BILL REQ. #:  H-0290.4 

Read first time 02/08/2005.   Referred to Committee on Appropriations.

     AN ACT Relating to establishing a process for reporting, reviewing, and collecting data on performance measures; amending RCW 43.88.090 and 43.88.030; adding a new section to chapter 43.88 RCW; and adding a new chapter to Title 44 RCW.

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

NEW SECTION.  Sec. 1   INTENT. The legislature finds that although state agencies have established missions, goals, and objectives to aid in self-assessment and budget development, this process requires further priority setting. First, state agencies must provide policymakers with focus on the agencies' priority performance measures. Second, legislators require the opportunity to review agencies' proposed priority performance measures in light of the state's priorities and the statutory purposes and policy goals of the programs. Third, legislative and executive policymakers require quantifiable, objective data that are measurable over time in order to gauge whether progress is being made toward agencies' goals. Specifically, budget managers and the legislature must have the data to move toward better statewide results that produce the intended public benefit. By compiling reliable data on valid performance measures for the state's policy priorities, legislative and executive policymakers will be able to make better budgeting decisions.

Sec. 2   RCW 43.88.090 and 1997 c 372 s 1 are each amended to read as follows:
     ALONG WITH MISSIONS AND GOALS, AGENCIES MUST ESTABLISH PERFORMANCE MEASURES--PRIORITY PERFORMANCE MEASURES SUBMITTED FOR LEGISLATIVE REVIEW. (1) For purposes of developing budget proposals to the legislature, the governor shall have the power, and it shall be the governor's duty, to require from proper agency officials such detailed estimates and other information in such form and at such times as the governor shall direct. The estimates for the legislature and the judiciary shall be transmitted to the governor and shall be included in the budget without revision. The estimates for state pension contributions shall be based on the rates provided in chapter 41.45 RCW. Copies of all such estimates shall be transmitted to the standing committees on ways and means of the house and senate at the same time as they are filed with the governor and the office of financial management.
     The estimates shall include statements or tables which indicate, by agency, the state funds which are required for the receipt of federal matching revenues. The estimates shall be revised as necessary to reflect legislative enactments and adopted appropriations and shall be included with the initial biennial allotment submitted under RCW 43.88.110. The estimates must reflect that the agency considered any alternatives to reduce costs or improve service delivery identified in the findings of a performance audit of the agency by the joint legislative audit and review committee. Nothing in this subsection requires performance audit findings to be published as part of the budget.
     (2) Each state agency shall define its mission and establish measurable goals for achieving desirable results for those who receive its services and the taxpayers who pay for those services. Each agency shall also develop clear strategies and timelines to achieve its goals. This section does not require an agency to develop a new mission or goals in place of identifiable missions or goals that meet the intent of this section. The mission and goals of each agency must conform to statutory direction and limitations.
     (3)(a) For the purpose of assessing program performance, each state agency shall establish ((program objectives)) performance measures for each major program in its budget. The ((objectives)) performance measures must be consistent with the missions and goals developed under this section and with the statutory purpose of the program. The ((objectives)) performance measures must be expressed ((to the extent practicable)) in a form that is outcome-based, objective, and measurable ((form)) over time unless an exception to adopt a different standard is granted by the office of financial management and approved by the legislative evaluation and accountability program committee ((on performance review)).
     (b) In addition to performance measures developed by state agencies under (a) of this subsection, the office of financial management shall submit proposed priority performance measures to the legislature for its review under the process established in section 3 of this act. The total number of priority performance measures for state government as a whole should be at least one hundred but not more than two hundred.
     (c) The office of financial management shall provide necessary professional and technical assistance to assist state agencies in the development of strategic plans that include the mission of the agency and its programs, measurable goals, strategies, and performance measurement systems.
     (4) Each state agency shall adopt procedures for continuous self-assessment of each program and activity, using the mission, goals, ((objectives, and measurements)) and performance measures required under subsections (2) and (3) of this section.
     (5) It is the policy of the legislature that each agency's budget proposals must be directly linked to the agency's stated mission and program goals and ((objectives)) performance measures. Consistent with this policy, agency budget proposals must include integration of performance measures that allow objective determination of a program's success in achieving its goals. The office of financial management shall develop a plan to merge the budget development process with agency performance assessment procedures. ((The plan must include a schedule to integrate agency strategic plans and performance measures into agency budget requests and the governor's budget proposal over three fiscal biennia. The plan must identify those agencies that will implement the revised budget process in the 1997-1999 biennium, the 1999-2001 biennium, and the 2001-2003 biennium. In consultation with the legislative fiscal committees, the office of financial management shall recommend statutory and procedural modifications to the state's budget, accounting, and reporting systems to facilitate the performance assessment procedures and the merger of those procedures with the state budget process. The plan and recommended statutory and procedural modifications must be submitted to the legislative fiscal committees by September 30, 1996.))
     (6) In the year of the gubernatorial election, the governor shall invite the governor-elect or the governor-elect's designee to attend all hearings provided in RCW 43.88.100; and the governor shall furnish the governor-elect or the governor-elect's designee with such information as will enable the governor-elect or the governor-elect's designee to gain an understanding of the state's budget requirements. The governor-elect or the governor-elect's designee may ask such questions during the hearings and require such information as the governor-elect or the governor-elect's designee deems necessary and may make recommendations in connection with any item of the budget which, with the governor-elect's reasons therefor, shall be presented to the legislature in writing with the budget document. Copies of all such estimates and other required information shall also be submitted to the standing committees on ways and means of the house of representatives and senate.

NEW SECTION.  Sec. 3   PROCESS ESTABLISHED FOR LEGISLATIVE REVIEW OF PRIORITY PERFORMANCE MEASURES PROPOSED BY AGENCIES. After the office of financial management submits proposed priority performance measures to the legislative fiscal committees under RCW 43.88.030, the proposed priority performance measures are subject to legislative review as provided in this section.
     (1) Upon receipt of the governor's proposed priority performance measures, the legislative fiscal committees shall distribute the measures among the appropriate legislative committees for those committees' review.
     (2) The legislative committees shall review the proposed priority performance measures for policy and program priority, measurability, specificity, objectivity, and conformance with statutes and legislative intent.
     (3) The legislative committees shall recommend any revisions to the proposed priority performance measures to the legislative fiscal committees. The legislative fiscal committees must consider the proposed revisions and may adopt different or additional revisions, based on the state's policy and program priorities and fiscal constraints.
     (4) The house of representatives and the senate shall adopt the priority performance measures prior to executive action on omnibus operating and transportation appropriations legislation in the respective bodies.
     (5) The legislature shall adopt final priority performance measures by concurrent resolution.
     (6) For purposes of this chapter only, "legislative fiscal committees" means the senate committee on ways and means, the house of representatives committee on appropriations, and the house of representatives and senate committees on transportation, or their successors.
     (7) The house of representatives and senate, jointly or separately, may adopt rules or resolutions to implement their respective responsibilities under this section.

NEW SECTION.  Sec. 4   LEAP CREATES DATA BASE ON PRIORITY PERFORMANCE MEASURES. The joint legislative evaluation and accountability program committee, in consultation with the joint legislative audit and review committee, shall compile, validate, and create a data base of historical information on priority performance measures established under RCW 43.88.090(3).

NEW SECTION.  Sec. 5   A new section is added to chapter 43.88 RCW to read as follows:
     OFM REPORTS PRIORITY PERFORMANCE MEASURE DATA TO LEAP.     The office of financial management shall compile data on agencies' progress toward meeting priority performance measures. The office of financial management shall report the data to the legislative evaluation and accountability program committee on a semiannual basis.

Sec. 6   RCW 43.88.030 and 2004 c 276 s 908 are each amended to read as follows:
     GOVERNOR'S BUDGET DOCUMENT MUST INCLUDE PERFORMANCE MEASURES, INCLUDING PRIORITY MEASURES; THE BUDGET DOCUMENT MUST INDICATE PROGRESS. (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 and committees 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 transportation revenue forecast council. 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 agency. However, documents submitted for the 2005-07 biennial budget request need not show expenditures by activity;
     (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 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;
     (c) Other statutory expenditures;
     (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) The governor's operating budget shall identify:
     (a) Performance measures adopted under RCW 43.88.090(3)(a);
     (b) Priority performance measures adopted by the legislature under section 3 of this act, along with information about progress toward these priority performance measures; and
     (c) Any new or revised priority performance measures proposed by the governor.
     (4) 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;
     (c) A capital plan consisting of proposed capital spending for at least four biennia succeeding the next biennium;
     (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))) (4), 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))) (5) 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.

NEW SECTION.  Sec. 7   CAPTIONS. Captions used in this act are not any part of the law.

NEW SECTION.  Sec. 8   Sections 1, 3, 4, and 7 of this act constitute a new chapter in Title 44 RCW.