(1) The Legislature finds (a) that effective state and local governmental institutions are essential in the maintenance and development of public administration in an increasingly complex and interdependent society; (b) that since numerous governmental activities administered by district and local governments are related to a statewide purpose and are financed in part by state funds, a state interest exists in a high caliber of public service in state, district and local governments; and (c) that the quality of public service at all levels of government can be improved by the development of innovative systems of public administration.

(2) The State Personnel Board is hereby authorized and directed to establish a program to encourage and recognize excellence, innovation and diversity on the part of state, district and local governmental entities in the design, execution and management of their own administrative procedures. The State Personnel Board shall establish by rule and regulation procedures for evaluating said examples of improvement in public administration, and shall provide for an annual awards program to recognize excellence in government. The board may establish categories of governmental service in order to recognize these achievements.

(3) Nominations for awards under the program of excellence in government prescribed herein shall be made to the State Personnel Director by the governing authority or board of the governmental entity employing the particular individual or group of individuals to be recognized. Such nominations shall be made at such time or times and shall contain such information as the State Personnel Board may prescribe. All nominations shall be submitted by the State Personnel Director to the Governor for review, comments and recommendation at least sixty (60) days prior to final evaluation by the State Personnel Board. An explanation in writing shall be sent to the Governor in the event the State Personnel Board does not concur with recommendations of the Governor in approving or disapproving said nominations.

(4) Nominations for awards under the program of excellence in government shall set forth clear and practicable actions for the improvement of particular aspects of technical or administrative procedure, such as:

(a) Establishment of personnel systems of general or special functional coverage to meet the needs of urban, suburban or rural governmental jurisdictions that may not be able to provide career inducements to well qualified professional, administrative and technical personnel;

(b) Strengthening one or more major areas of public administration, such as personnel recruitment, personnel training, personnel development and payroll administration; or

(c) Increasing intergovernmental cooperation with respect to such matters as personnel interchange, personnel recruiting, manpower utilization and interchange and fringe benefits.

(5) As part of the program of excellence in government, the State Personnel Board shall authorize and establish guidelines for state agencies to accept and present cash awards and bonuses as part of any federally funded employee awards incentive. The guidelines shall authorize state employees to compete for federal incentives and authorize state agencies to accept federal funds earmarked for incentives. All federal awards and bonuses received by state agencies shall not be designated as part of the agency’s yearly budget for the purpose of receiving state appropriations.

(6) The State Personnel Board may evaluate a nominee under the program of excellence in government and recommend a monetary award for those suggestions which improve management of technical or administrative procedures resulting in bona fide cost reduction for the state or local governmental entity. Upon approval of such an award by the board, the State Personnel Board may notify the State Auditor or the local governmental authority, as the case may be, who shall pay the award to the employee upon receipt of the proper requisition.