BILL ANALYSIS                                                                                                                                                                                                    



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          SENATE THIRD READING


          SB  
          682 (Leno)


          As Amended  August 31, 2015


          Majority vote


          SENATE VOTE:  24-14


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Judiciary       |7-3  |Mark Stone, Alejo,    |Wagner, Gallagher,  |
          |                |     |Chau, Chiu, Cristina  |Maienschein         |
          |                |     |Garcia, Holden,       |                    |
          |                |     |O'Donnell             |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |12-5 |Gomez, Bloom, Bonta,  |Bigelow, Chang,     |
          |                |     |Calderon, Nazarian,   |Gallagher, Jones,   |
          |                |     |Eggman, Eduardo       |Wagner              |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Quirk, Rendon, Weber, |                    |
          |                |     |Wood                  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 










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          SUMMARY:  Requires courts to comply with specified requirements  
          before contracting out services that are currently or  
          customarily performed by a trial court's 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 proposed  
               contract will 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 cost 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; 








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             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; and 

             aa)  The contract complies with any additional requirements  
               imposed by the Judicial Branch Contracting Manual.

          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 government entity for services to be performed  
               by employees of that trial court or 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;  










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             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; 

             aa)  Contract is for services of court interpreters; or

             bb)  Contract is for services provided to a court by a  
               traffic assistance program.

          4)Contains a severability clause.
          EXISTING LAW:


          1)Provides that employees of the state be appointed through the  
            civil service system.  
          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  








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               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.  

          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.  
          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.  


          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.  


          6)Allows a county to contract out for "special services," as  
            provided.  









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          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee: 


          1)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 and to renew or extend  
            existing contracts. (Based on a survey of the courts, the  
            Judicial Council estimates increased costs of $25 million to  
            hire employees for work currently performed by contract  
            staff.)


          2)Offsetting a portion of the above costs will be savings in  
            cases where the decision to continue or resume performing  
            functions with court employees is more cost effective.
          3)Unknown, significant loss of future savings, potentially in  
            the millions of dollars (General Fund) annually, to the extent  
            this bill restricts the ability of courts to transition to  
            technology-based services for existing court services.


          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.  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.  








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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 satisfy certain due  
          diligence requirements.  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,  
          community colleges and libraries.  In order to ensure that the  
          trial courts can operate effectively, the bill provides twelve  
          exemptions to permit contracting out of court services without  
          having to go through the due diligence review outlined above,  
          which are similar to exemptions provided to some other  
          government entities.


          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. This bill seeks to address the Governor's  
          concerns -- and the issues last year 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.  




          Analysis Prepared by:                                             
                          Leora Gershenzon / JUD. / (916) 319-2334  FN:  
          0001627














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