SB-1051, As Passed Senate, December 11, 2018

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 1051

      A bill to amend 1984 PA 431, entitled

"The management and budget act,"

by amending sections 113, 115, 123, 124, 283, 299, 343, 353, 363,

367, 373, 421, 462, 483, 484, 485, 486, and 487 (MCL 18.1113,

18.1115, 18.1123, 18.1124, 18.1283, 18.1299, 18.1343, 18.1353,

18.1363, 18.1367, 18.1373, 18.1421, 18.1462, 18.1483, 18.1484,

18.1485, 18.1486, and 18.1487), sections 113, 353, 363, 462, 484,

485, and 486 as amended by 1999 PA 8, section 115 as amended by

2012 PA 430, section 299 as added by 2006 PA 95, section 367 as

amended by 2016 PA 221, section 373 as added by 2012 PA 536,

section 421 as amended by 1988 PA 504, and sections 483 and 487 as

added by 1986 PA 272, and by adding section 495; and to repeal acts

and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1        Sec. 113. (1) "Capital outlay" means a project or facility

 2  financed either in whole or in part with state funds, including

 3  lease purchase agreements, to demolish, construct, renovate, or

 4  equip a building or facility for which total project costs exceed

 5  $1,000,000.00. These projects may be on state owned property,

 6  property owned by an institution of higher education, property

 7  owned by community colleges, or property under the control of the

 8  state building authority.

 9        (2) "Community college" means a community college or a junior

10  college.

11        (3) "Department" means the department of technology,

12  management, and budget.

13        (4) "Directives" means intergovernmental, interagency, or

14  interdepartment administrative or procedural guidelines or

15  instructions which do not affect the rights of, or procedures and

16  practices available to, the public.

17        (5) "Director" means the director of the department of

18  technology, management, and budget.

19        (6) "Energy conservation measure" means improvement of a

20  building structurally or the installation of equipment or materials

21  in a building for the purpose of reducing energy consumption or

22  cost, increasing energy efficiency, or allowing the use of a

23  renewable resource for fuel.

24        Sec. 115. (1) "Institution of higher education" or

25  "university" means a state supported 4-year college or university.

26        (2) "Information technology services" means services involving

 1  all aspects of managing and processing information, including, but

 2  not limited to, all of the following:

 3        (a) Application development and maintenance.

 4        (b) Desktop computer support and management.

 5        (c) Mainframe computer support and management.

 6        (d) Server support and management.

 7        (e) Local area network support and management, including, but

 8  not limited to, wireless networking.

 9        (f) Information technology project management.

10        (g) Information technology planning and budget management.

11        (h) Telecommunication services, security, infrastructure, and

12  support.

13  (3) (2) "JCOS" means the joint capital outlay subcommittee of

14  the appropriations committees.

15  (4) (3) Except as used in sections 284 to 292, "record" means

16  a public record as defined in section 2 of the freedom of

17  information act, 1976 PA 442, MCL 15.232.

18  (5) (4) "State agency" means a department, board, commission,

19  office, agency, authority, or other unit of state government. State

20  agency does not include an institution of higher education or a

21  community college or, for purposes of article 2 or 3, the

22  legislative branch of government. For purposes of article 2 or 3,

23  except for those sections pertaining to the authorization,

24  planning, construction, and funding of a capital outlay project,

25  including construction of a facility to house offices or functions

26  necessary for operation of the judicial branch of government, state

27  agency does not include the judicial branch of government.

 1  (6) (5) "Unit of local government" means a political

 2  subdivision of this state, including school districts, community

 3  college districts, intermediate school districts, cities, villages,

 4  townships, counties, and authorities, if the political subdivision

 5  has as its primary purpose the providing of local governmental

 6  service for citizens in a geographically limited area of the state

 7  and has the power to act primarily on behalf of that area.

 8        Sec. 123. (1) The director of the department of technology,

 9  management, and budget shall be appointed by the governor by and

10  with the advice and consent of the senate. The director shall serve

11  at the pleasure of the governor.

12        (2) The governor shall designate an individual within the

13  department, including, but not limited to, the director of the

14  department, to serve as the chief information officer for this

15  state. The director may serve concurrently as the state chief

16  information officer.

17        Sec. 124. (1) The director may organize the department into

18  organizational entities and may merge or transfer functions between

19  organizational entities to promote efficiency and economy. The

20  director shall exercise direction and supervision over the

21  organization entities in the performance of the respective

22  functions. The director may appoint deputies and other officers and

23  employees as permitted by law to effectively accomplish the duties

24  and responsibilities of the department. The director may designate

25  a deputy or other employee to act on behalf of the director.

26        (2) The chief information officer shall report to and advise

27  the governor on matters relating to information technology services

 1  and related technology. Under direction and guidance of the chief

 2  information officer, the department shall do all of the following

 3  related to information technology services:

 4        (a) Lead state efforts to reengineer the information

 5  technology infrastructure of this state to achieve the use of

 6  common technology across the executive branch of state government.

 7        (b) Coordinate a unified executive branch strategic

 8  information technology plan, identify best practices from executive

 9  branch agencies and other public and private sector entities, and

10  develop and implement processes to replicate information technology

11  best practices and standards throughout the executive branch of

12  state government.

13        (c) Oversee the expanded use and implementation of project

14  management principles related to information technology services

15  within the executive branch of state government. Funded projects

16  within all executive branch departments and agencies shall use

17  project management methodologies specified by the chief information

18  officer for this state.

19        (d) Serve as a general contractor between information

20  technology users within the executive branch and private-sector

21  providers of information technology products and services while

22  working to build stronger partnering relationships with providers.

23        (e) Develop and periodically update service-level agreements

24  with executive branch departments and agencies to ensure quality

25  information technology services are delivered on schedule and

26  within budget.

27        (f) Develop standards for application development, including,

 1  but not limited to, a standard methodology and cost-benefit

 2  analysis that all executive branch departments and agencies shall

 3  utilize for application development activities.

 4        (g) Determine and implement statewide efforts to standardize

 5  data elements, formats, and standards and determine data and

 6  information ownership or control issues among departments and

 7  agencies in the executive branch of state government with the full

 8  cooperation of executive branch departments and agencies.

 9        (h) Develop systems and methodologies to review, evaluate, and

10  prioritize existing information technology services projects within

11  the executive branch of state government.

12        (i) Assist the office of the state budget director with the

13  development of information technology services budgets for the

14  executive branch of state government. All information technology

15  budget requests from the executive branch must continue to be

16  submitted to the office of the state budget director and the chief

17  information officer. The office of the state budget director and

18  the chief information officer will continue to jointly review and

19  recommend for funding consideration only those proposals that fit

20  into the overall strategic information technology management plan

21  of this state and that provide a reasonable return on investment,

22  subject to available resources.

23        (3) All executive branch departments and agencies shall fully

24  cooperate with the state chief information officer in developing

25  and implementing the sharing of data and information throughout the

26  executive branch. The state chief information officer shall

27  determine and implement statewide efforts to standardize data

 1  elements and shall determine data ownership assignments among

 2  executive branch departments and agencies.

 3        Sec. 283. (1) The department state budget office shall issue

 4  directives necessary to establish and maintain the central payroll

 5  system for the periodic compensation of the officers and employees

 6  of all state agencies of all branches of state government.

 7        (2) The department state budget office shall perform such

 8  duties as required as the tax withholding agency for the state

 9  government payroll pursuant to any local, state, or federal law.

10        (3) The department state budget office shall issue directives

11  for the approval or disapproval of any proposal for payroll

12  deductions or withholding other than those required by law.

13        Sec. 1299. 299. (1) The office of the state budget director

14  shall do all of the following:

15        (a) Establish, maintain, and coordinate the state higher

16  education database commonly known as the higher education

17  institutional data inventory or "HEIDI".

18        (b) Collect data concerning public universities and public

19  university programs in this state, including data required by law,

20  and include it in the database.

21        (c) Establish procedures to ensure the validity and

22  reliability of the data and the collection process.

23        (d) Develop model data collection policies, including, but not

24  limited to, policies that ensure the privacy of individual student

25  data. Privacy policies shall ensure that student social security

26  numbers are not released to the public for any purpose.

27        (e) Provide data in a useful manner to allow state

 1  policymakers and public university officials to make informed

 2  policy decisions.

 3        (f) Assist public universities in complying with audits under

 4  this section or federal law.

 5        (g) Perform other functions assigned by the state budget

 6  director or required by law.

 7        (2) There is created within the office of the state budget

 8  director in the department the higher education institutional data

 9  inventory advisory committee. The committee shall provide advice to

10  the state budget director regarding the management of the state

11  higher education database, including, but not limited to:

12        (a) Determining what data is necessary to collect and

13  maintain.

14        (b) Defining the roles of all stakeholders in the data

15  collection system.

16        (c) Recommending timelines for the implementation and ongoing

17  collection of data.

18        (d) Establishing and maintaining data definitions, data

19  transmission protocols, and system specifications and procedures

20  for the efficient and accurate transmission and collection of data.

21        (e) Establishing and maintaining a process for ensuring the

22  accuracy of the data.

23        (f) Establishing and maintaining policies related to data

24  collection, including, but not limited to, privacy policies related

25  to individual student data.

26        (g) Ensuring the data is made available to state policymakers

27  and citizens of this state in the most useful format possible.

 1        (h) Addressing other matters as determined by the state budget

 2  director or as required by law.

 3        (3) The higher education institutional data inventory advisory

 4  committee created in subsection (2) shall consist of the following

 5  members:

 6        (a) One representative from the house fiscal agency, appointed

 7  by the director of the house fiscal agency.

 8        (b) One representative from the senate fiscal agency,

 9  appointed by the director of the senate fiscal agency.

10        (c) One representative from the office of the state budget

11  director, appointed by the state budget director.

12        (d) Three representatives of the presidents council of state

13  universities, appointed by the presidents council. The presidents

14  council shall appoint 1 representative each from a master's

15  university, a doctoral university, and a research university.

16        (4) The auditor general shall review higher education

17  institutional data inventory enrollment data submitted by all

18  public universities and shall perform audits of selected data

19  submitted by public universities at least once every 4 years. The

20  review and audits shall be based upon the definitions,

21  requirements, and uniform reporting categories established by the

22  state budget director in consultation with the higher education

23  institutional data inventory advisory committee. The auditor

24  general shall submit an annual a report of findings to the house

25  and senate appropriations committees and the state budget director

26  by July 1 of each year in which an audit is performed.

27        Sec. 343. The state budget director bureau of labor market and

 1  strategic initiatives shall conduct statistical studies and make

 2  estimates and projections of population relative to size and

 3  distribution.

 4        Sec. 353. (1) In a calendar quarter following a calendar

 5  quarter in which the seasonally adjusted state unemployment rate as

 6  certified by the director of the department of career development

 7  or its successor is 8% or more, an amount may be appropriated from

 8  the fund by the legislature for the purposes listed in this section

 9  in accordance with the following table:

10	Percent of seasonally	Percent of fund available
11	adjusted unemployment	for economic stabilization
12	in the calendar quarter	during the calendar quarter
13	preceding the calendar	following a calendar quarter
14	quarter in which an	of high unemployment
15	amount may be appropriated
16	_______________________________	_______________________________
17	8.0-11.9%	2.5% of fund balance
18		as of first day of
19		calendar quarter
20	12.0% and over	5.0% of fund balance
21		as of first day of
22		calendar quarter

23        (2) The legislature may appropriate by law money from the fund

24  in the amounts as provided in this section to assist in the

25  following countercyclical economic stabilization purposes:

26        (a) Capital outlay.

27        (b) Public works and public service jobs.

 1        (c) Refundable investment or employment tax credits against

 2  state business taxes for new outlays and hiring in this state.

 3        (d) Any other purpose the legislature may provide by law which

 4  provides employment opportunities counter to the state's economic

 5  cycle.

 6        (3) Notwithstanding subsections (1) and (2), there is hereby

 7  appropriated $40,000,000.00 from the fund for the Michigan state

 8  parks endowment fund. The appropriation provided for in this

 9  subsection shall only be effective after the proceeds from the sale

10  of the accident fund have been transferred to the fund as provided

11  for in section 701a of the worker's disability compensation act of

12  1969, 1969 PA 317, MCL 418.701a.

13        Sec. 363. (1) Within 30 days after the legislature convenes in

14  regular session, except in a year in which a newly elected governor

15  is inaugurated into office when 60 days shall be allowed, the

16  governor shall transmit to each member of the legislature and the

17  fiscal agencies the budget in detail as provided in this act,

18  accompanied by such explanations and recommendations relative

19  thereto to the budget as the governor considers necessary. At the

20  time the budget is transmitted to the legislature, the state budget

21  director shall transmit line-item appropriation detail to the

22  fiscal agencies using a computer software application that is

23  compatible with the budget tracking computer systems used by the

24  respective fiscal agencies.

25        (2) The budget transmitted by the governor to the legislature

26  shall be for the upcoming fiscal year and the following fiscal

27  year. At a minimum, the budgets shall consist of all of the

 1  following:

 2        (a) Estimates of anticipated revenues by state funds.

 3        (b) Line-item details of proposed expenditures unrolled to

 4  show specific programs.

 5        (c) Estimates of the year-end unrestricted fund balances for

 6  state funds.

 7        (d) Any additional budget detail required by this act.

 8        (3) Beginning for the 2020-2021 fiscal year, by the deadline

 9  established in subsection (1) for the governor to submit a budget

10  to the legislature, the governor shall also present a strategic

11  plan for this state.

12        (4) The strategic plan shall be published on the state's

13  website.

14        (5) The strategic plan shall start with the upcoming fiscal

15  year and shall cover the next 5 fiscal years. The strategic plan

16  can be a revised version of a previous strategic plan or a new

17  strategic plan.

18        (6) The strategic plan shall include the mission, vision,

19  goals, strategies, and performance measures for each state

20  department, including measures of the department's inputs, outputs,

21  and output measures. The department's balanced scorecard can serve

22  as the department's output measures.

23        (7) At the governor's discretion, the strategic plan may

24  include inputs, outputs, and output measures for state agencies,

25  bureaus, and divisions within a state department.

26        Sec. 367. (1) Concurrent with transmitting the state budget to

27  the legislature, the governor shall submit to the legislature and

 1  the fiscal agencies for the upcoming fiscal year and the following

 2  fiscal year executive budget bills containing itemized statements

 3  of estimated state spending to be paid to local units of

 4  government; annual required employer contributions toward total

 5  unfunded retiree health care and pension legacy costs as determined

 6  by the state's consulting actuary for each department and the

 7  legislative branch and the judicial branch; individual line item

 8  amounts, including the number of FTE positions to be funded by each

 9  individual line item amount, for the proposed expenditures; and any

10  necessary bills for additional revenue to provide financing for the

11  proposed expenditures.

12        (2) One executive budget bill and 1 enacted budget bill shall

13  contain all of the following:

14        (a) The estimated revenue for each state operating fund in

15  sufficient detail to provide for comparison with actual revenue.

16        (b) Summary totals for each state operating fund to reflect

17  that recommended expenditures for each fund are within proposed and

18  estimated resources.

19        (c) A statement of estimated state spending to be paid to

20  units of local government, total state spending from state sources

21  of financing, and the state-local proportion derived from that

22  data.

23        Sec. 373. (1) Beginning fiscal year 2013-2014, each reporting

24  unit shall classify each line item in the enacted budget in 1 of

25  the following spending categories: core services, support services,

26  or work projects. Each reporting unit shall prepare a spending plan

27  for each line item in the most recently enacted budget.

 1        (2) A spending plan under this section shall do all of the

 2  following:

 3        (a) Summarize the line items by appropriation unit.

 4        (b) Not exceed the gross appropriation for the line item in

 5  the enacted budget. A spending plan may propose a lesser amount if

 6  the federal or state revenues are anticipated to be less than the

 7  amount appropriated.

 8        (c) Identify the budget requirements for each core service,

 9  support service, and work project to, at a minimum, the following

10  expense categories:

11        (i) State employee wages.

12        (ii) State employee benefits including insurances, retirement,

13  and other postemployment benefits.

14        (iii) Materials and equipment.

15  (iii) (iv) Facilities, including rent, building occupancy

16  charges, and utilities.

17  (iv) (v) Direct payments to clients.

18  (v) (vi) Medical payments on behalf of clients.

19  (vi) (vii) Educational expenses on behalf of clients or

20  students.

21        (viii) Other contracts.

22  (vii) (ix) All Materials and equipment, other contracts, and

23  all other costs.

24        (d) Identify revenue sources and amounts for each

25  appropriation unit.

26        (3) Each reporting unit shall submit its spending plan to the

27  state budget office each year within 60 days after enactment of the

 1  budget. The state budget office shall define expense categories,

 2  design a standardized spending plan reporting format, and make the

 3  reporting form available for use by each reporting unit.

 4        (4) Within 30 days after the state budget office receives the

 5  spending plans from the reporting units, the director of the state

 6  budget office shall either review and approve each spending plan

 7  or, if the director requests changes, return the spending plan to

 8  the reporting unit with a description of requested changes. The

 9  reporting unit shall resubmit a revised spending plan that

10  addresses the requested changes within 2 weeks. The state budget

11  director shall submit each approved spending plan to the

12  appropriate appropriations subcommittees and the senate and house

13  fiscal agencies in a spreadsheet-compatible format, and post it on

14  the department's public website.

15        (5) For the fiscal year 2014-2015 and each subsequent fiscal

16  year, the legislature intends that the state budget director and

17  the senate and house appropriations committees work to identify

18  suitable adjustments to the annual state budget process to utilize

19  the information contained in the spending plans produced under this

20  section.

21        (6) As used in this section:

22        (a) "Appropriation unit" means a numbered section in a budget

23  bill that includes a related group of discrete line-item

24  appropriations representing the structure of an organization or its

25  major programs, the sum of which line-item appropriations equals

26  the total appropriation for the appropriation unit and the sum of

27  the appropriation unit total equals the total appropriation for the

 1  organization.

 2        (b) "Core service" means an activity that provides measurable

 3  value to beneficiaries such as citizens, businesses, and units of

 4  local government.

 5        (c) "Reporting unit" means a state agency, excluding a public

 6  body corporate and politic, to which an appropriation is made.

 7  However, a public body corporate and politic shall post annually on

 8  its website substantially the same spending and revenue data

 9  described in subsection (2)(c) and (d).

10        (d) "Schedule of programs" means a listing of the programs

11  within a budget that are funded from a specific line item.

12        (e) "Support service" means an activity, such as information

13  technology, accounting, human resources, legal, and other support

14  functions that are required to support the ongoing delivery of core

15  services.

16        (f) "Work project" means that term as defined in section 404

17  and that meets the criteria in section 451a(1).

18        Sec. 421. (1) In order to establish strong internal control in

19  the management of the state's financial transactions, the state

20  budget director may do any of the following:

21        (a) Issue directives for the accountability, custody, periodic

22  inventory, and maintaining departmental records of the real and

23  personal property and supplies and materials of the state.

24        (b) Issue directives relative to the formulation and control

25  of a state central accounting system.

26        (c) Monitor, approve or disapprove, and assist in the

27  development and enhancement of agency accounting systems. When

 1  assistance is provided, the state agency shall be interaccount

 2  billed for the cost of the services provided. The state budget

 3  director shall issue directives to implement this subdivision.

 4        (d) Examine, directly or by the director's representative,

 5  each proposed payment from the state treasury as will enable the

 6  director to certify to the state treasurer that the proposed

 7  payment is correct, for the discharge of a state liability or for

 8  some other purpose authorized by law, within the scope of the

 9  appropriation to which charged, and is not in excess of the

10  unexpended or unencumbered balance of the appropriation. Except for

11  investment transactions and refund of taxes, a payment shall not be

12  made from the state treasury except upon certification of the

13  director.Issue directives regarding internal control over payment

14  processing as will enable the state budget director to certify to

15  the state treasurer that the system of internal control is

16  sufficient to ensure that the proposed payment is properly

17  authorized and is not in excess of the unexpended or unencumbered

18  balance of the appropriation. Except for investment transactions,

19  lottery prize awards, and refund of taxes, a payment shall not be

20  made from the state treasury except upon certification of the state

21  budget director.

22        (e) Issue directives for the refund to payers of money which

23  has been deposited in the state treasury through misunderstanding,

24  inadvertence, or mistake and to which the state does not have a

25  claim. The refunds shall be made pursuant to the directives except

26  as otherwise provided in this act.

27        (f) Issue directives providing for and governing the

 1  establishment, the proper uses of, and accounting for imprest and

 2  petty cash funds by state agencies. An imprest or petty cash fund

 3  shall not exceed the monetary limit approved by the board.

 4        (g) Prepare and publish a comprehensive annual financial

 5  report at the close of each fiscal year which clearly reflects the

 6  financial position of the state funds at the close of the fiscal

 7  year.

 8        (2) If there is a conflict between generally accepted

 9  accounting principles, the principles adopted by the governmental

10  accounting standards board, or its successor, shall be used.

11  Changes in generally accepted accounting principles which require

12  budgetary revisions shall be incorporated not later than the next

13  executive budget after the change is issued. The state budget

14  director shall issue directives to incorporate any changes,

15  additions, and rescissions made to the generally accepted

16  accounting principles as they affect the accounting of state

17  government. If an item is not covered by an existing generally

18  accepted accounting principle, the state budget director shall

19  issue a directive which shall not be effective until 30 days after

20  the directive is reported to the appropriations committee and the

21  auditor general.

22        (3) The department state budget office shall not change an

23  accounting principle, or the application of an accounting

24  principle, from that which was followed in the preceding fiscal

25  year if the change will materially affect the final year-end

26  balance of an appropriated operating fund, unless the change in the

27  accounting principle or the application of the accounting principle

 1  is reported to the senate and house appropriations committees not

 2  later than 120 days after the end of the fiscal year for which the

 3  change is to be implemented. However, the 120-day notice

 4  requirement shall not apply to a change in an accounting principle

 5  or the application of an accounting principle which is implemented

 6  to conform with requirements promulgated by the governmental

 7  accounting standards board, or its successor.

 8        (4) The state budget director shall determine and authorize

 9  the most efficient manner possible for handling financial

10  transactions and records in the state's financial management system

11  necessary to implement executive reorganization orders as provided

12  under section 2 of article V of the state constitution of 1963.

13        Sec. 462. (1) Within 60 days after the final audit is

14  released, Upon completion of an audit, the principal executive

15  officer of a state agency which is audited shall submit a plan to

16  comply with the audit recommendations to the department. state

17  budget office. The plan shall be prepared in accordance with

18  procedures prescribed by the principal department. state budget

19  director. Copies of the plan shall be distributed in accordance

20  with the administrative guide to state government. Copies shall

21  also be distributed to relevant house and senate appropriations

22  subcommittees, relevant house and senate standing committees,

23  fiscal agencies, and the executive office.

24        (2) The state budget director shall develop procedures for

25  principal departments to follow for the development of corrective

26  action plans. The plan described under this section shall be

27  prepared in accordance with procedures prescribed by the state

 1  budget director and in accordance with reinforcing procedures

 2  prescribed by the principal department.

 3        (3) Principal departments shall periodically report progress

 4  on remediating material weaknesses on a schedule provided by the

 5  state budget director.

 6        Sec. 483. As used in this section and sections 484 to 489:

 7        (a) "Department head" means the head of a principal

 8  department.

 9        (b) "Internal accounting and administrative control system"

10  means the methods through which reasonable assurances can be given

11  that measures are being used by a principal department and its

12  state agencies to safeguard assets, check the accuracy and

13  reliability of accounting data, promote operational efficiency, and

14  encourage adherence to prescribed managerial policies.a process,

15  effected by the director of the principal department, management,

16  and other personnel, designed to provide reasonable assurance

17  regarding the accomplishment of department objectives relating to

18  operations, reporting, and compliance.

19        Sec. 484. (1) The state budget director, in consultation with

20  the auditor general, shall develop a system of reporting and a

21  general framework which shall be used by the principal departments

22  in performing evaluations on their respective internal accounting

23  and administrative control systems.

24        (2) The state budget director, in consultation with the

25  auditor general, may modify the format for the report or the

26  framework for conducting the evaluations after giving 30 days'

27  notice to each principal department head and the senate and house

 1  appropriations committees.

 2        Sec. 485. (1) The department head of each principal department

 3  shall establish and maintain an internal accounting and

 4  administrative control system within that principal department

 5  using the generally accepted accounting principles as developed by

 6  the accounting profession and in conformance with directives issued

 7  pursuant to section 141(d).

 8        (2) Each internal accounting and administrative control system

 9  shall include, but not be limited to, all of the following

10  elements:

11        (a) A plan of organization that provides separation of duties

12  and responsibilities among employees.

13        (b) A plan that limits access to that principal department's

14  resources to authorized personnel whose use is required within the

15  scope of their assigned duties.

16        (c) A system of authorization and record-keeping procedures to

17  control assets, liabilities, revenues, and expenditures.

18        (d) A system of practices to be followed in the performance of

19  duties and functions in each principal department.

20        (e) Qualified personnel that maintain a level of competence.

21        (f) Internal control techniques that are effective and

22  efficient.

23        (3) Each head of a principal department shall document the

24  system, communicate system requirements to employees of that

25  principal department, assure that the system is functioning as

26  prescribed, and modify as appropriate for changes in condition of

27  the system.

 1        (4) The head of each principal department shall provide a

 2  biennial report on or before May 1 of each odd numbered year

 3  prepared by the principal department's internal auditor on the

 4  evaluation of the principal department's internal accounting and

 5  administrative control system to the governor, the auditor general,

 6  the senate and house appropriations committees, the fiscal

 7  agencies, and the state budget director. The department director

 8  shall attach a letter from the internal auditor certifying the

 9  department's conformance to the evaluation and reporting

10  requirements in the general framework referenced in section 484.

11  For the period reviewed, the report shall include, but not be

12  limited to, both of the following:

13        (a) A description of any material inadequacy or weakness

14  discovered in connection with the evaluation of the department's

15  internal accounting and administrative control system as of October

16  1 of the preceding year and the plans and a time schedule for

17  correcting the internal accounting and administrative control

18  system, described in detail.

19        (b) A listing of each audit or investigation performed by the

20  internal auditor pursuant to sections 486(4) and 487.

21        Sec. 486. (1) Each principal department shall appoint an

22  internal auditor. The state budget director shall appoint internal

23  auditors as needed to audit principal departments. Each internal

24  auditor shall be a member of the state classified executive

25  service.

26        (2) Except as otherwise provided by law, each internal auditor

27  shall report to and be under the general supervision of the

 1  department head.state budget director.

 2        (3) A person may not prevent or prohibit the internal auditor

 3  from initiating, carrying out, or completing any audit or

 4  investigation. The internal auditor shall be protected pursuant to

 5  the whistleblowers' protection act, 1980 PA 469, MCL 15.361 to

 6  15.369.

 7        (4) The internal auditor of each principal department An

 8  internal auditor appointed by the state budget director shall:

 9        (a) Receive and investigate any allegations that false or

10  misleading information was received in evaluating the principal

11  department's internal accounting and administrative control system

12  or in connection with the preparation of the biennial report on the

13  system.

14        (b) Conduct and supervise audits relating to financial

15  activities of the principal department's operations.

16        (c) Review existing activities and recommend policies designed

17  to promote efficiency in the administration of that principal

18  department's programs and operations as assigned by the department

19  head.

20        (d) Recommend policies for activities to protect the state's

21  assets under the control of that principal department, and to

22  prevent and detect fraud and abuse in the principal department's

23  programs and operations.

24        (e) Review and recommend activities designed to ensure that

25  principal department's internal financial control and accounting

26  policies are in conformance with the department of management and

27  budget accounting division state budget office directives issued

 1  pursuant to sections 421 and 444.

 2        (f) Provide a means to keep the department head fully and

 3  currently informed about problems and deficiencies relating to the

 4  administration of that principal department's programs and

 5  operations and the necessity for and progress of corrective action.

 6        (g) Conduct other audit and investigative activities as

 7  assigned by the department head.state budget director.

 8        (h) Prepare biennial reports for principal departments

 9  required under section 485.

10        (5) Each internal auditor shall adhere to appropriate

11  professional and auditing standards in carrying out any financial

12  or program audits or investigations.

13        (6) Each internal auditor appointed by the state budget

14  director shall report immediately to the state budget director and

15  the principal department head if the internal auditor becomes aware

16  of particularly serious or flagrant problems, abuses, or

17  deficiencies relating to the administration of programs or

18  operations of a principal department or agencies within the

19  department.

20        Sec. 487. (1) Each internal auditor and department management

21  shall report immediately to the department head if the internal

22  auditor or management becomes aware of particularly serious or

23  flagrant problems, abuses, or deficiencies relating to the

24  administration of programs or operations of that principal

25  department or its state agencies. If criminal activity is

26  suspected, the department head shall immediately submit a report to

27  the governor, attorney general, and the auditor general in

 1  accordance with reporting requirements established pursuant to

 2  section 484. Departments shall establish incident reporting

 3  protocols, reviewed and approved by the principal department

 4  director, to fulfill the reporting of all suspected serious

 5  problems by either internal audit or department management.

 6  Incidences warranting reporting under these provisions shall

 7  include those perpetrated by state employees or external entities

 8  with whom departments come into contact.

 9        (2) Within 60 days after the receipt of a report filed

10  pursuant to subsection (1), the department head shall submit a plan

11  to correct the problems, abuses, or deficiencies to the state

12  budget director. Within 30 days after the receipt of the plan to

13  correct, the state budget director shall submit copies of the plan

14  to correct to the auditor general and the senate and house

15  appropriations committees.

16        (3) This section shall not be construed to authorize the

17  public disclosure of information which is part of an ongoing

18  criminal investigation or which is specifically prohibited from

19  public disclosure by any other provision of law.

20        Sec. 495. (1) Within 9 months after the end of the fiscal

21  year, the state budget director shall publish on the internet a

22  report that communicates the state's current financial situation in

23  an easy-to-understand report.

24        (2) At a minimum, the report will contain information on no

25  less than the most recent 5 years of data for each of the

26  following:

27        (a) Total state revenues and expenditures.

 1        (b) Total general fund/general purpose revenues and

 2  expenditures.

 3        (c) Total school aid fund revenues and expenditures.

 4        (d) The unrestricted fund balance for the general fund and

 5  school aid fund.

 6        (e) Total outstanding state debt by major type.

 7        (f) Total unfunded pension and other postemployment benefit

 8  obligations for each of the following retirement systems:

 9        (i) The state employees' retirement act, 1943 PA 240, MCL 38.1

10  to 38.69.

11        (ii) The public school employees retirement act of 1979, 1980

12  PA 300, MCL 38.1301 to 38.1437.

13        (iii) The judges retirement act of 1992, 1992 PA 234, MCL

14  38.2101 to 38.2670.

15        (iv) The state police retirement act of 1986, 1986 PA 182, MCL

16  38.1601 to 38.1648.

17        (v) The Michigan legislative retirement system act, 1957 PA

18  261, MCL 38.1001 to 38.1080.

19        (g) Total revenues by major source, including taxes and

20  federal grants.

21        (h) Total expenditures by major spending category.

22        (i) The number of state employees by department.

23        (j) Basic economic information for this state, including per-

24  capita income, nonfarm payroll employment, and the unemployment

25  rate.

26        Enacting section 1. Section 447 of the management and budget

27  act, 1984 PA 431, MCL 18.1447, is repealed.