Legislature(1993 - 1994)
03/19/1994 08:00 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 347 - STATE LONG-TERM PLANNING REPRESENTATIVE SEAN PARNELL, PRIME SPONSOR, addressed HB 347. He mentioned the problems HB 347 was meant to address: 1) the general distrust in government; 2) the lack of an objective way for the legislature or the executive branch to make budget choices; 3) the focus on programs, rather than the people being served; 4) the lack of accountability in the spending of the budget. He stated when the departments testify about their job requirements and yearly results it has not been very useful, because they are not focusing on what the customer is receiving, or the end product. For example, the Department of Public Safety should measure how many people were killed on the Seward highway, rather than how many roads they covered and how many less enforcement officers they have. He felt the departments should be measured on more specific terms. REPRESENTATIVE PARNELL commented during his initial days of working with the budget last year, he asked each department for their long range plans over the next 10-20 years. He noted some departments had a relatively good "big picture view" of where they were headed, some wanted more money to develop a long range plan, and none had any objective set of measures for the legislature to use in evaluating their budget requests and their progress over time. He felt HB 347 is intended to offer this structure. Planning would establish statewide direction in key policy areas and help the state move away from "prices policy decision making." State resources could be aligned in a rational manner. HB 347 could help establish the priorities needed to be set for budgeting. He also mentioned with the present declining revenues, planning should help allocate resources in a way that is important to Alaskans. REPRESENTATIVE PARNELL stated "performance based budgeting" is not a new procedure. He noted Texas and Oregon as example states which presently use it. HB 347 is modeled after Texas legislation because he felt their financial situation was most similar to Alaska. He noted the main difference between Oregon and Texas legislation was that Oregon was public driven, while Texas was executive driven. Even with the different angles, the focus was still on the customer. REPRESENTATIVE PARNELL outlined HB 347. At the beginning of each governor's term, the governor will develop statewide goals to issue on May 1 of each odd numbered year. He noted in the CSHB 347, version O work draft before the committee there was a discrepancy on page 1, line 8, whereby it should state "odd-numbered" instead of "even-numbered." This would need to be corrected. He stated the two year cycle would start and the Office of Management & Budget (OMB) would issue each principle department about the state's economy and population. Between May 1 and July 1, those departments would develop their separate goals and objectives. Between July 1 and October 1, the OMB would review and approve each agencies goal, so these performance measures could be included in the agency's budget submitted to OMB. By Dec 15, OMB and the governor would have compiled the plans into one strategic long range plan, and would submit it as part of the budget process. REPRESENTATIVE PARNELL commented long-term planning is meant to be an ongoing process as it will be reviewed every two years and updated. He credited OMB for having been involved in "performance based budgeting" in the past. Number 629 CHAIRMAN VEZEY asked if REPRESENTATIVE PARNELL had a flow chart. REPRESENTATIVE PARNELL stated a flow chart should be in the packet. Number 639 CHAIRMAN VEZEY examined the flow chart and reiterated REPRESENTATIVE PARNELL's outline of the procedure in HB 347. He questioned if the process occurs in one calendar year. REPRESENTATIVE PARNELL affirmed CHAIRMAN VEZEY. Number 648 CHAIRMAN VEZEY asked what happened in the even-numbered years. REPRESENTATIVE PARNELL responded the OMB was still working on the specifics; however, they could either budget using the same performance measures or they could revise and update those performance measures. Once HB 347 is in place, the agencies basically have the even years "off" in not having any active work. Number 656 REPRESENTATIVE G. DAVIS referred to REPRESENTATIVE PARNELL's indication that when he had asked for the goals of the departments they did not already have them. He felt REPRESENTATIVE PARNELL was surprised. Number 660 REPRESENTATIVE PARNELL affirmed REPRESENTATIVE G. DAVIS. He noted the plans in HB 347 are meant to be six year plans, however, they need to be on a two year cycle to stay updated. Number 668 REPRESENTATIVE G. DAVIS stated he too had been surprised when he found there was not more organization when it was time to budget. He noted the lack of prioritization within the departments. Number 675 REPRESENTATIVE ULMER commented HB 347 reminded her of 1978- 1979 when "performance based budgeting" used to be done in Alaska. Jay Hammond then termed it "management by objective," whereby objectives were set, measurements of attainment were set, and periodically the attainment was reviewed. She noted the elements which made the program work: 1) training of agency managers; 2) commitment from the governor and OMB because it runs counter to the way business is usually done; 3) a person responsible for the follow through;... TAPE 94-34, SIDE B Number 000 REPRESENTATIVE ULMER continued. ...4) legislative involvement, brought in by the Executive branch, early in the process with an agreement that budgets would be based cooperatively on the stated goals and objectives; and 5) enforcement of policy goals with both rewards and penalties. She stated without these elements the program would be short-lived, and to maintain them it takes money. She directed the committee to the HB 347 zero fiscal notes and stated it would be like "passing crime bills without putting money into the Department of Corrections or Public Safety budget." An appropriation to OMB or the Governor's office, which they could then distribute to the agencies, would have to be made. She emphasized that existing personnel cannot just pick up another specific job. REPRESENTATIVE ULMER stated she encouraged the program and felt if the money was there to back up the program, it would be a good time to engage it again. Number 052 REPRESENTATIVE PARNELL reiterated the elements REPRESENTATIVE ULMER referred to and stated he had witnesses available to testify on those areas. He believed HB 347 would change a person's job description, rather than add to it. He recognized the program may not be enforced without additional money. REPRESENTATIVE ULMER commented "performance based budgeting" requires a focus on the long-term with external measurements, as opposed to simply numbers on paper. She emphasized the program would depend upon enough people understanding the program, with a commitment. Number 112 REPRESENTATIVE SANDERS asked REPRESENTATIVE ULMER what happened to the previous program. Number 115 REPRESENTATIVE ULMER answered the program was very active in the late 1970s and early 1980s, and it began to diminish around 1982. The program failed because it was too much money. She stated the tailored program became overwhelmed by the influx of money and the legislature's desire to do good by distributing money quickly. She noted the time was at the very end of the Hammond Administration and priorities were changing. Number 157 CHAIRMAN VEZEY asked the advantage of Section 2 in HB 347. Number 160 REPRESENTATIVE PARNELL replied Section 2 directs Legislative Budget & Audit (LB&A) to evaluate laws and look for duplications. The value is having someone to look for it. Section 2 was part of the Texas bill, and although he was not determined to include it, he felt it was a valuable function. Number 170 CHAIRMAN VEZEY stated he felt Section 2 just reiterates LB&A's authority and noted it states they will quit doing it December 31, 1997. Number 174 REPRESENTATIVE PARNELL corrected CHAIRMAN VEZEY in that Section 2 states the recommendations shall be submitted to the legislature by December 31, 1997. Number 184 JACK FARGNOLI, SENIOR POLICY ANALYST, DIRECTOR'S OFFICE, OFFICE OF MANAGEMENT & BUDGET (OMB), supported HB 347. He stated OMB has been involved with performance measurement over the past year, and as of the past few months, the importance of the program elevated to something they definitely wanted to do and intend to develop for implementation in the coming 18 months independent of HB 347. He agreed with REPRESENTATIVE ULMER on elements necessary to make the program successful. OMB intends to revamp the current budget process and supplant the new program into it. They would prefer a system very closely integrated to the delivery of budget documents to the legislature, rather than a separate track of plans which may, or may not, be linked to the budget developing process. MR. FARGNOLI commented HB 347 is a large undertaking, especially in regards to commitment. He stated the resource requirements were not as large as they could be, depending upon how the process is structured. He has been directed, when session is over, to devote 100 percent of his time to working with the departments, the legislature, LB&A, and the finance committees to develop the process, identify the training requirements, and to develop budget instructions and forms. The intention would be to focus on effectiveness, not so much efficiency. He noted presently, when the state looks into services it is providing to determine how successful they are, the state has very little budgetary apparatus for making those determinations. Performance based budgeting will provide a "budget based vocabulary" for making such determinations. MR. FARGNOLI addressed HB 347 fiscal notes in the packets. He referred to them as preliminary because the majority of detailed discussions had not been engaged in yet. He noted the departments have been asked to identify their training requirements, under the assumption OMB would provide all of the training necessary. The responses he believed, would differ dramatically from department to department, but "none of them will be trivial either in scale or importance." He stressed training for all levels is a key factor. Number 310 REPRESENTATIVE SANDERS stated he assumed from MR. FARGNOLI's opening statement that he supported HB 347. MR. FARGNOLI affirmed REPRESENTATIVE SANDERS. Number 315 REPRESENTATIVE SANDERS mentioned the tremendous fiscal note HB 347 will have, and questioned if MR. FARGNOLI felt HB 347 was a tool for moving towards a sixty or ninety day session. He believed the program would save a lot of money for the legislature because the finance committee would no longer have to constantly fly witnesses to Juneau to testify on programs. He felt there would be a large net savings, in addition to the benefits of the planning. Number 322 MR. FARGNOLI agreed with REPRESENTATIVE SANDERS, however, they did not view the process as encouraging to any one legislative approach. Number 329 REPRESENTATIVE SANDERS commented 75 percent of the work done deals with the budget and HB 347 would reduce it. Number 330 MR. FARGNOLI responded the intent would be to make the budget process more streamlined; however, reorientation more of their objective. Number 335 REPRESENTATIVE ULMER commented she thought MR. FARGNOLI was "exactly right." In relation to the committee and subcommittee process, it is very generalized and fairly superficial. She noted the subcommittee members do not always come prepared to meetings, so they do not know the goals, measurements, and how well they achieved them. She felt this type of work could be done during the interim if performance based budgeting system was in place. Periodic performance updates could also be sent out during the interim. Number 360 REPRESENTATIVE G. DAVIS asked if there had been something to set off the OMB to be so wrong that they felt the change was needed. Number 368 MR. FARGNOLI stated the OMB saw the absence of useful information in budget documents. They need feedback on their policy choices, of which they have very little. Number 386 REPRESENTATIVE G. DAVIS agreed with MR. FARGNOLI and stated it was obvious to a lot of the them. He referred to words which MR. FARGNOLI frequently used in his testimony such as "effectiveness" and "prioritization." He noted he had not found the use of those words in HB 347. Number 397 REPRESENTATIVE PARNELL offered on page 2, line 3, it could be amended to read, "an analysis of workload, priorities, and of the results..." Number 406 REPRESENTATIVE G. DAVIS stated he did not really have a preference. (REPRESENTATIVE SANDERS left the meeting a 9:13 a.m.) Number 412 CHAIRMAN VEZEY stated he found Section 2 to be a little superfluous. He asked for a comment. Number 414 MR. FARGNOLI responded the OMB did not have a problem with Section 2. They assumed Section 2, given the role and the function of a performance based budgeting system in evaluating agencies, would be helpful to investigate whether there are other statutes or regulations which bear on the question of how agencies should be measured. Section 2 would be a housekeeping measure and necessary for any new budget system in place. Number 431 REPRESENTATIVE PARNELL stated he was not opposed to the elimination of Section 2 if it were to suit the committee. CHAIRMAN VEZEY responded Section 2 did not seem to bother the other committee members. He reminded the committee that committee substitute for HB 347 which reflects on page 1, line 8, "each odd-numbered year" needed to be adopted. (REPRESENTATIVE SANDERS returned to the meeting at 9:15 a.m.) Number 440 REPRESENTATIVE G. DAVIS so moved. Number 446 CHAIRMAN VEZEY, hearing no objection, adopted the committee substitute to HB 347 reflecting the change on page 1, line 8, which now read "each odd-numbered year." Number 448 REPRESENTATIVE G. DAVIS directed to CHAIRMAN VEZEY's discussion on Section 2. He clarified a department would not be duplicating work so much as LB&A would be to check interdepartmental work. He stated Section 2 was important to have identified in CSHB 347 so duplication was not forgotten. He noted it is not in the duties of department to check what other departments are doing so there is no duplication. Number 467 REPRESENTATIVE ULMER moved to pass CSHB 347 from committee with individual recommendations, asking unanimous consent. Number 468 CHAIRMAN VEZEY, hearing no objection, asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, ULMER, G. DAVIS, SANDERS, OLBERG. ABSENT: REPRESENTATIVES KOTT, B. DAVIS. MOTION PASSED WITH DO PASS RECOMMENDATION CHAIRMAN VEZEY called for a recess at 9:17 a.m. CHAIRMAN VEZEY reconvened the meeting at 9:25 a.m. Members present were REPRESENTATIVES G. DAVIS and OLBERG.
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