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SUMMARY
The Office of the Auditor General has conducted a performance audit and
Sunset review of the Private Enterprise Review Board, pursuant to a May 27, 1997,
resolution of the Joint Legislative Audit Committee. The audit was conducted as part of
the Sunset review set forth in Arizona Revised Statutes (A.R.S.) §§41-2951 through
41-2957.
The Legislature established the Private Enterprise Review Board (PERB)
in 1983 to provide a mechanism by which an independent body could review state government
functions that compete with private enterprise. As such, PERB performs four basic
functions:
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Second, PERB is empowered to solicit and evaluate written notices of interest, called
petitions of interest, from the private sector to perform functions that are currently
performed by a state agency.
PERB’s primary role in these areas is to hear testimony from both
the private sector and state agency representatives and then report its findings and
recommendations to the Legislature and the Governor.
PERB consists of ten volunteer members, primarily from the private
sector, and four non-voting, advisory members from the Legislature. In addition to its
volunteer members, PERB is supported by a part-time staff person from the Governor’s
Office for Excellence in Government (OEG). In return, the OEG receives a $55,000
appropriation.
Need for Private Enterprise Review
Board Still Not Demonstrated
(See pages 5 through 11)
Although PERB has taken steps to address deficiencies noted in the 1996
Auditor General review of the Board (see Report No. 96-3), the need for PERB has still not
been demonstrated. The Legislature should consider sunsetting PERB due to the small number
of issues it continues to receive and its limited demonstrated impact.
At the time of the last audit, PERB was also handling few cases. The
1996 audit noted this was possibly due to the fact that PERB had experienced a period in
which it had not met, and that it had insufficient staff support. Because at the time of
the audit PERB had recently become much more active and because representatives from both
state agencies and the business community indicated a need for a forum such as PERB, the
1996 audit recommended that PERB be given three to five years to demonstrate its viability
and impact on state government. Following the audit, the Legislature continued PERB for
two years.
Since the 1996 audit, PERB has taken action to increase public
awareness of its function. However, despite its efforts PERB has received and conducted
hearings on only five cases within its purview. Of those five cases considered,
PERB’s activities appear to have positively impacted only one area of state
government. Specifically, a petition of interest from the private sector resulted in the
Arizona Department of Transportation contracting-out for a service that the Department
previously performed. PERB also addressed two complaints that were outside of its
jurisdiction involving a community college and the Department of Economic Security.
If the Legislature chooses not to sunset PERB, changes are required to
clarify the extent of its involvement in unfair competition complaints and petitions of
interest. Although PERB’s statutorily established role is to review complaints and
petitions and report its findings and recommendations to the Legislature and Governor,
PERB appears to prolong its involvement in certain cases. For example, in the petition of
interest involving the Arizona Department of Transportation, PERB extended its involvement
well beyond the completion of its investigation by continuing to monitor the case for
several months. To ensure that PERB’s involvement in a case does not exceed its
statutory authority, PERB should better define when its role in a case ends.
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