BILL REQ. #:  H-3717.1 

Read first time 01/24/12.   Referred to Committee on Ways & Means.

     AN ACT Relating to accountability in state government through the review of state programs; amending RCW 43.88.090 and 43.88.030; adding new sections to chapter 43.09 RCW; and adding a new section to chapter 43.88 RCW.

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

NEW SECTION.  Sec. 1   The legislature finds that the state operating budget includes numerous programs and activities intended to achieve a variety of policy goals for the public interest. To measure the effectiveness of these programs and activities in meeting these goals, the legislature intends to adopt accountability processes and measures to evaluate all new state programs. The legislature also finds that it is unreasonable and not in the interest of providing quality public service for state agencies to administer programs that the legislature has established but is unwilling to fund. Therefore, it is also the intent of this act to provide a means of substantive legislative review of unfunded programs in order to debate the merits of funding or repealing those programs.

NEW SECTION.  Sec. 2   For the purposes of this chapter, section 7 of this act, RCW 43.88.030, and 43.88.090, the following definitions apply unless the context clearly requires otherwise:
     (1) "New program" means a newly created state agency, services not supported in the previous biennium by the state, services to a population or other entity not served by the state in the previous biennium, or any activity not undertaken by the state in the previous biennium. "Activity" means a discrete work element carried out by state government agencies.
     (2) "State program" means a group of agency services designed to accomplish specific public goals and result in specific public benefits. The term also includes a "new program."

NEW SECTION.  Sec. 3   (1) On July 1st of each calendar year, the state auditor shall publish a draft list on its web site of all new programs funded by any appropriation or allotment of state funds during the previous fiscal year. The state auditor shall provide written notice of publication to the appropriate fiscal committees of the house of representatives and the senate and to the office of financial management.
     (2) The list shall include:
     (a) The name of the program;
     (b) A brief description of the program and the expected result;
     (c) The name of the agencies receiving the funding; and
     (d) The amounts appropriated, by fund or account.
     (3) Within thirty days of the publication of the draft list of new programs, the legislature and the office of financial management may provide any comments it may have on the draft list to the state auditor's office.
     (4) Within sixty days after the publication of the draft list, the state auditor shall publish a final list of new programs on its web site. The state auditor shall provide written notice of the final publication to the appropriate fiscal committees of the house of representatives and the senate and to the office of financial management.

NEW SECTION.  Sec. 4   (1) Three years after the initial funding of any new program, as defined in section 2 of this act, the state auditor shall conduct a fiscal and performance audit of each new program.
     (2) The audit shall:
     (a) Identify the original objective or objectives of the new program;
     (b) Identify the data collected by the program and the performance measures;
     (c) Assess how effective the program was at meeting the objective or objectives;
     (d) Determine how efficiently the resources were used; and
     (e) Suggest changes to the program to increase effectiveness and efficiency, including alternative approaches or termination of the program.
     (3) The state auditor shall provide a final copy of the audit to the appropriate fiscal committees of the house of representatives and the senate and to the office of financial management by December 31st of the calendar year for that audit period.

Sec. 5   RCW 43.88.090 and 2005 c 386 s 2 are each amended to read as follows:
     (1) For purposes of developing budget proposals to the legislature, the governor shall have the power, and it shall be the governor's duty, to require from proper agency officials such detailed estimates and other information in such form and at such times as the governor shall direct. The governor shall communicate statewide priorities to agencies for use in developing biennial budget recommendations for their agency and shall seek public involvement and input on these priorities. The estimates for the legislature and the judiciary shall be transmitted to the governor and shall be included in the budget without revision. The estimates for state pension contributions shall be based on the rates provided in chapter 41.45 RCW. Copies of all such estimates shall be transmitted to the standing committees on ways and means of the house and senate at the same time as they are filed with the governor and the office of financial management.
     The estimates shall include statements or tables which indicate, by agency, the state funds which are required for the receipt of federal matching revenues. The budget document must also include a listing of all new programs funded in the previous two years. For each new program, the list shall include: Program name; program objective; a brief description of the program; performance measures; current annual funding levels by agency; and the funding level proposed in the governor's biennial budget request. The list shall include all new programs funded in the previous two years regardless of whether the governor proposes funding those programs for the ensuing biennium. The estimates shall be revised as necessary to reflect legislative enactments and adopted appropriations and shall be included with the initial biennial allotment submitted under RCW 43.88.110. The estimates must reflect that the agency considered any alternatives to reduce costs or improve service delivery identified in the findings of a performance audit of the agency by the joint legislative audit and review committee. Nothing in this subsection requires performance audit findings to be published as part of the budget.
     (2) Each state agency shall define its mission and establish measurable goals for achieving desirable results for those who receive its services and the taxpayers who pay for those services. Each agency shall also develop clear strategies and timelines to achieve its goals. This section does not require an agency to develop a new mission or goals in place of identifiable missions or goals that meet the intent of this section. The mission and goals of each agency must conform to statutory direction and limitations.
     (3) For the purpose of assessing activity performance, each state agency shall establish quality and productivity objectives for each major activity in its budget. The objectives must be consistent with the missions and goals developed under this section. The objectives must be expressed to the extent practicable in outcome-based, objective, and measurable form unless an exception to adopt a different standard is granted by the office of financial management and approved by the legislative committee on performance review. Objectives must specifically address the statutory purpose or intent of the program or activity and focus on data that measure whether the agency is achieving or making progress toward the purpose of the activity and toward statewide priorities. The office of financial management shall provide necessary professional and technical assistance to assist state agencies in the development of strategic plans that include the mission of the agency and its programs, measurable goals, strategies, and performance measurement systems.
     (4) Each state agency shall adopt procedures for and perform continuous self-assessment of each activity, using the mission, goals, objectives, and measurements required under subsections (2) and (3) of this section. The assessment of the activity must also include an evaluation of major information technology systems or projects that may assist the agency in achieving or making progress toward the activity purpose and statewide priorities. The evaluation of proposed major information technology systems or projects shall be in accordance with the standards and policies established by the ((information services board)) office of the chief information officer. Agencies' progress toward the mission, goals, objectives, and measurements required by subsections (2) and (3) of this section is subject to review as set forth in this subsection.
     (a) The office of financial management shall regularly conduct reviews of selected activities to analyze whether the objectives and measurements submitted by agencies demonstrate progress toward statewide results.
     (b) The office of financial management shall consult with the ((higher education coordinating board and the)) state board for community and technical colleges in those reviews that involve institutions of higher education.
     (c) The goal is for all major activities to receive at least one review each year.
     (d) The office of financial management shall consult with the ((information services board)) office of the chief information officer when conducting reviews of major information technology systems in use by state agencies. The goal is that reviews of these information technology systems occur periodically.
     (5) It is the policy of the legislature that each agency's budget recommendations must be directly linked to the agency's stated mission and program, quality, and productivity goals and objectives. Consistent with this policy, agency budget proposals must include integration of performance measures that allow objective determination of an activity's success in achieving its goals. When a review under subsection (4) of this section or other analysis determines that the agency's objectives demonstrate that the agency is making insufficient progress toward the goals of any particular program or is otherwise underachieving or inefficient, the agency's budget request shall contain proposals to remedy or improve the selected programs. The office of financial management shall develop a plan to merge the budget development process with agency performance assessment procedures. The plan must include a schedule to integrate agency strategic plans and performance measures into agency budget requests and the governor's budget proposal over three fiscal biennia. The plan must identify those agencies that will implement the revised budget process in the 1997-1999 biennium, the 1999-2001 biennium, and the 2001-2003 biennium. In consultation with the legislative fiscal committees, the office of financial management shall recommend statutory and procedural modifications to the state's budget, accounting, and reporting systems to facilitate the performance assessment procedures and the merger of those procedures with the state budget process. The plan and recommended statutory and procedural modifications must be submitted to the legislative fiscal committees by September 30, 1996.
     (6) In reviewing agency budget requests in order to prepare the governor's biennial budget request, the office of financial management shall consider the extent to which the agency's activities demonstrate progress toward the statewide budgeting priorities, along with any specific review conducted under subsection (4) of this section.
     (7) In the year of the gubernatorial election, the governor shall invite the governor-elect or the governor-elect's designee to attend all hearings provided in RCW 43.88.100; and the governor shall furnish the governor-elect or the governor-elect's designee with such information as will enable the governor-elect or the governor-elect's designee to gain an understanding of the state's budget requirements. The governor-elect or the governor-elect's designee may ask such questions during the hearings and require such information as the governor-elect or the governor-elect's designee deems necessary and may make recommendations in connection with any item of the budget which, with the governor-elect's reasons therefor, shall be presented to the legislature in writing with the budget document. Copies of all such estimates and other required information shall also be submitted to the standing committees on ways and means of the house and senate.

Sec. 6   RCW 43.88.030 and 2006 c 334 s 43 are each amended to read as follows:
     (1) The director of financial management shall provide all agencies with a complete set of instructions for submitting biennial budget requests to the director at least three months before agency budget documents are due into the office of financial management. The budget document or documents shall consist of the governor's budget message which shall be explanatory of the budget and shall contain an outline of the proposed financial policies of the state for the ensuing fiscal period, as well as an outline of the proposed six-year financial policies where applicable, and shall describe in connection therewith the important features of the budget. The biennial budget document or documents shall also describe performance indicators that demonstrate measurable progress towards priority results. The message shall set forth the reasons for salient changes from the previous fiscal period in expenditure and revenue items and shall explain any major changes in financial policy. Attached to the budget message shall be such supporting schedules, exhibits and other explanatory material in respect to both current operations and capital improvements as the governor shall deem to be useful to the legislature. The budget document or documents shall set forth a proposal for expenditures in the ensuing fiscal period, or six-year period where applicable, based upon the estimated revenues and caseloads as approved by the economic and revenue forecast council and caseload forecast council or upon the estimated revenues and caseloads of the office of financial management for those funds, accounts, sources, and programs for which the forecast councils do not prepare an official forecast. Revenues shall be estimated for such fiscal period from the source and at the rates existing by law at the time of submission of the budget document, including the supplemental budgets submitted in the even-numbered years of a biennium. However, the estimated revenues and caseloads for use in the governor's budget document may be adjusted to reflect budgetary revenue transfers and revenue and caseload estimates dependent upon budgetary assumptions of enrollments, workloads, and caseloads. All adjustments to the approved estimated revenues and caseloads must be set forth in the budget document. The governor may additionally submit, as an appendix to each supplemental, biennial, or six-year agency budget or to the budget document or documents, a proposal for expenditures in the ensuing fiscal period from revenue sources derived from proposed changes in existing statutes.
     The budget document or documents shall also contain:
     (a) Revenues classified by fund and source for the immediately past fiscal period, those received or anticipated for the current fiscal period, and those anticipated for the ensuing biennium;
     (b) The undesignated fund balance or deficit, by fund;
     (c) Such additional information dealing with expenditures, revenues, workload, performance, and personnel as the legislature may direct by law or concurrent resolution;
     (d) Such additional information dealing with revenues and expenditures as the governor shall deem pertinent and useful to the legislature;
     (e) Tabulations showing expenditures classified by fund, function, and agency;
     (f)(i) The expenditures that include nonbudgeted, nonappropriated accounts outside the state treasury; and
     (ii) A listing of each agency's inactive, unfunded state programs for which no specific funding was provided in the preceding fiscal year;
     (g) Identification of all proposed direct expenditures to implement the Puget Sound water quality plan under chapter 90.71 RCW, shown by agency and in total; and
     (h) Tabulations showing each postretirement adjustment by retirement system established after fiscal year 1991, to include, but not be limited to, estimated total payments made to the end of the previous biennial period, estimated payments for the present biennium, and estimated payments for the ensuing biennium.
     (2) The budget document or documents shall include detailed estimates of all anticipated revenues applicable to proposed operating or capital expenditures and shall also include all proposed operating or capital expenditures. The total of beginning undesignated fund balance and estimated revenues less working capital and other reserves shall equal or exceed the total of proposed applicable expenditures. The budget document or documents shall further include:
     (a) Interest, amortization and redemption charges on the state debt;
     (b) Payments of all reliefs, judgments, and claims;
     (c) Other statutory expenditures;
     (d) Expenditures incident to the operation for each agency;
     (e) Revenues derived from agency operations;
     (f) Expenditures and revenues shall be given in comparative form showing those incurred or received for the immediately past fiscal period and those anticipated for the current biennium and next ensuing biennium;
     (g) A showing and explanation of amounts of general fund and other funds obligations for debt service and any transfers of moneys that otherwise would have been available for appropriation;
     (h) Common school expenditures on a fiscal-year basis;
     (i) A showing, by agency, of the value and purpose of financing contracts for the lease/purchase or acquisition of personal or real property for the current and ensuing fiscal periods; and
     (j) A showing and explanation of anticipated amounts of general fund and other funds required to amortize the unfunded actuarial accrued liability of the retirement system specified under chapter 41.45 RCW, and the contributions to meet such amortization, stated in total dollars and as a level percentage of total compensation.
     (3) The governor's operating budget document or documents shall reflect the statewide priorities as required by RCW 43.88.090.
     (4) The governor's operating budget document or documents shall identify activities that are not addressing the statewide priorities.
     (5) A separate capital budget document or schedule shall be submitted that will contain the following:
     (a) A statement setting forth a long-range facilities plan for the state that identifies and includes the highest priority needs within affordable spending levels;
     (b) A capital program consisting of proposed capital projects for the next biennium and the two biennia succeeding the next biennium consistent with the long-range facilities plan. Insomuch as is practical, and recognizing emergent needs, the capital program shall reflect the priorities, projects, and spending levels proposed in previously submitted capital budget documents in order to provide a reliable long-range planning tool for the legislature and state agencies;
     (c) A capital plan consisting of proposed capital spending for at least four biennia succeeding the next biennium;
     (d) A strategic plan for reducing backlogs of maintenance and repair projects. The plan shall include a prioritized list of specific facility deficiencies and capital projects to address the deficiencies for each agency, cost estimates for each project, a schedule for completing projects over a reasonable period of time, and identification of normal maintenance activities to reduce future backlogs;
     (e) A statement of the reason or purpose for a project;
     (f) Verification that a project is consistent with the provisions set forth in chapter 36.70A RCW;
     (g) A statement about the proposed site, size, and estimated life of the project, if applicable;
     (h) Estimated total project cost;
     (i) For major projects valued over five million dollars, estimated costs for the following project components: Acquisition, consultant services, construction, equipment, project management, and other costs included as part of the project. Project component costs shall be displayed in a standard format defined by the office of financial management to allow comparisons between projects;
     (j) Estimated total project cost for each phase of the project as defined by the office of financial management;
     (k) Estimated ensuing biennium costs;
     (l) Estimated costs beyond the ensuing biennium;
     (m) Estimated construction start and completion dates;
     (n) Source and type of funds proposed;
     (o) Estimated ongoing operating budget costs or savings resulting from the project, including staffing and maintenance costs;
     (p) For any capital appropriation requested for a state agency for the acquisition of land or the capital improvement of land in which the primary purpose of the acquisition or improvement is recreation or wildlife habitat conservation, the capital budget document, or an omnibus list of recreation and habitat acquisitions provided with the governor's budget document, shall identify the projected costs of operation and maintenance for at least the two biennia succeeding the next biennium. Omnibus lists of habitat and recreation land acquisitions shall include individual project cost estimates for operation and maintenance as well as a total for all state projects included in the list. The document shall identify the source of funds from which the operation and maintenance costs are proposed to be funded;
     (q) Such other information bearing upon capital projects as the governor deems to be useful;
     (r) Standard terms, including a standard and uniform definition of normal maintenance, for all capital projects;
     (s) Such other information as the legislature may direct by law or concurrent resolution.
     For purposes of this subsection (5), the term "capital project" shall be defined subsequent to the analysis, findings, and recommendations of a joint committee comprised of representatives from the house capital appropriations committee, senate ways and means committee, legislative evaluation and accountability program committee, and office of financial management.
     (6) No change affecting the comparability of agency or program information relating to expenditures, revenues, workload, performance and personnel shall be made in the format of any budget document or report presented to the legislature under this section or RCW 43.88.160(1) relative to the format of the budget document or report which was presented to the previous regular session of the legislature during an odd-numbered year without prior legislative concurrence. Prior legislative concurrence shall consist of (a) a favorable majority vote on the proposal by the standing committees on ways and means of both houses if the legislature is in session or (b) a favorable majority vote on the proposal by members of the legislative evaluation and accountability program committee if the legislature is not in session.

NEW SECTION.  Sec. 7   A new section is added to chapter 43.88 RCW to read as follows:
     Any state program as defined in section 2 of this act taking effect on or after July 1, 2012, that does not receive specific funding as provided in the enacted bill's fiscal note prepared pursuant to RCW 43.88A.020 expires three years after the effective date, unless an earlier expiration date is specified in the enacting legislation.

NEW SECTION.  Sec. 8   Sections 1 through 4 of this act are each added to chapter 43.09 RCW.