BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 14
Author: Wolk (D), et al.
Amended: 8/25/11
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 8-0, 03/30/11
AYES: Wolk, Huff, DeSaulnier, Hancock, Hernandez, Kehoe,
La Malfa, Liu
NO VOTE RECORDED: Fuller
SENATE BUDGET & FISCAL REVIEW COMMITTEE : 16-0, 05/12/11
AYES: Leno, Huff, Alquist, Anderson, DeSaulnier, Emmerson,
Evans, Fuller, Hancock, La Malfa, Liu, Lowenthal, Rubio,
Simitian, Wolk, Wright
SENATE FLOOR : 38-0, 05/27/11
AYES: Alquist, Anderson, Berryhill, Blakeslee, Calderon,
Cannella, Corbett, Correa, De Le�n, DeSaulnier, Dutton,
Evans, Fuller, Gaines, Hancock, Harman, Hernandez, Huff,
Kehoe, La Malfa, Leno, Lieu, Liu, Lowenthal, Negrete
McLeod, Padilla, Pavley, Price, Rubio, Runner, Steinberg,
Strickland, Vargas, Walters, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Emmerson, Simitian
ASSEMBLY FLOOR : 79-0, 08/30/11 - See last page for vote
SUBJECT : State Budget
SOURCE : California Forward
CONTINUED
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DIGEST : This bill provides a statutory framework for the
implementation of performance- based budgeting and for a
systematic program performance review by the Legislature.
Assembly Amendments recast the bill with the same intent as
when it left the Senate, and add co-authors.
ANALYSIS : The California Constitution requires the
Governor to submit to the Legislature, within the first 10
days of the calendar year, a budget for the ensuing fiscal
year. The Governor's budget must include itemized
statements for recommended expenditures and estimated
revenues.
The State Department of Finance prescribes and manages the
development of a state budget and oversees state agencies'
financial practices. The Department ensures that budget
information reflects state agencies' activities and costs
and displays information on expenditures and objectives.
The Department helps state agencies use sound management
approaches.
This bill:
1.Requires the establishment of performance-based budgeting
for all state departments and agencies. Statewide the
implementation of performance-based budgeting would occur
concurrently with the new start of the new budget process
that will be developed as part of the Financial
Information System for California accounting system
project. As part of the Governor's budget submission,
each department would be required to provide the
following information in the budget:
A. The mission and goals of each agency;
B. The activities and programs of the agency;
C. Performance measures that reflect the desired
outcomes of the agency and a targeted performance
level of the following year;
D. Prior-year performance data; and,
E. A description of the impacts to current
beneficiaries of a program proposed for modification
or elimination.
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1.Requires the Department of Finance (DOF) to develop an
implementation plan, by August 1, 2012, that articulates
how the state will achieve full statewide implementation
of performance-based budgeting.
2.Implements the new performance-based budgeting
requirements subject to appropriation in the budget, but
requires the DOF to begin performance-based budgeting in
the 2013-14 budget process with programs and departments
identified in the implementation plan.
Legislative Intent . This bill states that the legislative
intent in enacting this measure is to provide a system of
analysis that supports a results-oriented framework for the
delivery of public services and the operation of state
departments and programs. 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.
The Legislature makes the following findings and
declarations:
1. State government must focus on the outcomes of public
policy decisions and public programs to ensure
opportunities are available for all Californians to
achieve a high quality of life.
2. The Legislature must ensure that policymakers, public
program administrators, and rank-and-file state workers
have access to relevant and timely information so that
they can make informed decisions in the design and
delivery of public programs.
3. The focus of that information must be on the goals of
those public programs and the performance of the public
agencies in administering those programs.
4. Goal and performance information should be widely
available, relevant, and timely for informing budget,
policy, and oversight decisions.
5. In order to identify performance measurements
relevant to budget, policy, and oversight
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decisionmaking, public agencies must consult with the
public, rank-and-file state workers, supervisors, and
other officials responsible for the delivery of public
programs.
6. Performance measurements, including information on
outcomes and other metrics relevant to improving those
outcomes, should be designed to ensure that limited
public resources are well spent.
7. Establishing goal, performance, and outcome
information for public programs should be part of a
systematic review of the effectiveness and efficiency
of those programs.
8. Goal, performance, and outcome information should be
made widely available to the public.
9. Goal, performance, and outcome information should be
used in the annual budget and policy-making process to
inform fiscal and policy decisions and by the
Legislature to enhance oversight of public programs and
to ensure results-based accountability.
10. As a component of legislative oversight, goal,
performance, and outcome information should be used to
identify programs that require fundamental reforms to
improve outcomes and programs subject to elimination
because they are ineffective.
Background
Historic Budget Reform Efforts . There have been numerous
proposals to reform the budget process over the past
several 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
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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.
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.
Recent Reform Efforts . The bipartisan California Forward
organization has sponsored 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 .
California Forward's efforts culminated with a
comprehensive constitutional amendment in 2010 (SCA 19,
DeSaulnier) that contained various changes to the state
budget and legislative process. Specifically, these
amendments would have implemented a pay as you go system
for the majority of legislation, the Governor's budget, and
initiatives. This measure would have significantly limited
how one-time revenues could be expended. This measure
required the Legislature to review state programs once
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every ten years. This measure would have also lowered the
vote threshold for the budget and increased the vote
threshold for fees when they are being used to fund a
program, service, or activity that was previously funded by
revenue from a tax. This measure would also have reduced
legislator pay if the budget was not passed by June 25 and
provided the Governor with mid-year cut authority if the
Legislature does not act prior to the 45th day of a fiscal
emergency. This measure was not passed by the Legislature
in 2010.
Two initiatives passed by the voters in November 2010,
including Proposition 25 and Proposition 26 enacted pieces
of the California Forward agenda. Proposition 25 lowered
the vote threshold for the budget to a majority vote and
reduced legislator's pay if the budget was not passed by
the constitutional deadline. Proposition 26 also passed by
the voters increased the vote threshold for some fees,
including those that are being raised to fund a program
that was previously funded by revenue from a tax.
Comments
The purpose of this bill is to create in statute a
systematic legislative review of the performance of state
government reviews. Presently, there are reviews of pieces
of state government that occur in the Budget Subcommittee
process and policy committees. However, these reviews are
usually related to a specific incident or a specific budget
issue and do not review all programs from a policy
perspective or in any systematic manner. This bill could
help the Legislature develop a system that would collect
longitudinal performance data systematically for more
effective input into the budget and legislative process.
This bill also establishes a performance-based budgeting
system to be used by all state departments in the
development of a budget and in the subsequent review of the
budget by the Legislature. This bill assumes that
performance outcomes are not being used in a widespread
manner by managers in state government or by the control
agencies or Legislature in evaluating and prioritizing
expenditures in the annual budget process. Performance
data has been collected by some programs and departments
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and is used to inform management decisions and budgetary
decisions. However, at present, there is not a systematic
approach across state government to collect relevant
performance data and use it to make management decisions
and inform budgetary decisions. This bill attempts to put
a system in place to make performance data a regular part
of government operations.
Departments across state government currently collect
performance data on programs, contracts, and other aspects
of their operations. While this data is not necessarily
collected systematically across state government, this data
is often used to inform budgetary decisions. For example,
the Franchise Tax Board is constantly evaluating audit
techniques and other tax enforcement efforts to determine
the most cost effective way of investing limited audit
resources. Some departments literally have dozens and
dozens of performance metrics; however, it is not always
clear whether they are being used to inform budget
decisions or other management decisions. Ultimately, using
data to inform management decisions and budget decisions
needs to be an ingrained part of the culture of the
administration and legislative review. Practically
speaking, performance data, while important, is often just
one of the inputs used to make decisions and without
leadership and commitment at every level of government to
rely on data to inform decisions, data will not, in itself,
change the outcomes of the decision makers.
In the Legislative Analyst's review of the state's
performance-based budgeting pilots of the early 1990s the
Analyst found that performance-based budgeting was more
successful when there was a collaboration with the
executive and legislative branches in developing metrics
and reporting procedures. Clearly, widespread buy-in into
a system of performance metrics would result in a more
successful integration of data into a decision-making
process. However, what happens if there are divergent
views on the fundamental goals of a program or department?
These debates, while not a reason to forgo performance
data, are a real hurdle to the successful integration of
data into the management and legislative process. For
example, numerous expert panels and actual data have shown
that the residential restrictions placed on sex offenders
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in California have had no and possibly negative impacts on
public safety. Nevertheless, proposals to change this law
have not been forthcoming.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Budget Committee, small
absorbable costs for DOF to provide the plan for
implementation. Additional costs will depend upon the
extent to which DOF believes it can leverage existing
resources and the Fi$Cal project to develop
performance-based budgeting, and would be subject to
appropriation in the budget.
SUPPORT : (Verified 8/30/11)
California Forward (source)
AARP
American Association of University Women, California
American Council of Engineering Companies of California
American Federation of State, County and Municipal
Employees
Bay Area Council
Brocade, Inc.
Business Council of San Joaquin County
California Alliance of Child and Family Services
California Association of Bed & Breakfast Inns
California Association of Nonprofits
California Chamber of Commerce
California Chapter of the American Fence Association
California Church IMPACT
California Construction and Industrial Materials
Association
California Fence Contractors' Association
California Grocers Association
California Hotel & Lodging Association
California Independent Oil Marketers Association
California Manufacturing & Technology Association
California Partnership for the San Joaquin Valley
California Retailers Association
California Senior Advocates League
California State Student Association
Cal Tax
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Consumer Specialty Products Association
Contra Costa Council
Contra Costa Transportation Authority
County of San Mateo
Engineering Contractors' Association
Flasher Barricade Association
Fresno Business Council
Greater Fresno Area Chamber of Commerce
Half Moon Bay Coastside Chamber of Commerce
Herbalife International of America, Inc.
Huntington Beach Chamber of Commerce
Kern County Taxpayers Association
Los Angeles Area Chamber of Commerce
Marin Builders' Association
MetricStream, Inc.
MoSys, Inc.
Proofpoint Systems, Inc.
San Francisco Chamber of Commerce
San Gabriel Valley Economic Partnership
San Mateo County Economic Development Association (SAMCEDA)
Santa Clara and San Benito Counties Building and
Construction Trades
Council
Santa Cruz County Medical Society
Saving California Communities
SEIU 1000
Silicon Valley Leadership Group
State Building and Construction Trades Council of
California
TechAmerica
USANA Health Sciences, Inc.
Valley Industry & Commerce Association
WELL Network
ASSEMBLY FLOOR : 79-0, 08/30/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
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Hern�ndez, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor,
Mendoza, Miller, Mitchell, Monning, Morrell, Nestande,
Nielsen, Norby, Olsen, Pan, Perea, V. Manuel P�rez,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Williams, Yamada,
John A. P�rez
NO VOTE RECORDED: Gorell
AGB:RJG:nl 8/30/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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