PRINTER'S NO. 1179
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1131
Session of
2021
INTRODUCED BY RYAN, KAUFFMAN, STAATS, HERSHEY, OWLETT, GROVE,
ROWE, KEEFER, B. MILLER, COX, JAMES, MOUL AND GLEIM,
APRIL 7, 2021
REFERRED TO COMMITTEE ON STATE GOVERNMENT, APRIL 7, 2021
AN ACT
Providing for duties of the Department of the Auditor General,
for initial performance audit of major State agencies, for
continuing performance audits of major State agencies, for
duties of major State agencies and for progress report by
major State agencies.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Lean State
Government Act.
Section 2. Findings and declarations.
The General Assembly finds and declares as follows:
(1) The purpose of this act is to require a major State
agency to implement a lean process improvement system to
analyze and improve the major State agency's operations.
(2) A lean process improvement system has been
successfully used by private and public entities around the
world to create efficient and goal-oriented operations.
(3) A major State agency benefits by examining the major
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State agency's operations and determining which activities
accomplish the major State agency's mission, vision and
strategic objectives.
(4) A major State agency should focus the major State
agency's operations around value-adding activities and
eliminating wasteful operations which do not add value.
(5) A critical step in a lean process improvement system
is the use of a performance audit to determine the
effectiveness of programs and operations by evaluating
specific performance measures and to determine whether the
money spent on these performance measures has resulted in
better major State agency performance.
(6) Implementing a lean process improvement system will
assist a major State agency to reduce costs and improve
operations and delivery of services.
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Certified fraud examiner." An individual who has satisfied
the requirements of the Association of Certified Fraud Examiners
to become a certified fraud examiner.
"Certified internal auditor." An individual who has
satisfied the requirements of The Institute of Internal Auditors
to become a certified internal auditor.
"Certified public accountant." As defined in the act of May
26, 1947 (P.L.318, No.140), known as the CPA Law.
"Cost-drivers." Anything that causes cost in providing a
service or producing a good. When aggregated, the marginal cost
of producing a good or service.
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"Department." The Department of the Auditor General of the
Commonwealth.
"Lean process improvement system." A management methodology
system for a major State agency that improves process speed and
quality, reduces waste and lowers cost through the use of data-
driven project or service analysis. The term includes any of the
following practices:
(1) Developing a process map that describes a widely
accepted business process improvement system by which the
major State agency engages in specific activities that
increase efficiency and reduce waste at the major State
agency.
(2) Engaging in specific activities to rapidly improve
the major State agency's processes that will increase value
or decrease staff time, inventory, defects, overproduction,
complexity, delays or excessive movement.
(3) Utilizing the major State agency's employees to map
the major State agency's processes and recommend improvements
to the processes with an emphasis on involving the major
State agency's employees who directly provide a product or
service to an end user.
(4) Providing the means to measure, through a limited
number of performance metrics based on how resources are
allocated and delivered to residents of this Commonwealth,
the major State agency's processes in order to demonstrate
the effectiveness of the processes.
(5) Training the major State agency employees to mentor
and train other major State agency employees in business
improvement process systems.
(6) Providing for public comment regarding performance
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audits and reports conducted under this act.
"Major State agency." Any office, department, authority,
board or commission of the executive branch with a budget
exceeding $100,000,000 in a fiscal year.
"Management letter." A written communication that states or
implies all of the following:
(1) Assurance as to the reliability of attested
information, compiled financial statements or assessments of
the status or performance of a major State agency.
(2) The issuer of the written communication has special
knowledge or competence in accounting or auditing arising
from any of the following:
(i) The issuer of the communication has a name or
title indicating that the issuer or any individual
employed by or affiliated with the issuer is an
accountant or auditor.
(ii) The language of the written communication.
"Performance audit." A comprehensive evaluation of a major
State agency's performance, including all of the following:
(1) The effectiveness, efficiency and economy with which
resources are managed and consumed.
(2) Findings and recommendations based on the
comprehensive evaluation which are submitted to a major State
agency in a management letter.
"Qualified performance auditor." A certified internal
auditor, certified fraud examiner or certified public accountant
who possesses a minimum of five years of experience conducting
performance or operational audits of private or public entities.
Section 4. Duties of department.
(a) General rule.--The department shall have the following
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duties:
(1) Entering into contracts with a qualified performance
auditor to conduct performance audits of major State agencies
if necessary to administer this act.
(2) Choosing a schedule of performance audits of major
State agencies so that each major State agency will be the
subject of a performance audit at least once during an
initial three-year period after the effective date of this
act.
(3) Choosing a schedule of continuing performance audits
for selected major State agencies.
(4) Recommending a set of performance measures prior to
the commencement of a performance audit.
(5) Upon receipt of a performance audit of a major State
agency under this act, posting the performance audit on the
department's publicly accessible Internet website and
providing a copy of the performance audit to all of the
following, or their authorized designee:
(i) The Governor.
(ii) The chairperson and minority chairperson of the
appropriate oversight committee of the Senate, if
applicable.
(iii) The chairperson and minority chairperson of
the appropriate oversight committee of the House of
Representatives, if applicable.
(iv) The major State agency subject to the
performance audit.
(6) Developing a lean process improvement system
training program for major State agencies.
(7) Recommending a lean process improvement system
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training schedule for major State agencies that shall recur
no less than once every three years for each major State
agency.
(b) Training.--A major State agency shall provide lean
process improvement system training for all management employees
of the major State agency prior to the implementation of the
lean process improvement system and a training program that
recurs no less than once every three years thereafter.
Section 5. Initial performance audit of major State agencies.
(a) Schedule.--All major State agencies shall be subject to
a performance audit during an initial three-year period after
the effective date of this act. The schedule of performance
audits for the initial three-year period shall be determined by
the department.
(b) Audit.--All major State agencies shall be subject to
performance audits by a qualified performance auditor. The
performance audits shall be completed no later than three years
after the effective date of this act unless a request for an
extension has been approved by the General Assembly. A
performance audit shall contain findings and recommendations
regarding the operations of the major State agency being audited
and the qualified performance auditor shall submit the findings
and recommendations to the department upon completion of the
performance audit.
(c) Submission.--Upon receipt of a performance audit under
subsection (b), the department shall provide a copy of each
performance audit to all of the following:
(1) The Governor.
(2) The General Assembly.
(3) The chairperson and minority chairperson of the
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appropriate oversight committee of the Senate, if applicable.
(4) The chairperson and minority chairperson of the
appropriate oversight committee of the House of
Representatives, if applicable.
(5) The major State agencies subject to the performance
audits.
Section 6. Continuing performance audits of major State
agencies.
(a) Schedule.--A major State agency may be subject to a
performance audit every three years after the lapse of the
initial three-year period under section 5. The schedule of
continuing performance audits shall be determined by the
department, and may be revised as the department deems
necessary. The department may consider a major State agency's
size and financial status and may choose not to schedule smaller
and financially stable major State agencies for continuing
audits.
(b) Audit.--Major State agencies specified in the schedule
shall be subject to a continuing performance audit every three
years by a qualified performance auditor. Performance audits
shall contain findings and recommendations regarding the
operations of the major State agency and the qualified
performance auditor shall submit the findings and
recommendations to the department upon completion of the
performance audit.
(c) Submission.--The department shall provide a copy of each
performance audit to all of the following:
(1) The Governor.
(2) The General Assembly.
(3) The major State agencies subject to the performance
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audits.
Section 7. Duties of major State agencies.
(a) Records.--Except as prohibited by the laws of this
Commonwealth, a major State agency shall provide the department
all the records that the department determines to be necessary
to allow the qualified performance auditor to conduct the
performance audit as required under this act.
(b) System.--Based on the findings and recommendations of a
performance audit conducted under this act, a major State agency
shall utilize a lean process improvement system as follows:
(1) Identifying and documenting all of the following:
(i) The mission and purpose of the major State
agency.
(ii) The services to be accomplished by the major
State agency.
(iii) Cost-drivers at the major State agency.
(iv) Critical success factors at the major State
agency.
(v) Measures of effectiveness at the major State
agency.
(vi) Processes utilized by the major State agency.
(2) Taking corrective steps to eliminate inefficiencies
in the major State agency's processes.
(c) Recovered money.--
(1) A major State agency shall provide notice of any
money saved as a result of the implementation of a lean
process improvement system to the Office of the Budget and
the General Assembly.
(2) Any money saved by a major State agency as a result
of the implementation of a lean process improvement system
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shall be deposited into the Budget Stabilization Reserve Fund
established in section 1701-A of the act of April 9, 1929
(P.L.343, No.176), known as The Fiscal Code.
Section 8. Progress report by major State agencies.
(a) Submission.--A major State agency shall submit a report,
which shall be a public record, one year after the major State
agency receives a performance audit under this act. If the
performance audit contains recommendations for corrective
action, a major State agency shall submit a report, which shall
be a public record, each of the next two years after submitting
the initial report. Reports required under this section shall be
submitted to all of the following:
(1) The Governor.
(2) The General Assembly.
(3) The department.
(b) Contents.--Reports required under this section shall
contain the following information:
(1) The major State agency's progress in remedying
concerns and implementing suggestions detailed in the
performance audit.
(2) The major State agency's implementation of a lean
process improvement system as specified under section 7(b).
Section 9. Effective date.
This act shall take effect in 60 days.
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