1325-S AAS 4/15/97 S2835

1325-S AAS 4/15/97 S2835.1

SHB 1325 - S COMM AMD

By Committee on Ways & Means

ADOPTED 4/15/97

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. The legislature finds that nonprofit organizations provide a variety of social services that serve the needs of the citizens of Washington, including many services implemented under contract with state agencies. The legislature also finds that the efficiency and quality of these services may be enhanced by the provision of safe, reliable, and sound facilities, and that, in certain cases, it may be appropriate for the state to assist in the development of these facilities.

NEW SECTION. Sec. 2. A new section is added to chapter 43.63A RCW to read as follows:

If the legislature provides an appropriation to assist nonprofit organizations in acquiring, constructing, or rehabilitating facilities used for the delivery of nonresidential social services, the legislature may direct the department of community, trade, and economic development to establish a competitive process to prioritize applications for the assistance as follows:

(1) The department shall conduct a state-wide solicitation of project applications from local governments, nonprofit organizations, and other entities, as determined by the department. The department shall evaluate and rank applications in consultation with a citizen advisory committee using objective criteria. At a minimum, applicants must demonstrate that the requested assistance will increase the efficiency or quality of the social services it provides to citizens. The evaluation and ranking process shall also include an examination of existing assets that applicants may apply to projects. Grant assistance under this section shall not exceed twenty-five percent of the total cost of the project. The nonstate portion of the total project cost may include, but is not limited to, land, facilities, and in-kind contributions.

(2) The department shall submit a prioritized list of recommended projects to the legislature by November 1st following the effective date of the appropriation. The list shall include a description of each project, the amount of recommended state funding, and documentation of nonstate funds to be used for the project. The department shall not sign contracts or otherwise financially obligate funds under this section until the legislature has approved a specific list of projects.

(3) In contracts for grants authorized under this section the department shall include provisions which require that capital improvements shall be held by the grantee for a specified period of time appropriate to the amount of the grant and that facilities shall be used for the express purpose of the grant. If the grantee is found to be out of compliance with provisions of the contract, the grantee shall repay to the state general fund the principal amount of the grant plus interest calculated at the rate of interest on state of Washington general obligation bonds issued most closely to the date of authorization of the grant.

(4) The department shall develop model contract provisions for compliance with subsection (3) of this section and shall distribute its recommendations to the appropriate legislative committees, the office of financial management, and to all state agencies which provide capital grants to nonstate entities.

NEW SECTION. Sec. 3. A new section is added to chapter 43.88 RCW to read as follows:

(1) Each state agency shall submit a report to the office of the state auditor listing each nongovernment entity that received over three hundred thousand dollars in state moneys during the previous fiscal year under contract with the agency for purposes related to the provision of social services. The report must be submitted by September 1 each year, and must be in a form prescribed by the office of the state auditor.

(2) The office of the state auditor shall select two groups of entities from the reports for audit as follows:

(a) The first group shall be selected at random using a procedure prescribed by the office of the state auditor. The office of the state auditor shall ensure that the number of entities selected under this subsection (2)(a) each year is sufficient to ensure a statistically representative sample of all reported entities.

(b) The second group shall be selected based on a risk assessment of entities conducted by the office of the state auditor in consultation with state agencies. The office of the state auditor shall consider, at a minimum, the following factors when conducting risk assessments: Findings from previous audits; decentralization of decision making and controls; turnover in officials and key personnel; changes in management structure or operations; and the presence of new programs, technologies, or funding sources.

(3) Each entity selected under subsection (2) of this section shall be required to complete a comprehensive entity-wide audit in accordance with generally accepted government auditing standards. The audit shall determine, at a minimum, whether:

(a) The financial statements of the entity are presented fairly in all material respects in conformity with generally accepted accounting principles;

(b) The schedule of expenditures of state moneys is presented fairly in all material respects in relation to the financial statements taken as a whole;

(d) The entity has complied with laws, regulations, and contract and grant provisions that have a direct and material effect on performance of the contract and the expenditure of state moneys.

(4) The office of the state auditor shall prescribe policies and procedures for the conduct of audits under this section. The office of the state auditor shall deem single audits completed in compliance with federal requirements to be in fulfillment of the requirements of this section if the audit meets the requirements of subsection (3)(a) through (d) of this section.

(5) Completed audits must be delivered to the office of the state auditor and the state agency by April 1 in the year following the selection of the entity for audit. Entities must resolve any findings contained in the audit within six months of the delivery of the audit. Entities may not enter into new contracts with state agencies until all major audit findings are resolved.

(6) Nothing in this section limits the authority of the state auditor to carry out statutorily and contractually prescribed powers and duties."

SHB 1325 - S COMM AMD

By Committee on Ways & Means

ADOPTED 4/15/97

On page 1, line 2 of the title, after "organizations;" strike the remainder of the title and insert "adding a new section to chapter 43.63A RCW; adding a new section to chapter 43.88 RCW; and creating a new section."