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Senate Bill 217 is a Sunset Bill and applies the recommendations in the report of the Sunset Advisory Commission on Self-Directed Semi-Independent Status of State Agencies.
Senate Bill 217 would put all state agencies currently with a Self-Directed and Semi-Independent (SDSI) status under the Self-Directed and Semi-Independent Act.
It would require that the Legislative Budget Board (LBB) develop and implement an application process for the SDSI status, as well as a process to review applications.
The LBB would be able to recover the costs associated with processing the application from the applying agency.
The application for the SDSI status would require that an agency undergo a financial audit as well as an effectiveness audit by the state auditor in the four years preceding the application; that the governing body of the agency provide notice and hold a public hearing, and approve the submission by majority vote; that the application be submitted to the LBB as part of the agency's legislative appropriations request. The application would also require justification for the application, and information on the efficiency of the agency.
Following the review of the application, LBB staff would make recommendations on whether to grant or deny the status. The LBB could recommend each house's committee on appropriations to grant the status. The Sunset Advisory Commission would also be able to review the status of self-directed semi-independent agencies.
Senate Bill 217 would provide that the LBB's staff would review each agency's annual report and the LBB or the Sunset Advisory Commission could recommend the revocation of the status, giving justification for this recommendation.
The Texas Real Estate Commission and the Texas Appraiser Licensing and Certification Board together would have to remit $750,000 to the general revenue fund every fiscal year.
Each SDSI agency would have to undergo a financial audit and an effectiveness audit by the state auditor at least once every 6 years, unless the state auditor determines an independent audit conducted on the same period could be used. The state auditor could conduct a risk-based audit of such an agency at any time.
Senate Bill 217 would increase the level of reporting required of these agencies to include revenues from all sources and and accounting of all expenditures, any purchase, sale of real property and costs linked to lease and maintenance of real property owned or leased. The bill would also add specific reporting requirements for financial regulatory agencies.
Senate Bill 217 would allow an agency with SDSI status to purchase or receive as a gift property necessary or convenient to the exercise of the agency's functions; to sell or dispose of real, personal or mixed property; to maintain, construct, improve, or extend facilities; to borrow money with a two-thirds majority vote and for a period not to exceed five years.
Self-Directed and Semi-Independent (SDSI) status allows agencies to operate outside the appropriations purview. In other words, SDSI agencies have more operational and budgetary control. Maintaining the existence of the SDSI program is bad policy because it goes against the notion of limited government and personal responsibility.
The arguments for SDSI are that it frees the legislature from having continually to set appropriations and performance measures since the agencies are responsible for raising their own revenue and creating their own measures. Additionally, proponents argue that SDSI agencies generate a positive fiscal impact to the state. Even though these points may be true, it is important to remember that no agency should have independent authority. When all agencies are subject to appropriations review it makes the legislature as a whole responsible for the actions of that agency, not the agency itself.