Bill Text: HI SB2616 | 2012 | Regular Session | Introduced

Hawaii Senate Bill 2616 (Prior Session Legislation)

Introduced

Bill Title: Truth in Accounting; Reporting; Budget

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2012-01-23 - (S) Referred to WAM. [SB2616 Detail]

Download: Hawaii-2012-SB2616-Introduced.html

THE SENATE	S.B. NO.	2616
TWENTY-SIXTH LEGISLATURE, 2012
STATE OF HAWAII

A BILL FOR AN ACT

relating to state finances.

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

SECTION 1. Chapter 37, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part . report on state financial condition

§37- - Short title. This part may be cited as "The Truth in Accounting Act."

§37- - Findings and purpose. The legislature finds that it is necessary to address existing shortfalls of the State budgeting process. The legislature recognizes that it is prudent to create a State budget process that requires the State government, which derives its powers from the consent of the governed, to fulfill its special responsibility to directly report on the actions that it takes and the results of those actions.

The legislature finds that the State budget process should establish a duty upon the State to report the best estimate of its own financial condition and provide financial transparency. Furthermore, presenting a comprehensive indication of the total activity of State and the long-term effects of current policy will greatly benefit the State. The long-term financial implications of the budgetary process must be shared with the public and full costing information must be provided in order to determine accountability and performance measurements.

The legislature finds that the governor�s and the legislature�s ability to determine compliance with the intent of the State�s balanced budget requirement, which is to preserve intergenerational equity promulgated by the Governmental Accounting Standards Board, must be strengthened. The budget process must transparently report the budget�s imposition of undue burdens for past and current year services upon future taxpayers, including State residents who, at the time a budget is enacted into law, are too young to vote. The public must be

able to determine if future budgetary resources will likely be sufficient to sustain public services and to meet obligations as they come due.

The purpose of this Act is to provide for truth in State accounting practices so as to increase governmental transparency and public awareness of the financial condition of the State.

§37- - Definitions. As used in this part:

�Amounts Due Pension Funds� means the Unfunded Actuarial Accrued Liability for the State Pension Plans, including the portion of Multiple-employer plans attributed to the State.

�All applicable revenues sources� means the following source revenues:

(a) Personal Income Tax;

(b) Corporate Income Tax;

(d) General Excise Tax retained by the state;

(e) Use Tax;

(f) User Fees;

(g) Fines and Penalties;

(h) Investment Income;

(i) Unencumbered funds provided by other governmental units; or

(j) Any other revenue source for which the state has no ongoing or unfulfilled obligation to any other party.

�Assets Restricted By Law or Contract� means restricted assets as defined by Governmental Accounting Standards Board concepts outlined in Governmental Accounting Standards Board Statement 34.

�Benefit Enhancements� means the Actuarial Present Value of Total Projected Benefits attributed to the estimated increase in the benefits of retirees or beneficiaries granted by the proposed budget or, proposed or enacted changes to the State Pension Law. The benefit enhancements that result from plan members� expected future service amount may be reduced by the amount of specified revenue sources enacted into law.

�Budget fiscal documents� means the estimated Balance Sheet, the estimated State of Activities, the estimated State of Cash Flow, the Statement of Fiscal Balance, the Statement of Fiscal Deficit and the Financial State of the State

�Comprehensive Annual Financial Report Preparer� shall be defined as the State official responsible for preparing the State�s Comprehensive Annual Financial Report.

�Capital Assets� shall be defined using Governmental Accounting Standards Board concepts outlined in Governmental Accounting Standards Board Statement 34.

"Net of Related Debt� shall be defined using Governmental Accounting Standards Board concepts outlined in Governmental Accounting Standards Board Statement 34.

�Fiduciary funds� shall be defined using Governmental Accounting Standards Board concepts outlined in Governmental Accounting Standards Board Statement 34.

�Commission� shall be defined as the agency responsible for preparing budget estimates.

�Estimated Statement of Activities� shall be an estimated Statement of Activities prepared using the Governmental Accounting Standards Board concepts outlined in Governmental Accounting Standards Board 34.

�Estimated Balance Sheet� shall be an estimated Statement of Net Assets prepared using the Governmental Accounting Standards Board concepts outlined in Governmental Accounting Standards Board 34.

�Estimated Statement of Cash Flow� shall be an estimated Statement of Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to Statement of Activities prepared using the Governmental Accounting Standards Board concepts outlined in Governmental Accounting Standards Board 34.

�Estimated Retirement Plans� Assets Gain or Loss� is defined as the change in the Actuarial Value of Assets at the beginning of the budget period and the Actuarial Value of Assets at the end of the budget period.

�Fiscal Budget Documents� shall be the estimated Balance Sheet, the estimated Statement of Activities, the estimated Statement of Cash Flow, the estimated Statement of Fiscal Balance, the estimated Statement of Fiscal Deficit and the estimated Financial State of the State.

�Government-Wide Generally Accepted Accounting Principles" or "State Wide Generally Accepted Accounting Principles � shall be the accounting standards used in the preparation of the State�s government-wide financial statements, using Governmental Accounting Standards Board concepts outlined in the Governmental Accounting Standards Board Statement 34. While the Governmental Accounting Standards Board does not prescribe standards for preparing governmental budgets, the accounting standards� concepts shall be applied to the budget documents prepared under this section.

�Increase in Pension Benefits Due� or "Decrease in Pension Benefits Due" shall be the change in the State�s pension plans� estimated Actuarial Accrued Liability at the beginning of the budget period and the sum of each pension plan�s estimated Actuarial Accrued Liability at the end of the budget period.

"Increase in Other Post-Employment Benefits Due� or "Decrease in Other Post-Employment Benefits Due" means the change in the State�s Other Post-Employment Benefits plans� estimated Actuarial Accrued Liability at the beginning of the budget period and the State�s Other Post-Employment Benefits plans� estimated Actuarial Accrued Liability at the end of the budget period.

�Net Pension Obligation�, �Net Other Post Employment Obligation�, �Actuarial Value of Assets�, �Actuarial Accrued Liability� and �Unfunded Actuarial Accrued Liability� �Actuarial Present Value of Total Projected Benefits� shall be defined using Governmental Accounting Standards Board concepts outlined in Governmental Accounting Standards Board Statement 45, Governmental Accounting Standards Board Statement 25 and Governmental Accounting Standards Board Statement 27, as amended by Governmental Accounting Standards Board 50.

�Off Balance Sheet Pension Liabilities� shall be the difference between the State pension plans� estimated unfunded actuarial accrued liability and the estimated Net Pension Obligation included in the estimated Balance Sheet.

�Off Balance Sheet Other Post Employment Benefit Liabilities� shall be the difference between the State Other Post-Employment Benefits plans� estimated unfunded actuarial accrued liability and the estimated Net Other Post Employment Benefit Obligation included in the estimated Balance Sheet.

�Other Post Employment Benefit� shall be defined as other post-employment benefits, which include retirement benefits except those considered as pension plans.

�Other Funds Available� shall be defined as:

(a) Funds which result from the actions of another entity or government;

(b) Funds received that are held in trust or have a fiduciary element;

(d) Pension contributions made by state employees not used to pay pensions or used to purchase assets for the state�s pension funds;

(e) That portion of sales tax collections which retailers pay to the state but which will be remitted to home rule and local governments;

(f) Court-ordered collections of child support;

(g) Inter-period borrowings;

(h) Prepaid tuition plans; or

(i) And any other source of funds for which the state has an unfulfilled or ongoing obligation.

�Reporting Offices� shall be defined as the offices of the Auditor General, the Governor, the Speaker and Minority Leader of the House of Representatives, and the President and Minority Leader of the Senate.

"Retirees� Health Care Benefits Due� shall be defined as the Unfunded Actuarial Accrued Liability for the State Other Post Employment Benefit Plans, including the portion of Multiple-employer plans attributed to the State.

�State Pension Plans� are the State�s Single-Employer pension plans and the portion of Agent Multiple-Employer pension plans attributed to the State.

�State Other Post Employment Benefit Plans� are the State�s Single-Employer Other Post Employment Benefit plans and the portion of Agent Multiple-Employer Other Post Employment Benefit plans attributed to the State.

§37- - Financial Reports Preparation; Timing of Reporting. (a) Within forty five days of each fiscal year end, State agencies shall report to the Comprehensive Annual Financial Report preparer all fiscal information necessary to prepare a comprehensive annual financial report for the prior fiscal year end. The Comprehensive Annual Financial Report preparer may require certain State agencies to report the information prior to the forty five day period under a schedule established by the Comprehensive Annual Financial Report preparer. Whenever the Comprehensive Annual Financial Report preparer determines that a State agency is delinquent in reporting the information, the Comprehensive Annual Financial Report preparer shall notify in writing the reporting offices of the delinquency and post notice of the delay on the Comprehensive Annual Financial Report preparer�s official website.

(b) The Comprehensive Annual Financial Report Preparer shall publish the Comprehensive Annual Financial Report no more than ninety days after the end of each State fiscal year. If the report is not published within that period, the Comprehensive Annual Financial Report prepare must promptly give notice of the delay to the reporting offices and post notice of the delay on the Comprehensive Annual Financial Report preparer�s official website.

§37- - Use of Generally Accepted Accounting Principles. (a) The financial accounting and reporting standards to be used by all State government and statement agencies shall be in compliance with accounting standards as prescribed by the Governmental Accounting Standards Board.

(b) The Comprehensive Annual Financial Report shall be prepared in accordance with the Generally Accepted Accounting Principles. The Report shall include explanations of any variance that exists between the estimates adopted by the legislature for each year, and the actual numbers reported. The Comprehensive Annual Financial Report Preparer shall, by administrative rule, determine a time line and protocol for the publication of this Report within ninety days of the fiscal year end.

§37- - Appropriations Bills Transparency. The legislature shall publish, by means of the Internet on a web page controlled by the legislature, the text of all appropriations bills. Each publication shall include embedded time reading until at least seventy two hours after the time of electronic publication. No amendment to an appropriation bill shall be considered on second reading until at least seventy two hours after the amendment has been published electronically.

§37- - Balanced Budget Calculation; Revenues. (a) The Commission shall publish, at the convening of each regular session of the legislature, a report that clearly separates and distinguishes All Applicable Revenues and Other Funds Available.

(b) The Commission shall prepare a calculation to determine if the proposed budget meets the State constitution balance budget requirement. All Applicable Revenues shall be included as available resources for the purpose of calculating the constitution�s balance budget requirement. Other Funds Available shall not be included as available resources in the budget estimate.

§37- - Preparation of Fiscal Budget Statements. (a) As soon as possible after the proposed budget is introduced, but at least seventy two hours before the final vote on the budget, the Commission shall include an estimated Balance Sheet, an estimated Statement of Activities and estimated Statement of Cash Flow.

(b) The Commission shall also prepare:

(1) The Statement of Fiscal Balance which shall include the columns used in the estimated Balance Sheet, the Total Net Assets, as determined in the estimated Balance Sheet, the Off-Balance Sheet Pension Liability, the Off Balance Sheet Other Post Employment Benefit liability, and the resulting Fiscal Balance;

(2) The Statement of Fiscal Deficit which shall include the columns used in the estimated Statement of Activities, the change in net assets, as determined in the estimated Statement of Activities, Benefit Enhancements, Retirement Plans� Assets Gain or Loss, Increase or Decrease in Pension Benefits Due, Increase or Decrease in Other Post Employment Benefits Due, and the resulting Fiscal Deficit; and

(3) The Financial State of the State which shall include amounts reported on the State�s Comprehensive Annual Financial Report for the State�s fiscal year two years prior to the current budget year, the estimated values from last period�s budget, the estimated values from the current budget period, amounts for what is State owned in terms of capital assets, other assets derived from the Total Assets reported on the Statement of Net Assets/Balance Sheet minus Capital Assets, what the State owes in the amount of State bonds, including, but not limited to, General Obligation Bonds and Special Revenue Bonds, amounts due pension funds, Retirees' Health Care Benefits Due, and other liabilities derived by subtracting the State bonds, the Net Pension Obligation and the Net Other Post Employment Benefit Obligation from the Total Liabilities reported on the Statement of Net Assets/Balance Sheet, and an estimate of funds needed to pay State obligations calculated by subtracting capital assets and assets restricted by law or contract from net assets per family, which is derived by dividing the Government�s Financial Position by the State population estimate as determined by the U.S. Census Bureau and then dividing by national average size of a family as determined by the U.S. Census Bureau.

§37- - Midterm reporting. The March estimates shall include a variance report of the ongoing fiscal year�s budget and appropriations.

§37- - Preparation of fiscal budget documents using State Wide-Generally Accepted Accounting Principles. The Commission shall publish the fiscal budget statements outlined in this Act in concert with State Wide-Generally Accepted Accounting Principles. The fiscal budget statements should display information about the State as a whole. The fiscal budget statements should include the primary State and its component units, expect for the fiduciary funds of the primary State and component units that are fiduciary in nature. The fiscal budget statements should be prepared using the economic resources measurement focus and the accrual basis of accounting. The fiscal budget statements should not be presented using the current financial resources measurement focus and the modified accrual basis of accounting, which are used to prepare the State�s governmental funds financial statements. The Commission shall work with each of the State�s pension and Other Post Employment Benefit plans� actuaries to determine the pension and Other Post Employment Benefit amounts needed to prepare the fiscal budget statements.

§37- - Adopting fiscal budget documents. The legislature shall not enact any bill to appropriate funds within any fiscal year prior to their adoption of the joint resolution accepting the amounts reported on the fiscal budget documents."

SECTION 2. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

Report Title:

Truth in Accounting; Reporting; Budget

Description:

The purpose of this Act is to develop a truth in accounting process for preparation and reporting of the State budget, which requires that the State government fulfill its responsibility to the public to transparently and timely report upon the actual financial status of the State.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.