BILL REQ. #:  S-0493.1 

Read first time 01/13/2005.   Referred to Committee on Government Operations & Elections.

     AN ACT Relating to improving government performance and accountability; adding new sections to chapter 43.09 RCW; adding a new section to chapter 43.88 RCW; adding new sections to chapter 43.131 RCW; adding new sections to chapter 41.04 RCW; adding a new section to chapter 44.04 RCW; adding a new section to chapter 2.04 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) Citizens demand and deserve accountability of public programs. 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 offices of executive branch state government elected officials.

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 a 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) Members selected under subsection (2)(a) and (b) of this section 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 43.09 RCW to read as follows:
     (1) The board 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;
     (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; and
     (c) 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.
     (2) The board and the state auditor shall work together regarding performance audits of state government.
     (a) 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, timelines, program objectives, and mission and goals as required in RCW 43.88.090.
     (b) Using the criteria developed in (a) of this subsection, 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.
     (c) 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 timeline 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.
     (d) 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.
     (e) 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:
     (i) Identification of programs and services that can be eliminated, reduced, consolidated, or enhanced;
     (ii) Identification of funding sources to the state agency, to programs, and to services that can be eliminated, reduced, consolidated, or enhanced;
     (iii) Analysis of gaps and overlaps in programs and services and recommendations for improving, dropping, blending, or separating functions to correct gaps or overlaps;
     (iv) Analysis and recommendations for pooling information technology systems used within the state agency, and evaluation of information processing and telecommunications policy, organization, and management;
     (v) 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;
     (vi) 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;
     (vii) Verification of the reliability and validity of agency performance data, self-assessments, and performance measurement systems as required under RCW 43.88.090;
     (viii) Identification of potential cost savings in the state agency, its programs, and its services;
     (ix) Identification and recognition of best practices;
     (x) Evaluation of planning, budgeting, and program evaluation policies and practices;
     (xi) Evaluation of personnel systems operation and management;
     (xii) Evaluation of state purchasing operations and management policies and practices; and
     (xiii) Evaluation of organizational structure and staffing levels, particularly in terms of the ratio of managers and supervisors to nonmanagement personnel.
     (f) 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, 2005.
     (g) 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 performance audit report shall include the objectives, scope, and methodology; the audit results, including findings and recommendations; conclusions; and identification of best practices.
     (h) The final performance audit reports shall be submitted to the board by the state auditor. The board and the state auditor shall jointly release final performance audit 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. 5   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 contract for and oversee performance audits pursuant to section 4 of this act.

NEW SECTION.  Sec. 6   A new section is added to chapter 43.09 RCW to read as follows:
     The audited agency is responsible for follow-up and corrective action on all performance audit findings and recommendations. The audited agency's plan for addressing each audit finding and recommendation shall be included in the final audit report. The plan shall provide the name of the contact person responsible for each action, the action planned, and the anticipated completion date. If the audited agency does not agree with the audit findings and recommendations or believes action is not required, then the action plan shall include an explanation and specific reasons.
     For agencies under the authority of the governor, the governor may require periodic progress reports from the audited agency until all resolution has occurred.
     For agencies under the authority of an elected official other than the governor, the auditor and the board may require periodic reports of the action taken by the audited agency until all resolution has occurred.
     The board may request status reports on specific audits or findings.

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, 2012, 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, 2013:
     (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   A new section is added to chapter 41.04 RCW to read as follows:
     (1) Each state agency shall, within available funds, develop and implement a quality management program to improve the quality, efficiency, and effectiveness of the public services it provides through business process redesign, employee involvement, and other quality management techniques. Each agency shall ensure that front line agency employees are engaged in the program and shall provide employees with the training necessary for successful implementation of efforts toward quality improvement.
     (2) Each agency shall, within available funds, ensure that its quality management program:
     (a) Identifies immediate-term and near-term opportunities to improve services and reduce costs;
     (b) Identifies goals and uses strategic business planning and performance measures to establish priorities and measure progress toward meeting them. Each state agency shall develop performance measures to assess customer satisfaction, agency progress toward accomplishing outcomes specified in the agency budget under RCW 43.88.090, and the impact of initiatives instituted under the quality management program as a whole;
     (c) Reports the results of its quality management program on a regular basis. Each agency shall ensure that its report specifies improved outcomes for public service and efficiency. Any agency in its report may describe methods of measuring customer and stakeholder satisfaction, of engaging agency employees in the program, and of assessing the extent to which business practices have been changed to improve quality, efficiency, and effectiveness;
     (d) Evaluates the results of its quality, service, and management improvement programs and assesses program effects upon leadership, information and analysis, strategic planning, human resource development and management, process improvement, business results, and customer focus and satisfaction; and
     (e) Develops a plan for quality improvement, documenting efforts made up to the date of the report and addressing all matters enumerated in this subsection.
     (3) State agencies whose chief executives are appointed by the governor shall report program results to the governor on a regular basis. State agencies whose chief executives are elected officials other than the governor shall report program results to the elected official on a regular basis.
     (4) Each state agency shall integrate efforts made under this section with quality management programs undertaken under executive order or other authority. The office of the secretary of state, the department of social and health services, and the department of corrections shall develop and implement a complete quality management program by June 30, 2007. The office of insurance commissioner, the department of natural resources, and four-year institutions of higher education shall develop and implement a complete quality management program by June 30, 2008. All other state agencies shall develop and implement a complete quality management program by June 30, 2006.
     (5) Starting in 2008 and at least once every three years thereafter, the office of the secretary of state, the department of social and health services, and the department of corrections shall apply for the Washington state quality award, or an equivalent outside quality assessment, for potential recognition. Starting in 2010 and at least once every three years thereafter, the office of insurance commissioner, the department of natural resources, and four-year institutions of higher education, or their subdivisions, or both, shall apply for the Washington state quality award or an equivalent outside quality assessment, for potential recognition. Starting in 2007 and at least once every three years thereafter, all other state agencies or their subdivisions, or both, shall apply for the Washington state quality award or an equivalent outside quality assessment, for potential recognition. Every subdivision of a state agency with three thousand or more full-time equivalent employees must complete an application in each three-year period.
     (6) For purposes of this section, "state agency" means those state agencies within the executive branch of government including institutions of higher education.

NEW SECTION.  Sec. 10   A new section is added to chapter 44.04 RCW to read as follows:
     The senate and the house of representatives shall each develop and implement quality improvement programs as described under section 9 of this act by June 30, 2007, and shall report the results of these efforts to the leadership of each major political party caucus within its respective house.

NEW SECTION.  Sec. 11   A new section is added to chapter 2.04 RCW to read as follows:
     The supreme court is encouraged to develop and implement quality improvement programs, as described under section 9 of this act, for the judicial branch of government, by June 30, 2007, and shall report the results of these efforts to the chief justice. The programs may be implemented directly by the supreme court or may be delegated to the administrator for the courts.

NEW SECTION.  Sec. 12   A new section is added to chapter 41.04 RCW to read as follows:
     (1) Local governments are encouraged to develop and implement quality management programs as described in section 9 of this act.
     (2) For purposes of this section, "local government" includes every county, city, town, special district, municipal corporation, and quasi-municipal corporation in the state.

NEW SECTION.  Sec. 13   If specific funding for the purposes of this act, referencing this act by bill or chapter number, is not provided by June 30, 2005, in the omnibus appropriations act, this act is null and void.