HANDBOOK ON SUNSET & SUNRISE REVIEW Joint Legislative Audit Committee Forty-seventh Legislature 2005 - 2006 TABLE OF CONTENTS Introduction....................................................................................................................................1 Role of Participants Joint Legislative Audit Committee ......................................................................................3 Office of the Auditor General ..............................................................................................7 Committees of Reference.....................................................................................................8 Agency Subject to Review...................................................................................................9 Legislative Staff ...................................................................................................................9 Committees of Reference (Forty-seventh Legislature) Senate COR........................................................................................................................11 House of Representatives COR .........................................................................................12 Sunset Review Process Description ........................................................................................................................15 Conducting a Sunset Review Auditor General Conducts Performance Audit..................................................................16 Timetable ...........................................................................................................................20 Committee of Reference Conducts Performance Audit.....................................................21 Timetable ...........................................................................................................................25 Sunrise Review Process Description.........................................................................................................................27 Sunrise Factors...................................................................................................................28 Conducting a Sunrise Review Conducting a Sunrise Review............................................................................................30 Timetable ...........................................................................................................................32 Exhibits A. B. C. D. E. F. Correspondence (COR conducts sunset audit) Correspondence (OAG conducts sunset audit) Agency Factors Interested Parties Correspondence Final Sunset Report Final Sunrise Report {This page left intentionally blank} Sunset & Sunrise Review Handbook 47th Legislature INTRODUCTION Established by Laws 1978, Chapter 210, the sunset review process is the process by which the Legislature reviews the purpose and functions of state agencies to determine whether continuation, revision, consolidation or termination is warranted. Sunset reviews are based on audits conducted by either the Office of the Auditor General (OAG) or a Committee of Reference (COR). Upon completion of the sunset audit, a public hearing is held by the COR to discuss the audit and receive testimony from agency officials and the public. Similarly, the sunrise process was established, by Laws 1985, Chapter 352, to provide a mechanism for health professions to request regulation or expansion in scope of practice. The sunrise process begins when an applicant group presents the Joint Legislative Audit Committee (JLAC) with a report defining the need for regulation or scope of practice expansion. JLAC then assigns the report to a COR for review and recommendation. This handbook is designed to be a guide for legislators and staff involved in the sunset and sunrise review of state agencies, boards, commissions, institutions and programs (agencies). However, both the sunset and sunrise processes are provided for pursuant to statute and it is recommended that statute be consulted in conjunction with the use of this handbook. For ease of reference, the handbook is divided into four primary sections. The first section provides a brief description of the entities that play an important role in the processes, specifically, JLAC, COR, OAG and legislative staff. The next two sections are divided based upon the actual sunset and sunrise processes. These two sections are further divided into brief descriptions of the overall sunset or sunrise process and a step-by-step guide of how to conduct a sunset or sunrise review. Finally, samples from previous reviews are provided to help eliminate questions regarding written correspondence and final reports. Joint Legislative Audit Committee Page 1 47th Legislature Sunset & Sunrise Review Handbook {This page left intentionally blank} Page 2 Joint Legislative Audit Committee Role of Sunset Review Participants 47th Legislature Role of Participants ROLE OF PARTICIPANTS The sunset and sunrise processes primarily involve JLAC, COR and the OAG. Legislative standing committee members, Joint Legislative Budget Committee (JLBC) staff, agency staff and legislative committee staff and interested parties also play important roles in the process. JOINT LEGISLATIVE AUDIT COMMITTEE (Title 41, Chapter 7, Article 10.1, Arizona Revised Statutes) MEMBERSHIP JLAC is a twelve-member committee, consisting of six members from each chamber of the Legislature. Five members each are appointed by the President of the Senate and Speaker of the House of Representatives, based on the members' understanding and interest in agency audits. JLAC membership includes an Appropriations Committee member from each chamber and no more than three appointees from each chamber may be members of the same political party. Additionally, the President of the Senate and Speaker of the House of Representatives serve as ex-officio members. JLAC chairmanship alternates each year between the House and Senate. Below are the JLAC members for the Forty-sixth Legislature: Senate Members House Members Senator Robert Blendu (Chair 2005) Senator Gabrielle Giffords Senator John Huppenthal Senator Harry E. Mitchell Senator Carolyn S. Allen President Ken Bennett, Ex-officio Representative Laura Knaperek (Chair 2006) Representative Tom Boone Representative Pete Rios Representative Ted Downing Representative Steven B. Yarbrough Speaker Jim Weiers, Ex-officio JLAC POWERS & DUTIES JLAC oversees all legislative and agency audit functions. Subject to legislative approval, JLAC appoints the Auditor General and directs all sunset, performance, special and financial audits and special research requests. JLAC is required to ensure that agencies comply with audit findings and recommendations and has legislative subpoena power. Following are the statutorily prescribed functions of JLAC: Joint Legislative Audit Committee Page 3 47th Legislature • • • • • • • • Role of Participants assigning agencies subject to sunset review to a COR; assigning sunrise review applicants to a COR; determining whether the OAG or a COR will conduct an agency’s sunset audit; directing the OAG or a COR to conduct performance audits or special audits; overseeing the preparation and introduction of legislation to delay a sunset review if the OAG or a COR is unable to complete the review according to schedule; directing the OAG or a COR to conduct performance audit follow-up reviews; assigning COR chairmen [JLAC has the statutory authority to appoint COR chairmen, but traditionally the chairs are selected by standing committee chairmen when appointing the members]; and meeting quarterly or on the call of the chairman. PERFORMANCE AUDIT FOLLOW-UP PROCEDURES In July 1997, JLAC adopted a process for following up on audit recommendations. At the September 29, 1999 meeting, JLAC expanded the audit recommendation follow-up process. Prior to this September 29th meeting, the OAG would follow-up with an agency six months after a performance audit was issued and report to JLAC whether the agency was making progress in implementing the audit report’s recommendations. If the agency appeared to be making satisfactory progress, the OAG conducted no further follow-up. If the agency was not making progress, further follow-up was conducted at 18-months. However, JLAC members expanded the audit follow-up procedures at the September 29, 1999 meeting. The follow-up process in place as of September 1999 is as follows: 1. In the written response to each audit recommendation in a performance audit report, the auditee will make one of the following statements: a. b. c. d. Page 4 The finding of the OAG is agreed to and the audit recommendations will be implemented. The finding of the OAG is agreed to and a different method of dealing with the finding will be implemented. The finding of the OAG is not agreed to but the recommendation will be implemented. The finding of the OAG is not agreed to and the recommendations will not be implemented. Joint Legislative Audit Committee Role of Participants 47th Legislature 2. Following the release of each audit report, JLAC will ensure that each audit receives a public hearing by a legislative committee. JLAC may refer the audit to a COR if the audit is performed under the sunset law. However, JLAC may request other pertinent committees to hold a hearing on any audit, or JLAC may hold the hearing. 3. JLAC shall request other committees holding a hearing on an audit to specifically address, and report back to JLAC, the nature of all report recommendations with which the agency does not agree and will not implement. 4. Six months after the audit report is issued, the auditee must provide to the OAG a written explanation of the status of all audit recommendations. (The OAG shall require the auditee to provide data and information necessary to document their efforts at implementing the recommendations.) The OAG will then issue a follow-up report to JLAC indicating the status of the agency’s efforts in implementing the audit recommendations. Specifically, the follow-up report will identify how many recommendations the agency has implemented, how many recommendations they are in the process of implementing and how many recommendations have not been implemented. If the auditee has implemented all recommendations as of six months, the OAG shall report this fact to JLAC and no further follow-up will be conducted. If the auditee has not fully implemented all recommendations at six months, but appears to be making progress, then this process continues at six-month intervals up to a period of two years after the release of the audit report. If the OAG finds that the auditee is not making substantial progress in implementing the recommendations at six months and 12 months, the OAG may, within a period not to exceed 18 months, initiate a more involved follow-up review. This review shall determine the status of the recommendations and what further actions, if any, are still necessary to implement the recommendations. At two years, JLAC may require the auditee to appear before it to review the status of any remaining recommendations and to determine whether continued reporting is warranted. The OAG has the authority to verify all information provided by the auditees and issue reports to JLAC and other relevant legislative committees. Joint Legislative Audit Committee Page 5 47th Legislature 5. Role of Participants The JLAC Chairman may at any time following the release of an audit report convene a panel of JLAC members to meet with the OAG and the auditee to discuss recommendations, with which the agency disagrees and will not implement. The panel will hear from both parties and will recommend to the full committee that: a) b) There is no need for further action, or Sufficient differences exist between the OAG and the auditee to warrant the attention of the full JLAC. 6. JLAC will determine the need for further review and may, as an option, convene a final meeting of the two parties. 7. If after final review, JLAC feels it is warranted, it will draft a memorandum summarizing the differences between the OAG and the auditee and will make a memorandum available, together with any recommendations, to all members of the Legislature. Page 6 Joint Legislative Audit Committee 47th Legislature Role of Participants OFFICE OF THE AUDITOR GENERAL (Title 41, Chapter 7, Article 10.1, Arizona Revised Statutes) REQUIREMENTS Statute provides for the appointment of the Auditor General by JLAC, subject to approval by the Legislature. The term of office is five years, however, the Auditor General may be removed from office pursuant to a concurrent resolution of the Legislature. Persons who serve as the Auditor General may be re-appointed. Statute requires the Auditor General to be a certified public accountant licensed to practice in Arizona and therefore subject to the standards and ethics of the accounting profession as regulated by the Arizona Board of Accountancy. OAG POWERS & DUTIES The OAG is responsible for providing independent financial, performance and compliance audits and special research requests in support of legislative oversight and public accountability of funds administered by the state and certain local governments. In order to perform its audits, the OAG is authorized by statute to access agency correspondence, files and other records, bank accounts, criminal history record information, money and other property of any state agency. Additionally, prior to conducting a performance audit, the OAG attempts to contact legislators and legislative staff to receive input and “leads” regarding areas of concern. The OAG staff also contacts legislators and staff following the publication of an audit to respond to any questions regarding audit findings. The OAG is required to perform the following duties relating to the sunset process: • • • • • prepare and submit to JLAC a list of all agencies scheduled for sunset termination at least 20 months prior to agency termination; recommend to JLAC sunset audits to be conducted by the OAG or COR; conduct all sunset (performance) audits assigned by JLAC; distribute copies of agency performance audits to JLAC members and staff; and testify before the COR to performance audit findings. Joint Legislative Audit Committee Page 7 47th Legislature Role of Participants COMMITTEES OF REFERENCE (ARS § 41-2954) MEMBERSHIP The COR is a subcommittee of a standing committee, designed to act as the proxy of the standing committee. Consisting of five members, a COR is appointed by each Senate and House of Representatives standing committee. Pursuant to statute, no more than three members may be from the same political party. Although JLAC has the statutory authority to appoint the COR chairs, traditionally this has been done by the chair of the standing committee at the same time he or she appoints the COR. When conducting a sunset or sunrise hearing, the House and Senate COR meet jointly, therefore there is a single COR, and separate motions for the House side and the Senate side are not in order. A quorum of a COR for sunset and sunrise purposes consists of a majority of all members. Agencies subject to sunset review are generally assigned to a COR whose standing committee would most likely be responsible for hearing any legislation affecting that particular agency and has knowledge or expertise in that particular subject area. COR POWERS & DUTIES A COR has legislative subpoena power and is responsible for: • • • • • • Page 8 conducting a sunset audit of each agency assigned to it by JLAC; holding at least one public hearing upon receipt or completion of the sunset audit; evaluating and recommending agency continuance, revision, consolidation or termination based on statutory sunset factors; evaluating and recommending regulation or increased scope of practice based on statutory sunrise factors; submitting a final sunset or sunrise review report by December 1 to JLAC, the President of the Senate, Speaker of the House of Representatives, Governor, OAG and the agency that was the subject of the review; and preparing legislation to implement its recommendations [JLAC is statutorily required to oversee the preparation of such legislation, but traditionally the COR chair and staff have overseen this responsibility]. Joint Legislative Audit Committee 47th Legislature Role of Participants AGENCY SUBJECT TO REVIEW An agency subject to review performs the following functions in the sunset and sunrise review process: • Assists the OAG or COR - The agency works with the OAG, providing any necessary information. If the sunset audit is conducted by a COR, the agency provides all necessary information and responds to the sunset (audit) questions submitted by the COR. • Testifies at hearings - Agency officials testify at public hearings and present agency responses to the required agency factors, providing justification for agency continuance, modification or creation and any additional information requested by COR members. • Supports introduction of legislation - Agency officials should work with staff and COR chairman to coordinate the drafting and introduction of legislation to continue, modify or create the agency pursuant to COR recommendations. LEGISLATIVE STAFF As the chairmanship of JLAC shifts between the House of Representatives and the Senate, so does primary staffing responsibility for sunsets and sunrises. Sunset and sunrise staffing responsibilities shift with legislative terms. Senate legislative staff is responsible for staffing sunset hearings during even-numbered legislatures (Forty-eighth Legislature) and legislative staff from the House is responsible during odd-numbered legislatures (Forty-seventh Legislature). Regardless of who has primary responsibility, it is always a good idea to keep one’s staff counterpart(s) apprised of information and progress. Staff responsibilities vary depending on whether the OAG or COR conducts the sunset audit. In most instances, staff is responsible for: • • • • • • • coordinating with their Senate/House counterpart; initiating contact with the agency subject to sunset review; compiling background information; preparing information for COR members and other interested Legislators; scheduling the sunset and sunrise hearing(s); writing the final sunset and/or sunrise report; and facilitating the drafting of any legislative recommendations of the COR. Joint Legislative Audit Committee Page 9 47th Legislature Roll of Participants {This page left intentionally blank} Page 10 Joint Legislative Audit Committee Committees of Reference (Forty-seventh Legislature) 47th Legislature Committees of Reference Senate Committees of Reference ( Forty-seventh Legislature) Appropriations Commerce and Economic Development Barbara Leff, Chair Ken Cheuvront Richard Miranda Jay Tibshraeny Jim Waring John Huppenthal, Chair Marsha Arzberger Jorge Luis Garcia Jack W. Harper Jim Waring Family Services Government Accountability and Reform Karen Johnson, Chair Linda Gray Rebecca Rios Victor Soltero Thayer Verschoor Health Jack Harper, Chair Robert “Bob” Burns Albert Hale Richard Miranda Thayer Verschoor Higher Education Jim Waring, Chair Carolyn Allen Marsha Arzberger Robert Cannell Barbara Leff K-12 Education Linda Gray, Chair Jake Flake Albert Hale Victor Soltero Thayer Verschoor Natural Resources and Rural Affairs Toni Hellon, Chair Linda Aguirre Ron Gould Karen Johnson Harry E. Mitchell Joint Legislative Audit Committee Marilyn Jarrett, Chair Marsha Arzberger Timothy S. Bee Robert Blendu Robert Cannell Finance Dean Martin, Chair Ken Cheuvront Jorge Luis Garcia Jack W. Harper Jay Tibshraeny Government Jim Waring, Chair Bill Brotherton Jake Flake Linda Gray Harry E. Mitchell Judiciary John Huppenthal, Chair Linda Aguirre Jack Harper Dean Martin Richard Miranda Transportation Thayer Verschoor, Chair Carolyn Allen Marilyn Jarrett Rebecca Rios Victor Soltero Page 11 47th Legislature Committees of Reference House of Representatives Committees of Reference ( Forty-seventh Legislature) Appropriations-B Tom Boone, Chair Robert Meza Warde Nichols Steven Yarbrough Pete Rios Counties, Municipalities & Military Affairs John Nelson, Chair Cheryl Chase Russell Jones Tom Prezelski Jerry Weiers Financial Institutions & Insurance Ted Carpenter, Chair John McComish Debbie McCune Davis Nancy McLain Robert Meza Human Services Pete Hershberger, Chair Manuel Alvarez Mark Anderson David Bradley Warde Nichols Page 12 Appropriations-P Andy Biggs, Chair Jack Brown Judy Burges David Lujan Lucy Mason Environment Michele Reagan, Chair Ray Barnes Steve Huffman Leah Landrum Taylor Kyrsten Sinema Commerce John McComish, Chair Bill Konopnicki Debbie McCune Davis Robert Meza Michele Reagan Federal Mandates & Property Rights Chuck Gray,Chair Manuel Alvarez Judy Burges Tom Prezelski David Burnell Smith Government Reform & Government Finance Accountability Bill Konopnicki, Chair Cheryl Chase Phil Lopes John McComish John Nelson Health Judiciary K-12 Education David Burnell Smith, Chair Steve Gallardo Ben Miranda Doug Quelland Steven Yarbrough Rick Murphy, Chair David Bradley Laura Knaperek Linda Lopez Doug Quelland Warde Nichols, Chair Martha Garcia Ann Kirkpatrick David Burnell Smith Bob Stump Joint Legislative Audit Committee 47th Legislature Committees of Reference House of Representatives Committees of Reference ( Forty-sixth Legislature) Natural Resources & Agriculture Public Institutions & Retirement Russell Jones, Chair Cheryl Chase Ann Kirkpatrick John Nelson Tom O’Halleran Universities, Community Colleges & Technology Trish Groe, Chair Jennifer Burns Meg Burton Cahill Steve Gallardo Marian McClure Transportation Pamela Gorman, Chair Meg Burton-Cahill Russell Jones John Nelson Tom Prezelski Ways and Means Laura Knaperek, Chair John Allen Andy Biggs David Bradley Ted Downing Joint Legislative Audit Committee Steve Huffman, Chair Jack Brown Ann Kirkpatrick Michele Reagan Steven Yarbrough Page 13 47th Legislature Committees of Reference {This page left intentionally blank} Page 14 Joint Legislative Audit Committee Sunset Review Process Conducting a Sunset Review 47th Legislature Sunset Review Process SUNSET REVIEW (Title 41, Chapter 27, Arizona Revised Statutes) DESCRIPTION Established by Laws 1978, Chapter 210, the sunset review process is the systematic evaluation of an agency, under the supervision of JLAC, to determine if the merits of the program justify its continuation rather than termination, or its continuation at a level greater than or less than its current level. The entire sunset review process takes place over a 20-month period. Sunset reviews are based on sunset audits conducted by either the OAG or a COR. JLAC initiates the sunset review process by reviewing the list of agencies scheduled for termination and assigning the agencies scheduled for termination to a COR. All agencies scheduled for sunset are assigned to a House and Senate COR. JLAC also makes the determination of whether the OAG or a COR will conduct the sunset audit (called a performance audit if conducted by the OAG). This determination is based upon a number of factors, including: the number of audit hours the OAG estimates a performance audit of the agency will require; the number and seriousness of concerns and issues identified by Legislators, legislative staff or the OAG regarding the agency; and the size and budget of the agency. Upon completion of the sunset audit, whether conducted by the OAG or the COR, the COR is required to hold at least one public hearing to discuss the audit and receive testimony from agency officials and the public. The COR may hold subsequent hearings to obtain further information as deemed necessary. Upon completion of COR deliberations, including a review of the 12 statutory sunset factors and a presentation by the agency addressing the four required agency factors, the COR must submit a final sunset review report by December 1, containing, in part, its recommendation for continuation, revision, consolidation or termination of the agency. The final sunset review report contains the COR recommendation to continue, revise, consolidate or terminate the agency and the written agency factors. Legislative staff and Legislative Council typically draft any recommended legislation. Historically, the COR chair has introduced the legislation necessary to continue, consolidate or revise and agency during the following legislative session; however, the agency subject to sunset review has the responsibility of requesting the chair, or any other legislative member, to sponsor the necessary legislation. If the COR recommends that the agency terminate, legislation is not necessary. Legislative staff should communicate this responsibility to the agency. Joint Legislative Audit Committee Page 15 47th Legislature Sunset Review Process CONDUCTING A SUNSET REVIEW A sunset review is based upon an audit conducted by either the OAG (performance audit) or the legislative staff assigned to the COR. The essential difference between a performance audit and an audit conducted by a COR is the depth and scope of the audit. An OAG performance audit is usually conducted over a period of several months and OAG staff actually goes on-site with the agency to review files and records and conduct interviews. COR audits are typically “self” audits as the agency is asked to respond to the sunset factors and legislative staff conducts minimal background and legal research. The steps for conducting a sunset review when the OAG conducts a performance audit are very similar to the steps for conducting a review when the COR conducts the audit. Following is a brief discussion of staff responsibilities under both of these scenarios. 1. WHAT TO DO IF OAG CONDUCTS THE AUDIT: Step 1 - Assignment of reviews • The OAG submits a list of agencies scheduled for termination to JLAC - This list includes all agencies statutorily scheduled for sunset termination and an estimation of the hours necessary to complete each agency's review if the OAG were to conduct the review. The OAG submits this list at least 20 months prior to the agencies' scheduled date of termination. • JLAC establishes the sunset review schedule - Based on a review of the sunset termination schedule and audit hours information submitted by the OAG, JLAC approves the audit schedule. JLAC may delay an agency's review if it believes the OAG or the COR will not be able to complete the audit according to schedule. If JLAC delays a review, it is responsible for introducing legislation to statutorily extend the agency's termination date so the agency will not expire pending review. • JLAC determines who shall perform the sunset audit - Based on the sunset schedule and audit hours information submitted by the OAG, JLAC determines whether the OAG or the COR will conduct an agency audit. The more complex agencies are generally assigned to the OAG for an agency-wide performance audit. • JLAC assigns agencies subject to review to a COR - Statute requires all agencies scheduled for a sunset to be assigned to a COR regardless of whether the OAG or the COR conducts the sunset audit. Legislative staff is provided a list of COR assignments by JLAC staff. Page 16 Joint Legislative Audit Committee Sunset Review Process 47th Legislature Step 2 - Performance Audit • The OAG conducts performance audits of assigned agencies - Legislative staff and all JLAC members receive a copy of the completed performance audit. Step 3 - Pre-Sunset Hearing • Review performance audit - Legislative staff should review the performance audit. • Contact the agency to request submission of written required agency factors – Agencies are statutorily required to submit written required agency factors prior to the public hearing (ARS §41-2954, paragraph F). • Contact other parties - Upon review of the performance audit, legislative staff should contact the following parties to discuss agency performance, identify problems and other issues relating to the agency: Joint Legislative Budget Committee (JLBC) Governor's Office of Strategic Planning and Budgeting (OSPB) OAG Professional Associations Interested Constituents • Contact the COR chairman and staff counterpart - Legislative staff should inform the COR chair of the upcoming sunset review and discuss any potential issues/ concerns. • Schedule a public hearing, prepare agenda and materials for members - The COR is required to hold a public hearing upon receipt of the performance audit, however, more than one meeting may be held, if necessary. When scheduling the public meeting, legislative staff should consult with agency staff and the OAG to ensure their attendance and ability to present the required agency factors. At a minimum, the sunset hearing agenda should include the presentation of the performance audit by the OAG, a presentation of the required agency factors and an opportunity for testimony from agency officials and the public. The agenda may also include adoption of the COR recommendations, if additional COR meetings will not be necessary. Materials distributed by legislative staff may include a summary of the performance audit and agency response; the written required agency factors, budget data and any draft recommendations. Joint Legislative Audit Committee Page 17 47th Legislature • Sunset Review Process Notify the agency - Legislative staff may prepare a notification letter on behalf of the COR chairman stating the date and time of the sunset review hearing. Meeting notices should also be sent to: COR members OAG JLAC members Attorney General Legislative Council JLBC Staff Director Other interested parties Step 4 - Sunset Hearing • Hold a public hearing - Statute (ARS § 41-2954) requires the COR to hold a public hearing for the following purposes: (1) (2) (3) (4) • Sunset factors - Statute (ARS § 41-2954) requires the COR to consider, at a minimum, the following 12 sunset factors when determining the need for continuation or termination of an agency: (1) (2) (3) (4) (5) (6) (7) (8) (9) Page 18 Determine the need of the agency to regulate or direct a particular activity. Determine if the agency is meeting its statutory responsibilities and if those responsibilities are necessary. Provide an opportunity for public testimony. Provide an opportunity for the agency to justify its continuation. The objective and purpose in establishing (continuing) the agency. The effectiveness with which the agency has met its objective and purpose, and the efficiency with which it has operated. The extent to which the agency has operated within the public interest. The extent to which rules adopted by the agency are consistent with the legislative mandate. The extent to which the agency has encouraged input from the public before adopting its rules and the extent to which it has informed the public as to its actions and their expected impact on the public. The extent to which the agency has been able to investigate and resolve complaints within its jurisdiction. The extent to which the Attorney General, or any other applicable agency of state government, has the authority to prosecute actions under the enabling legislation. The extent to which agencies have addressed deficiencies in their enabling statutes which prevent them from fulfilling their statutory mandate. The extent to which changes are necessary, in the laws of the agency, to adequately comply with the factors listed in this subsection. Joint Legislative Audit Committee Sunset Review Process (10) (11) (12) • 47th Legislature The extent to which the termination of the agency would significantly harm the public health, safety or welfare. The extent to which the level of regulation exercised by the agency is appropriate and whether less or more stringent levels of regulation would be appropriate. The extent to which the agency has used private contractors in the performance of its duties and how effective use of private contractors could be accomplished. Required Agency Factors - Statute requires the agency to prepare a written statement and make a presentation at the first public meeting that addresses the following required agency factors: (1) (2) (3) (4) An identification of the problem or needs which the agency is intended to address. A statement, to the extent practical, in qualitative or quantitative terms, of the objectives of the agency. Identification of any conflicting or overlapping duties with other agencies. An analysis of the consequences of eliminating the agency. Step 5 - Follow-up • Prepare a final sunset report - Legislative staff prepares a final report pursuant to statutory guidelines (ARS § 41-2954) containing the following information: (1) (2) • A recommendation that the agency be continued, revised, consolidated or terminated. A written statement prepared by the agency that contains the required agency factors. Distribute final sunset review report - By December 1, legislative staff should, at a minimum, distribute copies of the final report to the following: JLAC members COR members Governor’s Office Secretary of the Senate • Chief ClerkDirector of the agency subject to review State Library, Archives & Public Records OAG Draft legislation - Legislative staff and Legislative Council shall draft any recommended legislation. Legislation is not necessary if the COR recommends agency termination. Joint Legislative Audit Committee Page 19 47th Legislature Sunset Review Process SUNSET REVIEW PROCESS TIMETABLE (OAG Conducts a Performance Audit) Deadline May/June Activity OAG submits list of agencies subject to sunset review (at least 20 months prior to termination of the agencies) May/June JLAC assigns agencies to committees of reference for review Staff is notified of JLAC assignments August Draft performance audit completed Agencies may respond to the draft performance audit within 40 days September/October OAG submits performance audit report to JLAC Staff schedules Sunset hearing(s) December Final sunset review report completed January Introduction of legislation to implement COR recommendations July Termination of agency, unless legislatively continued Page 20 Joint Legislative Audit Committee Sunset Review Process 47th Legislature 2. WHAT TO DO IF COR CONDUCTS THE PERFORMANCE AUDIT: Step 1 - Assignment of reviews • The OAG submits a list of agencies scheduled for termination to JLAC - This list includes all agencies statutorily scheduled for sunset termination and an estimation of the hours necessary to complete each agency's review if the OAG were to conduct the review. The OAG submits this list at least 20 months prior to the agency’s scheduled date of termination. • JLAC establishes the sunset review schedule - Following a review of the sunset termination schedule and audit hours information submitted by the OAG, JLAC approves the audit schedule. JLAC may delay an agency's review if it believes the OAG or the COR will not be able to complete the audit according to schedule. If JLAC delays a review, it is responsible for introducing legislation to statutorily extend the agency's termination date so the agency will not expire pending review. • JLAC determines who shall perform the sunset audit - Based on the sunset schedule and audit hours information submitted by the OAG, JLAC determines whether the OAG or a COR will conduct an agency audit. The more complex agencies are generally assigned to the OAG for an agency-wide performance audit. • JLAC assigns agencies subject to review to a COR - Statute requires all agencies scheduled for a sunset to be assigned to a COR, regardless of whether the OAG or a COR will conduct the sunset audit. Legislative staff is provided a list of COR assignments by OAG staff. Step 2 - Initiate Contact • Contact the chairman of the COR and staff counterpart - Legislative staff should inform the COR chair of the upcoming sunset review and discuss any potential issues/ concerns. • Notify the agency - Legislative staff prepares a notification letter on behalf of the COR chair, informing the agency of its coming review and requesting the agency to submit a written report. The agency must submit a report containing the agency's response to the twelve sunset factors as well as a written statement addressing the four required agency factors listed in ARS § 41-2954. The chair may request other relevant information, such as copies of the agency’s annual report or minutes from board meetings. The written response of the agency, and other relevant information, is the sunset audit when the COR conducts the sunset review. Joint Legislative Audit Committee Page 21 47th Legislature Sunset Review Process The agency should be asked to respond to the chair, by a date certain (usually midAugust - September), allowing enough time for legislative staff to review and distribute to COR members the materials received from the agency. • Contact other parties - At a minimum, legislative staff should contact the following parties to discuss agency performance, identify problems and other issues relating to the subject agency: Joint Legislative Budget Committee Governor's Office of Strategic Planning and Budgeting Professional Associations Interested Constituents Step 3 - Pre-Sunset Meeting/Review Materials • Review and evaluate sunset factors - Legislative staff should, in conjunction with other information discovered through their research, review the agency's response. At a minimum, staff should ensure that the agency fully responded to the sunset factors. • Schedule a public hearing, prepare agenda and materials for members - Upon receipt of the sunset audit, the COR is required to hold at least one public hearing, however, more than one meeting may be held if necessary. At a minimum, the agenda should include a presentation from agency officials, including a presentation of the required agency factors, and provide an opportunity for public input. The agenda may also include adoption of the COR recommendations if follow-up COR meetings will not be necessary. Materials distributed by legislative staff may include a summary of the performance audit and agency response, budget data and draft recommendations. Meeting notices should be sent to: COR members Legislative Council Agency officials Page 22 JLAC members JLBC Staff Director Other interested parties Joint Legislative Audit Committee Sunset Review Process 47th Legislature Step 4 - Sunset Meeting • Hold a public hearing - Statute requires the COR to hold a public hearing for the following purposes: (1) (2) (3) (4) • Determine the need of the agency to regulate or direct a particular activity. Determine if the agency is meeting its statutory responsibilities and if those responsibilities are necessary. Provide an opportunity for public testimony. Provide an opportunity for the agency to justify its continuation. Sunset factors - Statute (ARS § 41-2954) requires the COR to consider, at a minimum, the following 12 sunset factors when determining the need for continuation or termination of an agency: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) The objective and purpose in establishing the agency. The effectiveness with which the agency has met its objective and purpose and the efficiency with which it has operated. The extent to which the agency has operated within the public interest. The extent to which rules adopted by the agency are consistent with the legislative mandate. The extent to which the agency has encouraged input from the public before adopting its rules and the extent to which it has informed the public as to its actions and their expected impact on the public. The extent to which the agency has been able to investigate and resolve complaints that are within its jurisdiction. The extent to which the attorney general or any other applicable agency of state government has the authority to prosecute actions under the enabling legislation. The extent to which agencies have addressed deficiencies in their enabling statutes which prevent them from fulfilling their statutory mandate. The extent to which changes are necessary in the laws of the agency to adequately comply with the factors listed in this subsection. The extent to which the termination of the agency would significantly harm the public health, safety or welfare. The extent to which the level of regulation exercised by the agency is appropriate and whether less or more stringent levels of regulation would be appropriate. The extent to which the agency has used private contractors in the performance of its duties and how effective use of private contractors could be accomplished. Joint Legislative Audit Committee Page 23 47th Legislature • Sunset Review Process Required Agency Factors – Statute requires the agency to prepare a written statement and make a presentation at the first public meeting that addresses the following required agency factors: (1) (2) (3) (4) An identification of the problem or the needs that the agency is intended to address. A statement, to the extent practical, in qualitative or quantitative terms, of the objectives of the agency and its anticipated accomplishments. Identification of any other agencies having similar, conflicting or duplicate objectives, and an explanation of the manner in which the agency avoids duplication or conflict with other such agencies. An assessment of the consequences of eliminating the agency or of consolidating it with another agency. Step 5 - Follow-up • Prepare a final sunset report - Legislative staff prepares a final report pursuant to statutory guidelines (ARS § 41-2954) containing the following information: (1) (2) • A recommendation that the agency be continued, revised, consolidated or terminated. A written statement prepared by the agency that contains the required agency factors. Distribute final sunset review report - By December 1, legislative staff should, at a minimum, distribute copies of the final report to the following: JLAC members COR members Governor’s Office Senate Resource Room House Chief Clerk Director of the agency subject to review State Library, Archives & Public Records OAG • Draft legislation - Legislative staff and Legislative Council draft any recommended legislation. Legislation is not necessary if the COR recommends agency termination. Page 24 Joint Legislative Audit Committee 47th Legislature Sunset Review Process SUNSET REVIEW PROCESS TIMETABLE (COR Conducting Performance Audit) Deadline Activity May/June OAG submits list of agencies subject to sunset review (at least 20 months prior to termination) May/June JLAC assigns agencies to committees of reference for review Legislative staff is notified of JLAC assignments June/July Agency contacted, requested to submit responses to sunset factors September/October Staff schedules Sunset hearing(s) December Final sunset review report completed January Introduction of legislation to implement COR recommendations July Termination of agency, unless legislatively continued Joint Legislative Audit Committee Page 25 47th Legislature Sunset Review Process {This page left intentionally blank} Page 26 Joint Legislative Audit Committee Sunrise Review Process Conducting a Sunrise Review 47th Legislature Sunrise Review Process SUNRISE REVIEW PROCESS (ARS § 32-3101 through 32-3106) DESCRIPTION The sunrise procedure was established by Laws 1985, Chapter 352, to provide a mechanism for health professions to request that the state regulate a currently unregulated profession or request an expansion of the scope of practice of a regulated profession. To initiate the sunrise process, an applicant group must submit a written report to JLAC, by September 1, responding to the statutorily prescribed sunrise factors (ARS § 32-3105 or 32-3106). The report is then assigned, by JLAC, to a COR for review. The COR may hold meetings as necessary to consider the report and receive testimony from the public, the applicant group and, if applicable, the regulatory board of the health profession. Although statute does not require the COR hold meetings to deliberate the sunrise application, the COR is required to study the sunrise report and deliver a report of its recommendations regarding the sunrise to JLAC, the Governor, President of the Senate, Speaker of the House of Representatives and the applicant group by December 1 of the same year the sunrise request is submitted to JLAC. Legislative staff and Legislative Council draft any recommended legislation. Although not required, the COR chair may introduce any legislation recommended to regulate a currently unregulated profession or request that the scope of practice of a currently regulated profession be expanded, during the following legislative session; however, the sunrise applicant has the responsibility of requesting the chair, or any other legislative member, to sponsor the legislation. Legislative staff should communicate this responsibility to the applicant. Joint Legislative Audit Committee Page 27 47th Legislature Sunrise Review Process SUNRISE FACTORS 1. GENERAL Statute stipulates that an unregulated health profession shall not be regulated unless the regulation is for the express purpose of protecting the public interest. All legislation proposed in order to regulate a health profession for the first time must be reviewed according to the following sunrise criteria: (1) (2) (3) If the practice of the health profession were to go unregulated, it could clearly harm or endanger the public health, safety or welfare and the potential for harm is easily recognizable and not remote or dependent on tenuous argument. The public needs, and can be reasonably expected to benefit from, the regulation of the profession. The public cannot be effectively protected by other means in a more cost beneficial manner. After evaluating the above criteria, if the Legislature finds that it is necessary to regulate a health profession, statute stipulates that the regulation to be implemented must be the least restrictive as possible. Regulation may be achieved through regulation by an exiting state agency and implementation of a registration or certification system, rather than the creation of a new licensing board. 2. APPLICANTS FOR NEW REGULATION Pursuant to ARS § 32-3105 (review statute for full text), the written sunrise report submitted to JLAC and the COR, applicants for regulation must respond to each of the following sunrise criteria: (1) (2) (3) (4) (5) (6) (7) (8) Page 28 Define the problem and why regulation is necessary, including the nature of potential harm to the public, and the extent to which consumers need and will benefit from the regulation. Describe efforts made to address the problem, including voluntary efforts and the use of applicable current law. Alternatives considered. Benefit to the public if regulation is granted. The extent to which regulation may harm the public. Proposed maintenance of standards. A description of the group proposed for regulation, including a list of associations, organizations and another groups. Expected costs to the state and the general public of implementing the proposed regulation. Joint Legislative Audit Committee Sunrise Review Process 3. 47th Legislature APPLICANTS FOR INCREASE IN SCOPE OF PRACTICE Pursuant to ARS § 32-3106 (review statute for full text), the written sunrise report submitted to JLAC and the COR, applicants for increased scope of practice must respond to each of the following sunrise criteria: (1) (2) (3) (4) Define the problem and why an increased scope of practice is necessary, including consumers need and benefits, if an increase is granted. The extent to which the public can be confident that qualified practitioners are competent. The extent to which an increased scope of practice may harm the public. The estimated cost to the state and the general public of implementing the proposed increase in scope of practice. Joint Legislative Audit Committee Page 29 47th Legislature Sunrise Review Process CONDUCTING A SUNRISE REVIEW Step 1 - Application Submitted • An applicant group requesting regulation - submits a written report defining the problem, explaining the need for regulation and discussing the costs, benefits and negative impact of regulation. This report lists the affected associations, organizations and other practitioner groups, summarizes efforts taken to address the problem, describes alternatives to regulation and discusses the maintenance of professional standards. The report must be submitted to JLAC on or before September 1. Step 2 - Assignment of review • JLAC receives the applicant group's report and assigns it to a COR. Step 3 - Pre-Sunrise Meeting • Review and evaluate sunrise factors - Legislative staff should: determine if the sunrise request is for an increase in scope of practice or new regulation and review the appropriate sunrise factors; review the applicant’s written report; and distribute copies of the report to COR members. • Contact the COR chair - Legislative staff should inform the COR chair of the application for new regulation or expanded scope of practice (sunrise) and discuss any potential issues/concerns. • Schedule a public hearing - A public hearing is not required by law and should be held at the discretion of the COR chair. • Prepare agenda and materials for a public hearing - If the COR chair decides to hold a public hearing, the agenda, at a minimum, should include the presentation of the written report by the applicant and an opportunity for testimony from other officials and the public. The agenda may also include adoption of final recommendations, if additional COR meetings are not necessary. If a public hearing is held, it is recommended that staff contact other legislative staff, such as JLBC and Legislative Council. • Recommendation - The COR, upon review of the applicant group’s sunrise request and receipt of testimony, may make recommendations regarding the request for regulation or the increased scope of practice. Step 4 - Follow-up Page 30 Joint Legislative Audit Committee Sunrise Review Process 47th Legislature • Prepare final sunrise report - While a meeting is not required on a sunrise, the COR is required to submit a report of its findings to JLAC, the Governor, President of the Senate and Speaker of the House by December 1. • Distribute sunrise review report - Legislative staff distributes copies of the sunrise report and recommendations to the following individuals: JLAC members & staff COR members Governor’s Office Applicant group State Library, Archives and Public Records Senate Resource Room House Chief Clerk • Draft legislation - Legislative staff and Legislative Council draft any recommended legislation. Joint Legislative Audit Committee Page 31 47th Legislature Sunrise Review Process SUNRISE PROCESS TIMETABLE Deadline Activity September 1 Applicant group submits a written report to JLAC detailing the reasons for regulation or increase in scope of practice Not specified JLAC assigns agencies to committees of reference for review Not specified Sunrise hearing(s) scheduled (Statute does not require that a hearing be held.) December 1 Final sunrise report submitted January Introduction of legislation to implement COR recommendations Page 32 Joint Legislative Audit Committee COMMITTEE OF REFERENCE (COR) ASSIGNMENTS FOR 2005 SUNSET CYCLE AND NON-SUNSET AUDITS Statutory Reference Agency and Programs Selected for Review COR Recommendations Responsible For Conducting Audit Arizona Outdoor Recreation Commission House: Counties, Mun. & Mil Senate: NRRA ARS §41-3006.02 Department of Mines and Mineral Resources House: Natural Res. Senate: NRRA COR ARS §41-3006.03 Oil and Gas Conservation Commission House: ENV Senate: NRRA COR ARS §41-3006.04 Arizona Power Authority House: Commerce Senate: CED COR ARS §41-3006.05 State Personnel Board House: GRGFA Senate: GOV COR ARS §41-3006.06 Department of Administration House: GRGFA Senate: GOV OAG ARS §41-3006.07 Election Officer Education, Training and Certification Advisory Committee House: JUD Senate: JUD COR ARS §41-3006.08 Arizona State Retirement System House: PIR Senate: FIN OAG ARS §41-3006.09 Elected Officials’ Retirement Plan; Public Safety Personnel Retirement System; Corrections Officer Retirement Plan House: PIR Senate: FIN COR ARS §41-3006.10 Board of Homeopathic Medical Examiners House: Health Senate: Health COR ARS §41-3006.01 1 COR Statutory Reference Agency and Programs Selected for Review COR Recommendations Responsible For Conducting Audit ARS §41-3006.11 Board for Private Postsecondary Education House: Univ, Comm Coll. & Tech. Senate: HED COR ARS §41-3006.12 State Foster Care Review Board House: Human Services Senate: FS OAG ARS §41-3006.13 Prescott Historical Society House: GRGFA Senate: GOV COR ARS §41-3006.14 Radiation Regulatory Agency and Hearing Board House: ENV Senate: CED COR ARS §41-3006.15 Board of Technical Registration House: COM Senate: CED COR ARS §41-3006.16 Health Facilities Authority House: Health Senate: Health COR ARS §41-3006.17 Industrial Commission House: COM Senate: CED COR ARS §41-3006.18 Occupational Safety and Health Advisory Committee House: COM Senate: CED COR ARS §41-3006.19 Boiler Advisory Board House: COM Senate: CED COR ARS §41-3006.20 Employment Advisory Council House: COM Senate: CED COR ARS §41-3006.21 Occupational Safety and Health Review Board House: COM Senate: CED COR 2 Statutory Reference Agency and Programs Selected for Review COR Recommendations Responsible For Conducting Audit ARS §41-3006.22 Department of Revenue House: Ways & Means Senate: FIN OAG ARS §41-3006.23 Department of Economic Security House: Human Services Senate: FS OAG ARS §41-3006.25 Government Information Technology; Information Technology Authorization Committee House: GRGFA Senate: GOV OAG ARS §41-3006.26 Medical Radiologic Technology Board of Examiners House: Health Senate: Health COR ARS §41-1279.03 Maricopa County Transportation Excise Tax House: Transportation Senate: Transportation OAG Laws 2004 Chapter 279 Nursing Care Institution Administrators and Assisted Living Facility Managers Board House: Health Senate: Health OAG Laws 2002 Chapter 245, §4 Review of Ultrasounds House: Health Senate: Health OAG 3 PRESIDENT AND SPEAKER RECOMMENDATIONS FOR COMMITTEE OF REFERENCE (COR) ASSIGNMENTS FOR 2006 SUNSET CYCLE AND NON-SUNSET AUDITS Statutory Reference Agency and Programs Selected for Review COR Recommendations Responsible for Conducting Audit A.R.S. §41-3007.01 Agricultural Best Management Practices Advisory Committees Senate: NRRA House: NRA COR A.R.S. §41-3007.02 Grazing Best Management Practices Advisory Committee Senate: NRRA House: NRA COR A.R.S. §41-3007.03 Arizona Exposition and State Fair Board Senate: GOV House: GRGFA COR A.R.S. §41-3007.04 Board of Respiratory Care Examiners Senate: HEALTH House: HEALTH COR A.R.S. §41-3007.05 Governor’s Regulatory Review Council Senate: GAR House: GRGFA OAG A.R.S. §41-3007.06 Arizona Uniform Plumbing Code Commission Senate: CED House: COMMERCE COR A.R.S. §41-3007.07 Arizona Criminal Justice Commission Senate: JUD House: JUD COR A.R.S. §41-3007.08 Property Tax Oversight Commission Senate: FIN House: WM COR A.R.S. §41-3007.09 School Safety Program Oversight Committee Senate: K-12 ED House: K-12 ED COR A.R.S. §41-3007.10 Automobile Theft Authority Senate: TRANS House: TRANS COR 1 Statutory Reference Agency and Programs Selected for Review COR Recommendations Responsible for Conducting Audit A.R.S. §41-3007.11 Board of Osteopathic Examiners in Medicine and Surgery Senate: HEALTH House: HEALTH COR A.R.S. §41-2958 Department of Education Senate: K-12 ED House: K-12 ED OAG A.R.S. §41-1279.03 Pinal County Transportation Excise Tax Senate: TRANS House: TRANS OAG A.R.S. §41-1279.03 School District Performance Audits (San Carlos Unified, Phoenix Elementary, Amphitheater Unified, Bisbee Unified, Alpine Elementary, Avondale Elementary, Deer Valley Unified, and Litchfield Elementary) Senate: K-12 ED House: K-12 ED OAG A.R.S. §41-1966 DES Child Protective Services Senate: FAMILY SERVICES House: HUMAN SERVICES OAG Laws 2004 Chapter 39, §2 Administrative Office of the Courts Senate: JUD House: JUD OAG Laws 2005 Chapter 256 Behavioral Health Services Senate: HEALTH House: HEALTH OAG Laws 2005 Chapter 328, §24 AHCCCS Healthcare Group Program Senate: HEALTH House: HEALTH OAG 2