BILL NUMBER: SB 14	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MARCH 17, 2011

INTRODUCED BY   Senators Wolk, DeSaulnier, and Huff
   (Principal coauthor: Senator Alquist)
   (Principal coauthors: Assembly Members  Buchanan and
    and Fletcher  
Bonilla,   Fletcher,   Gordon,   and Olsen
 )
    (   Coauthor:   Senator   Harman
  ) 
    (   Coauthors:   Assembly Members 
 Block,   Harkey,   and Wagner   )


                        DECEMBER 6, 2010

   An act to add Sections  9143.5   9147.8 
, 13335.3, and 13335.5 to the Government Code, relating to the State
Budget.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 14, as amended, Wolk. State Budget.
   (1) The California Constitution requires the Governor to submit
annually to the Legislature a budget itemizing state expenditures and
estimating state revenues and requires the Legislature to pass the
Budget Bill by midnight on June 15.
   This bill would require that the budget submitted by the Governor
to the Legislature for the 2014-15 fiscal year and each fiscal year
thereafter be developed pursuant to performance-based budgeting, as
defined, for each state agency.
   (2) Under existing law, a state agency for which an appropriation
is made is generally required to submit to the Department of Finance
for approval a complete and detailed budget setting forth all
proposed expenditures and estimated revenues for the ensuing fiscal
year.
   The bill would require the budget of a state agency, as defined,
submitted to the department to utilize performance-based budgeting
 ,  for all programs, as defined  to include
those performed not only by state agencies, but by local agencies,
contractors, or others that have a material relationship with the
state, or its authorities and activities. For those programs not
administered by the state, but which confer a benefit that would not
otherwise occur but for the action of state government, state
departments would be required to develop a process for consulting
with responsible local agencies, contractors or other responsible
entities, and stakeholders to develop information related to
performance standards and program performance  . The bill would
authorize  a joint committee  the Joint Sunset
Review Committee  , utilizing the recommendations of specified
entities, to propose changes to those programs.  The

    The  bill also would establish a task force comprised of
the Director of Finance, the Controller, and the chairpersons and
vice chairpersons of the Senate Committee on Budget and Fiscal Review
and Assembly Committee on Budget to  develop  
review and comment on  performance-based budgeting guidelines
and procedures,  including a process for phasing in
requirements of performance-based budgeting, and   to be
used by state agencies in developing performance-based budgets,
 to review and comment on a training  and education
 program for state agency personnel involved in the 
budget   performance-based budgeting  process
developed by the Department of Finance  , and to review and
comment on a plan developed by the department for phasing in
performance-based budgeting, which plan would be required to ensure
that such budgeting would be in use by   the 2012-13 fiscal
years, giving priority to those programs that were a part of the
2011-12 realignment project .
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    It is the intent of the Legislature in
enacting this measure during the 2011-12 Regular Session to provide a
system of analysis that supports a results-oriented framework for
the delivery of public services. That framework should prioritize
understanding the results of programs and funding that are subject to
a transfer of authority and responsibility from state government to
county governments.  
  SECTION 1.    Section 9143.5 is added to the
Government Code, to read:
   9143.5.  (a) Within one year of the effective date of the act that
added this section, the Legislature shall establish a process,
including the creation of a new or use of an existing joint
committee, and shall include a schedule and a deadline for reviewing
the performance of all programs at least once every 10 years in a
bill implementing the Budget Act. The process established by the
Legislature shall include the participation of the budget committee
of each house of the Legislature. The schedule  
  SEC. 2.    Section 9147.8 is added to the Government Code,
to read: 
    9147.8.   (a)     Within one year
of the   effective date of the act that added this section,
the Joint Sunset Review Committee shall adopt a process, schedule,
and deadline for reviewing the performance of all programs at least
once every 10 years. The schedule  shall provide for reviewing
programs with expenditures that total one-third or more of total
expenditures by July 1, 2015, and that total two-thirds of total
expenditures by January 1, 2018. For purposes of this section,
"expenditures" include  all funds as reflected in the Budget Bill
submitted by the Governor, and  statutory exemptions,
deductions, credits, or exclusions from taxes or fees that would
otherwise apply.  For purposes of this act, "expenditures" also
shall include the revenue and expenditures of state departments that
are not reflected in the Budget Bill. The process established by the
committee to review the performance of public programs shall reflect
the principles of performance-based budgeting and shall include the
participation of the Senate Committee on Budget and Fiscal Review and
the Assembly Committee on Budget. 
   (b) Six months prior to the deadline for review of each program,
the joint committee shall refer the  information on an 
initial program review to the appropriate policy committees of each
house of the Legislature. For programs with common objectives, the
reviews may be combined. Within 90 days prior to the deadline, the
policy committees shall make recommendations regarding a program to
the joint committee. The joint committee's review may be based on the
recommendations of the policy committees, as well as recommendations
that may be made by the Milton Marks "Little Hoover" Commission on
California State Government Organization and Economy, the Legislative
Analyst, the Bureau of State Audits, or the public. As part of its
recommendations to the joint committee, the Bureau of State Audits
shall identify those programs that pose the greatest financial risks
to the state. If following the review of one or more programs the
joint committee determines that statutory changes are necessary, the
joint committee may propose legislation that includes, but is not
limited to, one or more of the following:
   (1) Modifications to the program that will reduce costs.
   (2) Modifications to the program that will improve outcomes.
   (3) Reorganization of the program by consolidating it with
programs that have similar objectives.
   (4) Termination of the program  , provided that if a program
is recommended for termination, an analysis shall include the
potential benefits if performance is improved, the relationship
between the program and desired public outcomes, and the impact of
eliminating that program. The analysis of impacts of elimination
shall include ramifications on related outcomes, the potential to
increase the burden and fiscal impact on other public programs, and
the potential impact on future budgets  .
   (c) Proposed legislation shall be submitted to the Committee on
Rules of each house of the Legislature for referral to the
appropriate policy committee for public hearing and further action.
   (d) The joint committee shall post on an Internet Web site its
recommendations and the results of the Legislature's action.
   (e) "Performance-based budgeting" has the same meaning as set
forth in subdivision (d) of Section 13335.3.
   (f) For the purposes of this section, "program" includes statutory
or constitutional provisions that authorize services, regulate
activities,  evaluate services and programs,  provide
preferences in the tax system, or otherwise confer a benefit that
would not otherwise occur were it not for the action of the state
government, including the procedures used to administer those
programs,  and   whether performed by state
agencies, local agencies, contractors, or others that have a material
relationship with the state or its authorities and activities, or
 that have a fiscal effect on the state.
   SEC. 2.   SEC. 3.   Section 13335.3 is
added to the Government Code, to read:
   13335.3.  (a) The purpose of performance-based budgeting is to
inform policy, fiscal, and oversight decisions by the Governor and
Members of the Legislature; to focus managers, supervisors, and
rank-and-file workers on achieving desired goals; and to communicate
to the public the value of public programs, progress toward desired
results, and the choices available to improve the expenditure of
public funds.
   (b) Every state agency for which an appropriation has been made
shall submit to the department for approval a complete and detailed
budget at the time and in the form prescribed by the department,
setting forth all proposed expenditures and estimated revenues for
the ensuing fiscal year.
   (c) The budget submitted to the department and proposed by the
Governor shall use performance-based budgeting methods that make it
clear to policymakers and the public the value and results of
existing operations and proposed changes.
   (d) As used in this article, "performance-based budgeting" means
 a system of budgeting that uses information on performance to
inform resource allocation decisions, thereby  establishing
clear accountability by achieving measurable performance
results from the expenditure of state resources.   .

   (e) A performance-based budget shall identify and update all of
the following:
   (1) The mission and goals of the agency.
   (2) The activities and programs focused on achieving those goals.
   (3) Performance metrics that reflect desired outcomes for existing
and proposed activities and a targeted performance level for the
following year.
   (4) Prior-year performance data and an explanation of deviation
from previous-year targets.
   (5) Proposed changes in statute, including the creation of
incentives or elimination of disincentives that could improve
outcomes or hold down costs. 
   (6) A description of the impacts and consequences to the current
recipients or beneficiaries of a program proposed for modification or
elimination. 
   (f) The Governor's Internet Web site shall provide a summary of
each state agency's mission, goals, prior-year performance, and
future-year objectives.
   SEC. 3.   SEC. 4.   Section 13335.5 is
added to the Government Code, to read:
   13335.5.  (a) Not later than the 2014-15 fiscal year, and each
fiscal year thereafter, the budget submitted by the Governor to the
Legislature, as required by Section 12 of Article IV of the
California Constitution, shall be developed by utilizing
performance-based budgeting methods.
   (b) The amount of each appropriation made in the Budget Act for
the 2014-15 fiscal year, and each fiscal year thereafter, for
expenditure by any state agency shall be determined after considering
performance-related data. The Budget Bill submitted by the Governor
also shall include performance standards, which may be amended by the
Legislature in the same manner as amendments to appropriations in
the Budget Bill. These standards shall be applied to each state
agency, and should allow the public and policymakers to understand
the effectiveness and efficiency of each program.  For those
programs that are not administered by the state, but which confer a
benefit that would not otherwise occur were it not for the action of
the state government, departments shall develop a process for
consulting with the responsible local agencies, contractors or other
responsible entities, and stakeholders to develop information related
to performance standards and program performance. 
   (c) The Legislative Analyst's Office shall review the adequacy of
performance metrics and progress toward targeted outcomes in
preparing its review of the Governor's Budget proposal.
   (d) A task force consisting of the director, the Controller, and
the chairpersons and vice chairpersons of the Senate Committee on
Budget and Fiscal Review and the Assembly Committee on Budget shall
do all of the following:
   (1) Review and comment on guidelines and procedures drafted by the
department to be used by state agencies in developing
performance-based budgets pursuant to Sections 13320 and 13335.3. The
guidelines shall describe how state employees will be involved in
establishing and implementing performance standards.
   (2) Review and comment on a training program developed by the
department for appropriate executive branch personnel to ensure the
successful implementation of performance-based budgeting and
management by state agencies.
   (3) Review and comment on a plan prepared by the department for
systematically phasing in the requirements of Sections 13320 and
13335.3. The plan should ensure that, by the 2012-13 fiscal year,
performance-based budgeting methods are used in preparing, reviewing,
and enacting one-third or more of the total General Fund
expenditures as proposed in the Governor's Budget for that fiscal
year.  Priority shall be given to those programs that were part
of the 2011-12 realignment project as enacted. 
   (e) For purposes of this article, "state agency" means any agency,
department, or other entity of the executive branch of the state
that is required to submit a budget pursuant to Article 2 (commencing
with Section 13320).