BP BHEAD INT H

AN ACT Relating to state budgeting; amending RCW 43.88.140; adding new sections to chapter 43.88 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. Washington state government has the vision to be the most effective and best performing service organization in the state. The state of Washington also expects to be the most effective and best performing state government in the United States, measured in terms of quality of customer service, accountability for cost-effective services, and productivity. With the passage of Initiative 601 there are additional constraints on the growth of state government. It is the intent of the legislature to provide incentives to public employees to spend public funds in the most efficient and effective manner possible. The system that allows the spending of public money should reward frugality and innovation, not encourage wasteful spending. Agencies are encouraged to identify savings and entrepreneurial opportunities and then use a portion of the resulting savings and earnings to improve the quality of service to the customers of state government.

NEW SECTION. Sec. 2. (1) The efficiency fund is created in the custody of the state treasurer. An account within the fund shall be established for each state agency.

(2) The source of revenue for the fund is as follows: At the close of each fiscal year the state treasurer is to transfer into each agency's account in the efficiency fund sixty-six percent of each agency's administrative savings.

(a) The administrative savings shall be approved by the director of the office of financial management; and

(b) The funds may be transferred to the efficiency fund when there are no restrictions on the funds that would prohibit (i) their transfer or (ii) their use for the purposes allowed in subsection (3) of this section.

(3)(a) For the purposes of this section, "administrative savings" means unspent appropriations resulting from cost effectiveness measures or productivity gains such as:

(i) Improved systems and procedures;

(ii) Better deployment and utilization of personnel;

(iii) Elimination of unnecessary expenditures;

(iv) Reductions in the cost of goods and services; or

(v) Elimination of waste, duplication, and operations of doubtful value.

(b) Administrative savings may not result from:

(i) Lower workloads, caseloads, or enrollments than were budgeted;

(ii) A lowering of the quality of services rendered; or

(iii) Shifting of expenses to another unit of government, revenue source, or fiscal period.

Administrative savings cannot exceed the amount of reversions due to efficiency measures.

(4) The amount in a particular agency's account may be authorized for expenditure only for that agency.

(5) Funds may be expended from the efficiency fund in order to improve the quality of services to the customers of the state. This includes one-time expenditures for employee training, technology improvements, new work processes, program innovations, equipment upgrades, office remodels, performance measurement and benchmarking, or employee bonuses. The expenditure shall not be used to expand a current program or create new programs that would have ongoing costs that would require future appropriations from the legislature.

(6) The fund is not subject to allotment under this chapter and no appropriation is required for expenditures from the efficiency fund.

Sec. 3. RCW 43.88.140 and 1981 c 270 s 9 are each amended to read as follows:

(1) Except as set out under subsection (2) of this section, all appropriations shall lapse at the end of the fiscal period for which the appropriations are made to the extent that they have not been expended or lawfully obligated.

(2) An amount equal to sixty-six percent of all appropriations for a fiscal period, to the extent that they have not been expended or lawfully obligated, shall be deposited by the state treasurer into the efficiency savings account after the end of the fiscal period for which the appropriations are made.

(3) Any remaining appropriations shall lapse at the end of the fiscal period for which the appropriations are made to the extent that they have not been expended or lawfully obligated.

(4) Transfers from the general fund to the efficiency fund are exempt from the provisions of RCW 43.135.035(4).

NEW SECTION. Sec. 4. (1) The enterprise fund is created in the custody of the state treasurer. An account within the fund shall be established for each state agency. Revenue for the fund shall come from money each agency earns for service provided. This includes user fees, proceeds from the sale of publications, products, or services, royalties, concessions, rent, and other various services provided. If the money is not directed by law to another account it shall be deposited into the enterprise fund.

(2) Funds may be validly expended from the enterprise fund for those purposes that are consistent with the agency's priorities established in the budget process, and if the purposes are within either the agency's charter, or statutory intent, or both.

(3) The amount of money in a particular agency's account may be authorized for expenditure only for that agency.

(4) The fund is not subject to allotment under this chapter, and no appropriation is required for expenditures.

NEW SECTION. Sec. 5. Sections 2 and 4 of this act are each added to chapter 43.88 RCW.