BILL ANALYSIS                                                                                                                                                                                                    Ó




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                                        VETO 


          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

           SENATE FLOOR:  25-15, 9/3/15
           AYES:  Allen, Beall, Block, De León, Galgiani, Hall, Hancock,  
            Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leno, Leyva,  
            Liu, McGuire, Mendoza, Mitchell, Monning, Pan, Pavley, Roth,  
            Wieckowski, Wolk
           NOES:  Anderson, Bates, Berryhill, Cannella, Fuller, Gaines,  
            Glazer, Huff, Moorlach, Morrell, Nguyen, Nielsen, Runner,  
            Stone, Vidak

           ASSEMBLY FLOOR:  51-28, 9/2/15 - See last page for vote

           SUBJECT:   Courts








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


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


          ANALYSIS:   


          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;








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                 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  








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               be performed; 

                 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,  








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               competitive bidding process; 

                 The contract includes specific provisions pertaining to  
               the qualifications of the staff that will perform the work  
               under the contract, and assurance that the contractor's  
               hiring practices meet applicable nondiscrimination  
               standards;

                 The potential for future economic risk to the trial  
               court from potential contractor rate increases is minimal;

                 The contract is with a "firm," as defined; 

                 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; 








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                 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  








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               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  








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          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.   


          Comments


          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  








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            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:   (Verified10/20/15)


          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)








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          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:   (Verified10/20/15)


          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  








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          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  








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          users. [ . . . ]" 


          GOVERNOR'S VETO MESSAGE:


               I am returning Senate Bill 682 without my signature.

               This bill requires trial courts to meet specified standards  
               when entering into personal service contracts, and provide  
               an analysis of all such contracts, to the Legislature.

               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. 

          ASSEMBLY FLOOR:  51-28, 9/2/15
          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








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          NO VOTE RECORDED:  Gray


           Prepared by:Ronak Daylami / JUD. / (916) 651-4113
          11/4/15 14:01:16


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