SB571

Report Title:

Performance-Based Budgeting

Description:

Provides for the implementation of a performance-based budgeting system by all state executive departments and agencies. Requires the legislative analyst to assist the legislature in evaluating the performance data that are required of departments and programs involved in performance-based budgeting.

THE SENATE	S.B. NO.	571
TWENTY-FIRST LEGISLATURE, 2001
STATE OF HAWAII

A BILL FOR AN ACT

relating to performance-based budgeting.

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

SECTION 1. (a) The legislature understands the increasing frustration of the general public in determining how their tax dollars are spent, especially in the face of growing costs of public programs and increased spending. The legislature also recognizes that it has an inherent duty to account for how and where the tax money of Hawaii's residents is spent and the results of that spending. In 1998, the legislature took the first step of accountability by passing Act 230.

Part II of Act 230, Session Laws of Hawaii 1998, established a committee to evaluate and make recommendations to ensure that state government is more efficient, accountable, and competitive by creating and test piloting a performance-based budgeting system. The committee defined performance-based budgeting as a plan that connects appropriations to program performance that allows the legislature and the governor to know:

(1) What to expect for the appropriations allocated and spent;

(2) How proposed activities will make a difference in the community; and

(3) How departments or programs intend to measure their progress toward meeting their goals.

(b) Based on the committee’s conclusions and recommendations and following in the intent of the legislature’s commitment to achieve government reform, the purpose of this Act is to:

(1) Move all state agencies and departments from the current budget system to an improved performance-based budgeting system;

(2) Measure outputs and outcomes; and

(3) Provide clear information about resource allocation choices.

SECTION 2. Chapter 37, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§37- Performance-based budgeting. (a) The director of finance shall develop and oversee the implementation of plans for transforming the programming, planning, and budgeting systems of the executive departments to a performance-based budgeting system. The goal of the performance-based budgeting system shall be to:

(1) Describe the links between state resources and actions to implement executive agency strategies and operating level objectives;

(2) Focus on the provision and measurement of outputs and their relationship to outcomes, rather than looking at simple inputs of funds and personnel positions;

(3) Implement activity-based costing, including the means of allocating the cost of assets with lives greater than one year over multi-year periods;

(4) Provide agencies and the public with clear and easily-understandable information about resource allocation choices, decisions, and implementation; and

(5) Provide a means of establishing resource allocation priorities based on desired outcomes and related outputs.

(b) In order to facilitate the transformation of their programming, planning, and budgeting systems to a performance-based budgeting system, all executive departments and agencies shall:

(1) Shift organizational and program focus to the end results;

(2) Determine how progress can be measured;

(3) Communicate an action plan to all stakeholders;

(4) Collect and validate data for performance measures; and

(5) Improve on data collection to improve and validate information on outcomes.

"Outcome measures" means a measurable expression of end-states that are considered sufficient for resolving a problem or grasping an opportunity, including factors that are beyond the control of individual agencies, since a number of investments by different agencies may be necessary for a particular outcome measure to be achieved. The primary requirement for an outcome measure is that government must be able to state it clearly and compellingly, and to define the ways in which specific project returns will lead to or even cause the attainment of the outcome measure.

"Performance targets" means the measurable, individual changes or gains that must occur for the customers of a program in order for an outcome to be achieved. Performance targets are the aiming points in performance-based budgeting. Performance targets are more specific and delimited than formulations of goals and purposes, and are freestanding and not qualified by motives or intent.

(d) The director of finance shall adopt rules pursuant to chapter 91 to implement this section."

SECTION 3. Section 21F-7, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The purpose of the office of the legislative analyst shall be:

(1) To provide the legislature with research and analysis of current and projected state revenues and expenditures;

(2) To provide the legislature with a report analyzing the governor's proposed levels of revenue and expenditures for biennial budgets submitted under chapter 37 as well as other supplemental budget submittals to the legislature by the governor;

(3) To provide an analysis of the impact of the governor's proposed revenue and expenditure plans for the next biennium;

(4) To conduct research matters of economic and fiscal policy and to report to the legislature on the result of the research;

(5) To provide economic reports and studies on the state of the State's economy, including trends and forecasts for consideration by the legislature;

(6) To conduct budget and tax studies and provide general fiscal and budgetary information;

(7) To review and make recommendations on the operation of state programs in order to appraise the implementation of state laws regarding the expenditure of funds and to recommend means of improving their efficiency; [~~and~~]

(8) To recommend to the legislature changes in the mix of revenue sources for programs, in the percentage of state expenditures devoted to major programs, and in the role of the legislature in overseeing state government expenditures and revenue projections[.]; and

(9) To assist the legislature in evaluating the performance data that are required of departments and programs pursuant to section 37- ."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________