BILL ANALYSIS �
AB 2508
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2508 (Bonilla)
As Amended August 24, 2012
Majority vote
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|ASSEMBLY: |50-24|(May 30, 2012) |SENATE: |31-3 |(August 29, |
| | | | | |2012) |
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Original Committee Reference: B.,P. & C.P.
SUMMARY : Requires a state agency contracting for call center
services for public benefit programs only serving applicants,
recipients, or enrollees in those public benefits programs to
certify that the work will be performed solely by workers
employed in California.
The Senate amendments :
1)Delete the provision that a contractor's certification be made
under penalty of perjury.
2)Impose a civil penalty up to $10,000 against a contractor who
knowingly provides false information in a certification.
3)Exempt subcontractors who indirectly provide services to the
call centers from the requirement that the work be performed
solely by workers employed in California.
4)Delete language that would exempt a state agency from in-state
work requirements for specified call centers if the Governor
waives those requirements during a state of emergency.
5)Authorize, instead of require, a state agency to terminate a
contract when a contractor uses out-of-state workers.
6)Exempt a state agency from in-state work requirements for
specified call centers if the California Health and Human
Services Agency (CHHS) or the board of the California Health
Benefit Exchange (HBEX) make any of the following
determinations:
a) A prior solicitation was conducted and the bids received
were priced unreasonably high as a result of including this
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bill's provisions;
b) A prior solicitation was conducted and fewer than two
bids were received as a result of including this bill's
provisions; or,
c) The services are needed in cases of emergency where
immediate acquisition is necessary for the protection of
public health, welfare, or safety.
7)Require the CHHS or HBEX, when determining that a state agency
shall be exempt from the in-state work requirements for
specified call centers, to submit a report with the reason for
the determination to specified legislative committees by a
specified date.
8)Specify that a contractor who uses out-of-state workers shall
pay a penalty to the state agency in an amount equal to the
percentage of work performed by out-of-state workers, in
addition to any other applicable civil penalty.
9)Provide that nothing in this bill shall be construed to
conflict with federal law.
10)Make technical and clarifying changes.
AS PASSED BY THE ASSEMBLY , this bill prohibited a state agency
authorized to contract for public benefits programs from
contracting for call center services for those programs, unless
a contractor certifies under penalty of perjury that the work
will be performed solely by workers employed in California.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)By requiring state agencies to only contract for call center
services that will be performed in the state, the bill will
potentially increase costs to state agencies. Because wages
and other costs tend to be higher in California than in
surrounding states or countries, the cost of call center
services provided in California is likely to be higher than
services provided in lower cost states or countries. The size
of this impact is unknown and would depend on future contract
proposals.
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2)To the extent the bill requires jobs to be located in
California, the bill will increase state tax revenues.
According to the Board of Equalization and the Franchise Tax
Board, the average private sector job is responsible for about
$3,600 per year in General Fund (GF) tax revenue.
The net fiscal impact of the bill is uncertain. Whether the net
fiscal impact to the state is positive or negative would depend
on the relative cost difference between providing services in
California versus other states or countries.
For example, the state's Medi-Cal program is generally funded
with 50% GF and 50% federal funds. If the cost gap for call
center operations between California and a neighboring state is
more than $7,200 per job per year, the state would save more
money contracting for out-of-state services ($3,600) than it
would gain from GF tax revenues. If the cost gap is less, the
state would receive more in taxes than the cost savings. For
programs with greater state funding (or which are funded by
block grants) the cost gap at which the state would break even
would be narrower.
COMMENTS : According to the author's office, "Both the
Schwarzenegger and the Davis Administrations approved two
separate vendor contracts, for the �CalFRESH] food stamp
programs, that subcontracted with out-of country call centers.
Currently, �one of the] call center�s] is located in Juarez,
Mexico, where workers there provide assistance to Californians
who receive California Work Opportunity and Responsibility to
Kids (CalWORKS) or CalFRESH benefits. Approximately four
million Californians are currently receiving CalFRESH benefits
as a result of the ongoing recession and the increase in
unemployment and underemployment? Public assistance and health
benefit programs are funded for the purpose of helping people
who are unable to work or unable to find work. State and
federal funds to administer programs designed to create jobs
should be spent on creating jobs in California, not in other
countries."
Major CHHS programs include income support for CalWORKs
recipients, low-cost public health insurance (Healthy Families)
for children from working families, Medi-Cal, and CalFRESH.
This bill was amended by the author in the Senate Appropriations
Committee to exempt state agencies that the CHHS or CBEX
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determines, and certain subcontracted services, such as
information technology services, in contracts for call center
services for public benefit programs, from the requirement that
the work be performed solely by workers employed in California.
This bill authorizes, instead of requires, a state agency to
terminate a contract when a contractor uses out-of-state
workers.
This bill as amended in the Senate, is consistent with Assembly
actions.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
FN: 0005738