05/06/2003 08:45 AM House FIN

HOUSE BILL NO. 243                                                                                                            
                                                                                                                                
     "An Act  establishing state  agency program  performance                                                                   
     management  and  audit  powers  in  the  Office  of  the                                                                   
     Governor  for the  evaluation  of  agency programs;  and                                                                   
     providing for an effective date."                                                                                          
                                                                                                                                
JAY HOGAN, DEPUTY  DIRECTOR, OFFICE OF MANAGEMENT  AND BUDGET                                                                   
(OMB) provided information regarding  the bill.  He explained                                                                   
that the  bill would  formally reinstate  the internal  audit                                                                   
function  within  OMB.  The  bill  does  three  things:    1)                                                                   
establishes the  ability of OMB to do  performance budgeting,                                                                   
measurement  and   evaluation,  2)  allows  OMB   to  conduct                                                                   
internal audits in the executive  branch, and 3) rewrites the                                                                   
language  in  statute  to  ensure   confidentiality  of  work                                                                   
papers.   He stated that the funding  of the bill is included                                                                   
in the  Governor's [FY  04] budget, part  of which  was moved                                                                   
from  functions that  were  transferred  from the  Governor's                                                                   
office.   The  additional  cost  to the  OMB  budget is  $325                                                                   
thousand,  to  cover  the movement  of  three  positions  and                                                                   
related costs.                                                                                                                  
                                                                                                                                
Representative  Foster   asked  whether  or  not   OMB  still                                                                   
performed a  management function.   Mr. Hogan  discussed that                                                                   
when OMB was originally established  it consisted of internal                                                                   
audit,  management,  planning and  governmental  coordination                                                                   
functions.  He noted that currently  it was focused on budget                                                                   
and governmental  coordination, and  that the internal  audit                                                                   
function had dissipated.                                                                                                        
                                                                                                                                
Representative  Croft referred to  Section 3, and  asked when                                                                   
if  ever the  internal audits  were released  to the  public.                                                                   
Mr.  Hogan stated  that the  confidentiality  related to  the                                                                   
background work for the audits.   He discussed the history of                                                                   
audit functions  related to background materials,  and stated                                                                   
that traditionally  these work  papers remained  confidential                                                                   
indefinitely.                                                                                                                   
                                                                                                                                
Representative  Croft observed  that while  the reports  were                                                                   
public, the work papers remained  confidential.  He asked how                                                                   
this was  impacted by the  statement "kept confidential  only                                                                   
to  the extent  required by  law applicable  to the  agency".                                                                   
Mr. Hogan  stated  that the last  sentence  was added by  the                                                                   
House   State    Affairs   Committee   to   focus    on   the                                                                   
confidentiality  laws that preceded  the bill.   He  gave the                                                                   
example  that if state  employee records  had been  examined,                                                                   
any  related  findings  would remain  confidential  based  on                                                                   
state  law.   He speculated  that State  Affairs intended  to                                                                   
restrict the authority.                                                                                                         
                                                                                                                                
Representative  Croft referred  to  Section 44.19,  "internal                                                                   
audit work papers confidential  until released"; "can only be                                                                   
confidential  to the  extent required  by law".   He  claimed                                                                   
that  these statements  were not  complimentary.   Mr.  Hogan                                                                   
maintained  that the governor's  bill  did not contain  those                                                                   
two  sentences.    Representative  Croft  conceded  that  the                                                                   
second sentence provided for some public disclosure.                                                                            
                                                                                                                                
Representative Foster MOVED to  report HB243 out of Committee                                                                   
with individual  recommendations and the  accompanying fiscal                                                                   
note.  There being NO OBJECTIONS it was so ordered.                                                                             
                                                                                                                                
CS  HB243  (STA)  was REPORTED  out  of  Committee  with  "no                                                                   
recommendation" and  one new zero fiscal note  from Office of                                                                   
the Governor.