CERTIFICATION OF ENROLLMENT
SENATE BILL 5629
2002 Regular Session
Passed by the Senate March 11, 2002
YEAS 36 NAYS 0
President of the Senate
Passed by the House March 8, 2002
YEAS 96 NAYS 0
I, Tony M. Cook, Secretary of the Senate of the State of Washington, do hereby certify that the attached is SENATE BILL 5629 as passed by the Senate and the House of Representatives on the dates hereon set forth.
Speaker of the
House of Representatives
Governor of the State of Washington
Secretary of State
State of Washington
SENATE BILL 5629
AS AMENDED BY THE HOUSE
Passed Legislature - 2002 Regular Session
State of Washington 57th Legislature 2001 Regular Session
By Senators Patterson and Horn; by request of Office of Financial Management
Read first time 01/29/2001. Referred to Committee on State & Local Government.
AN ACT Relating to the office of financial management's budgeting, accounting, and reporting requirements for state agencies; amending RCW 43.88.160, 79.44.040, 79.44.050, 79.44.070, 79.44.080, 79.44.140, and 39.29.040; adding new sections to chapter 39.29 RCW; repealing RCW 79.44.180; providing an effective date; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1. RCW 43.88.160 and 1998 c 135 s 1 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) Except as provided in chapter 43.88C RCW, 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) Develop and maintain a system of internal controls and internal audits comprising methods and procedures to be adopted by each agency that will safeguard its assets, check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies for accounting and financial controls. The system developed by the director shall include criteria for determining the scope and comprehensiveness of internal controls required by classes of agencies, depending on the level of resources at risk.
Each agency head or authorized designee shall be assigned the responsibility and authority for establishing and maintaining internal audits following the standards of internal auditing of the institute of internal auditors;
(b) 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;
(c) Establish policies for allowing the contracting of child care services;
(d) Report to the governor with regard to duplication of effort or lack of coordination among agencies;
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)) the plans,
except that for the following agencies no amendment or alteration of (( said))
the plans may be made without the approval of the agency concerned:
Agencies headed by elective officials;
Fix the number and classes of positions or authorized ((
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)) the number or (( said)) the
classes for the following: Agencies headed by elective officials;
(g) Adopt rules to effectuate provisions contained in (a) through (f) of this subsection.
(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) Receive, disburse, or transfer public funds under the treasurer's supervision or custody;
(c) Keep a correct and current account of all moneys received and disbursed by the treasurer, classified by fund or account;
(d) Coordinate agencies' acceptance and use of credit cards and other payment methods, if the agencies have received authorization under RCW 43.41.180;
(e) Perform such other duties as may be required by law or by regulations issued pursuant to this law.
shall be unlawful for the treasurer to disburse public funds in the treasury
except upon forms or by alternative means duly prescribed by the director of
financial management. These forms or alternative means 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. When
services are lawfully paid for in advance of full performance by any private
individual or business entity other than equipment maintenance providers or
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. No payments shall be made in advance for any equipment maintenance
services to be performed more than (( three)) twelve 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. Where feasible in conducting examinations, the auditor shall utilize data and findings from the internal control system prescribed by the office of financial management. 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 determinations as to whether agencies, in making expenditures, complied with the laws of this state. The state auditor is authorized to perform or participate in performance verifications and performance audits as expressly authorized by the legislature in the omnibus biennial appropriations acts or in the performance audit work plan approved by the joint legislative audit and review committee. The state auditor, upon completing an audit for legal and financial compliance under chapter 43.09 RCW or a performance verification, may report to the joint legislative audit and review committee or other appropriate committees of the legislature, in a manner prescribed by the joint legislative audit and review committee, on facts relating to the management or performance of governmental programs where such facts are discovered incidental to the legal and financial audit or performance verification. The auditor may make such a report to a legislative committee only if the auditor has determined that the agency has been given an opportunity and has failed to resolve the management or performance issues raised by the auditor. If the auditor makes a report to a legislative committee, the agency may submit to the committee a response to the report. This subsection (6) shall not be construed to authorize the auditor to allocate other than de minimis resources to performance audits except as expressly authorized in the appropriations acts or in the performance audit work plan. The results of a performance audit conducted by the state auditor that has been requested by the joint legislative audit and review committee must only be transmitted to the joint legislative audit and review committee.
(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 within six months, such action to include, as appropriate, the withholding of funds as provided in RCW 43.88.110. The director of financial management shall annually report by December 31st the status of audit resolution to the appropriate committees of the legislature, the state auditor, and the attorney general. The director of financial management shall include in the audit resolution report actions taken as a result of an audit including, but not limited to, types of personnel actions, costs and types of litigation, and value of recouped goods or services.
(e) Promptly report any irregularities to the attorney general.
(f) Investigate improper governmental activity under chapter 42.40 RCW.
(7) The joint legislative audit and review committee may:
(a) Make post audits of the financial transactions of any agency and management surveys and program reviews as provided for in chapter 44.28 RCW as well as performance audits and program evaluations. To this end the joint 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. 2. RCW 79.44.040 and 1989 c 243 s 14 are each amended to read as follows:
of the intention to make such improvement, or impose any assessment, together
with the estimate of the amount to be charged to each lot, tract or parcel of
land, or other property owned by the state to be assessed, shall be forwarded
by registered or certified mail to the ((
director of financial management
and to the)) chief administrative officer of the agency of state government
occupying, using, or having jurisdiction over such lands at least thirty days
prior to the date fixed for hearing on the resolution or petition initiating (( said))
the assessment. Such assessing district, shall not have jurisdiction to
order such improvement as to the interest of the state in harbor areas and
state tidelands until the written consent of the commissioner of public lands
to the making of such improvement shall have been obtained, unless other means
be provided for paying that portion of the cost which would otherwise be levied
on the interest of the state of Washington in and to (( said)) those
tidelands, and nothing herein shall prevent the city from assessing the
proportionate cost of (( said)) the improvement against any
leasehold, contractual, or possessory interest in and to any tideland or
harbor area owned by the state: PROVIDED, HOWEVER, That in the case of
tidelands and harbor areas within the boundaries of any port district, notice
of intention to make such improvement shall also be forwarded to the
commissioners of (( said)) the port district.
Sec. 3. RCW 79.44.050 and 1989 c 243 s 15 are each amended to read as follows:
the approval and confirmation of the assessment roll ordered by the proper
authorities of any assessing district, the treasurer of such assessing district
shall certify and forward ((
to the director of financial management and))
to the chief administrative officer of the agency of state government
occupying, using, or having jurisdiction over the lands, (( in accordance
with such rules and regulations as the director of financial management may
provide,)) a statement of all the lots or parcels of land held or owned by
the state and charged on such assessment roll, separately describing each such
lot or parcel of the state's land, with the amount of the local assessment
charged against it, or the proportionate amount assessed against the fee simple
interest of the state, in case (( said)) the land has been
leased. The chief administrative officer upon receipt of such statement shall
cause a proper record to be made in his office of the cost of such assessment
upon the lands occupied, used, or under the jurisdiction of his agency.
No penalty shall be provided or enforced against the state, and the interest upon such assessments shall be computed and paid at the rate paid by other property situated in the same assessing district.
Sec. 4. RCW 79.44.070 and 1979 c 151 s 180 are each amended to read as follows:
any assessing district has made or caused to be made an assessment against such
leasehold, contractual, or possessory interest for any such local
improvement, the treasurer of ((
said)) that assessing district
shall immediately give notice (( to the director of financial management and))
to the chief administrative officer of the agency having jurisdiction over the
lands. (( Said)) The assessment shall become a lien against the
leasehold, contractual, or possessory interest in the same manner as the
assessments on other property, and its collection may be enforced against such
interests as provided by law for the enforcement of other local improvement
assessments: PROVIDED, That (( said)) the assessment shall not be
made payable in installments unless the owner of such leasehold, contractual,
or possessory interest shall first file with such treasurer a satisfactory bond
guaranteeing the payment of such installments as they become due.
Sec. 5. RCW 79.44.080 and 1979 c 151 s 181 are each amended to read as follows:
any assessing district shall have foreclosed the lien of any such delinquent
assessments, as provided by law, and shall have obtained title to such
leasehold, contractual, or possessory interest, ((
the director of
financial management and)) the chief administrative officer of the agency
having jurisdiction over the lands shall be notified by registered or certified
mail of such action and furnished a statement of all assessments against such
leasehold, contractual, or possessory interest, and the chief
administrative officer (( or director of financial management)) shall
cause the amount of such assessments to be paid as provided in RCW 79.44.060,
and upon the receipt of an assignment from such assessing district, the chief
administrative officer shall cancel such lease or contract: PROVIDED, HOWEVER,
That unless the assessing district making (( said)) the local
improvement and levying (( said)) the special assessment shall
have used due diligence in the foreclosure thereof, the chief administrative
officer (( and the director of financial management)) shall not be
required to pay any sum in excess of what they deem to be the special benefits
accruing to the state's reversionary interest in (( said)) the
property: AND PROVIDED FURTHER, That if such delinquent assessment or
installment shall be against a leasehold interest in fresh water harbor areas
within a port district, the chief administrative officer shall notify the
commissioners of (( said)) that port district of the receipt of
such assignment, and (( said)) the commissioners shall forthwith
cancel such lease.
Sec. 6. RCW 79.44.140 and 1979 c 151 s 182 are each amended to read as follows:
provisions of this chapter shall apply to all local improvements initiated
after June 11, 1919, including assessments to pay the cost and expense of
taking and damaging property by the power of eminent domain, as provided by
law: PROVIDED, That in case of eminent domain assessments, it shall not be
necessary to forward notice of the intention to make such improvement, but the
eminent domain commissioners, authorized to make such assessment, shall, at the
time of filing the assessment roll with the court in the manner provided by
law, forward by registered or certified mail ((
to the director of financial
management and)) to the chief administrative officer of the agency using,
occupying or having jurisdiction over the lands a notice of such assessment,
and of the day fixed by the court for the hearing thereof: PROVIDED, That no
assessment against the state's interest in tidelands or harbor areas shall be
binding against the state if the commissioner of public lands shall file a
disapproval of the same in court before judgment confirming the roll.
NEW SECTION. Sec. 7. A new section is added to chapter 39.29 RCW to read as follows:
(1) The office of financial management shall adopt uniform guidelines for the effective and efficient management of personal service contracts and client service contracts by all state agencies. The guidelines must, at a minimum, include:
(a) Accounting methods, systems, measures, and principles to be used by agencies and contractors;
(b) Precontract procedures for selecting potential contractors based on their qualifications and ability to perform;
(c) Incorporation of performance measures and measurable benchmarks in contracts, and the use of performance audits;
(d) Uniform contract terms to ensure contract performance and compliance with state and federal standards;
(e) Proper payment and reimbursement methods to ensure that the state receives full value for taxpayer moneys, including cost settlements and cost allowance;
(f) Postcontract procedures, including methods for recovering improperly spent or overspent moneys for disallowance and adjustment;
(g) Adequate contract remedies and sanctions to ensure compliance;
(h) Monitoring, fund tracking, risk assessment, and auditing procedures and requirements;
(i) Financial reporting, record retention, and record access procedures and requirements;
(j) Procedures and criteria for terminating contracts for cause or otherwise; and
(k) Any other subject related to effective and efficient contract management.
(2) The office of financial management shall submit the guidelines required by subsection (1) of this section to the governor and the appropriate standing committees of the legislature no later than December 1, 2002.
(3) The office of financial management shall publish a guidebook for use by state agencies containing the guidelines required by subsection (1) of this section.
NEW SECTION. Sec. 8. A new section is added to chapter 39.29 RCW to read as follows:
(1) A state agency entering into or renewing personal service contracts or client service contracts shall follow the guidelines required by section 7 of this act.
(2) A state agency that has entered into or renewed personal service contracts or client service contracts during a calendar year shall, on or before January 1st of the following calendar year, provide the office of financial management with a report detailing the procedures the agency employed in entering into, renewing, and managing the contracts.
(3) The provisions of this section apply to state agencies entering into or renewing contracts after January 1, 2003.
NEW SECTION. Sec. 9. A new section is added to chapter 39.29 RCW to read as follows:
(1) The office of financial management shall provide a training course for agency personnel responsible for executing and managing personal service contracts and client service contracts. The course must contain training on effective and efficient contract management under the guidelines established under section 7 of this act. State agencies shall require agency employees responsible for executing or managing personal service contracts and client service contracts to complete the training course to the satisfaction of the office of financial management. Beginning January 1, 2004, no agency employee may execute or manage personal service contracts or client service contracts unless the employee has completed the training course. Any request for exception to this requirement shall be submitted to the office of financial management in writing and shall be approved by the office of financial management prior to the employee executing or managing the contract.
(2)(a) The office of financial management shall conduct risk-based audits of the contracting practices associated with individual personal service and client service contracts from multiple state agencies to ensure compliance with the guidelines established in section 8 of this act. The office of financial management shall conduct the number of audits deemed appropriate by the director of the office of financial management based on funding provided.
(b) The office of financial management shall forward the results of the audits conducted under this section to the governor, the appropriate standing committees of the legislature, and the joint legislative audit and review committee.
NEW SECTION. Sec. 10. A new section is added to chapter 39.29 RCW to read as follows:
The state auditor and the attorney general shall annually by November 30th of each year provide a collaborative report of contract audit and investigative findings, enforcement actions, and the status of agency resolution to the governor and the policy and fiscal committees of the legislature.
Sec. 11. RCW 39.29.040 and 1998 c 101 s 7 are each amended to read as follows:
This chapter does not apply to:
(1) Contracts specifying a fee of less than five thousand dollars if the total of the contracts from that agency with the contractor within a fiscal year does not exceed five thousand dollars;
(2) Contracts awarded to companies that furnish a service where the tariff is established by the utilities and transportation commission or other public entity;
(3) Intergovernmental agreements awarded to any governmental entity, whether federal, state, or local and any department, division, or subdivision thereof;
(4) Contracts awarded for services to be performed for a standard fee, when the standard fee is established by the contracting agency or any other governmental entity and a like contract is available to all qualified applicants;
(5) Contracts for services that are necessary to the conduct of collaborative research if prior approval is granted by the funding source;
(6) Contracts for client services except as otherwise indicated in this chapter;
(7) Contracts for architectural and engineering services as defined in RCW 39.80.020, which shall be entered into under chapter 39.80 RCW;
(8) Contracts for the employment of expert witnesses for the purposes of litigation; and
(9) Contracts for bank supervision authorized under RCW 30.38.040.
NEW SECTION. Sec. 12. Section 7 of 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 takes effect immediately.
NEW SECTION. Sec. 13. Sections 8 and 9 of this act take effect January 1, 2003.
NEW SECTION. Sec. 14. RCW 79.44.180 (Director of financial management to adopt rules and regulations) and 1979 c 151 s 183 & 1963 c 20 s 14 are each repealed.
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