HOUSE BILL REPORT

HB 377

BYRepresentatives Hankins, Walk and H. Sommers; by request of  Office of Financial Management

Renaming the deferred compensation revolving fund.

House Committe on State Government

Majority Report:     Do pass.  (8)

     Signed by Representatives H. Sommers, Chair; Peery, Vice Chair; Baugher, Hankins, O'Brien, Sayan, Taylor and Walk.

House Staff:Pam Madson (786-7135)

AS PASSED HOUSE FEBRUARY 27, 1987

BACKGROUND:

The Committee for Deferred Compensation manages public employee deferred compensation plans.  All committee expenses, including the investment of deferred compensation funds and staffing and administrative expenses, are paid for out of the Deferred Compensation Revolving Fund in the State Treasury.

In 1984, the Legislature enacted provisions requiring the director of the Office of Financial Management to adopt a comprehensive state budgeting, accounting, and reporting system that embodies national generally accepted accounting principles, known as "GAAP"  (RCW 43.88.037).  GAAP requires that deferred compensation plans for public employees be accounted for, in agency funds, separately from associated staffing and administrative expenses.

SUMMARY:

State accounting requirements for public employee deferred compensation plans are amended as follows to comply with GAAP:

The Deferred Compensation Revolving Fund is renamed the "Deferred Compensation Principal Account".  Monies in the existing Revolving Fund are divided between the Principal Account and the newly created "Deferred Compensation Administrative Account."  The Principal Account includes only the principal activities of the present Revolving Fund (investment of deferred compensation funds), while the Administrative Account covers only associated staffing and administrative expenses.

Fiscal Note:    Not Requested.

House Committee ‑ Testified For:     Michael Cheney, Office of Financial Management.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     The state is required by statute to follow generally accepted accounting principles, which mandate a separate account in the State Treasury for deferred compensation funds.  No such account presently exists; deferred compensation funds are commingled with funds used for associated administrative expenses in a single account.  The bill would rectify the problem by dividing the single account into separate accounts for deferred compensation funds and administrative expenses.

House Committee - Testimony Against: None Presented.