1313-S

AN ACT Relating to a financial performance review of the management of state forest assets; adding new sections to chapter 43.30 RCW; creating a new section; making an appropriation; and declaring an emergency.

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

NEW SECTION. Sec. 1. The legislature finds that there is an ever-growing need to fund basic and higher educational construction projects and other programs that are or can be supported by timber sale revenues from federal land grant trusts and state forest lands. The value of the timber assets on these lands may approach ten billion dollars. Recent significant volatility and uncertainty in the timber sales volumes, and declines in sales volumes may jeopardize the educational and local government support purposes for which those lands are to be managed. Therefore, the legislature finds that an independent review of the management performance of the department of natural resources is necessary and appropriate.

NEW SECTION. Sec. 2. A new section is added to chapter 43.30 RCW to read as follows:

(1) There is created a state forest management review committee which consists of the state auditor, who shall serve as the committee chair, and four additional members selected as follows within sixty days of the effective date of this act:

(a) A representative selected by and from the legislative authorities of those counties that contain "state forest lands" acquired or transferred under chapter 76.12 RCW. In selecting the representative, each participating county shall have one vote. The Washington state association of counties shall arrange for a meeting to select the county representative, and shall promptly notify the auditor of the selection;

(b) Two school board members selected by the school districts of the state. The representatives shall not be from the same school district. In selecting the representatives, each school district shall have one vote. The Washington state school directors' association shall arrange for a meeting to select the school representatives, and shall notify the auditor of the selections; and

(c) A representative of higher education selected by the presidents of the University of Washington, Washington State University, Central Washington University, Eastern Washington University, and Western Washington University. In selecting the representatives, each president shall have one vote. The presidents shall promptly notify the auditor of their selection.

(2) The state forest land management review committee is authorized and directed to conduct a review of the financial results of the department of natural resources' management policies and their implementation. The review shall cover the management of the forested state lands, as defined in RCW 79.01.004, and the state forest lands held by the state under RCW 76.12.020 and 76.12.030, which are more particularly identified in the department of natural resources' July 1992 forest resource plan.

(3) In conducting the review, the committee shall evaluate the department's overall financial performance during the review period by comparison to pertinent financial measures, including but not limited to the performance of private forest landowners in the state during the review period. In so doing, the committee shall, among other evaluations it deems appropriate:

(a) Determine the overall rate of return based on asset value and the individual rates of return on specific investments of capital;

(b) Evaluate the results of the forest management, including silvicultural, policies implemented during the review period, including the policy changes put in place by the 1992 forest resource plan;

(c) Evaluate the relative efficiency of the department's timber sales planning process and the reasons for the decline in timber sales volumes during the review period, including but not limited to the department's failure to meet the requirements of RCW 43.30.390;

(d) Evaluate the sustainable harvest calculations of the department, including the timber inventory and allocation of lands as on-base or off-base, and their impact on financial performance;

(e) Evaluate the effectiveness of the department's strategies and actions in addressing regulatory impacts and related issues;

(f) Evaluate the relative efficiency of the department's expenses to income ratio; and

(g) Evaluate the effectiveness of the department's fiduciary control system.

(4) After completing the review, the committee shall prepare a report identifying the major positive and negative aspects of management during the review period, and recommending administrative or legislative measures, if any, to correct or improve the present and future financial performance of these significant assets.

(5) The committee shall be assisted and supported in its efforts by the office of the state auditor.

(6) It is recognized that proper performance of the review called for by this section will require specialized expertise not currently available within the state auditor's staff. Thus, in performing this review, it is expected that the committee and the auditor will employ such outside consultants as are needed to bring the necessary expertise to bear on the items of review specified in subsection (3) of this section. Any consultant firm selected must have significant recent experience and demonstrated expertise in the management of large forest land holdings in Washington.

(7) In performing this review, the committee, state auditor's staff, and the consultants shall have full access to all department records, files, and personnel. All financial information obtained from or concerning any private forest landowners for purposes of this review shall be confidential and included in the review report only in a manner so as not to make the private party's identity known or readily ascertainable.

(8) The committee shall submit a progress report on the review on or before January 1, 1996, and a final report not later than July 1, 1996. Such reports shall be submitted to the governor, legislature, board of natural resources, and the other entities identified in subsection (1) of this section.

NEW SECTION. Sec. 3. (1) The state auditor is authorized to take all necessary actions in assisting and carrying out the performance review of the department of natural resources required by section 2 of this act.

(2) The sum of three hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1997, from the auditing services revolving account to the office of the state auditor for purposes under this act.

(3) The treasurer shall transfer from the resource management cost account and forest development account the amount necessary to repay the money expended under subsection (2) of this section. The proportional share of each account shall be determined by the department of natural resources.

NEW SECTION. Sec. 4. A new section is added to chapter 43.30 RCW to read as follows:

In addition to the tasks assigned to the state forest land management review committee in section 2 of this act, the review committee shall also identify information that the department shall provide on a biennial basis to allow trust beneficiaries and other interested parties to assess the department's management of the trust assets. At a minimum, the review committee shall recommend that the department provide information on the volume of timber harvested, the location of the harvests, and the value of the harvested timber. The review committee may consider the forest report put forth by the state of Oregon in identifying what additional information the department shall provide. Beginning with the first biennium after the completion of the review in section 2 of this act, the department shall provide the information identified as necessary by the review committee, on a biennial basis.

NEW SECTION. Sec. 5. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.