BILL REQ. #:  H-0929.1 

Read first time 01/23/2003.   Referred to Committee on State Government.

     AN ACT Relating to government accountability; amending RCW 44.04.260, 44.28.005, 44.28.010, 44.28.020, 44.28.030, 44.28.040, 44.28.050, 44.28.055, 44.28.060, 44.28.065, 44.28.071, 44.28.075, 44.28.080, 44.28.083, 44.28.088, 44.28.091, 44.28.094, 44.28.097, 44.28.100, 44.28.120, 44.28.130, and 44.28.150; adding a new section to chapter 44.28 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   The legislature finds that the use of performance reviews, as well as outcome and performance measures, is necessary for demonstrating the accountability of state government to the public. The legislature also finds that performance measurement is integral to the efficient and effective management and operation of state agencies and programs, essential to the achievement of effective interagency cooperation and management, and integral to identifying priorities of government for purposes of funding biennial budgets. Thus, the legislature intends to expand its performance reviews to provide greater accountability to the public, to ensure that state government has effective measures for assessing and continuously improving performance, and to determine whether targeted funding investments and established priorities of government actually produce the intended and expected services and benefits. It is the intent of the legislature that outcome and performance measures used by state agencies and programs and required by RCW 43.88.090 become a tool for the governor and the legislature in establishing priorities of government and developing biennial budgets.

Sec. 2   RCW 44.04.260 and 2001 c 259 s 1 are each amended to read as follows:
     The ((joint legislative audit and review committee)) legislative accountability board, the legislative transportation committee, the joint committee on pension policy, the legislative evaluation and accountability program committee, and the joint legislative systems committee are subject to such operational policies, procedures, and oversight as are deemed necessary by the facilities and operations committee of the senate and the executive rules committee of the house of representatives to ensure operational adequacy of the agencies of the legislative branch. As used in this section, "operational policies, procedures, and oversight" includes the development process of biennial budgets, contracting procedures, personnel policies, and compensation plans, selection of a chief administrator, facilities, and expenditures. This section does not grant oversight authority to the facilities and operations committee of the senate over any standing committee of the house of representatives or oversight authority to the executive rules committee of the house of representatives over any standing committee of the senate.

Sec. 3   RCW 44.28.005 and 1996 c 288 s 2 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) (("Legislative auditor" means the executive officer of the joint legislative audit and review committee)) "Board" means the legislative accountability board.
     (2) "Economy and efficiency audits" means performance audits that establish: (a) Whether a state agency or unit of local government receiving state funds is acquiring, protecting, and using its resources such as personnel, property, and space economically and efficiently; (b) the causes of inefficiencies or uneconomical practices; and (c) whether the state agency or local government has complied with significant laws and rules in acquiring, protecting, and using its resources.
     (3) "Final compliance report" means a written document, as approved by the ((joint committee)) board, that states the specific actions a state agency or unit of local government receiving state funds has taken to implement recommendations contained in the final performance audit report and the preliminary compliance report. Any recommendations, including proposed legislation and changes in the agency's rules and practices or the local government's practices, based on testimony received, must be included in the final compliance report.
     (4) "Final performance audit report" means a written document adopted by the ((joint legislative audit and review committee)) board that contains the findings and proposed recommendations made in the preliminary performance audit report, the final recommendations adopted by the ((joint committee)) board, any comments to the preliminary performance audit report by the ((joint committee)) board, and any comments to the preliminary performance audit report by the state agency or local government that was audited.
     (5) (("Joint committee" means the joint legislative audit and review committee)) "Legislative auditor" means the executive officer of the board.
     (6) "Local government" means a city, town, county, special purpose district, political subdivision, municipal corporation, or quasi-municipal corporation, including a public corporation created by such an entity.
     (7) "Performance audit" means an objective and systematic assessment of a state agency or any of its programs, functions, or activities, or a unit of local government receiving state funds, 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. A performance audit of a local government may only be made to determine whether the local government is using state funds for their intended purpose in an efficient and effective manner.
     (8) "Performance measures" are a composite of key indicators of a program's or activity's inputs, outputs, outcomes, productivity, timeliness, and/or quality. They are means of evaluating policies and programs by measuring results against agreed upon program goals or standards.
     (9) "Performance review" means an outside evaluation of how a state agency uses its performance measures to assess the outcomes of its legislatively authorized activities.
     (10) "Preliminary compliance report" means a written document that states the specific actions a state agency or unit of local government receiving state funds has taken to implement any recommendations contained in the final performance audit report.
     (((10))) (11) "Preliminary performance audit report" means a written document prepared for review and comment by the ((joint legislative audit and review committee)) board after the completion of a performance audit. 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 or local government audited.
     (((11))) (12) "Program audits" means performance audits that determine: (a) The extent to which desired outcomes or results are being achieved; (b) the causes for not achieving intended outcomes or results; and (c) compliance with significant laws and rules applicable to the program.
     (((12))) (13) "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.

Sec. 4   RCW 44.28.010 and 1996 c 288 s 3 are each amended to read as follows:
     The ((joint legislative audit and review committee)) legislative accountability board is created, which shall consist of eight senators and eight representatives from the legislature. The senate members of the ((committee)) board shall be appointed by the president of the senate, and the house members of the ((committee)) board shall be appointed by the speaker of the house. Not more than four members from each house shall be from the same political party. Members shall be appointed before the close of each regular session of the legislature during an odd-numbered year. If before the close of a regular session during an odd-numbered year, the governor issues a proclamation convening the legislature into special session, or the legislature by resolution convenes the legislature into special session, following such regular session, then such appointments shall be made as a matter of closing business of such special session. Members shall be subject to confirmation, as to the senate members by the senate, and as to the house members by the house. In the event of a failure to appoint or confirm ((joint committee)) board members, the members of the ((joint committee)) board from either house in which there is a failure to appoint or confirm shall be elected by the members of such house.

Sec. 5   RCW 44.28.020 and 1996 c 288 s 4 are each amended to read as follows:
     The term of office of the members of the ((joint committee)) board who continue to be members of the senate and house shall be from the close of the session in which they were appointed or elected as provided in RCW 44.28.010 until the close of the next regular session during an odd-numbered year or special session following such regular session, or, in the event that such appointments or elections are not made, until the close of the next regular session during an odd-numbered year during which successors are appointed or elected. The term of office of ((joint committee)) board members who do not continue to be members of the senate and house ceases upon the convening of the next regular session of the legislature during an odd-numbered year after their confirmation, election or appointment. Vacancies on the ((joint committee)) board shall be filled by appointment by the remaining members. All such vacancies shall be filled from the same political party and from the same house as the member whose seat was vacated.

Sec. 6   RCW 44.28.030 and 1996 c 288 s 5 are each amended to read as follows:
     On and after the commencement of a succeeding general session of the legislature, those members of the ((joint committee)) board who continue to be members of the senate and house, respectively, shall continue as members of the ((joint committee)) board as indicated in RCW 44.28.020 and the ((joint committee)) board shall continue with all its powers, duties, authorities, records, papers, personnel and staff, and all funds made available for its use.

Sec. 7   RCW 44.28.040 and 1996 c 288 s 6 are each amended to read as follows:
     The members of the ((joint committee)) board shall serve without additional compensation, but shall be reimbursed for their travel expenses in accordance with RCW 44.04.120 for attending meetings of the ((joint committee)) board or a subcommittee of the ((joint committee)) board, or while engaged on other business authorized by the ((joint committee)) board.

Sec. 8   RCW 44.28.050 and 1989 c 137 s 1 are each amended to read as follows:
     All expenses incurred by the ((committee)) board, including salaries and expenses of employees, shall be paid upon voucher forms as provided by the auditor. The legislative auditor may be authorized by the ((legislative budget committee's)) board's executive committee to sign vouchers. Such authorization shall specify a dollar limitation and be set out in writing. A monthly report of such vouchers shall be submitted to the executive committee. If authorization is not given to the legislative auditor then the chair, or the vice-chair in the chair's absence, is authorized to sign vouchers. This authority shall continue until the chair's or vice-chair's successors are selected after each ensuing session of the legislature. Vouchers may be drawn on funds appropriated generally by the legislature for legislative expenses or upon any special appropriation which may be provided by the legislature for the expenses of the ((committee)) board or both.

Sec. 9   RCW 44.28.055 and 2001 c 259 s 2 are each amended to read as follows:
     The administration of the ((joint legislative audit and review committee)) board is subject to RCW 44.04.260.

Sec. 10   RCW 44.28.060 and 2001 c 259 s 3 are each amended to read as follows:
     The members of the ((joint committee)) board shall form an executive committee consisting of one member from each of the four major political caucuses, which shall include a chair and a vice-chair. The chair and vice-chair shall serve for a period not to exceed two years. The chair and the vice-chair may not be members of the same political party. The chair shall alternate between the members of the majority parties in the senate and the house of representatives.
     Subject to RCW 44.04.260, the executive committee is responsible for performing all general administrative and personnel duties assigned to it in the rules and procedures adopted by the ((joint committee)) board, as well as other duties delegated to it by the ((joint committee)) board. The executive committee shall recommend applicants for the position of the legislative auditor to the membership of the ((joint committee)) board. The legislative auditor shall be hired with the approval of a majority of the membership of the ((joint committee)) board. Subject to RCW 44.04.260, the executive committee shall set the salary of the legislative auditor.
     The ((joint committee)) board shall adopt rules and procedures for its orderly operation. The ((joint committee)) board may create subcommittees to perform duties under this chapter.

Sec. 11   RCW 44.28.065 and 2001 c 259 s 4 are each amended to read as follows:
     The legislative auditor shall:
     (1) Establish and manage the office of the ((joint legislative audit and review committee)) board to carry out the functions of this chapter;
     (2) Direct the audit and review functions described in this chapter and ensure that performance audits are performed in accordance with the "Government Auditing Standards" published by the comptroller general of the United States as applicable to the scope of the audit;
     (3) Make findings and recommendations to the ((joint committee)) board and under its direction to the committees of the state legislature concerning the organization and operation of state agencies and the expenditure of state funds by units of local government;
     (4) Subject to RCW 44.04.260, in consultation with and with the approval of the executive committee, hire staff necessary to carry out the purposes of this chapter. Subject to RCW 44.04.260, employee salaries, other than the legislative auditor, shall be set by the legislative auditor with the approval of the executive committee;
     (5) Assist the several standing committees of the house and senate in consideration of legislation affecting state departments and their efficiency; appear before other legislative committees; and assist any other legislative committee upon instruction by the ((joint legislative audit and review committee)) board;
     (6) Provide the legislature with information obtained under the direction of the ((joint legislative audit and review committee)) board;
     (7) Maintain a record of all work performed by the legislative auditor under the direction of the ((joint legislative audit and review committee)) board and keep and make available all documents, data, and reports submitted to the legislative auditor by any legislative committee.

Sec. 12   RCW 44.28.071 and 1996 c 288 s 9 are each amended to read as follows:
     (1) In conducting performance audits and other reviews, the legislative auditor shall work closely with the chairs and staff of standing committees of the senate and house of representatives, and may work in consultation with the state auditor and the director of financial management.
     (2) The legislative auditor may contract with and consult with public and private independent professional and technical experts as necessary in conducting the performance audits. The legislative auditor shall solicit input from appropriate industry representatives and experts regarding the conduct of the performance audits and regarding the preliminary and final reports and recommendations of the legislative auditor. It is the intent of the legislature that the staff, administration, and costs of the board be minimized, and that the board conduct operations through the use of qualified public and private resources and entities when appropriate and feasible or when staff resources are insufficient. The legislative auditor should also involve front-line employees and internal auditors in the performance audit process to the highest possible degree.
     (3) The legislative auditor shall work with the ((legislative evaluation and accountability program committee)) board and the office of financial management to develop information system capabilities necessary for the performance audit requirements of this chapter.
     (4) The legislative auditor shall work with the legislative office of performance review and the office of financial management to facilitate the implementation of effective performance measures throughout state government. In agencies and programs where effective systems for performance measurement exist, the measurements incorporated into those systems should be a basis for performance audits conducted under this chapter.

Sec. 13   RCW 44.28.075 and 1996 c 288 s 10 are each amended to read as follows:
     (1) Subject to the requirements of the performance audit work plan approved by the ((joint committee)) board under RCW 44.28.083, performance audits may, in addition to the determinations that may be made in such an audit as specified in RCW 44.28.005, include the following:
     (a) An examination of the costs and benefits of agency programs, functions, and activities;
     (b) Identification of viable alternatives for reducing costs or improving service delivery;
     (c) Identification of gaps and overlaps in service delivery, along with corrective action; and
     (d) Comparison with other states whose agencies perform similar functions, as well as their relative funding levels and performance.
     (2) As part of a performance audit, the legislative auditor may review the costs of programs recently implemented by the legislature to compare actual agency costs with the appropriations provided and the cost estimates that were included in the fiscal note for the program at the time the program was enacted.

Sec. 14   RCW 44.28.080 and 1996 c 288 s 11 are each amended to read as follows:
     The ((joint committee)) board has the following powers:
     (1) To make examinations and reports concerning whether or not appropriations are being expended for the purposes and within the statutory restrictions provided by the legislature; and concerning the organization and operation of procedures necessary or desirable to promote economy, efficiency, and effectiveness in state government, its officers, boards, committees, commissions, institutions, and other state agencies, and to make recommendations and reports to the legislature.
     (2) To make such other studies and examinations of economy, efficiency, and effectiveness of state government and its state agencies as it may find advisable, and to hear complaints, hold hearings, gather information, and make findings of fact with respect thereto.
     (3) To conduct program and fiscal reviews of any state agency or program scheduled for termination under the process provided under chapter 43.131 RCW.
     (4) To perform other legislative staff studies of state government or the use of state funds.
     (5) To conduct performance audits in accordance with the work plan adopted by the ((joint committee)) board under RCW ((44.28.180)) 44.28.083.
     (6) To receive a copy of each report of examination or audit issued by the state auditor for examinations or audits that were conducted at the request of the ((joint committee)) board and to make recommendations as it deems appropriate as a separate addendum to the report or audit.
     (7) To develop internal tracking procedures that will allow the legislature to measure the effectiveness of performance audits conducted by the ((joint committee)) board including, where appropriate, measurements of cost-savings and increases in efficiency and effectiveness in how state agencies deliver their services.
     (8) To receive messages and reports in person or in writing from the governor or any other state officials and to study generally any and all business relating to economy, efficiency, and effectiveness in state government and state agencies.

Sec. 15   RCW 44.28.083 and 1996 c 288 s 12 are each amended to read as follows:
     (1) During the regular legislative session of each odd-numbered year, beginning with 1997, the ((joint legislative audit and review committee)) board shall develop and approve a performance audit work plan for the subsequent sixteen to twenty-four-month period and an overall work plan that identifies state agency programs for which formal evaluation appears necessary. Among the factors to be considered in preparing the work plans are:
     (a) Whether a program newly created or significantly altered by the legislature warrants continued oversight because (i) the fiscal impact of the program is significant, or (ii) the program represents a relatively high degree of risk in terms of reaching the stated goals and objectives for that program;
     (b) Whether implementation of an existing program has failed to meet its goals and objectives by any significant degree; and
     (c) Whether a follow-up audit would help ensure that previously identified recommendations for improvements were being implemented.
     (2) The project description for each performance audit must include start and completion dates, the proposed approach, and cost estimates.
     (3) The legislative auditor may consult with the chairs and staff of appropriate legislative committees, the state auditor, and the director of financial management in developing the performance audit work plan.
     (4) The performance audit work plan and the overall work plan may include proposals to employ contract resources. As conditions warrant, the performance audit work plan and the overall work plan may be amended from time to time. All performance audit work plans shall be transmitted to the appropriate fiscal and policy committees of the senate and the house of representatives no later than the sixtieth day of the regular legislative session of each odd-numbered year, beginning with 1997. All overall work plans shall be transmitted to the appropriate fiscal and policy committees of the senate and the house of representatives.

Sec. 16   RCW 44.28.088 and 1996 c 288 s 13 are each amended to read as follows:
     (1) When the legislative auditor has completed a performance audit authorized in the performance audit work plan, the legislative auditor shall transmit the preliminary performance audit report to the affected state agency or local government and the office of financial management for comment. The agency or local government and the office of financial management shall provide any response to the legislative auditor within thirty days after receipt of the preliminary performance audit report unless a different time period is approved by the ((joint committee)) board. The legislative auditor shall incorporate the response of the agency or local government and the office of financial management into the final performance audit report.
     (2) Before releasing the results of a performance audit to the legislature or the public, the legislative auditor shall submit the preliminary performance audit report to the ((joint committee)) board for its review, comments, and final recommendations. Any comments by the ((joint committee)) board must be included as a separate addendum to the final performance audit report. Upon consideration and incorporation of the review, comments, and recommendations of the ((joint committee)) board, the legislative auditor shall transmit the final performance audit report to the affected agency or local government, the director of financial management, the leadership of the senate and the house of representatives, and the appropriate standing committees of the house of representatives and the senate and shall publish the results and make the report available to the public. For purposes of this section, "leadership of the senate and the house of representatives" means the speaker of the house, the majority leaders of the senate and the house of representatives, the minority leaders of the senate and the house of representatives, the caucus chairs of both major political parties of the senate and the house of representatives, and the floor leaders of both major political parties of the senate and the house of representatives.

Sec. 17   RCW 44.28.091 and 1996 c 288 s 14 are each amended to read as follows:
     (1) No later than nine months after the final performance audit has been transmitted by the ((joint committee)) board to the appropriate standing committees of the house of representatives and the senate, the ((joint committee)) board in consultation with the standing committees may produce a preliminary compliance report on the agency's or local government's compliance with the final performance audit recommendations. The agency or local government may attach its comments to the ((joint committee's)) board's preliminary compliance report as a separate addendum.
     (2) Within three months after the issuance of the preliminary compliance report, the ((joint committee)) board may hold at least one public hearing and receive public testimony regarding the findings and recommendations contained in the preliminary compliance report. The ((joint committee)) board may waive the public hearing requirement if the preliminary compliance report demonstrates that the agency or local government is in compliance with the audit recommendations. The ((joint committee)) board shall issue any final compliance report within four weeks after the public hearing or hearings. The legislative auditor shall transmit the final compliance report in the same manner as a final performance audit is transmitted under RCW 44.28.088.

NEW SECTION.  Sec. 18   A new section is added to chapter 44.28 RCW to read as follows:
     (1) The board shall review the performance and outcome measures of all state agencies and departments that are under the authority of the governor, the commissioner of public lands, the insurance commissioner, the state treasurer, the state attorney general, the superintendent of public instruction, the state auditor, the secretary of state, or a board or commission. The purpose of these reviews is to ensure that the legislature has 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 determine whether effective interagency cooperation and collaboration occurs in areas such as program coordination, administrative structures, information systems, and administration of grants and loans.
     (2) In conducting these reviews, the board shall work in consultation with the office of financial management and other state agencies. The legislative auditor may contract with and consult with public and private independent professional and technical experts as necessary in conducting the reviews.
     (3) The board shall develop a schedule and common methodology for conducting these reviews. The performance and outcome measures of each agency or department shall be reviewed not less than every five years. In setting the schedule and the extent of these performance reviews, the board shall consider the timing and results of other recent state, federal, and independent reviews and audits, the seriousness of past findings, any inadequate remedial action taken by an agency or department, whether an agency or department lacks performance and outcome measures, and the desirability to include a diverse range of agencies each year. The reviews shall include, but not be limited to:
     (a) 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 measurement;
     (b) An examination of how agency management uses the measures to manage resources in an efficient and effective manner;
     (c) An assessment of how performance benchmarks are established for the purpose of assessing overall performance compared to external standards and benchmarks;
     (d) An examination of how an analysis of the measurement data is used to make planning and operational improvements;
     (e) A determination of how performance and outcome measures are used in the budget planning, development, and allotment processes and the extent to which the agency is in compliance with its responsibilities under RCW 43.88.090;
     (f) A review of how performance data are reported to and used by the legislature both in policy development and resource allocation;
     (g) An assessment of whether the performance measure data are reliable and collected in a uniform and timely manner;
     (h) A determination whether targeted funding investments and established priorities of government actually produce the intended and expected services and benefits; and
     (i) Recommendations as necessary or appropriate.
     (4) Completed performance measure reviews shall be presented to the board and published in the same manner as prescribed for performance audits in RCW 44.28.088. Published performance reviews shall be made available to the public through the board's web site and through customary public communications. Final reports must also be transmitted to the appropriate policy and fiscal standing committees of the legislature.
     (5) After reviewing the performance or outcome measures of an agency or department, the legislative auditor shall recommend whether a full performance audit of the agency or department, or a specific program within the agency or department, is appropriate, and publicly post those recommendations. The board shall solicit input from the public at a subsequent hearing to decide whether and how to proceed with a full performance audit. If the board decides by a majority vote that a full performance audit of an agency or department, a specific program within an agency or department, or multiple agencies is appropriate, the board shall add that audit to its biennial performance audit work plan under RCW 44.28.080 and 44.28.083.
     (6) When conducting a full performance audit of an agency or department, or a specific program within an agency or department, or multiple agencies, in accordance with subsection (5) of this section, the board shall solicit input from appropriate industry representatives or experts. The board shall make recommendations regarding the continuation, abolition, consolidation, or reorganization of each affected agency, department, or program. The board shall identify opportunities to develop government partnerships, and eliminate program redundancies that will result in increased quality, effectiveness, and efficiency of state agencies.

Sec. 19   RCW 44.28.094 and 1996 c 288 s 15 are each amended to read as follows:
     Subject to the ((joint committee's)) board's approval, the office of the ((joint committee)) board shall undergo an external quality control review ((within three years of June 6, 1996, and)) at regular intervals ((thereafter)). The review must be conducted by an independent organization that has experience in conducting performance audits. The quality control review must include, at a minimum, an evaluation of the quality of the audits conducted by the ((joint committee)) board, an assessment of the audit procedures used by the ((joint committee)) board, and an assessment of the qualifications of the ((joint committee)) board staff to conduct performance audits.

Sec. 20   RCW 44.28.097 and 1996 c 288 s 18 are each amended to read as follows:
     All agency reports concerning program performance, including administrative review, quality control, and other internal audit or performance reports, as requested by the ((joint committee)) board, shall be furnished by the agency requested to provide such report.

Sec. 21   RCW 44.28.100 and 1996 c 288 s 19 are each amended to read as follows:
     The ((joint committee may)) board shall make reports from time to time to the members of the legislature, to the governor, and to the public with respect to any of its findings or recommendations. The ((joint committee)) board shall keep complete minutes of its meetings.

Sec. 22   RCW 44.28.120 and 1996 c 288 s 20 are each amended to read as follows:
     In case of the failure on the part of any person to comply with any subpoena issued in behalf of the ((joint committee)) board, or on the refusal of any witness to testify to any matters regarding which he or she may be lawfully interrogated, it shall be the duty of the superior court of any county, or of the judge thereof, on application of the ((joint committee)) board, to compel obedience by proceedings for contempt, as in the case of disobedience of the requirements of a subpoena issued from such court or a refusal to testify therein.

Sec. 23   RCW 44.28.130 and 1996 c 288 s 21 are each amended to read as follows:
     Each witness who appears before the ((joint committee)) board by its order, other than a state official or employee, shall receive for his or her attendance the fees and mileage provided for witnesses in civil cases in courts of record, which shall be audited and paid upon the presentation of proper vouchers signed by such witness, verified by the legislative auditor, and approved by the chair and the vice-chair of the ((joint committee)) board.

Sec. 24   RCW 44.28.150 and 1996 c 288 s 22 are each amended to read as follows:
     The ((joint committee)) board shall cooperate, act, and function with legislative committees and with the councils or committees of other states similar to this ((joint committee)) board and with other interstate research organizations.