Upon return in August from its summer recess, the California Assembly will consider the so-called “Civic Reporting Openness in Negotiations Efficiency Act” (SB 331), which passed the Senate on May 22, 2015. The bill targets the growing trend of public agencies adopting COIN (Civic Openness in Negotiations) ordinances designed to promote public awareness of the costs associated with labor negotiations. The opposite of what its title implies, SB 331 is a cynical piece of legislation designed to punish local agencies that adopt COIN ordinances, or even less stringent ordinances requiring public disclosure of benefit and long-term costs of labor contracts. Under the legislation, agencies that adopt almost any measure promoting a better understanding of their labor costs must accept onerous requirements for all public contracts over $250,000.
While many public sector labor negotiators are concerned that overly-intrusive COIN ordinances can impede the free flow of ideas at the bargaining table, the breadth of this bill may discourage even basic “sunshine” requirements that jurisdictions have adopted and may adopt in the future, to allow a more robust public understanding of labor costs.
“COIN” ORDINANCES
“Civic Openness in Negotiations” (COIN) is a relatively new policy initiative that is taking hold in California local agencies, primarily in Southern California. COIN ordinances take many forms – from minimalist to comprehensive. The common thread is that they give the public meaningful information about the content and costs of proposals made during labor negotiations. The intent of these ordinances is to increase transparency and accountability in labor negotiations and to reduce the number of expensive and inefficient proposals that do not serve the public interest.
Comprehensive COIN Ordinances, like one adopted by Orange County, require full analysis and disclosure of specific proposals before any negotiated deal is considered or approved by the elected body. However, many agencies are considering less extensive (COIN-lite) requirements, such as independent costing, a sunshine period before adoption of an MOU, and long-term analyses of costs. For more details on COIN ordinances, follow the link to our recent article in the California Employment Law Letter: http://publiclawgroup.com/wp-content/uploads/2015/07/Unions_Attempt_to_Close_Door.pdf.
SB 331
SB 331 was drafted at the behest of labor unions to target local agencies, including cities and counties that have passed COIN transparency measures. It applies to any jurisdiction that has adopted an ordinance that includes any of the following measures:
- Independent economic analysis describing the fiscal costs of benefit and pay components;
- Review by the public of the independent analysis;
- Updates of the analysis involving the annual or cumulative costs of each proposal and providing public notice thereof;
- Updates of economic analysis relating to the employer’s unfunded liability for pension or postretirement health benefits;
- Reports on negotiation offers or counteroffers that a party made in labor negotiations and disclosure of the negotiation participants;
- Updates of analysis on actuarially computed unfunded liability associated with the pension or postretirement health benefits.
An agency that adopts an ordinance requiring any of the above, must meet new requirements exceeding even the most stringent COIN ordinances for any contract for services valued over $250,000. For such contracts, the agency must:
- Use an unbiased independent auditor;
- Wait 90 days between issuance of the auditor report and agency action on the contract, with an additional 90 days before any changes in contract language may become effective;
- Disclose to the public all offers and counteroffers;
- Disclose within 24 hours any communications between agency staff and the contractor; and
- Hold a minimum of two meetings for public review and comment before adoption of the contract.
SB 331 is premised on the view that day-to-day contracts for goods and services implicate the same public policy concerns as comprehensive collective bargaining agreements. As we have been reminded in recent years, labor contracts are not only a far greater portion of agency budgets than such day to day contracts, but also impose many hidden costs, benefit increases, and may even lead to benefit vesting. SB 331’s procedural requirements would slow the procurement process for goods, increase the cost of services, and hamper the agency’s ability to obtain needed services for the public.
The breadth of contracts covered by SB 331 is also ridiculously extreme, including “accounting, financing, hardware and software maintenance, health care, human resources, human services, information technology, telecommunications, janitorial maintenance, legal services, lobbying, marketing, office equipment maintenance, passenger vehicle maintenance property leasing, public relations, public safety, social services, transportation, or waste removal.”
In short, SB 331 would impose extraordinary burdens on agencies working to promote a better public understanding of labor costs.
For additional insight into the costs of SB 331, follow this link to a recent article on the bill: http://www.contracostatimes.com/daniel-borenstein/ci_28496397/daniel-borenstein-cynical-labor-bill-seeks-keep-public
Double Whammy: PERB ALJ Decides that Orange County Illegally Implemented its COIN Ordinance
Labor organizations are also attacking COIN ordinances through PERB unfair practice charges. In a challenge brought against the County of Orange, the Orange County Employees Association alleged that the County’s adoption of a COIN ordinance itself constituted an unfair practice under the Meyers Milias Brown Act. (IUOE Local 501 v. County of Orange, PERB Case No. LA-CE-00934-M.) The Association maintained that the County illegally refused to bargain with the Association before implementing the ordinance and that the ordinance unilaterally dictates the time and manner of the collective bargaining process. A PERB ALJ recently held that Orange County violated the rights of a local employee organization by implementing the ordinance without going through negotiations. This development may further discourage local agencies from adopting similar measures to make negotiations more transparent and responsive to the public’s interests and welfare.The matter is now on appeal to the PERB Board itself. Follow the link to the ALJ proposed decision: Orange County Employees Association, et al. v. County of Orange, No. LA-CE-934-M.
Impact
If enacted, SB 331 will chill the willingness of local agencies to enact COIN ordinances, and will penalize local agencies for requiring meaningful disclosure and giving the public a voice in the bargaining process. While the value and workability of COIN ordinances is still subject to reasonable debate, this is a stunningly cynical bill; it is shocking that it has passed the California Senate.
If sustained by labor-friendly PERB, the Orange County ALJ decision will prevent local agencies from implementing COIN ordinances without going through full negotiations. And bear in mind that under PERB’s present approach (being challenged judicially), employers would be required not only to negotiate over their proposed ordinance, but also go through the fact-finding process before implementing an ordinance.
Transparency benefits management, but it is also core to democratic government. Whether one supports or opposes COIN ordinances generally, few would publicly argue that the public should be kept in the dark on how their tax dollars are being spent. In fact, promoting public understanding of public finances is often key to raising revenues.
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For more information, contact Jeff Sloan (jsloan@publiclawgroup.com, 415-678-3806) or Jon Holtzman (jholtzman@publiclawgroup.com, 415-678-3807).
Thanks to law clerk Alex Volberding (UCLA School of Law, 2016), who co-authored this article.