BILL ANALYSIS                                                                                                                                                                                                    



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          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  








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          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  








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               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  








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               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.










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          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  








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            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.









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          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.









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          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,  








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          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.










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          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  








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            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  








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          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.










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          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.)  










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          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,  








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          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.








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          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  








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          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  








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          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  








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          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  








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          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:








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               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








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          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