Amendment ASA1-AB228

CORRECTED COPY

LRBs0073/1

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2013 - 2014 LEGISLATURE

ASSEMBLY SUBSTITUTE AMENDMENT 1, TO ASSEMBLY BILL 228

June 5, 2013 - Offered by Representative Sargent.

AB228-ASA1,2,2 An Act to renumber and amend 13.94 (1) (dr); to amend 1.14 (1) (b), 13.92 (1) (b) 1. b., 13.94 (1s) (c) 5., 16.004 (17), 16.52 (6) (a), 16.53 (13) (a), 16.545 (9), 16.70 (1e), 16.765 (1), 16.765 (2), 16.765 (5), 16.765 (6), 16.765 (7) (intro.), 16.765 (7) (d), 16.765 (8), 16.84 (14), 16.847 (2) (a), 16.855 (16) (b) 1., 16.891 (1) (a), 16.967 (1) (a), 16.97 (1m), 19.42 (10) (sm), 19.42 (13) (om), 20.505 (5) (ke), 20.866 (2) (ws), 20.867 (3) (kd), 238.02 (3), 238.02 (4), 238.03 (2) (c), 238.03 (2) (e) and 250.20 (1) (k); to repeal and recreate 238.02 (1); and to create 13.94 (1) (dr) 1., 13.94 (1) (dr) 2., 238.02 (1d), 238.02 (1f), 238.02 (1g), 238.02 (1r), 238.02 (5), 238.045, 238.07 (2) (am), 238.07 (2) (dm), 238.07 (2) (fm) and 238.07 (2) (gm) of the statutes; relating to: board of directors, powers and duties, including reporting requirements, and financial audits of the Wisconsin Economic Development Corporation.

Analysis by the Legislative Reference Bureau

This substitute amendment makes a number of changes to the laws governing the Wisconsin Economic Development Corporation (WEDC), including the following:

1. WEDC administers, develops, and implements economic development programs that have the purpose of encouraging the establishment and growth of businesses in this state. Each year, WEDC submits a report by October l to the Joint Legislative Audit Committee and each house of the legislature that provides information about the progress of WEDC's economic development programs during the previous fiscal year. That report must contain a description of each program, a comparison of expected and actual program outcomes, the number of grants or loans made under each program, the amount of each grant or loan, the recipient of each grant or loan, the sum total of all grants and loans awarded by WEDC under an economic development program, and any recommended changes to each program.

The substitute amendment requires WEDC to include all of the following additional information in its annual report:

a. Quantifiable performance measures directly related to the purpose of each economic development program, including an accounting of the location and industry classification, by municipality, of each job created or retained in the state in the previous fiscal year as a result of the program.

b. The amount of tax benefits that WEDC allocated, or verified to the Department of Revenue (DOR), under each program in the previous fiscal year.

c. An identification of each recipient of a tax benefit that WEDC allocated, or verified to DOR, during the previous fiscal year.

d. The total number of recipients of a grant, loan, or tax benefit that satisfied certain reporting obligations to WEDC and a list identifying each recipient of a grant, loan, or tax benefit that failed to satisfy those obligations.

2. Currently, the WEDC board includes six members who are nominated by the governor and appointed with the advice and consent of the senate and who serve at the pleasure of the governor; three members appointed by the speaker of the assembly, consisting of one majority and one minority party representative to the assembly and one person employed in the private sector; and three members appointed by the senate majority leader, consisting of one majority and one minority party senator and one person employed in the private sector.

Under this substitute amendment, the members of the WEDC board nominated by the governor no longer serve at the pleasure of the governor but serve four-year terms. The governor must select nominees from a list of candidates prepared by the WEDC board. In addition, the members of the board appointed by the speaker of the assembly and senate majority leader who are employed in the private sector no longer serve at the pleasure of the speaker or majority leader but serve four-year terms.

3. Under the substitute amendment, the WEDC board must prepare a list of candidates from which the governor may nominate members of the board. The WEDC board must include on the list at least two candidates for each position. In addition, the board must select candidates who have financial management experience, municipal or regional economic development experience, or private sector business experience. The board must also ensure that some of the candidates have expertise in corporate ethics.

4. Currently, the governor serves as chairperson of the WEDC board. Under the substitute amendment, the WEDC board must elect a chairperson. The board must also elect one of its members to serve as a lead director for a two-year term. Under the substitute amendment, the lead director is to provide guidance to the WEDC board, facilitate communication between the board and the corporation, and advise the chairperson of the board and the chief executive officer.

5. Currently, the WEDC chief executive officer is nominated by the governor, and with the advice and consent of the senate appointed, to serve at the pleasure of the governor. This substitute amendment provides that the board shall appoint the chief executive officer and may not delegate to any WEDC employee the power to appoint or terminate the employment of any executive employee of WEDC.

6. The substitute amendment also provides that the WEDC board may not delegate to any WEDC employee the power or duty to develop or implement any internal policy without the board first approving the policy.

7. The substitute amendment requires the WEDC board to establish a finance committee consisting of five board members. The members of the finance committee must elect a chairperson. Under the substitute amendment, no offers of grants, loans, or tax credits may be made by WEDC to any business without the approval of the finance committee.

8. The substitute amendment requires the WEDC board to establish an audit and compliance committee to audit the programs and finances of WEDC and to ensure that WEDC is in compliance with applicable state and federal law. The committee must meet monthly and publish the minutes of its meetings. The committee must also report at each WEDC board meeting on the current compliance of WEDC with applicable state and federal law, the status of any contracts with businesses that are out of compliance with the contract, and what actions have been planned or taken to resolve the compliance issues.

9. The substitute amendment provides that the chairpersons of all committees established by the WEDC board must prepare agendas for committee meetings.

10. The substitute amendment provides that if the WEDC board establishes or incorporates a foundation or other entity to solicit funds for economic development in this state, the board must publish a list of all donors on an Internet site maintained by WEDC and must include the list in its annual report to the legislature. Under the substitute amendment, no person who contributes moneys to the foundation or other entity may participate in any WEDC economic development program for two years from the date of the contribution.

11. Under the substitute amendment, the board must also elect one of its public members to serve as the board's lead director for a two-year term. The lead director must have significant corporate management experience. Under the substitute amendment, the lead director is to chair meetings of the board in the chairperson's absence, chair the governance committee, described below, serve as a liaison between the chairperson and the other board members, work with the chairperson to ensure adequate committee structure for any committees the board establishes, and carry out other duties as assigned by the board or the governance committee.

12. The substitute amendment further requires WEDC's board to establish a governance committee. In addition to the lead director, who serves as chair of the governance committee, the governance committee must include two of the board's public members. The substitute amendment directs the governance committee to develop principles for the board's oversight of WEDC, oversee the board's operations, recommend membership for committees the board establishes, assist the chairperson and the board to identify qualified candidates to fill vacancies on the board, and facilitate communication between the members of the board and the chief executive officer of WEDC.

13. Under current law, the Legislative Audit Bureau is required to conduct a financial audit of WEDC every two years and a program evaluation audit of the economic development programs administered by WEDC every two years. The substitute amendment requires that the financial audit be conducted annually until June 30, 2019, after which point, the financial audit reverts to being conducted every two years.

14. In addition to other powers specifically enumerated in the statutes, current law grants WEDC all the powers necessary or convenient to carry out its purposes. The substitute amendment limits WEDC's power to establish a nonprofit organization by requiring WEDC to submit any plan to establish a nonprofit organization to the Joint Committee on Finance under passive review.

15. Under current law, with certain exceptions, the Department of Administration (DOA) must purchase, or may delegate the authority to purchase, all necessary materials, supplies, equipment, all other permanent personal property and miscellaneous capital, and contractual services for all agencies. DOA, or its delegated agents, may contract for services that can be performed more economically or efficiently by contract. With exceptions, DOA must award orders and contracts to the lowest responsible bidders or most competitive proposal. If the estimated cost of an expenditure exceeds $50,000, DOA must solicit bids or competitive sealed proposals. This substitute amendment adds WEDC to the definition of agency for purposes of state procurement so that WEDC is subject to the same laws regulating agency purchasing.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB228-ASA1,1 Section 1. 1.14 (1) (b) of the statutes is amended to read:

AB228-ASA1,5,2 1.14 (1) (b) "State agency" has the meaning given for "agency" under s. 16.70 (1e) 16.97 (1m).

AB228-ASA1,2 Section 2. 13.92 (1) (b) 1. b. of the statutes is amended to read:

AB228-ASA1,5,5 13.92 (1) (b) 1. b. Any agency, as defined in s. 16.70 (1e) 16.97 (1m), created under ch. 13, 14, 15, or 758.

AB228-ASA1,3 Section 3. 13.94 (1) (dr) of the statutes is renumbered 13.94 (1) (dr) 3. and amended to read:

AB228-ASA1,5,11 13.94 (1) (dr) 3. Biennially, beginning in 2013, conduct a financial audit of the Wisconsin Economic Development Corporation and a program evaluation audit of the economic development programs administered by the Wisconsin Economic Development Corporation under ch. 238.

AB228-ASA1,5,13 4. The legislative audit bureau shall file a copy of each audit report under this paragraph with the distributees specified in par. (b).

AB228-ASA1,4 Section 4. 13.94 (1) (dr) 1. of the statutes is created to read:

AB228-ASA1,5,16 13.94 (1) (dr) 1. Annually, conduct a financial audit of the Wisconsin Economic Development Corporation. This subdivision does not apply after June 30, 2019.

AB228-ASA1,5 Section 5. 13.94 (1) (dr) 2. of the statutes is created to read:

AB228-ASA1,5,19 13.94 (1) (dr) 2. Biennially, conduct a financial audit of the Wisconsin Economic Development Corporation. This subdivision applies after June 30, 2019.

AB228-ASA1,6 Section 6. 13.94 (1s) (c) 5. of the statutes is amended to read:

AB228-ASA1,5,22 13.94 (1s) (c) 5. The Wisconsin Economic Development Corporation for the cost of the audit audits required to be performed under sub. (1) (dr).

AB228-ASA1,7 Section 7. 16.004 (17) of the statutes is amended to read:

AB228-ASA1,6,2 16.004 (17) Business intelligence and data warehousing system. The department may implement an enterprise-wide reporting, data warehousing, and data analysis system applicable to every agency, as defined in s. 16.70 (1e) 16.97 (1m), other than the legislative and judicial branches of state government.

AB228-ASA1,8 Section 8. 16.52 (6) (a) of the statutes is amended to read:

AB228-ASA1,6,13 16.52 (6) (a) Except as authorized in s. 16.74, all purchase orders, contracts, or printing orders for any agency, as defined in s. 16.70 (1e) 16.97 (1m), shall, before any liability is incurred thereon, be submitted to the secretary for his or her approval as to legality of purpose and sufficiency of appropriated and allotted funds therefor. In all cases the date of the contract or order governs the fiscal year to which the contract or order is chargeable, unless the secretary determines that the purpose of the contract or order is to prevent lapsing of appropriations or to otherwise circumvent budgetary intent. Upon such approval, the secretary shall immediately encumber all contracts or orders, and indicate the fiscal year to which they are chargeable.

AB228-ASA1,9 Section 9. 16.53 (13) (a) of the statutes is amended to read: