HOUSE BILL REPORT
SB 5414
As Reported by House Committee On:
State Government & Tribal Relations
Title: An act relating to requiring social equity impact analysis in performance audits and legislative public hearings thereon.
Brief Description: Requiring social equity impact analysis in performance audits and legislative public hearings thereon.
Sponsors: Senators Hasegawa, Nobles and Valdez; by request of State Auditor.
Brief History:
Committee Activity:
State Government & Tribal Relations: 3/19/25, 3/25/25 [DP].
Brief Summary of Bill
  • Requires performance audits to include social equity impact analysis of programs or services.
  • Extends the deadline for legislative bodies to hold public hearings on the findings of performance audits. 
HOUSE COMMITTEE ON STATE GOVERNMENT & TRIBAL RELATIONS
Majority Report: Do pass.Signed by 4 members:Representatives Mena, Chair; Stearns, Vice Chair; Doglio and Farivar.
Minority Report: Do not pass.Signed by 3 members:Representatives Waters, Ranking Minority Member; Walsh, Assistant Ranking Minority Member; Chase.
Staff: Desiree Omli (786-7105).
Background:

The Office of the State Auditor (SAO) has the power to examine the financial affairs of all governments in the state, including local governments, schools, state agencies, and institutions of higher education.  In addition, the SAO carries out special investigations and performance audits of state agencies and local governments.

 

Performance audits evaluate the efficiency and effectiveness of government programs by comparing agency practices against legal requirements and industry best practices.  The authority and funding for performance audits was granted by voters through the passage of Initiative 900.  Findings from performance audits are reported to the Legislature through the Joint Legislative Audit and Review Committee.

 

Under current law, the scope of each performance audit must, at a minimum, include: 

  • identification of cost savings;
  • identification of services that can be reduced or eliminated;
  • identification of programs or services that can be transferred to the private sector;
  • analysis of gaps or overlaps in programs or services and recommendations to correct gaps or overlaps;
  • feasibility of pooling information technology systems within the department;
  • analysis of the roles and functions of the department, and recommendations to change or eliminate departmental roles or functions;
  • recommendations for statutory or regulatory changes that may be necessary for the department to properly carry out its functions;
  • analysis of departmental performance data, performance measures, and self-assessment systems; and
  • identification of best practices.

 

Audit reports are required to be submitted to the corresponding legislative body or bodies, and made publicly available within 30 days after completion of the audit.  Within 30 days after a performance audit is made public, the corresponding legislative body or bodies must hold at least one public hearing to consider audit findings and receive public comment.
Summary of Bill:

The scope of performance audits is expanded to require the inclusion of social equity impact analysis of programs or services.

 

The timeframe for a legislative body receiving the performance audit report from the SAO to hold a public hearing on the audit findings is extended to 90 days after a performance audit is made public.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.
Staff Summary of Public Testimony:

(In support) Requiring the Office of the State Auditor (SAO) to include social equity impacts in their performance audits has zero fiscal impact.  The Joint Legislative Audit Review Committee (JLARC) is directed to incorporate a racial equity impact analysis into their audits.  The SAO wants to incorporate this into their work because inequity cannot be fixed if it is not measured.  This requirement will allow the SAO to begin measuring this.  In practice, in any performance audit the SAO would need to incorporate that analysis or explain why that analysis is not necessary or appropriate.  The SAO has been conducting more audits that might have a social equity impact such as ballot rejection rates, civil asset forfeiture, and lead testing.  The SAO doesn't need this directive in statute to enable them to do social equity analyses, but it instead codifies it so that the directive in statute is consistent with the directive in statute for JLARC.

 

The second change this bill makes is to extend the timeframe for JLARC to hold hearings on the SAO's audit reports.  Currently, JLARC must hold a hearing within 30 days of the SAO publishing its report.  Regular monthly meetings are set by JLARC and the SAO tries to time its publications to coincide with those monthly meetings.  However, at times, the schedule for SAO's publication does not line up with the monthly meetings.  In those situations, the choices are for the SAO to delay its publication or for JLARC to delay its hearing in violation of the law.  Extending the time for JLARC to hold its hearings on SAO audit reports to 90 days would avoid these issues.

 

(Opposed) None. 
Persons Testifying:

Senator Bob Hasegawa, prime sponsor; Scott Nelson, Washington State Auditor; and Scott Frank, Washington State Auditor.
Persons Signed In To Testify But Not Testifying: None.