BILL ANALYSIS �
AB 2332
Page 1
ASSEMBLY THIRD READING
AB 2332 (Wieckowski)
As Amended May 23, 2014
Majority vote
JUDICIARY 7-3 APPROPRIATIONS 12-5
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|Ayes:|Wieckowski, Alejo, Chau, |Ayes:|Gatto, Bocanegra, |
| |Dickinson, Garcia, | |Bradford, |
| |Muratsuchi, Stone | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Holden, |
| | | |Pan, Quirk, |
| | | |Ridley-Thomas, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Wagner, Gorell, |Nays:|Bigelow, Donnelly, Jones, |
| |Maienschein | |Linder, Wagner |
| | | | |
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SUMMARY : Requires courts to comply with specified requirements
before contracting out services currently or customarily
performed by trial court employees. Specifically, this bill :
1)Provides that if a trial court seeks, on or after January 1,
2015, to enter into a contract, or renew or extend an existing
contract, for services currently or customarily performed by
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 for the
duration of the contract, considering specified factors, as
provided.
c) The contract shall 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
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not 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 practicing 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 is limited to no more than five years.
2)Does not preclude a trial court or the Judicial Council from
adopting more restrictive rules regarding contracting of court
services.
3)Provides that the requirements for contracting out in 1)
above, do not apply to:
a) Contracts between a trial court and another trial court
or a local government entity for services to be performed
by employees of that trial court or local 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
cannot be obtained from court employees;
d) Services incidental to a contract for purchase of
property, except for contracts to operate equipment or
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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 are 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.
4)Requires each trial court that enters into a personal services
contract between July 1, 2014, and January 1, 2015, with a
term beyond March 1, 2015, to report to the Legislature by
February 1, 2015, 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 3)
above.
5)Contains a severability clause.
EXISTING LAW :
1)Provides that employees of the state be appointed through the
civil service system. (California Constitution, Article VII,
Section 1.)
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
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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.
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 Assembly Appropriations
Committee:
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1)Unknown, potentially significant costs to the extent standards
established by this bill limit the courts' ability to
negotiate contracts for services. The courts will also incur
administrative costs to demonstrate that a decision to
contract-out for services is allowable, and to provide the
specified additional information and performance audit for
contracts exceeding $100,000.
2)Offsetting a portion of the above costs will be savings in
cases where the decisions to continue or resume performing
functions with court employees is more cost effective.
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. Three 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 seeks to extend these same due
diligence protections to the trial courts.
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 judicial process: "AB 2332 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, almost
verbatim, identical to requirements today that apply to all
state agencies, as well as schools, community colleges and
libraries. Like the courts, these entities, with the exception
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of the libraries, receive the bulk of their funding from and
through the state. In order to ensure that the trial courts can
operate effectively, the bill provides 10 exemptions that permit
contracting out of court services without having to go through
the due diligence review.
This bill is substantially similar to AB 566 (Wieckowski) of
2013, which passed the Legislature but was vetoed by the
Governor. This bill seeks to address the Governor's concerns
by, most specifically, narrowing the scope of contracts to which
the bill applies. Like this bill, last year's bill applied to
all services currently or customarily done by trial court
employees, but then defined customarily as "historically," which
potentially implicated many long-standing contracts. This bill
does not do that and thus should significantly reduce the reach
of the bill.
Analysis Prepared by : Leora Gershenzon / JUD. / (916) 319-2334
FN: 0003720