2014 -- S 2585 SUBSTITUTE A AS AMENDED

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LC004073/SUB A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

     RELATING TO STATE AFFAIRS AND GOVERNMENT - QUASI-PUBLIC

CORPORATIONS ACCOUNTABILITY AND TRANSPARENCY ACT

     

     Introduced By: Senators Sheehan, DiPalma, Sosnowski, Walaska, and Algiere

     Date Introduced: March 04, 2014

     Referred To: Senate Government Oversight

     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

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GOVERNMENT" is hereby amended by adding thereto the following chapter:

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CHAPTER 155

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QUASI-PUBLIC CORPORATIONS 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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     (8) The general assembly has made comprehensive amendments to the Rhode Island

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commerce corporation’s enabling legislation to enhance transparency and accountability; provide

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board members with additional tools to exercise crucial oversight; establish increased reporting

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requirements; and establish regularly scheduled audits of the corporation. All Rhode Island quasi-

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public corporations should be held to these higher standards of transparency and accountability.

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     42-155-3. Definitions. -- (a) As used in this chapter, "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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but not limited to, 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 industrial facilities corporation;

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     (4) Rhode Island industrial-recreational building authority;

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     (5) Rhode Island small business loan fund corporation;

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     (6) Quonset development corporation;

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     (7) Rhode Island airport corporation;

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     (8) I-195 redevelopment district commission;

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     (9) Rhode Island health and educational building corporation;

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     (10) Rhode Island housing and mortgage finance corporation;

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     (11) Rhode Island higher education assistance authority;

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     (12) Rhode Island student loan authority;

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     (13) Narragansett bay commission;

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     (14) Rhode Island clean water finance agency;

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     (15) Rhode Island water resources board;

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     (16) Rhode Island resource recovery corporation;

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     (17) Rhode Island public rail corporation;

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     (18) Rhode Island public transit authority;

 

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     (19) Rhode Island turnpike and bridge authority;

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     (20) Rhode Island tobacco settlement financing corporation: and

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     (21) Any subsidiary of the Rhode Island commerce corporation.

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     (b) Cities, towns, and any corporation created that is an instrumentality and agency of a

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city or town, and any corporation created by a state law that has been authorized to transact

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business and exercise its powers by a city or town pursuant to ordinance or resolution, and fire

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

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     (c) The Rhode Island commerce corporation, being subject to similar transparency and

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accountability requirements set forth in chapter 64 of title 42; the Rhode Island public rail

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corporation established in chapter 64.2 of title 42; Block Island power authority; and the Pascoag

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utility district shall not be 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 oversight of the corporation, the chief executive, and other management in

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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, at least once every three (3)

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

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

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bylaws of the corporation: and

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     (6) Perform each of their duties as 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 that an

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

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

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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 20 of title 35, the "Public Corporation Financial Integrity and Accountability Act of

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1995";

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     (2) Travel, including lodging, meals, and incidental expenses; provided, however, that no

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reimbursement shall exceed the allowable state employee reimbursement amount per day;

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

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

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meeting 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 corporation's

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mission;

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     (iii) The identity of each board member or employee of the corporation who will receive

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any benefit from the grant, donation, or contribution including, without limitation, tickets to

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events, meals, and golf;

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     (iv) Any disclosure required by chapter 14 of title 36 ("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 corporation.

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

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be used for personal 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;

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

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the corporation;

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     (7) Marketing expenses; and

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     (8) Lobbyists' expenses.

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

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

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

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     (d) No board member shall serve in a paid capacity as an employee or consultant of the

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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, comprised solely of board members that 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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     42-155-6. Transparency requirements established. -- The following shall be public

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and, available to the public upon request and posted directly, or via direct 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) Compensation comparability studies of the executive;

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     (3) Quarterly financial statements;

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     (4) Capital improvement plans;

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     (5) Operating budgets;

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     (6) Strategic plan;

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

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

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     (9) Regulations adopted by the quasi-public corporation;

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     (10) Enabling legislation;

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     (11) Mission statement;

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     (12) Board members;

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     (13) Organizational chart;

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

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     (15) All reports and audits required by this chapter.

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     42-155-7. Audit of quasi-public corporations. -- (a) Commencing January 1, 2015, and

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every five (5) years thereafter, each quasi-public corporation shall be subject to a performance

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

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the chief of the bureau of audits. The chief, in collaboration with the quasi-public corporation,

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shall determine the scope of the audit. To assist in the performance of an audit, the chief, in

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collaboration with the quasi-public corporation, may procure the services of a certified public

 

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accounting firm, which shall be a subcontractor of the bureau of audits, and shall be under the

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direct supervision of the bureau of audits. The chief of the bureau of audits shall establish a

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

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The schedule shall be posted on the website of the bureau of audits.

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     (b) The audit shall be conducted in conformance with chapter 7 of title 35 ("Post Audit of

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Accounting").

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     (c) Each quasi-public corporation shall be responsible for costs associated with its own

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audit. The chief and each quasi-public corporation shall agree upon reasonable costs for the audit,

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not to exceed seventy-five thousand dollars ($75,000), that shall be remitted to the bureau of

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audits.

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

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

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     (e) For purposes of this section, a performance audit shall mean an independent

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examination of a program, function, operation, or the management systems and procedures of a

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governmental or nonprofit entity to assess whether the entity is achieving economy, efficiency,

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and effectiveness in the employment of an available resources.

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

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

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

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

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public corporation.

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     42-155-9. Rules and regulations and other statutes. -- When issuing rules and

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regulations, or any amendments to rules and regulations, or when adopting by laws or

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amendments to bylaws, each quasi-public corporation shall be subject to the provisions of chapter

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35 of title 42 ("Administrative Procedures "). All quasi-public corporations shall be subject to the

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provisions of chapter 46 of title 42 ("Open Meetings"), chapter 2 of title 38 ("Access to Public

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Records"), and chapter 14 of title 36 ("Code of Ethics").

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     42-155-10. 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 on January 1, 2015.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

     RELATING TO STATE AFFAIRS AND GOVERNMENT - QUASI-PUBLIC

CORPORATIONS ACCOUNTABILITY AND TRANSPARENCY ACT

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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 on January 1, 2015.

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