House Bill No. 21

Introduced By cobb

A Bill for an Act entitled: "An Act removing the requirement that most state agency encumbrances be treated as expenditures for accounting purposes; allowing certain contractual encumbrances to be treated as expenditures for accounting purposes; amending section

17-1-102, MCA; and providing an immediate effective date and an applicability date."

Be it enacted by the Legislature of the State of Montana:

Section 1.  Section 17-1-102, MCA, is amended to read:

"17-1-102.   Uniform accounting system and expenditure control. (1) The department shall establish a system of financial control so that the functioning of the various agencies of the state state agencies may be improved, duplications duplication of work by different state agencies and employees may be eliminated, public service may be improved, and the cost of government may be reduced.

(2)  The department shall prescribe and install uniform accounting and reporting for all state agencies and institutions, showing the receipt, use, and disposition of all public money and property in accordance with generally accepted accounting principles,. and The department shall develop plans for improvements and economies in the organization and operation of state agencies and institutions, which must be submitted to the respective heads of state agencies and institutions. Copies of all plans must be delivered to the governor, and additional copies must be retained in the office of the department for inspection by the members of the legislature.

(3)  The uniform accounting and reporting system must contain three levels of expenditure. The first level must include general categories, such as personal services, operating expenses, equipment, capital outlay, local assistance, grants, benefits and claims, transfers, and debt service. The second level of expenditure must include specific categories of expenditures within each first-level category. The third level of expenditure must include specific items of expenditure within each category of the second level.

(4)  The department shall examine all financial affairs of each state agency and institution for the purpose of developing plans for improvements and economies in the organization and operation of the state agencies and institutions and for the purpose of enabling the department to properly perform any of the duties imposed upon the department by this part.

(5) (a)  All Except as provided in subsection (5)(b), all state agencies, including units of the university system but excluding community colleges, shall input all necessary transactions to the accounting system prescribed in subsection (2) before the accounts are closed at the end of the fiscal year in order to present the receipt, use, and disposition of all money and property for which the state agency is accountable in accordance with generally accepted accounting principles, except that for budgetary control purposes, encumbrances that are required by generally accepted accounting principles to be reported as a reservation of fund balance must be recorded as expenditures and liabilities on the accounting records.

(b) Encumbrances for highway construction contracts and encumbrances for other contracts that are subjected to the condition contained in this subsection (5)(b) in a general appropriation act, as provided in 17-8-103, must be recorded as expenditures and liabilities in the accounting records."

NEW SECTION. Section 2.  Applicability. [Section 1] applies to contracts entered into or renewed on or after [the effective date of this act].

NEW SECTION. Section 3.  Effective date. [This act] is effective on passage and approval.

-END-