HBA-ALS H.B. 930 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 930 By: Junell State Affairs 4/4/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, a regional planning commission, also known as a council of government (COG), is required to file with the governor's office an independent financial audit, and each agency granting money to a COG is responsible for reviewing the audit for allowable expenses when funding a program. However, no one agency or entity is responsible for reviewing the entire budget for overall expenditures, efficiency, or performance. To date, Texas has not adopted any allowable indirect expenses and these expenses are not audited by independent auditors. Under the Appropriations Act adopted by the 75th Legislature, COGs were made subject to state government agency rules regarding the prohibition of state expenditures on alcoholic beverages, political aid, and legislative influence; budgeting and reporting; travel expenditures; annual reports and inventories; and internal audit findings. The purpose of this bill is to apply administrative guidelines to COGs and to designate the governor's office as the monitoring authority for all COGs. C.S.H.B. 930 requires the governor to adopt rules relating to a commission's operations, receipt and expenditure of funds, annual reporting requirements, standards for evaluating productivity and performance, and review and comment procedure guidelines. This bill requires a commission to annually report to the governor specified information relating to the commission's funds, expenses, indirect costs, productivity, and performance, and authorizes the governor to appoint a receiver for failure to comply with those reporting requirements. This bill places restrictions on a commission's expenditure of funds relating to travel, purchase of alcoholic beverages, goods, and services, and indirect costs. This bill makes a commission's employees and officers subject to the same rules regarding lobbying and advocacy activities as an officer or employee of a state agency. C.S.H.B. 930 requires a commission to adopt and submit to the governor for objections and approval, a yearly salary schedule containing specified information before its implementation of that schedule. This bill does not apply to a commission of a county having an actual average weekly wage that exceeds the state's actual average weekly wage by 20 percent or more for the previous year. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the governor in SECTION 1 (Section 391.009, Local Government Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 391.009, Local Government Code, as follows: Sec. 391.009. ROLE OF GOVERNOR AND STATE AGENCIES. (a) Requires the governor, in order to protect the public interest or promote efficient use of public funds, to adopt: (1) rules relating to the operation and oversight of a commission; (2) rules relating to the receipt or expenditure of funds by a commission including specified restrictions on the expenditure of commission funds for certain classes of expenses; (3) annual reporting requirements for a commission; (4) annual audit requirements of all funds received or expended by a commission; (5) rules relating to the establishment and use of standards for evaluating the productivity and performance of each commission; and (6) guidelines that are required to be followed by commissions and governmental units in carrying out the provisions of this chapter relating to review and comment procedures. Makes nonsubstantive changes. (b) Requires the governor and state agencies to provide technical information and assistance to the members and staff of a commission to ensure compliance with the rules, requirements, and guidelines adopted under Subsection (a). SECTION 2. Amends Chapter 391, Local Government Code, by adding Section 391.0095, as follows: Sec. 391.0095. AUDIT AND REPORTING REQUIREMENTS. (a) Requires the audit and reporting requirements under Section 391.009(a) to include a requirement that a commission annually report to the governor: (1) the amount and source of funds the commission receives; (2) the amount and source of funds the commission expends; (3) an explanation of the commission's method of computing its expenses and indirect costs; (4) the commission's productivity and performance during the annual reporting period; (5) a projection of the commission's productivity and performance during the next annual reporting period; (6) the results of the commission's affairs compiled in an audit prepared by an independent certified public accountant; and (7) any assets disposed of by the commission. (b) Authorizes the annual audit of a commission to be commissioned by the governor's office or the commission, as determined by the governor's office, and requires the audit to be paid from the commission's funds. (c) Requires a commission to submit any other report or audit that is required by the governor. (d) Authorizes the governor to appoint a receiver to operate or oversee a commission or withhold any appropriated commission funds if the commission fails to submit a required report or audit or comply with a rule, requirement, or guideline under Section 391.009. (e) Requires a commission to send a copy of a required report or audit to the state auditor, comptroller, and the Legislative Budget Board. Requires the governor to report to the state auditor for review any expenditure or action of a commission that is questioned by the governor about its appropriateness. SECTION 3. Amends Section 391.011(d), Local Government Code, to delete language that authorizes expending funds for the reimbursement of travel expenses and automobile mileage that are incurred while a member of the governing body of the commission is engaged in official commission business. SECTION 4. Amends Chapter 391, Local Government Code, by adding Sections 391.0115 to 391.0117, as follows: Sec. 391.0115. RESTRICTIONS ON COMMISSION COSTS. (a) Prohibits a commission from expending funds for commission personnel travel in excess of the amount that may be expended for state personnel under the General Appropriations Act or travel regulations adopted by the comptroller, including restrictions on mileage reimbursement, per diem, and lodging reimbursement rates. (b) Prohibits a commission from expending funds for the purchase of alcoholic beverages or entertainment. (c) Authorizes a commission to purchase goods or a service if the commission complies with the same provisions that are equivalent to the provisions applying to a local government, including Chapter 252 (Purchasing and Contracting Authority of Municipalities), Local Government Code. (d) Prohibits a commission from spending on indirect costs an amount that is more than 15 percent of the commission's total expenditures. Prohibits the commission's capital expenditures and subcontracts, pass-throughs, or subgrants from being considered in determining the commission's total direct costs, for purposes of this subsection. Defines "pass-through funds" for purposes of this subsection. (e) Defines "indirect costs," and requires the governor, in administering this section, to use the federal Office of Management and Budget circulars A-87 and A-122 or to use rules relating to the determination of indirect costs under Chapter 783 (Uniform Grant and Contract Management), Government Code. Sec. 391.0116. RESTRICTIONS ON EMPLOYMENT. Provides that an employee of a commission is subject to the same rules regarding lobbying and advocacy activities as an employee of any state agency. Provides that the nepotism provisions under Chapter 573 (Degrees of Relationship; Nepotism Prohibitions), Government Code, apply to a commission. Sec. 391.0117. SALARY SCHEDULES. (a) Requires a commission to adopt a salary schedule, for each fiscal year, that contains a classification salary schedule for classified positions and identifies and specifies the salaries for positions exempt from the classification salary schedule. (b) Prohibits the salary schedule for classified positions adopted by the commission from exceeding the state salary schedule for classified positions as prescribed by the General Appropriations Act adopted by the most recent legislature. Authorizes a commission to adopt a salary schedule which is less than the state salary schedule. (c) Prohibits a salary of a classified position from exceeding the state salary approved by the state auditor's office and paid by the state for comparable work. (d) Provides that a position may only be exempted from the classification salary schedule adopted by the commission if the exemption and amount of salary paid is within the appropriate range for state exempt positions, as determined by the state auditor. (e) Requires the commission to submit the commission's salary schedule to the governor no later than the 45th day before the beginning of the commission's fiscal year. Prohibits a portion of the commission's salary schedule that is objected to by the governor from going into effect until the governor is given satisfactory revisions or explanations and the governor approves that portion of the schedule. (f) Provides that this section does not apply to a commission if the most populous county that is a member of the commission has an actual average weekly wage exceeding the state's actual average weekly wage by 20 percent or more for the previous year as determined by the Texas Workforce Commission in its County Employment and Wage Information Report. SECTION 5. Effective date: September 1, 1999. SECTION 6. Requires the governor to adopt rules, requirements, and guidelines required by Sections 391.009 and 391.0095, Local Government Code, as amended or added by this Act, by January 1, 2000. Requires an entity which is required to file an audit or a report under Sections 391.009 or 391.0095, Local Government Code, as amended or added by this Act, to file the initial audit or report by September 1, 2000. SECTION 7. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1. The substitute modifies the original bill by deleting proposed Subsection (c), which required the governor to appoint one member to each commission. SECTION 2. The substitute modifies the original bill by adding new Subsection (b), authorizing the annual audit of a commission to be commissioned by the governor's office or the commission, as determined by the governor's office, and requiring that the audit be funded from the commission's funds. Redesignates proposed Subsection (c) of the original to Subsection (d) of the substitute, and modifies proposed Subdivision (2) to authorize the governor to withhold any of the commission's appropriated funds if the commission fails to submit a required report or audit, or comply with a rule, requirement, or guideline under Section 391.009. Redesignates proposed Subsections (b) and (d) of the original to Subsections (c) and (e) of the substitute. SECTION 4. Sec. 391.0115. The substitute modifies the original bill by redesignating proposed Subsection (d) of the original to Subsection (c) of the substitute. Adds language authorizing a commission to purchase goods or services if the commission complies with the same provisions that apply to a local government, rather than with those rules that apply to the purchase of goods or a service by a state agency, including Chapter 252, Local Government Code, rather than Chapters 2155 (Purchasing: General Rules and Procedures), 2156 (Purchasing Methods), 2157 (Purchasing: Purchase of Automated Information Systems), and 2158 (Purchasing: Miscellaneous Provisions for Purchase of Certain Goods and Services), Government Code. Redesignates proposed Subsection (e) of the original to Subsection (d) of the substitute, and makes changes to prohibit a commission from spending an amount greater than 15 percent of the commission's total expenditures on its indirect costs. Prohibits the consideration of a commission's capital expenditures and subcontracts, pass-throughs, or subgrants in determining the commission's total direct costs, for purposes of this subsection. Defines "pass-through funds" for purposes of this subsection. Requires the governor, in administering this section, to use the federal Office of Management and Budget circulars A-87 and A-122 or to use rules relating to the determination of indirect costs under Chapter 783, Government Code (Uniform Grant and Contract Management). Deletes poposed Subsection(e) of the original bill which prohibited a commission from spending on indirect costs an amount that is more than the lesser of 20 percent of the commissions's direct personnel costs or 10 percent of the commission's total direct costs. Redesignates proposed Subsection (a) of the original to Subsection (e) of the substitute. Makes nonsubstantive changes. Sec. 391.0116. The substitute modifies this section of the original bill by deleting language which provided that an officer of a commission is subject to the same rules regarding lobbying and advocacy activities as an officer of any state agency. Sec. 391.0117. The substitute redesignates proposed Subsection (c) of the original to Subsection (b), and adds language which prohibits the salary schedule for classified positions adopted by the commission from exceeding the state salary schedule for classified positions as prescribed by the General Appropriations Act adopted by the most recent legislature. Authorizes a commission to adopt a salary schedule which is less than the state salary schedule. Deletes porposed Subsection (b) from the original bill which provided that the salary schedule for classified positions adopted by the commission must be identical to the state salary schedule for classified positions as prescribed by the general appropriations act adopted by the most recent legislature. In proposed Subsection (e), the substitute requires the commission to submit its salary schedule to the governor, rather than to the governor for approval. Prohibits any portion of the commission's salary schedule that is objected to by the governor from going into effect until the governor receives satisfactory revisions or explanations and the governor approves that portion of the schedule. Deletes language from the original bill which prohibited a commission from implementing a salary schedule without the governor's approval. Adds new Subsection (f) stating that this section does not apply to a commission if the most populous county that is a member of the commission has an actual average weekly wage exceeding the state's actual average weekly wage by 20 percent or more for the previous year as determined by the Texas Workforce Commission in its County Employment and Wage Information Report. Makes conforming and nonsubstantive changes.