County’s Use of Private Firms May Be Revised : Supervisors: An ordinance will be drafted that would require businesses to improve employee benefits. Action may signal a shift away from ‘privatization.’

The Los Angeles County Board of Supervisors voted Thursday to initiate major reforms in the system of contracting out government services to private firms, including a measure that would require the firms to provide health insurance to thousands of employees.

The board voted 4 to 1 to order drafting of an ordinance mandating the reforms. Its action signals a possible shift away from the “privatization” trend previously embraced by the conservative majority that once controlled the board. The move also indicates a setback for Chief Administrative Officer Richard Dixon, who has touted contracting-out as a major cost-saving program.

Private firms perform tasks equivalent to 4,700 county Civil Service positions--at a cost to the county of about $250 million annually. Officials at the chief administrative office calculate that privatization saves the county $53 million a year.

The measure would affect about 130 firms that contract with the county to provide a wide range of services, including maintenance of the county vehicle fleet, management of welfare caseloads and operation of five airports.

Supervisor Gloria Molina authored the measure, arguing that an untold number of low-paid workers are being denied the same medical benefits provided to the county employees they replaced. As a result, many workers are dependent on the county’s public health system, she said.

“If these people end up in our health care system, it costs us twice as much,” Molina said. “We need to mandate a basic level of health care and set an example as the county’s largest employer.”

The board also voted for an amendment to Molina’s motion made by Supervisor Ed Edelman to eliminate the system that granted department heads pay bonuses for privatizing county services.

Another Edelman amendment, also approved by the board, would require county department heads to conduct regular reviews of the contracts and to prove that privatizing county services provides long-term savings.

“In the past, the (conservative) board majority thought contracting out was the cat’s meow,” Edelman said. “They did it every way they could. I’m saying: ‘Let’s look at this in an analytical, objective way.’ ”

Supervisor Deane Dana, a conservative running for reelection this year, joined liberal colleagues Molina, Edelman and Kenneth Hahn in supporting the reforms.

The measure was opposed by Supervisor Michael Antonovich and by representatives of some small businesses that have been awarded the contracts.

Antonovich said the health insurance requirement would force many small companies to drop out of the bidding process for county contracts, effectively discriminating against firms owned by women and minorities.

Assistant Chief Administrative Officer Mary Jung joined Antonovich in arguing against the measure.

Patty De Dominic, president of PDQ Personnel Services Inc., which performs clerical work for the county, told the board that the health care plan would have a “devastating effect” on her firm. “You’re trying to put us out of business,” De Dominic told Molina.

Molina countered by citing the testimony at a board hearing Tuesday by a PDQ employee who earns $5.50 an hour. The employee, a single mother, said she is forced to rely on Medi-Cal for her and her children’s health care needs.

Union officials have often tangled with the board and Dixon over privatization because many county employees lost their jobs when their positions were given to lower-paid contract workers.

“Dixon’s whole ideological agenda as CAO was to run the county as if it were a major private corporation,” said Dan Savage, spokesman for the Service Employees International Union Local 660. “Privatization fit into that ideology perfectly.”

Dixon was out of town Thursday and could not be reached for comment.

Savage said Local 660 recently conducted a study that found that contract workers are usually custodians, food service workers and other low-wage employees. Many workers are living near or below the poverty line, Savage said.

The board instructed the chief administrative office to draft an ordinance implementing the reforms and to define the level of basic health care to be provided. The office will also study the cost to private firms of providing medical benefits to employees.

The measure would affect all firms granted contracts under Proposition A--the 1978 initiative that amended the County Charter to allow private firms to perform tasks previously limited to Civil Service employees.