READ FIRST TIME 01/23/03.   

     AN ACT Relating to government accountability; adding new sections to chapter 43.09 RCW; adding a new section to chapter 44.28 RCW; adding a new section to chapter 43.88 RCW; adding new sections to chapter 43.131 RCW; and creating new sections.

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

NEW SECTION.  Sec. 1   The legislature finds that:
     (1) Public confidence in government is essential. Public programs must continuously improve in quality, efficiency, and effectiveness in order to increase public trust;
     (2) Washington state government and other entities that receive tax dollars must continuously improve the way they operate and deliver services so citizens receive maximum value for their tax dollars;
     (3) An independent citizen oversight board is necessary to establish an annual assessment and performance grading program to ensure that government services, customer satisfaction, program efficiency, and management systems are world class in performance; and
     (4) Fair, independent, professional performance audits of state agencies by the state auditor are essential to improving the efficiency and effectiveness of government.

NEW SECTION.  Sec. 2   A new section is added to chapter 43.09 RCW to read as follows:
     For purposes of sections 3 through 6 of this act:
     (1) "Board" means the citizen oversight board created in section 3 of this act.
     (2) "Draft work plan" means the work plan for conducting performance audits of state agencies proposed by the board and state auditor after the statewide performance review.
     (3) "Final performance audit report" means a written document jointly released by the citizen oversight board and the state auditor that includes the findings and comments from the preliminary performance audit report.
     (4) "Final work plan" means the work plan for conducting performance audits of state agencies adopted by the board and state auditor.
     (5) "Performance audit" means an objective and systematic assessment of a state agency or any of its programs, functions, or activities by an independent evaluator in order to help public officials improve efficiency, effectiveness, and accountability. Performance audits include economy and efficiency audits and program audits.
     (6) "Preliminary performance audit report" means a written document prepared after the completion of a performance audit to be submitted for comment before the final performance audit report. The preliminary performance audit report must contain the audit findings and any proposed recommendations to improve the efficiency, effectiveness, or accountability of the state agency being audited.
     (7) "State agency" or "agency" means a state agency, department, office, officer, board, commission, bureau, division, institution, or institution of higher education. "State agency" includes all elective offices in the executive branch of state government.

NEW SECTION.  Sec. 3   A new section is added to chapter 43.09 RCW to read as follows:
     (1) The citizen oversight board is created to improve efficiency, effectiveness, and accountability in state government.
     (2) The board shall consist of seven members as follows:
     (a) One member shall be the state auditor, who shall be a nonvoting member;
     (b) One member shall be the chair of the joint legislative audit and review committee, who shall be a nonvoting member;
     (c) Four of the members shall be selected by the governor as follows: Each major caucus of the house of representatives and the senate shall submit a list of three names. The lists may not include the names of members of the legislature. The governor shall select a person from each list provided by each caucus; and
     (d) The governor shall select the fifth member.
     (3) The board shall elect a chair. Neither the chair of the joint legislative audit and review committee nor the state auditor may serve as chair.
     (4) Appointees shall be individuals who have a basic understanding of state government operations with knowledge and expertise in performance management, quality management, strategic planning, performance assessments, or closely related fields.
     (5) Appointed members shall serve for terms of four years, with the terms expiring on June 30th on the fourth year of the term. However, in the case of the initial members, two members shall serve four-year terms, two members shall serve three-year terms, and one member shall serve a two-year term, with each of the terms expiring on June 30th of the applicable year. Appointees may be reappointed to serve more than one term.
     (6) The joint legislative audit and review committee shall provide clerical, technical, and management personnel to the board to serve as the board's staff.
     (7) The board shall meet at least once a quarter and may hold additional meetings at the call of the chair or by a majority vote of the members of the board.
     (8) The members of the board shall be compensated in accordance with RCW 43.03.220 and reimbursed for travel expenses in accordance with RCW 43.03.050 and 43.03.060.

NEW SECTION.  Sec. 4   A new section is added to chapter 44.28 RCW to read as follows:
     (1) The citizen oversight board, created in section 3 of this act, shall establish an annual assessment and performance grading program. The program shall consist of conducting annual performance assessments and grading state agency performance. Assessments shall be implemented on a phased-in schedule. Initial areas to be assessed shall include quality management, productivity and fiscal efficiency, program effectiveness, contract management and oversight, internal audit, internal and external customer satisfaction, statutory and regulatory compliance, and technology systems and on-line services. As part of this program, the board shall:
     (a) Consult with and seek input from elected officials, state employees, and professionals with a background in performance management for establishing the grading standards. In developing the criteria, the board shall consider already developed best practices and audit criteria used by government or nongovernment organizations. Before the assessment, the agencies shall be given the criteria for the assessment and the standards for grading; and
     (b) Contract or partner with public or private entities that have expertise in public sector reviews and/or technical expertise in individual assessment areas to perform the assessments and grading of all state agencies. The board may contract or partner with more than one entity for different assessment areas.
     (2) The board shall submit the results of the assessment and grading program to the governor, the office of financial management, appropriate legislative committees, and the public by December 15th of each year. The results of the annual assessments and performance grading shall be posted on the internet.
     (3) The definitions in section 2 of this act apply to this section.

NEW SECTION.  Sec. 5   A new section is added to chapter 43.09 RCW to read as follows:
     (1) The board and the state auditor shall work together regarding performance audits of state government.
     (2) The board shall establish criteria for performance audits. Agencies shall be audited using criteria that include generally accepted government auditing standards as well as legislative mandates and performance objectives established by state agencies. Mandates include, but are not limited to, agency strategies, time lines, program objectives, and mission and goals as required in RCW 43.88.090.
     (3) Using the criteria developed in subsection (2) of this section, the board and the state auditor shall complete a statewide performance review within one year of contracting as a preliminary to a draft work plan for conducting performance audits. The board and the state auditor shall develop a schedule and common methodology for conducting these reviews.
     (4) The board and the state auditor shall develop the draft work plan for performance audits based on input from citizens, state employees, state managers, the joint legislative audit and review committee, public officials, and others. The draft work plan may include a list of agencies, programs, or systems to be audited on a time line decided by the board and the state auditor based on a number of factors including risk, importance, and citizen concerns. All audits shall be designed to be completed within a six-month period.
     (5) Before adopting the final work plan, the board shall consult with the legislative auditor and other appropriate oversight and audit entities to coordinate work plans and avoid duplication of effort in their planned performance audits of state government agencies. The board shall defer to the joint legislative audit and review committee work plan if a similar audit is included on both work plans for auditing. The final work plan must be agreed upon by the board and the state auditor.
     (6) The state auditor shall contract out for performance audits. In conducting the audits, agency front-line employees and internal auditors should be involved. The audits may include an evaluation of:
     (a) Identification of programs and services that can be eliminated, reduced, consolidated, or enhanced;
     (b) Identification of funding sources to the state agency, to programs, and to services that can be eliminated, reduced, consolidated, or enhanced;
     (c) Analysis of gaps and overlaps in programs and services and recommendations for improving, dropping, blending, or separating functions to correct gaps or overlaps;
     (d) Analysis and recommendations for pooling information technology systems used within the state agency, and evaluation of information processing and telecommunications policy, organization, and management;
     (e) Analysis of the roles and functions of the state agency, its programs, and its services and their compliance with statutory authority and recommendations for eliminating or changing those roles and functions and ensuring compliance with statutory authority;
     (f) Recommendations for eliminating or changing statutes, rules, and policy directives as may be necessary to ensure that the agency carry out reasonably and properly those functions vested in the agency by statute;
     (g) Verification of the reliability and validity of agency performance data, self-assessments, and performance measurement systems as required under RCW 43.88.090;
     (h) Identification of potential cost savings in the state agency, its programs, and its services;
     (i) Identification and recognition of best practices;
     (j) Evaluation of planning, budgeting, and program evaluation policies and practices;
     (k) Evaluation of personnel systems operation and management;
     (l) Evaluation of state purchasing operations and management policies and practices; and
     (m) Evaluation of organizational structure and staffing levels, particularly in terms of the ratio of managers and supervisors to nonmanagement personnel.
     (7) The state auditor and the board may develop a grading system for the audits. The audit report may include the agency grade, evaluation and identification of best practices, and findings and recommendations for efficiency and effectiveness of state programs. The board and the state auditor shall examine a system for grading the audits. The board shall report its findings to the legislature by December 31, 2003.
     (8) The state auditor must solicit comments on preliminary performance audit reports from the audited state agency, the office of the governor, the office of financial management, the board, and the joint legislative audit and review committee for comment. Comments must be received within thirty days after receipt of the preliminary performance audit report unless a different time period is approved by the state auditor. All comments shall be incorporated into the final performance audit report. The final audit report shall include the objectives, scope, and methodology; the audit results, including findings and recommendations; conclusions; and identification of best practices.
     (9) The final reports shall be submitted to the board by the state auditor. The board and the state auditor shall jointly release final reports to the citizens of Washington, the governor, and the appropriate legislative committees. Final performance audit reports shall be posted on the internet.

NEW SECTION.  Sec. 6   A new section is added to chapter 43.88 RCW to read as follows:
     In addition to the authority given the state auditor in RCW 43.88.160(6), the state auditor is authorized to conduct performance audits identified in section 5 of this act.

NEW SECTION.  Sec. 7   A new section is added to chapter 43.131 RCW to read as follows:
     The citizen oversight board created in section 3 of this act and its powers and duties shall be terminated June 30, 2010, as provided in section 8 of this act. The joint legislative audit and review committee shall contract with a private entity for the review in this section.

NEW SECTION.  Sec. 8   A new section is added to chapter 43.131 RCW to read as follows:
     The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective June 30, 2011:
     (1) Section 2 of this act;
     (2) Section 3 of this act;
     (3) Section 4 of this act;
     (4) Section 5 of this act; and
     (5) Section 6 of this act.

NEW SECTION.  Sec. 9   If specific funding for the purposes of this act, referencing this act by bill or chapter number, is not provided by June 30, 2003, in the omnibus appropriations act, this act is null and void.