[atlas:bill]

AN ACT Relating to legislative review of school district financial management practices; adding a new section to chapter 44.28 RCW; and adding a new chapter to Title 28A RCW.

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

NEW SECTION. Sec. 1. The legislature finds that use of best financial management practices by school districts leads to efficient and effective use of state and district resources, improves district performance and accountability, and helps build public confidence in district operations. Therefore, the legislature intends to design and implement an evaluation system to determine if school districts are employing best financial management practices.

NEW SECTION. Sec. 2. (1) The joint legislative audit and review committee, with the assistance of the state auditor, shall design a system that can be used to evaluate whether a school district is employing best financial management practices. The system must include the identification of criteria that can be used to evaluate financial management practices in specific functional areas. The specific functional areas in the system must include at least the following:

(a) Management structure;

(b) Performance accountability;

(d) Administrative and educational technology;

(e) Personnel systems and benefits management;

(f) Facilities construction, including use of state and district construction funds;

(g) Facilities maintenance;

(h) Student transportation;

(i) Food service operations;

(j) Cost control systems, including asset management, risk management, financial management, purchasing, internal auditing, and financial auditing;

(k) Safety and security; and

(l) Community involvement.

(2) In designing the evaluation system, the committee shall consult with the appropriate committees of the legislature, the state auditor, the office of financial management, the office of the superintendent of public instruction, the state board of education, educational service districts, and other appropriate community and educational organizations.

NEW SECTION. Sec. 3. (1) Upon completion of the evaluation system created under section 2 of this act and to the extent that the legislature provides specific appropriations for this purpose, the committee, with the assistance of the state auditor, shall conduct three school district financial management practices reviews using the new evaluation system during the 2001-2003 biennium. The committee shall complete one school district review in fiscal year 2002 and two school district reviews in fiscal year 2003. The committee shall select the three districts to be reviewed as follows: One district with a student population of less than five thousand; one district with a student population between five thousand and ten thousand; and one district with a student population greater than ten thousand. The committee may contract with and consult with public and private entities as necessary in conducting the school district reviews.

(2) Upon selection of a school district for a review under subsection (1) of this section, the committee shall notify the school district that the review is commencing. The school district financial management practices review shall be completed within six months after the school district receives this notification. Within sixty days of completing the review, the committee shall issue a final report assessing the degree to which the school district employs best financial management practices and including any recommendations for improving the district's financial management practices. The committee shall provide a copy of the final report to the school district, the appropriate committees of the legislature, the state auditor, the office of the superintendent of public instruction, the state board of education, and the office of financial management.

(3) Upon completion of the three school district financial management practices reviews, the committee, in consultation with the state auditor, shall recommend to the legislature whether to conduct additional school district reviews in future biennia.

NEW SECTION. Sec. 4. (1) If a school district review conducted under section 3 of this act concludes that a school district is employing best financial management practices, the state board of education may acknowledge the district's efforts through issuance of a "seal of best financial management practices." This acknowledgment is effective for five years or until the next review is completed, whichever is sooner.

(2) If a school district review concludes that a district is not conforming with best financial management practices, the school district shall review the recommendations from the final report and shall provide a response to the committee within ninety days of receipt of the report on how the district plans to implement the recommendations and otherwise move forward to adopt best financial management practices. The plan submitted by the district must include a schedule that will result in the district's adoption of best financial management practices within two years. The plan is subject to approval by the committee.

(3) Within one year of submission of the plan, the district shall submit an initial status report to the committee on implementation of the district's plan. The district shall submit a second status report no later than one year after the submission of the initial status report. The status reports must include documentation of changes in financial management practices, actual cost savings, cost avoidances, and other financial management efficiencies. With the assistance of the state auditor, the committee shall assess the school district's progress in implementing its plan and shall determine if the district is successfully employing best financial management practices. Upon such a finding, the school district may be acknowledged as provided in subsection (1) of this section.

NEW SECTION. Sec. 5. Sections 1 through 4 of this act constitute a new chapter in Title 28A RCW.

NEW SECTION. Sec. 6. A new section is added to chapter 44.28 RCW to read as follows:

The joint committee, with the assistance of the state auditor, shall design a system that can be used to evaluate whether a school district is employing best financial management practices and shall conduct reviews of school district financial management practices as provided in chapter 28A.--- RCW (sections 1 through 4 of this act).