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 BUDGET purposes; allowing certain contractual encumbrances to be treated as expenditures for accounting purposes; amending section

17-1-102 17-7-102, 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].


"17-7-102.   Definitions. As used in this chapter, the following definitions apply:

(1)  "Additional services" means different services or more of the same services.

(2)  "Agency" means each state office, department, division, board, commission, council, committee, institution, university unit, or other entity or instrumentality of the executive branch, office of the judicial branch, or office of the legislative branch of state government, except for purposes of capital projects administered by the department of administration, for which institutions are treated as one department and university units as one system.

(3)  "Approved long-range building program budget amendment" means approval by the budget director of a request submitted through the architecture and engineering division of the department of administration to transfer excess funds appropriated to a capital project within an agency to increase the appropriation of another capital project within that agency or to obtain financing to expand a project with funds that were not available for consideration by the legislature.

(4)  "Approving authority" means:

(a)  the governor or the governor's designated representative for executive branch agencies;

(b)  the chief justice of the supreme court or the chief justice's designated representative for judicial branch agencies;

(c)  the speaker for the house of representatives;

(d)  the president for the senate;

(e)  appropriate legislative committees or a designated representative for legislative branch agencies; or

(f)  the board of regents of higher education or its designated representative for the university system.

(5)  "Base budget" means that level of funding authorized by the previous legislature, but excluding encumbrances under 17-1-102(5).

(6)  "Budget amendment" means a legislative appropriation to increase spending authority for the special revenue fund, proprietary funds, or unrestricted subfund, contingent on total compliance with all budget amendment procedures.

(7)  "Effectiveness measure" means a criterion for measuring the degree to which the objective sought is attained.

(8)  "Emergency" means a catastrophe, disaster, calamity, or other serious unforeseen and unanticipated circumstance that has occurred subsequent to the time that an agency's appropriation was made, that was clearly not within the contemplation of the legislature and the governor, and that affects one or more functions of a state agency and the agency's expenditure requirements for the performance of the function or functions.

(9)  "Necessary" means essential to the public welfare and of a nature that cannot wait until the next legislative session for legislative consideration.

(10) "New proposals" means requests to provide new nonmandated services, to change program services, to eliminate existing services, or to change sources of funding. For purposes of establishing the present law base, the distinction between new proposals and the adjustments to the base budget to develop the present law base is to be determined by the existence of constitutional or statutory requirements for the proposed expenditure. Any proposed increase or decrease that is not based on those requirements is considered a new proposal.

(11) "Present law base" means that additional level of funding needed under present law to maintain operations and services at the level authorized by the previous legislature, including but not limited to:

(a)  changes resulting from legally mandated workload, caseload, or enrollment increases or decreases;

(b)  changes in funding requirements resulting from constitutional or statutory schedules or formulas;

(c)  inflationary or deflationary adjustments; and

(d)  elimination of nonrecurring appropriations.

(12) "Priority listing" means a ranking of proposed expenditures in order of importance.

(13) "Program" means a combination of resources and activities designed to achieve an objective or objectives.

(14) "Program size" means the magnitude of a program, such as the size of clientele served or the volume of service in relation to the population or area.

(15) "Program size indicator" means a measure to indicate the magnitude of a program.

(16) "Requesting agency" means the agency of state government that has requested a specific budget amendment.

(17) "University system unit" means the board of regents of higher education; office of the commissioner of higher education; university of Montana, with campuses at Missoula, Butte, Dillon, and Helena; Montana state university, with campuses at Bozeman, Billings, Havre, and Great Falls; the agricultural experiment station, with central offices at Bozeman; the forest and conservation experiment station, with central offices at Missoula; the cooperative extension service, with central offices at Bozeman; the bureau of mines and geology, with central offices at Butte; the fire services training school at Great Falls; and the community colleges at Miles City, Glendive, and Kalispell."

NEW SECTION. Section 2.  Effective date. [This act] is effective on passage and approval.