BILL ANALYSIS
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Denise Moreno Ducheny, Chair
Bill No: SB 1020
Author: Wolk
As Amended: February 11, 2010
Consultant: Keely Martin Bosler
Fiscal: Yes
Hearing Date: April 12, 2010
Subject : State budget.
Summary : This bill provides a statutory framework for the
implementation of performance based budgeting and for a
systematic program performance review by the Legislature.
The provisions of this bill are the same performance based
budgeting and program performance review provisions
contained in the larger package of reforms sponsored by
California Forward.
Background :
Historic Budget Reform Efforts. There have been numerous
proposals to reform the budget over the past decades.
Historical reform efforts include, but are not limited to,
the following:
Pilot projects on performance budgeting in four
State departments starting in 1993 by then Governor
Pete Wilson.
Recommendations by the California Constitution
Revision Commission that convened from 1994 to 1996 at
the direction of statute and made various
recommendations regarding the State budget process and
alignment of programs between State and local
governments.
Recommendations by the California Citizens Budget
Commission in 1998 that proposed statutory and
constitutional changes to the budget process,
including reducing the vote requirement for the State
budget to a majority vote.
Recommendations in the Governor's 2004 California
Performance Review regarding the State budget process,
including a recommendation to adopt a biennial budget
and a performance-based budgeting system.
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California Forward Organization. California Forward has
sponsored the most recent efforts regarding government
reform. California Forward is an organization that was
created by California Common Cause, the Center for
Governmental Studies, the New California Network, and the
Commonwealth Club of California's Voices for Reform Project
in March 2008. The organization's main goal is to
contribute to improving the quality of life for all
Californians by creating a more responsive, representative,
and cost-effective government. This organization is funded
by the following foundations: the California Endowment,
the Evelyn and Walter Haas Jr. Fund, the William and Flora
Hewlett Foundation, the James Irvine Foundation, and the
David and Lucile Packard Foundation.
In 2008, California Forward started a process of
consultation and engagement with the public and community
leaders regarding a government reform agenda. They have
made hundreds of presentations, consulted with hundreds of
community leaders, conducted focus groups and public
opinion research in the development of a reform agenda that
includes budget process reform and local government reform.
Performance-based budgeting and program performance review
are just two of the reforms proposed by California Forward.
Proposed Law:
This bill does the following:
Program Performance Review. This bill requires the
Legislature to establish a process for reviewing the
performance of all state programs at least once every ten
years, including tax expenditures. Six months prior to the
deadline for review of each program, a joint committee
shall refer the initial program review to the appropriate
policy committee of each house of the Legislature. A joint
committee shall propose legislation based on the policy
committee recommendations and other recommendations that
will reduce costs, improve outcomes, or terminate the
program. The proposed legislation of the joint committees
shall be submitted to the Rules Committee in each house and
referred to appropriate committees for public hearings and
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further actions. This bill requires the proposed
legislation to be posted on the joint committee's website.
Performance Data in Budget Document. This bill requires
each state agency to submit performance data that reflect
desired outcomes for existing and proposed activities as
part of the annual budget submission. This bill also
requires each state agency to identify and update the
following: the mission and goals of the agency, the
activities and programs focused on achieving those goals,
performance metrics, prior-year performance data, and
proposed changes in statute to improve outcomes or reduce
costs. This data shall be available on the Governor's
website.
Development of a Performance-Based Budget. This bill
requires that performance based budgeting methods be
implemented for all budgets submitted to the Legislature by
the 2014-15 fiscal year. This bill requires the LAO to
review the adequacy of the performance metrics.
This bill creates a task force consisting of the Department
of Finance (DOF), the State Controller's Office (SCO), and
the Chairpersons and Vice Chairpersons of the budget
committees that shall review and comment on DOF's
guidelines for developing performance-based budgets, on
DOF's training program to ensure successful implementation
of performance-based budgets, and on DOF's plans for
implementing performance-based budgeting.
Fiscal Effect:
This bill is likely to require new state spending in the
tens of millions of dollars annually to develop and
implement new performance standards. This includes
additional resources for the DOF and the LAO given their
expanded roles under this bill. In addition, new
information technology expenditures could result to address
the new requirements.
Source : California Forward
Support:
American Council of Engineering Companies of California
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California Business Properties Association
California Chapter of the American Fence Association
California Construction and Industrial Materials
Association
California Fence Contractors' Association
California Forestry Association
California Grocers Association
California Independent Oil Marketers Association
California League of Food Processors
California Manufacturers & Technology Association
California Taxpayers Association
Chemical Industry Council of California
Engineering Contractors' Association
Flasher/Barricade Association
Marin Builders' Association
Western Growers
Western States Petroleum Association
Supporters of SB 777 the 2009 version of SB 1020:
California Forward (Sponsor)
California Association of Nonprofits
California Taxpayers Association (Cal-Tax)
Children Now
Northbay Leadership Council
Fresno Unified School District
San Jose Unified School District
Orange County Business Council
Saving California Communities
Yolo County
City of Long Beach
City of Riverside
City of Monterey
Kern County Taxpayers Association
Valley Industry and Commerce Association
Inland Empire Economic Partnership
Monterey County Business Council
Individuals
Bill Slaton, SMUD board member
Robert Goetsch, President, Zephyr Development
Bruce Presser, CEO, The Covello Group
Fred Main, California Forward Advisory Committee
Opposed : None on file.
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Comments :
1. Performance Measures and Management. Performance
measures can be a useful tool for managers to assess
how effective programs are in meeting their goals
and to help focus managers on outcomes and not
processes. However, many state departments would
have to make significant changes to their management
structure, training, and data collection systems
before they could effectively use performance
measures to guide management decisions. Given this,
it is unclear whether the state could meet the
deadline for performance measures set forth in this
constitutional amendment. This is especially true
if there is not sustained leadership in the
executive branch on this effort.
2. Measurements and Priorities. Performance
measurements can be useful tools in helping the
Legislature evaluate program performance and
efficacy. However, they are not a substitute for
setting Legislative priorities. For example, public
needs still require funding regardless of a
department's administrative performance in achieving
an agreed upon performance level.
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