CC SR 20160315 04 - Civic Reporting Openness in Negotiations Efficiency (CRONEY) Act 2RANCHO PALOS VERDES CITY COUNCIL
AGENDA REPORT
AGENDA DESCRIPTION:
MEETING DATE: 03/15/2016
AGENDA HEADING: Regular Business
Consideration and possible action on the Civic Reporting Openness in Negotiations
Efficiency ("CRONEY") Act
RECOMMENDED COUNCIL ACTION:
1) Direct Staff to prepare an ordinance repealing the OPEN Ordinance
FISCAL IMPACT: None
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: Gabriella Yap, Deputy City Manager
REVIEWED BY: Same
APPROVED BY: Doug Willmore, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. Memo from City Attorney regarding CRONEY Act (page A-1)
BACKGROUND AND DISCUSSION:
Beginning January 1, 2016, the Civic Reporting Openness in Negotiations Efficiency
("CRONEY") Act imposed additional requirements for municipalities that have adopted a
Civic Openness In Negotiations (COIN) ordinance or other similar ordinance, like the
City's Open Public Employees Negotiation (OPEN) Ordinance. The City Attorney's
Office has prepared the attached memo outlining the details of the CRONEY Act, which
basically states the City will be required to designate an independent auditor to evaluate
many new contracts valued at $250,000 or more; make the report available to the public
at least 30 days before the issue can be heard before the City, and at least 60 days
before the City can take any action to approve or disapprove the contract. In addition,
any offers or counteroffers related to these contract negotiations must be disclosed on
the City's website within 24 hours; the City Council must disclose any communications
related to the negotiations; and the City's final determination on a contract may not be
made until the matter has been heard at a minimum of two meetings of the governing
body. Cities that do not have COIN ordinances are not required to comply with these
requirements.
From a management perspective, the CRONEY Act brings significant operational
challenges because of its much more stringent requirements. By requiring the
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independent auditor to provide a report to all parties and make the report available to
the public at least 30 days before the issue can be heard before the City, and at least 60
days before the City can take any action to approve or disapprove the contract, it
essentially delays the ability to move forward on agreements for a minimum of two
months. This does not include the additional steps and time involved if there is a back -
and -forth negotiations process, nor does it consider that such requirements may make
the negotiations process more difficult with contractors or consultants.
From a fiscal perspective, on average, each review or "audit" of a proposal done in
accordance with the OPEN ordinance cost approximately $2,000. During the labor
negotiations, every fiscal analysis of the proposals performed by the Finance
Department was verified by the independent auditor without any changes. In essence,
the auditor confirmed that the Finance Department was correctly assessing the costs of
each proposal. However, the likely cost of needing to send the financial proposals for
every contract covered under CRONEY to an independent auditor would probably easily
total in the tens of thousands per year.
While the goal of the OPEN ordinance was for increased transparency, there may be
other ways of achieving the same level of transparency without the constraints of the
new CRONEY Act. For example, if the Council chooses to move forward with repealing
the OPEN ordinance, the City Council could require that Staff continue to request that
the Employee Association agree to continue the practice of placing the negotiation
proposals on the website.
CONCLUSION:
It is recommended that the Council direct Staff to prepare an ordinance repealing the
OPEN Ordinance so as not to create delays or additional costs in the negotiation and
execution of other agreements that would result from the requirements of the CRONEY
Act.
ALTERNATIVES:
In addition to the Staff recommendation, the following alternative actions are available
for the City Council's consideration:
1. Direct Staff to prepare a draft amendment to the OPEN Ordinance to
ensure the City's labor negotiations comply with the CRONEY Act, and
direct staff to prepare City contracting procedures that comply with the
CRONEY Act.
2. Take other action.
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MEMORANDUM
TO: HONORABLE MAYOR & CITY COUNCIL MEMBERS
FROM: DAVID J. ALESHIRE, CITY ATTORNEY
DATE: FEBRUARY 16, 2016
SUBJECT: CIVIC OPENNESS IN NEGOTIATIONS EFFICIENCY ("CRONEY")
ACT
CC: DOUG WILLMORE, CITY MANAGER
EXECUTIVE SUMMARY
Beginning January 1, 2016 the City will need to comply with the Civic Reporting Openness
in Negotiations Efficiency (CRONEY) Act, which imposes additional requirements for
municipalities that have adopted a Civic Openness In Negotiations (COIN) ordinance or
other similar ordinance. The City's Open Public Employees Negotiation (OPEN)
Ordinance is a COIN ordinance, and as such the City will be required to comply with the
CRONEY Act. Under the CRONEY Act, the City will be required to designate an
independent auditor to evaluate many new contracts valued at $250,000 or more. In
addition, any offers or counteroffers related to these contract negotiations must be
disclosed on the City's website within 24 hours, the City Council must disclose any
communications related to the negotiations, and the City's final determination on a
contract may not be made until the matter has been heard at a minimum of two meetings
of the governing body.
BACKGROUND
On October 9, 2015, Governor Jerry Brown signed SB 331, the Civic Reporting Openness
in Negotiations Efficiency (CRONEY) Act. The CRONEY Act greatly expands the
reporting requirements for cities that have adopted COIN ordinances. Namely, the
CRONEY Act requires cities with COIN ordinances to follow certain additional procedures
for the negotiation and approval of goods and services contracts, within an enumerated
list of subject areas', that are valued at $250,000 or morel.
The list of subject areas is: 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.
2 The CRONEY Act also applies to any contracts, within the enumerated subject areas, with a person or
entity that are cumulatively worth $250,000 or more within the municipality's fiscal year.
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Specifically, the CRONEY Act creates the following requirements for cities with COIN
ordinances:
1. Cities are required to designate "an unbiased independent auditor" to review the cost
of any proposed contract that is covered by the CRONEY Act. The independent
auditor is required to prepare a report on the cost of the contract, including a
determination of the fiscal impacts of each term and condition of the contract, and to
make a recommendation as to the viability of the contract.
2. The independent auditor must provide his report to all parties to the contract and make
the report available to the public at least 30 days before the issue can be heard before
the City, and at least 60 days before the City can take any action to approve or
disapprove the contract.
3. Any offer or counteroffer must be disclosed on the City website within 24 hours.
4. City representatives must advise the governing body of all offers, counteroffers,
information, or statements of position discussed by either party in the negotiations.
5. Before approving any contract, the city must release detailed information about any
negotiation sessions, including: the names of all persons in attendance; the date,
length, and location of the session; and any pertinent facts regarding the negotiations
occurring at each session.
6. Each member of the governing body, and staff members of governing body offices,
must disclose publicly all communications related to the negotiations, or pending
negotiations, with official or unofficial representatives of the private person or entity
within 24 hours.
7. The final determination of the governing body must not be made until the matter has
been heard at a minimum of two meetings of the governing body where the public has
had an opportunity to review and comment on the matter.
ANALYSIS
The City enacted OPEN, its COIN ordinance, in 2014. Because the City has a COIN
ordinance, the CRONEY Act requires that, in addition to complying with the above -listed
requirements for labor negotiations, the City must comply with the above -listed
requirements for goods and services contracts (see Footnote 1) that are valued at
$250,000 or more. Cities that do not have COIN ordinances are not required to comply
with these requirements.
1. CRONEY-Required Changes to Labor Negotiations
The City's OPEN ordinance requires the City's finance department prepare a fiscal
impact analysis for any meet and confer proposal, as well as any proposed
Memorandum of Understanding. This fiscal impact analysis must then be reviewed by
an independent certified public accountant. The City defines a "meet and confer
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proposal" as any written proposal presented or received during the course of
negotiations. Therefore, the City's current procedure, as it pertains to meet and confer
proposals, likely complies with the CRONEY Act. However, the CRONEY Act further
requires that, before a Memorandum of Understanding is proposed to the City Council,
the City must have an independent auditor prepare his or her own report regarding
the costs. As currently written, the OPEN ordinance does not require this additional
step, and as such the City's procedures may be deficient under the CRONEY Act.
Further, under the CRONEY Act the City must now post all offers and counteroffers—
not just those that are rejected and no longer being considered—to the City Website
within 24 hours. Finally, to comply with the CRONEY Act, the City must ensure that
the independent auditor's report, when prepared for any proposed contract, be made
public at least 30 days prior to the first meeting at which the contract is to be discussed,
and 60 days prior to any action to approve or disapprove the contract.
2. CRONEY-Required Changes to Other Contract Negotiations
The CRONEY Act also requires cities with COIN Ordinances to comply with the
requirements set forth above for contracts with a person or entity valued individually
or cumulatively at $250,000 or more for the following types of goods or services:
❖ Accounting
❖ Financing
❖ Hardware and software
maintenance
❖
Health care
❖
Human resources
❖
Human services
❖
Information technology
❖
Telecommunications
❖
Janitorial maintenance
❖
Legal services
CONCLUSION
❖ Lobbying
❖ Marketing
❖ Office equipment maintenance
❖ Passenger vehicle maintenance
❖ Property leading
❖ Public relations
❖ Public safety
❖ Social services
❖ Transportation
❖ Waste removal
The CRONEY Act imposes a significant number of additional requirements on the City
because the City has a COIN ordinance. These requirements will likely lengthen the time
it takes the City to negotiate and approve contracts. Further, because of the additional
requirements that the City hire an independent auditor to evaluate any proposed contract
and that the City post any offers or counteroffers to its website, complying with the
CRONEY Act will likely increase the financial burden on the City when negotiating
contracts.
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Should the City repeal its OPEN Ordinance, it would no longer need to comply with the
CRONEY Act. If, on the other hand, the City maintains its OPEN Ordinance, it should
amend the OPEN Ordinance to ensure the City and its unions are on notice of the
additional requirements imposed by the CRONEY Act on labor negotiations. Further, the
City should adopt a set of procedures for contract negotiations for the goods and services
contracts impacted by the CRONEY Act so that contractors and the City are aware of the
additional requirements imposed by the CRONEY Act.
Attachment(s): SB 331
MA
Senate Bill No. 331
CHAPTER 714
An act to add Chapter 4.5 (commencing with Section 22175) to Part 3 of
Division 2 of the Public Contract Code, relating to public contracts.
[Approved by Governor October 9, 2015. Filed with
Secretary of State October 9, 2015.]
LEGISLATIVE COUNSEL'S DIGEST
SB 331, Mendoza. Public contracts: local agencies: negotiations.
Existing law relating to public contracts requires local agencies, including
cities and counties, to comply with specified procedures for public
contracting for public construction.
The Meyers-Milias-Brown Act requires the governing body of a local
public agency to meet and confer in good faith regarding wages, hours, and
other terms and conditions of employment with representatives of a
recognized employee organization.
This bill would enact the Civic Reporting Openness in Negotiations
Efficiency Act to establish specific procedures for the negotiation and
approval of certain contracts valued at $250,000 or more for goods or
services by cities, counties, cities and counties, or special districts that have
adopted a civic openness in negotiations ordinance, or COIN ordinance,
defined as an ordinance imposing specified requirements as part of any
collective bargaining process undertaken pursuant to the
Meyers-Milias-Brown Act. The act would require the designation of an
independent auditor to review and report on the cost of any proposed
contract. The act would require a city, county, city and county, or special
district to disclose prescribed information relating to the contract and contract
negotiations on its Internet Web site. The act would prohibit a final
determination by the governing body regarding approval of any contract
until the matter has been heard at a minimum of 2 public meetings of the
governing body.
The act would exempt from its provisions contracts required to respond
to, recover from, or mitigate the effects of a temporary public safety
emergency declared by the chief law enforcement officer of a city, county,
city and county, or special district, or a state of war emergency, state of
emergency, or local emergency, as those terms are defined in the California
Emergency Services Act. The act would also exempt from its provisions a
renewal of a contract if the employees performing the services are covered
by a collective bargaining agreement that is governed by the National Labor
Relations Act.
By imposing new requirements on cities, counties, cities and counties,
and special districts, this bill would impose a state -mandated local program.
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The California Constitution requires local agencies, for the purpose of
ensuring public access to the meetings of public bodies and the writings of
public officials and agencies, to comply with a statutory enactment that
amends or enacts laws relating to public records or open meetings and
contains findings demonstrating that the enactment furthers the constitutional
requirements relating to this purpose.
This bill would make legislative findings to that effect.
The California Constitution requires the state to reimburse local agencies
and school districts for certain costs mandated by the state. Statutory
provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for
a specified reason.
The people of the State of California do enact as follows:
SECTION 1. Chapter 4.5 (commencing with Section 22175) is added
to Part 3 of Division 2 of the Public Contract Code, to read:
CHAPTER 4.5. CIVIC OPENNESS IN NEGOTIATIONS
22175. This chapter shall be known, and may be cited, as the Civic
Reporting Openness in Negotiations Efficiency Act, or CRONEY.
22176. As used in this chapter, "civic openness in negotiations
ordinance" or "COIN ordinance" means an ordinance adopted by a city,
county, city and county, or special district that requires any of the following
as a part of any collective bargaining process undertaken pursuant to the
Meyers-Milias-Brown Act (Chapter 10 (commencing with Section 3500)
of Division 4 of Title 1 of the Government Code):
(a) The preparation of an independent economic analysis describing the
fiscal costs of benefit and pay components currently provided to members
of a recognized employee organization, as defined in Section 3501 of the
Government Code.
(b) The completion of the independent economic analysis prior to the
presentation of an opening proposal by the public employer.
(c) Availability for review by the public of the independent economic
analysis before presentation of an opening proposal by the public employer.
(d) Updating of the independent economic analysis to reflect the annual
or cumulative costs of each proposal made by the public employer or
recognized employee organization.
(e) Updating of the independent economic analysis to reflect any absolute
amount or change from the current actuarially computed unfunded liability
associated with the pension or postretirement health benefits.
(f) The report from a closed session of a meeting of the public employer's
governing body of offers, counteroffers, or supposals made by the public
employer or the recognized employee organization and communicated
during that closed session.
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(g) The report from a closed session of a meeting of the public employer's
governing body of any list of names of persons in attendance during any
negotiations session, the date of the session, the length of the session, the
location of the session, or pertinent facts regarding the negotiations that
occurred during a session.
22177. (a) This chapter applies only to a city, county, city and county,
or special district that has adopted a COIN ordinance, which is effective
and operative. This chapter shall not apply if the city, county, city and
county, or special district suspends, repeals, or revokes its COIN ordinance.
(b) This chapter shall not apply to a contract if the contract is required
to respond to, recover from, or mitigate the effects of any of the following:
(1) A temporary public safety emergency declared by the chief law
enforcement officer of a city, county, city and county, or special district.
(2) A state of war emergency, state of emergency, or local emergency,
as those terms are defined in Section 8558 of the Government Code.
(c) This chapter shall not apply to a renewal of a contract if the employees
performing the services are covered by a collective bargaining agreement
that is governed by the National Labor Relations Act (29 U.S.C. Sec. 151
et seq.).
22178. (a) This chapter shall apply to any contracts with a value of at
least two hundred fifty thousand dollars ($250,000), and to any contracts
with a person or entity, or related person or entity, with a cumulative value
of at least two hundred fifty thousand dollars ($250,000) within the fiscal
year of the city, county, city and county, or special district, being negotiated
between the city, county, city and county, or special district, and any person
or entity that seeks to provide services or goods to the city, county, city and
county, or special district, in the following areas: 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.
(b) The city, county, city and county, or special district shall designate
an unbiased independent auditor to review the cost of any proposed contract.
The independent auditor shall prepare a report on the cost of the contract
and provide the report to all parties and make it available to the public before
the governing body takes any action to approve or disapprove the contract.
The report shall comply with the following:
(1) The report shall include a recommendation regarding the viability of
the contract, including any supplemental data upon which the report is based,
and shall determine the fiscal impacts attributable to each term and condition
of the contract.
(2) The report shall be made available to the public at least 30 days before
the issue can be heard before the governing body and at least 60 days before
any action to approve or disapprove the contract by the governing body.
(3) Any proposed changes to the contract after it has been approved by
the governing body shall adhere to the same approval requirements as the
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original contract. The changes shall not go into effect until all of the
requirements of this subdivision are met.
(c) The city, county, city and county, or special district shall disclose all
offers and counteroffers to the public within 24 hours on its Internet Web
site.
(d) Before approving any contract, the city, county, city and county, or
special district shall release a list of names of all persons in attendance,
whether in person or by electronic means, during any negotiation session
regarding the contract, the date of the session, the length of the session, the
location where the session took place, and any pertinent facts regarding the
negotiations that occurred in that session.
(e) Representatives of the governing body shall advise the governing
body of all offers, counteroffers, information, or statements of position
discussed by the contracting person or entity and city, county, city and
county, or special district representatives participating in negotiations
regarding any contract.
(f) Each governing body member and staff members of governing body
offices shall disclose publicly all verbal, written, electronic, or other
communications regarding a subject matter related to the negotiations or
pending negotiations they have had with any official or unofficial
representative of the private entity within 24 hours after the communication
occurs.
(g) A final governing body determination regarding approval of any
contract shall be undertaken only after the matter has been heard at a
minimum of two meetings of the governing body wherein the public has
had the opportunity to review and comment on the matter.
SEC. 2. The Legislature finds and declares that Section 1 of this act,
which adds Chapter 4.5 (commencing with Section 22175) to Part 3 of
Division 2 of the Public Contract Code, furthers, within the meaning of
paragraph (7) of subdivision (b) of Section 3 of Article I of the California
Constitution, the purposes of that constitutional section as it relates to the
right of public access to the meetings of local public bodies or the writings
of local public officials and local agencies. Pursuant to paragraph (7) of
subdivision (b) of Section 3 of Article I of the California Constitution, the
Legislature makes the following findings:
This act ensures that members of the public have the opportunity to be
informed of, and meaningfully participate in, the negotiation and approval
of contracts for goods and services by a city, county, city and county, or
special district that has adopted a civic openness in negotiations (COIN)
ordinance, thereby furthering the purposes of Section 3 of Article I of the
California Constitution.
SEC. 3. No reimbursement is required by this act pursuant to Section 6
of Article XIII B of the California Constitution because the only costs that
may be incurred by a local agency or school district under this act would
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result from a legislative mandate that is within the scope of paragraph (7)
of subdivision (b) of Section 3 of Article I of the California Constitution.
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