1313-S2

AN ACT Relating to a financial performance review of the management of state forest assets; creating new sections; 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, uncertainty, and declines in timber 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. (1) There is created a state forest management review panel to assist and advise the legislative budget committee in conducting the review under subsection (2) of this section. The panel shall consist of four 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 committee 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 promptly notify the committee of the selections; and

(c) A representative of higher education selected by the presidents of the state four-year universities. In selecting the representative, each president shall have one vote. The presidents shall promptly notify the committee of their selection.

(2) The legislative budget 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 legislative budget committee shall evaluate the department of natural resources overall financial performance by comparison to pertinent financial measures, including but not limited to the performance of private forest landowners in the state. 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 department's forest management and silvicultural policies, 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, including but not limited to the department's performance in meeting 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 in meeting its fiduciary responsibility to trust beneficiaries.

(4) After completing the review, the legislative budget 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 department of natural resources shall cooperate with the committee in the review by providing requested information in a timely manner. 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.

(6) The legislative budget 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. In addition to the tasks assigned to the legislative budget committee in section 2 of this act, the committee shall also recommend to the legislature information that the department of natural resources should report on a biennial basis to allow trust beneficiaries and other interested parties to assess the department's management of the trust assets. The committee may consider information such as the volume of timber harvested, the location of the harvests, and the value of the harvested timber in developing its recommendations. The committee may also consider the forest report put forth by the state of Oregon as an example of a possible report.

NEW SECTION. Sec. 4. 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.