Bill would add social-equity analysis to state performance audits and extend JLARC hearing window

Senate Bill 5414, introduced at a public hearing before the State Government & Tribal Relations Committee, would require the state auditor's office to include a social equity impact analysis in its performance audits and extend the time for the Joint Legislative Audit and Review Committee (JLARC) to hold hearings on those audits from 30 days to 90 days.

Desiree Olney, OPR staff, told the committee that the bill would add social equity impact analysis as an additional element required in performance audits and would lengthen JLARC's hearing window. She said the bill is an agency-request measure from the state auditor's office and that the fiscal note in the packet shows no fiscal impact.

The bill matters because performance audits compare agency practices with legal requirements and best practices, and adding an explicit social equity component would require auditors to consider whether programs produce disparate outcomes across demographic groups. The extension to a 90-day JLARC hearing period is aimed at reducing publication delays caused by scheduling constraints, particularly during the legislative session.

Scott Nelson, Director of Legislation and Policy for State Auditor Pat McCarthy, and Scott Frank, Director of Performance and IT Audit for the Washington State Auditor's Office, testified in support. Frank said the change would either require auditors to add a social equity analysis to reports or explain why such analysis would not be appropriate for a particular audit subject. He described the change as a codification that would align the auditor's office with requirements already placed on JLARC.

Committee members asked for specifics about the equity analysis. Frank cited the auditor's office's prior ballot-rejection study as an example: auditors used statistical techniques to estimate demographic characteristics when race and ethnicity were not collected, then tested whether those characteristics were associated with ballot rejection rates. He said those statistical approaches can be useful when large populations or transaction sets are available, and that auditors would use existing data where possible or decline to perform the analysis if the data were insufficient.

Senator Hasegawa, identified in the hearing as the bill sponsor, said the legislation responds to a gap: JLARC was required by statute in 2021 to include racial equity analyses in its work, but state auditor performance audits did not always include an equivalent analysis. He and witnesses said the change will help make audits "apples to apples" across auditing entities.

No formal action or vote was recorded during the hearing. Staff closed the public hearing and the committee moved to its next agenda item.

The hearing record includes an agency fiscal note stating no fiscal impact and multiple witnesses who said the auditor's office can carry out the change within existing resources.

The committee did not take final action on the bill during the session recorded in the transcript.