California Education Code Section 88003.1
(a) Notwithstanding any other provision of this chapter,
personal services contracting for all services currently or
customarily performed by classified school employees to achieve cost
savings is permissible, unless otherwise prohibited, when all the
following conditions are met:
(1) The governing board or contracting agency clearly demonstrates
that the proposed contract will result in actual overall cost
savings to the community college district, provided that:
(A) In comparing costs, there shall be included the community
college district's additional cost of providing the same service as
proposed by a contractor. These additional costs shall include the
salaries and benefits of additional staff that would be needed and
the cost of additional space, equipment, and materials needed to
perform the function.
(B) In comparing costs, there shall not be included the community
college district's indirect overhead costs unless these costs can be
attributed solely to the function in question and would not exist if
that function was not performed by the community college district.
Indirect overhead costs shall mean the pro rata share of existing
administrative salaries and benefits, rent, equipment costs,
utilities, and materials.
(C) In comparing costs, there shall be included in the cost of a
contractor providing a service any continuing community college
district costs that would be directly associated with the contracted
function. These continuing community college district costs shall
include, but not be limited to, those for inspection, supervision,
(2) Proposals to contract out work shall not be approved solely on
the basis that savings will result from lower contractor pay rates
or benefits. Proposals to contract out work shall be eligible for
approval if the contractors wages are at the industry's level and do
not undercut community college district pay rates.
(3) The contract does not cause the displacement of community
college district employees. The term "displacement" includes layoff,
demotion, involuntary transfer to a new classification, involuntary
transfer to a new location requiring a change of residence, and time
base reductions. Displacement does not include changes in shifts or
days off, nor does it include reassignment to other positions within
the same classification and general location or employment with the
contractor, so long as wages and benefits are comparable to those
paid by the school district.
(4) The savings shall be large enough to ensure that they will not
be eliminated by private sector and community college district cost
fluctuations that could normally be expected during the contracting
(5) The amount of savings clearly justify the size and duration of
the contracting agreement.
(6) The contract is awarded through a publicized, competitive
(7) The contract includes specific provisions pertaining to the
qualifications of the staff that will perform the work under the
contract, as well as assurance that the contractor's hiring practices
meet applicable nondiscrimination standards.
(8) The potential for future economic risk to the community
college district from potential contractor rate increases is minimal.
(9) The contract is with a firm. A "firm" means a corporation,
limited liability corporation, partnership, nonprofit organization,
or sole proprietorship.
(10) The potential economic advantage of contracting is not
outweighed by the public's interest in having a particular function
performed directly by the community college district.
(b) Notwithstanding any other provision of this chapter, personal
services contracting shall also be permissible when any of the
following conditions can be met:
(1) The contract is for new community college district functions
and the Legislature has specifically mandated or authorized the
performance of the work by independent contractors.
(2) The services contracted are not available within community
college districts, cannot be performed satisfactorily by community
college district employees, or are of such a highly specialized or
technical nature that the necessary expert knowledge, experience, and
ability are not available through the community college district.
(3) The services are incidental to a contract for the purchase or
lease of real or personal property. Contracts under this criterion,
known as "service agreements," shall include, but not be limited to,
agreements to service or maintain office equipment or computers that
are leased or rented.
(4) The policy, administrative, or legal goals and purposes of the
community college district cannot be accomplished through the
utilization of persons selected pursuant to the regular or ordinary
hiring process. Contracts are permissible under this criterion to
protect against a conflict of interest or to ensure independent and
unbiased findings in cases where there is a clear need for a
different, outside perspective. These contracts shall include, but
not be limited to, obtaining expert witnesses in litigation.
(5) The nature of the work is such that the criteria for emergency
appointments apply. "Emergency appointment" means an appointment
made for a period not to exceed 60 working days either during an
actual emergency to prevent the stoppage of public business or
because of the limited duration of the work. The method of selection
and the qualification standards for an emergency employee shall be
determined by the community college district. The frequency of
appointment, length of employment, and the circumstances appropriate
for the appointment of firms or individuals under emergency
appointments shall be restricted so as to prevent the use of
emergency appointments to circumvent the regular or ordinary hiring
(6) The contractor will provide equipment, materials, facilities,
or support services that could not feasibly be provided by the
community college district in the location where the services are to
(7) The services are of such an urgent, temporary, or occasional
nature that the delay incumbent in their implementation under the
community college district's regular or ordinary hiring process would
frustrate their very purpose.
(c) This section shall apply to all community colleges, including
community college districts that have adopted the merit system.
(d) This section shall apply to personal service contracts entered
into after January 1, 2003. This section shall not apply to the
renewal of personal services contracts subsequent to January 1, 2003,
where the contract was entered into before January 1, 2003,
irrespective of whether the contract is renewed or rebid with the
existing contractor or with a new contractor.