BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 682| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 682 Author: Leno (D), et al. Amended: 8/31/15 Vote: 21 SENATE JUDICIARY COMMITTEE: 5-1, 4/28/15 AYES: Jackson, Hertzberg, Leno, Monning, Wieckowski NOES: Anderson NO VOTE RECORDED: Moorlach SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15 AYES: Lara, Beall, Hill, Leyva, Mendoza NOES: Bates, Nielsen SENATE FLOOR: 24-14, 6/2/15 AYES: Allen, Beall, Block, De León, Galgiani, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan, Pavley, Wieckowski, Wolk NOES: Anderson, Bates, Berryhill, Fuller, Gaines, Glazer, Huff, Moorlach, Morrell, Nguyen, Nielsen, Roth, Runner, Vidak NO VOTE RECORDED: Cannella, Stone ASSEMBLY FLOOR: 51-28, 9/02/15 - See last page for vote SUBJECT: Courts SOURCE: American Federation of State, County and Municipal Employees, AFL-CIO Laborers Locals 777 and 792 Orange County Employees Association Service Employees International Union SB 682 Page 2 DIGEST: This bill requires a trial court to meet certain standards if it intends to enter into a contract for any services that are currently or have been customarily performed by that trial court's employees, except as specified. Assembly Amendments 1) require that the contract comply with any additional requirements imposed by the Judicial Branch Contracting Manual, as specified; 2) expand and clarify the exceptions to the contracting out requirements; 3) remove requirements for contracts entered into, renewed, or extended between July 1, 2015 and December 31, 2015; and 4) make other technical or clarifying changes. ANALYSIS: Existing law: 1)Permits a state agency to contract out for personal services only if specified standards are satisfied, including, among other things: The agency clearly demonstrates actual overall cost savings, as specified; Proposals to contract out are not approved solely on the basis that savings will result from lower contractor pay rates or benefits, except that proposals to contract out work are eligible for approval if the contractor's wages are at the industry's level and do not significantly undercut state pay rates; The contract does not displace civil service employees, as specified; The savings are large enough to ensure they will not be eliminated by cost fluctuations that could normally be expected during the contracting period; SB 682 Page 3 The amount of savings clearly justify the size and duration of the agreement; The contract is awarded through a publicized, competitive bidding process; The potential economic advantage of contracting is not outweighed by the public's interest in having a particular function performed directly by state government. 1)Exempts personal services contracting from the above requirements under specified circumstances, including, among other things, where: The contract is for a new state function and the Legislature has specifically mandated or authorized the performance of the work by independent contractors; The services contracted are not available within civil service, cannot be performed satisfactorily by civil service employees, or are of such a highly specialized or technical nature that the necessary expert knowledge, experience, and ability are not available through the civil service system; The services are incidental to a contract for the purchase or lease of real or personal property; The legislative, administrative, or legal goals and purposes cannot be accomplished through the utilization of persons selected pursuant to the regular civil service system, as specified; The nature of the work is such that specified existing law standards for emergency appointments apply; The contractor will provide equipment, materials, facilities, or support services that the state could not feasibly provide in the location where the services are to be performed; SB 682 Page 4 The services are of such an urgent, temporary, or occasional nature that the delay incumbent in their implementation under civil service would frustrate their very purpose. This bill: 1)Provides that the purpose of its provisions is to establish standards when a trial court intends to enter into a contract for any services that are currently or have been customarily performed by that trial court's employees and generally authorizes a trial court to contract for such services to achieve cost savings in that trial court if all of the following conditions are met: The trial court clearly demonstrates that the proposed contract will result in actual overall cost savings to the trial court, as specified; The contract shall not be approved solely on the basis that savings will result from lower contractor pay rates or benefits, except contracts shall be eligible for approval if the contractor's wages are at the industry level and do not significantly undercut trial court pay rates; The contract does not displace trial court employees, as specified; The savings are large enough to ensure they will not be eliminated by private sector and trial court cost fluctuations that could normally be expected during the contracting period; The amount of savings clearly justifies the size and duration of the contracting agreement; The contract is awarded through a publicized, competitive bidding process; SB 682 Page 5 The contract includes specific provisions pertaining to the qualifications of the staff that will perform the work under the contract, and assurance that the contractor's hiring practices meet applicable nondiscrimination standards; The potential for future economic risk to the trial court from potential contractor rate increases is minimal; The contract is with a "firm," as defined; The potential economic advantage of contracting out is not outweighed by the public's interest in having a particular function performed directly by the trial court; and The contract shall comply with any additional requirements imposed by the Judicial Branch Contracting Manual, as specified. 1)Exempts contracts from the above requirements if: The contract is for a new trial court function and the Legislature has specifically mandated or authorized the performance of the work by independent contractors; The contract is between a trial court and another trial court or a government entity for services to be performed by employees of the other trial court or employees of the government entity; The services contracted for cannot be satisfactorily performed by trial court employees, or are of such a highly specialized or technical nature that the necessary expert knowledge, experience, and ability cannot be obtained from the court's trial court employees; The services are incidental to a contract for the purchase or lease of real or personal property; SB 682 Page 6 The legislative, administrative, or legal goals and purposes cannot be accomplished through the utilization of trial court employees for specified reasons. These contracts shall include, but not be limited to, obtaining expert witnesses in litigation; Due to an emergency, a contract is necessary for the immediate preservation of the public health, welfare, or safety; The contractor will conduct training courses for which appropriately qualified trial court employee instructors are not available from the court, provided that permanent instructor positions shall be filled through the process for hiring trial court employees; The contractor will provide equipment, materials, facilities, or support services that could not feasibly be provided by the trial court in the location where the services are to be performed, except as specified; The services are of such an urgent, temporary, or occasional nature that the delay incumbent in their implementation through the process for hiring trial court employees would frustrate their very purpose, except as specified; The contract is a personal services contract developed pursuant to rehabilitation programs, as specified, or pursuant to a program vendored or contracted through a regional center or the Statement Department of Developmental Services, as specified, and the contract will not cause an existing trial court employee to incur a loss of his or her employment or employment seniority; a reduction in wages, benefits, or hours; or an involuntary transfer to a new location requiring a change in residence; The contract is for the services of any court interpreter, which shall be governed by specified laws, and any memorandum of understanding or agreement entered into SB 682 Page 7 pursuant to those acts, as specified; or The contract is for services provided to a court by a traffic assistance program, as specified. 1)Includes a severability clause. Background Under California law, most governmental entities can use personal services contracts (i.e. contracting out) to achieve cost savings only if specified standards are satisfied, chief among them being that the entity clearly demonstrates actual overall cost savings based upon certain information. These entities include executive branch agencies, public schools, community colleges, and libraries. In recent years, California's judicial branch has experienced catastrophic budget reductions that have crippled California's court system by, among other things, forcing the closure of courts and self-help centers, which has resulted in delayed access to justice for a large number of Californians. In response, many courts have begun seeking ways in which to operationalize those budget reductions. According to information provided to this Committee by the Judicial Council of California, examples of services that trial courts currently contract out for include: court reporters; interpreters; child custody evaluations; probate investigations; family law facilitators; minor's counsel in dependency cases; child custody mediation services; mediators/alternative dispute resolution; security guards; personnel services; payroll; information services; collections; adoption investigation services; services for self-represented litigants; labor negotiation services; transcripts for electronically recorded proceedings; and more. Over the last two years, bills have been introduced in an effort to impose various contracting out standards upon the trial SB 682 Page 8 courts. The first bill, AB 566 (Wieckowski, 2013) was ultimately vetoed by the Governor, and the second bill, AB 2332 (Wieckowski, 2014) died on the Senate Appropriations Committee's Suspense File. This bill similarly seeks to impose certain standards upon courts when entering into contracts for services currently or customarily performed by the trial court's employees, largely based upon standards imposed on state agencies. Comment As stated by the author: The major government entities in California either face explicit limits (cities and counties) on privatization of public services or must meet due diligence requirements (State, community colleges, K-12 school districts, libraries) prior to privatizing their services. Historically, trial courts in California were county entities, funded by the [c]ounties and thus subject to the privatization restrictions that applied to [c]ounties. But in 1997, the Legislature passed the Lockyer-Isenberg Trial Court Funding Act [ . . . ] and shifted the responsibility for funding from the [c]ounties to the State. Subsequently, many of the laws that had previously applied to the trial courts no longer applied once they were removed from the [c]ounties' jurisdictions, such as open meetings, access to public records, whistleblower protections, public contract code requirements for contracting purposes and provisions relating to privatization. As a result of recent budget cuts to the trial courts, some courts have sought alternative ways to provide critically important services to the public, including privatizing some of the most sensitive services that help preserve the integrity of our impartial trial court system. Alternatives SB 682 Page 9 being considered include privatizing the handling and maintenance of private, confidential and sensitive information contained in official court records. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the 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. SUPPORT: (Verified9/2/15) American Federation of State, County and Municipal Employees, AFL-CIO (co-source) Laborers' Locals 777 and 792 (co-source) Orange County Employees Association (co-source) SB 682 Page 10 Service Employees International Union (co-source) Alliance of California Judges California Court Reporters Association California Labor Federation California Professional Firefighters Center for Judicial Excellence Glendale City Employees Association Orange County Employees Association Organization of SMUD Employees San Bernardino Public Employees Association San Diego County Court Employees Association San Luis Obispo County Employees Association OPPOSITION: (Verified9/2/15) California Chamber of Commerce Judicial Council Los Angeles Superior Court Ventura County Superior Court, Presiding Judge ARGUMENTS IN SUPPORT: The Service Employees International Union (SEIU), co-sponsor of this bill, writes that "SB 682 would ensure that trial courts operate within the norms of good government practices by requiring them to show diligence prior to privatizing important trial court services." SEIU argues: [T]ax dollars have the dual responsibility of being well spent for quality services, as well as being an investment in the larger society. In fact, it could be argued that the level of accountability should be higher for trial court services. Being a nation of laws, a fair and impartial judicial system is a critical underpinning of democracy and is fundamental to the success of a civilized society. Trial court services represent a "public good," which are most effectively delivered by government and public employees. [ . . . ] SEIU also asserts that SB 682's provisions "are neither radical SB 682 Page 11 nor a departure from current law governing most other parts of government and will ensure that tax dollars are accountable. In a time of budget austerity it is even more important to ensure that scarce judicial dollars are well spent. Every misspent dollar is a dollar taken away from a taxpayers' ability to access much needed court services." ARGUMENTS IN OPPOSITION: Judicial Council takes an "oppose unless amended" position, writing that this bill would severely hamper the trial courts' ability to contract for personal services. Judicial Council writes that the bill: presumes no personal services contract is valid unless it meets one of several very limited exceptions or has achieved the impossible balance of attaining actual savings without reducing labor and benefit costs; applies to any services "currently or customarily" performed by trial court employees which is not only "overly broad, it's also vague and retroactive;" inhibits the trial courts' ability to manage their staff and resources; reduces local control and discretion over trial court management; conflicts with recent legislation regarding judicial branch contracting; and affects circumstances that are more appropriately addressed at the local level through collective bargaining agreements. Judicial Council further argues that while this bill appears to be modeled upon the Government Code section limiting contracting in the executive branch for services that could be performed by civil service employees, that "model is inappropriate for trial courts because . . . the trial courts must operate independently from one jurisdiction to the next." Additionally, unlike executive branch agencies that "can manage the amount of work they receive, the number and types of people they serve, and the services provided . . . trial courts must accept all filings form the public, have no control over the number and types of cases they must process, and have no ability to limit court SB 682 Page 12 users. [ . . . ]" ASSEMBLY FLOOR: 51-28, 9/02/15 AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Roger Hernández, Holden, Irwin, Jones-Sawyer, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Olsen, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Atkins NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Kim, Lackey, Levine, Linder, Maienschein, Mathis, Mayes, Melendez, Obernolte, Patterson, Steinorth, Wagner, Waldron, Wilk NO VOTE RECORDED: Gray Prepared by:Ronak Daylami / JUD. / (916) 651-4113 9/2/15 15:53:19 **** END ****