We need to fundamentally change the way the state conducts its business. Today the Assembly passed legislation I was proud to be the principal co-author of dealing with performance-based budgeting. We must make state government more accountable, more transparent and ultimately, more effective.
I am the proud principal co-author of Senate Bill 14 (SB 14) that will put in place performance-based budgeting. Currently, the state budget operates on the principle of baseline budgeting. Many programs take the previous year’s amount and factor in an automatic increase. So what is often discussed in public as a cut is, in fact, simply a reduction in the rate of growth. This not only confuses the public, but also shifts the debate. Instead of focusing on whether a program is working efficiently or is even needed, the entire discussion becomes about the size of the increase.
The baseline model does not facilitate discussion or agreement on priorities. Instead, it needs to be about goals and desired results. Under the baseline model, state officials do not have the necessary information to determine which programs are really working. Baseline budgeting does not provide data to help policymakers exercise needed oversight on the cost or effectiveness of public programs, when we have more money to invest or when we must make cuts.
To improve budget accountability, the Governor and Legislature should adopt clear and compelling goals for each of California’s agencies. Citizens and policymakers should understand specifically what the state is trying to accomplish in education and workforce development, health and human services, public safety, resource management and environmental protection as well as other public programs. We should then be able to see how much we are paying to reach those goals. The Governor and the Legislature should define achievable targets that allow members of the budget committees and the public to evaluate the progress being made.
The critical first step toward reforming our budget system is to implement performance-based budgeting. This action would improve accountability and put California on the leading edge of budget reform.
SB 14 establishes a performance-based budget process for California that would be phased in completely for all departments and programs by the 2014-15 fiscal year.
The bill requires that the government makes its budget decisions in the same way businesses do -through a performance-based model that includes:
1) The mission and goals of the agency.
2) The activities and programs focused on achieving those goals.
3) Performance metrics that reflect desired outcomes for existing and proposed activities and a targeted performance level for the following year.
4) Prior-year performance data and an explanation of deviation from previous-year targets.
5) Proposed statutory changes, including creation of incentives or elimination of disincentives that could improve outcomes or hold down costs.
Just as businesses do, state program goals must be supported by results – or performance measures – that allow public managers to report their progress and propose future targets. Performance-based budgeting will allow us to identify and then work to lower the cost of labor for each area of state government.
We know that performance-based budgeting is a successful business model, so why would it not be equally effective for government?
This issue isn’t a partisan one. I am proud to partner with my colleagues across the aisle in pushing for a common-sense change that is long overdue. We know it won’t be easy; tackling entrenched bureaucracy and countering the argument of “that’s the way it has always been done” is difficult. However, tough times require new ways of thinking.
Instead of letting our financial challenges erode California’s greatness, we can use the state’s budget crisis to focus our efforts on doing the best job we can with our limited resources. The time for real change and a fundamental restructuring of the way our state operates is now. This opportunity must not be squandered.