BILL ANALYSIS �
AB 566
Page 1
GOVERNOR'S VETO
AB 566 (Wieckowski)
As Amended September 11, 2013
2/3 vote
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| |51-25|(May 30, 2013) |SENATE: |22-12|(September 12, |
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|ASSEMBLY: | | | | | |
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|ASSEMBLY: |45-26|(September 12, | | | |
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Original Committee Reference: JUD.
SUMMARY : Requires, until January 1, 2020, a court to comply with
specified requirements before contracting out services currently or
customarily performed by that court's trial court employees.
Specifically, this bill :
1)Provides that, until January 1, 2020, if a trial court seeks to
contract for services currently or customarily, as defined,
performed by that court's trial court employees, all of the
following apply:
a) The contract may not be approved if, in light of the
services provided by the trial courts and the special nature of
the judicial function, it would be inconsistent with the public
interest to have the services performed by a private entity.
b) The court clearly demonstrates that the contract will result
in actual, overall cost savings to the court, considering
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specified factors, as provided.
c) 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 materially undercut trial court pay rates.
d) The contract does not cause existing trial court employees
to lose employment, as provided.
e) The contract is awarded through a competitive bidding
process.
f) The contract provides for qualified staff, and the
contractor's hiring practices are nondiscriminatory.
g) The contract allows for immediate termination by the trial
court, without penalty, for material breach.
h) For contracts over $100,000, requires the contract to i)
disclose specified information, ii) provide measurable
performance standards; and iii) require a performance audit and
a cost audit be done and considered prior to any contract
renewal.
i) The contract may only be awarded if the savings clearly
justify the size and duration of the contracting agreement.
2)Provides that the provisions in 1) above, do not apply to:
a) Contracts 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;
b) Contracts for a new trial court function for which the
Legislature has specifically mandated or authorized the
performance of the services by independent contractors;
c) Services contracted for that are of such a highly
specialized or technical nature that necessary expertise are
not available from court employees;
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d) Services incidental to a contract for purchase of property,
except for contracts to operate equipment or computers (other
than service or maintenance agreements);
e) Contracts needed to protect against conflict of interest or
ensure independent unbiased findings;
f) Emergency situations;
g) Training courses when qualified instructors not available
from court employees;
h) 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, except individual pro tempore court reporters may be
used as appropriate;
i) Contracts for services with individuals with developmental
disabilities pursuant to rehabilitation programs; and
j) Contracts for services of court interpreters.
3)Does not preclude a trial court or the Judicial Council from
adopting more restrictive rules regarding contracting of court
services.
4)Applies to any contract entered into, renewed or extended after
the bill's effective date.
5)Requires each trial court that enters into a personal services
contract between July 1, 2013, and the effective date of the bill,
with a term beyond March 1, 2014, to report to the Legislature by
February 1, 2014, on the contract, as provided. States the intent
of the Legislature to consider reducing future budget
appropriations to a trial court if such a contract would not have
been allowed under the terms set forth in 1) and 2), above.
6)Contains a severability clause.
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The Senate amendments add the sunset, delete the retroactive effect
of the bill, define customarily, add seven new exemptions to
contracting restrictions and require trial courts to report to the
Legislature on specified contracts.
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 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.
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.
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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.
FISCAL EFFECT : According to the Senate Appropriations Committee:
1)Unknown, significant loss of future cost savings potentially in
the millions of dollars (General Fund*) per year to the extent the
provisions of this measure restrict the ability of courts to
transition to the use of technology-based services for existing
court services, including but not limited to court reporting.
2)The amendment removing the July 1, 2012, retroactive provision but
adding the services of court reporters more broadly to be subject
to the contracting standards could still result in the potential
fiscal impact of nearly $2 million as previously indicated by the
Judicial Council. To the extent the inclusion of court reporter
services impacts additional courts that have been utilizing
electronic court reporting in limited cases, the potential fiscal
impact could potentially be greater.
3)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, including but not limited to for extended contracts
(limits contract terms to five years), pay rates, and contracts
with non-local governmental agencies.
4)Ongoing significant administrative costs (General Fund*) to the
courts to demonstrate that a decision to contract out for services
is allowable under the bill's parameters, and to provide the
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specified additional information and performance audits for
contracts exceeding $100,000.
5)To the extent the contracting restrictions expose the trial courts
to legal action from persons or groups contesting whether the
specified conditions were met, additional costs could be incurred.
*Trial Court Trust Fund (TCTF)
COMMENTS : Nearly all government entities in California are
restricted from contracting out functions customarily done by public
employees, unless specified conditions are satisfied. These
requirements are designed to ensure that not only is work done
cost-effectively, but 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 and community college
districts are also required to comply with the same standards that
apply to state departments. Just two years ago, the Legislature
passed, and the Governor signed, almost identical provisions to
limit the privatization of public libraries in AB 438 (Williams),
Chapter 611, Statutes of 2011. This bill, jointly sponsored by the
Service Employees International Union (SEIU) and the American
Federation of State, County and Municipal Employees (AFSCME), seeks
to extend these same due diligence protections to the trial courts
in a pilot program.
The author writes that this bill is necessary not only to ensure
that scarce court resources are used as effectively and efficiently
as possible, but also to protect the very integrity of the court
process: "AB 566 is consistent with the law today for the state,
school districts, community colleges, and our libraries. This bill
simply puts the trial courts on par with other important government
functions by ensuring that our tax dollars are accountable and that
the public's interest in fair and judicious courts is considered
before privatizing critical court functions."
The due diligence requirements in this bill are very similar to
requirements today that apply to all state agencies, as well as
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schools, 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.
Historically, trial courts in California were county entities,
funded by the counties, but 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), Chapter 850, Statutes of 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 have, to date, spared the court system some 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
been taking 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 the trial courts have
received an additional $60 million this year, some of the one-time
fixes are set to expire. As a result, it is anticipated that courts
may be looking for additional ways to reduce expenditures. 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.
The Placer Superior Court has reportedly gone 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
will result in $600,000 in anticipated savings in the 2013-14 fiscal
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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 savings, but the Placer Court nevertheless
pursued the private contract even though there were no longer
savings. Moreover, 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, will now be performed by a
private, for-profit company. This bill would help ensure that
future contracts of this sort not only actually save money for the
courts, but also are, most importantly, in the public's interest.
GOVERNOR'S VETO MESSAGE :
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.
Analysis Prepared by : Leora Gershenzon / JUD. / (916) 319-2334
FN: 0002909