BILL ANALYSIS Ó
ACR 45
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Date of Hearing: May 7, 2015
ASSEMBLY COMMITTEE ON BUDGET
Shirley Weber, Chair
ACR 45
(Grove) - As Introduced March 11, 2015
SUBJECT: State agency budgets: legislative review: zero-based
budgeting
SUMMARY: Resolves that a zero-based budgeting analysis be
performed for the 40 largest State departments and agencies over
a five-year period. The resolution outlines a process by
which these departments and agencies are identified by June
30, 2015 and then the first eight agencies begin the analysis
during the 2015 interim study recess.
COMMENTS: There has been considerable interest in adding some
sort of "top to bottom" programmatic review of all departments
to complement the existing budget process. On December 8, 2011,
the Governor issued executive order B-13-11 directing the
Department of Finance to create a strategy for
program-evaluation methods into the budget process, zero-based
budgeting was included as one approach. The intent of ACR 45
appears in line with this effort for greater oversight.
ACR 45
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This resolution envisioned an approach of the legislature
reviewing eight departments/agencies for the first year, and
presumable eight each subsequent year, to review 40 different
departments and agencies within five years. Such an approach
differs from current efforts underway in the Assembly and in the
Executive Branch.
Assembly Budget Subcommittee #2 is currently engaged in the
zero-based budgeting analysis of the University of California.
The Subcommittee 2 held its first hearing in February and is
scheduled to follow up on the UC Budget on May 13th. The
experience to date has shown that the effort requires
significant staff resources as well as considerable time to sift
through increasingly more detailed levels of financial,
performance, and staffing data. The zero-based budgeting
effort for the University of California may need to continue for
more than an additional year, given the complexity of issues
brought forward to date.
The Assembly Budget Committee has already been directed to
explore expanding the role of zero-based budgeting to all State
departments and agencies at least once every ten years. The
Committee has not yet developed a work plan for achieving such a
review, as the current experience with Subcommittee 2 is
critical to informing the future approach. In addition, the
Committee intends to develop templates and protocols so that
several different departments can be analyzed at the same time
in a consistent manner.
ACR 45
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The Department of Finance must play a critical role in leading
any zero-based budgeting effort. The Department's expertise and
resources must be fully engaged in any effort for it to be
successful. In meeting the requirements of Executive Order
B-13-11, the Department of Finance has chosen to apply
zero-based budgeting at the programmatic level in select
departments. For example, the many programmatic functions of
Caltrans have been the subject of this review over the last four
years, and in 2014, the analysis focused on the Caltrans Legal
Services division, rather than the entire department. This
approach has allowed the Department of Finance to conduct
programmatic evaluation within the existing staff resources at
the department. Such an approach achieves the same goals as
this resolution, but in a much slower and more gradual pace.
The process for conducting zero-based budgeting outlined in ACR
45 may be difficult to implement in the tight timelines
envisioned by the resolution. Under the proposed language, work
on the zero-based budgeting efforts would need to commence
immediately to begin an analysis of eight departments
and/agencies for this fall.
The Assembly's effort to implement zero-based budgeting also
overlaps with the implementation of the new state accounting
system, FI$Cal. Over 80 state agencies and departments are
scheduled to transition to this new system in 2015-2017. It may
be unrealistic to try to have these departments undertake both
difficult and resource intensive activities at the same time.
ACR 45
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REGISTERED SUPPORT / OPPOSITION:
Support
None on file
Opposition
None on file
Analysis Prepared by:Christian Griffith / BUDGET /916-319-2099