2001 Montana Legislature

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HOUSE BILL NO. 73

INTRODUCED BY R. BROWN

Montana State Seal

AN ACT REQUIRING CERTAIN DIVISIONS, BUREAUS, UNITS, AND PROGRAMS TO DEVELOP AND IMPLEMENT A FULL COST ACCOUNTING PILOT PROGRAM; AMENDING SECTION 5-5-223, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND A TERMINATION DATE.



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



     Section 1.  Short title. [Sections 1 through 5] may be cited as the "Full Cost Accounting Act".



     Section 2.  Legislative findings and declarations. (1) The legislature finds that acknowledging the complete costs of agency programs and services enables policymakers to develop more informed decisions, identify opportunities for streamlining programs and services, facilitate cost-saving efforts, and better plan for the future.

     (2) The legislature further finds that applying a full cost accounting model may result in the following benefits:

     (a) agency rates and fees for goods and services that are set correctly and fairly;

     (b) agency budget requests that are more clear and defensible; and

     (c) programs or services that may be operated more effectively or offered for less cost.

     (3) The legislature further finds that full cost accounting serves different goals and audiences than traditional government accounting reports.

     (4) Therefore, the legislature declares that there is a compelling public need to adopt a full cost accounting model to isolate state agency program costs.



     Section 3.  Policy and purpose. The purpose of [sections 1 through 5] is to provide the legislature, the executive branch, and the public with a detailed description of individual program costs to:

     (1) identify cost-effective methods of providing goods and services;

     (2) assist the legislature in making decisions regarding the appropriation of public revenue; and

     (3) establish rates and fees that reflect the true cost of providing goods and services.



     Section 4.  Definitions. As used in [sections 1 through 5], the following definitions apply:

     (1) "Committee" means the business and labor interim committee provided for in 5-5-223.

     (2) "Direct costs" means costs that are clearly and exclusively associated with an agency program or service.

     (3) "Executive branch" means the executive branch of state government referred to in Article III, section 1, and Article VI of the Montana constitution.

     (4) "Executive oversight" means the salary and expenses of an agency director, deputy director, or advisory board or commission.

     (5) "Full cost accounting" means a systematic approach for identifying, aggregating, and reporting the actual costs of agency programs or services by accounting for all monetary resources used or committed by agency programs or services.

     (6) "Indirect costs" means costs that are not exclusively related to an agency program or service and that benefit at least one other agency program or service. For the purposes of [section 5], indirect costs include but are not limited to the following services:

     (a) accounting and payroll;

     (b) human resource;

     (c) legal;

     (d) purchasing and procurement;

     (e) data processing;

     (f) records management; and

     (g) executive oversight.

     (7) "Program" means any legislatively or administratively created function, project, or duty of an agency.



     Section 5.  Full cost accounting pilot program -- duties of divisions, bureaus, units, and programs -- cost factors -- reporting requirements. (1) Beginning July 1, 2001, each division, bureau, unit, or program listed in subsection (2) shall establish a full cost accounting model to determine the total cost of providing services in-house, using the cost factors provided for in subsection (3).

     (2) The following divisions, bureaus, units, or programs shall establish a full cost accounting model:

     (a) central stores program within the department of administration;

     (b) marketing unit of the travel promotion and development division within the department of commerce;

     (c) nursery program of the forestry division within the department of natural resources and conservation;

     (d) plan and specification review program of the public water supply section within the department of environmental quality;

     (e) chemical dependency bureau within the department of public health and human services;

     (f) motor pool unit within the department of transportation;

     (g) state hail program and state grain laboratory bureau within the department of agriculture; and

     (h) capitol grounds maintenance program within the department of fish, wildlife, and parks.

     (3) The full cost accounting model must contain the following cost factors:

     (a) direct costs, including but not limited to:

     (i) employee wages, benefits, and pensions;

     (ii) supplies and materials;

     (iii) travel;

     (iv) printing;

     (v) rent;

     (vi) utilities;

     (vii) interest on capital items;

     (viii) facility and equipment costs;

     (ix) communications; and

     (x) other costs expended for the exclusive benefit of the program; and

     (b) indirect costs.

     (4) Each division, bureau, unit, or program shall prepare and deliver a final report of its findings to the committee, the legislative finance committee, and the legislative auditor no later than September 1, 2002. Each report must contain:

     (a) the true cost of providing a service or program;

     (b) issues associated with implementing and administering a full cost accounting model;

     (c) recommendations for changing the full cost accounting model to ensure the effective collection and use of information; and

     (d)  any recommendation to privatize functions within the departments, which must be submitted for review according to the provisions of Title 2, chapter 8, part 3.



     Section 6.  Section 5-5-223, MCA, is amended to read:

     "5-5-223.  Business and labor interim committee. (1) The business and labor interim committee has administrative rule review, program evaluation, and monitoring functions for the following executive branch agencies and the entities attached to agencies for administrative purposes:

     (1)(a)  department of agriculture;

     (2)(b)  department of commerce;

     (3)(c)  department of labor and industry;

     (4)(d)  department of livestock;

     (5)(e)  department of public service regulation; and

     (6)(f)  office of the state auditor and insurance commissioner.

     (2) The committee shall review the implementation and administration of the full cost accounting pilot program and make recommendations for implementing a full cost accounting model for all state agencies."



     Section 7.  Saving clause. [This act] does not affect rights and duties that matured, penalties that were incurred, or proceedings that were begun before [the effective date of this act].



     Section 8.  Severability. If a part of [this act] is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.



     Section 9.  Effective date. [This act] is effective on passage and approval.



     Section 10.  Termination. [This act] terminates December 31, 2002.

- END -




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