Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR Altamirano

DATE TYPED 1/31/05

HB

SHORT TITLE Creating Office of State Comptroller

SB 170

ANALYST Hadwiger

APPROPRIATION

(in $000s)

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$750.0

Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates HB49. Both are LFC committee bills.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts (AOC)

State Auditor (SA)

Attorney General (AG)

General Services Department (GSD)

Corrections Department (CD)

Public Education Department (PED)

Human Services Department (HSD)

No responses had been received from the Taxation and Revenue Department, Department of Fi-

nance and Administration, or State Personnel Office at the time this fiscal impact report was pre-

pared.

SUMMARY

Synopsis of Bill

Senate Bill 170 would create an Office of the State Comptroller as an adjunct agency, adminis-

tratively attached to the Department of Finance and Administration. The comptroller would be

appointed by the Governor with the advice and consent of the Senate. The bill sets out the

comptroller’s required qualifications—that he or she be a certified public accountant with audit

and government experience. The comptroller would serve for a term of six years and be re-

moved only for cause.

Senate Bill 170 -- Page 2

SB170 sets forth the following duties for the state comptroller:

1.

Oversee the executive branch’s implementation of the Accountability in Government Act

2.

Oversee statutory oversight duties of specified divisions of the Department of Finance

and Administration, as well as the State Personnel Office, Public Education Department,

General Services Department, and Commission on Higher Education to assure compli-

ance with statutory duties

3.

Conduct periodic reviews and recommend revisions in policies, procedures and resources

of the agencies above to assure statutory compliance

4.

Work with the State Auditor on annual and special audits

5.

As requested by interim legislative committees, gather, analyze and validate state agency

information

6.

Conduct performance audits pursuant to the Accountability in Government Act

7.

Perform duties as assigned by the governor

8.

Assist state agencies in resolving audit findings and reviewing performance measures

9.

Contract for special audits and investigations

10.

Promulgate rules as necessary to carry out these duties.

SB170 requires state agencies to provide complete cooperation to the state comptroller in the

conduct of a performance audit and requires employees of state agencies to provide the comp-

troller access to specified public records and documents as well as to such property of a contrac-

tor of the agency. Inspectors general and internal auditors of state agencies would report to the

comptroller periodically and as requested. The inspectors general and internal auditors, with the

New Mexico state police, would be required to conduct such audits and special investigations as

are requested by the state comptroller. The bill provides that final audits and reports of the comp-

troller would be public documents, but working papers would be confidential.

SB170 also makes it a duty for the Legislative Finance Committee (LFC) to conduct perform-

ance audits pursuant to the Accountability in Government Act. It also requires state agencies to

provide complete cooperation to the LFC in the conduct of a performance audit and requires em-

ployees of state agencies to provide the LFC access to specified public records and documents as

well as to such property of a contractor of the agency. The bill provides that final audits and re-

ports of the LFC would be public documents, but working papers would be confidential.

Senate Bill 170 appropriates $750 thousand from the general fund to the Office of the State

Comptroller in the Department of Finance and Administration to carry out the provisions of the

act.

Significant Issues

Senate Bill 170 proposes creation of an agency (the Office of the State Comptroller) within the

executive branch that would provide a single point of oversight, or umbrella oversight, of statu-

tory compliance of other state agencies. The purpose of this bill is to fill significant gaps within

the current structure of oversight in New Mexico state government.

Currently, several state agencies are responsible for statutory and regulatory compliance with

regard to a limited sector of state government activities, but there is no single authority with

broad oversight. The State Personnel Office (SPO) enforces the Personnel Act, as well as over-

sees state compliance with federal law and other federal and state regulations. The financial con-

trol division of the Department of Finance and Administration (DFA) maintains the central ac-

Senate Bill 170 -- Page 3

counting system, validates legal appropriation of funds before vouchers or purchase orders are

issued and is generally responsible for financial controls. The State Auditor is responsible for

annual audits of agency finances, as well as special audits, with a particular focus on identifying

financially fraudulent activities.

There are two shortcomings to the current method of oversight in the executive branch. First,

there are gaps in coverage. No executive branch agency is responsible for performance audits

under the Accountability in Government Act or for management and program audits that do not

involve fraudulent activities. The State Auditor has generally declined to assume these responsi-

bilities, even when offered additional resources to perform them. Second, to some degree, agen-

cies such as SPO or the financial control division are responsible for overseeing statutory com-

pliance of their own operations, creating a conflict of interest within the agency.

The Human Services Department indicated SB170 could increase state agency compliance with

performance-based budgeting and its ultimate goals of improved performance and achieving

stated missions, but could also increase the resources required to address additional auditing and

reporting requests from the comptroller and LFC. This perspective was echoed by the Adminis-

trative Office of the Courts, which noted that the comptroller could possibly streamline audits

and help state agencies to better comply with audit issues, but could also result in a need to re-

spond to more audits.

The Corrections Department indicated that SB170 does not pose any significant issues for that

agency. The bill may result in a slight increase in administrative requirements to comply with

the reporting requirement or to assist in audits.

The Attorney General indicated concern that SB170 might violate separation of powers between

the executive and legislative branch by requiring the comptroller to analyze information at the

request of an interim legislative committee and by authorizing the LFC staff to audit executive

branch agencies. This discussion reflects an ongoing tension between executive autonomy and

executive privilege, on one hand, and legislative oversight on the other. In Congress, the U.S.

Government Accountability Office (GAO) has functions similar to those of the LFC and access

to extensive executive branch information. GAO activities include evaluations of federal pro-

grams; performance, financial and management audits; policy analyses; legal opinions; bid pro-

test adjudications; and fraud investigations. It is not clear that the LFC responsibilities and ac-

cess to information in this bill would encroach further upon executive privilege than the GAO

does in Washington.

The Attorney General was also concerned that the expansion of LFC staff authority to include

auditing agency contractors might violate constitutional privacy, search and seizure, and due

process concerns.

The Office of the State Auditor indicated that the bill would duplicate responsibilities already

assigned to several agencies, including the auditor (fraud investigations), the financial control

division of the Department of Finance and Administration (internal control over finance and

compliance with laws), and the LFC (review of agency operations and management). The State

Auditor was concerned that the new office of comptroller could cause confusion regarding which

agency is responsible for what. The State Auditor was also concerned that agency’s independ-

ence could be impaired.

Senate Bill 170 -- Page 4

PERFORMANCE IMPLICATIONS

Under SB170, the Office of the State Comptroller and LFC would play a critical role in assuring

the validity of performance measures submitted under the Accountability in Government Act and

in assessing agency performance under the Act.

FISCAL IMPLICATIONS

The appropriation of $750 thousand contained in this bill is a recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of FY06 would revert to

the general fund.

Several agencies indicated concern that there might be additional costs incurred in copying and

providing information to the comptroller. To some degree, this concern was offset by the possi-

bility that the comptroller could improve operations or result in operational efficiencies.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

SB170 duplicates House Bill 49. Both are sponsored for the LFC.

DH/yr