S-3637.1          _______________________________________________


                                 SENATE BILL 6412



State of Washington              52nd Legislature             1992 Regular Session


By Senators Madsen, McCaslin, Sutherland and Thorsness


Read first time 01/29/92.  Referred to Committee on Governmental Operations.Enhancing accountability in state government.

     AN ACT Relating to accountability in state government; amending RCW 43.09.050, 43.88.160, 44.28.085, 43.88.010, and 43.88.090; amending 1987 c 480 s 3 (uncodified); adding a new section to chapter 43.06 RCW; adding a new section to chapter 43.88 RCW; adding a new chapter to Title 43 RCW; creating new sections; and providing an effective date.




     NEW SECTION.  Sec. 1.      The legislature finds that demand is growing for a new level of accountability in government.  The public is asking its government whether desired results are actually accomplished, not just what volume of services is provided.  Taxpayers want to know what value they are receiving for their money.  Policymakers need more accurate information for setting policy and allocating scarce resources.  Agency directors need better information on whether new and existing programs are effective.  Mid-level managers must be able to determine how efficiently they administer programs.  Front-line employees must be given the necessary data and opportunity to suggest creative ways to improve program operations.

     The legislature finds that ensuring accountability in government is a long-term process that will require a sustained and collaborative effort directed at developing an integrated, comprehensive accountability system that incorporates an ongoing cycle of policy planning, quality management, and program evaluation.  It is the intent of the legislature that the state auditor, the legislative budget committee, and the commission for efficiency and accountability in government continue to perform responsibilities as currently defined in state law, except as amended by this act.  However, establishing an integrated accountability system will require a collaborative effort between these existing evaluative entities and the public, the legislature, the governor, the office of financial management, and state agencies.


     NEW SECTION.  Sec. 2.      For the purposes of this chapter, the following terms shall have the following meanings:

     (1) "Performance audit" means an audit which determines the following:  (a) Whether a government entity is acquiring, protecting, and using its resources economically and efficiently; (b) the causes of inefficiencies or uneconomical practices; (c) whether the entity has complied with laws and regulations applicable to the program; (d) the extent to which the desired results or benefits established by the legislature are being achieved; and (e) the effectiveness of organizations, programs, activities or functions;

     (2) "Program evaluation" means the use of scientific research methods to determine the extent to which a program is achieving its legislative intent in terms of producing the effects expected.  Program evaluation seeks to make an objective judgment of the efficiency and effectiveness of programs in the context of their goals and objectives, with respect to their implementation, outcomes, and net impact.  It includes the application of systematic methods to estimate the extent to which observed results, intended or unintended, are caused by program activities.

     (3) "Success measures" means at least each of the following three different categories of indicators:  (a) Indicators of service efforts, which include dollar cost inputs and nonmonetary resource inputs expended on a service during a particular period; (b) indicators of service accomplishments, which include outputs such as the amount of workload accomplished, and outcomes, including numeric indicators of program results and indicators of service quality; and (c) indicators that relate service efforts to service accomplishments, such as inputs divided by outputs or outcomes, and indexes of productivity or efficiency.


     Sec. 3.  1987 c 480 s 3 (uncodified) is amended to read as follows:

     To carry out the provisions of section 2, chapter 480, Laws of 1987, the commission shall:

     (1) ((Prepare a list of)) Identify selected programs funded by the state that will be subject to review by the commission((.  The list shall include)) including programs that have a major fiscal impact on the state and where the commission determines that operational and organizational improvements are feasible. The reviews shall concentrate on identifying improvements that will result in increased program efficiency and effectiveness and reduced costs, greater accountability to the general public, increased information and data relative to governmental expenditures, and increased managerial competence and workforce productivity.

     (2) ((Develop a four‑year plan for the orderly review of each program identified under subsection (1) of this section.  The plan shall contain a timetable for the completion of each program review and an estimate of the resources needed to carry out the reviews.  The plan shall be updated annually.

     (3) Secure private sector financial and other support for the conduct of the reviews.

     (4))) Establish the scope of program reviews, select review teams and direct those teams to conduct the program reviews identified by the commission. The review teams shall report to the commission their findings and recommendations for organizational and operational improvements.

     (((5))) (3) Decide upon recommendations for executive action or legislation necessary to implement the operational or organizational improvements developed by program review teams.

     (((6) Submit the following reports to the legislature:

     (a) By December 31, 1987, a four‑year plan required by subsection (2) of this section;

     (b))) (4) Provide to the legislature, upon completion of each program review, its recommendations for operational and organizational improvements for the program reviewed.  The report shall include estimates of savings which may result from recommended legislative or executive action.

     (((c) By December 31, 1988, a report summarizing recommendations of the commission for legislative and executive actions to accomplish operational and organizational improvements identified in completed program reviews and any executive action initiated as a result of findings of a program review.  Thereafter,)) The commission shall report to the legislature annually, no later than December 31, on its progress ((toward completing the four‑year review plan)) and on its recommendations for operational and organizational improvements in state government.


     NEW SECTION.  Sec. 4.      The office of financial management shall facilitate and coordinate the development of a state-wide program evaluation system.  Toward this end, the office of financial management shall at a minimum:

     (1) Provide technical assistance to agencies in initiating, conducting, and using the results of evaluations to improve programs;

     (2) Share evaluation information and results;

     (3) Develop standard definitions of commonly used program evaluation terms;

     (4) Develop suggested guidelines for conducting program evaluations, including standards of practices and standards for evaluative tools;

     (5) Assist in developing training programs in evaluation methodologies for state employees;

     (6) Work toward establishing automated data systems that are readily accessible for evaluation purposes;

     (7) Develop methods of tracking performance measures and report to the legislature by January, 1993; and

     (8) Establish a clearinghouse for program evaluation results and information from other states and the federal government.


     NEW SECTION.  Sec. 5.  A new section is added to chapter 43.06 RCW to read as follows:

     The governor shall prepare a plan for the establishment of a strategic planning process for the key functional areas of state government.  The key functional areas that must be accounted for in the governor's strategic planning process are general government, health and human services, community and economic development, the environment and natural resources, transportation, K-12 education, and higher education.  The strategic planning processes must include (1) the identification of key stakeholders and a means to involve them actively in the planning process; (2) the establishment of results-oriented goals and objectives for the biennium and for a six-year planning cycle; and (3) the development of indicators of success measures based on the identified goals and objectives, for each key functional area of state government.  The plan shall provide for implementing the strategic planning process in July 1993, with specific results-oriented goals and objectives for each functional area to be adopted by January 1995.  The governor shall report to the legislature on the status of the strategic planning process in January 1994 and invite the legislature to approve the plan by resolution.  In developing this plan, the governor shall consult with the commissioner of public lands, the transportation commission, the superintendent of public instruction, and the higher education coordinating board.


     Sec. 6.  RCW 43.09.050 and 1979 c 151 s 91 are each amended to read as follows:

     The auditor shall:

     (1) Except as otherwise specifically provided by law, audit the accounts of all collectors of the revenue and other holders of public money required by law to pay the same into the treasury;

     (2) In his or her discretion, inspect the books of any person charged with the receipt, safekeeping, and disbursement of public moneys;

     (3) Inform the attorney general in writing of the necessity for ((him)) the attorney general to direct prosecutions in the name of the state for all official delinquencies in relation to the assessment, collection, and payment of the revenue, against all persons who, by any means, become possessed of public money or property, and fail to pay over or deliver the same, and against all debtors of the state;

     (4) Give information in writing to the legislature, whenever required, upon any subject relating to the financial affairs of the state, or touching any duties of his or her office;

     (5) Report to the director of financial management in writing the names of all persons who have received any moneys belonging to the state, and have not accounted therefor;

     (6) Authenticate with his or her official seal papers issued from his  or her office;

     (7) Make his or her official report annually on or before the 31st of December((.));

     (8) Conduct performance audits of state agency programs.


     Sec. 7.  RCW 43.88.160 and 1991 c 358 s 4 are each amended to read as follows:

     This section sets forth the major fiscal duties and responsibilities of officers and agencies of the executive branch.  The regulations issued by the governor pursuant to this chapter shall provide for a comprehensive, orderly basis for fiscal management and control, including efficient accounting and reporting therefor, for the executive branch of the state government and may include, in addition, such requirements as will generally promote more efficient public management in the state.

     (1) Governor; director of financial management.  The governor, through the director of financial management, shall devise and supervise a modern and complete accounting system for each agency to the end that all revenues, expenditures, receipts, disbursements, resources, and obligations of the state shall be properly and systematically accounted for.  The accounting system shall include the development of accurate, timely records and reports of all financial affairs of the state.  The system shall also provide for central accounts in the office of financial management at the level of detail deemed necessary by the director to perform central financial management.  The director of financial management shall adopt and periodically update an accounting procedures manual.  Any agency maintaining its own accounting and reporting system shall comply with the updated accounting procedures manual and the rules of the director adopted under this chapter.  An agency may receive a waiver from complying with this requirement if the waiver is approved by the director.  Waivers expire at the end of the fiscal biennium for which they are granted.  The director shall forward notice of waivers granted to the appropriate legislative fiscal committees.  The director of financial management may require such financial, statistical, and other reports as the director deems necessary from all agencies covering any period.

     (2) The director of financial management is responsible for quarterly reporting of primary operating budget drivers such as applicable workloads, caseload estimates, and appropriate unit cost data.  These reports shall be transmitted to the legislative fiscal committees or by electronic means to the legislative evaluation and accountability program committee.  Quarterly reports shall include actual monthly data and the variance between actual and estimated data to date.  The reports shall also include estimates of these items for the remainder of the budget period.

     (3) The director of financial management shall report at least annually to the appropriate legislative committees regarding the status of all appropriated capital projects, including transportation projects, showing significant cost overruns or underruns.  If funds are shifted from one project to another, the office of financial management shall also reflect this in the annual variance report.  Once a project is complete, the report shall provide a final summary showing estimated start and completion dates of each project phase compared to actual dates, estimated costs of each project phase compared to actual costs, and whether or not there are any outstanding liabilities or unsettled claims at the time of completion.

     (4) In addition, the director of financial management, as agent of the governor, shall:

     (a) Make surveys and analyses of agencies with the object of determining better methods and increased effectiveness in the use of manpower and materials; and the director shall authorize expenditures for employee training to the end that the state may benefit from training facilities made available to state employees;

     (b) Report to the governor with regard to duplication of effort or lack of coordination among agencies;

     (c) Review any pay and classification plans, and changes thereunder, developed by any agency for their fiscal impact:  PROVIDED, That none of the provisions of this subsection shall affect merit systems of personnel management now existing or hereafter established by statute relating to the fixing of qualifications requirements for recruitment, appointment, or promotion of employees of any agency.  The director shall advise and confer with agencies including appropriate standing committees of the legislature as may be designated by the speaker of the house and the president of the senate regarding the fiscal impact of such plans and may amend or alter said plans, except that for the following agencies no amendment or alteration of said plans may be made without the approval of the agency concerned:  Agencies headed by elective officials;

     (d) Fix the number and classes of positions or authorized man years of employment for each agency and during the fiscal period amend the determinations previously fixed by the director except that the director shall not be empowered to fix said number or said classes for the following:  Agencies headed by elective officials;

     (e) Provide for transfers and repayments between the budget stabilization account and the general fund as directed by appropriation and RCW 43.88.525 through 43.88.540;

     (f) Promulgate regulations to effectuate provisions contained in subsections (a) through (e) hereof.

     (5) The treasurer shall:

     (a) Receive, keep, and disburse all public funds of the state not expressly required by law to be received, kept, and disbursed by some other persons:  PROVIDED, That this subsection shall not apply to those public funds of the institutions of higher learning which are not subject to appropriation;

     (b) Disburse public funds under the treasurer's supervision or custody by warrant or check;

     (c) Keep a correct and current account of all moneys received and disbursed by the treasurer, classified by fund or account;

     (d) Perform such other duties as may be required by law or by regulations issued pursuant to this law.

     It shall be unlawful for the treasurer to issue any warrant or check for public funds in the treasury except upon forms duly prescribed by the director of financial management.  Said forms shall provide for authentication and certification by the agency head or the agency head's designee that the services have been rendered or the materials have been furnished; or, in the case of loans or grants, that the loans or grants are authorized by law; or, in the case of payments for periodic maintenance services to be performed on state owned equipment, that a written contract for such periodic maintenance services is currently in effect and copies thereof are on file with the office of financial management; and the treasurer shall not be liable under the treasurer's surety bond for erroneous or improper payments so made:  PROVIDED, That when services are lawfully paid for in advance of full performance by any private individual or business entity other than as provided for by RCW 42.24.035, such individual or entity other than central stores rendering such services shall make a cash deposit or furnish surety bond coverage to the state as shall be fixed in an amount by law, or if not fixed by law, then in such amounts as shall be fixed by the director of the department of general administration but in no case shall such required cash deposit or surety bond be less than an amount which will fully indemnify the state against any and all losses on account of breach of promise to fully perform such services:  AND PROVIDED FURTHER, That no payments shall be made in advance for any equipment maintenance services to be performed more than three months after such payment.  Any such bond so furnished shall be conditioned that the person, firm or corporation receiving the advance payment will apply it toward performance of the contract.  The responsibility for recovery of erroneous or improper payments made under this section shall lie with the agency head or the agency head's designee in accordance with regulations issued pursuant to this chapter.  Nothing in this section shall be construed to permit a public body to advance funds to a private service provider pursuant to a grant or loan before services have been rendered or material furnished.

     (6) The state auditor shall:

     (a) Report to the legislature the results of current post audits that have been made of the financial transactions of each agency; to this end the auditor may, in the auditor's discretion, examine the books and accounts of any agency, official or employee charged with the receipt, custody or safekeeping of public funds.  The current post audit of each agency may include a section on recommendations to the legislature as provided in (c) of this subsection.

     (b) Give information to the legislature, whenever required, upon any subject relating to the financial affairs of the state.

     (c) Make the auditor's official report on or before the thirty-first of December which precedes the meeting of the legislature.  The report shall be for the last complete fiscal period and shall include at least the following:

     Determinations as to whether agencies, in making expenditures, complied with the laws of this state((:  PROVIDED, That nothing in this section may be construed to grant the state auditor the right to perform performance audits.  A performance audit for the purpose of this section is the examination of the effectiveness of the administration, its efficiency, and its adequacy in terms of the programs of departments or agencies as previously approved by the legislature.  The authority and responsibility to conduct such an examination shall be vested in the legislative budget committee as prescribed in RCW 44.28.085)).

     (d) Be empowered to take exception to specific expenditures that have been incurred by any agency or to take exception to other practices related in any way to the agency's financial transactions and to cause such exceptions to be made a matter of public record, including disclosure to the agency concerned and to the director of financial management.  It shall be the duty of the director of financial management to cause corrective action to be taken promptly, such action to include, as appropriate, the withholding of funds as provided in RCW 43.88.110.

     (e) Promptly report any irregularities to the attorney general.

     (7) The legislative budget committee may:

     (a) Make post audits of the financial transactions of any agency and management surveys and program reviews as provided for in RCW 44.28.085.  To this end the committee may in its discretion examine the books, accounts, and other records of any agency, official, or employee.

     (b) Give information to the legislature or any legislative committee whenever required upon any subject relating to the performance and management of state agencies.

     (c) Make a report to the legislature which shall include at least the following:

     (i) Determinations as to the extent to which agencies in making expenditures have complied with the will of the legislature and in this connection, may take exception to specific expenditures or financial practices of any agencies; and

     (ii) Such plans as it deems expedient for the support of the state's credit, for lessening expenditures, for promoting frugality and economy in agency affairs and generally for an improved level of fiscal management.


     Sec. 8.  RCW 44.28.085 and 1975 1st ex.s. c 293 s 15 are each amended to read as follows:

     The legislative budget committee shall make management surveys and program reviews as to every public body, officer or employee subject to the provisions of RCW 43.09.290 through 43.09.340.  The legislative budget committee may also make management surveys and program reviews of local school districts, intermediate school districts, and other units of local government receiving state funds as grants-in-aid or as shared revenues.  Management surveys for the purposes of this section shall be an independent examination for the purpose of providing the legislature with an evaluation and report of the manner in which any public agency, officer, administrator, or employee has discharged the responsibility to faithfully, efficiently, and effectively administer any legislative purpose of the state.  Program reviews for the purpose of this section shall be an examination of state or local government programs to ascertain whether or not such programs continue to serve their intended purposes, are conducted in an efficient and effective manner, or require modification or elimination:  PROVIDED, That nothing in this section shall limit the power or duty of the state auditor to report to the legislature as directed by subsection (3) of RCW 43.88.160 ((as now or hereafter amended.  The authority in this section conferred excludes a like authority in the state auditor)).

     The legislative budget committee shall receive a copy of each report of examination issued by the state auditor under RCW 43.09.310, shall review all such reports, and shall make such recommendations to the legislature and to the state auditor as it deems appropriate.


     Sec. 9.  RCW 43.88.010 and 1986 c 215 s 1 are each amended to read as follows:

     It is the purpose of this chapter to establish an effective state budgeting, accounting, and reporting system for all activities of the state government, including both capital and operating expenditures and state program performance; to prescribe the powers and duties of the governor as these relate to securing such ((fiscal)) controls as will promote effective program and budget administration; and to prescribe the responsibilities of agencies of the executive branch of the state government.

     It is the intent of the legislature that the powers conferred by this chapter, as amended, shall be exercised by the executive in cooperation with the legislature and its standing, special, and interim committees in its status as a separate and coequal branch of state government.


     Sec. 10.  RCW 43.88.090 and 1989 c 273 s 26 are each amended to read as follows:

     (1) For purposes of developing budget proposals to the legislature, the governor shall have the power, and it shall be the governor's duty, to require from proper agency officials such detailed estimates and other information in such form and at such times as the governor shall direct.  The estimates for the legislature and the judiciary shall be transmitted to the governor and shall be included in the budget without revision.  The estimates for state pension contributions shall be based on the rates provided in chapter 41.45 RCW.  Copies of all such estimates shall be transmitted to the standing committees on ways and means of the house and senate at the same time as they are filed with the governor and the office of financial management.

     (2) ((Estimates from each agency shall include goals and objectives for each program administered by the agency.  The goals and objectives shall, whenever possible, be stated in terms of objective measurable results.))  For the purpose of assessing program performance, each state agency shall establish results-oriented goals and objectives, and develop success measures based on these goals and objectives, for each major program in its budget.  Each agency shall express the success measures in an objective, quantifiable, and measurable form unless permitted by the office of financial management to adopt a different standard.

     The estimates shall include statements or tables which indicate, by agency, the state funds which are required for the receipt of federal matching revenues.  The estimates shall be revised as necessary to reflect legislative enactments and adopted appropriations and shall be included with the initial biennial allotment submitted under RCW 43.88.110.

     (3) In the year of the gubernatorial election, the governor shall invite the governor-elect or the governor-elect's designee to attend all hearings provided in RCW 43.88.100; and the governor shall furnish the governor-elect or the governor-elect's designee with such information as will enable the governor-elect or the governor-elect's designee to gain an understanding of the state's budget requirements.  The governor-elect or the governor-elect's designee may ask such questions during the hearings and require such information as the governor-elect or the governor-elect's designee deems necessary and may make recommendations in connection with any item of the budget which, with the governor-elect's reasons therefor, shall be presented to the legislature in writing with the budget document.  Copies of all such estimates and other required information shall also be submitted to the standing committees on ways and means of the house and senate.


     NEW SECTION.  Sec. 11.  A new section is added to chapter 43.88 RCW to read as follows:

     It shall not be in order for either house of the legislature to consider any bill or amendment that provides for the authorization of appropriation of funds unless the bill or amendment specifies goals or objectives, and desired outcomes, for the appropriation.


     NEW SECTION.  Sec. 12.     This act may be known and cited as the government accountability act of 1992.


     NEW SECTION.  Sec. 13.     Sections 1 and 2 of this act shall constitute a new chapter in Title 43 RCW.


     NEW SECTION.  Sec. 14.     Sections 10 and 11 of this act shall take effect July 1, 1993, for the purpose of incorporating these sections into budget planning for the 1995-97 biennium.


     NEW SECTION.  Sec. 15.     If specific funding for the purposes of this act, referencing this act by bill number, is not provided by June 30, 1993, in the omnibus appropriations act, this act shall be null and void.