By: Hinojosa, et al. S.B. No. 217

A BILL TO BE ENTITLED

AN ACT

relating to the self-directed and semi-independent status of certain agencies and to the requirements applicable to, and the oversight of, those agencies.

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

SECTION 1. Sections 472.001 and 472.002, Government Code, are amended to read as follows:

Sec. 472.001. APPLICABILITY OF CHAPTER. This chapter applies to:

(1) the Texas State Board of Public Accountancy;

(2) the Texas Board of Professional Engineers; [and]

(3) the Texas Board of Architectural Examiners;

(4) the Texas Real Estate Commission;

(5) the Texas Appraiser Licensing and Certification Board;

(6) the Texas Department of Banking;

(7) the Department of Savings and Mortgage Lending;

(8) the Office of Consumer Credit Commissioner; and

(9) the Credit Union Department.

Sec. 472.002. DEFINITIONS [DEFINITION]. In this chapter:

(1) "Agency"[, "agency"] means an agency listed in Section 472.001.

(2) "Board" means the Legislative Budget Board.

(3) "Financial regulatory agency" means an agency described by Sections 472.001(6)-(9).

SECTION 2. Subchapter A, Chapter 472, Government Code, is amended by adding Sections 472.003, 472.004, 472.005, and 472.006 to read as follows:

Sec. 472.003. STATUS AND OVERSIGHT OF CERTAIN AGENCIES. This chapter does not affect:

(1) the Texas Appraiser Licensing and Certification Board's status as an independent subdivision of the Texas Real Estate Commission as provided by Section 1103.051, Occupations Code; or

(2) the oversight of a financial regulatory agency by that agency's governing body or the agency's accountability to, and relationship with, that governing body.

Sec. 472.004. ROLE OF BOARD; RECOVERY OF COSTS. (a) The board has responsibility under this chapter for developing and administering the application process, monitoring agencies, and performing other duties provided under this chapter.

(b) The board may recover from an agency the costs associated with administering the application process for the agency and the board's monitoring of the agency.

Sec. 472.005. APPLICATION FOR SELF-DIRECTED AND SEMI-INDEPENDENT AGENCY STATUS; AUDIT REQUIRED. (a) Before a state agency may be granted self-directed and semi-independent status, the agency must:

(1) submit an application to the board; and

(2) undergo a financial audit and an effectiveness audit as required under Subsection (e).

(b) A state agency may not submit the application required under Subsection (a) until the agency's governing body:

(1) provides notice and holds a public hearing on the application; and

(2) approves, by majority vote, the submission of the application.

(c) The application must be submitted to the board as part of the agency's legislative appropriations request.

(d) The application shall be in the form prescribed by the board, which must require the agency applying for self-directed and semi-independent status to:

(1) state the reasons for which the agency is seeking self-directed and semi-independent status and address any potential problems that may result from granting that status; and

(2) include, as relevant to the agency's application:

(A) information demonstrating the agency's history of efficient operation and continuing ability to operate efficiently and in a manner that protects the public interest;

(B) documentation of adequate budgetary processes and controls; and

(C) an analysis of the fiscal effect on state revenue and other state agencies demonstrating that the agency's status as self-directed and semi-independent would be revenue neutral.

(e) A state agency must undergo a financial audit and an effectiveness audit by the state auditor during the four-year period preceding the date the agency submits an application under Subsection (a). The state auditor shall conduct the financial audit and effectiveness audit and make the findings of the completed audits available to the board.

(f) The board may require an agency to submit additional information necessary to evaluate the agency's ability to operate effectively as a self-directed and semi-independent agency.

Sec. 472.006. REVIEW OF APPLICATION AND RECOMMENDATION. (a) The board's staff shall promptly review an application submitted under Section 472.005. The staff review shall determine whether the agency's application is sufficient and whether the agency's application should be granted or denied.

(b) The board's staff shall submit the staff's recommendation as to whether the agency's application should be granted or denied to the board. The board may recommend to the committee of each house of the legislature that has jurisdiction over appropriations that legislation be introduced to grant self-directed and semi-independent status to the agency.

SECTION 3. Section 472.051(c), Government Code, is amended to read as follows:

(c) The Sunset Advisory Commission shall examine each agency's status and performance as a self-directed and semi-independent agency and the agency's compliance with this chapter as part of the commission's periodic review of the agency under Chapter 325 (Texas Sunset Act).

SECTION 4. Subchapter B, Chapter 472, Government Code, is amended by adding Sections 472.052 and 472.053 to read as follows:

Sec. 472.052. REVIEW OF SELF-DIRECTED AND SEMI-INDEPENDENT AGENCIES. (a) The board's staff and the board shall review each agency's annual report submitted under Section 472.104(b) and any additional information requested by the board and received from the agency to determine the agency's compliance with this chapter.

(b) The board's staff may make a recommendation to the committee of each house of the legislature that has jurisdiction over appropriations and to the legislature to address issues identified during a review conducted under this section, except that the staff may not recommend the revocation of an agency's self-directed and semi-independent status.

(c) The board may recommend that legislation be introduced to revoke an agency's self-directed and semi-independent status or otherwise address issues raised by the board. A recommendation to revoke an agency's self-directed and semi-independent status may be based on the agency's conduct, including:

(1) material abuse by the agency of its self-directed and semi-independent status; or

(2) fiscal mismanagement.

Sec. 472.053. REVOCATION OF SELF-DIRECTED AND SEMI-INDEPENDENT STATUS. (a) The board may develop criteria for determining when a recommendation for the revocation of an agency's self-directed and semi-independent status is appropriate. The board may recommend the revocation of an agency's self-directed and semi-independent status to the legislature as provided by Section 472.052(c). If the board recommends revocation of an agency's self-directed and semi-independent status, the agency shall have the opportunity to respond in writing to that recommendation.

(b) The Sunset Advisory Commission may recommend revocation of an agency's self-directed and semi-independent status to the legislature as part of the commission's periodic review of the agency under Chapter 325 (Texas Sunset Act).

(c) The legislature may consider legislation to revoke an agency's self-directed and semi-independent status regardless of whether the revocation is recommended by the board or the Sunset Advisory Commission.

(d) The board shall assist an agency in transitioning from self-directed and semi-independent status if the agency's status is revoked. The board may consider issues relating to appropriations and financial planning for the agency, and an evaluation of the status and disposition of agency contracts, facilities, properties, and leases when assisting an agency under this subsection.

SECTION 5. Section 472.102, Government Code, is amended by adding Subsection (d) to read as follows:

(d) Not later than August 31 of each state fiscal year, the Texas Real Estate Commission and the Texas Appraiser Licensing and Certification Board together shall remit $750,000 to the general revenue fund.

SECTION 6. Section 472.103, Government Code, is amended to read as follows:

Sec. 472.103. AUDITS. Nothing in this chapter shall affect the duty of the state auditor to audit an agency. The state auditor shall enter into a contract and schedule with each agency to conduct audits, including financial audits [reports] and effectiveness [performance] audits. The schedule must require an agency to undergo a financial audit and an effectiveness audit at least once every six years, unless the state auditor determines that the auditor may rely on an independent audit of the agency conducted during the same period. The state auditor may conduct a risk-based audit of an agency at any time. Costs incurred in performing such audits shall be reimbursed by the agency.

SECTION 7. Section 472.104, Government Code, is amended by amending Subsection (b) and adding Subsection (c) to read as follows:

(b) In addition to the reporting requirements of Subsection (a), each agency shall, in the form prescribed by the board, report annually, not later than November 20 [1], to the governor, to the committee of each house of the legislature that has jurisdiction over appropriations, and to the board [Legislative Budget Board] the following:

(1) the salary for all agency personnel and the total amount of per diem expenses and travel expenses paid for all agency employees, including trend performance data for the preceding five fiscal years;

(2) the total amount of per diem expenses and travel expenses paid for each member of the governing body of each agency, including trend performance data for the preceding five fiscal years;

(3) each agency's operating plan covering a period of two fiscal years;

(4) each agency's operating budget, including revenues from all sources, an accounting of all expenditures, and a breakdown of expenditures by program and administrative expenses, showing:

(A) projected budget data for a period of two fiscal years; and

(B) trend performance data for the preceding five fiscal years; [and]

(5) the purchase or sale of any real property during the year;

(6) any lease and maintenance costs associated with real property owned or leased by the agency;

(7) for an agency other than a financial regulatory agency, trend performance data for the preceding five fiscal years regarding:

(A) the number of full-time equivalent positions at the agency;

(B) the number of complaints received from the public and the number of complaints initiated by agency staff;

(C) the number of complaints dismissed and the number of complaints resolved by enforcement action;

(D) the number of enforcement actions by sanction type;

(E) the number of enforcement cases closed through voluntary compliance;

(F) the amount of administrative penalties assessed and the rate of collection of assessed administrative penalties;

(G) the number of enforcement cases that allege a threat to public health, safety, or welfare or a violation of professional standards of care and the disposition of those cases;

(H) the average time to resolve a complaint;

(I) the number of license holders or regulated persons broken down by type of license and license status, including inactive status or retired status;

(J) the fee charged to issue and renew each type of license, certificate, permit, or other similar authorization issued by the agency;

(K) the average time to issue a license;

(L) litigation costs, broken down by administrative hearings, judicial proceedings, and outside counsel costs; and

(M) reserve fund balances; and

(8) for a financial regulatory agency, trend performance data for the preceding five fiscal years regarding:

(A) the number of full-time equivalent positions at the agency;

(B) the number of complaints received;

(C) the number of complaints dismissed or resolved and, of those complaints, the number resolved by enforcement action;

(D) the number of enforcement actions by type;

(E) the amount of administrative penalties assessed and the amount of administrative penalties collected;

(F) the number of entities regulated by the agency;

(G) the fee charged to issue and renew each type of license, certificate, permit, or other similar authorization issued by the agency, or any assessments paid to the agency by the holder of a license, certificate, permit, or other similar authorization issued by the agency;

(H) litigation costs, broken down by administrative hearings, judicial proceedings, and outside counsel costs;

(I) reserve fund balances; and

(J) the key performance measures approved by the governing board of the agency during the fiscal year for which the report is due.

(c) If, based on a review of an agency's annual report submitted as required under Subsection (b), the board determines that additional information is necessary to address an issue identified during the review, the board may require an agency to submit information to the board demonstrating the agency's:

(1) ability to perform those duties that are required of the agency by its enabling statute or a related duty contained in another law;

(2) financial soundness, including the agency's ability to raise sufficient revenue, maintain sufficient operating reserves, and meet all of the agency's financial obligations;

(3) compliance with the provisions of this chapter; and

(4) satisfactory audit history, including a summary of any corrective action taken by the agency in response to an audit.

SECTION 8. Section 472.105, Government Code, is amended to read as follows:

Sec. 472.105. DISPOSITION OF CERTAIN FEES COLLECTED. (a) Subject to Subsection (b), if [If] provided in an agency's enabling legislation, the agency shall collect annually from its license holders:

(1) a professional fee of $200 [from its license holders annually], which shall be remitted to the state; and

(2)[. If provided in an agency's enabling legislation, the agency shall collect] a scholarship fee of $10 [annually from its license holders].

(b) A fee increase described by Section 1101.153, Occupations Code, shall be deposited as provided by Subsection (b) of that section.

SECTION 9. Section 472.108, Government Code, is amended to read as follows:

Sec. 472.108. PROPERTY. An agency may:

(1) acquire by purchase, lease, gift, or any other manner provided by law and maintain, use, and operate[,] any real, personal, or mixed property, or any interest in property, necessary or convenient to the exercise of the powers, rights, privileges, or [and] functions of the agency;

(2) sell or otherwise dispose of any real, personal, or mixed property, or any interest in property, that the agency determines is not necessary or convenient to the exercise of the agency's powers, rights, privileges, or functions;

(3) construct, extend, improve, maintain, and reconstruct, or cause to construct, extend, improve, maintain, and reconstruct, and use and operate all facilities necessary or convenient to the exercise of the powers, rights, privileges, or functions of the agency; and

(4) borrow money, as may be authorized from time to time by an affirmative vote of a two-thirds majority of the policy-making body of the agency, for a period not to exceed five years if necessary or convenient to the exercise of the agency's powers, rights, privileges, or functions.

SECTION 10. Sections 472.110(b) and (d), Government Code, are amended to read as follows:

(b) Except as provided by Section 472.105 and this subsection, all [All] fees and funds collected by an agency, any funds appropriated to the agency, and any other funds belonging to or under the control of an agency shall be deposited in interest-bearing deposit accounts in the Texas Treasury Safekeeping Trust Company. The comptroller shall contract with the agency for the maintenance of the deposit accounts under terms comparable to a contract between a commercial banking institution and its customers. An agency may not hold funds in an account that is not under the control of the comptroller. This subsection does not apply to funds held by an agency under Section 13.016, 154.351, 154.353, 154.412, 156.501, 157.0201, 341.602, or 393.628, Finance Code.

(d) An agency shall remit all administrative penalties collected by the agency to the comptroller for deposit in the general revenue fund. This subsection does not apply to the Texas Real Estate Commission, the Texas Appraiser Licensing and Certification Board, or a financial regulatory agency.

SECTION 11. Section 16.001, Finance Code, is amended to read as follows:

Sec. 16.001. SELF-DIRECTED AND SEMI-INDEPENDENT STATUS OF FINANCIAL REGULATORY AGENCIES [DEFINITIONS]. (a) A financial regulatory agency has self-directed and semi-independent status as provided under Chapter 472, Government Code.

(b) For purposes of [In] this chapter and Chapter 472, Government Code:

(1) "Financial regulatory agency" means:

(A) the Texas Department of Banking;

(B) the Department of Savings and Mortgage Lending;

(C) the Office of Consumer Credit Commissioner; and

(D) the Credit Union Department.

(2) "Policy-making body" means:

(A) the Finance Commission of Texas for:

(i) the Texas Department of Banking;

(ii) the Department of Savings and Mortgage Lending; and

(iii) the Office of Consumer Credit Commissioner; and

(B) the Credit Union Commission for the Credit Union Department.

SECTION 12. Sections 1105.001 and 1105.002, Occupations Code, are amended to read as follows:

Sec. 1105.001. DEFINITIONS. In this chapter [section]:

(1) "Agency" means the commission and the board.

(2) "Board" means the Texas Appraiser Licensing and Certification Board.

(3) "Commission" means the Texas Real Estate Commission.

Sec. 1105.002. SELF-DIRECTED AND SEMI-INDEPENDENT STATUS. (a) Notwithstanding any other provision of law, the agency is self-directed and semi-independent as specified by Chapter 472, Government Code. [this chapter. Any Act of the 82nd Legislature that relates to the agency and that is inconsistent with the agency being self-directed and semi-independent may be implemented by the administrator of the agency only on authorization by the agency.]

(b) Chapter 472, Government Code, [This chapter] does not affect the board's status as an independent subdivision of the commission as provided by Section 1103.051.

SECTION 13. The following are repealed:

(1) Sections 16.002, 16.003, 16.004, 16.005, 16.006, 16.007, 16.008, 16.009, 16.010, 16.011, and 16.012, Finance Code; and

(2) Sections 1105.003, 1105.004, 1105.005, 1105.006, 1105.007, 1105.008, 1105.009, 1105.010, 1105.011, and 1105.012, Occupations Code.

SECTION 14. Section 472.104, Government Code, as amended by this Act, applies only to a report originally due on or after the effective date of this Act. A report originally due before the effective date of this Act is governed by the law in effect on the date the report was originally due, and the former law is continued in effect for that purpose.

SECTION 15. The repeal by this Act of Section 16.006, Finance Code, and Section 1105.006, Occupations Code, does not affect the validity of a contract entered into under those sections before the effective date of this Act.

SECTION 16. This Act takes effect September 1, 2015.