"NEW SECTION.  Sec. 1   (1) The legislature finds that in the last ten years, significant progress has been made to identify and monitor accountability and performance measures in higher education, both internally in institutions and externally in the legislative and state policymaking environment.
     (2) However, the legislature further finds that opportunities exist to promote greater visibility of performance measures among policymakers and among the public consumers of higher education. Policy decisions, including decisions about resource allocation, should be made with greater knowledge and a shared understanding about the tradeoffs between resources, flexibility, and desired outcomes. A forum should be created to allow discussion among policymakers and institution leaders about setting outcome-oriented priorities, targeting of investments, linking operating and capital planning, and creating a longer-term view than the biennial budget cycle typically permits.
     (3) Therefore, the legislature intends to implement a process for such discussions, agreements, and planning to occur. The process of crafting higher education performance agreements will be pilot-tested over a six-year period with the public four-year institutions of higher education beginning in 2008.

NEW SECTION.  Sec. 2   A new section is added to chapter 28B.10 RCW to read as follows:
     (1) As used in this section and sections 3 and 4 of this act, a performance agreement is an agreement reached between the state and the governing board of an institution of higher education and approved by the legislature using the process provided in section 4 of this act.
     (2) The purpose of a performance agreement is to develop and communicate a six-year plan developed jointly by state policymakers and an institution of higher education that aligns goals, priorities, desired outcomes, flexibility, institutional mission, accountability, and levels of resources.
     (3) Beginning in 2008, performance agreements shall be pilot-tested with the public four-year institutions of higher education.

NEW SECTION.  Sec. 3   A new section is added to chapter 28B.10 RCW to read as follows:
     (1) Performance agreements shall address but not be limited to the following issues:
     (a) Indicators that measure outcomes concerning cost, quality, timeliness of student progress toward degrees and certifications, and articulation between and within the K-12 and higher education systems;
     (b) Benchmarks and goals for long-term degree production, including discrete benchmarks and goals in particular fields of study;
     (c) The level of resources necessary to meet the performance outcomes, benchmarks, and goals, subject to legislative appropriation;
     (d) The prioritization of four-year institution capital budget projects by the office of financial management; and
     (e) Indicators that measure outcomes concerning recruitment, retention, and success of students, faculty, and staff from diverse, underrepresented communities.
     (2) The goals and outcomes identified in a performance agreement shall be linked to the role, mission, and strategic plan of the institution of higher education and aligned with the statewide strategic master plan for higher education.
     (3) Performance agreements may also include grants to an institution, under the terms of the agreement, of flexibility or waivers from state controls or rules. The agreement may identify areas where statutory change is necessary to grant an institution flexibility or waivers of state agency rules.
     (4) The following areas may not be included in a performance agreement:
     (a) Flexibility or waivers of requirements in a collective bargaining agreement negotiated under chapter 28B.52, 41.56, 41.59, 41.76, or 41.80 RCW;
     (b) Flexibility or waivers of administrative rules or processes governed by chapter 28B.52, 41.56, 41.59, 41.76, or 41.80 RCW;
     (c) Rules, processes, duties, rights, and responsibilities of the academic faculty as contained in the faculty codes of the four-year institution;
     (d) Flexibility or waivers of requirements under chapter 39.12 RCW;
     (e) Flexibility or waivers of administrative rules or other regulations that address health and safety, civil rights, and nondiscrimination laws that apply to institutions of higher education; and
     (f) State laws covering terms and conditions of employment, including but not limited to salaries, job security, and health, retirement, unemployment, or any other employment benefits.

NEW SECTION.  Sec. 4   A new section is added to chapter 28B.10 RCW to read as follows:
     (1) A state performance agreement committee is created to represent the state in developing performance agreements under this section and sections 2 and 3 of this act. The committee is composed of representatives from the governor's office, the office of financial management, the higher education coordinating board, the office of the superintendent of public instruction, two members of the senate appointed by the secretary of the senate, and two members of the house of representatives appointed by the speaker of the house of representatives. The state performance agreement committee shall be staffed by personnel from the higher education coordinating board.
     (2) Each of the participating institutions shall develop a preliminary draft of a performance agreement with input from students and faculty. The governing boards of the public four-year institutions of higher education shall designate performance agreement representatives for each institution respectively that shall include two faculty members at those institutions bargaining under chapter 41.76 RCW, at least one of whom shall be appointed by the exclusive collective bargaining agent and the other appointed by the faculty governance organization of that institution. If the participating pilot institution does not bargain under chapter 41.76 RCW, then two faculty members shall be appointed by the faculty governance organization of that institution. The associated student governments or their equivalents shall designate two performance agreement representatives at those institutions. Starting with the preliminary drafts, the state performance agreement committee and representatives of each institution shall develop revised draft performance agreements for each institution and submit the revised drafts to the governor and the fiscal and higher education committees of the legislature no later than September 1, 2008.
     (3) After receiving informal input on the revised draft performance agreements, particularly regarding the levels of resources assumed in the agreements, the state committee and institution representatives shall develop final proposed performance agreements and submit the agreements to the governor and the office of financial management by November 1, 2008, for consideration in development of the governor's 2009-2011 operating and capital budget recommendations.
     (4) The state committee shall submit any legislation necessary to implement a performance agreement to the higher education committees of the senate and house of representatives.
     (5) All cost items contained within a performance agreement are subject to legislative appropriation.
     (6) If the legislature affirms, through a proviso in the 2009-2011 omnibus appropriations act, that the omnibus appropriations act and the 2009 capital budget act enacted by the legislature align with the proposed performance agreements, the performance agreements shall take effect beginning July 1, 2009, through June 30, 2015. If the legislature affirms, through a proviso in the 2009-2011 omnibus appropriations act or through inaction, that the omnibus appropriations act and/or the 2009 capital budget act are not aligned with the proposed performance agreements, the state committee and institution representatives shall redraft the agreements to align with the enacted budgets, and the redrafted agreements shall take effect beginning September 1, 2009, through June 30, 2015.
     (7) The legislature, the state committee, and the institution representatives shall repeat the process described in subsection (6) of this section for each subsequent omnibus appropriations and capital budget act enacted between the 2010 and 2014 legislative sessions to ensure that the performance agreements are updated as necessary to align with enacted omnibus appropriations and capital budget acts.

NEW SECTION.  Sec. 5   A new section is added to chapter 44.28 RCW to read as follows:
     The joint committee shall conduct an evaluation of the higher education performance agreement pilot test under sections 2 through 4 of this act and make recommendations regarding changes to the substance or process of creating the agreements, including whether the performance agreement process should be continued and expanded to include additional higher education institutions. The evaluation shall be submitted to the governor and the higher education committees of the senate and house of representatives by November 1, 2014."