85R14024 CJC-D

By: Hinojosa S.B. No. 1875

A BILL TO BE ENTITLED

AN ACT

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

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

SECTION 1. Section 472.104(b), Government Code, is amended to read as follows:

(b) In addition to the reporting requirements of Subsection (a), [each agency shall report annually,] not later than November 1 of each year, each agency shall submit the report required under Section 473.101 [, to the governor, to the committee of each house of the legislature that has jurisdiction over appropriations, and to the 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 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) 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].

SECTION 2. Subtitle E, Title 4, Government Code, is amended by adding Chapter 473 to read as follows:

CHAPTER 473. PROVISIONS GENERALLY APPLICABLE TO SELF-DIRECTED AND

SEMI-INDEPENDENT AGENCIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 473.001. DEFINITIONS. In this chapter:

(1) "Agency" means a state agency that:

(A) is self-directed and semi-independent under the laws of this state; or

(B) is seeking self-directed and semi-independent agency status.

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

Sec. 473.002. 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. 473.003. REVIEW OF LEGISLATION; REPORT. (a) The board's staff shall review legislation passed in each regular or special legislative session that:

(1) grants a state agency self-directed and semi-independent status; or

(2) amends a provision of this chapter or any other law that relates to a state agency's self-directed and semi-independent status.

(b) Not later than December 1 of each even-numbered year, the board's staff shall submit a report to the committee of each house of the legislature that has jurisdiction over appropriations that includes:

(1) a list of all state agencies granted self-directed and semi-independent status during the preceding regular or special session of the legislature; and

(2) recommendations by the board's staff to address potential problems identified by the staff during the review prescribed by Subsection (a).

SUBCHAPTER B. APPLICATION FOR SELF-DIRECTED AND SEMI-INDEPENDENT

AGENCY STATUS

Sec. 473.051. APPLICATION; AUDIT REQUIRED. (a) Before an 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 board shall prescribe an application form that requires 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. 473.052. REVIEW OF APPLICATION; RECOMMENDATION. (a) The board's staff shall promptly review an application submitted under Section 473.051. 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.

SUBCHAPTER C. REPORTING REQUIREMENTS; AUDITS

Sec. 473.101. ANNUAL REPORT. (a) In addition to any other report required by law, not later than November 1 of each year, each self-directed and semi-independent agency shall report in the form prescribed by the board to the governor, the committee of each house of the legislature that has jurisdiction over appropriations, and the 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;

(5) the purchase or sale of any real property during the preceding 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 as defined by Section 16.001, Finance Code, 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 as defined by Section 16.001, Finance Code, 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.

(b) If, based on a review of an agency's annual report submitted as required under Subsection (a), 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.

Sec. 473.102. AUDITS. (a) In addition to any other audit required by law, the state auditor shall conduct a financial audit and an effectiveness audit of a self-directed and semi-independent agency 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 a self-directed and semi-independent agency at any time.

(b) The agency shall reimburse the state auditor for costs incurred in performing an audit under this section.

SUBCHAPTER D. REVIEW OF SELF-DIRECTED AND SEMI-INDEPENDENT

AGENCIES; REVOCATION OF STATUS

Sec. 473.151. REVIEW OF AGENCIES. (a) The board's staff and the board shall review each agency's annual report submitted under Section 473.101 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. 473.152. REVOCATION OF 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 473.151(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 3. Section 16.005(c), Finance Code, is amended to read as follows:

(c) In addition to the reporting requirements of Subsection (b), not later than November 1 of each year, each financial regulatory agency shall submit the report required under Section 473.101, Government Code [to the governor, the committee of each house of the legislature that has jurisdiction over appropriations, and the Legislative Budget Board a report that contains:

[(1) the salary for all financial regulatory agency personnel and the total amount of per diem expenses and travel expenses paid for all agency employees;

[(2) the total amount of per diem expenses and travel expenses paid for each member of the agency's policy-making body, provided that only one report must be submitted regarding the Finance Commission of Texas;

[(3) the agency's operating plan and annual budget; and

[(4) a detailed report of all revenue received and all expenses incurred by the financial regulatory agency in the previous 12 months].

SECTION 4. Section 1105.001, Occupations Code, is 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.

SECTION 5. Section 1105.005(c), Occupations Code, is amended to read as follows:

(c) In addition to the reporting requirements of Subsection (b), not later than November 1 of each year, the agency shall submit the report required under Section 473.101, Government Code [to the governor, the committee of each house of the legislature that has jurisdiction over appropriations, and the Legislative Budget Board a report that contains:

[(1) the salary for all agency personnel and the total amount of per diem expenses and travel expenses paid for all agency employees;

[(2) the total amount of per diem expenses and travel expenses paid for each member of the agency;

[(3) the agency's operating plan and the annual budgets of the commission and the board; and

[(4) a detailed report of all revenue received and all expenses incurred by the agency in the previous 12 months].

SECTION 6. Section 16.005, Finance Code, Section 472.104, Government Code, and Section 1105.005, Occupations Code, as amended by this Act, and Section 473.101, Government Code, as added by this Act, apply 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 7. Section 473.051, Government Code, as added by this Act, does not require a state agency that, on the effective date of this Act, is self-directed and semi-independent to submit an application to the Legislative Budget Board seeking self-directed and semi-independent agency status.

SECTION 8. This Act takes effect September 1, 2017.