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A00175
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
104
Session of
2021
INTRODUCED BY GAYDOS, OWLETT, SANKEY, THOMAS, IRVIN, GROVE,
RYAN, KAUFFMAN, SAYLOR, BERNSTINE, GLEIM, WEBSTER AND
WHEELAND, JANUARY 11, 2021
REFERRED TO COMMITTEE ON STATE GOVERNMENT, JANUARY 11, 2021
AN ACT
Amending Title 71 (State Government) of the Pennsylvania
Consolidated Statutes, providing for the assessment and
reduction of improper payments by Commonwealth agencies. and
for public information on payments and programs of
Commonwealth agencies.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 71 of the Pennsylvania Consolidated
Statutes is amended by adding a part to read:
PART II
COMMONWEALTH AGENCIES
Chapter
11. Preliminary Provisions (Reserved)
13. Assessment and Reduction of Improper Payments
CHAPTER 11
PRELIMINARY PROVISIONS
(Reserved)
CHAPTER 13
ASSESSMENT AND REDUCTION OF IMPROPER PAYMENTS
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Sec.
1301. Definitions.
1302. Assessment of improper payments.
1303. Review of programs and activities of Commonwealth
agencies.
1304. Corrective action plans.
1305. Audits of Commonwealth agencies. Public information on
payments and programs of Commonwealth agencies
§ 1301. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Commonwealth agency." Any board, commission or department
of the executive branch under the policy supervision and
jurisdiction of the Governor. The term does not include any of
the following:
(1) The Treasury Department.
(2) The Department of the Auditor General.
(3) The Office of Attorney General.
"Improper payment." A payment that should not have been made
by a Commonwealth agency or a contractor with a Commonwealth
agency under statutory, contractual, administrative or other
legal applicable requirements, including any of the following:
(1) An overpayment.
(2) An underpayment.
(3) A payment to an ineligible recipient.
(4) A payment for an ineligible service.
(5) A payment for a duplicative or redundant service.
(6) A payment for services not received.
(7) A payment for goods and services that does not
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utilize or was not given available discounts.
"Office." The Office of State Inspector General.
"Payment." A payment, including a commitment for a future
payment, that is made by a Commonwealth agency or a contractor
with a Commonwealth agency and utilizes Federal or State funds.
§ 1302. Assessment of improper payments.
(a) Assessment.--No less than once every two years, a
Commonwealth agency shall conduct an assessment of improper
payments on any program which is not required under Federal law .
A Commonwealth agency shall conduct an initial assessment of
improper payments no later than 10 120 days after the effective
date of this section.
(b) Contents.--As part of the assessment under subsection
(a), a Commonwealth agency shall:
(1) Determine whether the programs operated by the
Commonwealth agency have a low, moderate or high risk of
resulting in improper payments . based on each program's total
amount of improper payments in dollars and total improper
payments as a percentage of each program's total
expenditures.
(2) Explain the reasons why the programs operated by the
Commonwealth have been assessed as having a low, moderate or
high risk of resulting in improper payments.
(3) Make recommendations for reducing improper payments.
(3) Discover and report the root causes of improper
payments within high-risk programs.
(4) Utilize statistical sampling and extrapolation to
calculate an improper payment error rate for high-risk
programs.
(5) Adopt a corrective action plan to reduce improper
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payment error rates to no more than 3% for high-risk programs
for the next occurring biennial assessment.
(c) Copies.--A Commonwealth agency shall provide a an
electronic copy of the assessment under subsection (a) to all of
the following:
(1) The Secretary of the Budget.
(2) The office Office of the Inspector General .
(3) The Department of the Auditor General.
(4) The Independent Fiscal Office.
(5) The Legislative Budget and Finance Committee.
(6) Members of the General Assembly.
§ 1303. Review of programs and activities of Commonwealth
agencies.
(a) Review.--The office shall establish a schedule to review
at least one Commonwealth agency during each calendar year.
(b) Examination.--In reviewing a Commonwealth agency under
subsection (a), the office shall examine the Commonwealth
agency's programs and activities to determine all of the
following:
(1) The total percentage of the Commonwealth agency's
activities and programs susceptible to improper payments.
(2) The number of the Commonwealth agency's improper
payments.
(3) The total amount of Federal or State funds that were
expended through improper payments.
(c) Duties of Commonwealth agencies.--A Commonwealth agency
shall provide the office with all the information necessary to
conduct the review under subsection (a).
(d) Reports.-- The following shall apply:
(1) Upon completion of the office's review of a
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Commonwealth agency under subsection (a), the Inspector
General shall submit a report on the Commonwealth agency's
programs and activities to all of the following:
(i) The Department of the Auditor General.
(ii) The Legislative Budget and Finance Committee.
(iii) Members of the General Assembly.
(2) The Inspector General shall submit the report no
later than December 31, 2022, and each December 31
thereafter.
(3) The report shall include all of the following:
(i) An estimate of the total annual amount of
improper payments by the Commonwealth agency during the
previous two fiscal years.
(ii) The total percentage of the Commonwealth
agency's expenditures that constitute improper payments
during the previous two fiscal years.
(iii) The reasons why the Commonwealth agency made
the improper payments.
(iv) An evaluation of whether the Commonwealth
agency has the procedures and resources to prevent
improper payments.
(v) Whether the Commonwealth agency has taken steps
to address improper payments.
(vi) The actions necessary for the Commonwealth
agency to reduce improper payments as a percentage of the
Commonwealth agency's total expenditures to no more than
3% within the next five fiscal years.
§ 1304. Corrective action plans.
After the office submits a report on a Commonwealth agency
under section 1303(d)(1) (relating to r eview of programs and
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activities of Commonwealth agencies), the Commonwealth agency
shall adopt a corrective action plan to reduce the rate of
improper payments to no more than 3% as specified under section
1303(d)(3)(vi).
§ 1305. Audits of Commonwealth agencies.
(a) Initial audits.--The Legislative Budget and Finance
Committee shall perform an audit on a Commonwealth agency no
later than five years after the office has completed its review
of the Commonwealth agency under section 1303(a) (relating to
review of programs and activities of Commonwealth agencies) to
determine whether the Commonwealth agency has reduced its rate
of improper payments by at least 50% since the initial review by
the office under section 1303(a).
(b) Initial notice.--After the Legislative Budget and
Finance Committee performs an audit under subsection (a), if the
Legislative Budget and Finance Committee finds that the
Commonwealth agency's rate of improper payments has not been
reduced by at least 50% since the initial review by the office
under section 1303(a) , the Executive Director of the Legislative
Budget and Finance Committee shall provide notice to all of the
following:
(1) The Governor.
(2) The office.
(3) The members of the General Assembly.
(c) Transfers.--Upon receiving the notice under subsection
(b), the Governor shall transfer, the lesser of the following
from the funds appropriated to the Commonwealth agency for
general government operations into budgetary reserve:
(1) An amount equal to the total improper payments by
the Commonwealth agency.
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(2) An amount equal to the percentage of the
Commonwealth agency's expenditures that exceed the improper
payment rate established in the corrective action plan under
section 1304.
(d) Additional audits.--No later than s ix months after the
Governor transfers funds into budgetary reserve under subsection
(c), the Legislative Budget and Finance Committee shall perform
another audit of the Commonwealth agency to determine whether
the Commonwealth agency's rate of improper payments has been
reduced by at least 50% since the initial review by the office
under section 1303(a).
(e) Additional notice.--After the Legislative Budget and
Finance Committee performs an audit under subsection (d), if the
Legislative Budget and Finance Committee finds that the
Commonwealth agency's rate of improper payments has been reduced
by at least 50% since the initial review by the office under
section 1303(a) , the Executive Director of the Legislative
Budget and Finance Committee shall provide notice to all of the
following:
(1) The Governor.
(2) The office.
(3) The members of the General Assembly.
(f) Transfers prohibited.--Upon receiving the notice under
subsection (e), if the Governor has already transferred funds
from the Commonwealth agency's general government operations
into budgetary reserves, the Governor shall transfer the funds
out of budgetary reserves to the Commonwealth agency for general
government operations.
§ 1303. Public information on payments and programs of
Commonwealth agencies.
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The Office of the Budget shall maintain a publicly accessible
Internet website and update the website to inform the public of,
at a minimum, all of the following information:
(1) Each Commonwealth agency's biennial improper payment
assessments.
(2) Each Commonwealth agency's total improper payments
in dollar value and total improper payment error rate.
(3) Each Commonwealth agency's high-risk program, the
dollar value of improper payments for each high-risk program
and the improper payment error rate percentage for each high-
priority program.
(4) Each Commonwealth agency's high-risk program
corrective action plan and a summary status of completing the
corrective action plan.
(5) The recovery of improper payments for each program
in total dollars and by percentage.
Section 2. This act shall take effect in 60 120 days.
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