Committee backs bill letting state agencies retain portion of documented cost savings

Representative Ballard and the legislative auditor told the House committee that House Bill 317 would formalize a process for state agencies to identify and implement efficiency improvements and to retain a portion of verified cost savings for reinvestment.

The bill would direct the Legislative Fiscal Analyst (LFA) and the Governor’s Office of Planning and Budget (GOPB) to jointly conduct annual efficiency evaluations, establish measurable metrics — including cost, time and service-delivery savings — and create incentives that reward agencies and employees who produce verifiable innovations, according to the sponsor and the Legislative Auditor.

Why it matters: Sponsors called the measure a tool to encourage agencies to modernize operations by removing the “use it or lose it” disincentive for unspent appropriations and giving agencies the option to request portions of realized savings be treated as non-lapsing funds. The measure also creates an accountability layer: the Office of the Legislative Auditor General (OLAG) and LFA would validate claimed savings and could refer concerns for further audit.

During committee questions, members pressed how the portion of savings that would be retained or treated as non-lapsing would be determined. Representative McPherson and others asked whether the appropriation process or a formula in the bill would set that portion; sponsors answered that agencies would still go through the regular appropriation process and that LFA and appropriation committee review remains part of the decision-making chain.

Representative Ballard and Cade Minchie, Legislative Auditor, said the validation step is not the same as a full financial audit but is intended to provide verification of claimed efficiencies; if verification raises concerns, staff said the audit subcommittee or a formal audit could be requested.

The committee voted to favorably recommend House Bill 317, Executive Agency Innovation Incentives.

Quotes from the hearing include Representative Ballard arguing the bill “opens up the opportunity for government agencies to retain a portion of cost savings that they achieve for them to reinvest or reallocate” and Cade Minchie of the auditor’s office describing the validation role: “they're not audits in the traditional sense. What they are is just an accountability piece making sure that the efficiencies that are there are being recognized.”

Next steps: The bill was recommended out of committee and will move to the floor. Sponsors said they will continue coordination with GOPB and LFA on implementation details and metrics.

Ending note: Committee members who asked detailed questions said they supported the idea of incentives but emphasized safeguards — including transparency to appropriation committees and the option for audits — to prevent inflated claims of savings.