BILL REQ. #:  H-1563.1 

Read first time 02/18/2003.   Referred to Committee on State Government.

     AN ACT Relating to administrative overhead costs of contract administration for state agencies, state offices, and institutions of higher education; amending RCW 39.34.020 and 39.34.130; adding a new section to chapter 39.34 RCW; providing an effective date; and declaring an emergency.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 39.34 RCW to read as follows:
     The legislature finds that the public interest requires state agencies to coordinate and collaborate whenever appropriate and to avoid excessive or duplicative administrative costs for interagency contracts. The legislature therefore finds it necessary to limit indirect administrative costs charged by state agencies to administer contracts with other state agencies.

Sec. 2   RCW 39.34.020 and 1985 c 33 s 1 are each amended to read as follows:
     For the purposes of this chapter, the term "public agency" shall mean any agency, political subdivision, or unit of local government of this state including, but not limited to, municipal corporations, quasi municipal corporations, special purpose districts, and local service districts; any agency of the state government, including institutions of higher education; any agency of the United States; any Indian tribe recognized as such by the federal government; and any political subdivision of another state.
     The term "state" shall mean a state of the United States.

Sec. 3   RCW 39.34.130 and 1979 c 151 s 45 are each amended to read as follows:
     (1) Except as otherwise provided by law and in subsection (3) of this section, the full costs of a state agency incurred in providing services or furnishing materials to or for another agency, other than an agency of state government, under chapter 39.34 RCW or any other statute shall be charged to the agency contracting for such services or materials and shall be repaid and credited to the fund or appropriation against which the expenditure originally was charged. Amounts representing a return of expenditures from an appropriation shall be considered as returned loans of services or of goods, supplies or other materials furnished, and may be expended as part of the original appropriation to which they belong without further or additional appropriation. Such interagency transactions shall be subject to regulation by the director of financial management, including but not limited to provisions for the determination of costs, prevention of interagency contract costs beyond those which are fully reimbursable, disclosure of reimbursements in the governor's budget and such other requirements and restrictions as will promote more economical and efficient operations of state agencies.
     (2) Except as otherwise provided by law, this section shall not apply to the furnishing of materials or services by one agency to another when other funds have been provided specifically for that purpose pursuant to law.
     (3) Except as otherwise authorized by law or the omnibus operating appropriations act, a state agency may not charge another state agency an administrative overhead cost in excess of ten percent to administer a contract. This limitation does not apply to interagency contracts solely involving specific federal grant moneys.

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 takes effect July 1, 2003.