BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 2332 (Wieckowski) - Courts: personal service contracts.
Amended: July 1, 2014 Policy Vote: Judiciary 5-2
Urgency: No Mandate: No
Hearing Date: August 4, 2014
Consultant: Jolie Onodera
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 2332 would establish standards for the use of
contracts by the trial courts for all services currently or
customarily performed by that trial court's employees, as
specified. This bill would restrict the use of personal services
contracts to those resulting in actual overall cost savings to
the trial court for the duration of the entire contract,
permitting contracts only if specified conditions are met.
Fiscal Impact:
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.
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.
(See Staff Comments)
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.
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)
Background: Under existing law, most governmental entities are
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authorized to utilize personal services contracts 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 response to significant budget reductions experienced by the
courts over the past five years, many courts have sought
alternative ways to provide services to the public with limited
resources, including the use of personal services contracts.
Examples of services that trial courts currently contract out
for include court reporters, court interpreters, child custody
evaluations, probate investigations, family law facilitators,
minors' counsel in dependency cases, child custody mediation
services, security guards, personnel services, payroll,
information services, collections, labor negotiation services,
and transcripts for electronically recorded proceedings.
This bill seeks to authorize the use of service contracts
subject to specified contracting standards such as competitive
bidding, performance standards, and financial audits.
Proposed Law: This bill would provide that if a trial court
intends to enter into a contract for any services that are
currently or customarily performed by that trial court's
employees, all of the following requirements shall apply:
The trial court shall clearly demonstrate that the
contract will result in actual overall cost savings to the
court for the duration of the entire contract as compared
with the court's actual costs of providing the same
services, 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 are eligible for approval if the
contractor's wages are at the industry level and do not
undercut trial court pay rates.
The contract cannot 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 cannot be approved if, in light of the
services provided by trial courts and the special nature of
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the judicial function, it would be inconsistent with the
public interest to have the services performed by a private
entity.
The contract must be awarded through a publicized,
competitive bidding process.
The contract must include specific provisions pertaining
to the qualifications of the staff that will perform the
work under the contract, as well as assurances that the
contractor's hiring practices meet applicable
nondiscrimination standards.
The contract must provide that it may be terminated at
any time by the trial court without penalty if there is a
material breach of the contract and notice is provided
within 30 days of termination.
The term of the contract shall not be more than five
years from the date on which the trial court approves the
contract.
Provides that the bill's provisions do not preclude a
trial court or the Judicial Council from adopting more
restrictive rules regarding the contracting of court
services.
This bill provides that the provisions of the bill do not apply
to a contract under specified circumstances such as if the
contract is between a trial court and another trial court or a
local government entity, or the contract is for a new trial
court function and the Legislature has specifically mandated or
authorized the performance of the services by independent
contractors. Additional exemptions from the above requirements
include:
If the services contracted for 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.
Exempts "service agreements," including agreements to
service or maintain office equipment or computers that are
leased or rented, but contract agreements to operate
equipment or computers, except as necessary to service or
maintain that equipment, are not exempt.
With the exception of the services of official court
reporters, provides that the provisions of the bill do not
apply to a contract if the services are of such an urgent,
temporary, or occasional nature that the delay incumbent in
their implementation through the process for hiring trial
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court employees would frustrate their very purpose.
Provides that individual official reporters pro tempore may
be used when the criteria of this paragraph are met.
Authorizes the use of personal services contracts
developed pursuant to rehabilitation programs or programs
vendored or contracted through a regional center or the
Department of Developmental Services, and the contract will
not cause an existing trial court employee to incur a loss
of his or her employment or seniority, a reduction in
wages, benefits, or hours, or an involuntary transfer to a
new location requiring a change in residence.
Exempts contracts for services of court interpreters, as
specified.
This bill provides that the bills' provisions apply to any
contract entered into on or after January 1, 2015.
Requires each trial court to provide a report no later
than February 1, 2015, to the chairpersons of specified
legislative committees if the trial court enters into a
contract between July 1, 2014, and December 31, 2014, for
services provided or customarily provided by its trial
court employees if the contract extends beyond March 31,
2015. Provides that it is the intent of the Legislature to
consider the reduction of future budget appropriations to
each trial court by the amount of any contract analyzed
pursuant to this bill if the Legislature concludes that the
contract would not have been permissible under the new
standards.
Prior Legislation: AB 566 (Wieckowski) 2013 was similar to this
bill and was vetoed by the Governor with the following message:
I am returning Assembly Bill 566 without my signature. 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
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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.
Related Legislation: AB 438 (Williams) Chapter 611/2011 imposes
requirements, until January 1, 2019, on a city or library
district that intends to withdraw from a county free library
system and operate libraries with a private contractor.
SB 1419 (Alarcon) Chapter 894/2002 established standards for the
use of personal service contracts in California school districts
and community college districts.
AB 3336 (Ryan) Chapter 1057/1982 established standards for the
use of personal service contracts in California executive branch
agencies.
Staff Comments: This bill will require the trial courts to
convert existing contracts to court employees rather than
renewing or extending existing contracts on or after January 1,
2015, at a statewide cost potentially in the millions of dollars
(General Fund). Additionally, greater impacts could be incurred
prospectively as opportunities to increase operating
efficiencies are discouraged due to the contracting restrictions
outlined in the bill.
This bill creates a list of circumstances under which the
contract requirements of the bill do not apply. One such
exception includes services of a temporary, occasional, or
urgent nature such that the delay incumbent in their
implementation through the process for hiring trial court
employees would frustrate their very purpose. This bill also
creates an exception to this allowance, and states that this
exception does not apply to the services of official court
reporters, except individual official reporters pro tempore may
be used when the criteria above are met. In the absence of an
exception for contracting out for court reporter services,
numerous courts could incur significant additional costs
estimated in the low millions of dollars annually.
This bill requires the trial courts to demonstrate that a
decision to contract out for services is allowable under the
bill's parameters This provision of the bill is estimated to
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result in ongoing significant administrative costs to the trial
courts. Additionally, this bill requires each trial court to
provide a report to specified legislative committees on
contracts entered into between July 1, 2014 and December 31,
2014.
While modeled upon existing statutes requiring governmental
entities (executive branch agencies, public K-12 schools,
community colleges, libraries) to meet specified standards
before executing personal service contracts, this bill differs
from existing statutes under specified provisions, including the
following:
Under Government Code (GC) � 19130(a)(1), contracting
for personal services is permissible if the contracting
agency clearly demonstrates that the proposed contract will
result in actual overall cost savings to the state. Under
this bill's provisions, trial courts must clearly
demonstrate that the contract will result in actual overall
cost savings for the duration of the entire contract. This
provision appears to be a more restrictive standard for
trial courts to adhere to, as contracts that may have
greater up-front costs but cost savings in subsequent
years, resulting in overall cost savings to the trial court
over the life of the contract, would be prohibited.
Under GC � 19130(a)(2), government agency 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. Under the
provisions of this bill, trial court contracts are eligible
for approval only if the contractor's wages are at the
industry's level and do not undercut trial court pay rates.
This provision appears to be a more restrictive standard
for trial courts to adhere to than other governmental
agencies (with the exception of libraries).
The following exception is included in other personal
services contracting statutes (GC � 19130(b)(8), EC �
45103.1(b)(6), and EC � 88003.1(b)(6)), but is not included
as an exception for the trial courts: "The contractor will
provide equipment, materials, facilities, or support
services that could not feasibly be provided by the state
in the location where the services are to be performed."
Under GC � 19130(a)(6), personal services contracting is
allowable for governmental agencies if the amount of
savings clearly justify the size and duration of the
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contracting agreement. Under this bill's provisions, the
term of any contract is limited to no more than five years.
This provision appears to be a more restrictive standard
for trial courts to adhere to than the standards imposed on
state agencies and schools.
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 also
be incurred. Courts may additionally claim that because the bill
limits their ability to negotiate personal services contracts
that may result in savings, they will incur increased costs.