Summary of LAO Findings and Recommendations on the 2012-13 Budget

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	Program	Budget Issue	LAO Finding Or Recommendation	Last Updated
Go Back	California Community Colleges	Contracting out for noninstructional services	Recommend the Legislature ease restrictions on contracting out for noninstructional services.	2-10-12

Detailed Narrative
Existing State Restrictions on Contracting Out. Under current law, community college (and K-12) districts can contact out for many noninstructional services (such as maintenance, payroll, and food service) only if certain conditions are met. For example, contracting out for services cannot result in the layoff or demotion of existing district employees. Districts also cannot contract out based solely on savings they would get from lower contractor pay rates for benefits. Create More Flexibility for Districts. Easing these restrictions would allow districts to more frequently bid on the open market for noninstructional services. To the extent districts took greater advantage of contracting out, they likely would realize some cost savings at the local level. This, in turn, could help districts balance their budgets.(Because contractor availability, collective bargaining agreements, and existing service agreements differ across the state, though, it is uncertain exactly how much systemwide savings could be realized.) In order to allow districts to identify the most cost-effective options for meeting their needs, we recommend the Legislature waive the current restrictions on contracting out for noninstructional services.

Detailed Narrative

Existing State Restrictions on Contracting Out. Under current law, community college (and K-12) districts can contact out for many noninstructional services (such as maintenance, payroll, and food service) only if certain conditions are met. For example, contracting out for services cannot result in the layoff or demotion of existing district employees. Districts also cannot contract out based solely on savings they would get from lower contractor pay rates for benefits.

Create More Flexibility for Districts. Easing these restrictions would allow districts to more frequently bid on the open market for noninstructional services. To the extent districts took greater advantage of contracting out, they likely would realize some cost savings at the local level. This, in turn, could help districts balance their budgets.(Because contractor availability, collective bargaining agreements, and existing service agreements differ across the state, though, it is uncertain exactly how much systemwide savings could be realized.)

In order to allow districts to identify the most cost-effective options for meeting their needs, we recommend the Legislature waive the current restrictions on contracting out for noninstructional services.