Filed 8/5/13 Dept. of Corrections v. State Personnel Board CA3
                                           NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.




              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                      THIRD APPELLATE DISTRICT
                                                     (Sacramento)
                                                            ----



DEPARTMENT OF CORRECTIONS AND                                                               C068744
REHABILITATION,
                                                                                   (Super. Ct. No.
                   Plaintiff and Respondent,                                 34201080000722CUWMGDS)

         v.

STATE PERSONNEL BOARD,

                   Defendant and Respondent;

AMERICAN FEDERATION OF STATE,
COUNTY, AND MUNICIPAL EMPLOYEES
LOCAL 2620, AFL-CIO,

                   Real Party in Interest and Appellant.




         This appeal involves the use of private contractors to perform state functions. The
Department of Corrections and Rehabilitation (CDCR) entered into contracts with private
contractors to provide mental health services to parolees pursuant to Penal Code




                                                             1
section 3073.1 On behalf of the CDCR employees it represents, the American Federation
of State, County, and Municipal Employees Local 2620, AFL-CIO (AFSCME) sought
administrative review by the State Personnel Board (the Board), which concluded the
contracts were invalid under civil service laws prohibiting state agencies from contracting
with private entities to perform services customarily or historically performed by state
employees. (Cal. Const., art. VII.)2 CDCR filed a petition for writ of administrative
mandamus. (Code Civ. Proc., § 1094.5.) The trial court granted the petition, ruling that
the personal services contracts were valid under the “new state function” exception to the
civil service mandate in Government Code section 19130, subdivision (b)(2).3 AFSCME



1  Penal Code section 3073 provides: “[CDCR] is hereby authorized to obtain day
treatment, and to contract for crisis care services, for parolees with mental health
problems. Day treatment and crisis care services should be designed to reduce parolee
recidivism and the chances that a parolee will return to prison. The department shall
work with counties to obtain day treatment and crisis care services for parolees with the
goal of extending the services upon completion of the offender‟s period of parole, if
needed.” (Italics added.) (Stats. 2007, ch. 7, § 12 (sometimes referred to herein as AB
900).)
2  California Constitution, article VII, section 1 provides: “(a) The civil service includes
every officer and employee of the State except as otherwise provided in this Constitution.
[¶] (b) In the civil service permanent appointment and promotion shall be made under a
general system based on merit ascertained by competitive examination.” The State
Personnel Board is a constitutional agency charged with enforcing the civil service
statutes. (Cal. Const., art. VII, § 3.)
3   Undesignated statutory references are to the Government Code.

  Section 19130 provides in part: “The purpose of this article is to establish standards for
the use of personal services contracts. [¶] (a) Personal services contracting is
permissible to achieve cost savings [under specified conditions]. [¶] (b) Personal
services contracting also shall be permissible when any of the following conditions can
be met: . . . [¶] (2) The contract is for a new state function and the Legislature has
specifically mandated or authorized the performance of the work by independent
contractors. [¶] (3) The services contracted are not available within civil service, cannot
be performed satisfactorily by civil service employees, or are of such a highly specialized

                                             2
appeals, arguing the trial court erred in reweighing the evidence before the Board, and the
evidence supported the Board‟s determination that the services did not comprise a new
state function.
       We affirm the judgment.
                  FACTUAL AND PROCEDURAL BACKGROUND
       In 1954, CDCR established the Parole Outpatient Clinic (POC) program to reduce
recidivism by helping parolees with mental health problems successfully reintegrate into
the community. In 1999, CDCR implemented the Mental Health Services Continuum
Program (MHSCP), consisting of (1) a Transitional Case Management Program for the
Mentally Ill (TCMP-MI), which provides prerelease assessments of inmates identified as
part of the prison‟s mental health services delivery system, and (2) POC, which provides
mental health assessments and treatment during parole. Treatment consists of medication
management, group therapy, and individual therapy to parolees at high risk of criminal
behavior due to mental illness. POC staff conduct evaluations and provide outpatient
services and medication management in CDCR parole offices located throughout the
state. POC does not provide housing or inpatient care. POC staffing includes clinical
social workers and psychologists.
       In 2007, the Legislature enacted Penal Code section 3073, (fn. 1, ante) directing
CDCR to work with counties in providing day treatment programming and mental health
crisis intervention for parolees with mental health problems. The statute expressly


or technical nature that the necessary expert knowledge, experience, and ability are not
available through the civil service system. [¶] . . . [¶] (8) 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.” (Italics added.)

  A personal services contract is any contract under which labor or personal services is a
significant, separately identifiable element; the party performing these services must be
an independent contractor that does not have status as a State employee. (Cal. Code
Regs., tit. 2, § 547.59(a).)

                                             3
authorizes CDCR to contract for those services.4 The statute was part of the Public
Safety and Offender Rehabilitation Services Act of 2007, which was enacted in response
to federal court cases regarding California prison overcrowding. (Sen. Rules Com., Off.
of Sen. Floor Analyses, 3d reading analysis of AB 900 (2007-2008 Reg. Sess.) as
amended April 26, 2007, pp. 6-8.) Among the purposes of the legislation was to
“require[] CDCR to implement and significantly enhance anti-recidivism programming
including substance abuse treatment, mental health care, and academic and vocational
education.” (Office of Assem. Floor Analysis, 3d reading analysis of AB 900 (2007-
2008 Reg. Sess.) as amended April 26, 2007, p. 1.)
       In response to the enactment of Penal Code section 3073, CDCR developed a
program called Integrated Services for Mentally Ill Parolees (ISMIP) to fill a gap in
services between POC‟s outpatient role and a 72-hour hold for parolees who were a
danger to themselves or others or gravely disabled under Welfare and Institutions Code
section 5150 (5150 hold).5 ISMIP is a comprehensive model that provides for varied
levels of care, supportive/transitional housing resources, and an array of mental health
rehabilitative services that assist with the development of independent living for mentally
ill parolees in the least restrictive environment possible.



4 AFSCME‟s appellate brief expressly states that AFSCME does not dispute that the
contracts were “authorized” within the meaning of Government Code section 19130,
subdivision (b)(2) (fn. 3, ante) by Penal Code section 3073 (fn. 1, ante), which authorizes
CDCR to contract for crisis care services.
5 Welfare and Institutions Code section 5150, subdivision (a) provides: “When any
person, as a result of mental disorder, is a danger to others, or to himself or herself, or
gravely disabled, a peace officer, member of the attending staff, as defined by regulation,
of an evaluation facility designated by the county, or other professional person designated
by the county may, upon probable cause, take, or cause to be taken, the person into
custody and place him or her in a facility designated by the county and approved by
the State Department of Health Care Services as a facility for 72-hour treatment and
evaluation.”

                                              4
        As attested to by ISMIP manager Robert Storms, the resources, facilities and
services for the ISMIP program could not be adequately provided by POC, and therefore
CDCR tried to contract with counties for these services under Penal Code section 3073.
However, CDCR was able to contract with only two county providers -- San Francisco
and Santa Clara. Other counties contracted for these services privately. Accordingly,
CDCR sought private contractors to meet the benchmark required by Penal Code former
section 7021, subdivision (a)(8), that “At least 300 parolees are being served in day
treatment or crisis care services, pursuant to Section 3073.”
        CDCR issued a Request for Proposal (RFP) No. 6000000037.6 (Gov. Code,
§ 19132;7 Cal. Code Regs., tit. 2, § 547.59 et seq.) The project introduction of the
RFP references CDCR‟s authority pursuant to Penal Code section 3073 to contract for
“Mental Health Crisis intervention . . . services.” (Italics added.) The RFP described
the responsibilities of ISMIP case managers8 as including a complete assessment of the
parolee‟s needs and goals, development of a personal services plan, linkage with all
appropriate community services, housing referrals, monitoring the quality and follow
through of services, providing necessary advocacy to ensure receipt of services, and
providing individualized coaching to achieve the parolee‟s goals. The RFP said each
individual personal services plan was to contain objectives, which could include but
were not limited to, provision for housing and employment, application for entitlements



6   AFSCME filed a challenge to an earlier RFP, but CDCR withdrew the earlier RFP.
7 Section 19132 provides: “The . . . Board, at the request of an employee organization
that represents state employees, shall review the adequacy of any proposed or executed
contract which is of a type enumerated in subdivision (b) of Section 19130. . . .”
8 “Case manager” is described in the RFP: “Each parolee-client shall have a clearly
designated mental health personal services coordinator (Case Manager) who, as a part
of a multidisciplinary treatment team, is responsible for providing or assuring needed
services.”

                                             5
(Social Security, Medi-Cal, Veterans benefits), coordination and access to mental health
services such as medications, psychiatric and psychological services, substance abuse
services, family support and consultation services, and access to academic education or
skills training.
       In 2009, CDCR contracted with private companies to provide the personal
services of mental health personal services coordinator to parolees, with the intent
of “promot[ing] self-sufficiency in reducing recidivism for mentally ill parolee-
clients. This appeal involves six9 contracts -- four with Telecare Corporation, one
with Turning Point of Central California, Inc., and one with Quality Group Homes,
Incorporated.
       Each Agreement Summary contained the following general statement of purpose
or Agreement Outline: “Contract is necessary in order for the [CDCR], Division of
Adult Parole Operations, to provide rehabilitation, reduce homelessness, and reduce
recidivism among the mentally ill parolee population.” Each Agreement Summary
stated as Justification for Contracting Out that, under Government Code section 19130,
subdivision (b)(3), “The services contracted are not available within civil service.
Contract is for the care/placement of mentally ill inmates/parolees requiring job
training and life skills. The CDCR currently does not own or operate this type of
facility.”10




9  A seventh contract between CDCR and the San Francisco Department of Public Health
is not at issue in this appeal.
10 As will be seen, the Board rejected the applicability of section 19130, subdivision
(b)(3), the nature of the services exception. CDCR does not argue its applicability in this
appeal.

                                             6
       In November 2009, AFSCME filed with the Board an administrative challenge to
the six private contracts. (Pub. Contract Code, § 10337.)11 AFSCME sought disapproval
of the contracts on the ground they called for private contractors to perform the same
work as civil service employees.
       CDCR sought dismissal of the challenge, because the contracted services were for
ISMIP and were not services provided by CDCR employees.
       The Board directed CDCR to provide copies of the contracts, which it did, and
invited AFSCME to file a supplemental brief, which it did not.
       In March 2010, Board Executive Officer Suzanne M. Ambrose issued a decision
(Pub. Contract Code, § 10337, subd. (c); see fn. 11, ante), concluding CDCR failed to
establish that the contracts were permitted under Government Code section 19130,
subdivision (b) (see fn. 3, ante). She concluded civil service clinical social workers
could provide the same services as the contractors and stated she did not need to address
psychologists. She said AFSCME asserted the private contractors performed work
similar to civil service employees in the same settings and under the same conditions,



11  Public Contract Code section 10337, subdivision (c), provides: “A contract proposed
or executed pursuant to subdivision (b) of Section 19130 of the Government Code shall
be reviewed by the State Personnel Board if the board receives a request to conduct such
a review from an employee organization representing state employees. Any such review
shall be restricted to the question as to whether the contract complies with [Government
Code section 19130, subdivision (b)]. The board shall delegate the review of such a
contract to the executive officer of the board. If the employee organization requests it,
the executive officer shall grant the employee organization the opportunity to present its
case against the contract and the reasons why the contract should be referred to the board
for a hearing. Upon a showing of good cause by the employee organization, the
executive officer shall schedule the disputed contract for a hearing before the board for
the purpose of receiving evidence and hearing arguments concerning the propriety of the
disputed contract. The executive officer shall approve or disapprove the contract or refer
it to the board for a hearing within 30 days of its receipt. The reasons for the decision by
the executive officer, or the board, approving or disapproving the contract shall be stated
in writing.”

                                             7
but “AFSCME offered no evidence to show that the work „settings‟ and „conditions‟
of the employees represented by AFSCME are similar to those of the contractors.
Nonetheless, it is necessary to examine” whether the asserted similarity had factual
support. She said the purpose of the contracts was to provide individuals in the ISMIP
project a safe, clean, drug-free environment to facilitate rehabilitation and reduce
homelessness and recidivism among mentally ill parolees. The contracts required the
contractors to assess parolees‟ needs/goals, develop parolee-driven personal service
plans (Plans), link parolees with all appropriate community services, make housing
referrals, monitor the quality and follow-through of services, provide necessary advocacy
to ensure that parolees receive the services in their Plans, and provide individualized
coaching. Under the contracts, the Plans had to help parolees find the most independent
and least restrictive and immediate, transitional or permanent housing feasible in the
local community; help them get jobs or productive activity; secure benefits from Social
Security, Medi-Cal, and Veterans Affairs; help parolees self-manage serious mental
illness; coordinate access to mental health services such as medications, psychiatric and
psychological services; provide parolee-directed services for psychosocial rehabilitation
and recovery; provide substance abuse services; help secure parenting and family support
and provide consultation, peer group support, or self-help group support; create and
maintain a support system of friends and family and facilitate participation in community
activities; help parolees access academic education or career-specific trade or skill
training; and help in transition upon discharge from parole.
       The Board Executive Officer said these services appeared to be within the
customary duties of civil service clinical social workers. According to the Board‟s
job specifications, clinical social workers are required to conduct assessments and
summarize case information for use in diagnosis, treatment, and dispositional release
of disabled inmates; diagnose and/or collaborate in the formulation of a diagnosis;
develop, monitor and modify treatment plans in collaboration with the interdisciplinary

                                             8
treatment team; identify and recommend appropriate services based on assessments;
provide individual and group therapy as delineated in the treatment plan; provide suicide
and crisis risk assessment and intervention; participate in risk assessment, evaluation, and
recommendation for alternative level of care placement, release to the community, or
other case disposition; coordinate discharge planning activities and act as a resource on
accessing appropriate community support and services upon release; respond to requests
from clients, family members, courts and community agencies; consult with colleagues;
prepare social work reports; and participate in training and research. CDCR has the
prerogative to assign clinical social workers specific duties such as assessing disabled
parolees‟ needs, devising detailed and individualized planning, assisting parolees in
obtaining appropriate community services, education, housing, eligible benefits, and
trade/occupation, coordinating access to health care, facilitating their efforts to achieve or
maintain a productive life, and providing general advocacy for disabled parolees. The
Executive Officer stated, “It is not difficult to see that these duties are the very tasks
required under the Contracts.”
       The Executive Officer‟s comparison did not take into consideration work days or
work hours. Nevertheless, the Executive Officer concluded CDCR had failed to establish
that the contracts were permitted under any exception in section 19130, subdivision (b).
       In April 2010, CDCR appealed the Executive Officer‟s decision to the Board.
(Cal. Code Regs., tit. 2, § 547.66.)12 CDCR submitted a declaration from ISMIP



12 California Code of Regulations, title 2, section 547.66 states: “Any party may appeal
the executive officer‟s decision to the board by filing a written request with the board
within 30 days after issuance of the executive officer‟s decision. (See § 547.64(b).)
Upon receipt of a timely appeal, the executive officer shall schedule the matter for
briefing and oral arguments before the board. The board will decide the appeal upon the
factual information, documentary evidence, and declarations submitted to the executive
officer before he or she issued his or her decision. Upon the objection of a party, the
board will not accept additional factual information, documentary evidence, or

                                               9
manager Robert Storms, that “Services provided by the contractors include[] 24/7 crisis
care, including in[]patient services for enrolled parolee-clients; vocational training;
housing referrals and linkage; parolee transportation; and administrative support, office
space and necessary equipment.”13 (Italics added.) He attested the services “cannot be
performed satisfactorily by civil service employees within the counties in which these
services were contracted.”
       On August 3, 2010, the Board conducted a hearing at which it heard testimony in
the form of oral statements.14 AFSCME representative Cliff Tillman stated that services
under the contacts were not “new” and were being performed and could be performed by
existing CDCR social workers or psychologists.
       Sean Carey, a CDCR clinician at the Victorville POC, acknowledged some of the
contract services “are the things that we don‟t do.” He said “day treatment” was
regularly performed, but mostly with “enhanced outpatient” clients (EOPs) who require
such services the most. He said, “we would very much like to do more, if given the
opportunity, but we are doing this and we are capable of it. [¶] As far as monthly and
every few weeks, . . . it was alluded to that our services are haphazard. The only reason
why these would be haphazard would be due to scheduling conflict, not that we can‟t
do this. We would love to do this. And in many areas, it isn‟t that we‟re not doing it.



declarations that were not previously filed with the executive officer if the board finds
that the submission of this additional factual information, documentary evidence, or
declarations would be unduly prejudicial to the objecting party.”
13 We disregard AFSCME‟s unsupported disparagement of the declaration as a “lawyer-
prepared declaration” of “dubious credibility.”
14 The Board may accept “additional factual information” at the hearing. (Cal.
Code Regs., tit. 2, § 547.66; see fn. 12, ante.) The hearing transcript, which begins
midsentence, does not reflect that anyone was sworn in before speaking to the Board,
but no one raises an issue about it, and the Board referred to the oral statements as
“testimony.”

                                             10
For the most critical of clients, we do.” The only individuals Carey sees on a regular
basis, i.e., once or twice a week, are sex offenders. POC can arrange transport via agents
or ambulance for suicidal or homicidal parolees. POC can arrange housing for sex
offenders. Carey claimed private contractors are not aware of the locations of schools,
parks, and “temporary daycares,” to ensure that housing for sex offenders is a sufficient
distance to comply with Jessica‟s Law. Carey said “[t]he contract is almost a job
description of what we do.”
       Amy Kim, a CDCR licensed clinical social worker out of POC‟s in the Los
Angeles area and a chair of a POC steward‟s council, stated, “we‟ve always wanted to
be able to do more.” She stated CDCR clinicians, psychiatrists, social workers and
psychologists were unhappy that AB 900 money was going to private contractors
instead of to “existing rehab people to beef up the services we want to do and can do.”
       Debra Webb, a CDCR psychologist at a Los Angeles POC, stated that POC
clinicians travel to clients‟ homes and “[w]e‟d like to be able to do more of that.”
She said CDCR provides housing and has contracts for some of the EOP‟s. She sees
some of her clients more than once a week. Clients who have crisis issues “know
how to call crisis lines,” and they can call their parole agent, go to a hospital, call a
hospital, or call 911. She agreed mentally ill clients need additional services.
       A Board member asked, “What specifically can private contractors provide that
our state civil service professionals cannot? Bottom line, what is it?” Storms responded
“24-hour access, seven days a week, 365 days a year inpatient care, structured mental
health board and care, facilitated care. Things that we do not have; they do not exist.”
       Dr. Webb said, “. . . Actually, that‟s not really what‟s happening; they aren‟t
really providing those services out there. What they do is the same kinds of things
[sic] that we do, is hookups with board and care, help them get access to hospitals on
a 5150 basis when they need to. And, by the way, you have to be a peace officer to
do that, so our agents help with that. We do give them resources for the 24-hour care.”

                                              11
Dr. Webb said the private contractors “are providing lists of community services for
individuals who . . . need medical treatment. We do the same thing: We give them
lists of services; we will make phone calls for them for clients that aren‟t able to do
that; we help them find the housing; we help them find the SOR housing in downtown
L.A.; we do applications for disabled bus passes. . . . [¶] We help them with a whole
array of wraparound services. It does not appear that the outside provider is really
doing anything that we don‟t.” Dr. Webb did not say POC provides any of these
services on a 24/7 basis.
       Carey stated: “. . . Nowhere in the contract does it say that these individuals have
to maintain a -- a 24-hour inpatient service. And what they do is they‟re going to refer to
county. And that‟s the same thing that we do. And it is 24 hours, because they have 24-
hour access to the parole agent who, if they are suicidal or homicidal -- which the
contracts can deal with -- if they are suicidal or homicidal, they will take them into
county, no different than we would.”
       Storms said, “The contract does require that they have 24-hour response to the --
they provide a hotline; each contractor has to provide 24-hour, seven-day[]-a-week
access. [¶] Peace officers do not certify 5150‟s. It‟s mental health staff that certifies
5150‟s, and our staff cannot. Peace officers present individuals for 5150‟s. Our peace
officers are not necessarily available 24 hours a day.”
       On September 7, 2010, the Board issued a resolution adopting the Executive
Officer‟s decision and disapproving the contracts. The Board found:
       1.     CDCR failed to demonstrate the services are a “new state function” under
section 19130, subdivision (b)(2), because it did not prove, in addition to legislative
authorization, that the service truly comprised a new governmental activity and not
merely expansion of an existing function. The Board cited its decision in a previous




                                             12
matter -- In the Matter of the Appeal by California Department of Forestry and Fire
Protection (2001) PSC No. 01-04 (CDF).15
       2.     CDCR failed to demonstrate that the contracted services cannot be
performed satisfactorily by civil service employees under section 19130,
subdivision (b)(3), the “nature of the services” exception, because AFSCME adequately
showed that state employees in their current positions perform the same services that are
provided under the contracts.
       3.     CDCR failed to demonstrate that the contracted services are justified under
section 19130, subdivision (b)(8), because CDCR did not provide credible evidence to
show what specific “equipment, materials, facilities, or support services” the contractor
will provide at specific locations that could not feasibly be provided by the state.
       Since the contracts had already been executed, the Board gave CDCR six months
to transition from private contractors to civil service employees.
       On November 29, 2010, CDCR filed the operative pleading -- a first amended
petition for writ of administrative mandate and first amended complaint for declaratory
relief, naming the Board and AFSCME as defendants and AFSCME as real party in
interest. The pleading alleged the Board failed to perform an act required by law and




15 The parties appear to believe CDF was a precedential Board decision under
section 19582.5, which states the Board “may designate certain of its decisions as
precedents. . . . All decisions designated as precedents shall be published in a manner
determined by the Board.” However, CDF is not a published precedential decision;
rather, it is a posted personal services contract decision which, according to the Board
website, is “not designated precedential but [is] posted here for informational purposes
only”; it is “not binding on the Board in future cases but may be cited by parties for their
persuasive value.” (See http://spb.ca.gov/board/contract_decisions.cfm. [as of August 5,
2013].) In any event, even Board precedential decisions are not binding on this court.
(California Dept. of Corrections v. State Personnel Bd. (2004) 121 Cal.App.4th 1601,
1618.)

                                             13
made findings unsupported by the evidence. The hearing on the petition and complaint
took place on April 8, 2011.
       On May 25, 2011, the trial court entered judgment in favor of CDCR. The
judgment incorporated the court‟s ruling under submission. The trial court said
the Executive Officer improperly focused on the “nature of the services” test of
section 19130, subdivision (b)(3) -- i.e., “whether the tasks and skills required by
the contracts can be adequately, competently, and satisfactorily performed by civil
service employees” -- and ignored the “new state function” test of section 19130,
subdivision (b)(2). The court noted that the “Executive Officer did not make any
factual findings relating to the „new state function‟ test, i.e., whether the contracted
services displace existing state civil service functions or, instead, embrace new
functions not previously undertaken by the state or covered by an existing agency.”
The court also noted that the Board concluded CDCR failed to prove new state
function, but that the Board made no express factual findings to support this conclusion.
The court said the Board‟s decision necessarily implied a finding that the contracted
services duplicate or displace existing civil service functions, but no substantial
evidence supported this implied finding. To the contrary, undisputed evidence
showed the contracted services represented a new government program intended to
“fill a gap” in service for mentally ill parolees between POC and 5150 holds. The court
said the Board and AFSCME took “too literal an approach” in maintaining that the
contracted services were an expansion of an existing state function. POC workers can
and do provide mental health services, but “they do not provide 24/7 crisis care in an
in[]patient setting,” and “[t]his is the novelty of the contracted services which renders
them a new state function.” The court concluded CDCR had the right to enter into
the contracts because the contracted services were a “new state function” under
section 19130, subdivision (b)(2), and the Board abused its discretion in concluding
otherwise. The trial court directed issuance of a peremptory writ of mandate

                                              14
commanding the Board to set aside its decision and issue a new decision concluding the
contracts were valid.
                                      DISCUSSION
                                  I. Standard of Review
       On appeal, we review the Board‟s decision, applying the same standard as the trial
court. We ask whether the Board‟s findings are supported by substantial evidence.
(Pan v. State Personnel Bd. (1986) 180 Cal.App.3d 351, 357.) We uphold the Board‟s
factual determinations if they are supported by substantial evidence in light of the whole
record (Code Civ. Proc., § 1094.5, subd. (c)), and all reasonable and legitimate inferences
must be drawn in support of those findings (Pan, supra, at p. 357).
       “Substantial evidence” is relevant evidence that is reasonable, credible, and of
solid value that a reasonable mind might accept as adequate to support a conclusion.
(California Youth Authority v. State Personnel Bd. (2002) 104 Cal.App.4th 575, 584-585
(California Youth Authority).) Different from the substantial evidence test in other
contexts, the substantial evidence standard in State Personnel Board cases requires that
reviewing courts consider all evidence, including that which fairly detracts from the
evidence supporting the Board‟s decision. (Id. at p. 586.) However, we do not reweigh
the evidence and must indulge all presumptions and resolve all conflicts in favor of the
Board‟s decision. (Camarena v. State Personnel Bd. (1997) 54 Cal.App.4th 698, 701
(Camarena).)
       The Board‟s legal conclusions, however, are reviewed de novo. (Yamaha Corp.
of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7.) We give deference to
an agency‟s interpretation of statutes affecting issues within its administrative
sphere. (Camarena, supra, 54 Cal.App.4th at p. 701.) But “an agency‟s interpretation
of a statute or regulation is contextual: Its power to persuade is both circumstantial
and dependent on the presence or absence of factors that support the merit of the
interpretation.” (Yamaha Corp., supra, 19 Cal.4th at p. 7, italics omitted.)

                                             15
“ „The ultimate interpretation of a statute is an exercise of the judicial power . . .
conferred upon the courts by the Constitution and, in the absence of a constitutional
provision, cannot be exercised by any other body.‟ ” (Ibid.) Thus, it is our duty to
construe statutes. (Ibid.)
                              II. “New State Function” Test
       AFSCME argues the trial court‟s judgment must be reversed because the trial
court applied an improper legal standard for the “new state function” test which would
invalidate a private contract only if it literally displaced civil service employees by firing
them or laying them off. We disagree with AFSCME‟s contention that the trial court
misapplied the law.
       The purposes of the constitutional civil service provision (fn. 2, ante) are “ „(1) to
encourage efficiency and economy in state government, and (2) to eliminate the “spoils
system” of political patronage by ensuring that demonstrated fitness--rather than political
considerations--spurs all appointments to public service.‟ ” (California Correctional
Peace Officers Assn. v. Schwarzenegger (2008) 163 Cal.App.4th 802, 821; see id. at
pp. 820-821 [private contracts with out-of-state private prisons to house California
inmates during declared emergency of prison overcrowding did not violate civil service
mandate].) Courts have interpreted the civil service mandate as forbidding private
contracting for services that are of a kind that persons selected through civil service could
perform adequately and competently. (California Correctional Peace Officers Assn.,
supra, at p. 821.) Exceptions to this rule are set forth in section 19130. (Ibid.)
       Here, as the trial court observed, the Board‟s reliance on its prior decision, CDF,
was misplaced, because that decision confused the “nature of the services” test of
section 19130, subdivision (b)(3), with the “new state function” test of subdivision (b)(2)
(fn. 3, ante).
       Under the “nature of the services” test, the question is whether the services at issue
could be performed by civil service employees, regardless of whether they in fact are

                                              16
being so performed. (Professional Engineers in California Government v. Kempton
(2007) 40 Cal.4th 1016, 1033 (Kempton); Professional Engineers v. Department of
Transportation (California Transportation Ventures) (1993) 13 Cal.App.4th 585, 593
(California Transportation Ventures); State Compensation Ins. Fund v. Riley (1937)
9 Cal.2d 126, 135.) If the services could be performed by civil service employees,
contracts to private contractors cannot be justified under the “nature of the services” test.
(Ibid.)
          In contrast, the “new state function” test allows private contracts “ „if the state
seeks to contract for private assistance to perform new functions not previously
undertaken by the state or covered by an existing department or agency.‟ ” (Kempton,
supra, 40 Cal.4th at p. 1033, original italics; California State Employees‟ Assn. v.
Williams (1970) 7 Cal.App.3d 390, 397-400 [permitting state to hire private insurance
carriers to administer state Medi-Cal program].) “ „[I]f the services . . . do not duplicate
functions of an existing agency, the contract is permissible.‟ ” (Professional Engineers v.
Dept. of Transportation (1997) 15 Cal.4th 543, 549 (Dept. of Transportation), original
italics.) As our high court has noted, the “nature of the services” test is inapplicable if the
state seeks to contract for the performance of new functions not previously undertaken by
the state. (Id. at p. 549, citing Williams, supra, 7 Cal.App.3d at pp. 397-400; Kennedy v.
Ross (1946) 28 Cal.2d 569, 571-574; San Francisco v. Boyd (1941) 17 Cal.2d 606, 618-
620.)
          The “new state function” test calls for a function not performed by any existing
agency of state government. Under this test, courts ask whether contracted services
“displace existing state civil service functions or, instead, embrace a new state activity or
function.” (California Transportation Ventures, supra, 13 Cal.App.4th at p. 593.) “The
key in such cases is whether a contract displaces the civil service.” (Savient
Pharmaceuticals, Inc. v.Department of Health Services (2007) 146 Cal.App.4th 1457,
1467, italics omitted.) The reason for this inquiry is that “the civil service mandate is

                                                 17
aimed at protecting „the existing civil service structure,‟ and does not compel the state „to
fulfill every new state function through its own agency.‟ ” (Dept. of Transportation,
supra, 15 Cal.4th at p. 549.) Section 19130, subdivision (a) is “carefully crafted to
permit personal service contracts to achieve cost savings only when they will have no
detrimental effect on the integrity of the civil service system.” (California State
Employees‟ Assn. v. State of California (1988) 199 Cal.App.3d 840, 846; see id. at p. 844
[rejected facial challenge to constitutionality of section 19130, subd. (a)].) “The statute
combines considerations of efficiency and economy with other interests, including those
of state employees.” (California State Employees‟ Assn. v. State of California, supra, at
p. 846.) In Department of Transportation v. Chavez (1992) 7 Cal.App.4th 407 (Chavez),
this court held that where personal service contracts for maintenance of highway rest
stops were executed 20 years after the authorizing statute was enacted, and a designated
state agency used state employees for most of that work during those intervening years,
the Board could properly decide that the work eventually contracted out did not relate to
or stem from a new state function within the meaning of section 19130. (Chavez, supra,
at pp. 409-411, 416.)
       Thus, whether services are a “new state function” depends not on whether, in
theory or in fact, they could be performed by civil service employees, but rather whether
they are, at the time of the contracts, already being performed by civil service employees.
       Moreover, the “new state function” test should not be interpreted too narrowly. In
California Transportation Ventures, the court addressed whether contracting out
construction of state toll roads was permissible as a “new state function.” (California
Transportation Ventures, supra, 13 Cal.App.4th at pp. 592-593.) The program gave
private developers exclusive leases during which the developers would operate the
facilities and apply collected tolls to payment of their capital outlay, costs, and a
reasonable rate of return on investment. After the lease term, the facility would revert to
the state. (Id. at p. 590.) Although the court agreed with the state employees that the

                                              18
“design and construction of roads” was not a new state function as a general matter, the
court cautioned that the state employees took “too literal an approach” in asserting the
demonstration projects were not a new state function. (Id. at p. 593.) The court
concluded the “novelty” of the projects lay in the privatization of not only their financing
(no state funds would be used to defray construction costs), but also their design,
construction, and operation. (Ibid.) The bar on private contracting of state work should
not be interpreted so as to “discourage [such] experimentation,” because “[t]he
constitutional policy of a merit employment system „does not prohibit legislative
experimentation in new forms to fit new functions.” (Ibid.)
       In contrast, a “ „ “new technique‟ ‟ ” for performing an existing state function does
not constitute a “ „ “new state function.” ‟ ” (Dept. of Transportation, supra, 15 Cal.4th
at p. 571.) In Dept. of Transportation, the Supreme Court held that legislation
authorizing Caltrans to use private contractors on state highway projects to ensure timely
retrofitting for seismic safety and ensure timely project delivery did not involve a “new
state function.” (Id. at pp. 552, 569, 571.) Caltrans had always been responsible for
project development of state highway projects; the new legislation did not change that but
simply expanded Caltrans‟s power to contract with private entities to perform that work.
(Id. at p. 571.) The Supreme Court rejected Caltrans‟s argument that an “ „ “enriched” ‟ ”
blend of private contracting to meet responsibilities historically discharged by Caltrans
employees created a “ „ “new state function.” ‟ ” (Ibid.) In discussing the decisional law,
the Supreme Court said of California Transportation Ventures that the legislation there
authorized Caltrans to contract with private development firms to construct and operate
tollways under state lease, on an experimental basis, to secure needed transportation
unobtainable through public financing arrangements. (Dept. of Transportation, supra,
15 Cal.4th at p. 550.) Although the design and construction of roads were neither new
functions nor ones that state workers could not satisfactorily perform, the privatization
program in the California Transportation Ventures case was an experimental one, and no

                                             19
state funds would be used to defray construction costs, and under these circumstances,
considerations of efficiency and economy permitted an exception to the private
contracting restriction. (Dept. of Transportation, supra, 15 Cal.4th at p. 550.)
       In CDF, the prior Board decision relied upon by the Board in this case, the Board
disallowed contracts CDF entered into with private medical providers to perform initial
and periodic medical examinations of firefighters who sometimes must wear respirators
while working. (CDF, supra, PSC No. 01-04 at p. 1.) CDF argued the medical
examinations were a new state function because they were being conducted in accordance
with new regulations promulgated by California‟s Division of Occupational Safety and
Health (Cal-OHSA); CDF had not previously performed medical evaluations on all its
respirator users; CDF nurse practitioners had never performed this type of medical
evaluation for respirator users; before the regulations, CDF employees could be
employed for years without medical evaluation; and the nature and frequency of the
newly mandated medical evaluations constituted a significant change in philosophy and
practice compared to CDF‟s past procedures. (CDF, supra, at pp. 4-5.) The Board‟s
entire analysis of “new state function” stated: “The documents submitted by both CDF
and CSEA [employees‟ association] indicate, however, that CDF has historically
performed medical evaluations of employees when they are first appointed as limited
term fire apparatus engineers, when they turn 40, and when they turn 55. In addition, the
duties listed in the class specification for Nurse Practitioners call for them to conduct
physical examinations. Thus, from the information CDF has provided, it appears that,
under the new Cal-OSHA regulations, CDF was not required to perform a new state
function, but, instead, was compelled to expand upon an existing state function. The
expansion of an already existing state function does not constitute a new state function
under the first condition of . . . § 19130(b)(2).” (CDF, supra, at p. 5.) The Board cited
Dept. of Transportation, supra, 15 Cal.4th at page 571. (CDF, supra, at p. 5, fn. 5.)



                                             20
       In CDF, the Board‟s analysis of the “new state function” test was vague, and a fair
reading suggests the Board made its determination because the nurse practitioners were
capable of performing the so-called “expanded” services, not that they were actually
performing those functions. We agree with the trial court that the CDF analysis, at heart,
applied the “nature of the services” test rather than the “new state function” test.
Therefore, CDF does not support the Board‟s decision in this case.
       AFSCME argues the trial court, in attempting to distinguish CDF, stated
two inconsistent principles: (1) that a contract may embrace a new state function even
if the tasks are or can be performed by existing civil service employees, and (2) that
expansion of an existing state function is not a new state function. AFSCME argues the
“gap” in services identified by the court is merely an expansion of existing services
outside of normal business hours, and merely adding services after business hours
does not constitute a “new state function.” AFSCME argues that focusing only on a
chronological gap in services for the “new state function” test, without regard to the
“nature of the services” provided by civil service employees, precludes the possibility
that the gap can -- and must, under the civil service mandate -- be an expansion of the
agency‟s existing functions. Presumably, AFSCME would have the State hire more
civil service employees, or pay overtime to existing civil service employees, to staff an
after-hours POC.
       However, no supporting authority is cited. AFSCME cites Dept. of
Transportation. As indicated, ante, the Supreme Court there held that using private
contractors on state highway projects to ensure timely retrofitting for seismic safety and
ensure timely project delivery did not involve a “new state function,” because Caltrans
had always been responsible for project development of state highway projects, and the
new legislation did not change that but simply expanded Caltrans‟s power to contract
with private entities to perform that work. (Id. at pp. 552, 569, 571.) However, the work
in that case was work already being done by civil service employees, and no facts

                                             21
supported a finding that civil service staff would be unable adequately and completely to
perform the work. (Ibid.) Here, in contrast, the evidence showed POC staff do not and
would not perform any work after business hours.
       AFSCME suggests affirmance of the trial court‟s judgment would constitute a
ruling that “displacement” of civil service for purposes of the “new state function” test
occurs only where state workers are actually fired or laid off. We disagree. Indeed, this
court concluded the “new state function” test did not apply in Chavez, where the existing
employees who had maintained the highway rest stops had not been laid off, but had been
reassigned to other work. (Chavez, supra, 7 Cal.App.4th at pp. 410-411, 416.)
       Here, as in Williams, “the state civil service suffers no displacement and the
underlying constitutional policy is not offended when a new state activity is conducted by
contract with a separate public or private entity.” (Williams, supra, 7 Cal.App.3d at
p. 399.) We reject AFSCME‟s contention that the trial court applied an improper legal
standard for “new state function.”
                                III. Substantial Evidence
       AFSCME argues substantial evidence supports the Board‟s finding that the
contracted services did not comprise a new state function, and the trial court improperly
reweighed the evidence before the Board. We disagree.
       As indicated, the substantial evidence standard in State Personnel Board cases
requires that all evidence be considered, including that which fairly detracts from the
evidence supporting the Board‟s decision. (California Youth Authority, supra,
104 Cal.App.4th at pp. 584-586.) AFSCME‟s reliance on cases that employ a substantial
evidence test in other contexts is misplaced.
       The evidence showed that the private contractors provide services that fill a “gap”
in services performed by civil service employees in the counties covered by the private




                                             22
contracts. They provide 24/7 crisis16 care, including inpatient services; vocational
training; housing referrals; parolee transportation; and administrative support, office
space, and necessary equipment. Without the contracted services, there is a gap in
service between POC outpatient services and a 5150 hold. Before the contracts, the
counties had to look to local community agencies to try to put together -- piecemeal --
inpatient counseling, transitional services, critical care beds, and overnight crisis
counseling/care -- services not provided by POC. Some of the services under the
contracts which fill the gap between POC and a 5150 hold are transitional housing, acute
case management, and daily meetings with a counselor if necessary. POC workers are
tied to the business hours of the parole units, Monday through Friday, excluding nights,
weekends and holidays. POC workers do not provide a 24-hour call center or 24/7 access
to a mental health professional, housing or the other listed services, as do the private
contractors. POC has no specific funding for housing; parole agents merely have “cash
assistance” available to assist with transitional housing.
       We have considered all the evidence, including the evidence indicating an overlap
of services during POC‟s regular business hours. However, even indulging presumptions
in favor of the Board‟s decision, there is no substantial evidence that civil services
employees perform the services that constitute the identified “gap.”
       AFSCME argues there is such evidence, in that parolees have 24-hour access to
their parole agent and parolees know how to call other crisis hotlines or go to a hospital.



16  It is hard to imagine that the Legislature had anything other than 24/7 care in mind
when it used the word “crisis” in Penal Code section 3073, given the plain meaning of the
word “crisis,” which includes “an emotionally significant event or radical change of
status in a person‟s life,” “an unstable or crucial time or state of affairs in which a
decisive change is impending; esp : one with the distinct possibility of a highly
undesirable outcome,” and “a situation that has reached a critical phase.” (Merriam-
Webster‟s Collegiate Dict. (11th ed. 2006) p. 296, col. 2.) The occurrence of such events
is not limited to the regular workweek during business hours.

                                              23
AFSCME argues Telecare‟s 24/7 crisis care is, according to its proposal, just an on-call
staff person with a cell phone, to ensure evening and weekend coverage. However, even
that is something not done by POC staff. Although AFSCME questions whether the
person who carries the phone has adequate training, Telecare also promised to have an
administrator and program psychiatrist available for after-hours consultation on an as-
needed basis. AFSCME argues “the only feature arguably distinguishing” the private
contractors‟ activities from POC‟s is that the private contractors “have assumed the role
of an after-hours crisis hotline (for parolees who already have 24-hour access to a parole
agent and other crisis hotlines).” Thus, AFSCME acknowledges that the private
contractors provide something not provided by POC social workers or psychologists.
       AFSCME argues there is no evidence of what “in[]patient” care is being provided
by the private contractors. AFSCME says it “does not dispute that Telecare or other
private contractors may be capable of providing in[]patient services to parolees,” but this
does not establish that their inpatient services, whether provided directly or by
subcontract, is distinct from POC‟s activities. AFSCME argues the private contractors
may merely be subcontracting for inpatient services in a manner already performed by
POC staff. AFSCME points to the oral statements of POC staff at the Board hearing, that
the private contractors were doing the same kinds of things POC staff did, “hookups with
board and care,” etc. However, at most, this merely indicates a potential overlap during
POC business hours. It says nothing about the gap filled by the private contractors for
services not performed by POC staff.
       AFSCME says the POC and private contractors work with the same population of
parolees. However, the cited evidence is an oral statement by POC psychologist Debra
Webb at the Board hearing. She said some parolees were unhappy with one of the
private contractors and wanted to come back to POC. However, the Board chair agreed




                                             24
with CDCR counsel that quality of care by the private contractor was not at issue in the
administrative appeal.17 We agree as well.
       We conclude the evidence is insufficient to support the Board‟s decision.
                                      IV. Remand
       AFSCME argues that, if the trial court was correct that the Board failed to apply
the correct legal standard and make findings for the “new state function” test, then we
should remand to the Board to correct those defects. We disagree.
       Code of Civil Procedure section 1094.5 implicitly requires that administrative
agencies set forth findings “to bridge the analytic gap between the raw evidence and
ultimate decision or order.” (Topanga Assn. for a Scenic Community v. County of Los
Angeles (1974) 11 Cal.3d 506, 515.) When an administrative agency‟s findings are not
adequate in that regard, remand is an appropriate remedy so that the agency may make
the proper findings. (Glendale Memorial Hospital & Health Center v. State Dept. of
Mental Health (2001) 91 Cal.App.4th 129, 140.)
       However, administrative agency findings need not be stated with the formality
and precision required in judicial proceedings, and remand is not appropriate if the court
determines that necessary findings reasonably may be implied. (North Gualala Water
Co. v. State Water Resources Control Bd. (2006) 139 Cal.App.4th 1577, 1603.)
       Here, we conclude (as did the trial court) that remand is not required, because
the Board‟s ultimate decision -- that CDCR failed to prove a “new state function” --
necessarily implied the underlying finding that the contracted services duplicate and
displace existing state functions.




17 The administrative appeal is restricted to the question whether the contract complies
with section 19130. (Pub. Contract Code, § 10337; Cal. Code Regs., tit. 2, § 547.66.)

                                             25
                                       DISPOSITION
       The judgment is affirmed. CDCR shall recover its costs on appeal. (Cal. Rules of
Court, rule 8.278(a).)



                                                               MURRAY               , J.



We concur:



             BLEASE             , Acting P. J.



         NICHOLSON              , J.




                                           26
