BP BHEAD INT S [atlas:bill]

AN ACT Relating to performance budgeting for transportation agencies; reenacting and amending 43.88.030 RCW; adding a new chapter to Title 47 RCW; and creating new sections.

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

NEW SECTION. Sec. 1. INTENT. It is the intent of the legislature and the governor to ensure efficiency and accountability for transportation agencies' programs and activities. Performance budgeting requires that agencies make investment choices based on anticipated results and outcomes. The use of performance budgeting provides agencies the opportunity to prioritize and focus transportation revenues on programs that maximize the value of the public's transportation resources and revenues.

The objective of this chapter is to require that the major transportation agencies submit performance-based budgets for the 2001-2003 biennium to the governor and the legislature. The major transportation agencies are the department of transportation, the Washington state patrol, and the department of licensing.

This chapter provides the framework for the legislature, the governor, major transportation agencies, and the citizens of the state to more fully benefit the transportation programs and their goals, objectives, and effectiveness.

This chapter capitalizes upon activities currently being performed by the major transportation agencies: Strategic planning, cost accounting, performance measure establishment, quality initiatives, performance reporting, and participation in the transportation executive information system.

NEW SECTION. Sec. 2. PERFORMANCE BUDGET DEVELOPMENT. The major transportation agencies shall develop and implement a performance-based budgeting process that provides a measurable link between program objectives, activities, service levels, budget, and a method to evaluate accomplishment. The agencies' decision packages must be linked to their strategic plan through connections between the agency mission, vision, and its assorted goals and activities, measured by related indicators of performance and stated in terms of expected results and outcomes.

NEW SECTION. Sec. 3. INCREASED PERFORMANCE REPORTING. A major transportation agency shall submit a strategic plan with its agency request budget. The strategic plan must at a minimum include a six-year outlook and define and clarify the agency mission. The strategic plan shall also outline the agency's goals and strategies and serve as the focus for agency operations. It will also serve as the basis for the agency to request and account for, the governor to recommend, the legislature to appropriate money and approve programs, and the citizens to understand transportation agencies' programs.

NEW SECTION. Sec. 4. AGENCY BUSINESS PLAN. The major transportation agencies shall develop and implement an agency business plan that will be updated annually and provide the basis for future budget development and policy direction. The plan will include a mission, program description, program goals, and performance measures.

NEW SECTION. Sec. 5. PROGRAM LEVEL BUDGET REQUESTS. The major transportation agencies shall develop agency biennial budget requests at the agency budget program level, rather than the object level, and submit their biennial and supplemental budget requests to the office of financial management via the WINSUM budget system beginning July 1, 1998.

NEW SECTION. Sec. 6. AGENCY ORGANIZATIONAL STRUCTURE. Agencies shall revise their program budget to reflect any organizational changes to ensure the agency's budget is aligned with the current organizational structure.

NEW SECTION. Sec. 7. COST ACCOUNTING. The agencies shall use their cost accounting systems in preparing detailed information in support of agency programs during the budget submittal process and the monitoring process. Where practical, cost accounting information must be used to measure the unit costs of agency activities.

NEW SECTION. Sec. 8. PERFORMANCE MEASURE ESTABLISHMENT. The agencies shall establish performance measures that measure activities identified to achieve the goals and strategies in the strategic plan and shall project them for six years. In addition, they shall provide historical information on those performance measures. The agencies shall establish performance measures for the major activities of each subprogram. Data gathered from conducting performance measures shall be used in agency decision-making.

NEW SECTION. Sec. 9. MASTER PROGRAM LIST. Each transportation agency shall submit a master program list to the legislative transportation committee at the end of each fiscal year. The list must describe the functions of the program and related funding by fund and number of full-time equivalents.

The list must include performance measures for each program. Each agency shall consider the name of each program, subprogram, and major activity to ensure that the name is clear and understandable to a layperson.

NEW SECTION. Sec. 10. PROGRAM AUTHORIZATION REVIEW. (1) The legislative transportation committee, the office of financial management, the major transportation agencies, an outside consultant, or any combination of these parties shall establish the means of conducting program authorization reviews of all transportation programs. The reviews shall include:

(a) An agency self-assessment in which the agency:

(i) Identifies the agency's long-term stategic program goals;

(ii) Identifies program priorities and objectives;

(iii) Identifies activities necessary to achieve program priorities and objectives;

(iv) Establishes service level criteria for the necessary activities;

(v) Uses an approach that researches and utilizes best practices by other states to benchmark the performance of their programs; and

(vi) Identifies how different funding levels, by using service level criteria, could affect future performance;

(b) An advisory committee review of the agency self-assessment and a report to the legislature regarding the committee's findings;

(c) An advisory committee report which determines whether to retain, eliminate, or modify funding and related statutory references for the agency. The advisory committee shall consider: (i) Whether the agency performance measurements adequately measure the agency goals; (ii) whether the program performs efficiently and effectively, including comparisons with other jurisdictions; and (iii) whether there are other cost-effective alternative methods of accomplishing the program's mission.

(2) The legislature will implement a six-year program evaluation schedule within the transportation budget document.

NEW SECTION. Sec. 11. TRANSPORTATION EXECUTIVE INFORMATION SYSTEM. The agencies shall input monthly their financial information and program performance measurements into the transportation executive information system. There is no requirement to submit a monthly hard copy report to the legislature.

NEW SECTION. Sec. 12. PILOT PROJECT. The major transportation agencies shall develop a pilot project for each designated program to test the effectiveness of performance-based budgeting for the 1999-2001 budget submittal period and biennium.

NEW SECTION. Sec. 13. CAPITALIZATION ON CURRENT ACTIVITIES. This act does not require an agency to develop a new strategic plan, cost accounting system, performance measures, or management quality initiatives in place of current activities that substantively meet the intent of this act.

NEW SECTION. Sec. 14. Section captions used in this act are not part of the law.

NEW SECTION. Sec. 15. Sections 1 through 11 and 14 of this act constitute a new chapter in Title 47 RCW.

Sec. 16. RCW 43.88.030 and 1997 c 168 s 5 and 1997 c 96 s 4 are each reenacted and amended to read as follows:

(1) The director of financial management shall provide all agencies with a complete set of instructions for submitting biennial budget requests to the director at least three months before agency budget documents are due into the office of financial management. The director shall provide agencies that are required under RCW 44.40.070 to develop comprehensive six-year program and financial plans with a complete set of instructions for submitting these program and financial plans at the same time that instructions for submitting other budget requests are provided. The budget document or documents shall consist of the governor's budget message which shall be explanatory of the budget and shall contain an outline of the proposed financial policies of the state for the ensuing fiscal period, as well as an outline of the proposed six-year financial policies where applicable, and shall describe in connection therewith the important features of the budget. The message shall set forth the reasons for salient changes from the previous fiscal period in expenditure and revenue items and shall explain any major changes in financial policy. Attached to the budget message shall be such supporting schedules, exhibits and other explanatory material in respect to both current operations and capital improvements as the governor shall deem to be useful to the legislature. The budget document or documents shall set forth a proposal for expenditures in the ensuing fiscal period, or six-year period where applicable, based upon the estimated revenues and caseloads as approved by the economic and revenue forecast council and caseload forecast council or upon the estimated revenues and caseloads of the office of financial management for those funds, accounts, sources, and programs for which the forecast councils do not prepare an official forecast, including those revenues anticipated to support the six-year programs and financial plans under RCW 44.40.070. In estimating revenues to support financial plans under RCW 44.40.070, the office of financial management shall rely on information and advice from the interagency revenue task force. Revenues shall be estimated for such fiscal period from the source and at the rates existing by law at the time of submission of the budget document, including the supplemental budgets submitted in the even-numbered years of a biennium. However, the estimated revenues and caseloads for use in the governor's budget document may be adjusted to reflect budgetary revenue transfers and revenue and caseload estimates dependent upon budgetary assumptions of enrollments, workloads, and caseloads. All adjustments to the approved estimated revenues and caseloads must be set forth in the budget document. The governor may additionally submit, as an appendix to each supplemental, biennial, or six-year agency budget or to the budget document or documents, a proposal for expenditures in the ensuing fiscal period from revenue sources derived from proposed changes in existing statutes.

Supplemental and biennial documents shall reflect a six-year expenditure plan consistent with estimated revenues from existing sources and at existing rates for those agencies required to submit six-year program and financial plans under RCW 44.40.070. Any additional revenue resulting from proposed changes to existing statutes shall be separately identified within the document as well as related expenditures for the six-year period.

The budget document or documents shall also contain:

(a) Revenues classified by fund and source for the immediately past fiscal period, those received or anticipated for the current fiscal period, those anticipated for the ensuing biennium, and those anticipated for the ensuing six-year period to support the six-year programs and financial plans required under RCW 44.40.070;

(b) The undesignated fund balance or deficit, by fund;

(c) Such additional information dealing with expenditures, revenues, workload, performance, and personnel as the legislature may direct by law or concurrent resolution;

(d) Such additional information dealing with revenues and expenditures as the governor shall deem pertinent and useful to the legislature;

(e) Tabulations showing expenditures classified by fund, function, activity, and ((~~object~~)) agency;

(f) A delineation of each agency's activities, including those activities funded from nonbudgeted, nonappropriated sources, including funds maintained outside the state treasury;

(g) Identification of all proposed direct expenditures to implement the Puget Sound ((~~water quality~~)) management plan under chapter 90.71 RCW, shown by agency and in total; and

(h) Tabulations showing each postretirement adjustment by retirement system established after fiscal year 1991, to include, but not be limited to, estimated total payments made to the end of the previous biennial period, estimated payments for the present biennium, and estimated payments for the ensuing biennium.

(2) The budget document or documents shall include detailed estimates of all anticipated revenues applicable to proposed operating or capital expenditures and shall also include all proposed operating or capital expenditures. The total of beginning undesignated fund balance and estimated revenues less working capital and other reserves shall equal or exceed the total of proposed applicable expenditures. The budget document or documents shall further include:

(a) Interest, amortization and redemption charges on the state debt;

(b) Payments of all reliefs, judgments and claims;

(d) Expenditures incident to the operation for each agency;

(e) Revenues derived from agency operations;

(f) Expenditures and revenues shall be given in comparative form showing those incurred or received for the immediately past fiscal period and those anticipated for the current biennium and next ensuing biennium, as well as those required to support the six-year programs and financial plans required under RCW 44.40.070;

(g) A showing and explanation of amounts of general fund and other funds obligations for debt service and any transfers of moneys that otherwise would have been available for appropriation;

(h) Common school expenditures on a fiscal-year basis;

(i) A showing, by agency, of the value and purpose of financing contracts for the lease/purchase or acquisition of personal or real property for the current and ensuing fiscal periods; and

(j) A showing and explanation of anticipated amounts of general fund and other funds required to amortize the unfunded actuarial accrued liability of the retirement system specified under chapter 41.45 RCW, and the contributions to meet such amortization, stated in total dollars and as a level percentage of total compensation.

(3) A separate capital budget document or schedule shall be submitted that will contain the following:

(a) A statement setting forth a long-range facilities plan for the state that identifies and includes the highest priority needs within affordable spending levels;

(b) A capital program consisting of proposed capital projects for the next biennium and the two biennia succeeding the next biennium consistent with the long-range facilities plan. Insomuch as is practical, and recognizing emergent needs, the capital program shall reflect the priorities, projects, and spending levels proposed in previously submitted capital budget documents in order to provide a reliable long-range planning tool for the legislature and state agencies;

(d) A strategic plan for reducing backlogs of maintenance and repair projects. The plan shall include a prioritized list of specific facility deficiencies and capital projects to address the deficiencies for each agency, cost estimates for each project, a schedule for completing projects over a reasonable period of time, and identification of normal maintenance activities to reduce future backlogs;

(e) A statement of the reason or purpose for a project;

(f) Verification that a project is consistent with the provisions set forth in chapter 36.70A RCW;

(g) A statement about the proposed site, size, and estimated life of the project, if applicable;

(h) Estimated total project cost;

(i) For major projects valued over five million dollars, estimated costs for the following project components: Acquisition, consultant services, construction, equipment, project management, and other costs included as part of the project. Project component costs shall be displayed in a standard format defined by the office of financial management to allow comparisons between projects;

(j) Estimated total project cost for each phase of the project as defined by the office of financial management;

(k) Estimated ensuing biennium costs;

(l) Estimated costs beyond the ensuing biennium;

(m) Estimated construction start and completion dates;

(n) Source and type of funds proposed;

(o) Estimated ongoing operating budget costs or savings resulting from the project, including staffing and maintenance costs;

(p) For any capital appropriation requested for a state agency for the acquisition of land or the capital improvement of land in which the primary purpose of the acquisition or improvement is recreation or wildlife habitat conservation, the capital budget document, or an omnibus list of recreation and habitat acquisitions provided with the governor's budget document, shall identify the projected costs of operation and maintenance for at least the two biennia succeeding the next biennium. Omnibus lists of habitat and recreation land acquisitions shall include individual project cost estimates for operation and maintenance as well as a total for all state projects included in the list. The document shall identify the source of funds from which the operation and maintenance costs are proposed to be funded;

(q) Such other information bearing upon capital projects as the governor deems to be useful;

(r) Standard terms, including a standard and uniform definition of normal maintenance, for all capital projects;

(s) Such other information as the legislature may direct by law or concurrent resolution.

For purposes of this subsection (3), the term "capital project" shall be defined subsequent to the analysis, findings, and recommendations of a joint committee comprised of representatives from the house capital appropriations committee, senate ways and means committee, legislative transportation committee, legislative evaluation and accountability program committee, and office of financial management.

(4) No change affecting the comparability of agency or program information relating to expenditures, revenues, workload, performance and personnel shall be made in the format of any budget document or report presented to the legislature under this section or RCW 43.88.160(1) relative to the format of the budget document or report which was presented to the previous regular session of the legislature during an odd-numbered year without prior legislative concurrence. Prior legislative concurrence shall consist of (a) a favorable majority vote on the proposal by the standing committees on ways and means of both houses if the legislature is in session or (b) a favorable majority vote on the proposal by members of the legislative evaluation and accountability program committee if the legislature is not in session.