FREE MARKET PROTECTION & PRIVATIZATION BOARD

REPRESENTATIVE KAY CHRISTOFFERSON Chair KIMBERLEY JONES Vice Chair State of Utah

GARY R. HERBERT Governor

SPENCER J. COX Lieutenant Governor

October 17, 2018

Government Operations Interim Committee Senator Wayne Harper, Senate Chair Representative Jeremy Peterson, House Chair

Update on The Free Market Protection and Privatization Board

Background The Free Market Protection and Privatization Board (“Privatization Board”) was established by the legislature in UCA 63I-4a-203(1) to:

(a) determine whether an activity provided by an agency could be privatized to provide the same types and quality of a good or service that would result in cost savings; (b) review privatization of an activity...; (c) review issues concerning agency competition with one or more private enterprises...; [and] (d) recommend privatization of an agency if a proposed privatization is demonstrated to provide a more cost efficient and effective manner of providing a good or service.

The board has operated since 1989 and has undergone various changes and improvements. During the 2016 General Session, the Legislature did not fund the board's continuation. For several years prior to that, the board had been funded with one-time funds. The Governor’s Office of Management and Budget (GOMB) employee who staffed the board obtained other employment, as the position was no longer funded. Since the time the board’s funding ended on June 30, 2016, GOMB has only able to provide minimal staff support to the board. The progress of the board has been seriously impeded by the lack of resources.

September 2017 to October 2018 Board Meetings Because the board does not have funding for dedicated staff it has only been able to focus on a limited number of issues in recent years. In most cases the board invited state agencies or other entities to respond to issues raised by businesses or individuals. The board has discussed the following topics in five board meetings held since preparing its last annual report for the Government Operations Interim Committee in September 2017:

• Public Funding for Cancer Treatment Services • Fish Hatcheries and Private Aquaculture • Student Information Systems Update • Management of Golf Courses at State Parks • Interagency Mail • Government Enterprise Amendments • Immunity for Government Enterprises

The board has also had multiple discussions on improving the Free Market Protection and Privatization Review Process and received input from the Libertas Institute, the Sutherland Institute, and the Utah Taxpayers Association.

Funding Request Board Chair, Representative Kay Christofferson, submitted a request for appropriation during the 2018 General Session to request $70,000 in ongoing funding for the Free Market Protection and Privatization Board. This was half the amount that was funded previously. It would have funded the GOMB staff person half time (half FTE), as well as pay the required expenses for board members. Unfortunately the request was not funded by the Legislature. Representative Kay Christofferson is going to submit the same $70,000 request again in the 2019 General Session. We believe that ongoing funding at this level will ensure stability in the effectiveness of the board and will significantly reduce the historical expense of the board.

If funding is not provided in the upcoming 2019 General Session, the Government Operations Interim Committee should review the Free Market Protection and Privatization Board statute to determine if it should be revised or repealed. For example, the board has discussed an alternative process to have an ombudsman receive free market protection and privatization concerns and forward those to the governmental entity that is in the best position to respond to those concerns. The board has also discussed changing the size and composition of the board to improve board member participation (the board currently has 17 members requiring 9 for a quorum) and removing exemptions for state entities, such as higher education, that are currently exempt from board oversight.

Thank you for your consideration of the board’s appropriations request during the upcoming general session. The viability of this board is contingent upon receiving this resource.

Sincerely,

Free Market Protection and Privatization Board

Attachment: Free Market Protection and Privatization Board History

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Fee Market Protection and Privatization Board History

Statutory History

1989 - Privatization Policy Board established with 11 members serving four year terms. The board was required to meet at least once per year. The chief procurement officer or designee served as a nonvoting secretary to the board (Chapter 221, Laws of Utah 1989).

1996 - Board membership was increased from 11 to 13 members. The board was required to hold quarterly meetings and submit an annual report to the Legislature and the Governor (Chapter 18, Laws of Utah 1996).

2003 - Board membership was increased from 13 to 15 members (Chapter 193, Laws of Utah 2003).

2008 - Board membership was increased from 15 to 17 members. The scope of agencies and activities reviewed by the board was more narrowly defined. Changed the term of Legislative board members to two year. Added an interim report due to the Government Operations Interim Committee. Required the board to carry out a Commercial Activities Inventory and Review (Chapter 147, Laws of Utah 2008).

2013 – The name of the board was changed to the Free Market Protection and Privatization Board. Reassigned staffing responsibilities from the chief procurement officer to the Governor's Office of Planning and Budget (now the Governor’s Office of Management and Budget) and permitted the board to contract for additional staff from the private sector. Changed the term of all board members to two years (Chapter 325, Laws of Utah 2013).

Funding History

The first appropriations for the board were provided during the 2013 General Session. The following is a history of appropriations provided for the Free Market Protection and Privatization Board: • FY 2014 $7,700 ongoing to pay board member per diem (SB4 Item 36) and $200,000 one-time for staff support (SB2 Item 5) • FY 2015 $150,000 one-time for staff support (HB2 Item 3) • The board spent $58,660 from the FY 2014 and FY 2015 appropriations for contract support to develop a privatization review process – the process was published in April 2015 • FY 2016 $150,000 one-time for staff support (SB3 Item 37) • FY 2017 The Governor recommended a $140,000 one-time appropriation that was not adopted by the Legislature

Current Board

Rep. Kay Christofferson, Chair LeGrand Bitter Jacquie Nielsen Kimberley Jones, Vice Chair Travis Dimick Randy Park Sen. Howard Stephenson Steve Fairbanks Manuel Torres Sen. Karen Mayne Rick Jones Sean Wright Russell Anderson Shawn Milne

Staff: Duncan Evans, Budget Manager, Governor’s Office of Management and Budget

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