BILL ANALYSIS Ó SB 682 Page 1 Date of Hearing: June 23, 2015 ASSEMBLY COMMITTEE ON JUDICIARY Mark Stone, Chair SB 682 (Leno) - As Amended May 5, 2015 As Proposed to be Amended SENATE VOTE: 24-14 SUBJECT: COURTS: PERSONAL SERVICES CONTRACTS KEY ISSUE: IN ORDER TO PROTECT THE INTEGRITY OF OUR COURTS AND ENSURE THAT SCARCE JUDICIAL RESOURCES ARE SPENT EFFICIENTLY, SHOULD TRIAL COURTS COMPLY WITH DUE DILIGENCE STANDARDS BEFORE PRIVATIZING WORK THAT IS CURRENTLY OR CUSTOMARILY PERFORMED BY TRIAL COURT EMPLOYEES? SYNOPSIS Unless specified conditions are satisfied, nearly all government entities in California are restricted from contracting out functions customarily done by public employees. These requirements are designed to ensure that not only is the work done cost-effectively, but also that the public interest in the particular government function remains paramount. As a general rule, work performed for the state must be done by state employees, unless a proposed contract for personal services meets specified criteria, including a clear demonstration of cost savings. Schools and community college districts are also required to comply with basically the same standards that apply to the state. Most recently, the Legislature established SB 682 Page 2 similar due diligence standards for public libraries in AB 438 (Williams), Chap. 611, Stats. 2011. This bill, sponsored jointly by the Service Employees International Union (SEIU), the American Federation of State, County and Municipal Employees (AFSCME), Laborers' Locals 777 and 792, and the Orange County Employees Association, extends the same due diligence protections to the trial courts and their employees, but with 11 exemptions to ensure that courts can function effectively and efficiently in these still difficult budget times. This bill is substantially similar to last year's AB 2332 (Wieckowski), which passed the Assembly, but was held in the Senate Appropriations Committee, and AB 566 (Wieckowski), 2013, which passed the Legislature but was vetoed by the Governor. However, the bill has been narrowed to track much more closely the language in the state agency contracting statute and to address concerns raised by the Governor. The bill is supported by many labor organizations, including the California Labor Federation and the California State Sheriffs Association. It is opposed by the Chamber of Commerce, the Los Angeles Superior Court and, unless amended, by the Judicial Council, which proposes amendments that would make it much easier for the courts, as compared to state agencies, schools and libraries, to contract out significant judicial branch functions to private entities. The author has agreed to amend the bill to address some, but not all, of the Judicial Council's concerns. SUMMARY: Requires courts to comply with specified requirements before contracting out services that are currently or customarily performed by trial court employees. Specifically, this bill: 1)Provides that contracts for services currently or customarily performed by trial court employees are permissible if all of the following conditions are met: a) The court clearly demonstrates that the contract will SB 682 Page 3 result in actual, overall cost savings to the court, considering specified factors, as provided; b) The contract may not be approved solely on the basis that savings will result from lower contractor pay rates or benefits, provided the contract is eligible for approval if the contractor's wages are at the industry standard and do not significantly undercut trial court pay rates; c) The contract does not cause displacement of court employees, as provided; d) The contract savings are large enough to ensure they will not be lost by various fluctuations during the contract period; e) The amount of the savings justifies the size and duration of the contract; f) The contract is awarded through a competitive bidding process; g) The contract provides for qualified staff, and the contractor's hiring practices are nondiscriminatory; h) The potential for future economic risk to the court from future contract rate increases is minimal; i) The contract is with a firm, as defined; and j) The potential economic advantage of contracting out is not outweighed by the public's interest in having the function performed directly by the court. 2)Does not preclude a trial court or the Judicial Council from adopting more restrictive rules regarding contracting of court services. 3)Contracting is also permissible if one of the following conditions is met: a) Contract is for a new trial court function for which the Legislature has specifically authorized the performance of the services by independent contractors; b) Contract is between a trial court and another trial court or a local government entity for services to be performed by employees of that trial court or local SB 682 Page 4 government entity; c) Services contracted for cannot be satisfactorily performed by court employees or are of such a highly specialized or technical nature that necessary expertise cannot be obtained from court employees; d) Services are incidental to a contract for purchase of property, except for contracts to operate equipment or computers (other than service or maintenance agreements); e) Contract is needed to protect against conflict of interest or ensure independent unbiased findings; f) Emergency situations in which contract is necessary for immediate preservation of public health, welfare or safety; g) Training courses when qualified instructors are not available from court employees; h) Contractor will provide equipment, materials, facilities or support services that cannot feasibly be provided in the location, except these will not be used to open closed courthouses or for ongoing operation at new or reopened courthouses; i) Services are of such an urgent, temporary or occasional nature that delay in hiring employees would frustrate their very purpose, but this provision does not apply to court reporters, except individual pro tempore court reporters may be used as appropriate; j) Contract is for services with individuals with developmental disabilities pursuant to rehabilitation programs; or aa) Contract is for services of court interpreters. 4)Requires each trial court that enters into a personal services contract between July 1, 2015, and December 31, 2015, with a term beyond March 31, 2016, to report to the Department of Finance and the Legislature by February 1, 2016, on the contract, as provided. 5)Contains a severability clause. SB 682 Page 5 EXISTING LAW: 1)Provides that employees of the state be appointed through the civil service system. (Cal. Constitution, Article VII, Section 1.) 2)Limits personal service contracts (contracting out) for work done by state employees to when specified conditions are satisfied, including: a) The contracting state agency clearly demonstrates actual overall savings; b) The contract savings are not the result of lower contractor pay rates or benefits, provided the contract is eligible for approval if the contractor's wages are at the industry standard and do not undercut existing pay rates; c) The contract does not cause displacement of state civil service employees; d) The amount of the savings clearly justifies the agreement; e) The contract is awarded through a competitive bidding process; f) The potential for future economic risk for the state from the contractor is minimal; and g) The potential economic advantage of contracting out is not outweighed by the public's interest in having a particular function performed directly by the state. (Government Code Section 19130(a).) 3)Permits contracting out of work done by state employees in limited specified situations, including new state functions, services that cannot be performed within civil service, and emergency situations. (Government Code Section 19130(b).) 4)Prevents a school district or community college district from contracting out services currently or customarily performed by classified employees, unless conditions similar to those set out in #2), above, are satisfied. (Education Code Sections SB 682 Page 6 45103.1 and 88003.1.) 5)Prevents, until January 1, 2019, a city or library district from withdrawing from a county free library system and operating libraries with a private contractor, unless conditions similar to #2), above, are satisfied. (Education Code Section 19104.5.) 6)Allows a county to contract out for "special services," as provided. (Government Code Section 31000.) FISCAL EFFECT: As currently in print this bill is keyed fiscal. COMMENTS: Nearly all government entities in California are restricted from contracting out functions that are customarily done by public employees, unless specified conditions are satisfied. These requirements are designed to ensure not only that work is done cost-effectively, but also that the public interest in government activities remains paramount. As a general rule, work performed for the state must be done by state employees, unless the proposed contract for personal services meets specified criteria, including a clear demonstration of cost savings. Schools, community college districts and public libraries are also required to comply with generally the same standards that apply to the state. (See AB 3336 (Ryan), Chap. 1057, Stats. 1982; SB 1419 (Alarcon), Chap. 894, Stats. 2002; AB 438 (Williams), Chap. 611, Stats. 2011.) This bill, jointly sponsored by SEIU, AFSCME, Laborers' Locals 777 and 792, and the Orange County Employees Association, seeks to extend these same due diligence protections to the trial courts. This bill is similar to last year's AB 2332 (Wieckowski), which passed the Assembly, but was held in Senate Appropriations Committee, and AB 566 (Wieckowski), 2013, which passed the Legislature, but was vetoed by the Governor. SB 682 Page 7 The author writes that this bill is necessary to not only ensure that scarce court resources are used as effectively and efficiently as possible, but also to protect the very integrity of the judicial process: 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. In all sectors of government, California requires that some due diligence standards be satisfied prior to the privatization of public services. However, trial courts are currently exempt from similar accountability measures. Given the critical importance of the trial courts and the sensitivity of the information that is processed and maintained in confidence by the courts and their employees, trial courts should be held to at least the same standards of due diligence as other public entities. SB 682 requires the courts to show they used due diligence in deciding to employ a private contractor to perform court services that are currently or have customarily been performed by trial court employees. . . . The purpose of this bill is not to infringe upon the independent discretion of the trial courts. Rather, it is to ensure that trial courts meet the same common-sense standards when contracting out for services as all other governmental agencies in this state. SB 682 Page 8 Under this bill, if a trial court intends to privatize a function that is currently or customarily performed by trial court employees, the court must first: Demonstrate cost savings: The court must clearly demonstrate that the contract will result in actual, overall cost savings to the court. Show savings not solely from reduced wages and that employees will not be displaced: The contract savings may not be solely the result of lower contractor pay rates or benefits, but may be approved if the contractor's wages are at the industry standard. The contract may not cause existing trial court employees to be displaced. Use competitive bidding: The contract must be awarded through competitive bidding. Provide for staff qualifications and hiring: The contract must provide qualifications of staff, and the contractor's hiring practices must be nondiscriminatory. Public interest: The potential economic advantage of the contract is not outweighed by the public's interest in having the function performed directly by the court. The bill's author notes that these requirements are necessary and appropriate to ensure that any private contract both results in actual savings for the court and retains the integrity of the judicial system. One of the sponsors, AFSCME, states succinctly that these requirements provide "an efficient way of evaluating whether privatizing trial court jobs is in the best interest of the state." These Requirements Are Nearly Identical to Requirements that Already Apply Today to State Agencies and to Schools, Community Colleges, and Libraries. The due diligence requirements in this bill are, almost verbatim, identical to requirements in current law that apply to all state agencies, as well as schools, SB 682 Page 9 community colleges and libraries. Like the courts, these entities (with the exception of the libraries) receive the bulk of their funding from and through the state. Indeed, contracting out work performed by state employees is even more limited than what is proposed by this bill. The state constitution and case law make clear that, before considering the due diligence standards, work done by state employees can only be contracted out to private companies if it fits into certain allowable exceptions. One exception is that the work represents a legislatively created "new state function" that does not displace existing civil service functions. (Professional Engineers v. Dep't of Transportation (1993) 13 Cal.App.4th 585, 593.) Another exception applies when the "nature of the services" is such that they cannot be performed adequately, satisfactorily or competently by state employees. (Burum v. State Compensation Ins. Fund (1947) Cal.2d 575, 582.) Similar to restrictions on state agencies, the Attorney General has opined that general law counties (the vast majority of California counties are general law counties, although the larger ones tend to be charter counties), may not, solely to save money, contract out personal services for work that is provided by civil service employees. (76 Ops. Cal. Atty. Gen. 86 (1993).) However, there is statutory authority to contract out for enumerated "special services." But even when the "special services" exception applies, only those employees who are specifically trained, experienced and expert to perform those services can be replaced with contract employees. Unlike the limitation for general law counties, this bill does not, in its current form, prevent courts from contracting out services that are not "special services." It simply requires due diligence standards before permitting courts to contract out judicial functions. SB 682 Page 10 The Bill Provides Eleven Exemptions to Ensure That Courts Can Operate Effectively and Efficiently. In order to ensure that the trial courts can operate effectively, the bill provides eleven exemptions to permit contracting out of court services without having to go through the due diligence review outlined above. These exemptions, which are similar to exemptions provided to some other government entities, are: Contracts with other governmental entities: Contracts between a trial court and another trial court or a local government entity for services to be performed by employees of that trial court or local government entity; New functions: Contracts for a new trial court function for which the Legislature has authorized that services be performed by independent contractors; Technical services: Services contracted for that are of such a highly specialized or technical nature that necessary expertise cannot be obtained from court employees; Purchase of property: Services incidental to a contract for purchase of property, except for contracts to operate equipment or computers (other than service or maintenance agreements); Conflict of interest: Contracts needed to protect against conflict of interest or ensure independent unbiased findings; Emergencies: Emergency situations; Training: Training courses when qualified instructors not available from court employees; Difficult to access location: Contracts for provision of equipment, materials or support services that cannot be feasibly provided by the trial court in that location, although this provision does not permit services to reopen a closed courthouse or for the ongoing operation of a courthouse; Urgent, temporary or occasional services: Services that are of such an urgent, temporary or occasional nature that delay in hiring employees would frustrate their very purpose, but this provision does not apply to court reporters; however, individual pro tempore court reporters may be used as SB 682 Page 11 appropriate; Developmentally disabled individuals: Contracts for services with individuals with developmental disabilities pursuant to rehabilitation programs; and Court interpreters: Contracts for services of court interpreters. Now More Than Ever Scare Court Resources Must Be Expended Prudently to Help Ensure Justice for All. Historically, trial courts in California were county entities, funded by the counties. In 1997, after significant problems came to light with the county-based court funding model, the Legislature passed the Lockyer-Isenberg Trial Court Funding Act, AB 233 (Escutia and Pringle), Chap. 850, Stats. 1997. Under that bill, the state assumed responsibility for funding the courts and helping ensure equal access to a quality judicial system statewide. After the state took over funding, the courts received significant funding increases and historically underfunded courts saw greater increases. Unfortunately, the recession forced significant reductions in state General Fund support for the courts, but "one-time" fixes, backfills and new revenues spared the court system the full brunt of the General Fund reductions. Nevertheless the state's trial courts and their employees, and all court users in the state, have been experiencing tragic reductions in court services and basic access to justice. Trial courts have taken dramatic and painful steps to address the budget cuts, including 1) closing courthouses and courtrooms, some on selected days and others completely; 2) laying off or furloughing employees; and 3) reducing services, including substantial cuts to self-help and family law facilitator assistance, and providing fewer court reporters and court interpreters. While this year's budget increased trial court funding by $129 million and the 2015-16 budget includes an additional $166 million for the trial courts on top of last year's $129 million, one-time fixes have expired and large SB 682 Page 12 reserves have been eliminated. As a result, courts could still be looking for additional ways to reduce expenditures, unless there is an infusion of additional funds. Courts may therefore understandably be tempted to consider contracting out important court functions in an attempt to reduce expenses. If this is the case, it is important to ensure that such contracting out will actually save the courts money and continue to strongly protect the integrity of the judicial system. According to the author, this bill proposes to do exactly that. Concerns Raised by Recent State Audits of Judicial Branch Procurements. The 2011 public safety budget trailer bill, SB 92 (Committee on Budget and Fiscal Review), Chap. 36, Stats. 2011, mandated that the State Auditor audit the trial courts and the Administrative Office of the Courts (AOC, since renamed by the Judicial Council as the Judicial Council) on a regular basis. Two years ago, the Auditor did a pilot audit on the goods and services procurement practices of six trial courts and reported its findings in Judicial Branch Procurement: Six Superior Courts Generally Complied With the Judicial Branch Contracting Law, but They Could Improve Some Policies and Practices (March 2013). While noting that the six courts audited - Napa, Orange, Sacramento, Stanislaus, Sutter and Yuba - "generally demonstrated good contracting practices," the Auditor uncovered instances where courts used sole-source contracts for which there was no justification, managers approved contracts for amounts above their authority, and inaccurate cost data were reported. The audit summed up the problems: "Each of the issues described here appears to be an isolated lapse in policy rather than a systemic failure. However, when courts do not comply with the judicial contracting manual and other state procurement requirements, they risk not receiving the best price for goods and services." (Id. at 3.) Creating more transparency and more accountability before contracting out for services should help ensure that the courts receive the best price. SB 682 Page 13 The State Auditor again audited the AOC and the courts in late 2013 and again discovered procurement problems, noting that some courts "did not consistently use a competitive process to procure goods and services. . . . [F]our of the judicial entities could not demonstrate that they competitively procured goods or services in five of the 15 instances we reviewed for which competition was required." The State Auditor also found that the AOC did not always correctly evaluate bids for competitive procurements and "the AOC and the judicial entities did not properly document their justifications for using sole-source procurements rather than a competitive process in nine instances totaling $1.6 million." (State Auditor, Semiannual Reports to the Legislature Are of Limited Usefulness, Information Systems Have Weak Controls, and Certain Improvements in Procurement Practices Are Needed 2 (December 2013).) In that same audit, the State Auditor uncovered "pervasive weaknesses in the general controls-which include the key control categories of security management, access controls, and contingency planning- that affect the AOC's and superior courts' information systems, including Oracle and Phoenix. We also noted deficiencies in the Phoenix application's general controls related to access and business process application controls related to procurement and accounts payable activities. The results of our review indicate that there is an unacceptably high risk that reliance on data from the applications the AOC and superior courts currently use to perform their day-to-day operations could lead to an incorrect or improper conclusion." (State Auditor letter to the Governor, President pro Tempore of the Senate and Speaker of the Assembly (March 2014).) The State Auditor was concerned enough about these deficiencies to send a special letter to the Governor and legislative leaders about this just last year: "We are issuing this letter because we believe it is important that the governor and Legislature be made aware of the specific details related to the weaknesses we identified." (Id.) SB 682 Page 14 In the most recent audit completed at the end of last year, the State Auditor again found problems with procurement and found that none of the courts audited "fully complied with the judicial contracting manual's guidance." (State Auditor, Judicial Branch Procurement: Five Superior Courts Did Not Consistently Follow Judicial Branch Contracting Practices 1 (Nov. 2013).) The Auditor discovered that two of the courts audited (Fresno and Yuba) made contract payments without proper authorization and one court -- Alameda -- failed to authorize any payment reviewed by the Auditor, which resulted in an overpayment to one vendor. Additionally all five courts audited -- the above three, along with Butte and San Luis Obispo -- failed to properly document justification for noncompetitive (sole-source) contracting. Without the documentation, there is no guarantee that these contracts are reasonably or fairly priced. (Id.) Placer Court Has Contracted Out All of Its Court Reporting, Although it is Unclear if There Are Any Savings. In 2012, the Placer Superior Court went so far as to lay off all its court reporters and contract out all of their work to private court reporters. The Placer Court states that the contract resulted in approximately $600,000 in savings in the 2013-14 fiscal year. However, according to the sponsors, court employees agreed to reduce their wages and benefits to the level of the private contract and attain the $600,000 annual savings, but the Placer Court nevertheless pursued the private contract even though there were apparently no longer savings. The Placer Court disputes the claims and believes that the contract resulted in overall savings to the court. Additionally, the contract has not increased either the number or type of cases for which court reporters are present. Thus, court reporting in all cases in Placer County, including juvenile court cases, which are closed to the public, is now performed by a private, for-profit company. Given the questionable savings, lack of increased court reporter coverage, SB 682 Page 15 and the critical and sensitive nature of making the official record, it is reasonable to question whether this private contract was actually in the public's best interest. This bill would help ensure that future contracts of this sort not only save money for the courts, but most importantly, are also in the public's interest. In Order to Protect the Integrity of Our Courts, It Could Be Reasonably Argued the Due Diligence Standards Need to Be Even Higher Than in Other Areas of Government, Although, Understanding the Budget Pressures on the Courts, This Bill Currently Keeps the Same Standards. Given the importance of the courts as a cornerstone of our democracy, sponsor SEIU states that the level of due diligence necessary before trial court services can be privatized should be higher than for other government entities: Being a nation of laws, a fair and impartial judicial system that is accessible to all 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. SB 682 correctly places the burden of altering one of the most essential public services on those advocating it. Additionally, profit should never be associated with any aspect of fair review and rights to redress in an impartial judicial system that should be accessible to all people. As noted, however, this bill does not mandate a higher standard to be realized before important court functions can be privatized. It simply requires the same due diligence to be used that is already required for other government functions. SB 682 Page 16 Similar Legislation Has Stalled in the Last Two Years. Last year, AB 2332 (Wieckowski), which was similar to this bill, passed the Assembly and the Senate Judiciary Committee, but was held on the Senate Appropriations Committee suspense file. In 2013, the Governor vetoed AB 566 (Wieckowski), which also was similar to this bill. In his veto message, the Governor stated: 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 face these challenges. This bill seeks to address the Governor's concerns -- and the issues in the Senate Appropriations Committee -- by increasing the exemptions, narrowing the scope of contracts to which the bill applies, and making the requirements of the bill nearly identical to the limitations that today apply to state agencies. For example, like existing state agency statute -- Government Code Section 19130 -- this bill requires the trial court to clearly demonstrate that the contract will result in actual overall cost savings to the trial court, as specified. Unlike AB 2332 and AB 566, however, this bill does not additionally require that the actual cost savings must be for the duration of SB 682 Page 17 the entire contract as compared with the trial court's actual costs of providing the same services. Additionally, unlike its predecessors, this bill does not impose additional standards for contracts over $100,000. Judicial Council Opposes the Bill Unless Amended and its Proposed Amendments Would Significantly Reduce the Effect of the Bill and Significantly Depart From the Contracting Limitations that Apply to Other State Agencies. The Judicial Council opposes the bill because it would "severely hamper the trial courts' ability to contract for personal services," and requests amendments which would greatly change the scope of the bill and the personal services to which the law would apply. The proposed amendments would also create a contracting rule that would be substantially different from the rules that now apply to state agencies, schools and libraries. As discussed above, the current version of the bill is almost identical to the law that applies to state agencies. The Judicial Council requests amendments that would completely change that and greatly expand, from the current version of the bill, the courts' ability to privatize key court functions. The key concerns raised by Judicial Council are that the bill: 1) is too prescriptive and will make it impossible to contract out for services; 2) has language applying to services "currently or customarily" performed by trial court employees that is vague and could impact existing contracts when they come up for renewal or extension; 3) inhibits a court's ability to manage its staff and resources; 4) reduces local control; 5) conflicts with the Judicial Branch Contracting Manual; and 6) affects circumstances that are more appropriately addressed through collective bargaining at the local level. In particular, the Judicial Council believes that the bill's language, applying to contracts for services currently or customarily performed by trial court employees is problematic SB 682 Page 18 because the term customarily is not defined in the bill and could be read to bring back in all sorts of services that have been contracted out for years. The Judicial Council requests the word customarily be deleted or that all existing contracts be "grandfathered in." The author responds that the word "customarily" has a settled legal meaning, defined as "usually, habitually, according to the customs, general practice or usual order of things, regularly." (Jones v. Robertson (1947) 79 Cal.App.2d 813, 818-19; Black's Law Dictionary 462 (4th ed. 1951).) Additionally, the word appears in similar statutes without a definition (Education Code Sections 45103.1, 88003.1), so adding a definition of "customarily" in this bill would raise questions about whether the word means something different than what it means in the other statutes. Moreover, continues the author, the bill was amended in the Senate specifically to remove renewals and extensions from the bill, making clear the bill does not apply to existing contracts. However, an explicit grandfathering clause would create "evergreen" contracts, which could allow existing contracts to exist in perpetuity without review. In the past few years, the Legislature has taken action to either eliminate or reduce the potential for these contracts. The author writes that "[a]llowing them in the judicial branch is particularly imprudent given the critical nature of trial court services and because the branch has a poor history of managing contracts to ensure quality services and containing costs." Proposed Amendment: The author does concede that one of Judicial Council's requested amendments makes the bill better and agrees to amend the bill accordingly. Currently the bill exempts any contract between a trial court and another trial court or a local government entity from the due diligence standards. However, this exemption is too narrow and would not permit a court to contract with the, say, Judicial Council for SB 682 Page 19 the provision of various services or the Franchise Tax Board for assistance with debt collection. Therefore, the author rightly proposes to eliminate the word "local" from that provision and allow courts to contract with all government entities without having to comply with the due diligence requirements. This is accomplished by the following amendments: 1. On page 4, line 10, delete "local" 2. On page 4, line 11, delete "local" ARGUMENTS IN SUPPORT: In support of the bill, the California Labor Federation writes: 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, 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. California requires due diligence standards be satisfied in all sectors of government prior to privatization of public services. However, 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 interest. Laborers' Locals 777 & 792 add their concerns that critically SB 682 Page 20 important court services, often involving confidential information, should not be privatized just potentially to save money, at the expense of the justice system: As a result of substantial budget cuts to the trial courts, and as a means to reduce costs, some courts have begun providing or are considering providing critically important services to the public via private services. This includes privatizing the handling and maintenance of private, confidential and sensitive information contained in official court records. Given the important work done by the trial courts, the sensitivity of the information that is processes and maintained, and the sanctity of the rights of public court consumers, the contracting out of court work should never be used as a cost saving measure. ARGUMENTS IN OPPOSITION: In opposition to the bill, the Los Angeles Superior Court writes: The Legislature has established a decentralized system of trial court management that appropriately provides for countywide administration of the courts, with local personnel plans and with local control and discretion over trial court management. Within the constraints of the California Judicial Branch Contract Law, the Trial Court Employment Protection and Governance Act, and local employee bargaining agreements, each local trial court has the responsibility and the authority to decide when and to what extent contracting for services is the most effective, efficient and responsible use of resources. SB 682 would contravene this well-considered approach, and would effectively substitute overly broad statewide limitations on contracts for personal services. Adds the California Chamber of Commerce: SB 682 Page 21 A functioning judicial system is important for all members of the public, including businesses. . . . SB 682 would restrict a trial court from utilizing a private contractor for duties that are "currently or customarily" performed by trial court employees, unless the trial court can "clearly demonstrate" actual cost savings, not including existing overhead costs or contractors' lower wages or benefits. This provision restricts courts from using their reduced budgets in the most efficient manner possible in order to provide necessary services for all members of the public, and will potentially interfere with existing contracts. We believe 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. REGISTERED SUPPORT / OPPOSITION: Support American Federation of State, County and Municipal Employees, AFL-CIO (co-sponsor) Laborers' Locals 777 and 792 (co-sponsor) Orange County Employees Association (co-sponsor) Service Employees International Union (co-sponsor) California Court Reporters Association California Labor Federation California Official Court Reporters Association California Professional Firefighters California State Sheriffs' Association SB 682 Page 22 Glendale City Employees Association Organization of SMUD Employees Professional and Technical Engineers, IFPTE Local 21 San Bernardino Public Employees Association San Diego County Court Employees Association San Luis Obispo County Employees Association Opposition California Chamber of Commerce Judicial Council (unless amended) Los Angeles Superior Court Analysis Prepared by:Leora Gershenzon / JUD. / (916) 319-2334