2013 -- S 0609 SUBSTITUTE A

=======

LC01737/SUB A

=======

STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

____________

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- QUASI-PUBLIC

CORPORATIONS ACCOUNTABILITY AND TRANSPARENCY ACT

     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:

1-1

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

1-2

hereby amended by adding thereto the following chapter:

1-3

     CHAPTER 155

1-4

     QUASI-PUBLIC CORPORATIONS

1-5

     ACCOUNTABILITY AND TRANSPARENCY ACT

1-6

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

1-7

Corporations Accountability and Transparency Act."

1-8

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

1-9

      (1) Quasi-public corporations are established and empowered by state law, and would

1-10

not exist but for their relationship with the state.

1-11

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

1-12

essential government services.

1-13

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

1-14

generate other revenue and incur debt.

1-15

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

1-16

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

1-17

review required of state agencies and departments.

1-18

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

1-19

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

2-1

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

2-2

the highest standards of transparent, effective and ethical operation.

2-3

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

2-4

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

2-5

this oversight role.

2-6

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

2-7

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

2-8

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

2-9

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

2-10

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

2-11

but not limited to. the following:

2-12

     (1) Capital center commission;

2-13

     (2) Rhode Island convention center authority;

2-14

     (3) Rhode Island industrial facilities corporation;

2-15

     (4) Rhode Island industrial-recreational building authority;

2-16

     (5) Rhode Island small business loan fund corporation;

2-17

     (6) Quonset point development corporation;

2-18

     (7) Rhode Island airport corporation;

2-19

     (8) 1-195 redevelopment district commission;

2-20

     (9) Rhode Island health and educational building corporation;

2-21

     (10) Rhode Island housing and mortgage finance corporation;

2-22

     (11) Rhode Island higher education assistance authority;

2-23

     (12) Rhode Island student loan authority;

2-24

     (13) Narragansett bay commission;

2-25

     (14) Rhode Island clean water finance agency;

2-26

     (15) Rhode Island water resources board;

2-27

     (16) Rhode Island resource recovery corporation.

2-28

     (17) Rhode Island public rail corporation;

2-29

     (18) Rhode Island public transit authority;

2-30

     (19) Rhode Island turnpike and bridge authority;

2-31

     (20) Rhode Island tobacco settlement financing corporation: and

2-32

     (21) Any subsidiary of the Rhode Island economic development corporation.

2-33

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

2-34

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

3-1

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

3-2

public corporations shall:

3-3

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

3-4

     management in the effective and ethical management of the corporation;

3-5

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

3-6

management controls and operational decisions of the corporations;

3-7

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

3-8

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

3-9

Ethics");

3-10

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

3-11

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

3-12

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

3-13

achievement of its goals may be evaluated. Each corporation shall at least once every three (3)

3-14

years publish a self-evaluation based on the stated measurements;

3-15

     (5) Adopt and periodically update an indemnification policy which shall be set forth in

3-16

the bylaws of the corporation: and

3-17

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

3-18

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

3-19

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

3-20

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

3-21

the public;

3-22

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

3-23

policies and procedures for the following:

3-24

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

3-25

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

3-26

     (2) Travel, including lodging, meals and incidental expenses, no reimbursement shall

3-27

exceed the allowable state employee reimbursement amount per day;

3-28

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

3-29

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

3-30

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

3-31

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

3-32

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

3-33

corporation's mission;

4-34

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

4-35

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

4-36

tickets to events, meals, and golf;

4-37

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

4-38

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

4-39

statements of the quasi-public corporation.

4-40

     (4) Credit card use, provided, however that pursuant to section 35-20-10, no credit card

4-41

shall be used for personal use;

4-42

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

4-43

and expenses classified as gifts or entertainment;

4-44

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

4-45

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

4-46

position may be created or a vacancy filled;

4-47

     (7) Marketing expenses; and

4-48

     (8) Lobbyists' expenses;

4-49

     (c) The written policies and procedures required by this section and any additional

4-50

written policies and procedures that the board may adopt shall be approved by the board during

4-51

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

4-52

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

4-53

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

4-54

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

4-55

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

4-56

approve the request.

4-57

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

4-58

or consultant of the quasi-public corporation.

4-59

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

4-60

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

4-61

shall:

4-62

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

4-63

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

4-64

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

4-65

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

4-66

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

4-67

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

4-68

the retirement plan in the overall compensation package;

5-1

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

5-2

performance for the executive officer and senior management;

5-3

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

5-4

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

5-5

by the full board during an open meeting.

5-6

     42-155-6. Transparency requirements established. -- The following shall be public

5-7

record, available to the public upon request and posted directly or via direct link, on the website

5-8

of each quasi-public corporation:

5-9

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

5-10

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

5-11

     (3) Compensation comparability studies of the executive;

5-12

     (4) Quarterly financial statements;

5-13

     (5) Capital improvement plans;

5-14

     (6) Operating budgets;

5-15

     (7) Strategic plan;

5-16

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

5-17

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

5-18

     (10) Regulations:

5-19

     (11) Enabling legislation;

5-20

     (12) Mission statement;

5-21

     (13) Board members;

5-22

     (14) Organizational chart;

5-23

     (15) By-laws of the quasi-public corporation;

5-24

     (16) All reports and audits required by this chapter; and

5-25

     (17) Within ten (10) business days of execution, a copy of each contract for legal,

5-26

medical, accounting, engineering, or any other professional, financial, technical, or consultant

5-27

services for the quasi-public corporation, consistent with the provisions of chapter 38-2 et seq.

5-28

(Access to Public Records Act).

5-29

     42-155-7. Audit of quasi-public corporations. -- (a) Commencing July 1, 2013, and

5-30

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

5-31

audit conducted in compliance with the generally acceptable governmental auditing standards, by

5-32

the chief of the bureau of audits or a certified public accounting firm qualified in

5-33

performance audits. The chief of the bureau of audits shall establish a rotating schedule

5-34

identifying the year in which each quasi-public corporation shall be audited. The schedule shall

6-1

be posted on the website of the bureau of audits.

6-2

     (b) If the audit is not directly performed by the chief of the bureau of audits, the selection

6-3

of the auditor and the scope of the audit shall be subject to the approval of the chief of the bureau

6-4

of audits.

6-5

     (c) The audit shall be conducted in conformance with subsections 35-7-3(b) through (d).

6-6

     (d) Each quasi-public corporation shall be responsible for all costs associated with its

6-7

own audit.

6-8

     (e) The results of the audit shall be made public upon completion and posted on the

6-9

websites of the bureau of audits and the quasi-public corporation.

6-10

     42-155-8. Outside employment. -- No employee of a quasi-public corporation may

6-11

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

6-12

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

6-13

barred if the private employer can benefit from the official actions of the employee of the quasi-

6-14

public corporation.

6-15

     42-155-9. Purchases. -- Notwithstanding any other provision of the general or public

6-16

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

6-17

provisions of chapter 37-2 (“State Purchases”).

6-18

     42-155-10. Rules and regulations. -- When issuing rules and regulations or any

6-19

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

6-20

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

6-21

Procedures Act”).

6-22

     42-155-11. Severability. -- If any provision of this chapter or of any rule or regulation

6-23

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

6-24

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

6-25

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

6-26

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

6-27

of the remainder of the chapter.

6-28

     SECTION 2. This act shall take effect upon passage.

=======

LC01737/SUB A

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- QUASI-PUBLIC

CORPORATIONS ACCOUNTABILITY AND TRANSPARENCY ACT

***

7-1

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

7-2

corporations.

7-3

     This act would take effect upon passage.

=======

LC01737/SUB A

=======