By: Dunnam, Crownover, Coleman, H.B. No. 2942

Turner of Harris, Gattis, et al.

A BILL TO BE ENTITLED

AN ACT

relating to accountability and transparency in government operations, including disclosure, oversight, and enforcement measures; providing penalties.

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

ARTICLE 1. SHORT TITLE; FINDINGS; PURPOSE

SECTION 1.01. This Act may be cited as the "Texas Government Accountability and Transparency Act of 2009."

SECTION 1.02. The legislature finds that the public's confidence in its government is highest when there is adequate oversight of government spending and performance by an independent agency that answers to the people's elected representatives.

SECTION 1.03. The purpose of Article 2 of this Act is to ensure that the State Auditor and the State Accountability Office are able to provide the highest level of oversight of government spending and performance to ensure the greatest possible economy and efficiency in government.

ARTICLE 2. STATE AUDITOR AND STATE ACCOUNTABILITY OFFICE

SECTION 2.01. The heading to Chapter 321, Government Code, is amended to read as follows:

CHAPTER 321. STATE ACCOUNTABILITY OFFICE AND STATE AUDITOR

SECTION 2.02. Chapter 321, Government Code, is amended by designating Sections 321.001 through 321.012 as Subchapter A and adding a heading for Subchapter A to read as follows:

SUBCHAPTER A. GENERAL PROVISIONS

SECTION 2.03. Section 321.001, Government Code, is amended by amending Subdivisions (1), (3), and (4) and adding Subdivisions (4-a) and (4-b) to read as follows:

(1) "Audit plan" means the outline of the office's work [approved by the committee] for [the State Auditor's Office in] a year for the performance of audits and related services, including technical assistance, data analysis, consulting and oversight functions, investigations, and the preparation of audit reports and other types of communications.

(3) "Board" ["Committee"] means the legislative audit board [committee].

(4) "Department" includes every state department, agency, board, bureau, institution, or commission. The term includes an institution of higher education as defined by Section 61.003, Education Code.

(4-a) "Office" means the State Accountability Office.

(4-b) "Recovery Act" means the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) and includes any subsequent federal economic stimulus legislation.

SECTION 2.04. Subchapter A, Chapter 321, Government Code, as added by this Act, is amended by adding Sections 321.0011, 321.0014, and 321.0015 to read as follows:

Sec. 321.0011. STATE ACCOUNTABILITY OFFICE. The State Accountability Office is an independent agency of the legislative branch of state government.

Sec. 321.0014. APPLICABILITY TO CERTAIN ENTITIES. This chapter applies to the following entities in the same manner as if each entity were a department:

(1) an independent organization certified by the Public Utility Commission of Texas under Section 39.151, Utilities Code;

(2) a regional mobility authority;

(3) the Texas Economic Development Corporation;

(4) a nonprofit organization that is established by a state officer or department and that solicits gifts, grants, and other donations for the Texas Enterprise Fund under Section 481.078;

(5) a nonprofit organization that is established by a state officer or department and that solicits gifts, grants, and other donations for any other purpose; and

(6) any public or private person or entity receiving funds through a governmental entity in this state that were made available by or provided under the Recovery Act.

Sec. 321.0015. REFERENCES IN LAW. (a) A reference in this chapter or other law to the state auditor's office means the State Accountability Office.

(b) A reference in this chapter or other law to the legislative audit committee means the legislative audit board.

SECTION 2.05. Section 321.002, Government Code, is amended to read as follows:

Sec. 321.002. LEGISLATIVE AUDIT BOARD [COMMITTEE]. (a) The legislative audit board [committee] consists of:

(1) the lieutenant governor;

(2) the speaker of the house of representatives;

(3) the chair [chairman] of the senate finance committee;

(4) four other members [one member] of the senate appointed by the lieutenant governor;

(5) the chair [chairman] of the house appropriations committee; [and]

(6) the chair [chairman] of the house ways and means committee; and

(7) three other members of the house appointed by the speaker.

(b) In the absence of the chair [chairman] of a house or senate committee, the vice chair [vice-chairman] of the respective committee shall act.

(c) Members of the board [committee] serve without compensation but are entitled to actual and necessary expenses incurred in performing official duties.

(d) The board [committee] shall employ necessary clerical assistants as allowed by legislative appropriation.

(e) The lieutenant governor and the speaker are joint chairs of the board [committee]. [The committee shall elect one member to serve as secretary.]

SECTION 2.06. Subchapter A, Chapter 321, Government Code, as added by this Act, is amended by adding Section 321.003 to read as follows:

Sec. 321.003. SUNSET PROVISION. The office and the board are subject to review under Chapter 325 (Texas Sunset Act) but are not abolished under that chapter. The office and board shall be reviewed during the periods in which state agencies scheduled to be abolished in 2013.

SECTION 2.07. Section 321.004, Government Code, is amended to read as follows:

Sec. 321.004. MEETINGS RELATED TO RECOVERY ACT [PROCEDURE FOR TIE VOTE]. Beginning July 1, 2009, the board shall meet at least once each month in Austin to take testimony and receive evidence related to funds received by the state from the federal government for economic stabilization, including Recovery Act funds. This section expires January 1, 2011 [(a) If the full committee is present and is not able to resolve a tie vote within a reasonable time on a matter this chapter requires the committee to decide, the committee shall select a member of the house or senate to meet with the committee and to cast the tie-breaking vote.

[(b) The seventh member's duty to the committee ends when the member casts the tie-breaking vote and the matter is resolved].

SECTION 2.08. Section 321.005, Government Code, is amended to read as follows:

Sec. 321.005. [APPOINTMENT OF] STATE AUDITOR; APPOINTMENT. (a) The State Auditor is the office's chief executive and administrative officer. The State Auditor [committee] shall:

(1) administer and enforce this chapter;

(2) [appoint a State Auditor to] investigate all custodians of state funds, disbursing agents, and department personnel;

(3) investigate fraud or abuse in all departments, including misuse of funds, conflicts of interest, contract abuses, and other violations of law;

(4) monitor the compliance of all departments with the applicable laws relating to the powers, duties, and functions of the departments;

(5) refer criminal matters as appropriate to the Travis County district attorney or the prosecuting attorney of the county in which an offense is alleged to have occurred;

(6) refer civil matters, as appropriate, to the attorney general, the Travis County district attorney, or the district or county attorney, as applicable, for the county in which a civil action regarding the matter would be brought; and

(7) perform all other duties and exercise all other powers granted to the office or the State Auditor by this chapter or any other law.

(b) The board [committee] shall appoint the State Auditor. The joint chairs of the board shall execute a written declaration of the person appointed by the board as State Auditor and file the declaration with the secretary of state.

(c) The State Auditor serves at the will of the board [committee]. The State Auditor is ineligible to be a candidate for a public elective office in this state unless the State Auditor has resigned and the board has accepted the resignation.

(d) The board [committee] shall fill any vacancy in the office of State Auditor.

(e) A majority vote of the board [committee] members is sufficient to exercise any action authorized by this section.

SECTION 2.09. Section 321.008(b), Government Code, is amended to read as follows:

(b) The State Auditor must file the oath with the secretary of state not later than the 10th day after the date on which the board [committee] appointed the State Auditor, or the board [committee] or a majority of the board [committee] members shall appoint another qualified person as State Auditor.

SECTION 2.10. Section 321.023, Government Code, is transferred to Subchapter A, Chapter 321, Government Code, as added by this Act, redesignated as Section 321.009, Government Code, and amended to read as follows:

Sec. 321.009 [321.023]. SEAL. The [state auditor shall obtain a] seal of the office is [with "State Auditor, State of Texas" engraved around the margin and] a five-pointed star in the center with the words "State Accountability Office, State of Texas" engraved around the margin. The seal shall [to] be used to authenticate official documents issued by or on the order of the state auditor.

SECTION 2.11. Section 321.010(a), Government Code, is amended to read as follows:

(a) The State Auditor shall [may] appoint a first assistant state auditor with the approval of the board.

SECTION 2.12. Subchapter A, Chapter 321, Government Code, as added by this Act, is amended by adding Sections 321.0101 and 321.0102 to read as follows:

Sec. 321.0101. COUNSELOR; ADVISORY OPINIONS. (a) The State Auditor shall appoint a counselor.

(b) The counselor must be an attorney licensed to practice law in this state.

(c) The counselor may issue advisory opinions under procedures approved by the State Auditor relating to the appropriate use of and authority to spend state funds.

Sec. 321.0102. CHIEF CLERK. The State Auditor may appoint a chief clerk to receive, file, and carefully preserve all documents and records provided to the State Auditor and the office and to serve as secretary to the board.

SECTION 2.13. Sections 321.011(a), (b), and (c), Government Code, are amended to read as follows:

(a) Subject to the General Appropriations Act, and as necessary to carry out the powers and duties of the State Auditor and the office under this chapter and other laws granting jurisdiction or applicable to the State Auditor or the office, the [The] State Auditor may:

(1) appoint [may employ a professional staff, including] assistant state auditors and special agents; and

(2) employ other [stenographic and clerical] personnel.

(b) The State Auditor shall establish the qualifications necessary for appointment or employment, including qualifications regarding necessary legal knowledge, law enforcement experience, honesty, integrity, education, training, and executive ability. A person appointed or employed must have the experience necessary to qualify the person for the position. The State Auditor may conduct professional examinations to determine the qualifications of a person seeking appointment or employment [prospective staff members].

(c) The State Auditor may discharge any [assistant auditors or stenographic or clerical] personnel at any time for any reason satisfactory to the State Auditor and without a hearing.

SECTION 2.14. Subchapter A, Chapter 321, Government Code, is amended by adding Sections 321.0111, 321.0112, and 321.0113 to read as follows:

Sec. 321.0111. SPECIAL AGENTS. (a) The State Auditor may employ and commission special agents to assist the office in carrying out the duties of the office relating to detection, investigation, and prevention of fraud, waste, and abuse.

(b) A special agent employed by the office is not:

(1) a peace officer but has the powers of search and seizure, as to felony offenses only, under the laws of this state; or

(2) entitled to supplemental benefits from the law enforcement and custodial officer supplemental retirement fund unless the officer transfers from a position, without a break in service, that qualifies for supplemental retirement benefits from the fund.

(c) The State Auditor may not commission more than 20 special agents at any time.

Sec. 321.0112. EXPERTS. Subject to the availability of funds, the State Auditor may contract with certified public accountants, qualified management consultants, or other professional experts as necessary to independently perform the functions of the office under this chapter or other law.

Sec. 321.0113. PERSONNEL; POLITICAL INFLUENCE. (a) The State Auditor and office personnel are to be free from partisan politics, and the State Auditor is free to select the most efficient personnel available for each position in the office so that the State Auditor may render to the legislature the service the legislature has a right to expect.

(b) It is against public policy and a criminal offense for a member of the legislature, an officer or employee of the state, or an officer or employee of a state department to recommend or suggest that the State Auditor appoint a person to a position in the office. An offense under this section is a Class A misdemeanor.

SECTION 2.15. Sections 321.012(a) and (c), Government Code, are amended to read as follows:

(a) The board [committee] directs and controls the expenditure of any money appropriated to the office [of the State Auditor] and must approve the State Auditor's appropriation requests [and audit plan].

(c) The salaries of the assistant auditors and other [stenographic and clerical] personnel may not exceed the amounts paid by other departments for similar services without the approval of the board.

SECTION 2.16. Subchapter A, Chapter 321, Government Code, as added by this Act, is amended by adding Sections 321.0121 through 321.0124 to read as follows:

Sec. 321.0121. PUBLIC INTEREST INFORMATION. (a) The office shall prepare information of public interest describing:

(1) the functions of the office, including the functions of the State Auditor;

(2) the matters or issues that may be subject to audits, investigations, and other functions performed by the office; and

(3) the manner in which a person may report an allegation of fraud or abuse to the office.

(b) The office shall make the information described by Subsection (a) available to state officers and employees and to the public.

Sec. 321.0122. REQUIRED CONTRACT DISCLOSURE STATEMENT. (a) The office shall develop a standard contract provision requiring a contractor to disclose to the office the amount of a payment made under the contract to any subcontractor, consultant, or person required to register as a lobbyist under Chapter 305 or the Lobbying Disclosure Act of 1995 (2 U.S.C. Section 1601 et seq.).

(b) A department shall include the provision in any contract entered into by the department.

Sec. 321.0123. CONTRACT REPORTING REQUIREMENTS. A department that is required under other law to report information relating to a contract entered into by the department to the Legislative Budget Board shall also report the information to the office.

Sec. 321.0124. POSTING OF CONTRACT INFORMATION ON INTERNET. (a) The office shall post any information received by the office that relates to a contract entered into by a department and that is not confidential by law on an Internet site maintained by or for the office. The office shall post the information in a timely manner after receipt of the information.

(b) The Internet site must be accessible to the public.

SECTION 2.17. Chapter 321, Government Code, is amended by designating Sections 321.013 through 321.022 as Subchapter B and adding a heading for Subchapter B to read as follows:

SUBCHAPTER B. AUDITS AND INVESTIGATIONS

SECTION 2.18. The heading for Section 321.013, Government Code, is amended to read as follows:

Sec. 321.013. ADDITIONAL POWERS AND DUTIES OF STATE AUDITOR.

SECTION 2.19. Sections 321.013(a), (c), and (f), Government Code, are amended to read as follows:

(a) The State Auditor shall conduct audits of all departments, including institutions of higher education, as specified in the audit plan. The [At the direction of the committee, the] State Auditor may [shall] conduct an audit or investigation of any entity receiving funds from the state.

(c) The State Auditor shall prepare an [recommend the] audit plan for the state for each year [to the committee]. In devising the plan, the State Auditor shall consider recommendations concerning coordination of agency functions made jointly by representatives of the Legislative Budget Board, Sunset Advisory Commission, and the office [State Auditor's Office]. The State Auditor shall also consider the extent to which a department has received a significant increase in appropriations, including a significant increase in federal or other money passed through to the department, and shall review procurement activities for compliance with Section 2161.123. The plan shall provide for auditing of federal programs at least as often as required under federal law and shall ensure that audit requirements of all bond covenants and other credit or financial agreements are satisfied. The board [committee] shall review [and approve] the plan.

(f) The State Auditor may conduct financial audits, compliance audits [and investigations, and, with specific authority from the committee], economy and efficiency audits, effectiveness audits, and special audits as defined by this chapter and specified in the audit plan. The State Auditor shall conduct or direct investigations as necessary.

SECTION 2.20. Section 321.016, Government Code, is amended to read as follows:

Sec. 321.016. IMPROPER PRACTICES AND ILLEGAL TRANSACTIONS. (a) If in the course of an audit the State Auditor finds evidence of improper practices of financial administration, inadequate fiscal records, uneconomical use of resources, or ineffective program performance, the State Auditor, after consulting with the head of the agency, shall immediately report the evidence to the governor, the board [committee], the chairs of the committees of each house with oversight responsibility for the agency, and the administrative head and the chair [chairman] of the governing body of the affected department.

(b) If in the course of an audit the State Auditor finds evidence of an illegal transaction, the State Auditor, after consulting with the head of the agency, shall immediately report the transaction to the governor, the board [committee], the chairs of the committees of each house with oversight responsibility for the agency, the Travis County district attorney or the prosecuting attorney of the county in which the offense is alleged to have occurred, and any other [the] appropriate legal authority.

(c) Immediately after the board [committee] receives a report from the State Auditor alleging improper practices of financial administration, uneconomical use of resources, or ineffective program performance, the board [committee] shall review the report and shall consult with and may hold hearings with the administrative head and the chair [chairman] of the governing body of the affected department regarding the report.

(d) If the administrative head or the governing body of the affected department refuses to make the changes recommended by the board [committee] at the hearing or provide any additional information or reports requested, the board [committee] shall report the refusal to the legislature.

SECTION 2.21. Section 321.018, Government Code, is amended to read as follows:

Sec. 321.018. SUBPOENAS. (a) The [At the request of the] State Auditor or the board [on its own motion, the committee] may subpoena witnesses or any books, records, or other documents reasonably necessary to conduct an examination under this chapter.

(b) Each subpoena must be signed by either:

(1) the State Auditor; or

(2) one of the joint chairs of the board [committee or the secretary of the committee].

(c) On the request of either the State Auditor or one of the joint chairs of the board, a special agent of the office [committee or the secretary of the committee], the sergeant at arms or an assistant sergeant at arms of either house of the legislature, or any peace officer shall serve the subpoena in the manner prescribed for service of a district court subpoena.

(d) If the person to whom a subpoena is directed fails to comply, the State Auditor or the board [committee] may bring suit in district court to enforce the subpoena. If the court determines that good cause exists for the issuance of the subpoena, the court shall order compliance. The court may modify the requirements of a subpoena that the court determines are unreasonable. Failure to comply with the order of the district court is punishable as contempt.

(e) The State Auditor or the board [committee] may provide for the compensation of subpoenaed witnesses. The amount of compensation may not exceed the amount paid to a witness subpoenaed by a district court in a civil proceeding.

SECTION 2.22. The heading to Section 321.019, Government Code, is amended to read as follows:

Sec. 321.019. INTERFERENCE WITH AUDIT OR INVESTIGATION; CRIMINAL OFFENSE.

SECTION 2.23. Section 321.019, Government Code, is amended by amending Subsection (b) and adding Subsection (c) to read as follows:

(b) An offense under this section is a Class A misdemeanor, except that the offense is a felony of the third degree if the audit or investigation is related to funds made available by or provided under the Recovery Act.

(c) An offense under this section may be prosecuted in the county in which an element of the offense occurs or in Travis County.

SECTION 2.24. Subchapter B, Chapter 321, Government Code, as added by this Act, is amended by adding Section 321.0191 and Sections 321.023 through 321.027 to read as follows:

Sec. 321.0191. REQUEST FOR INFORMATION; CIVIL PENALTY. (a) The State Auditor may serve on the officer or employee of a department or an entity subject to audit or investigation under this chapter written requests for information or inspection of property. A request under this section must:

(1) identify and describe with reasonable particularity the information sought, documents to be produced, or other property to which access is requested; and

(2) set forth the items to be inspected by individual item or by category.

(b) An officer or employee who does not, without good cause, produce the documents or grant access to the property before the 25th hour after the request is served is personally liable to the state for a civil penalty of $1,000 for each day the conduct continues, except that the civil penalty is $5,000 for each day the conduct continues if the audit or investigation is related to funds made available by or provided under the Recovery Act.

(c) The attorney general, the Travis County district attorney, or the prosecuting attorney of the county in which a violation is alleged to have occurred may sue to collect the penalty.

Sec. 321.023. GOVERNMENT ACCOUNTABILITY RECOMMENDATIONS. The office shall recommend policies for:

(1) the detection of fraud and abuse, including state contract violations, conflicts of interest, and the inappropriate use or unauthorized expenditure of state funds;

(2) the identification of participants in any detected fraud or abuse;

(3) the termination or prosecution of state employees in relation to detected fraud or abuse; and

(4) the exclusion of contractors from participation in state contracts for detected fraud or abuse.

Sec. 321.024. RECEIPT AND INVESTIGATION OF COMPLAINTS AND INFORMATION. (a) The State Auditor may receive and investigate complaints and information concerning the possible existence of fraud or abuse.

(b) The State Auditor shall establish and operate a toll-free telephone line to be known as the Texas Government Accountability Hotline that enables a person to call the hotline number to:

(1) obtain information concerning audits or investigations conducted by the office; or

(2) report an alleged violation of the laws of this state related to government accountability, including laws related to spending, procurement, and auditing, by any department or any entity subject to audit or investigation under this chapter.

(c) The State Auditor shall establish an Internet web page that permits a person to obtain information and report violations as provided by Subsection (b).

(d) Each department and each entity subject to audit or investigation under this chapter that maintains one or more Internet web pages shall post on the department's or entity's home page a prominent link to the Internet web page maintained by the State Auditor under this section.

Sec. 321.025. LEGAL ASSISTANCE. On request of the State Auditor, the Travis County district attorney or the prosecuting attorney of the county in which an offense is alleged to have occurred shall assist the State Auditor with investigations and provide appropriate legal assistance.

Sec. 321.026. REFERRAL OF CERTAIN MATTERS. (a) After an investigation of possible fraud or abuse, if the State Auditor believes that fraud or abuse by a department may have resulted in the inappropriate use or unauthorized expenditure of state funds, the office may refer the matter to the Travis County district attorney or the prosecuting attorney of the county in which an offense or impropriety is alleged to have occurred and recommend that the attorney pursue the recovery of state funds.

(b) After receiving a referral from the office under this section, the Travis County district attorney or the prosecuting attorney of the county in which an offense or impropriety is alleged to have occurred shall review the request, make an independent decision, and issue a written public opinion with respect to the existence of fraud or abuse and whether the attorney intends to pursue the recovery of state funds.

Sec. 321.027. REFERRAL OF MATTERS RELATED TO RECOVERY ACT. Notwithstanding any other provision of law, a matter referred by the State Auditor concerning fraud or other criminal activity in connection with Recovery Act funds may be prosecuted in a county in which an element of the offense occurs or in Travis County.

SECTION 2.25. Sections 322.015, 322.016, 322.0165, 322.017, and 322.018, Government Code, are transferred to Chapter 321, Government Code, renumbered as Sections 321.051, 321.052, 321.053, 321.054, and 321.055, Government Code, respectively, designated as Subchapter C, Chapter 321, Government Code, and amended, and a heading is added for Subchapter C, Chapter 321, Government Code, to read as follows:

SUBCHAPTER C. PERFORMANCE REVIEWS

Sec. 321.051 [322.015]. REVIEW OF INTERSCHOLASTIC COMPETITION. The office [board] may periodically review and analyze the effectiveness and efficiency of the policies, management, fiscal affairs, and operations of an organization that is a component or part of a state agency or institution and that sanctions or conducts interscholastic competition. The office [board] shall report the findings to the governor and the legislature. The legislature may consider the office's [board's] reports in connection with the legislative appropriations process.

Sec. 321.052 [322.016]. PERFORMANCE REVIEW OF SCHOOL DISTRICTS. (a) The office [board] may periodically review the effectiveness and efficiency of the operations of school districts, including the district's expenditures for its officers' and employees' travel services. A review of a school district may be initiated by the office [board] at the State Auditor's [its] discretion or on the request of the school district. A review may be initiated by a school district only by resolution adopted by a majority of the members of the board of trustees of the district.

(b) If a review is initiated on the request of the school district, the district shall pay 25 percent of the cost incurred in conducting the review.

(c) The office [board] shall:

(1) prepare a report showing the results of each review conducted under this section;

(2) file the report with the school district, the governor, the lieutenant governor, the speaker of the house of representatives, the chairs of the standing committees of the senate and the house of representatives with jurisdiction over public education, and the commissioner of education; and

(3) make the entire report and a summary of the report available to the public on the Internet.

(d) Until the office [board] has completed a review under this section, all information, documentary or otherwise, prepared or maintained in conducting the review or preparing the review report, including intra-agency and interagency communications and drafts of the review report or portions of those drafts, is excepted from required public disclosure as audit working papers under Section 552.116. This subsection does not affect whether information described by this subsection is confidential or excepted from required public disclosure under a law other than Section 552.116.

Sec. 321.053 [322.0165]. PERFORMANCE REVIEW OF INSTITUTIONS OF HIGHER EDUCATION. (a) In this section, "public junior college" and "general academic teaching institution" have the meanings assigned by Section 61.003, Education Code.

(b) The office [board] may periodically review the effectiveness and efficiency of the budgets and operations of:

(1) public junior colleges; and

(2) general academic teaching institutions.

(c) A review under this section may be initiated by the office [board] or at the request of:

(1) the governor; or

(2) the public junior college or general academic teaching institution.

(d) A review may be initiated by a public junior college or general academic teaching institution only at the request of the president of the college or institution or by a resolution adopted by a majority of the governing body of the college or institution.

(e) If a review is initiated by a public junior college or general academic teaching institution, the college or institution shall pay 25 percent of the cost incurred in conducting the review.

(f) The office [board] shall:

(1) prepare a report showing the results of each review conducted under this section;

(2) file the report with:

(A) the chief executive officer of the public junior college or general academic teaching institution that is the subject of the report; and

(B) the governor, the lieutenant governor, the speaker of the house of representatives, the chairs of the standing committees of the senate and of the house of representatives with primary jurisdiction over higher education, and the commissioner of higher education; and

(3) make the entire report and a summary of the report available to the public on the Internet.

(g) Until the office [board] has completed a review under this section, all information, documentary or otherwise, prepared or maintained in conducting the review or preparing the review report, including intra-agency and interagency communications and drafts of the review report or portions of those drafts, is excepted from required public disclosure as audit working papers under Section 552.116. This subsection does not affect whether information described by this subsection is confidential or excepted from required public disclosure under a law other than Section 552.116.

Sec. 321.054 [322.017]. EFFICIENCY REVIEW OF STATE AGENCIES. (a) In this section, "state agency" has the meaning assigned by Section 2056.001.

(b) The office [board] periodically may review and analyze the effectiveness and efficiency of the policies, management, fiscal affairs, and operations of state agencies.

(c) The office [board] shall report the findings of the review and analysis to the governor and the legislature.

(d) The legislature may consider the office's [board's] reports in connection with the legislative appropriations process.

(e) Until the office [board] has completed a review and analysis under this section, all information, documentary or otherwise, prepared or maintained in conducting the review and analysis or preparing the review report, including intra-agency and interagency communications and drafts of the review report or portions of those drafts, is excepted from required public disclosure as audit working papers under Section 552.116. This subsection does not affect whether information described by this subsection is confidential or excepted from required public disclosure under a law other than Section 552.116.

Sec. 321.055 [322.018]. RECORDS MANAGEMENT REVIEW. (a) In this section, "state agency" has the meaning assigned by Section 2056.001.

(b) The office [board] may periodically review and analyze the effectiveness and efficiency of the policies and management of a state governmental committee or state agency that is involved in:

(1) analyzing and recommending improvements to the state's system of records management; and

(2) preserving the essential records of this state, including records relating to financial management information.

ARTICLE 3. LEGISLATIVE BUDGET BOARD

SECTION 3.01. Section 322.001(a), Government Code, is amended to read as follows:

(a) The Legislative Budget Board consists of:

(1) the lieutenant governor;

(2) the speaker of the house of representatives;

(3) the chair [chairman] of the senate finance committee;

(4) the chair [chairman] of the house appropriations committee;

(5) the chair [chairman] of the house ways and means committee;

(6) five [three] members of the senate appointed by the lieutenant governor; and

(7) four [two] other members of the house appointed by the speaker.

SECTION 3.02. Chapter 322, Government Code, is amended by adding Section 322.002 to read as follows:

Sec. 322.002. SUNSET PROVISION. The board is subject to review under Chapter 325 (Texas Sunset Act) but is not abolished under that chapter. The board shall be reviewed during the periods in which state agencies scheduled to be abolished in 2013.

SECTION 3.03. Chapter 322, Government Code, is amending by adding Section 322.0031 to read as follows:

Sec. 322.0031. MEETINGS RELATED TO RECOVERY ACT. Beginning July 1, 2009, the board shall meet at least once every two months in Austin to take testimony and receive evidence related to funds received by the state from the federal government for economic stabilization, including funds received under the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5). This section expires January 1, 2011.

ARTICLE 4. TEXAS LEGISLATIVE COUNCIL

SECTION 4.01. Section 323.001(b), Government Code, is amended to read as follows:

(b) The council consists of:

(1) the lieutenant governor;

(2) the speaker of the house of representatives;

(3) the chair [chairman] of the house administration committee;

(4) eight [six] senators from various areas of the state appointed by the president of the senate; and

(5) seven [five] other members of the house of representatives from various areas of the state appointed by the speaker.

SECTION 4.02. Chapter 323, Government Code, is amended by adding Section 323.002 to read as follows:

Sec. 323.002. SUNSET PROVISION. The council is subject to review under Chapter 325 (Texas Sunset Act) but is not abolished under that chapter. The council shall be reviewed during the periods in which state agencies scheduled to be abolished in 2013.

SECTION 4.03. Section 323.0145(a), Government Code, is amended by amending Subdivision (2) and adding Subdivision (3) to read as follows:

(2) "Legislative information" means:

(A) a list of all the members of each house of the legislature;

(B) a list of the committees of the legislature and their members;

(C) the full text of each bill as filed and as subsequently amended, substituted, engrossed, or enrolled in either house of the legislature;

(D) the full text of each amendment or substitute adopted by a legislative committee for each bill filed in either house of the legislature;

(E) the calendar of each house of the legislature, the schedule of legislative committee hearings, and a list of the matters pending on the floor of each house of the legislature;

(F) detailed procedural information about how a bill filed in either house of the legislature becomes law, including detailed timetable information concerning the times under the constitution or the rules of either house when the legislature may take certain actions on a bill;

(G) the district boundaries or other identifying information for the following districts in Texas:

(i) house of representatives;

(ii) senate;

(iii) State Board of Education; and

(iv) United States Congress; [and]

(H) information about legislative oversight of Recovery Act funds, including the committees of each house and each legislative agency responsible for providing oversight of or information about Recovery Act funds; and

(I) other information related to the legislative process that in the council's opinion should be made available through the Internet.

(3) "Recovery Act" means the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) and includes any subsequent federal economic stimulus legislation.

SECTION 4.04. Section 323.0145(b), Government Code, is amended to read as follows:

(b) The council, to the extent it considers it to be feasible and appropriate, may make legislative information available to the public through the Internet. The council shall make legislative information related to the Recovery Act available to the public through the Internet.

ARTICLE 5. LEGISLATIVE REFERENCE LIBRARY

SECTION 5.01. Chapter 324, Government Code, is amended by adding Section 324.003 to read as follows:

Sec. 324.003. SUNSET PROVISION. The board and the library are subject to review under Chapter 325 (Texas Sunset Act) but are not abolished under that chapter. The board and the library shall be reviewed during the periods in which state agencies scheduled to be abolished in 2013.

SECTION 5.02. Section 324.004, Government Code, is amended by amending Subsection (b) and adding Subsection (b-1) to read as follows:

(b) The board consists of:

(1) the lieutenant governor;

(2) the speaker of the house of representatives;

(3) the chair [chairman] of the house appropriations committee;

(4) four [two] members of the senate appointed by the lieutenant governor; and

(5) three [one] other members [member] of the house appointed by the speaker.

(b-1) The lieutenant governor and the speaker are joint chairs of the board.

SECTION 5.03. Chapter 324, Government Code, is amended by adding Section 324.0081 to read as follows:

Sec. 324.0081. RECOVERY ACT DEPOSITORY. (a) The library shall serve as the central depository for all Recovery Act publications.

(b) Each state or local governmental entity and each private entity receiving, disbursing, investigating, auditing, or reporting the use of Recovery Act funds received by or through a governmental entity in this state shall provide the library with a copy of each Recovery Act publication produced, assembled, or maintained by the entity.

(c) To the extent feasible, the library shall make Recovery Act publications available for public viewing on the Internet.

(d) In this section:

(1) "Recovery Act" means the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) and includes any subsequent federal economic stimulus legislation.

(2) "Recovery Act publication":

(A) means information in any format, including materials in a physical format or in an electronic format, related in any way to the receipt, disbursement, expenditure, or audit of Recovery Act funds, including a report regarding Recovery Act funds, that:

(i) is produced, assembled, or maintained by or for a state or local governmental entity receiving Recovery Act funds or an entity receiving Recovery Act funds through a governmental entity in this state; and

(ii) is distributed to persons outside the entity or distributed to persons within the entity; and

(B) does not include information the distribution of which is limited to members of the public under a request made under Chapter 552.

ARTICLE 6. SUNSET ADVISORY COMMISSION

SECTION 6.01. Chapter 325, Government Code, is amended by adding Section 325.0115 to read as follows:

Sec. 325.0115. CRITERIA FOR REVIEW OF CERTAIN LEGISLATIVE AGENCIES. (a) Notwithstanding Section 325.011, for the initial review of a legislative agency, board, or council subject to review under this chapter in 2013, the commission and its staff may only consider the extent to which the agency, board, or council discharged its responsibilities related to Recovery Act funds under this subtitle and any other applicable law.

(b) In this section, "Recovery Act" means the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) and includes any subsequent federal economic stimulus legislation.

(c) This section expires January 1, 2014.

ARTICLE 7. RECOVERY ACT ACCOUNTABILITY BOARD

SECTION 7.01. Subtitle C, Title 3, Government Code, is amended by adding Chapter 331 to read as follows:

CHAPTER 331. RECOVERY ACT ACCOUNTABILITY BOARD

Sec. 331.001. DEFINITIONS. In this chapter:

(1) "Recovery Act" means the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) and includes any subsequent federal economic stimulus legislation.

(2) "Board" means the Recovery Act Accountability Board.

(3) "Legislative agency" means:

(A) the Texas Legislative Council;

(B) the Legislative Budget Board;

(C) the Legislative Reference Library;

(D) the State Accountability Office; or

(E) any other agency in the legislative branch of state government.

Sec. 331.002. RECOVERY ACT ACCOUNTABILITY BOARD. (a) The Recovery Act Accountability Board consists of:

(1) the following voting members:

(A) the lieutenant governor;

(B) the speaker of the house of representatives;

(C) one senate member, designated by the lieutenant governor, and one house member, designated by the speaker, of the Legislative Audit Board;

(D) one senate member, designated by the lieutenant governor, and one house member, designated by the speaker, of the Legislative Budget Board;

(E) one senate member, designated by the lieutenant governor, and one house member, designated by the speaker, of the Texas Legislative Council;

(F) one senate member, designated by the lieutenant governor, and one house member, designated by the speaker, of the Sunset Advisory Commission;

(G) one senate member, designated by the lieutenant governor, and one house member, designated by the speaker, of the Legislative Library Board;

(H) the chair and vice chair of the House Select Committee on Federal Economic Stabilization Funding;

(I) four other members of the senate, designated by the lieutenant governor;

(J) four other members of the house, designated by the speaker;

(K) two public members appointed by the lieutenant governor; and

(L) two public members appointed by the speaker; and

(2) the following nonvoting members:

(A) four members of the United States Congress from this state, with two members selected by the members of each political party required by law to hold a primary; and

(B) the chief administrative officer of each legislative agency, except the State Accountability Office.

(b) One of the members appointed under Subsection (a)(1) must be the chair of the Senate Finance Committee. One other member appointed under Subsection (a)(1) must be the chair of the House Appropriations Committee.

(c) The lieutenant governor and the speaker are joint chairs of the board.

(d) A legislative member serving on the board because of the member's service on another board, commission, or committee serves a term coinciding with the member's service on the other board, commission, or committee. Other legislative members and public members serve for the term of the board.

(e) If a vacancy occurs in the appointed membership, the appropriate appointing authority shall appoint a person to serve for the remainder of the unexpired term.

(f) Each member of the board is entitled to reimbursement for actual and necessary expenses incurred in performing board duties. Each legislative member is entitled to reimbursement from the appropriate fund of the member's respective house. Each public member is entitled to reimbursement from the appropriate fund of the house of the appointing authority.

Sec. 331.003. TERM OF BOARD; EXPIRATION. The board is abolished and this chapter expires December 31, 2013.

Sec. 331.004. ADMINISTRATIVE OFFICER. The board shall select a chief administrative officer of the board. An officer or employee of a legislative agency, other than the State Accountability Office, is eligible for appointment under this section.

Sec. 331.005. MEETINGS. Beginning July 1, 2009, the board shall meet at least once each month in Austin to take testimony and receive evidence related to funds received by governmental entities in this state from the federal government for economic stabilization, including funds received under the Recovery Act.

Sec. 331.006. POWERS AND DUTIES. The board:

(1) shall coordinate reviews of spending of Recovery Act funds conducted by a legislative agency to ensure that duplication and overlap of legislative agency work is avoided;

(2) may hold hearings and conduct investigations and surveys as provided by Section 331.008;

(3) shall ensure the public has access to vital information related to the expenditure of Recovery Act funds;

(4) may prescribe performance measures in addition to those prescribed by Section 331.007;

(5) may make recommendations regarding interagency coordination, opportunities that concern multiple units of government, and opportunities for public-private partnerships using Recovery Act funds; and

(6) may appoint advisory committees as necessary to assist the board.

Sec. 331.007. RECIPIENT AGENCY REPORTS; PERFORMANCE MEASURES. Not later than the 10th day after the date a state fiscal quarter ends, each governmental entity that receives Recovery Act funds shall submit a report to the board that contains:

(1) the amount of Recovery Act funding received by a public or private entity by or through the governmental entity under the Act;

(2) the citation to the specific provision of the Recovery Act under which the funding is provided;

(3) any outstanding requirements or unmet deadlines for applying for Recovery Act funds;

(4) any changes in any requirements associated with Recovery Act funding, including spending limitations, state match or cost share requirements, percentage limitations, and timeframes;

(5) the date on which each type of Recovery Act funding discussed in the report is anticipated to end;

(6) whether any additional authority is necessary to spend the Recovery Act funds;

(7) the number of additional state employees actually employed or projected to be needed to oversee or administer Recovery Act funds;

(8) current plans for addressing how each agency will conduct its operations when Recovery Act funds end;

(9) a detailed list of all projects or activities for which Recovery Act funds were expended or obligated, including:

(A) the name of the project or activity;

(B) a description of the project or activity; and

(C) an evaluation of the completion status of the project or activity;

(10) an assessment of the performance of all Recovery Act funds expended or obligated relating to specific performance measures, including:

(A) the number of new jobs created in this state;

(B) the number of new jobs created in small and medium-sized businesses;

(C) the estimated economic benefit for small and medium-sized businesses;

(D) the number of new jobs created in women-owned and minority-owned businesses;

(E) the estimated economic benefit for women-owned and minority-owned businesses;

(F) the number of new jobs created in distressed areas;

(G) the estimated economic benefit in distressed areas;

(H) the number of new jobs created at or above the median hourly wage in this state;

(I) the increase in jobs providing access to employer-sponsored health insurance; and

(J) any other performance measures prescribed by the board; and

(11) an impact statement detailing the impact, if any, of Recovery Act funds on:

(A) the extent to which electric utility customers in this state have increased access to renewable energy;

(B) carbon emissions in this state resulting from energy and transportation projects, including any emissions reductions; and

(C) the extent to which per capita electric usage in this state is reduced as a result of energy efficiency initiatives.

Sec. 331.008. HEARINGS; INVESTIGATIONS AND SURVEYS. (a) The board may make investigations and surveys regarding funds received by governmental entities in this state from the federal government for economic stabilization, including Recovery Act funds, and may hold public or executive hearings in connection with those investigations and surveys.

(b) A hearing shall be held at a time and place in the state determined by the board.

(c) The board may:

(1) inspect and copy any book, record, file, or other instrument or document of a governmental entity in this state that is pertinent to a matter under investigation by the board; and

(2) examine and audit the books of a person, firm, or corporation having dealings with a governmental entity under investigation by the board.

(d) Any member of the board may administer oaths to witnesses appearing at the hearing.

Sec. 331.009. SUBPOENAS. (a) The board may issue subpoenas to compel the attendance of witnesses and the production of books, records, or other documents in their custody.

(b) A subpoena must be signed by either of the joint chairs of the board.

(c) The sergeant at arms of either house of the legislature or any peace officer shall serve the subpoena in the manner prescribed for service of a district court subpoena.

(d) If a person to whom a subpoena is directed refuses to appear, refuses to answer inquiries, or fails or refuses to produce books, records, or other documents that were under the person's control when the demand was made, the board shall report the fact to a Travis County district court.

(e) The district court shall enforce a board subpoena by attachment proceedings for contempt in the same manner the court enforces a subpoena issued by that court.

(f) A subpoenaed witness who attends a board hearing or meeting is entitled to the same mileage and per diem as a witness who appears before a grand jury of this state.

Sec. 331.010. ASSISTANCE FROM OTHER AGENCIES; CONTRACTS. (a) The board may request assistance and advice from a legislative agency or any other state officer, department, board, commission, or agency, including the governor and the attorney general.

(b) Either of the joint chairs may request legal opinions or other advice or assistance from:

(1) the counselor of the State Accountability Office; or

(2) the director of the legal division of the Texas Legislative Council.

ARTICLE 8. PROVISIONS APPLICABLE TO ALL LEGISLATIVE AGENCIES

SECTION 8.01. The heading to Chapter 326, Government Code, is amended to read as follows:

CHAPTER 326. PROVISIONS GENERALLY APPLICABLE TO [COOPERATION

BETWEEN] LEGISLATIVE AGENCIES AND OVERSIGHT COMMITTEES

SECTION 8.02. Chapter 326, Government Code, is amended by designating Sections 326.001 through 326.003 as Subchapter A and adding a heading for Subchapter A to read as follows:

SUBCHAPTER A. COOPERATION BETWEEN LEGISLATIVE AGENCIES

SECTION 8.03. Section 326.001, Government Code, is amended to read as follows:

Sec. 326.001. DEFINITION. In this subchapter [chapter], "legislative agency" means:

(1) the senate;

(2) the house of representatives;

(3) a committee, division, department, or office of the senate or house;

(4) the Texas Legislative Council;

(5) the Legislative Budget Board;

(6) the Legislative Reference Library;

(7) the [office of the] State Accountability Office [Auditor];

(7-a) the Recovery Act Accountability Board; or

(8) any other agency in the legislative branch of state government.

SECTION 8.04. The heading to Section 326.003, Government Code, is amended to read as follows:

Sec. 326.003. COMMITTEE OF STATE ACCOUNTABILITY [AUDITOR'S] OFFICE, LEGISLATIVE BUDGET BOARD, AND SUNSET ADVISORY COMMISSION.

SECTION 8.05. Sections 326.003(a) and (d), Government Code, are amended to read as follows:

(a) The State Accountability [Auditor's] Office, Legislative Budget Board, and Sunset Advisory Commission shall form a committee to make recommendations relating to the coordination of the agencies' functions.

(d) Not later than one month after the date of a meeting, the committee shall submit its recommendations in writing to the head of each agency and the members of the legislative audit board [committee].

SECTION 8.06. Chapter 326, Government Code, is amended by adding Subchapter B to read as follows:

SUBCHAPTER B. QUORUM AND MEETINGS

Sec. 326.021. DEFINITION. In this subchapter, "legislative entity" means:

(1) the Legislative Audit Board;

(2) the Legislative Budget Board;

(3) the Legislative Library Board;

(4) the Texas Legislative Council;

(5) the Recovery Act Accountability Board; and

(6) any other oversight committee created under this subtitle.

Sec. 326.022. CONFLICT WITH OTHER LAW. To the extent of a conflict between this subchapter and any other provision of this subtitle, the other provision of this subtitle prevails.

Sec. 326.023. QUORUM. (a) Except as provided by Subsection (b), a majority of the members of a legislative entity from each house constitutes a quorum to transact business. If a quorum is present, the legislative entity may act on any matter that is within its jurisdiction by a majority vote.

(b) Two members of a legislative entity from each house constitutes a quorum for the taking of testimony and receiving evidence.

Sec. 326.024. MEETINGS. (a) A legislative entity shall meet as often as necessary to perform its duties. A legislative entity shall meet at least once every six months. Meetings may be held at any time at the request of either of the joint chairs of a legislative entity or on written petition of two of the members of a legislative entity from each house.

(b) Each member of the legislature is entitled to attend and present the member's views in any meeting of the legislative entity. A legislator who is not a member of the legislative entity may not vote.

(c) As an exception to Chapter 551 and other law, if a meeting is located in Austin and the joint chairs of a legislative entity are physically present at the meeting, then any number of the other members of the legislative entity may attend the meeting by use of telephone conference call, videoconference call, or other similar telecommunication device. This subsection applies for purposes of constituting a quorum, for purposes of voting, and for any other purpose allowing a member of the legislative entity to otherwise fully participate in any meeting of the legislative entity. This subsection applies without exception with regard to the subject of the meeting or topics considered by the members.

(d) A meeting held by use of telephone conference call, videoconference call, or other similar telecommunication device:

(1) is subject to the notice requirements applicable to other meetings;

(2) must specify in the notice of the meeting the location in Austin of the meeting at which the joint chairs will be physically present;

(3) must be open to the public and shall be audible to the public at the location in Austin specified in the notice of the meeting as the location of the meeting at which the joint chairs will be physically present; and

(4) must provide two-way audio communication between all members of the legislative entity attending the meeting during the entire meeting, and if the two-way audio communication link with any member attending the meeting is disrupted at any time, the meeting may not continue until the two-way audio communication link is reestablished.

SECTION 8.07. Section 783.003(4), Government Code, is amended to read as follows:

(4) "State agency" means a state board, commission, or department, or office having statewide jurisdiction, but does not include a state college or university or an agency of the legislative branch of state government.

ARTICLE 9. PROVISIONS APPLICABLE TO CERTAIN COUNTIES

SECTION 9.01. Subchapter A, Chapter 112, Local Government Code, is amended by adding Section 112.011 to read as follows:

Sec. 112.011. ELECTRONIC CHECKING ACCOUNT TRANSACTION REGISTER. (a) This section applies only to a county with a population of 250,000 or more that has received funds under the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) and is subject to audit by the office of the state auditor.

(b) The county treasurer shall maintain the transaction register for the county's checking account as a list in a searchable electronic spreadsheet format, such as a portable document format (PDF) or similar file type, in which the transaction register is readily available for purposes of Subsection (d). Except as provided by Subsection (c), the electronic checking account transaction register must include for each check written from a county checking account:

(1) the transaction amount;

(2) the name of the payee; and

(3) a statement of the purpose of the expenditure for which the check was written.

(b-1) Notwithstanding Subsection (b), beginning September 1, 2010, a county's electronic checking account transaction register must contain the information required by Subsections (b)(1) and (2) for each check dated on or after August 1, 2010. Beginning September 1, 2011, a county's electronic checking account transaction register must contain the information required by Subsections (b)(1) through (3) for each check dated on or after August 1, 2011. This subsection expires October 1, 2011.

(c) A county may not include in the county's electronic checking account transaction register a check issued to:

(1) a county employee in payment of:

(A) salary, wages, or an employment stipend; or

(B) a workers' compensation income benefit, medical benefit, death benefit, or burial benefit that is issued by a county operating as a self-insurer under Chapter 504, Labor Code; or

(2) a court-appointed attorney, including an attorney in a juvenile justice court.

(d) A county shall post the electronic checking account transaction register at all times on the county's Internet website for viewing and downloading by interested persons. The county may not charge a fee to a person who views or downloads the electronic checking account transaction register under this subsection.

(e) A county shall:

(1) update the electronic checking account transaction register at least once each month, not later than the 30th day after the closing date of the most recent monthly statement for the checking account; and

(2) maintain each transaction or listing in the electronic checking account transaction register on the county's Internet website until the first anniversary of the date of the transaction or listing.

(f) The county treasurer may consult with the comptroller in developing an electronic checking account transaction register under this section.

(g) This section does not apply to a county that maintains a check registry or a similar comprehensive monthly financial report that was posted on the county's Internet website for public viewing and downloading on or before August 1, 2010.

(h) Nothing in this section shall be construed as requiring a county to provide access to the county's bank account statement or to post additional information, including check numbers, not required under Subsection (b).

ARTICLE 10. INSPECTOR GENERAL

SECTION 10.01. Subtitle B, Title 4, Government Code, is amended by adding Chapter 422 to read as follows:

CHAPTER 422. OFFICE OF INSPECTOR GENERAL

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 422.001. SHORT TITLE. This chapter may be cited as the Office of Inspector General Act.

Sec. 422.002. DEFINITIONS. In this chapter:

(1) "Agency" means a board, commission, committee, department, office, division, or other agency of the executive branch of state government. The term does not include an institution of higher education as defined by Section 61.003, Education Code.

(2) "Commission" means the Health and Human Services Commission.

(3) "Fraud" means an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to that person or some other person. The term includes any act that constitutes fraud under applicable federal or state law.

(4) "Furnished," in reference to items or services:

(A) means items or services provided directly by, provided under the direct supervision of, or ordered by:

(i) a physician or other individual licensed under state law to practice the individual's profession, either as an employee or in the individual's own capacity;

(ii) a provider; or

(iii) another supplier of services; and

(B) does not include services ordered by one party but billed for and provided by or under the supervision of another.

(5) "Hold on payment" means the temporary denial of reimbursement under a federal program for items or services furnished by a specified provider.

(6) "Inspector general" means the inspector general appointed under Section 422.101.

(7) "Office" means the office of inspector general established under this chapter.

(8) "Program exclusion" means the suspension of a provider's authorization under a federal program to request reimbursement for items or services furnished by that provider.

(9) "Provider" means a person, firm, partnership, corporation, agency, association, institution, or other entity that was or is approved by the commission to provide:

(A) medical assistance under contract or provider agreement with the commission; or

(B) third-party billing vendor services under a contract or provider agreement with the commission.

(10) "Review" includes an audit, inspection, investigation, evaluation, or similar activity.

(11) "State funds" or "state money" includes federal funds or money received and appropriated by the state or for which the state has oversight responsibility.

Sec. 422.003. APPLICATION OF SUNSET ACT. The office of inspector general is subject to Chapter 325 (Texas Sunset Act). Unless continued in existence as provided by that chapter, the office is abolished and this chapter expires September 1, 2021.

Sec. 422.004. AGENCY ESTABLISHMENT OF INSPECTOR GENERAL OFFICE. An agency may not establish an office of inspector general without specific legislative authorization.

Sec. 422.005. REFERENCE IN OTHER LAW. (a) Notwithstanding any other provision of law, a reference in law or rule to an agency's office of inspector general means the office of inspector general established under this chapter.

(b) Notwithstanding any other provision of law, a reference in law or rule to the commission's office of investigations and enforcement or the commission's office of inspector general means the office of inspector general established under this chapter.

[Sections 422.006-422.050 reserved for expansion]

SUBCHAPTER B. ADMINISTRATION

Sec. 422.051. OFFICE OF INSPECTOR GENERAL. (a) The office of inspector general is an agency of this state.

(b) The office is governed by the inspector general.

(c) The office shall have its principal office and headquarters in Austin.

(d) The office consists of the inspector general, deputy inspectors general, and other personnel necessary to carry out the duties of the inspector general.

Sec. 422.052. INDEPENDENCE OF OFFICE. (a) Except as otherwise provided by this chapter, the office and inspector general operate independently of any other agency.

(b) The inspector general, a deputy inspector general, and the office staff are not employees of any other agency.

Sec. 422.053. ADMINISTRATIVE ATTACHMENT. A person designated by the inspector general to serve as the deputy inspector general for an agency, together with office staff assigned to the deputy inspector general, are administratively attached to the assigned agency. The assigned agency shall provide to office personnel administrative support services.

Sec. 422.054. SERVICE LEVEL AGREEMENT. (a) The office and each agency to which a deputy inspector general is appointed shall enter into a service level agreement that establishes the performance standards and deliverables with regard to administrative support provided to the office by the agency.

(b) The service level agreement must be reviewed at least annually to ensure that services and deliverables are provided in accordance with the agreement.

(c) The commission shall provide to the deputy inspector general designated for the commission and that person's staff, for the state fiscal biennium beginning September 1, 2009, the same level of administrative support the commission provided to the office established under former Section 531.102 for the state fiscal biennium beginning September 1, 2007. This subsection expires January 1, 2012.

[Sections 422.055-422.100 reserved for expansion]

SUBCHAPTER C. INSPECTOR GENERAL AND PERSONNEL

Sec. 422.101. APPOINTMENT. (a) From a list of three or more names submitted to the governor by the Legislative Budget Board, the governor, with the advice and consent of the senate, shall appoint an inspector general to serve as director of the office.

(b) The appointment shall be made without regard to race, color, disability, sex, religion, age, or national origin.

(c) In preparing the list and in making the appointment, the Legislative Budget Board and the governor, respectively, shall consider the person's knowledge of laws, experience in the enforcement of law, honesty, integrity, education, training, executive ability, capability for strong leadership, and demonstrated ability in accounting, auditing, financial analysis, law, management analysis, public administration, investigation, criminal justice administration, or other closely related fields.

Sec. 422.102. TERM; VACANCY. (a) The inspector general serves a two-year term that expires on February 1 of each odd-numbered year. The inspector general may be reappointed to one or more subsequent terms.

(b) The governor shall fill a vacancy in the office of inspector general for the unexpired term in the same manner as the inspector general is appointed under Section 422.101(a).

Sec. 422.103. ELIGIBILITY. (a) A person is not eligible for appointment as inspector general or designation as a deputy inspector general if the person or the person's spouse:

(1) is an officer or paid consultant of a business entity or other organization that holds a license, certificate of authority, or other authorization from an agency for which a deputy inspector general is appointed or that receives funds from an agency for which a deputy inspector general is appointed;

(2) owns or controls, directly or indirectly, more than a 10 percent interest in a business entity or other organization receiving funds from an agency for which a deputy inspector general is appointed; or

(3) uses or receives a substantial amount of tangible goods or funds from an agency for which a deputy inspector general is appointed, other than compensation or reimbursement authorized by law.

(b) A person is not eligible to serve as inspector general or deputy inspector general if the person or the person's spouse is required to register as a lobbyist under Chapter 305 because of the person's or spouse's activities for compensation related to the operation of an agency for which a deputy inspector general is appointed.

(c) A person who is a former or current executive or manager of an agency may not be appointed as the inspector general or a deputy inspector general for that agency before the fifth anniversary of the person's last day of service with the agency.

(d) The inspector general, a deputy inspector general, or an employee of the office may not during the person's term of appointment or employment:

(1) become a candidate for any elective office;

(2) hold another elected or appointed public office except for an appointment on a governmental advisory board or study commission or as otherwise expressly authorized by law;

(3) be actively involved in the affairs of any political party or political organization; or

(4) actively participate in any campaign for any elective office.

Sec. 422.104. CONFLICT OF INTEREST. (a) The inspector general may not serve as an ex officio member on the governing body of a governmental entity.

(b) The inspector general may not have a financial interest in the transactions of the office or an agency.

(c) The inspector general and the deputy inspector general designated for the commission may not have a financial interest in the transactions of a provider.

Sec. 422.105. REMOVAL. The governor, with the advice and consent of the senate, may remove the inspector general from office as provided by Section 9, Article XV, Texas Constitution.

Sec. 422.106. DEPUTY INSPECTORS GENERAL. (a) Subject to available appropriations and as necessary to carry out the powers and duties of the inspector general under this chapter and other laws granting jurisdiction to or applicable to the inspector general, the inspector general may designate a person to serve as the deputy inspector general for any agency or serve as a deputy inspector general for more than one agency.

(b) The inspector general shall designate persons to serve as the deputy inspectors general for each of the following agencies:

(1) the Health and Human Services Commission;

(2) the Texas Youth Commission;

(3) the Texas Department of Criminal Justice;

(4) the Texas Education Agency; and

(5) the Texas Department of Transportation.

(c) A deputy inspector general is an at-will employee and may be discharged by the inspector general without a hearing.

(d) A deputy inspector general shall report to and perform duties as directed by the inspector general.

(e) Each agency to which a deputy inspector general is appointed shall provide to the agency's designated deputy inspector general facilities and support services, including suitable office space, furniture, computer and communications equipment, administrative support, and salary and benefits as provided by the General Appropriations Act.

Sec. 422.107. PEACE OFFICERS. (a) The office may employ and commission peace officers to assist the inspector general in carrying out the duties of the office relating to detection, investigation, and prevention of criminal wrongdoing, malfeasance, misfeasance, or fraud, waste, and abuse in programs at an agency or in programs receiving state or federal funds that are implemented, administered, or overseen by or for an agency.

(b) A commissioned peace officer or otherwise designated law enforcement officer employed by the office is not entitled to supplemental benefits from the law enforcement and custodial officer supplemental retirement fund unless the officer transfers from a position, without a break in service, that qualifies for supplemental retirement benefits from the fund.

Sec. 422.108. IN-HOUSE GENERAL COUNSEL. The inspector general shall employ an in-house general counsel. The general counsel must:

(1) be an attorney licensed to practice law in this state;

(2) be in good standing with the State Bar of Texas; and

(3) have at least five years of continuing experience in advising senior executive management in the public or private sector on contracts and contract management.

Sec. 422.109. EXPERTS. Subject to the availability of funds, the inspector general and deputy inspectors general may contract with certified public accountants, qualified management consultants, or other professional experts as necessary to independently perform the functions of the office.

Sec. 422.110. EMPLOYEES; TRAINING. (a) The inspector general may appoint, employ, promote, and remove personnel as the inspector general considers necessary for the efficient and effective administration of the office.

(b) The inspector general shall train office personnel to pursue, efficiently and as necessary, fraud, waste, and abuse cases in programs at an agency or in other state or federally funded programs implemented, administered, or overseen by or for the agency.

Sec. 422.111. ASSISTANCE BY AGENCY EMPLOYEES. (a) The inspector general may require employees of an agency to provide information, resources, or other assistance to the office as the inspector general considers necessary to fulfill the duties and responsibilities imposed on the office under this chapter and other law in connection with the investigation of fraud, waste, and abuse in the provision of services for programs at an agency or in state or federally funded programs implemented, administered, or overseen by or for the agency.

(b) The inspector general or the deputy inspector general for the commission may also require employees of any health and human services agency to provide assistance under Subsection (a).

Sec. 422.112. MERIT SYSTEM. (a) The office may establish a merit system for its employees.

(b) The merit system may be maintained in conjunction with other agencies that are required by federal law to operate under a merit system.

[Sections 422.113-422.150 reserved for expansion]

SUBCHAPTER D. GENERAL POWERS AND DUTIES

Sec. 422.151. GENERAL RESPONSIBILITIES. (a) The office is responsible for:

(1) the investigation of any matter pertaining to or involving an agency that receives state or federal funds; and

(2) the investigation, prevention, and detection of criminal misconduct and wrongdoing and of fraud, waste, and abuse, as defined in applicable state and federal law, in the provision or funding of services by or for an agency or under a program implemented, administered, or overseen by or for the agency.

(b) The inspector general shall set clear objectives, priorities, and performance standards for the office that emphasize:

(1) coordinating investigative efforts to aggressively recover money;

(2) allocating resources to cases that have the strongest supportive evidence and the greatest potential for recovery of money; and

(3) maximizing opportunities for referral of cases to the appropriate authorities.

(c) The inspector general shall investigate allegations of fraud, waste, abuse, misconduct, nonfeasance, misfeasance, and malfeasance, and violations of this chapter or other law.

(d) The office may:

(1) conduct criminal, civil, and administrative investigations and initiate reviews of an agency as considered appropriate by the inspector general; and

(2) receive and investigate complaints from any source on its own initiative.

(e) The inspector general shall perform all other duties and exercise all other powers granted to the inspector general's office by this chapter or another law.

Sec. 422.152. GENERAL POWERS. The office has all the powers necessary or appropriate to carry out its responsibilities and functions under this chapter and other law. In addition to performing functions and duties otherwise provided by law, the office may:

(1) audit the use and effectiveness of state or federal funds, including contract and grant funds, administered by a person or an agency;

(2) conduct reviews, investigations, and inspections relating to the funds described by Subdivision (1);

(3) recommend policies promoting economical and efficient administration of the funds described by Subdivision (1) and the prevention and detection of fraud, waste, and abuse in administration of those funds; and

(4) conduct internal affairs investigations in instances of fraud, waste, and abuse and in instances of misconduct by employees, contractors, subcontractors, and vendors.

Sec. 422.153. RULEMAKING BY INSPECTOR GENERAL. (a) Notwithstanding Section 531.0055(e) and any other law, the inspector general shall adopt the rules necessary to administer the functions of the office, including rules to address the imposition of sanctions and penalties for violations and due process requirements for imposing sanctions and penalties.

(b) A rule, standard, or form adopted by an agency that is necessary to accomplish the duties of the office is considered to also be a rule, standard, or form of the office and remains in effect as a rule, standard, or form of the office until changed by the inspector general.

(c) The rules must include standards for the office that emphasize:

(1) coordinating investigative efforts to aggressively recover money;

(2) allocating resources to cases that have the strongest supportive evidence and the greatest potential for recovery of money; and

(3) maximizing opportunities for referral of cases to the appropriate authorities.

Sec. 422.154. STATE AUDITOR AUDITS, INVESTIGATIONS, AND ACCESS TO INFORMATION NOT IMPAIRED. This subchapter or other law related to the operation of the inspector general does not:

(1) take precedence over the authority of the state auditor to conduct audits under Chapter 321 or other law; or

(2) prohibit the state auditor from conducting an audit, investigation, or other review or from having full and complete access to all records and other information, including witnesses and electronic data, that the state auditor considers necessary for the audit, investigation, or other review.

Sec. 422.155. PUBLIC PAMPHLET. (a) The office shall provide information of public interest in the form of a pamphlet that describes:

(1) the functions of the office, including the functions of the inspector general;

(2) the matters or issues that may be subject to an investigation or review performed by the office; and

(3) the manner in which a person may report an allegation of fraud, abuse, or criminal wrongdoing to the office.

(b) The office shall make the information described by Subsection (a) available to state officers and employees and to the public.

Sec. 422.156. INTERNET WEBSITE. (a) The office shall maintain an Internet website accessible to the public.

(b) The office shall post in a conspicuous place on the office's Internet website the public interest pamphlet prepared under Section 422.155.

(c) The office shall ensure that the office's Internet website allows a person to report to the office an allegation of fraud, abuse, or criminal wrongdoing related to an agency. A report submitted through the office's Internet website, in person, or through another means of communication may be anonymous.

Sec. 422.157. SEAL. The seal of the office shall be a five-pointed star in the center with the words "Office of Inspector General, State of Texas" engraved around the margin. The seal shall be used to authenticate official documents issued by the office.

Sec. 422.158. EXECUTIVE ORDERS. (a) The governor may issue executive orders directing agencies to implement recommendations issued by the office for corrective or remedial actions promoting the economical and efficient administration of money and the detection of fraud.

(b) The governor shall submit to the lieutenant governor, the speaker of the house of representatives, the state auditor, and the comptroller a report of the executive orders issued under this chapter and the compliance by agencies with those orders.

Sec. 422.159. DEFENSE BY ATTORNEY GENERAL. The attorney general shall defend any action brought against the inspector general, a deputy inspector general, or an employee or officer of the office as a result of that person's official act or omission, whether or not the person has terminated service with the office at the time the action is instituted.

Sec. 422.160. INTERAGENCY COORDINATION. (a) The office may develop and implement written procedures for coordinating reviews of suspected fraud, waste, or abuse, as those terms are defined by state or federal law, or other violations of state or federal law under programs at an agency for which a deputy inspector general is appointed or in programs at any agency receiving state or federal funds that are implemented, administered, or overseen by the agency.

(b) An exchange of any information under this section between the office and appropriate authorities does not subject the exchange of the information or the information to disclosure under Chapter 552.

Sec. 422.161. INFORMATION AND TECHNOLOGY. The office may obtain information or technology necessary to enable the office to meet its responsibilities under this chapter or other law.

[Sections 422.162-422.200 reserved for expansion]

SUBCHAPTER E. REVIEWS, INVESTIGATIONS, AND AUDITS

Sec. 422.201. REVIEW, INVESTIGATION, AND AUDIT AUTHORITY. (a) The inspector general may evaluate any activity or operation of:

(1) an agency;

(2) a provider, in connection with an activity listed in Section 422.002(9) or in connection with the provider's relationship with the commission or a health and human services agency as defined by Section 531.001; or

(3) a person in this state in relation to the investigation, detection, or prevention of fraud, waste, abuse, or employee misconduct in a program at an agency or in a state or federally funded program implemented, administered, or overseen by or for the agency.

(b) A review may include an investigation or other inquiry into a specific act or allegation of, or a specific financial transaction or practice that may involve, impropriety, malfeasance, or nonfeasance in the obligation, spending, receipt, or other use of state or federal money.

(c) The office shall conduct reviews and inspections to protect the public and detect and prevent fraud, waste, and abuse in the provision or funding of services or programs by or for an agency.

(d) An agency or the governing body or governing officer of an agency may not impair or prohibit the inspector general from initiating or completing a review.

(e) With respect to an agency, the inspector general may audit and review the use and effectiveness of state or federal funds, including contract and grant funds, administered by a person or agency receiving the funds in connection with an agency or state or federally funded program implemented, administered, or overseen by or for the agency.

Sec. 422.202. CLAIMS CRITERIA FOR INVESTIGATIONS. The office by rule shall set specific claims criteria that, when met, require the office to begin an investigation.

Sec. 422.203. INITIATION OF REVIEW. The inspector general may initiate a review:

(1) on the inspector general's own initiative;

(2) at the request of an agency or the governing body or governing officer of the agency; or

(3) based on a complaint from any source concerning a matter described by Section 422.201.

Sec. 422.204. ACCESS TO INFORMATION. (a) To further a review conducted by the office, the inspector general or a deputy inspector general is entitled to access all books, records, accounts, documents, reports, vouchers, databases, systems, or other information, including confidential information, electronic data, and internal records relevant to the functions of the office that are maintained by or for a person, agency, or provider, if applicable, in connection with an agency or a state or federally funded program implemented, administered, or overseen by or for the agency. The inspector general's authority under this subsection supersedes any claim of privilege.

(b) The inspector general or deputy inspector general may not access data or other information the release of which is restricted under federal law unless the appropriate federal agency approves the release to the office or its agent.

Sec. 422.205. COOPERATION REQUIRED. To further a review conducted by the inspector general's office, the inspector general or deputy inspector general may require medical or other professional assistance from an agency or an auditor, accountant, or other employee of the agency.

Sec. 422.206. EMPLOYEE REPORTS. The inspector general may require employees at an agency to report to the office information regarding fraud, waste, misuse or abuse of funds or resources, corruption, or illegal acts.

Sec. 422.207. SUBPOENAS. (a) The inspector general may issue a subpoena to compel the attendance of a relevant witness at a hearing or deposition under this chapter or to compel the production, for inspection or copying, of books, papers, records, documents, or other relevant materials, including electronic data, in connection with a review, hearing, or deposition conducted under this chapter. The inspector general may issue a subpoena for the records of any person receiving any funds from an agency under a contract for the delivery of goods or services to this state.

(b) The inspector general may delegate the authority to issue subpoenas to a deputy inspector general.

(c) A subpoena may be served personally or by certified mail. If a person fails to comply with a subpoena, the inspector general, acting through the attorney general, may file suit to enforce the subpoena in a district court in this state.

(d) On finding that good cause exists for issuing the subpoena, the court shall order the person to comply with the subpoena. The court may hold in contempt a person who fails to obey the court order.

(e) The reimbursement of the expenses of a witness whose attendance is compelled under this section is governed by Section 2001.103.

(f) Nothing in this section limits or alters a person's rights under state or federal law.

Sec. 422.208. INTERNAL AUDITOR. (a) In this section, "internal auditor" means a person appointed under Section 2102.006.

(b) The internal auditor for an agency shall provide the inspector general with a copy of the agency's internal audit plan to:

(1) assist in the coordination of efforts between the inspector general and the internal auditor; and

(2) limit duplication of effort regarding reviews by the inspector general and internal auditor.

(c) The internal auditor shall provide to the inspector general all final audit reports concerning audits of any:

(1) part or division of the agency;

(2) contract, procurement, or grant; and

(3) program conducted by the agency.

Sec. 422.209. REFERRAL OF CRIMINAL, CIVIL, AND ADMINISTRATIVE MATTERS. (a) The inspector general may provide information and evidence relating to criminal acts to the state auditor's office and appropriate law enforcement officials.

(b) The inspector general shall refer matters for further criminal action in the same manner as the state auditor refers criminal matters under Chapter 321.

(c) The inspector general shall refer matters for further civil and administrative action in the same manner as the state auditor refers civil and administrative matters under Chapter 321.

(d) The office may assist appropriate authorities with their administrative, civil, or criminal investigations if the assistance is requested by the appropriate authorities.

(e) An appropriate authority that decides not to investigate or prosecute a complaint alleging criminal conduct referred to that authority by the inspector general shall notify the inspector general of that decision.

Sec. 422.210. COOPERATION AND COORDINATION WITH STATE AUDITOR. (a) The state auditor may, on request of the inspector general, provide appropriate information or other assistance to the inspector general or office, as determined by the state auditor.

(b) The inspector general may meet with the state auditor's office to coordinate a review conducted under this chapter, share information, or schedule work plans.

(c) The state auditor is entitled to access all information maintained by the inspector general, including vouchers, electronic data, internal records, and information obtained under Section 422.204 or subject to Section 422.253.

(d) Any information obtained or provided by the state auditor under this section is confidential and not subject to disclosure under Chapter 552.

Sec. 422.211. PREVENTION. (a) The inspector general may recommend to an agency or the presiding officer of the agency policies on:

(1) promoting economical and efficient administration of state or federal funds administered by an individual or entity that received the funds from an agency; and

(2) preventing and detecting fraud, waste, and abuse in the administration of those funds.

(b) The inspector general may provide training or other education regarding the prevention of fraud, waste, and abuse to employees of an agency. The training or education provided must be approved by the presiding officer of the agency.

Sec. 422.212. AWARD FOR REPORTING FRAUD, WASTE, ABUSE, OR OVERCHARGES. (a) If the office determines that the report results in the recovery of an administrative or civil penalty imposed by law, the office may grant an award to an individual who reports:

(1) activity that constitutes fraud, waste, or abuse of money related to any agency programs or in programs receiving state or federal funds that are implemented, administered, or overseen by the agency; or

(2) overcharges in a program described by Subdivision (1).

(b) The office may not grant an award to an individual in connection with a report if the office or attorney general had independent knowledge of the activity reported by the individual.

(c) The office shall determine the amount of an award granted under this section. The amount may not exceed five percent of the amount of the administrative or civil penalty imposed by law that resulted from the individual's report.

(d) In determining the amount of an award granted under this section, the office:

(1) shall consider the importance of the report in ensuring the fiscal integrity of the program; and

(2) may consider whether the individual participated in the reported fraud, waste, abuse, or overcharge.

(e) A person who brings an action under Subchapter C, Chapter 36, Human Resources Code, is not eligible for an award under this section.

Sec. 422.213. RULEMAKING BY PRESIDING OFFICER OF AGENCY. An agency may adopt rules governing the agency's response to reports and referrals from the inspector general on issues identified by the inspector general related to the agency or a contractor of the agency.

Sec. 422.214. ALLEGATIONS OF MISCONDUCT AGAINST PRESIDING OFFICER. If a review by the inspector general involves allegations that a presiding officer of the governing body of an agency, or if applicable the single state officer who governs the agency, has engaged in misconduct, the inspector general shall report to the governor during the review until the report is completed or the review is closed without a finding.

Sec. 422.215. RIGHT TO DECLINE INVESTIGATION. The inspector general may decline to investigate a complaint that the inspector general determines:

(1) is trivial, frivolous, or vexatious;

(2) was not made in good faith;

(3) is based on a situation for which too much time has passed to justify an investigation;

(4) may not be adequately investigated with the resources available, considering established priorities; or

(5) addresses a matter that is not within the inspector general's investigatory authority.

[Sections 422.216-422.250 reserved for expansion]

SUBCHAPTER F. REPORTS

Sec. 422.251. REPORTING OFFICE FINDINGS. Unless the findings would compromise an ongoing investigation by the attorney general or law enforcement, the inspector general shall report the findings of the office in connection with a review conducted under this chapter to:

(1) the presiding officer of the governing body of the agency, or if applicable the single state officer who governs the agency;

(2) the governor;

(3) the lieutenant governor;

(4) the speaker of the house of representatives;

(5) the comptroller;

(6) the state auditor; and

(7) the attorney general.

Sec. 422.252. FLAGRANT VIOLATIONS. The inspector general may report to the presiding officer of the governing body of the agency associated with the review, or if applicable the single state officer who governs the agency, the governor, and the state auditor a particularly serious or flagrant problem relating to the administration of a program, operation of the agency, or interference with an inspector general review.

Sec. 422.253. INFORMATION CONFIDENTIAL. (a) Except as provided by this chapter, all information and material compiled by the inspector general during a review under this chapter is:

(1) confidential and not subject to disclosure under Chapter 552; and

(2) not subject to disclosure, discovery, subpoena, or other means of legal compulsion for release to anyone other than the state auditor's office, the agency that is the subject of a review, or the office or its agents involved in the review related to that information or material.

(b) As the inspector general determines appropriate, information relating to a review may be disclosed to:

(1) a law enforcement agency;

(2) the attorney general;

(3) the state auditor; or

(4) the agency that is the subject of a review.

(c) A person that receives information under Subsection (b) may not disclose the information except to the extent that disclosure is consistent with the authorized purpose for which the person received the information.

Sec. 422.254. DRAFT OF FINAL REVIEW REPORT; AGENCY RESPONSE. (a) Except in cases in which the office has determined that potential fraud, waste, or abuse exists, the office shall provide a draft of the final review report of any investigation, audit, or review of the operations of an agency to the presiding officer of the governing body of the agency, or if applicable to the single state officer who governs the agency, before publishing the office's final review report.

(b) The agency may provide a response to the office's draft report in the manner prescribed by the office not later than the 10th day after the date the draft report is received by the agency. The inspector general by rule shall specify the format of and requirements for the agency response.

(c) Notwithstanding Subsection (a), the office may not provide a draft report to the presiding officer of the governing body of the agency, or if applicable to the single state officer who governs the agency, if in the inspector general's opinion providing the draft report could negatively affect any anticipated civil or criminal proceedings.

(d) The office may include any portion of the agency's response in the office's final report.

Sec. 422.255. FINAL REVIEW REPORTS; AGENCY RESPONSE. (a) The inspector general shall prepare a final report for each review conducted under this chapter. The final report must include:

(1) a summary of the activities performed by the inspector general in conducting the review;

(2) a determination of whether wrongdoing was found; and

(3) a description of any findings of wrongdoing.

(b) The inspector general's final review reports are subject to disclosure under Chapter 552.

(c) All working papers and other documents related to compiling the final review reports remain confidential and are not subject to disclosure under Chapter 552.

(d) Not later than the 60th day after the date the office issues a final report that identifies deficiencies or inefficiencies in, or recommends corrective measures in the operations of, an agency, the agency shall file a response that includes:

(1) an implementation plan and timeline for implementing corrective measures; or

(2) the agency's rationale for declining to implement corrective measures for the identified deficiencies or inefficiencies or the office's recommended corrective measures, as applicable.

Sec. 422.256. COSTS. (a) The inspector general shall maintain information regarding the cost of reviews.

(b) The inspector general may cooperate with appropriate administrative and prosecutorial agencies, including the attorney general, in recovering costs incurred under this chapter from nongovernmental entities, including contractors or individuals involved in:

(1) violations of applicable state or federal rules or statutes;

(2) abusive or wilful misconduct; or

(3) violations of a provider contract or program policy.

Sec. 422.257. SEMIANNUAL REPORT; LEGISLATIVE REPORT. (a) The office shall prepare and submit a semiannual report to the governor, the lieutenant governor, the speaker of the house of representatives, the state auditor, the comptroller, and each member of the legislature concerning:

(1) any completed final review; and

(2) the activities of the office and the attorney general in detecting and preventing fraud, waste, and abuse under any agency programs or in programs receiving state or federal funds that are implemented, administered, or overseen by an agency that is reviewed by the office under this chapter.

(b) Not later than December 1 of each even-numbered year, the office shall issue to each member of the legislature a report that contains the information required under Subsection (a) for the two years immediately preceding the legislative session. The office shall make the report available to the public.

[Sections 422.258-422.300 reserved for expansion]

SUBCHAPTER G. HEALTH AND HUMAN SERVICES POWERS AND DUTIES

Sec. 422.301. GENERAL HEALTH AND HUMAN SERVICES POWERS. The office has all the powers necessary or appropriate to carry out its responsibilities and functions under this chapter and other law in relation to health and human services matters. In addition to performing functions and duties otherwise provided by law, the office may provide for coordination between the office and special investigative units formed by managed care organizations under Section 531.113 or entities with which managed care organizations contract under that section.

Sec. 422.302. HEALTH AND HUMAN SERVICES RESPONSIBILITIES. The office is responsible for:

(1) the investigation of fraud, waste, and abuse in the provision or funding of health or human services by this state;

(2) the enforcement of state law relating to the provision of those services to protect the public; and

(3) the prevention and detection of crime relating to the provision of those services.

Sec. 422.303. INTEGRITY REVIEW FOR MEDICAID PROGRAM. (a) The deputy inspector general designated for the commission shall conduct an integrity review to determine whether there is sufficient basis to warrant a full investigation on receipt of any complaint of fraud, waste, or abuse of funds in the state Medicaid program from any source.

(b) An integrity review under this section must begin not later than the 30th day after the date the office receives a complaint or has reason to believe that Medicaid fraud, waste, or abuse has occurred. An integrity review shall be completed not later than the 90th day after the date the review began.

(c) If the findings of an integrity review give the office reason to believe that an incident of fraud involving possible criminal conduct has occurred in the state Medicaid program, the office must take the following action, as appropriate, not later than the 30th day after the completion of the integrity review:

(1) if a provider is suspected of fraud involving criminal conduct, the office must refer the case under Section 422.209, provided that the criminal referral does not preclude the office from continuing its investigation of the provider or preclude the imposition of appropriate administrative or civil sanctions; or

(2) if there is reason to believe that a recipient of funds has defrauded the Medicaid program, the office may conduct a full investigation of the suspected fraud.

Sec. 422.304. IMMEDIATE REFERRAL OF MEDICAID FRAUD. (a) At the time the office learns or has reason to suspect that a health or human services provider's records related to participation in the state Medicaid program are being withheld, concealed, destroyed, fabricated, or in any way falsified, the office shall immediately refer the case as provided in Section 422.209.

(b) A criminal referral under Subsection (a) does not preclude the office from continuing its investigation of a health or human services provider or the imposition of appropriate administrative or civil sanctions.

Sec. 422.305. HOLD ON CLAIM REIMBURSEMENT PAYMENT; EXCLUSION FROM PROGRAMS. (a) In addition to other instances authorized under state or federal law, the office shall impose without prior notice a hold on payment of claims for reimbursement submitted by a health or human services provider to compel production of records related to participation in the state Medicaid program or on request of the state's Medicaid fraud control unit, as applicable.

(b) The office must notify the health or human services provider of the hold on payment not later than the fifth working day after the date the payment hold is imposed.

(c) The office shall, in consultation with the state's Medicaid fraud control unit, establish guidelines under which holds on payment or exclusions from a health and human services program:

(1) may permissively be imposed on a health or human services provider; or

(2) shall automatically be imposed on a provider.

(d) A health or human services provider subject to a hold on payment or excluded from a program under this section is entitled to a hearing on the hold or exclusion. A hearing under this subsection is a contested case hearing under Chapter 2001. The State Office of Administrative Hearings shall conduct the hearing. After the hearing, the office, subject to judicial review, shall make a final determination. The commission, a health and human services agency, and the attorney general are entitled to intervene as parties in the contested case.

Sec. 422.306. REQUEST FOR EXPEDITED HEARING. (a) On timely written request by a health or human services provider subject to a hold on payment under Section 422.305, other than a hold requested by the state's Medicaid fraud control unit, the office shall file a request with the State Office of Administrative Hearings for an expedited administrative hearing regarding the hold.

(b) The health or human services provider must request an expedited hearing not later than the 10th day after the date the provider receives notice from the office under Section 422.305(b).

Sec. 422.307. INFORMAL RESOLUTION. (a) The inspector general shall adopt rules that allow a health or human services provider subject to a hold on payment under Section 422.305, other than a hold requested by the state's Medicaid fraud control unit, to seek an informal resolution of the issues identified by the office in the notice provided under that section.

(b) A health or human services provider that seeks an informal resolution must do so not later than the 10th day after the date the provider receives notice from the office under Section 422.305(b).

(c) A health or human services provider's decision to seek an informal resolution does not extend the time by which the provider must request an expedited administrative hearing under Section 422.306.

(d) A hearing initiated under Section 422.305 shall be stayed at the office's request until the informal resolution process is completed.

[Sections 422.308-422.450 reserved for expansion]

SUBCHAPTER J. PENALTIES

Sec. 422.451. ADMINISTRATIVE OR CIVIL PENALTY; INJUNCTION. (a) The office may request that the appropriate authorities obtain an injunction to prevent a person from disposing of an asset identified by the office as potentially subject to recovery by the office due to the person's fraud, waste, or abuse.

(b) The office may act for an agency in assessing administrative or civil penalties the agency is authorized to assess under applicable law if:

(1) the inspector general is required to designate a deputy inspector general for the agency under Section 422.106;

(2) the agency is a health and human services agency as defined by Section 531.001; or

(3) the penalty is imposed in connection with fraud, waste, or abuse in the use of state or federal funds.

(c) If the office imposes an administrative or civil penalty under Subsection (b) for an agency:

(1) the agency may not impose an administrative or civil penalty against the same person for the same violation; and

(2) the office shall impose the penalty under applicable rules of the office, this chapter, and applicable laws governing the imposition of a penalty by the agency.

SECTION 10.02. Section 20.038, Business & Commerce Code, is amended to read as follows:

Sec. 20.038. EXEMPTION FROM SECURITY FREEZE. A security freeze does not apply to a consumer report provided to:

(1) a state or local governmental entity, including a law enforcement agency or court or private collection agency, if the entity, agency, or court is acting under a court order, warrant, subpoena, or administrative subpoena;

(2) a child support agency as defined by Section 101.004, Family Code, acting to investigate or collect child support payments or acting under Title IV-D of the Social Security Act (42 U.S.C. Section 651 et seq.);

(3) the office of inspector general [Health and Human Services Commission] acting to investigate fraud, waste, or abuse in state agencies under Chapter 422, Government Code, or other law [under Section 531.102, Government Code];

(4) the comptroller acting to investigate or collect delinquent sales or franchise taxes;

(5) a tax assessor-collector acting to investigate or collect delinquent ad valorem taxes;

(6) a person for the purposes of prescreening as provided by the Fair Credit Reporting Act (15 U.S.C. Section 1681 et seq.), as amended;

(7) a person with whom the consumer has an account or contract or to whom the consumer has issued a negotiable instrument, or the person's subsidiary, affiliate, agent, assignee, prospective assignee, or private collection agency, for purposes related to that account, contract, or instrument;

(8) a subsidiary, affiliate, agent, assignee, or prospective assignee of a person to whom access has been granted under Section 20.037(b);

(9) a person who administers a credit file monitoring subscription service to which the consumer has subscribed;

(10) a person for the purpose of providing a consumer with a copy of the consumer's report on the consumer's request;

(11) a check service or fraud prevention service company that issues consumer reports:

(A) to prevent or investigate fraud; or

(B) for purposes of approving or processing negotiable instruments, electronic funds transfers, or similar methods of payment;

(12) a deposit account information service company that issues consumer reports related to account closures caused by fraud, substantial overdrafts, automated teller machine abuses, or similar negative information regarding a consumer to an inquiring financial institution for use by the financial institution only in reviewing a consumer request for a deposit account with that institution; or

(13) a consumer reporting agency that:

(A) acts only to resell credit information by assembling and merging information contained in a database of another consumer reporting agency or multiple consumer reporting agencies; and

(B) does not maintain a permanent database of credit information from which new consumer reports are produced.

SECTION 10.03. Article 2.12, Code of Criminal Procedure, is amended to read as follows:

Art. 2.12. WHO ARE PEACE OFFICERS. The following are peace officers:

(1) sheriffs, their deputies, and those reserve deputies who hold a permanent peace officer license issued under Chapter 1701, Occupations Code;

(2) constables, deputy constables, and those reserve deputy constables who hold a permanent peace officer license issued under Chapter 1701, Occupations Code;

(3) marshals or police officers of an incorporated city, town, or village, and those reserve municipal police officers who hold a permanent peace officer license issued under Chapter 1701, Occupations Code;

(4) rangers and officers commissioned by the Public Safety Commission and the Director of the Department of Public Safety;

(5) investigators of the district attorneys', criminal district attorneys', and county attorneys' offices;

(6) law enforcement agents of the Texas Alcoholic Beverage Commission;

(7) each member of an arson investigating unit commissioned by a city, a county, or the state;

(8) officers commissioned under Section 37.081, Education Code, or Subchapter E, Chapter 51, Education Code;

(9) officers commissioned by the General Services Commission;

(10) law enforcement officers commissioned by the Parks and Wildlife Commission;

(11) airport police officers commissioned by a city with a population of more than 1.18 million that operates an airport that serves commercial air carriers;

(12) airport security personnel commissioned as peace officers by the governing body of any political subdivision of this state, other than a city described by Subdivision (11), that operates an airport that serves commercial air carriers;

(13) municipal park and recreational patrolmen and security officers;

(14) security officers and investigators commissioned as peace officers by the comptroller;

(15) officers commissioned by a water control and improvement district under Section 49.216, Water Code;

(16) officers commissioned by a board of trustees under Chapter 54, Transportation Code;

(17) investigators commissioned by the Texas Medical Board;

(18) officers commissioned by the board of managers of the Dallas County Hospital District, the Tarrant County Hospital District, or the Bexar County Hospital District under Section 281.057, Health and Safety Code;

(19) county park rangers commissioned under Subchapter E, Chapter 351, Local Government Code;

(20) investigators employed by the Texas Racing Commission;

(21) officers commissioned under Chapter 554, Occupations Code;

(22) officers commissioned by the governing body of a metropolitan rapid transit authority under Section 451.108, Transportation Code, or by a regional transportation authority under Section 452.110, Transportation Code;

(23) investigators commissioned by the attorney general under Section 402.009, Government Code;

(24) security officers and investigators commissioned as peace officers under Chapter 466, Government Code;

(25) an officer employed by the Department of State Health Services under Section 431.2471, Health and Safety Code;

(26) officers appointed by an appellate court under Subchapter F, Chapter 53, Government Code;

(27) officers commissioned by the state fire marshal under Chapter 417, Government Code;

(28) an investigator commissioned by the commissioner of insurance under Section 701.104, Insurance Code;

(29) apprehension specialists [and inspectors general] commissioned by the Texas Youth Commission as officers under Section [Sections 61.0451 and] 61.0931, Human Resources Code;

(30) [officers appointed by the inspector general of the Texas Department of Criminal Justice under Section 493.019, Government Code;

[(31)] investigators commissioned by the Commission on Law Enforcement Officer Standards and Education under Section 1701.160, Occupations Code;

(31) [(32)] commission investigators commissioned by the Texas Private Security Board under Section 1702.061(f), Occupations Code;

(32) [(33)] the fire marshal and any officers, inspectors, or investigators commissioned by an emergency services district under Chapter 775, Health and Safety Code;

(33) [(34)] officers commissioned by the State Board of Dental Examiners under Section 254.013, Occupations Code, subject to the limitations imposed by that section; [and]

(34) [(35)] investigators commissioned by the Texas Juvenile Probation Commission as officers under Section 141.055, Human Resources Code; and

(35) officers commissioned by the office of inspector general established under Chapter 422, Government Code.

SECTION 10.04. The following sections of the Government Code are repealed:

(1) Section 531.102;

(2) Section 531.1021; and

(3) Section 531.103.

SECTION 10.05. (a) The repeal by this Act of Section 531.102, Government Code, does not affect the validity of a complaint, investigation, or other proceeding initiated under that section before the effective date of this Act. A complaint, investigation, or other proceeding initiated under that section is continued in accordance with the changes in law made by this Act.

(b) The repeal by this Act of Section 531.1021, Government Code, does not affect the validity of a subpoena issued under that section before the effective date of this Act. A subpoena issued under that section before the effective date of this Act is governed by the law that existed when the subpoena was issued, and the former law is continued in effect for that purpose.

SECTION 10.06. (a) As soon as practicable after the effective date of this Act, the Legislative Budget Board shall submit to the governor a list with the names of at least three persons who may be appointed as inspector general for the office of inspector general as required by Chapter 422, Government Code, as added by this Act.

(b) As soon as practicable after the date the governor receives the list under Subsection (a) of this section, the governor shall appoint an inspector general for the office of inspector general established under Chapter 422, Government Code, as added by this Act, to a term expiring February 1, 2011.

(c) A person serving on the effective date of this Act as inspector general for a state agency subject to Chapter 422, Government Code, as added by this Act, shall serve as the deputy inspector general designated for the agency under Chapter 422, Government Code, as added by this Act, unless and until replaced by the inspector general.

SECTION 10.07. A contract or proceeding primarily related to a function transferred to the office of inspector general established under this Act is transferred to the office. The transfer does not affect the status of a proceeding or the validity of a contract.

SECTION 10.08. (a) All personnel and assets currently assigned to the inspector general of an agency subject to Chapter 422, Government Code, as added by this Act, shall be promptly transferred to the office of inspector general established under Chapter 422 along with any equipment, documents, and records currently assigned to or used by the inspector general of that agency. Inventory of personnel, equipment, documents, records, and assets to be transferred under this section shall be accomplished jointly by the transferring agency and the inspector general serving under Chapter 422. All funds previously appropriated or used, from any source, by the transferring agency in support of the transferred functions, personnel, equipment, documents, records, or assets shall also be contemporaneously transferred to the office.

(b) For purposes of this section, "currently assigned" means:

(1) all personnel and vacant full-time equivalent positions assigned to or supporting a transferred function at any time during the state fiscal biennium beginning September 1, 2007; and

(2) all inventory and equipment assigned to a transferred function or transferring personnel or that was in the possession of transferring personnel on or at any time after October 31, 2008.

(c) All state and federal funding, including funding for overhead costs, support costs, and lease or colocation lease costs, for the functions to be transferred to the office of inspector general established under Chapter 422, Government Code, as added by this Act, shall be reallocated to that office.

(d) For purposes of federal single state agency funding requirements, any federal funds for an agency subject to Chapter 422, Government Code, as added by this Act, that may not be appropriated directly to the office of inspector general shall be transferred from the single state agency receiving the funds to the office of inspector general established under Chapter 422 if the funds are intended for a function performed by the office.

SECTION 10.09. On the effective date of this Act:

(1) all functions, activities, employees, rules, forms, money, property, contracts, memorandums of understanding, records, and obligations of a previously established office of inspector general of an agency subject to Chapter 422, Government Code, as added by this Act, become functions, activities, employees, rules, forms, money, property, contracts, memorandums of understanding, records, and obligations of the office of inspector general established under Chapter 422, without a change in status; and

(2) all money appropriated or budgeted for the operations of a previously established office of inspector general at an agency subject to Chapter 422, Government Code, as added by this Act, including money for providing administrative support, is considered appropriated for the use of the office of inspector general established under Chapter 422.

SECTION 10.10. (a) Each agency subject to Chapter 422, Government Code, as added by this Act, shall take all action necessary to provide for the orderly transfer of the assets and responsibilities of any previously established office of inspector general for that agency to the office of inspector general established under Chapter 422.

(b) A rule or form adopted by a previously established office of inspector general of an agency subject to Chapter 422, Government Code, as added by this Act, is a rule or form of the office of inspector general established under Chapter 422 and remains in effect until changed by the office of inspector general.

(c) A reference in law or administrative rule to a previously established office of inspector general of an agency subject to Chapter 422, Government Code, as added by this Act, means the office of inspector general established under Chapter 422.

SECTION 10.11. If before implementing any provision of this Act a state agency determines that a waiver or authorization from a federal agency is necessary for implementation of that provision, the agency affected by the provision shall request the waiver or authorization and may delay implementing that provision until the waiver or authorization is granted.

ARTICLE 11. TRANSITION PROVISIONS AND EFFECTIVE DATES

SECTION 11.01. (a) On the effective date of this Act the state auditor's office is renamed the State Accountability Office.

(b) The validity of an action taken by the state auditor, the state auditor's office, or the legislative audit committee is not affected by the change in names of the state auditor's office and the legislative audit committee.

(c) On the effective date of this Act:

(1) all functions, activities, employees, rules, forms, money, property, contracts, records, and obligations of the state auditor's office become functions, activities, employees, rules, forms, money, property, contracts, records, and obligations of the State Accountability Office without a change in status;

(2) a reference in law to the state auditor's office means the State Accountability Office; and

(3) all funds appropriated to the state auditor's office, including funds for providing administrative support for the state auditor's office, such as funds to pay the salary and benefits of employees who provide administrative support, are transferred to the State Accountability Office.

SECTION 11.02. (a) Not later than March 1, 2010, the State Accountability Office shall develop the standard contract provision required by Section 321.0122, Government Code, as added by this Act.

(b) A department is not required to comply with Section 321.0122, Government Code, as added by this Act, until September 1, 2010.

SECTION 11.03. A governmental entity is not required to submit a report under Section 331.007, Government Code, as added by this Act, until the end of the first full state fiscal quarter after the effective date of this Act.

SECTION 11.04. (a) In this section, "performance review" means a function performed by the Legislative Budget Board before the effective date of this Act under Section 322.015, 322.016, 322.0165, 322.017, or 322.018, Government Code.

(b) On the effective date of this Act, the following are transferred from the Legislative Budget Board to the State Accountability Office:

(1) all employees whose primary duties involved performing or supporting the performance of performance reviews;

(2) all records and equipment primarily used by the board in connection with performance reviews; and

(3) all appropriations for the state fiscal biennium beginning September 1, 2009, made to or budgeted by the board specifically for performance reviews.

(c) If the Legislative Budget Board does not receive appropriations specifically designated for performance review purposes for the state fiscal biennium beginning September 1, 2009, and has not specifically budgeted amounts for performance review purposes for that biennium, an amount equal to the amount of appropriations specifically designated for or budgeted by the Legislative Budget Board for performance review purposes for the state fiscal biennium beginning September 1, 2007, is transferred from appropriations made to the Legislative Budget Board for the state fiscal biennium beginning September 1, 2009, to the State Accountability Office for that biennium.

SECTION 11.05. In the event of a conflict between a provision of this Act and another Act passed by the 81st Legislature, Regular Session, 2009, that becomes law, this Act prevails and controls regardless of the relative dates of enactment.

SECTION 11.06. (a) The changes in law made by this Act do not affect the entitlement of a person who is a member of a board, commission, or council serving immediately before the effective date of this Act to continue to carry out the board's, commission's, or council's functions for the remainder of the member's term.

(b) As soon as possible after the effective date of this Act, the lieutenant governor and speaker of the house of representatives shall appoint members in accordance with Sections 321.002, 322.001, 323.001, and 324.004, Government Code, as amended by this Act, and Section 331.002, Government Code, as added by this Act.

SECTION 11.07. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2009.