil service  
               system, as specified;
                 The nature of the work is such that specified existing  
               law standards for emergency appointments apply; 
                 State agencies need private counsel because a conflict  
               of interest on the part of the Attorney General's office  
               prevents it from representing the agency without  
               compromising its position, as specified;
                 The contractor will provide equipment, materials,  
               facilities, or support services that the state could not  
               feasibly provide in the location where the services are to  
               be performed; 
                 The contractor will conduct training courses for which  
               appropriately qualified civil service instructors are not  
               available, provided that permanent instructor positions in  
               academies or similar settings shall be filled through civil  
               service appointment; or
                 The services are of such an urgent, temporary, or  
               occasional nature that the delay incumbent in their  
               implementation under civil service would frustrate their  
               very purpose.  (Government Code Section 19130)


          This bill: 


 1)Provides that the purpose of its provisions is to establish standards  
            when a trial court intends to enter into a contract for any  
            services that are currently or have been customarily performed  
            by that trial court's employees and authorizes trial courts to  
            contract for such services if all of the following conditions  
            are met:


                 The trial court clearly demonstrates that the contract  
               will result in actual overall cost savings to the trial  
               court, as specified;
                 The contract shall not be approved solely on the basis  
               that savings will result from lower contractor pay rates or  







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               benefits, except contracts shall be eligible for approval  
               if the contractor's wages are at the industry level and do  
               not significantly undercut trial court pay rates;
                 The contract does not displace trial court employees, as  
               specified;
                 The savings are large enough to ensure they will not be  
               eliminated by private sector and trial court fluctuations  
               that could normally be expected during the contracting  
               period;
                 The amount of savings clearly justify the size and  
               duration of the contracting agreement;
                 The contract is awarded through a publicized,  
               competitive bidding process; 
                 The contract includes specific provisions pertaining to  
               the qualifications of the staff that will perform the work  
               under the contract, and assurance that the contractor's  
               hiring practices meet applicable nondiscrimination  
               standards;
                 The potential for future economic risk to the trial  
               court from potential contractor rate increases is minimal;
                 The contract is with a "firm," as defined; and
                 The potential economic advantage of contracting out is  
               not outweighed by the public's interest in having a  
               particular function performed directly by the trial court. 

 1)Provides that these provisions do not preclude a trial court or  
            Judicial Council from adopting more restrictive rules  
            regarding the contracting of court services.


 2)Exempts contracts from the above requirements if:


                 The contract is for a new trial court function and the  
               Legislature has specifically mandated or authorized the  
               performance of the work by independent contractors;
                 The contract is between a trial court and another trial  
               court or a local government entity for services to be  
               performed by employees of the other trial court or  
               employees of the local government entity;
                 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  







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               the court's trial court employees; 
                 The services are incidental to a contract for the  
               purchase or lease of real or personal property.  Such  
               contracts, known as "service agreements," shall include,  
               but not be limited to, agreements to service or maintain  
               office equipment or computers that are leased or rented.   
               Service agreements do not include contracts to operate  
               equipment or computers for purposes other than service or  
               maintenance; 
                 The legislative, administrative, or legal goals and  
               purposes cannot be accomplished through the utilization of  
               trial court employees because of the need to protect  
               against a conflict of interest or to ensure independent and  
               unbiased findings in situations where there is a clear need  
               for an independent, outside perspective;
                 Due to an emergency, a contract is necessary for the  
               immediate preservation of the public health, welfare, or  
               safety; 
                 The contractor will conduct training courses for which  
               appropriately qualified trial court employee instructors  
               are not available from the court, provided that permanent  
               instructor positions shall be filled through the process  
               for hiring trial court employees; 
                 The contractor will provide equipment, materials,  
               facilities, or support services that could not feasibly be  
               provided by the trial court in the location where the  
               services are to be performed, except as specified;
                 The services are of such an urgent, temporary, or  
               occasional nature that the delay incumbent in their  
               implementation through the process for hiring trial court  
               employees would frustrate their very purpose, except as  
               specified; 
                 The contract is a personal services contract developed  
               pursuant to rehabilitation programs, as specified, or  
               pursuant to a program vendored or contracted through a  
               regional center or the Statement Department of  
               Developmental Services in accordance with the Lanterman  
               Developmental Disabilities Services Act, as specified, and  
               the contract will not 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; or 
                 The contract is for the services of any court  







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               interpreter, which shall be governed by the Trial Court  
               Interpreter Employment and Labor Relations Act or by the  
               other provisions of the Trial Court Employment Protection  
               and Governance Act, and any memorandum of understanding or  
               agreement entered into pursuant to those acts, as  
               specified. 


 1)Specifies that if a trial court entered into, or renewed or extended, a  
            contract between July 1, 2015, and December 31, 2015,  
            inclusive, for services that were provided or are customarily  
            provided by its trial court employees and that contract has a  
            term extending beyond March 31, 2016, the trial court must  
            provide a specified report by no later than February 1, 2016. 


 2)Includes a severability clause.


          Background


          Under California law, most governmental entities can use  
          personal services contracts (i.e. contracting out) 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 recent years, California's judicial branch has experienced  
          catastrophic budget reductions that have crippled California's  
          court system by, among other things, forcing the closure of  
          courts and self-help centers, which has resulted in delayed  
          access to justice for a large number of Californians.  In  
          response, many courts have begun seeking ways in which to  
          operationalize those budget reductions.  According to  
          information provided to this Committee by the Judicial Council  
          of California, examples of services that trial courts currently  
          contract out for include:  court reporters; interpreters; child  
          custody evaluations; probate investigations; family law  
          facilitators; minor's counsel in dependency cases; child custody  
          mediation services;  mediators/alternative dispute resolution;  







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          security guards; personnel services; payroll; information  
          services; collections; adoption investigation services; services  
          for self-represented litigants; labor negotiation services;  
          transcripts for electronically recorded proceedings; and more.


          Over the last two years, bills have been introduced in an effort  
          to impose various contracting out standards upon the trial  
          courts.  The first bill, AB 566 (Wieckowski, 2013) was  
          ultimately vetoed by the Governor, and the second bill, AB 2332  
          (Wieckowski, 2014) passed this Committee but died on the  
          Suspense File in the Senate Appropriations Committee.  


          This bill similarly seeks to impose certain standards upon  
          courts when entering into contracts for services currently or  
          customarily performed by the trial court's employees, largely  
          based upon standards imposed on state agencies.   


          Comment


          As stated by the author: 


            The major government entities in California either face  
            explicit limits (cities and counties) on privatization of  
            public services or must meet due diligence requirements  
            (State, community colleges, K-12 school districts, libraries)  
            prior to privatizing their services. 


            Historically, trial courts in California were county entities,  
            funded by the [c]ounties and thus subject to the privatization  
            restrictions that applied to [c]ounties. But in 1997, the  
            Legislature passed the Lockyer-Isenberg Trial Court Funding  
            Act, AB 233 (Escutia and Pringle), Ch. 850, Stats. 1997[,] and  
            shifted the responsibility for funding from the [c]ounties to  
            the State. Subsequently, many of the laws that had previously  
            applied to the trial courts no longer applied once they were  
            removed from the [c]ounties' jurisdictions, such as open  
            meetings, access to public records, whistleblower protections,  
            public contract code requirements for contracting purposes and  







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            provisions relating to privatization.


            As a result of recent budget cuts to the trial courts, some  
            courts have sought alternative ways to provide critically  
            important services to the public, including privatizing some  
            of the most sensitive services that help preserve the  
            integrity of our impartial trial court system.  Alternatives  
            being considered include privatizing the handling and  
            maintenance of private, confidential and sensitive information  
            contained in official court records.


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee:

                 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  
               negotiate contracts for services prospectively, including  
               contracts with non-local governmental agencies.

          *Trial Court Trust Fund 


          SUPPORT:   (Verified5/29/15)


          American Federation of State, County and Municipal Employees,  
          AFL-CIO (co-source)
          Laborers' Locals 777 and 792 (co-source)
          Orange County Employees Association (co-source)
          Service Employees International Union (co-source)
          California Professional Firefighters  
          Center for Judicial Excellence
          Glendale City Employees Association 
          Orange County Employees Association 







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          Organization of SMUD Employees 
          San Bernardino Public Employees Association 
          San Diego County Court Employees Association 
          San Luis Obispo County Employees Association


          OPPOSITION:   (Verified5/29/15)


          California Chamber of Commerce
          Judicial Council
          Ventura County Superior Court, Presiding Judge


          ARGUMENTS IN SUPPORT:     The Service Employees International  
          Union (SEIU), co-sponsor of this bill, writes that "SB 682 would  
          ensure that trial courts operate within the norms of good  
          government practices by requiring them to show diligence prior  
          to privatizing important trial court services."  SEIU argues:


            [T]ax dollars have the dual responsibility of being well spent  
            for quality services, as well as being an investment in the  
            larger society. In fact, it could be argued that the level of  
            accountability should be higher for trial court services.   
            Being a nation of laws, a fair and impartial judicial system  
            is a critical underpinning of democracy and is fundamental to  
            the success of a civilized society. Trial court services  
            represent a "public good," which are most effectively  
            delivered by government and public employees.  [ . . . ] 


          SEIU also asserts that SB 682's provisions "are neither radical  
          nor a departure from current law governing most other parts of  
          government and will ensure that tax dollars are accountable.  In  
          a time of budget austerity it is even more important to ensure  
          that scarce judicial dollars are well spent. Every misspent  
          dollar is a dollar taken away from a taxpayers' ability to  
          access much needed court services."


          The California Labor Federation writes in support:









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            When entities contract out, oftentimes there are sacrifices  
            made in the pursuit of cost savings.  Outsourcing can result  
            in less accountability, public access, and transparency.  Such  
            practices can lead to substantially reduced wages, [thereby]  
            increasing demand for taxpayer funded public assistance.  
            Public interest becomes secondary to profit maximization when  
            for-profit corporations are responsible for delivery of public  
            services.  [Whereas] California requires due diligence  
            standards be satisfied in all sectors of government prior to  
            privatization of public services [. . .] trial courts are  
            exempt from even this minimum standard, which applies to other  
            public entities.  Privatization of court services means that  
            justice truly is in the hands of private contractors whose  
            primary concern is profits for shareholders over fairness to  
            the public. For these reasons, it is essential to have  
            safeguards in the law protecting the public interests.


          ARGUMENTS IN OPPOSITION:     Judicial Council opposes this bill  
          because it would severely hamper the trial courts' ability to  
          contract for personal services. Judicial Council bases its  
          opposition on several grounds, including that the bill: 


           presumes no personal services contract is valid unless it  
            meets one of several very limited exceptions or has achieved  
            the impossible balance of attaining actual savings without  
            reducing labor and benefit costs; 
           applies to any services "currently or customarily" performed  
            by trial court employees which is not only "overly broad, it's  
            also vague and retroactive;"
           inhibits the trial courts' ability to manage their staff and  
            resources, which is critical in view of substantial budget  
            cuts in recent years and an ongoing funding gap of more than  
            $600 million;
           reduces local control and discretion over trial court  
            management; 
           conflicts with recent legislation regarding judicial branch  
            contracting; and
           affects circumstances that are more appropriately addressed at  
            the local level through collective bargaining agreements. 


          Judicial Council further argues that while this bill appears to  







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          be modeled upon the Government Code section limiting contracting  
          in the executive branch for services that could be performed by  
          civil service employees, that "model is inappropriate for trial  
          courts because . . . the trial courts must operate independently  
          from one jurisdiction to the next."  Additionally, unlike  
          executive branch agencies that "can manage the amount of work  
          they receive, the number and types of people they serve, and the  
          services provided . . .  trial courts must accept all filings  
          form the public, have no control over the number and types of  
          cases they must process, and have no ability to limit court  
          users. In order to effectively manage their caseloads, courts  
          need flexibility in managing their costs and contracts."


          The California Chamber of Commerce (Cal Chamber) writes in  
          opposition that a functioning judicial system is important for  
          all members of the public, including business, and that this  
          bill does not help the courts' current funding situation, which  
          has resulted in closed courthouses, reduced hours of service,  
          and reduced number of employees. Cal Chamber argues that "the  
          judicial branch is in the best position to determine how to  
          balance the needs of the public with their existing budget,  
          including whether private contractors are necessary." 


          Prepared by:Ronak Daylami / JUD. / (916) 651-4113
          5/31/15 12:40:14


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