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;
(e)
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;
(f)
Fix the number and classes of positions or authorized ((man)) employee
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.
It
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:
Notice
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:
Upon
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:
When
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:
Whenever
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:
The
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.
