Reference Title: department of administration; omnibus

AN ACT
AMENDING SECTIONS 11-497, 41-621, 41-622, 41-703, 41-764, 41-790 AND 41-792.01, ARIZONA REVISED STATUTES; AMENDING SECTION 34-201, ARIZONA REVISED STATUTES, AS AMENDED BY LAWS 1996, CHAPTER 212, SECTION 2; AMENDING SECTION 34-201, ARIZONA REVISED STATUTES, AS AMENDED BY LAWS 1996, CHAPTER 212, SECTION 3; PROVIDING FOR THE DELAYED REPEAL OF SECTION 34-201, ARIZONA REVISED STATUTES, AS AMENDED BY SECTION 2 OF THIS ACT; REPEALING SECTION 41-2535, ARIZONA REVISED STATUTES, AS AMENDED BY LAWS 1993, CHAPTER 135, SECTION 2; REPEALING SECTION 41-736, ARIZONA REVISED STATUTES; AMENDING TITLE 41, CHAPTER 4, ARTICLE 3, ARIZONA REVISED STATUTES, BY ADDING A NEW SECTION 41-736; AMENDING LAWS 1976, CHAPTER 5, SECTION 1; PROVIDING FOR THE DELAYED REPEAL OF LAWS 1976, CHAPTER 5, SECTION 1, AS AMENDED BY THIS ACT; REPEALING LAWS 1993, CHAPTER 135, SECTION 7, AS AMENDED BY LAWS 1995, CHAPTER 14, SECTION 1; REPEALING LAWS 1993, CHAPTER 135, SECTION 8, AS AMENDED BY LAWS 1995, CHAPTER 14, SECTION 2; RELATING TO THE DEPARTMENT OF ADMINISTRATION.

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 11-497, Arizona Revised Statutes, is amended to read:

11-497 . Disbursement of forest reserve monies

The treasurer shall notify the clerk of the board of supervisors and the county school superintendent of the amount received from the director of the department of administration STATE TREASURER as the county share of the money OF PASS THROUGH MONIES received by the state from the United States from forest reserves, as provided in section 41-736, and thereafter the money shall be disbursed for the benefit of public schools and public roads of the county as the board of supervisors may direct.

Sec. 2. Section 34-201, Arizona Revised Statutes, as amended by Laws 1996, chapter 212, section 2, is amended to read:

34-201 . Notice of intention to receive bids and enter contract; procedure; doing work without advertising for bids; county compliance; guaranteed energy savings contract exception

A. Except as provided in subsections B through F, K and L of this section, every agent shall, upon acceptance and approval of the working drawings and specifications, publish a notice to contractors of intention to receive bids and contract for the proposed work, and stating:

1. The nature of the work required, the type, purpose and location of the proposed building, and where the plans, specifications and full information as to the proposed work may be obtained.

2. That contractors desiring to submit proposals may obtain copies of full or partial sets of plans and specifications for estimate on request or by appointment. The return of such plans and specifications shall be guaranteed by a deposit of a designated amount which shall be refunded on return of the plans and specifications in good order.

3. That every proposal shall be accompanied by a certified check, cashier's check or surety bond for ten per cent of the amount of the bid included in the proposal as a guarantee that the contractor will enter into a contract to perform the proposal in accordance with the plans and specifications. Notwithstanding the provisions of any other statute, the surety bond shall be executed solely by a surety company or companies holding a certificate of authority to transact surety business in this state issued by the director of the department of insurance pursuant to title 20, chapter 2, article 1. The surety bond shall not be executed by an individual surety or sureties, even if the requirements of section 7-101 are satisfied. The certified check, cashier's check or surety bond shall be returned to the contractors whose proposals are not accepted, and to the successful contractor upon the execution of a satisfactory bond and contract as provided in this article. The conditions and provisions of the surety bid bond regarding the surety's obligations shall follow the following form:

Now, therefore, if the obligee accepts the proposal of the principal and the principal enters into a contract with the obligee in accordance with the terms of the proposal and gives the bonds and certificates of insurance as specified in the standard specifications with good and sufficient surety for the faithful performance of the contract and for the prompt payment of labor and materials furnished in the prosecution of the contract, or in the event of the failure of the principal to enter into the contract and give the bonds and certificates of insurance, if the principal pays to the obligee the difference not to exceed the penalty of the bond between the amount specified in the proposal and such larger amount for which the obligee may in good faith contract with another party to perform the work covered by the proposal then this obligation is void. Otherwise it remains in full force and effect provided, however, that this bond is executed pursuant to the provisions of section 34-201, Arizona Revised Statutes, and all liabilities on this bond shall be determined in accordance with the provisions of the section to the extent as if it were copied at length herein.

4. That the right is reserved to reject any or all proposals or to withhold the award for any reason the agent determines.

B. If the agent believes that any construction, building addition or alteration contemplated at a public institution can be advantageously done by the inmates thereof and regularly employed help, the agent may cause the work to be done without advertising for bids.

C. Any building, structure, addition or alteration may be constructed either with or without the use of the agent's regularly employed personnel without advertising for bids provided that the total cost of the work, excluding materials and equipment previously acquired by bid, does not exceed:

1. In fiscal year 1994-1995, fourteen thousand dollars.

2. In fiscal year 1995-1996 and each fiscal year thereafter, the amount provided in paragraph 1 of this subsection adjusted by the annual percentage change in the GDP price deflator as defined in section 41-563, subsection E.

D. Notwithstanding the provisions of subsection C of this section, any street, road, bridge, water or sewer work, other than a water or sewer treatment plant or building, may be constructed either with or without the use of the agent's regularly employed personnel without advertising for bids provided that the total cost of the work does not exceed:

1. In fiscal year 1994-1995, one hundred fifty thousand dollars.

2. In fiscal year 1995-1996 and each fiscal year thereafter, the amount provided in paragraph 1 of this subsection adjusted by the annual percentage change in the GDP price deflator as defined in section 41-563, subsection E.

E. Notwithstanding the provisions of this section, an agent may construct, reconstruct, install or repair a natural gas or electric utility and distribution system, owned or operated by such agent, with regularly employed personnel of the agent without advertising for bids, unless otherwise prohibited by charter or ordinance.

F. A contribution by an agent for the financing of public infrastructure made pursuant to a development agreement is exempt from the provisions of this section if such contribution for any single development does not exceed:

1. In fiscal year 1994-1995, one hundred thousand dollars.

2. In fiscal year 1995-1996 and each fiscal year thereafter, the amount provided in paragraph 1 of this subsection adjusted by the annual percentage change in the GDP price deflator as defined in section 41-563, subsection E.

G. In addition to other state or local requirements relating to the publication of bids, each agent shall provide at least one set of all plans and specifications to any construction news reporting service that files an annual request with the agent. For the purposes of this subsection, "construction news reporting service" means a service that researches, gathers and disseminates news and reports either in print or electronically, on at least a weekly basis for building projects, construction bids, the purchasing of materials, supplies or services and other construction bidding or planned activity to the allied construction industry. The allied construction industry includes both general and specialty contractors, builders, material and service suppliers, architects and engineers, owners, developers and government agencies.

H. Any construction by a county under this section shall comply with the uniform accounting system prescribed for counties by the auditor general under section 41-1279.21. Any construction by a city or town under this section shall comply with generally accepted accounting principles.

I. Any construction, building addition or alteration project which is financed by monies of this state or its political subdivisions shall not use endangered tropical hardwood WOOD SPECIES unless an exemption is granted by the director of the department of administration. The director shall only grant an exemption if the use of endangered tropical hardwood WOOD SPECIES is deemed necessary for historical restoration or to repair existing facilities and the use of any substitute material is not practical. Any lease-purchase agreement entered into by this state or its political subdivisions for construction shall specify that no endangered tropical hardwood WOOD SPECIES may be used in the construction unless an exemption is granted by the director. As used in this subsection, "endangered tropical hardwood " includes ebony, lauan, mahogany or teak hardwood WOOD SPECIES" INCLUDES THOSE LISTED IN APPENDIX I OF THE CONVENTION ON INTERNATIONAL TRADE IN ENDANGERED SPECIES OF WILD FLORA AND FAUNA .

J. All bonds given by a contractor and surety pursuant to the provisions of this article, regardless of their actual form, will be deemed by law to be the form required and set forth in this article and no other.

K. Any building, structure, addition or alteration may be constructed without complying with this article if the construction, including construction of buildings or structures on public or private property, is required as a condition of development of private property and is authorized by section 9-463.01 or 11-806.01. For the purposes of this subsection, building does not include police, fire, school, library, or other public buildings.

L. Notwithstanding section 34-221, any agent may enter into a guaranteed energy cost savings contract with a qualified provider, as those terms are defined in section 15-213.01, for the purchase of energy cost savings measures without complying with this article and may procure a guaranteed energy cost savings contract through the competitive sealed proposal process prescribed in title 41, chapter 23, article 3 or any similar competitive proposal process adopted by the agent as long as the agent follows any additional requirements set forth in section 15-213.01.

Sec. 3. Section 34-201, Arizona Revised Statutes, as amended by Laws 1996, chapter 212, section 3, is amended to read:

34-201 . Notice of intention to receive bids and enter contract; procedure; doing work without advertising for bids; county compliance

A. Except as provided in subsections B through F and K of this section, every agent shall, upon acceptance and approval of the working drawings and specifications, publish a notice to contractors of intention to receive bids and contract for the proposed work, and stating:

1. The nature of the work required, the type, purpose and location of the proposed building, and where the plans, specifications and full information as to the proposed work may be obtained.

2. That contractors desiring to submit proposals may obtain copies of full or partial sets of plans and specifications for estimate on request or by appointment. The return of such plans and specifications shall be guaranteed by a deposit of a designated amount which shall be refunded on return of the plans and specifications in good order.

3. That every proposal shall be accompanied by a certified check, cashier's check or surety bond for ten per cent of the amount of the bid included in the proposal as a guarantee that the contractor will enter into a contract to perform the proposal in accordance with the plans and specifications. Notwithstanding the provisions of any other statute, the surety bond shall be executed solely by a surety company or companies holding a certificate of authority to transact surety business in this state issued by the director of the department of insurance pursuant to title 20, chapter 2, article 1. The surety bond shall not be executed by an individual surety or sureties, even if the requirements of section 7-101 are satisfied. The certified check, cashier's check or surety bond shall be returned to the contractors whose proposals are not accepted, and to the successful contractor upon the execution of a satisfactory bond and contract as provided in this article. The conditions and provisions of the surety bid bond regarding the surety's obligations shall follow the following form:

Now, therefore, if the obligee accepts the proposal of the principal and the principal enters into a contract with the obligee in accordance with the terms of the proposal and gives the bonds and certificates of insurance as specified in the standard specifications with good and sufficient surety for the faithful performance of the contract and for the prompt payment of labor and materials furnished in the prosecution of the contract, or in the event of the failure of the principal to enter into the contract and give the bonds and certificates of insurance, if the principal pays to the obligee the difference not to exceed the penalty of the bond between the amount specified in the proposal and such larger amount for which the obligee may in good faith contract with another party to perform the work covered by the proposal then this obligation is void. Otherwise it remains in full force and effect provided, however, that this bond is executed pursuant to the provisions of section 34-201, Arizona Revised Statutes, and all liabilities on this bond shall be determined in accordance with the provisions of the section to the extent as if it were copied at length herein.

4. That the right is reserved to reject any or all proposals or to withhold the award for any reason the agent determines.

B. If the agent believes that any construction, building addition or alteration contemplated at a public institution can be advantageously done by the inmates thereof and regularly employed help, the agent may cause the work to be done without advertising for bids.

C. Any building, structure, addition or alteration may be constructed either with or without the use of the agent's regularly employed personnel without advertising for bids provided that the total cost of the work, excluding materials and equipment previously acquired by bid, does not exceed:

1. In fiscal year 1994-1995, fourteen thousand dollars.

2. In fiscal year 1995-1996 and each fiscal year thereafter, the amount provided in paragraph 1 of this subsection adjusted by the annual percentage change in the GDP price deflator as defined in section 41-563, subsection E.

D. Notwithstanding the provisions of subsection C of this section, any street, road, bridge, water or sewer work, other than a water or sewer treatment plant or building, may be constructed either with or without the use of the agent's regularly employed personnel without advertising for bids provided that the total cost of the work does not exceed:

1. In fiscal year 1994-1995, one hundred fifty thousand dollars.

2. In fiscal year 1995-1996 and each fiscal year thereafter, the amount provided in paragraph 1 of this subsection adjusted by the annual percentage change in the GDP price deflator as defined in section 41-563, subsection E.

E. Notwithstanding the provisions of this section, an agent may construct, reconstruct, install or repair a natural gas or electric utility and distribution system, owned or operated by such agent, with regularly employed personnel of the agent without advertising for bids, unless otherwise prohibited by charter or ordinance.

F. A contribution by an agent for the financing of public infrastructure made pursuant to a development agreement is exempt from the provisions of this section if such contribution for any single development does not exceed:

1. In fiscal year 1994-1995, one hundred thousand dollars.

2. In fiscal year 1995-1996 and each fiscal year thereafter, the amount provided in paragraph 1 of this subsection adjusted by the annual percentage change in the GDP price deflator as defined in section 41-563, subsection E.

G. In addition to other state or local requirements relating to the publication of bids, each agent shall provide at least one set of all plans and specifications to any construction news reporting service that files an annual request with the agent. For the purposes of this subsection, "construction news reporting service" means a service that researches, gathers and disseminates news and reports either in print or electronically, on at least a weekly basis for building projects, construction bids, the purchasing of materials, supplies or services and other construction bidding or planned activity to the allied construction industry. The allied construction industry includes both general and specialty contractors, builders, material and service suppliers, architects and engineers, owners, developers and government agencies.

H. Any construction by a county under this section shall comply with the uniform accounting system prescribed for counties by the auditor general under section 41-1279.21. Any construction by a city or town under this section shall comply with generally accepted accounting principles.

I. Any construction, building addition or alteration project which is financed by monies of this state or its political subdivisions shall not use endangered tropical hardwood WOOD SPECIES unless an exemption is granted by the director of the department of administration. The director shall only grant an exemption if the use of endangered tropical hardwood WOOD SPECIES is deemed necessary for historical restoration or to repair existing facilities and the use of any substitute material is not practical. Any lease-purchase agreement entered into by this state or its political subdivisions for construction shall specify that no endangered tropical hardwood WOOD SPECIES may be used in the construction unless an exemption is granted by the director. As used in this subsection, "endangered tropical hardwood" includes ebony, lauan, mahogany or teak hardwood WOOD SPECIES" INCLUDES THOSE LISTED IN APPENDIX I OF THE CONVENTION ON INTERNATIONAL TRADE IN ENDANGERED SPECIES OF WILD FLORA AND FAUNA .

J. All bonds given by a contractor and surety pursuant to the provisions of this article, regardless of their actual form, will be deemed by law to be the form required and set forth in this article and no other.

K. Any building, structure, addition or alteration may be constructed without complying with this article if the construction, including construction of buildings or structures on public or private property, is required as a condition of development of private property and is authorized by section 9-463.01 or 11-806.01. For the purposes of this subsection, building does not include police, fire, school, library, or other public buildings.

Sec. 4. Section 41-621, Arizona Revised Statutes, is amended to read:

41-621 . Purchase of insurance; coverage; limitations; exclusions; definitions

A. The department of administration shall obtain insurance against loss, to the extent it is determined necessary and in the best interests of the state as provided in subsection F of this section, on the following:

1. All state owned buildings, including those of the universities, excluding buildings of community colleges, whether financed in whole or in part by state monies or buildings in which the state has an insurable interest as determined by the department of administration.

2. Contents in any buildings owned, leased or rented, in whole or in part, by or to the state, excluding buildings of community colleges, and reported to the department of administration.

3. The state and its departments, agencies, boards and commissions and all officers, agents and employees thereof and such others as may be necessary to accomplish the functions or business of the state and its departments, agencies, boards and commissions against liability for acts or omissions of any nature while acting in authorized governmental or proprietary capacities and in the course and scope of employment or authorization except as prescribed by this chapter.

4. All personal property reported to the department of administration, including vehicles and aircraft owned by the state and its departments, agencies, boards and commissions and all non-owned personal property which is under the clear responsibility of this state because of written leases or other written agreements.

5. The state and its departments, agencies, boards and commissions against casualty, use and occupancy and liability losses of every nature except as prescribed by this chapter.

6. Workers' compensation and employers' liability insurance.

7. DESIGN AND CONSTRUCTION OF BUILDINGS, ROADS, ENVIRONMENTAL REMEDIATIONS AND OTHER CONSTRUCTION PROJECTS.

7. 8. Other exposures to loss where insurance may be required to protect this state and its departments, agencies, boards and commissions and all officers, agents and employees acting in the course and scope of employment or authorization except as prescribed by this chapter.

B. To the extent it is determined necessary and in the best interests of the state, the department of administration shall obtain insurance or provide for state self-insurance against property damage caused by clients and liability coverage resulting from, the direct or incidental care of clients participating in programs of the state and its departments, agencies, boards or commissions relating to custodial care. The insurable programs shall include foster care, programs for the developmentally disabled, an independent living program pursuant to section 8-521 and respite-sitter service programs. The department shall obtain insurance or provide for state self-insurance pursuant to this subsection to protect the clients participating in these programs and individual providers of these program services on behalf of the state and its departments, agencies, boards or commissions. The insurance provided under this subsection does not include medical or workers' compensation coverage for providers. The department may include in its annual budget request pursuant to section 41-622, subsection D a charge for the insurance or self-insurance provided in this subsection. To assist in carrying out the provisions of this subsection, the department shall establish a seven member advisory board in accordance with the following provisions:

1. The board shall consist of three members appointed by the director of the department of administration, at least one of whom shall be a foster parent, two members appointed by the director of the department of economic security, one member appointed by the director of the state department of corrections, and one member appointed by the administrative director of the courts.

2. The board shall elect a chairman from among its members.

3. The board shall hold at least two meetings a year or shall meet at the call of the chairman.

4. Board members shall serve for three year terms.

5. Board members are not eligible to receive compensation but are eligible for reimbursement of expenses pursuant to title 38, chapter 4, article 2.

6. The board shall provide advice to the department regarding coverage and administration of the provisions of this subsection and shall assist the department in coordinating its activities pursuant to this subsection with state departments, agencies, boards and commissions.

C. The department of administration may obtain insurance against loss, to the extent it is determined necessary and in the best interests of the state as provided in subsection F of this section for the professional liability of individual physicians and psychiatrists who provide services under a contract with the state department of corrections. Coverage is limited to acts and omissions committed inside a state department of corrections facility while in the performance of the contract and to individual physicians and psychiatrists who demonstrate to the satisfaction of the state department of corrections that they cannot otherwise obtain professional liability coverage for the services required by the contract. The director of the department of administration may impose on the state department of corrections a deductible of not more than ten thousand dollars per loss that arises out of a professional liability claim pursuant to this subsection. Deductible amounts established by the director shall be subject to annual review by the joint legislative budget committee.

D. The department of administration may obtain property, liability, disability or workers' compensation insurance, self-insure or develop risk retention pools to provide for payment of property loss or casualty claims or disability insurance claims against contractors of this state with the approval of the joint legislative budget committee. With respect to insurance, self-insurance or risk retention pools for contractors licensed and contracted to do work for this state, the coverage afforded applies with respect to the conduct of the business entity of that contractor. The pool is available to all contractors regardless of the amount that the state contracted work bears in relation to the amount of nonstate contracted work. The contractor shall be terminated from the pool if the contractor ceases to be a state contractor.

E. The department of administration may determine, in the best interests of the state, that state self-insurance is necessary or desirable and, if that decision is made, shall provide for state self-insurance for losses arising out of state property, liability or workers' compensation claims prescribed by subsection A of this section. If the department of administration provides state self-insurance, such coverage shall be excess over any other valid and collectible insurance. The director of the department of administration may impose on state departments, agencies, boards and commissions a deductible of not more than ten thousand dollars per loss that arises out of a property, liability or workers' compensation loss pursuant to this subsection. Deductible amounts established by the director shall be subject to annual review by the joint legislative budget committee.

F. In carrying out the provisions of this chapter, the department of administration shall establish and provide the state with some or all of the necessary risk management services, or shall contract for risk management services pursuant to chapter 23 of this title, as the director of the department of administration deems necessary in the best interest of the state, and may, in addition to other specifications of such coverage as deemed necessary, determine self-insurance to be established. The provisions of chapter 23 of this title shall not apply to the department of administration's procurement of insurance to cover losses arising out of state property or liability claims prescribed in subsections A and D of this section or excess loss insurance for the state's workers' compensation liability for individual or aggregate claims, or both, in such amounts and at such primary retention levels as the department of administration deems in the best interest of the state. In purchasing insurance to cover losses arising out of state property or liability claims prescribed by subsection A of this section, the department of administration is not subject to the provisions of title 20, chapter 2, article 5.

G. No successful bidder for risk management services pursuant to this section shall be entitled to receive directly or indirectly any sales commission, contingent commission, excess profit commission, or other commissions, or anything of value, as payment for the risk management services except those amounts received directly from this state as payment for the risk management services.

H. The department of administration shall pay for purchased risk management services, premiums for insurance on state property and state liability and workers' compensation pursuant to the provisions of this chapter.

I. A state officer, agent or employee acting in good faith, without wanton disregard of his statutory duties and under the authority of an enactment that is subsequently declared to be unconstitutional, invalid or inapplicable is not personally liable for an injury or damage caused thereby except to the extent that he would have been personally liable had the enactment been constitutional, valid and applicable.

J. A state officer, agent or employee, except as otherwise provided by statute, is not personally liable for an injury or damage resulting from his act or omission in a public official capacity where the act or omission was the result of the exercise of the discretion vested in him if the exercise of the discretion was done in good faith without wanton disregard of his statutory duties.

K. The state and its departments, agencies, boards and commissions are immune from liability for losses arising out of a judgment for willful and wanton conduct resulting in punitive or exemplary damages.

L. The following exclusions shall apply to subsections A, B and E of this section:

1. Losses against this state and its departments, agencies, boards and commissions that arise out of and are directly attributable to an act or omission determined by a court to be a felony by a person who is provided coverage pursuant to this article unless the state knew of the person's propensity for that action, except those acts arising out of the operation or use of a motor vehicle.

2. Losses arising out of contractual breaches.

M. If self-insurance coverage is determined to exist, the attorney general, with funds provided by the department of administration, shall provide for the defense, either through his office or by appointment of outside legal counsel, of the state and its departments, agencies, boards and commissions and all officers, agents and employees thereof and such others as are insured by the department of administration for or on account of their acts or omissions covered pursuant to this chapter. All state departments, agencies, boards and commissions, all officers, agents and employees thereof and such others as are insured by the department of administration shall cooperate fully with the attorney general and department of administration in the defense of claims arising pursuant to this chapter.

N. A claim for liability damages made pursuant to this chapter may be settled and payment made up to the amount of twenty-five thousand dollars or such higher limit as may be established by the joint legislative budget committee with the approval of the director of the department of administration. A claim over the amount of twenty-five thousand dollars up to fifty thousand dollars or such higher limit as may be established by the joint legislative budget committee may be settled and payment made with the approval of the director of the department of administration and the attorney general. Any claim over the amount of fifty thousand dollars or such higher limit as may be established by the joint legislative budget committee may be settled and payment made with the approval of the director of the department of administration, the attorney general and the joint legislative budget committee. If it is in the best interest of this state, the joint legislative budget committee may establish higher settlement limits. Any settlements involving amounts in excess of fifty thousand dollars or such higher limit as may be established by the joint legislative budget committee shall be approved by the department of administration, the attorney general and the joint legislative budget committee pursuant to the authority granted. The settlement of liability claims shall be solely the authority of the department of administration, the attorney general and the joint legislative budget committee. No state department, agency, board or commission or any officer, agent or employee of this state may voluntarily make any payment, assume any obligation, incur any expense or maintain the individual right of consent for liability claims made pursuant to this chapter except as provided by this section.

O. Neither the authority provided by this section to insure, nor the exercise of such authority, shall:

1. Impose any liability on this state or the departments, agencies, boards and commissions or any officers, agents and employees of this state unless such liability otherwise exists.

2. Impair any defense this state or the departments, agencies, boards and commissions or any officers, agents and employees of this state otherwise may have.

P. The department of administration shall pay, on behalf of any state officer, agent or employee, any damages, excluding punitive damages, for which the officer, agent or employee becomes legally responsible if the acts or omissions resulting in liability were within the officer's, agent's or employee's course and scope of employment. The department of administration may pay for all damages however designated which the officer, agent or employee becomes legally responsible for if the acts or omissions resulting in liability are determined by the director of the department of administration to be within the person's course and scope of employment.

Q. The department of administration shall adopt such rules as are deemed necessary to carry out, implement and limit the provisions of this chapter.

R. For purposes of determining whether a state officer, agent or employee is entitled to coverage under this chapter, "within the course and scope of employment or authorization" means:

1. The acts or omissions that the state officer, agent or employee is employed or authorized to perform.

2. The acts or omissions of the state officer, agent or employee occur substantially within the authorized time and space limit.

3. The acts or omissions are activated at least in part by a purpose to serve this state or its departments, agencies, boards or commissions.

S. TO THE EXTENT IT IS DETERMINED NECESSARY AND IN THE BEST INTEREST OF THIS STATE, THE DEPARTMENT OF ADMINISTRATION MAY OBTAIN DESIGN AND CONSTRUCTION INSURANCE OR PROVIDE FOR SELF-INSURANCE AGAINST PROPERTY DAMAGE CAUSED BY THIS STATE, ITS DEPARTMENTS, AGENCIES, BOARDS AND COMMISSIONS AND ALL OFFICERS AND EMPLOYEES OF THIS STATE IN CONNECTION WITH THE CONSTRUCTION OF PUBLIC WORKS PROJECTS. WORKERS' COMPENSATION LIABILITY INSURANCE MAY BE PURCHASED TO COVER BOTH GENERAL CONTRACTORS AND SUBCONTRACTORS DOING WORK ON A SPECIFIC CONTRACTED WORK SITE. THE DEPARTMENT MAY INCLUDE IN ITS ANNUAL BUDGET REQUEST, PURSUANT TO SECTION 41-622, SUBSECTION D, THE COST OF THE INSURANCE PURCHASED OR PROVIDED. IN CONNECTION WITH THE CONSTRUCTION OF PUBLIC WORKS PROJECTS, THE DEPARTMENT OF ADMINISTRATION MAY ALSO USE AN OWNER-CONTROLLED OR WRAP-UP INSURANCE PROGRAM IF ALL OF THE FOLLOWING CONDITIONS ARE MET:

1. THE TOTAL COST OF THE PROJECT IS OVER FIFTY MILLION DOLLARS.

2. THE PROGRAM MAINTAINS COMPLETED OPERATIONS COVERAGE FOR A TERM DURING WHICH COVERAGE IS REASONABLY COMMERCIALLY AVAILABLE AS DETERMINED BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE, BUT IN NO EVENT FOR LESS THAN THREE YEARS.

3. BID SPECIFICATIONS CLEARLY SPECIFY FOR ALL BIDDERS THE INSURANCE COVERAGE PROVIDED UNDER THE PROGRAM AND THE MINIMUM SAFETY REQUIREMENTS THAT SHALL BE MET.

4. THE PROGRAM DOES NOT PROHIBIT A CONTRACTOR OR SUBCONTRACTOR FROM PURCHASING ANY ADDITIONAL INSURANCE COVERAGE THAT A CONTRACTOR BELIEVES IS NECESSARY FOR PROTECTION FROM ANY LIABILITY ARISING OUT OF THE CONTRACT. THE COST OF THE ADDITIONAL INSURANCE SHALL NOT BE PASSED THROUGH TO THIS STATE ON A CONTRACT BID.

5. THE PROGRAM DOES NOT INCLUDE SURETY INSURANCE.

6. THE STATE MAY PURCHASE AN OWNER-CONTROLLED OR WRAP-UP POLICY THAT HAS A DEDUCTIBLE OR SELF-INSURED RETENTION AS LONG AS THE DEDUCTIBLE OR SELF-INSURED RETENTION DOES NOT EXCEED ONE MILLION DOLLARS.

T. FOR PURPOSES OF SUBSECTION S OF THIS SECTION:

1. "OWNER-CONTROLLED OR WRAP-UP INSURANCE" MEANS A SERIES OF INSURANCE POLICIES ISSUED TO COVER THIS STATE AND ALL OF THE CONTRACTORS, SUBCONTRACTORS, ARCHITECTS AND ENGINEERS ON A SPECIFIED CONTRACTED WORK SITE FOR PURPOSES OF GENERAL LIABILITY, PROPERTY DAMAGE AND WORKERS' COMPENSATION.

2. "SPECIFIC CONTRACTED WORK SITE" MEANS CONSTRUCTION BEING PERFORMED AT ONE SITE OR A SERIES OF CONTIGUOUS SITES SEPARATED ONLY BY A STREET, ROADWAY, WATERWAY OR RAILROAD RIGHT-OF-WAY, OR ALONG A CONTINUOUS SYSTEM FOR THE PROVISION OF WATER AND POWER.

Sec. 5. Section 41-622, Arizona Revised Statutes, is amended to read:

41-622 . Revolving funds for self-insured losses and administrative costs; budget requests

A. There is established a permanent risk management revolving fund , and a permanent workers' compensation liability loss revolving fund AND A CONSTRUCTION INSURANCE FUND in the department of administration for the purchase of insurance, risk management services including loss control PREVENTION services, payment of self-insured losses pursuant to section 41-621, subsections A, B, C, D and E and administrative costs necessary to carry out risk management services prescribed by section 41-621. The department of administration shall pay for claims processing costs, including adjusting costs, legal defense costs and attorney fees, for any portion of claims falling within state self-insurance coverage pursuant to the provisions of this chapter.

B. The permanent risk management revolving fund in the department of administration shall exclude any property loss arising from damage due to mechanical or electrical breakdown, ordinary wear and tear or obsolescence, nonserviceability, mysterious disappearance or inventory shortage. Mysterious disappearance shall not be construed to include a loss if there is a reasonable presumption of theft. The department of administration, subject to chapter 23 of this title, may advance or disburse monies to contractors who rebuild state property as a result of self-insured losses or to persons who supply goods or services in replacing self-insured losses. The department of administration shall pay for claims processing costs, including adjusting costs, legal defense costs and attorney fees, for any portion of claims falling within state self-insurance coverage pursuant to the provisions of this chapter.

C. To qualify for payment for loss by theft or burglary of state-owned personal property, an agency, department, board or commission must show evidence of forcible entry or that threat of violence was used in the taking of the property or there must be a reasonable presumption of theft.

D. The department of administration shall present to the legislature not later than September 1 of each year, in accordance with the provisions of section 35-113, a budget request based on the actuarial needs for liability losses, workers' compensation liability losses, property losses and risk management administrative costs. The budget request shall be broken down to reflect the amount of monies to be charged to each of the state departments, agencies, boards and commissions and any others insured under this chapter. Any state department, agency, board or commission that has an amount for insurance included in its appropriation, whether specifically stated or not, and any state department, agency, board or commission or others insured under this chapter that receive funds other than those appropriated shall be billed for the proportionate share of the charges for insurance or self-insurance by the department of administration. In collecting the agency billings for risk management charges, the director of the department of administration may transfer the entire amount of the billing for appropriated insurance from the agency account into the fund designated in subsection A of this section at the start of the fiscal year or in periodic payments during the fiscal year if necessitated by cash flow restrictions. Those entities or persons insured under the provisions of this chapter that are not state agencies, departments, boards, commissions or employees or that do not receive funding from state sources shall pay annually the amount required by risk management to the permanent risk management revolving fund or , permanent workers' compensation liability loss revolving fund OR CONSTRUCTION INSURANCE FUND before the coverage continues for existing claims or begins for new claims made. THE CONSTRUCTION INSURANCE FUND SHALL RECEIVE MONIES NECESSARY TO PAY THE COST OF PURCHASING INSURANCE, PROVIDING SELF-INSURANCE OR ADMINISTERING THE FUND AS AUTHORIZED BY SECTION 41-621, SUBSECTION S FROM EACH CAPITAL CONSTRUCTION PROJECT BUDGET AT RATES ESTABLISHED BY THE DEPARTMENT OF ADMINISTRATION AND REVIEWED BY THE JOINT COMMITTEE ON CAPITAL REVIEW. These amounts shall be included in the budget request. All monies received from all billings shall be deposited in the funds as identified in subsection A of this section.

E. All monies recovered by the state pursuant to litigation, recovery, salvage value of damaged property, proportionate share monies from any other existing state funds, or otherwise, for damages relating to either a liability, property or workers' compensation loss for which monies from the risk management or workers' compensation liability loss funds OR CONSTRUCTION INSURANCE FUND have been or will be paid shall be deposited in the respective revolving fund.

F. If a revolving fund is projected to be exhausted while the legislature is in session, a special appropriation may be requested by the department of administration for monies to meet the needs of the funds. If the funds are exhausted at a time when the legislature is not in session, any final judgment shall accrue interest and shall be payable upon appropriation in the next succeeding regular session of the legislature. Interest on any judgment against this state paid for out of the permanent risk management revolving fund shall accrue at the average yield offered by United States treasury bills during the course of the appeal and shall be paid in accordance with this section. If the appeal is lost by this state, the judgment amount plus interest at the rate prescribed in this subsection shall be paid.

G. All monies deposited in the funds identified in subsection A of this section , EXCEPT THE CONSTRUCTION INSURANCE FUND, are subject to annual legislative appropriation beginning in the 1992-1993 fiscal year to the department of administration for use pursuant to this section and . MONIES IN THE CONSTRUCTION INSURANCE FUND ARE CONTINUOUSLY APPROPRIATED FOR THE FUND PURPOSES. ALL FUNDS ESTABLISHED BY SUBSECTION A OF THIS SECTION are exempt from the provisions of section 35-190, relating to lapsing of appropriations.

H. Monies in the funds established pursuant to subsection A of this section shall not be used for administrative costs, other than costs directly related to liability, property loss claims, workers' compensation liability, loss control services, risk management services or administration of the risk management division, without approval of the joint legislative budget committee.

I. H. A ten thousand dollar death benefit shall be paid from the workers' compensation liability loss revolving fund to the estate of a deceased volunteer, who is registered as a volunteer by the agency, board or commission, or to an employee who is not subject to the provisions of section 38-651.02, upon proof of death while in the course and scope of duties as prescribed in section 41-621, subsection P for any state agency, board or commission.

Sec. 6. Section 41-703, Arizona Revised Statutes, is amended to read:

41-703 . Duties of director

The director shall:

1. Be directly responsible to the governor for the direction, control and operation of the department.

2. Provide assistance to the governor and legislature as requested.

3. Adopt rules the director deems necessary or desirable to further the objectives and programs of the department.

4. Formulate policies, plans and programs to effectuate the missions and purposes of the department.

5. Employ, determine the conditions of employment and prescribe the duties and powers of administrative, professional, technical, secretarial, clerical and other persons as may be necessary in the performance of the department's duties and contract for the services of outside advisors, consultants and aides as may be reasonably necessary.

6. Make contracts and incur obligations within the general scope of the department's activities and operations subject to the availability of monies.

7. Contract with or assist other departments, agencies and institutions of the state, local and federal governments in the furtherance of the department's purposes, objectives and programs.

8. Accept and disburse grants, GIFTS, DONATIONS, matching monies and direct payments from public or private agencies for the conduct of programs that are consistent with the overall purposes and objectives of the department.

9. Establish and maintain separate financial accounts as required by federal law or regulations.

10. Advise and make recommendations to the governor and the legislature on all matters concerning the department's objectives.

11. Delegate such THE administrative functions, duties and powers as the director deems necessary to carry out the efficient operation of the department.

Sec. 7. Repeal

Section 41-736 , Arizona Revised Statutes, is repealed.

Sec. 8. Title 41, chapter 4, article 3, Arizona Revised Statutes, is amended by adding a new section 41-736, to read:

41-736 . Forest reserve monies

WHEN THIS STATE RECEIVES ANY MONIES THAT BELONG TO THE COUNTIES FROM THE FEDERAL GOVERNMENT FROM FOREST RESERVES THE DEPARTMENT SHALL:

1. DETERMINE THE AMOUNT TO PASS THROUGH TO EACH COUNTY ACCORDING TO THE FOREST ACREAGE REPORT FOR EACH COUNTY.

2. DISTRIBUTE THE MONIES AS DIRECTED BY THE FEDERAL GOVERNMENT AMONG THESE COUNTIES.

3. TRANSMIT THESE PAYMENTS TO THE COUNTY TREASURERS FOR DEPOSIT IN THEIR RESPECTIVE COUNTY GENERAL FUNDS.

Sec. 9. Section 41-764, Arizona Revised Statutes, is amended to read:

41-764 . Contribution of pro rata share for personnel division fund

A. For the fiscal year beginning July 1, 1978, state service agencies within the covered service shall contribute a pro rata share of the overall cost of personnel administration services provided by the department. The pro rata share shall be payable by payroll fund source and the resultant amount shall be deposited in a personnel division fund in the office of the state treasurer for appropriation by the legislature for the personnel division of the department. Beginning July 1, 1990 through June 30, 1992, the pro rata share shall be .70 per cent of the total payroll of the agency and shall increase by .05 per cent each fiscal year thereafter until January 1, 1997. Beginning January 1, 1997 through June 30, 1997, the pro rata share shall be .80 per cent of the total payroll of the agency. Beginning July 1, 1997, the pro rata share shall be .90 per cent of the total payroll of the agency. Total payroll shall include all fund sources including the state general fund, federal monies, special revenue funds, intergovernmental revenue monies, trust funds and other payroll fund sources.

B. A claim for the pro rata share percentage payment shall be submitted according to the fund source, with the accompanying payroll to the department for deposit in the personnel division fund.

C. Notwithstanding section 35-190, only monies in excess of two hundred thousand dollars revert to the state general fund at the end of each fiscal year. THE STATE COMPTROLLER SHALL PAY ANY MONIES DETERMINED TO BE OWED TO THE FEDERAL GOVERNMENT FROM THE PERSONNEL DIVISION FUND BEFORE CALCULATING THE REVERSION.

Sec. 10. Section 41-790, Arizona Revised Statutes, is amended to read:

41-790 . Definitions

In this article, unless the context otherwise requires:

1. "Building renewal" means major activities that involve the repair or reworking of a building , including the upgrading of systems which AND THE SUPPORTING INFRASTRUCTURE THAT will result in maintaining a building's expected useful life. Building renewal does not include new construction BUILDING ADDITIONS , NEW INFRASTRUCTURE ADDITIONS, landscaping and area beautification, infrastructure replacement or repairs, routine maintenance , new paving, resurfacing of an area that was not capitalized as part of the original cost of the building, or demolition and removal of a building.

2. "Building system" means a group of buildings which together constitute a single unit for purposes of planning, land acquisition, construction or building renewal.

3. "Capital projects" means buildings, structures, facilities and areas constructed for the use or benefit of this state.

4. "Infrastructure" means items NONBUILDING IMPROVEMENTS THAT DIRECTLY SUPPORT OPERATING A FACILITY THAT IS LISTED IN THE ANNUAL BUILDING SYSTEM such as , but not limited to, utility delivery systems, roadway systems, external lighting systems, grounds and parking lots that are not capitalized as part of the original cost of a building. IRRIGATION SYSTEMS, SIDEWALKS AND PARKING LOTS.

5. "Land acquisition" means the procurement of real property by gift, grant, purchase, lease purchase, condemnation or other lawful means.

6. "State capitol building" means:

(a) The original 1898 statehouse known as the state capitol museum.

(b) The 1919 state capitol wing and the 1938 state capitol justice addition known jointly as the legislative services wing.

(c) The house of representatives wing.

(d) The senate wing.

(e) The west wing known as the state capitol executive tower.

Sec. 11. Section 41-792.01, Arizona Revised Statutes, is amended to read:

41-792.01 . Capital outlay stabilization fund; authorization for collection of rental; basis of payment; distribution of monies collected; transfer of payment; definition

A. The capital outlay stabilization fund is established which shall consist of monies paid into it in accordance with the provisions of subsection SUBSECTIONS D AND F of this section and legislative appropriations to the account. All monies in the fund are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

B. The director shall make a recommendation for the allocation of a varying sum to the capital outlay stabilization fund each year. No part of the fund may be expended without specific appropriation from the legislature.

C. Each state department and each state agency when using space under the jurisdiction of the department as prescribed in section 41-791 or when using space in a building owned by or leased to the state shall pay a rental AND TENANT IMPROVEMENT LABOR COSTS as prescribed in subsection D or , E OR F of this section.

D. The rental rate authorized for agencies occupying state owned buildings shall be determined by the joint committee on capital review after recommendation by the director prior to the beginning of each fiscal year. The rental is payable whether the STATE department or STATE agency is funded in whole or in part by state monies. The department of administration shall transfer the entire amount of the rental fee assessed on an A STATE agency from the agency account into the capital outlay stabilization fund promptly at the start of each fiscal year. During the remainder of the fiscal year, the department of administration shall calculate pro rata adjustments to the rental fee on a monthly basis to reflect any changes in the occupancy of state owned buildings. The department OF ADMINISTRATION shall transfer the amount of the rental fee adjustment assessed on an A STATE agency from the agency account into the capital outlay stabilization fund. The rental fee authorized for STATE agencies occupying state owned buildings is the greater of the amount included in each agency's annual operating budget as reported by the staff of the joint legislative budget committee or the pro rata adjusted amount based on actual occupancy. The director of the department of administration, upon recommendation of the joint committee on capital review, may authorize an exemption for PERIODS OF one year OR MORE at a time for an A STATE agency from the full payment account transfer requirements of this subsection if the agency can demonstrate a practice of making full payment of rent on a different basis necessitated by its cash flow. If an A STATE agency does not occupy or vacates state owned space after the beginning of the fiscal year, the director of the department of administration, on recommendation of the joint committee on capital review, may authorize a whole or partial exemption from payment of the rental fee. The department of administration shall report quarterly to the director of the joint legislative budget committee on the status of rental fee collections and adjustments.

E. The rental authorized for STATE agencies occupying state leased buildings shall be the greater of the amount included in each agency's annual operating budget as reported by the staff of the joint legislative budget committee or the pro rata adjusted amount based on actual occupancy. The rental amount shall include the amount necessary to pay the lease or lease-purchase obligation and may include the amount necessary to pay operating costs associated with the lease-purchase buildings. The rental is payable whether the STATE department or STATE agency is funded in whole or in part by state monies. At the start of each fiscal year, the department of administration shall transfer the entire amount of the rental fee assessed on an A STATE agency from the agency account into the department of administration's fund established for the purposes of this subsection. The department shall transfer from the applicable state agency budgets amounts necessary to pay all operating costs associated with a lease-purchase building in the amounts reported by the staff of the joint legislative budget committee. During the remainder of the fiscal year, the department of administration shall calculate pro rata adjustments to the rental fee on a monthly basis to reflect any changes in the occupancy of state leased buildings. The director of the department of administration, on recommendation of the joint committee on capital review, may authorize an exemption for an A STATE agency from the full payment account transfer requirements of this subsection for one year periods OR LONGER PERIODS if the agency can demonstrate a practice of making full payment of rent on a different basis necessitated by its cash flow. If an A STATE agency does not occupy or vacates state leased space after the beginning of the fiscal year, the director of the department of administration, on recommendation of the joint committee on capital review, may authorize a whole or partial exemption from payment of the rental fee.

F. THE DEPARTMENT SHALL CHARGE STATE AGENCIES FOR THE FULL COSTS OF LABOR SERVICES IT PROVIDES TO ACCOMPLISH TENANT IMPROVEMENT PROJECTS WITHIN A BUILDING OWNED BY OR LEASED TO THE STATE. CHARGES FOR THIS LABOR SHALL BE DEPOSITED IN THE CAPITAL OUTLAY STABILIZATION FUND.

F. G. State universities, community colleges and the department of transportation are exempt from the provisions of this section, except when these STATE agencies are using space under the jurisdiction of the department of administration.

G. H. For the purposes of this section, "state department" or "state agency" means any department or agency of the executive or judicial branch of state government.

Sec. 12. Repeal

Section 41-2535 , Arizona Revised Statutes, as amended by Laws 1993, chapter 135, section 2, is repealed.

Sec. 13. Laws 1976, chapter 5, section 1 is amended to read:

Section 1. Authorization to transfer title to certain state-owned real property as part of the consideration for purchase of certain real property

A. The assistant director for the division of finance, OF THE department of administration, with the consent of the governor, may convey in the name of the state of Arizona title to Lots 23 , and 24 , 25 AND THE EAST ELEVEN FEET OF LOT 26 , Block 12, Capitol Addition, according to Book 1 of Maps, page 62, records of Maricopa County, Arizona, to the owners of Lots 6 and 7 in said Block as part of the consideration for the purchase by the state of said Lots 6 and 7 and the improvements thereon ON THESE LOTS on the terms and conditions agreed upon by such assistant THE director and the owners of Lots 6 and 7 as a voluntary exchange and purchase in lieu of condemnation.

B. Possession of said Lots 6 and 7, as described in subsection A of this section, and the improvements thereon ON THESE LOTS , shall be granted to the state of Arizona only after completion of construction of a new building on said Lots 23 , and 24, 25 AND THE EAST ELEVEN FEET OF LOT 26 , by the parties to whom title thereto TO THESE LOTS is to be transferred pursuant to subsection A of this section, and after the business interests on said Lots 6 and 7, as described in subsection A of this section, have been satisfactorily relocated on said Lots 23 , and 24 , 25 AND THE EAST ELEVEN FEET OF LOT 26 .

C. The improvements planned to be constructed on said Lots 23 , and 24 , 25 AND THE EAST ELEVEN FEET OF LOT 26 by the parties to whom the title thereto TO THESE LOTS is to be transferred, pursuant to subsection A of this section , shall be submitted to the planning office of the division of finance, GENERAL SERVICES DIVISION OF THE department of administration , for review prior to starting construction of such improvements.

Sec. 14. Delayed repeal

Laws 1976, chapter 5, section 1, as amended by this act, is repealed from and after December 31, 1999.

Sec. 15. Repeal

A. Laws 1993, chapter 135, section 7, as amended by Laws 1995, chapter 14, section 1, is repealed.

B. Laws 1993, chapter 135, section 8, as amended by Laws 1995, chapter 14, section 2, is repealed.

Sec. 16. Delayed repeal

Section 34-201, Arizona Revised Statutes, as amended by section 2 of this act, is repealed from and after July 31, 1999.

Sec. 17. Delayed effective date

Section 34-201, Arizona Revised Statutes, as amended by section 3 of this act, is effective from and after July 31, 1999.

Sec. 18. Emergency

This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.

APPROVED BY THE GOVERNOR APRIL 10, 1997.

FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 10, 1997.