READ FIRST TIME 01/23/03.   

     AN ACT Relating to government accountability; adding a new section to chapter 43.88 RCW; adding new sections to chapter 43.131 RCW; adding a new chapter to Title 43 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 more accountability of public programs;
     (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) A comprehensive system of measuring performance is necessary to evaluate the effectiveness of agency programs and agency performance management practices, and to demonstrate accountability; and
     (4) Fair, independent, and professional audits of agency performance are necessary to ensure that government programs are achieving their intended goals and using their resources in the most productive manner.

NEW SECTION.  Sec. 2   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 based on the statewide performance system review.
     (3) "Final performance audit report" means a written document released by the citizen oversight board 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.
     (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 effectiveness audits.
     (6) "Performance system review" means an objective and systematic assessment of a state agency's performance and outcome measures and its systems for managing towards accomplishment of the outcomes.
     (7) "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.
     (8) "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 elective offices in the executive branch of state government.

NEW SECTION.  Sec. 3   (1) The citizen oversight board is created to improve efficiency, effectiveness, and accountability in state government.
     (2) The board shall consist of eight 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, or his or her designee, who shall be a nonvoting member;
     (c) One member shall be the director of the office of financial management, who shall be a nonvoting member;
     (d) 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
     (e) The governor shall select one additional member.
     (3) The board shall elect a chair. Neither the chair of the joint legislative audit and review committee, the director of the office of financial management, 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)(d) and (e) 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 and the office of financial management shall provide clerical, technical, and management personnel to the board to serve as the board's staff jointly.
     (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   (1) The board will work with the office of financial management and the joint legislative audit and review committee regarding reviews of agency performance measurement systems. The reviews shall include regular assessments of the measures and methods that state agencies use to manage program and agency performance.
     (a) The office of financial management shall review the performance measurement systems of state agencies. The purpose of these reviews is to ensure that the governor, agency management, and the legislature have the means to adequately and accurately assess the performance and outcomes of those agencies and departments. Where two or more agencies have shared responsibility for functions or priorities of government, these reviews can also ensure that effective interagency cooperation and collaboration occurs in areas such as program coordination, administrative structures, information systems, and administration of grants and loans.
     (b) The office of financial management shall review the performance measurement system of each agency, board, department, or institution not less than every five years. In setting the schedule and the extent of reviews, the office of financial management shall consider the timing and results of other recent reviews and audits conducted by the joint legislative audit and review committee and performance audits under subsection (2) of this section, the seriousness of past findings, any inadequate remedial action taken by an agency, department, or institution, whether a state agency lacks performance and outcome measures, and the desirability to include a diverse range of agencies each year.
     (c) The office of financial management shall work with the board to develop the criteria, schedule, and methodology for conducting these reviews. The reviews may include, but not be limited to, the following:
     (i) A determination of whether the performance and outcome measures are consistent with legislative mandates, strategic plans, mission statements, and goals and objectives, and whether the legislature has established clear mandates, strategic plans, mission statements, and goals and objectives that lend themselves to performance and outcome measure;
     (ii) An examination of how agency management uses the measures to manage resources in an efficient and effective manner;
     (iii) An assessment of how performance benchmarks are used to assess overall performance compared to external standards and benchmarks;
     (iv) An examination of how measurement data is used to make planning and operational improvements;
     (v) A determination of how performance measures are used in the budget planning, development, and allotment process and the extent to which the agency is in compliance with its responsibilities under RCW 43.88.090;
     (vi) A review of how performance data are reported to the legislature;
     (vii) An assessment of whether the performance measure data are reliable and collected in a uniform and timely manner;
     (viii) An assessment of whether the collection of measures used by an agency is balanced and reflects service quality, internal and external customer satisfaction, productivity, efficiency, program effectiveness, and regulatory compliance;
     (ix) An assessment of the effectiveness of agency programs related to planning, resourcing, organizing, directing, and controlling program operations, and the systems put in place for measuring, evaluating, reporting, and monitoring program performance. Such systems include personnel systems, purchasing systems, contracting systems, organizational structures, and information technology systems; and
     (x) Recommendations as necessary or appropriate.
     (d) Completed performance measurement system reviews shall be presented to the board and the governor and published on the internet. Final reports shall also be transmitted to the joint legislative audit and review committee and the appropriate policy and fiscal standing committees of the legislature.
     (e) The office of financial management shall provide guidance and training to state agencies to support their development of performance measurement systems.
     (2) The board shall work with the state auditor's office and the joint legislative audit and review committee 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. Audits may evaluate the effectiveness of agency programs as well as agency internal performance management systems and controls.
     (b) The board shall use the results of the performance system reviews conducted by the office of financial management, as well as input from citizens, state employees, state managers, the joint legislative audit and review committee, public officials, and others to prepare a draft work plan for conducting performance audits. The board shall develop a schedule and common methodology for conducting these audits.
     (c) The draft work plan may include a list of agencies, programs, or systems to be audited on a timeline decided by the board 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.
     (e) The state auditor shall contract with qualified independent evaluators to conduct the performance audits included in the final work plan approved by the board. In conducting the audits, the independent evaluator may consult with agency front-line employees and internal auditors.
     (f) The audits may evaluate efficiency as well as program effectiveness and may include:
     (i) The extent to which legislative, regulatory, or organizational goals and objectives are being achieved;
     (ii) The relative ability of alternative approaches to yield better program performance or eliminate factors that inhibit program effectiveness;
     (iii) The relative cost and benefits or cost-effectiveness of program performance;
     (iv) Whether a program produced intended results or produced effects that were not intended by the program's objectives;
     (v) The extent to which programs duplicate, overlap, or conflict with other related programs;
     (vi) The validity and reliability of performance measures concerning program effectiveness and results, or economy and efficiency.
     (g) Audits may also identify and recognize best practices.
     (h) The state auditor shall 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 audit report shall include the objectives, scope, and methodology; the audit results, including findings and recommendations; conclusions; and identification of best practices.
     (i) The final reports shall be submitted to the board by the state auditor. The board shall release final 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   The citizen oversight 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:
     (1) 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; and
     (2) 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.
     The board shall submit the results of the assessment and grading program to the governor, the 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.

NEW SECTION.  Sec. 6   (1) The reviewed agency is responsible for follow-up and corrective action on performance measurement system reviews. Agencies under the authority of or appointed by the governor shall submit periodic progress reports detailing actions undertaken toward achieving resolution to the governor and the board until all resolution has occurred. Agencies under the authority of an elected official other than the governor shall submit periodic progress reports detailing actions undertaken toward achieving resolution to the board until all resolution has occurred. Progress reports shall be available on the internet.
     (2) 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.
     Agencies under the authority of or appointed by the governor, shall submit periodic progress reports to the governor and the board until all resolution has occurred. Agencies under the authority of an elected official other than the governor shall submit periodic reports to the board of the action taken by the audited agency until all resolution has occurred. Progress reports shall be available on the internet.

NEW SECTION.  Sec. 7   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 only authorized to contract for and oversee performance audits pursuant to section 4 of this act.

NEW SECTION.  Sec. 8   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, 2011, as provided in section 9 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. 9   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, 2012:
     (1) Section 2 of this act;
     (2) Section 3 of this act;
     (3) Section 4 of this act;
     (4) Section 5 of this act;
     (5) Section 6 of this act; and
     (6) Section 7 of this act.

NEW SECTION.  Sec. 10   If specific funding for the purposes of this act, referencing this act by bill or chapter number, is not provided by June 30, 2004, in the omnibus appropriations act, this act is null and void.

NEW SECTION.  Sec. 11   Sections 2 through 6 of this act constitute a new chapter in Title 43 RCW.