SB388: Bill Text

LRB-4089/1

MPG/JK/MDK:kjf&skw

2019 - 2020 LEGISLATURE

2019 Senate BILL 388

September 5, 2019 - Introduced by Senators Cowles, Jacque and Stroebel, cosponsored by Representatives Murphy, Kerkman, Nygren, Felzkowski, Zimmerman, Pronschinske, Ramthun, Knodl and Tusler. Referred to Committee on Universities, Technical Colleges, Children and Families.

SB388,1,8 An Act to renumber and amend 18.01 (4) (intro.), 19.32 (2) and 36.09 (1) (f); to amend 18.05 (2), 18.05 (3), 18.06 (8) (am) 2., 18.10 (1), 18.10 (8), 18.10 (9), 18.14 (title), 36.115 (1) and 36.17 (1); and to create 18.01 (4) (bm), 18.11, 19.32 (2) (c), 19.42 (10) (t), 19.42 (13) (q), 36.09 (1) (f) 1. a., 36.09 (1) (f) 1. b., 36.09 (1) (f) 2., 36.09 (3) (c), 36.11 (59) and 36.115 (9) of the statutes; relating to: state debt guaranties; delegations by the Board of Regents of the University of Wisconsin System; organizations affiliated with the UW System; and standards of conduct for certain UW System employees.

Analysis by the Legislative Reference Bureau

This bill provides that any agreement by the state to guaranty the debt of another is not a debt of the state and is unenforceable except as expressly provided otherwise by law. The bill also makes the following changes regarding the University of Wisconsin System.

Delegations of authority. The bill makes changes to the delegation authority of the Board of Regents of the UW System. The bill requires the Board of Regents to make all limited appointments, except for those that current law requires the president of the UW System to make, and prohibits the Board of Regents from delegating its authority to make limited appointments. The bill also prohibits the Board of Regents from delegating its governance powers or duties to the president of the UW System or a chancellor or other administrative officer of a UW institution. “Governance powers or duties” is defined as those powers or duties that rise above duties related to administration or operation and include the power to approve policies or budgets or to specify the mission of the UW System or a UW institution. The bill also prohibits the Board of Regents from delegating the authority to enter into a guaranty, financial agreement, or obligation involving an affiliated organization. Subject to the foregoing prohibitions, the bill allows the Board of Regents to adopt policies that explicitly delegate authority it considers appropriate to a committee of the Board of Regents, an institutional board, a committee of an institution, or another group.

UW-affiliated organizations. The bill prohibits a chancellor or administrative officer or other employee of an institution to make a guaranty or enter into a financial agreement or obligation with a UW-affiliated organization without the express written consent of the Board of Regents. The bill defines a “UW-affiliated organization” as an entity that 1) is legally distinct from a UW institution; 2) is organized and operated for the benefit or in support of a UW institution; and 3) is either permitted to use a UW institution's name (name permission) or is provided use of a UW institution's space, resources, or employees (institutional use). However, excluded from the definition is the UW Hospitals and Clinics Authority and its affiliated entities. Also excluded is any “state agency,” which is defined as any office, department, agency, institution of higher education, association, society, or other body in state government that is 1) created or authorized to be created by the state's constitution or any law and 2) entitled to expend moneys appropriated by law. “State agency” is also defined to include any authority, but to exclude the legislature and the courts.

The bill provides that a violation of the above prohibition is malfeasance and requires the violator to be dismissed for cause. The bill also provides that a guaranty, financial agreement, or obligation made or entered into in violation of the prohibition is void and unenforceable, except the violator is personally liable for any obligation incurred on behalf of a UW institution in the guaranty, financial agreement, or obligation.

The bill imposes other requirements regarding UW-affiliated organizations. The bill requires UW institutions to annually report to the Board of Regents the name permission and institutional use provided to UW-affiliated organizations and the payments made for the name permission and institutional use. The bill defines “payment” to include any payment in cash, goods, services, or any other thing of value. The report must also include the difference between the monetary value of the payments and the fair market value of the name permission and institutional use. In addition, the report must describe and set forth all payments made by a UW institution to a UW-affiliated organization. The bill also requires the Board of Regents to establish requirements for regularly evaluating the relationship between UW institutions and UW-affiliated organizations.

The bill prohibits an individual employed by a UW institution from being employed at the same time by a UW-affiliated organization, unless the dual employment is approved by the Board of Regents and the institution's chancellor. The prohibition is prospective, as it applies to UW institution employees whose employment by a UW-affiliated organization commences on the bill's effective date. If approval is granted for an individual, the bill prohibits the UW institution and UW-affiliated organization from compensating the individual for the same time worked. The bill imposes reporting requirements to ensure compliance with that prohibition.

Ethics and public records. Under the bill, an employee of a UW institution who is any of the following is considered a state public official subject to the state code of ethics and required to file an annual statement of economic interests with the Ethics Commission:

1. A chancellor, dean, or director.

2. Responsible for signing a contract on behalf of the institution.

3. Also an officer or board member of a UW-affiliated organization on an ongoing basis.

The bill provides that information provided by a UW-affiliated organization to a UW institution employee is considered a public record, not including donor information.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

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

SB388,1 Section 1 . 18.01 (4) (intro.) of the statutes is renumbered 18.01 (4) (am) (intro.) and amended to read:

SB388,3,5 18.01 (4) (am) (intro.) “Public debt" or “debt" means every voluntary, unconditional undertaking by the state, other than an operating note, to repay a sum certain:

SB388,2 Section 2 . 18.01 (4) (bm) of the statutes is created to read:

SB388,3,8 18.01 (4) (bm) “Public debt” does not include any agreement by the state to guaranty the debt of another.

SB388,3 Section 3 . 18.05 (2) of the statutes is amended to read:

SB388,4,3 18.05 (2) The last determination made by the department of revenue of the full market value of all general property of the state liable to taxes pursuant to s. 70.575 shall be the aggregate value of all taxable property in the state. The department of revenue shall certify such value when requested for use in connection with the contracting of state public debt.

SB388,4 Section 4 . 18.05 (3) of the statutes is amended to read:

SB388,4,10 18.05 (3) The legislative audit bureau shall annually determine the amounts under sub. (1) (b) 1. and 2. and shall certify such amounts when requested for use in connection with the contracting of state public debt. It shall use in making such determination the fair market value of all property on hand in the sinking funds of the bond security and redemption fund. It shall take into account any anticipatory contracts under s. 18.10 (1).

SB388,5 Section 5 . 18.06 (8) (am) 2. of the statutes is amended to read:

SB388,4,15 18.06 (8) (am) 2. The interest exchange agreement must identify by maturity, bond issue, or bond purpose the public debt or obligation to which the agreement is related. The determination of the commission included in an interest exchange agreement that such agreement relates to a debt or obligation shall be conclusive.

SB388,6 Section 6 . 18.10 (1) of the statutes is amended to read:

SB388,4,25 18.10 (1) Anticipatory contracts. After adoption of an authorizing resolution for a purpose which is to be accomplished wholly or in part through performance of an executory contract by some other contracting party, such contract may be entered into prior to the contracting of the public debt authorized by such resolution with like effect as if the funds necessary for payments on the contract were already available. In such cases the public debt authorized by such resolution shall be deemed to have been contracted pursuant to such resolution in the amount necessary to make such payments on the date such contract is entered into and the authority of such resolution shall promptly thereafter be exercised.

SB388,7 Section 7. 18.10 (8) of the statutes is amended to read:

SB388,5,14 18.10 (8) Trustees and fiscal agents. The commission may appoint one or more trustees and fiscal agents for each issue of bonds or notes. The secretary of administration may be denominated the trustee and the sole fiscal agent or a cofiscal agent for any issue of bonds or notes. Every other such fiscal agent shall be an incorporated bank or trust company authorized by the laws of the United States or of the state in which it is located to do a banking or trust company business. There may be deposited with a trustee, in a special account administered as provided in this chapter, moneys to be used only for the purposes expressly provided in a resolution authorizing the issuance of public debt or an agreement between the commission and the trustee. The commission may make such other provisions respecting trustees and fiscal agents as it deems necessary or useful and may enter into a contract with any trustee or fiscal agent containing such terms, including compensation, and conditions in regard to the trustee or fiscal agent as it deems necessary or useful.

SB388,8 Section 8 . 18.10 (9) of the statutes is amended to read:

SB388,5,18 18.10 (9) Prepayment. The commission may authorize public debt having any provisions for prepayment deemed necessary or useful, including the payment of any premium.

SB388,9 Section 9 . 18.11 of the statutes is created to read:

SB388,5,22 18.11 Guaranty agreements unenforceable. Unless otherwise expressly provided by law, an agreement by the state to guaranty the debt of another is unenforceable.

SB388,10 Section 10 . 18.14 (title) of the statutes is amended to read:

SB388,5,24 18.14 (title) Validation of public debt.

SB388,11 Section 11. 19.32 (2) of the statutes is renumbered 19.32 (2) (a) and amended to read:

SB388,6,6 19.32 (2) (a) “Record" means any material on which written, drawn, printed, spoken, visual, or electromagnetic information or electronically generated or stored data is recorded or preserved, regardless of physical form or characteristics, that has been created or is being kept by an authority.

SB388,6,10 (b) “Record" includes, but is not limited to, handwritten, typed, or printed pages, maps, charts, photographs, films, recordings, tapes, optical discs, and any other medium on which electronically generated or stored data is recorded or preserved.

SB388,6,19 (d) “Record" does not include drafts, notes, preliminary computations, and like materials prepared for the originator's personal use or prepared by the originator in the name of a person for whom the originator is working; materials that are purely the personal property of the custodian and have no relation to his or her office; donor information provided by a UW-affiliated organization, as defined in s. 36.11 (59) (a) 3., to an employee of a University of Wisconsin System institution; materials to which access is limited by copyright, patent, or bequest; and published materials in the possession of an authority other than a public library that are available for sale, or that are available for inspection at a public library.

SB388,12 Section 12. 19.32 (2) (c) of the statutes is created to read:

SB388,6,23 19.32 (2) (c) “Record” also includes budgets, meeting minutes, and other information provided by a UW-affiliated organization, as defined in s. 36.11 (59) (a) 3., to an employee of any University of Wisconsin System institution.

SB388,13 Section 13. 19.42 (10) (t) of the statutes is created to read:

SB388,6,25 19.42 (10) (t) A state public official described under sub. (13) (q).