REPORT TITLE:
Performance-Based Budgeting


DESCRIPTION:
Establishes the joint legislative performance-based budgeting
system committee to develop and oversee the implementation of
plans for transforming the programming, planning, and budgeting
systems of the legislature and its service agencies to a
performance-based budgeting system.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           1578
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO THE LEGISLATURE.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that the primary focus of
 
 2 performance-based budgeting is on outcomes rather than processes.
 
 3 Performance-based budgeting is intended to address the situations
 
 4 that arise when organizations focus too much on "what" they are
 
 5 doing and not enough on "why" they are doing it.  It also is
 
 6 intended to address the situations that arise when organizations
 
 7 think that they are hard at work for their customers but their
 
 8 customers think that the work being done on their behalf is
 
 9 either not worth doing or of limited value.  Overreliance on
 
10 process leads to automatic requests for increases in program
 
11 budgets without thought to whether or not the activities being
 
12 performed by the programs are worth doing or of value to anyone
 
13 besides the people running the programs.
 
14      The primary purpose of performance-based budgeting is to
 
15 help organizations address these situations by getting them to:
 
16      (1)  Define their priorities and goals;
 
17      (2)  Define the services that they want to provide;
 
18      (3)  Define measures to track their performance;
 
19      (4)  Develop the associated costs of their programs; and
 

 
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 1      (5)  Implement a process for tracking their actual
 
 2           performance against their expected performance.
 
 3      The purpose of this Act is to set an example for the rest of
 
 4 state government by having the legislature and its service
 
 5 agencies adopt a performance-based budgeting system by the
 
 6 regular session of 2001.  By leading from the front, the
 
 7 legislature will demonstrate that transforming the programming,
 
 8 planning, and budgeting systems of state government to a
 
 9 performance-based budgeting system can be done effectively and
 
10 efficiently, and with little or no disruption to existing
 
11 services.
 
12      SECTION 2.  There is established within the legislature, the
 
13 joint legislative performance-based budgeting system committee.
 
14 The purpose of the committee shall be to develop and oversee the
 
15 implementation of plans for transforming the programming,
 
16 planning, and budgeting systems of the legislature and its
 
17 service agencies to a performance-based budgeting system by the
 
18 regular session of 2001.
 
19      SECTION 3.  The goal of the performance-based budgeting
 
20 system for the legislature and its service agencies shall be to:
 
21      (1)  Describe the links between state resources and actions
 
22           to implement the legislature's strategies and operating
 
23           level objectives;
 

 
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 1      (2)  Focus on the provision and measurement of outputs and
 
 2           their relationship to outcomes, rather than looking at
 
 3           simple inputs of funds and personnel positions;
 
 4      (3)  Implement activity-based costing, including the means
 
 5           of allocating the cost of assets with lives greater
 
 6           than one year over multi-year periods;
 
 7      (4)  Provide legislators and the public with clear and
 
 8           easily-understandable information about resource
 
 9           allocation choices, decisions, and implementation; and
 
10      (5)  Provide a means of establishing resource allocation
 
11           priorities based on desired outcomes and related
 
12           outputs.
 
13      SECTION 4.  The committee shall consist of the following
 
14 twelve members:
 
15      (1)  The president of the senate or the president's
 
16           designee;
 
17      (2)  The speaker of the house of representatives or the
 
18           speakers's designee;
 
19      (3)  The director of the senate majority attorney's office
 
20           or the director's designee;
 
21      (4)  The director of the house majority staff office or the
 
22           director's designee;
 
23      (5)  The chief clerk of the senate;
 

 
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 1      (6)  The chief clerk of the house of representatives;
 
 2      (7)  The chair of the committee on finance of the house of
 
 3           representatives;
 
 4      (8)  The co-chairs of the senate committee on ways and
 
 5           means;
 
 6      (9)  The director of the legislative reference bureau or the
 
 7           director's designee;
 
 8     (10)  The auditor or the auditor's designee; and
 
 9     (11)  The ombudsman or the ombudsman's designee.
 
10      SECTION 5.  Upon this Act taking effect, the legislature and
 
11 its service agencies shall begin the development of outcome
 
12 measures and performance targets for all legislative programs to
 
13 facilitate the transformation of their programming, planning, and
 
14 budgeting systems to a performance-based budgeting system by the
 
15 regular session of 2001; provided that priority shall be given to
 
16 new or substantially changed programs.
 
17      The committee may form ad hoc citizen advisory groups to
 
18 assist in carrying out the purposes of this Act.
 
19      The committee shall submit a report of its proposed outcome
 
20 measures and performance targets, plans, recommendations, and
 
21 implementing actions to the legislature not less than twenty days
 
22 prior to the convening of the regular session of 2000, or sooner.
 
23      SECTION 6.  For the purposes of this Act:
 

 
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 1      "Outcome measures" means a measurable expression of end-
 
 2 states that are considered sufficient for resolving a problem or
 
 3 grasping an opportunity.  Generally, outcome measures are
 
 4 expressed as collective gains for persons with problems and
 
 5 persons who would help them.  Outcome measures may include
 
 6 factors that are beyond the control of individual agencies since
 
 7 a number of investments by different agencies may be necessary
 
 8 for a particular outcome measure to be achieved.  Outcome
 
 9 measures reflect visions, that is, they lie considerably beyond
 
10 present reality.  The primary requirement for an outcome measure
 
11 is that government must be able to state it clearly and
 
12 compellingly, and to define the ways in which specific project
 
13 returns will lead to or even cause the attainment of the outcome
 
14 measure.
 
15      "Performance targets" means the measurable, individual
 
16 changes or gains that must occur for the customers of a program
 
17 in order for an outcome to be achieved.  Performance targets are
 
18 literally the aiming points in performance-based budgeting.
 
19 Performance targets are more specific and delimited than
 
20 formulations of goals and purposes, and they are freestanding,
 
21 not qualified by motives or intent.  Reaching them defines
 
22 achievement for a program and return for an investor.  By
 
23 definition, they reflect a different reality than would have
 

 
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 1 unfolded without a given intervention.
 
 2      SECTION 7.  Decisions of the committee shall be made by
 
 3 consensus, and nine members shall constitute a quorum.  The
 
 4 president of the senate and the speaker of the house of
 
 5 representatives, or their designees, shall chair the committee on
 
 6 a rotating basis.  The members of the committee shall serve
 
 7 without compensation but shall be reimbursed for expenses,
 
 8 including travel expenses, necessary for the performance of their
 
 9 duties.
 
10      SECTION 8.  There is appropriated out of the general
 
11 revenues of the State of Hawaii the sum of $        , or so much
 
12 thereof as may be necessary for fiscal year 1999-2000, to carry
 
13 out the purposes of this Act, including the hiring of trainers
 
14 and facilitators.
 
15      SECTION 9.  The sum appropriated shall be expended by the
 
16 legislature for the purposes of this Act.
 
17      SECTION 10.  This Act shall take effect on July 1, 1999.
 
18 
 
19                           INTRODUCED BY:  _______________________
 
20 
 
21                                           _______________________