2013 -- S 0609

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LC01737

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- STATE PURCHASES

     Introduced By: Senators Sheehan, Ciccone, DiPalma, Sosnowski, and Lynch

     Date Introduced: March 06, 2013

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 42 of the General Laws entitled "State Affairs and Government" is

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hereby amended by adding thereto the following chapter:

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     CHAPTER 155

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QUASI-PUBLIC CORPORATIONS

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ACCOUNTABILITY AND TRANSPARENCY ACT

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     42-155-1. Title. – This chapter shall be known and may be cited as the "Quasi-Public

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Corporations Accountability and Transparency Act."

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     42-155-2. Legislative findings. – It is hereby found that:

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     (1) Quasi-public corporations are established and empowered by state law, and would not

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exist but for their relationship with the state.

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     (2) Quasi-public corporations perform essential government functions and/or provide

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essential government services.

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     (3) Many quasi-public corporations are granted the public power to collect fees and/or

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generate other revenue and incur debt.

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     (4) Quasi-public corporations manage significant public resources; however, the majority

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are exempt from many kinds of public oversight, such as executive and legislative budgetary

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review required of state agencies and departments.

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     (5) It is essential that quasi-public corporations provide more, not less transparency by

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making their decisions and budgets especially transparent and open to public scrutiny, and by

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demonstrating a commitment to protecting the interests of Rhode Island taxpayers by achieving

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the highest standards of transparent, effective and ethical operation.

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     (6) Quasi-public corporations are governed by independent boards that serve a critical

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oversight function, and there exists a need to strengthen the ability of board members to carry out

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this oversight role.

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     (7) Rhode Island citizens rely on their government to provide oversight of quasi-public

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corporations, with a goal of ensuring that these state entities carry out their government missions

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effectively, and exemplify a commitment to transparent, accountable and effective government.

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     42-155-3. Definitions. – As used in this chapter: (a) "quasi-public corporation" means

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any body corporate and politic created or to be created pursuant to the general laws, including,

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without limitation, the following:

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     (1) Capital center commission;

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     (2) Rhode Island convention center authority;

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     (3) Rhode Island economic development corporation and any subsidiaries thereof,

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including, but not limited to:

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     (i) Rhode Island industrial facilities corporation;

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     (ii) Rhode Island industrial-recreational building authority;

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     (iii) Rhode Island small business loan fund corporation;

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     (iv) Quonset point development corporation;

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     (v) Rhode Island airport corporation; and

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     (vi) I-195 redevelopment district commission;

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     (4) Rhode Island health and educational building corporation;

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     (5) Rhode Island housing and mortgage finance corporation;

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     (6) Rhode Island higher education assistance authority;

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     (7) Rhode Island student loan authority;

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     (8) Narragansett bay commission;

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     (9) Rhode Island clean water finance agency;

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     (10) Rhode Island water resources board;

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     (11) Rhode Island resource recovery corporation;

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     (12) Rhode Island public rail corporation;

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     (13) Rhode Island public transit authority;

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     (14) Rhode Island turnpike and bridge authority; and

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     (15) Rhode Island tobacco settlement financing corporation.

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     (b) Cities, towns, and any corporation created by a city or town pursuant to ordinance,

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and fire and water districts are not subject to the provisions of this chapter.

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     42-155-4. Role and responsibilities of board members. – (a) Board members of quasi-

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public corporations shall:

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     (1) Execute direct oversight of the corporation and the chief executive and other

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management in the effective and ethical management of the corporation;

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     (2) Understand, review and monitor the implementation of fundamental financial and

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management controls and operational decisions of the corporation;

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     (3) Adopt a code of ethics applicable to each officer, director and employee of the

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corporation that, at a minimum, includes the standards established in chapter 14 of title 36 ("Code

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of Ethics");

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     (4) Adopt a mission statement expressing the purpose and goals of the corporation, a

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description of the stakeholders of the corporation and their reasonable expectations from the

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corporation and a list of measurements by which performance of the corporation and the

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achievement of its goals may be evaluated. Each corporation shall reexamine its mission

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statement at least once every three (3) years and publish a self-evaluation based on the stated

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measurements;

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     (5) Adopt an indemnification policy which shall be set forth in the by-laws of the

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corporation; and

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     (6) Perform each of their duties as a board members, including, but not limited to, those

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imposed by this section, in good faith and with that degree of diligence, care and skill which an

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ordinarily prudent person in like position would use under similar circumstances, and may take

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into consideration the views and policies of any elected official or body, or other person and

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ultimately apply independent judgment in the best interest of the quasi-public corporation, its

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mission and the public.

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      (b) Board members of quasi-public corporations shall establish and maintain written

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policies and procedures for the following:

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     (1) Internal accounting and administrative controls in accordance with the provisions of

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chapter 35-20, the ("Public Corporation Financial Integrity and Accountability Act");

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      (2) Travel, including lodging, meals and incidental expenses, requiring that each request

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for payment or reimbursement shall be supported by detailed documentation and an explanation

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of business purpose, that no reimbursement shall exceed the allowable state employee

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reimbursement amount per day, and that a board member shall be assigned to review and approve

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all out-of state travel expenses and requests for reimbursement prior to payment;

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     (3) Grants, charitable and civic donations and/or contributions, provided however that all

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such grants, donations or contributions shall be voted by the full board during an open meeting

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and the vote shall be recorded in the minutes of the meeting, together with:

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     (i) The citation to the specific state statute authorizing the action;

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     (ii) An explanation of how the grant, donation or contribution relates to the quasi-public

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corporation’s mission;

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     (iii) The identity of each board member or employee of the quasi-public corporation that

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will receive any benefit from the grant, donation or contribution including without limitation

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tickets to events, meals, and golfing;

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     (iv) Any disclosure required by chapter 36-14 ("Code of Ethics"); and

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     (v) Each such grant, donation or contribution shall be clearly identified in the financial

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statements of the quasi-public corporation.

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     (4) Credit card use, including that each credit card charge shall be supported by a detailed

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receipt and explanation of business purpose; provided, however that pursuant to 35-20-10, no

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credit card shall be used for personal use; and that a board member shall be assigned to review

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and approve all credit card statements prior to payment; the board shall also consider the use of

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purchase cards which allow the board to restrict the types and dollar amounts of purchases that

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can be made on the card as an alternative to credit card use;

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     (5) Employee reimbursement, including requests by management for business expenses,

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and expenses classified as gifts or entertainment; provided, however, that each request for

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reimbursement shall be supported by a detailed receipt and explanation of business purpose, that

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a board member shall be assigned to review and approve all requests for reimbursement prior to

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payment;

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     (6) Personnel, including hiring, dismissing, promoting and compensating employees of

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the quasi-public corporation; a requirement of board approval in an open meeting before a

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position may be created or a vacancy filled; and policies protecting employees from retaliation for

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disclosing information concerning acts of wrongdoing, misconduct, malfeasance, or other

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inappropriate behavior by an employee or board member of the quasi-public corporation;

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     (7) Marketing expenses, including that each marketing expense shall be supported by a

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detailed receipt and explanation of business purposes and provided further that each marketing

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expense shall be coded to a specific marketing goal to ensure that board members are informed of

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the expenses involved in a specific marketing promotion; and

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     (8) Lobbyists’ expenses, including each request for reimbursement by a lobbyist which

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shall be supported by a detailed receipt and explanation of business purpose, and a board member

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shall be assigned to review and approve all requests for reimbursement prior to payment;

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      (c) The written policies and procedures required by this section shall be approved by the

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board during an open meeting and the vote shall be recorded in the minutes of the meeting.

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     (d) A board member shall serve no more than two (2) terms. Any board member as of

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July 1, 2013, who is serving beyond two (2) terms shall serve the remaining term of his or her

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current appointment, and shall not be eligible to serve any additional terms. The limitations of

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this provision shall not apply to exofficio members.

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     (e) Any board member who fails to attend more than fifty percent (50%) of all meetings

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held during any calendar year shall be deemed to have resigned, unless the board member

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requests in writing to the chairperson to serve the remaining term of his or her appointment,

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setting forth the reason or reasons for the absences, and the majority of the board members

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approve the request.

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     (f) No board member shall serve in a paid or voluntary capacity as an officer, employee

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or consultant of the corporation.

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     42-155-5. Executive compensation. – (a) Each quasi-public corporation shall establish a

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committee on executive compensation which shall meet independently of management and which

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shall:

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     (1) Recommend to the full board the compensation packages of the executive and senior

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management of the corporation. The compensation package of the executive officer shall be

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based on a comprehensive and objective analysis of comparable compensation of similar officers

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of state government, other authorities, quasi-public corporations, and private-sector employees

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with similar functions and responsibilities. The committee may retain a consultant to assist in the

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comparability study. When calculating compensation, the committee shall consider the value of

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the retirement plan in the overall compensation package.

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     (2) Prepare clear written job descriptions and clear written expectations of job

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performance for the executive officer and senior management;

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     (3) Conduct the job performance review of the executive officer at least annually; and

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     (4) Negotiate the employment contract of the executive officer which shall be approved

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by the full board during an open meeting.

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     (b) No employee of a state quasi-public corporation shall be compensated for sick,

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vacation, or other leave time to an extent greater than state employees, nor be granted severance

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pay after removal for cause, nor be granted severance pay in excess of three (3) months salary if

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removed other than for cause. Notwithstanding any general or specific provision to the contrary,

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the employment contract of the executive director of a quasi-public corporation shall constitute a

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public record within the meaning of chapter 38-2 ("Access to Public Records").

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     42-155-6. Governance committee established. – (a) The board members of each quasi-

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public corporation shall establish a governance committee.

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     (b) It shall be the responsibility of the governance committee to:

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     (1) Keep the board informed of current best practices;

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     (2) Review corporate governance trends;

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     (3) Recommend updates to the corporation’s corporate governance principles;

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     (4) Advise appointing authorities on the skills and experiences required of potential board

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members;

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     (5) Examine ethical and conflict of interest issues;

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     (6) Perform board self-evaluations and recommend by-laws which shall include rules;

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and

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     (7) Procedures for conduct of board business.

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     42-155-7. Transparency requirements established. – The following shall be public

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record, available to the public upon request and posted directly and not via link, on the website of

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each quasi-public corporation:

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     (1) Job descriptions of the executive director and management;

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     (2) Employment contracts of the executive director and management;

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     (3) Compensation comparability studies of the executive;

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     (4) Monthly financial statements;

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     (5) Capital improvement plans;

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     (6) Operating budgets;

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     (7) Strategic plan;

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     (8) Agendas and minutes of the open meetings of the board;

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     (9) Quarterly contracting reports required by 42-90-1;

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     (10) Regulations;

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     (11) Enabling legislation;

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     (12) Mission statement;

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     (13) Board members; and

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     (14) Organizational chart.

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     42-155-8. Access to executive sessions of quasi-public corporations. – (a) Within three

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(3) working days of a written request by the governor or his or her designee, or by the speaker of

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the house or his or her designee, or by the senate president or his or her designee, the quasi-public

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corporation shall furnish:

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     (1) A copy, whether approved by the quasi-public corporation or not, of the minutes of

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any meeting, including any executive session of the quasi-public corporation; and

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     (2) The same information and documents in the same form as provided to the board

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members of any meeting, including any executive session of the quasi-public corporation.

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     (b) Access by the governor, by the speaker of the house or by the senate president or their

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designees to any confidential data shall not in any way change the confidential nature of the data

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obtained.

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     (c) The governor, the speaker of the house, the senate president or their designees shall be

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immune from any liability to any party for claims arising out of disclosure authorized by this

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section.

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     42-155-9. Eminent domain procedure. – In the exercise of its power of eminent

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domain, each quasi-public corporation shall be subject to the provisions of chapter 37-6.

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     42-155-10. Audit of quasi-public corporations. – (a) Commencing July 1, 2013, and

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every three (3) years thereafter, each quasi-public corporation shall be subject to a

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performance audit conducted in compliance with the generally acceptable governmental

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auditing standards, by the auditor general or a certified public accounting firm qualified in

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performance audits. The auditor general shall establish a rotating schedule identifying the

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year in which each quasi-public corporation shall be audited. The schedule shall be posted on

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the auditor general’s website.

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     (b) If the audit is not directly performed by his or her office, the selection of the

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auditor and the scope of the audit shall be subject to the approval of the auditor general.

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     (c) Within thirty (30) days following the date of the issuance of the audit report, the board

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of the quasi-public corporation shall respond in writing to each recommendation made in the final

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audit report. This response shall address the quasi-public corporation’s plan of implementation

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for each specific audit recommendation and, if applicable, the reasons for disagreement with any

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recommendation proposed in the audit report. The board’s responses shall be included in the final

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audit report. Within one year following the date on which the final audit report was issued, the

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auditor general may perform a follow-up audit for the purpose of determining whether the quasi-

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public corporation has implemented, in an efficient and effective manner, its plan of action for the

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recommendations proposed in the audit report.

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     (d) The auditor general shall maintain a full record of each audit. In the event that

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information gathered as a result of an audit indicates that criminal activity may have occurred, the

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auditor general shall provide such information to a state or federal law enforcement agency. For

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any such information that is otherwise exempt from public disclosure under the provisions of

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chapter 38-2, the provision of such information to a law enforcement agency shall not be

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construed to require that this information be further disclosed.

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     (e) Copies of each audit report, the written response to the audit report, and the results of

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each follow-up audit as set forth in subsection (d) herein shall be submitted to the governor, the

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speaker of the house and the senate president no later than three (3) days after issuance.

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     (f) Commencing January 1, 2014, and every year thereafter, each quasi-public

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corporation shall be assessed an amount not to exceed one-sixteenth (1/16) of one percent

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(1%) of its total annual revenue for the previous fiscal year. The assessments shall be placed

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in a restricted receipt account of the joint committee on legislative services for the sole

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purpose of covering the costs of the audits required by this section.

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     (g) The results of the audit shall be made public upon completion, posted on the

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websites of the auditor general and the quasi-public corporation.

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     42-155-11. Outside employment. – No employee of a quasi-public corporation may

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accept outside employment which will impair his or her judgment as to duties and

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responsibilities in the course of employment with the quasi-public corporation. Generally,

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outside employment is barred if the private employer can benefit from the official actions of

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the employee of the quasi-public corporation.

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     42-155-12. Purchases. – Notwithstanding any other provision of the general or public

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laws, to the contrary, the corporation shall be considered a public agency and subject to the

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provisions of chapter 37-2 ("State Purchases").

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     42-155-13. Rules and regulations. – When issuing rules and regulations or any

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amendments to rules and regulations or when adopting by-laws or amendments to by-laws each

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quasi-public corporation shall be subject to the provisions of chapter 42-35 ("The Administrative

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Procedures Act").

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     42-155-14. Severability. – If any provision of this chapter or of any rule or regulation

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made under this chapter, or its application to any person or circumstance is held invalid by a court

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of competent jurisdiction, the remainder of the chapter, rule, or regulation and the application of

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the provision to other persons or circumstances shall not be affected by this invalidity. The

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invalidity of any section or sections or parts of any section or sections shall not affect the validity

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of the remainder of the chapter.

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     SECTION 2. This act shall take effect upon passage.

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LC01737

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- STATE PURCHASES

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     This act would impose standards of accountability and transparency on quasi-public

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corporations.

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     This act would take effect upon passage.

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LC01737

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