REPORT TITLE:
Government


DESCRIPTION:
Provides for the implementation of performance-based budgeting
for state government agencies.  Requires performance-based
budgets to be submitted to the legislature for review by the
legislative analyst.  Appropriates funds for the office of the
legislative analyst.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           1508
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO GOVERNMENT.



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

 1                              PART I
 
 2      SECTION 1.  The legislature believes that the state
 
 3 government's budgeting, accounting, and procurement systems
 
 4 should serve as effective tools for the efficient use of scarce
 
 5 resources in pursuing the goals and objectives of the people of
 
 6 Hawaii by:
 
 7      (1)  Describing the links between state resources and
 
 8           actions to implement the State's strategies and
 
 9           operating level objectives;
 
10      (2)  Focusing on the provision and measurement of outputs
 
11           and their relationship to outcomes, rather than looking
 
12           at simple inputs of funds and personnel positions;
 
13      (3)  Implementing activity-based costing, including the
 
14           means of allocating the cost of assets with lives
 
15           greater than one year over multi-year periods;
 
16      (4)  Providing decision-makers and the public with clear and
 
17           easily-understandable information about resource
 
18           allocation choices, decisions, and implementation; and
 
19      (5)  Providing a means of establishing resource allocation
 

 
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 1           priorities based on desired outcomes and related
 
 2           outputs.
 
 3      Accordingly, the purpose of this part is to amend the Hawaii
 
 4 Revised Statutes to implement performance-based budgeting for
 
 5 state government agencies.  This part also repeals part II of Act
 
 6 230, Session Laws of Hawaii 1998, which provided in uncodified
 
 7 session law for the establishment of a committee to develop and
 
 8 oversee that task.
 
 9      SECTION 2.  Chapter 37, Hawaii Revised Statutes, is amended
 
10 by adding two new sections to be appropriately designated and to
 
11 read as follows:
 
12      "37-     Performance-based budget; submission of budget
 
13 requests, programs, and performance measures.  (a)  Prior to each
 
14 fiscal year, each state agency shall submit a performance-based
 
15 budget request to the legislature and the governor pursuant to
 
16 this section.  Each agency shall identify and submit to the
 
17 governor a list of proposed programs.  The identification of the
 
18 programs shall be conducted after discussions with legislative
 
19 appropriations and subject matter committees, revised as
 
20 necessary, and approved by the governor within thirty days of
 
21 receipt.
 
22      (b)  The following documentation shall accompany the list of
 
23 proposed programs submitted by the agency:
 

 
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 1      (1)  The constitutional or statutory direction and authority
 
 2           for each program;
 
 3      (2)  Identification of the customers, clients, and users of
 
 4           each program;
 
 5      (3)  The purpose of each program or the benefit derived by
 
 6           the customers, clients, and users of each program;
 
 7      (4)  Direct and indirect costs of each program;
 
 8      (5)  Information on fees collected and the adequacy of those
 
 9           fees in funding each program for which fees are
 
10           collected;
 
11      (6)  An assessment of whether each program is conducive to
 
12           performance-based budgeting;
 
13      (7)  An assessment of the time needed to develop meaningful
 
14           performance measures for each program;
 
15      (8)  Review and reevaluate current budget system
 
16           requirements under part IV of chapter 37;
 
17      (9)  Evaluate and identify information system requirements
 
18           needed for effective program budgeting, management, and
 
19           accounting;
 
20     (10)  Identify the links between state resources, statutory
 
21           requirements, and actions necessary to implement the
 
22           State's strategies and operating level objectives;
 
23     (11)  Review and evaluate the implementation of full-cost
 

 
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 1           budgeting and accounting, including the allocating and
 
 2           accounting of overhead and asset costs with obligations
 
 3           longer than one year, over multiple years;
 
 4     (12)  Focus on the provision of accurate measures of
 
 5           effectiveness and program performance indicators,
 
 6           rather than looking at simple inputs of funds and
 
 7           personnel positions;
 
 8     (13)  Identify a process to determine state funding
 
 9           priorities; and
 
10     (14)  Provide decisionmakers and the public with clear and
 
11           understandable information about resource allocation
 
12           choices, decisions, and implementation.
 
13      (c)  The governor, after discussion with the legislative
 
14 appropriations and subject matter committees, shall develop
 
15 instructions for the development of performance measures for each
 
16 program on the list approved pursuant to this section and shall
 
17 submit the instructions to each agency.
 
18      (d)  Each agency shall submit to the governor performance
 
19 measures for each program on the approved list.  For each
 
20 approved program, agencies shall identify the following:
 
21      (1)  Outputs produced;
 
22      (2)  Resulting outcomes; and
 
23      (3)  Baseline data associated with each performance measure.
 

 
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 1      Performance measures shall be reviewed, after discussion
 
 2 with the legislative appropriations and subject matter
 
 3 committees, revised as necessary, and approved or disapproved by
 
 4 the governor within thirty days of receipt.
 
 5      (e)  Notwithstanding the programs, performance measures, and
 
 6 standards requested in each agency's final budget request or the
 
 7 governor's recommendations, the legislature shall have final
 
 8 approval of all programs, performance measures, and standards,
 
 9 pursuant to section 37-66.
 
10      (f)  Each agency shall submit documentation to the governor
 
11 regarding the validity, reliability, and appropriateness of each
 
12 performance measure.  Each agency shall indicate how the
 
13 performance measure relates to its strategic plan and how it is
 
14 used in management decision-making and other agency processes.
 
15      (g)  Annually, no later than            , agencies may
 
16 submit to the governor any adjustments to the performance
 
17 standards based on the amounts appropriated for each program by
 
18 the legislature.  When an adjustment is made, all performance
 
19 standards, including any adjustments, shall require the approval
 
20 of the governor.  The director of finance shall maintain the
 
21 official record of adjustments to the performance standards as
 
22 part of the agency's approved operating budget.
 
23      (h)  An agency operating under a performance-based budget
 

 
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 1 shall not have the authority to amend or establish programs or
 
 2 performance measures, except as authorized under subsection (g).
 
 3      (i)  All agencies shall submit performance-based budgets
 
 4 pursuant to this section to the legislature.  The legislative
 
 5 analyst shall review each such budget as required by section
 
 6 21F-7(a)."
 
 7      SECTION 3.  Section 37-62, Hawaii Revised Statutes, is
 
 8 amended by adding six new definitions to be appropriately
 
 9 inserted and to read as follows:
 
10      ""Baseline data" means indicators of an agency's current
 
11 performance level, pursuant to guidelines established by the
 
12 governor in consultation with legislative appropriations and
 
13 subject area committees.
 
14      "Outcome" means an indicator of the actual impact or public
 
15 benefit of a program.
 
16      "Output" means the actual service or product delivered by an
 
17 agency.
 
18      "Performance-based budget" means a budget that incorporates
 
19 approved programs and performance measures.
 
20      "Performance measure" means a quantitative or qualitative
 
21 indicator used to assess agency performance.
 
22      "Standard" means the level of performance of an outcome or
 
23 output."
 

 
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 1      SECTION 4.  Section 37-69, Hawaii Revised Statutes, is
 
 2 amended by amending subsections (c) and (d) to read as follows:
 
 3      "(c)  The financial plan for the ensuing six fiscal years
 
 4 shall more specifically include:
 
 5      (1)  Economic data for the State and the counties of the
 
 6           following kinds:
 
 7           (A)  Population: Including historical, current, and
 
 8                projected population count; population
 
 9                distribution by age and sex; estimated increases
 
10                and decreases, including increases and decreases
 
11                by immigration;
 
12           (B)  Employment: Including magnitude of labor force by
 
13                age and sex; labor force participation rates;
 
14                employment by age and sex; industry and
 
15                occupational surpluses and shortages; effects of
 
16                government programs on employment rate;
 
17           (C)  Income: Including per capita and per family
 
18                income; disposable income; income distribution;
 
19           (D)  Wages and prices: Including wages by industry and
 
20                occupational groups; prices for government
 
21                procurement items; construction costs; cost of
 
22                living index; price indices for components of
 
23                personal consumption;
 

 
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 1           (E)  Industry and business trends; and
 
 2           (F)  Effects of national economic and financial
 
 3                policies and conditions;
 
 4      (2)  Brief statements disclosing the basis upon which the
 
 5           revenue estimates in the plan were made, including for
 
 6           each specific tax and nontax revenue source:
 
 7           (A)  The previous projections for the last completed
 
 8                fiscal year and the fiscal year in progress;
 
 9           (B)  The variance between the projections and the
 
10                actual or revised estimate, and the reasons for
 
11                the variances;
 
12           (C)  Tax or source base and rates;
 
13           (D)  Yield projections of existing revenue sources and
 
14                existing taxes at authorized rates;
 
15           (E)  Assumptions made and methodology used in
 
16                projections;
 
17           (F)  Changes recommended; and
 
18           (G)  Projected yields if changes are adopted; etc.;
 
19      (3)  At the lowest level on the state program structure, for
 
20           each program:
 
21           (A)  The total actual program cost for the last
 
22                completed fiscal year, the estimated cost for the
 
23                fiscal year in progress, and the estimated cost
 

 
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 1                for each of the next six fiscal years; research
 
 2                and development, operating, and capital costs
 
 3                shall be included and the means of financing shall
 
 4                be identified.  The number of personnel positions
 
 5                and all lease payments shall be shown for the
 
 6                program, identified by their means of financing;
 
 7           (B)  The program size indicators; the actual size
 
 8                attained in the last completed fiscal year, the
 
 9                estimated size for the fiscal year in progress,
 
10                and the estimated size for each of the next six
 
11                fiscal years; and
 
12           (C)  The effectiveness measures; the actual level of
 
13                effectiveness attained in the last completed
 
14                fiscal year, the estimated level of effectiveness
 
15                for the fiscal year in progress, and the estimated
 
16                level for each of the next six fiscal years;
 
17           provided that this paragraph shall not apply to those
 
18           agencies submitting performance-based budgets pursuant
 
19           to section 37-   ;
 
20      (4)  Appropriate displays of paragraph (3)(A) and [(C),]
 
21           (3)(C), at every level of the state program structure
 
22           above the lowest level, by the major groupings of
 
23           programs encompassed within the level.  The displays of
 

 
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 1           [[]paragraph[]] (3)(A) shall appropriately identify the
 
 2           means of financing and the number of positions included
 
 3           in the level;
 
 4      (5)  Financial summaries displaying the State's financial
 
 5           condition, actual for the last completed fiscal year,
 
 6           and estimated for the fiscal year in progress and each
 
 7           of the next six fiscal years, including:
 
 8           (A)  A display of the programmed, total state
 
 9                expenditures, by cost categories, the total state
 
10                resources anticipated from existing tax and nontax
 
11                sources at existing rates, by resource categories,
 
12                including the fund balance or deficit at the
 
13                beginning of the fiscal year and bond receipts,
 
14                and the resulting fund balance or deficit at the
 
15                close of each fiscal year.  Lease payments in each
 
16                cost category shall be stated separately; and
 
17           (B)  The changes proposed to the existing tax and
 
18                nontax rates, sources or structure, and the
 
19                estimated increases or reductions in revenues, the
 
20                estimated cumulative increases or reductions, and
 
21                the estimated fund balance or deficit in each of
 
22                the next six fiscal years as a result of such
 
23                proposed changes.  Proposals for changes in the
 

 
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 1                existing tax and nontax rates, sources or
 
 2                structure shall be made in every case where the
 
 3                proposed, total state expenditures exceed the
 
 4                total resources anticipated from existing tax and
 
 5                nontax sources at existing rates.
 
 6           Such financial summaries shall be prepared for the
 
 7           total state expenditures and resources and for the
 
 8           general fund and special fund portions thereof;
 
 9      (6)  A summary of the balance of each special fund, actual
 
10           for the last completed fiscal year and estimated for
 
11           the fiscal year in progress and estimated for each of
 
12           the next six fiscal years;
 
13      (7)  A summary of the State's total bond fund required to
 
14           carry out the recommended programs and the kinds of
 
15           bonds and amounts thereof through which the
 
16           requirements were met in the last completed fiscal
 
17           year, are to be met in the fiscal year in progress, and
 
18           are proposed to be met in each of the next six fiscal
 
19           years.  The summary shall detail, for each fiscal year:
 
20           (A)  Of the total bond fund requirements, the amount,
 
21                by cost categories, requiring new bond issuance
 
22                authorization and the kinds and amounts of bonds
 
23                planned for issuance under such new
 

 
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 1                authorizations;
 
 2           (B)  By bond categories, the total, cumulative balance
 
 3                of bonds authorized in prior years but unissued
 
 4                and the amount thereof proposed to be issued; and
 
 5           (C)  A recapitulation of the total bonds to be issued,
 
 6                including both new authorizations and prior
 
 7                authorizations, by bond categories;
 
 8      (8)  Separately for general fund tax revenues, special fund
 
 9           tax revenues, general fund nontax revenues, and special
 
10           fund nontax revenues:
 
11           (A)  By kinds of taxes or sources, the amount of
 
12                revenue from existing, authorized taxes or sources
 
13                at existing rates received in the last completed
 
14                fiscal year and estimated to be received in the
 
15                fiscal year in progress and in each of the next
 
16                six fiscal years;
 
17           (B)  A summary of the proposed changes in the existing
 
18                taxes or sources or rates, and the estimated
 
19                increases or reductions in revenues in each of the
 
20                next six fiscal years resulting from such changes;
 
21                and
 
22           (C)  The total estimated revenues with and without the
 
23                proposed changes in each of the next six fiscal
 

 
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 1                years; and
 
 2      (9)  A summary of the State's total payments due under
 
 3           financing agreements required to carry out the
 
 4           recommended programs and the kinds of financing
 
 5           agreements and amounts thereof through which the
 
 6           requirements were met in the last completed fiscal
 
 7           year, are to be met in the fiscal year in progress, and
 
 8           are proposed to be met in each of the next six fiscal
 
 9           years.  The summary shall detail, for each fiscal year:
 
10           (A)  Of the total financing agreement requirements, the
 
11                amount, by cost categories, requiring new
 
12                financing agreement authorizations and the kinds
 
13                and amounts of financing agreements planned for
 
14                execution and delivery under such new
 
15                authorizations;
 
16           (B)  By cost category, the cumulative balance of
 
17                financing agreements authorized in prior years but
 
18                not executed and delivered and the amount proposed
 
19                to be executed and delivered; and
 
20           (C)  A recapitulation of the total financing agreements
 
21                to be executed and delivered, including both new
 
22                authorizations and prior authorizations, by cost
 
23                categories.
 

 
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 1      (d)  The program plans for the ensuing six fiscal years
 
 2 shall more specifically include:
 
 3      (1)  At the lowest level on the state program structure, for
 
 4           each program:
 
 5           (A)  A statement of its objectives;
 
 6           (B)  Measures by which the effectiveness in attaining
 
 7                the objectives is to be assessed;
 
 8           (C)  The level of effectiveness planned for each of the
 
 9                ensuing six fiscal years;
 
10           (D)  A brief description of the activities encompassed;
 
11           (E)  The program size indicators;
 
12           (F)  The program size planned for each of the next six
 
13                fiscal years;
 
14           (G)  A narrative explanation of the plans for the
 
15                program.  It shall contain, and in general be
 
16                limited to, the following:
 
17                (i)  A description of the kinds of activities
 
18                     carried out or unusual technologies employed;
 
19               (ii)  A statement of key policies pursued;
 
20              (iii)  Identification of important program or
 
21                     organizational relationships involved;
 
22               (iv)  A description of major external trends
 
23                     affecting the program;
 

 
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                                     S.B. NO.           1508
                                                        
                                                        


 1                (v)  A discussion of significant discrepancies
 
 2                     between previously planned cost,
 
 3                     effectiveness, and program size levels and
 
 4                     those actually achieved;
 
 5               (vi)  Comments on, and an interpretation of, cost,
 
 6                     effectiveness, and program size data over the
 
 7                     upcoming budget period, with special
 
 8                     attention devoted to changes from the current
 
 9                     budget period;
 
10              (vii)  Comments on, and an interpretation of, cost,
 
11                     effectiveness, and program size data over the
 
12                     four years of the planning period and how
 
13                     they relate to the corresponding data for the
 
14                     budget period; and
 
15             (viii)  A summary of the special analytic study,
 
16                     program evaluation, or other analytic report
 
17                     supporting a substantial change in the
 
18                     program where such a major program change
 
19                     recommendation has been made;
 
20           (H)  The full cost implications of the recommended
 
21                programs, by cost categories and cost elements,
 
22                actually experienced in the last completed fiscal
 
23                year, estimated for the fiscal year in progress,
 

 
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                                     S.B. NO.           1508
                                                        
                                                        


 1                and estimated for each of the next six fiscal
 
 2                years.  The means of financing shall be identified
 
 3                for each cost category.  The personal services
 
 4                cost element and the lease payments cost element
 
 5                shall be shown separately; the cost elements of
 
 6                other current expenses, equipment, and motor
 
 7                vehicles may be combined.  The number of positions
 
 8                included in the program shall be appropriately
 
 9                identified by means of financing;
 
10           (I)  A recapitulation of subparagraph (H) for the last
 
11                completed fiscal year, the fiscal year in progress
 
12                and each of the next six fiscal years, by means of
 
13                financing grouped under each cost category.  The
 
14                number of positions included in any program shall
 
15                be appropriately identified;
 
16           (J)  An identification of the revenues generated in the
 
17                last completed fiscal year and estimated to be
 
18                generated in the fiscal year in progress and in
 
19                each of the next six fiscal years, and the fund
 
20                into which such revenues are deposited;
 
21           (K)  Details of implementation of each capital
 
22                improvement project included in the total program
 
23                cost, including:
 

 
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                                     S.B. NO.           1508
                                                        
                                                        


 1                (i)  A description of the project, location, and
 
 2                     scope;
 
 3               (ii)  The initially estimated, currently estimated,
 
 4                     and final cost of the project, by investment
 
 5                     cost elements and by means of financing;
 
 6              (iii)  The amounts previously appropriated by the
 
 7                     legislature for the project, by cost elements
 
 8                     and by means of financing specified in the
 
 9                     acts appropriating the sums, and an
 
10                     identification of the acts so appropriating;
 
11               (iv)  The costs incurred in the last completed
 
12                     fiscal year and the estimated costs to be
 
13                     incurred in the fiscal year in progress and
 
14                     in each of the next six fiscal years, by cost
 
15                     elements and by means of financing; and
 
16                (v)  A commencement and completion schedule, by
 
17                     month and year, of the various phases of the
 
18                     capital improvement project (i.e., land
 
19                     acquisition, design, construction, and
 
20                     occupancy) as originally intended, as
 
21                     currently estimated, and as actually
 
22                     experienced; and
 
23           (L)  A crosswalk of the program expenditures, by cost
 

 
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                                     S.B. NO.           1508
                                                        
                                                        


 1                categories and cost elements between the program
 
 2                and expending agencies for the next two fiscal
 
 3                years.  The means of financing and the number of
 
 4                positions included in the program costs to be
 
 5                expended by each agency shall be specified; and
 
 6      (2)  Appropriate displays at every level of the state
 
 7           program structure above the lowest level.  The displays
 
 8           shall include:
 
 9           (A)  A listing of all major groupings of programs
 
10                included within the level, together with the
 
11                objectives, measures of effectiveness, and planned
 
12                levels of effectiveness for each of the ensuing
 
13                six fiscal years for each such major groupings of
 
14                programs; and
 
15           (B)  A summary of the total cost of each cost category
 
16                by the major groupings of programs encompassed
 
17                within the level, actual for the last completed
 
18                fiscal year and estimated for the fiscal year in
 
19                progress and for each of the next six fiscal
 
20                years[.];
 
21 provided that this subsection        shall not apply to those
 
22 agencies submitting performance-based budgets pursuant to
 
23 section 37-   ."
 

 
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                                     S.B. NO.           1508
                                                        
                                                        


 1      SECTION 5.  The director of finance with the assistance of
 
 2 the auditor shall implement performance-based budgeting as
 
 3 provided in sections 37-    and 37-   , Hawaii Revised Statutes,
 
 4 in section 2 of this Act.  The director of finance shall submit
 
 5 legislation that may be necessary to further implement
 
 6 performance-based budgeting to the regular session of 2000.
 
 7      SECTION 6.  Act 230, Session Laws of Hawaii 1998, is amended
 
 8 by amending section 1 to read as follows:
 
 9      "SECTION 1.  The purpose of this Act is to provide various
 
10 means of making state government more efficient and more capable
 
11 of competing in and supporting the efforts of Hawaii's businesses
 
12 and enterprises to participate and compete successfully in the
 
13 world's ever-evolving global economy.
 
14      This Act is divided into five parts.  [Part II creates a
 
15 special committee to begin the task of transforming the State's
 
16 budgeting, accounting, and procurement systems.  The assessment
 
17 and improvement in the system will set clearer directions in the
 
18 plans for a privatization process in Part III.] Part III
 
19 establishes a process to facilitate increased public-private
 
20 competition and partnerships for the provision of services to or
 
21 on behalf of government.  Part IV is intended to ensure that
 
22 during the development and implementation of a managed
 
23 competitive process, the State and counties are permitted to
 

 
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                                     S.B. NO.           1508
                                                        
                                                        


 1 contract for necessary goods and services without being disrupted
 
 2 or delayed by lawsuits.  Part V provides logistical directions
 
 3 for these efforts.
 
 4      SECTION 7.  Act 230, Session Laws of Hawaii 1998, is amended
 
 5 by repealing part II of that Act, consisting of sections 2, 3, 4,
 
 6 and 5.
 
 7                            ["PART II.
 
 8      SECTION 2.  The legislature believes that the state
 
 9 government's budgeting, accounting, and procurement systems
 
10 should serve as effective tools for the efficient use of scarce
 
11 resources in pursuing the goals and objectives of the people of
 
12 Hawaii by:
 
13      (1)  Describing the links between state resources and
 
14           actions to implement the State's strategies and
 
15           operating level objectives;
 
16      (2)  Focusing on the provision and measurement of outputs
 
17           and their relationship to outcomes, rather than looking
 
18           at simple inputs of funds and personnel positions;
 
19      (3)  Implementing activity-based costing, including the
 
20           means of allocating the cost of assets with lives
 
21           greater than one year over multi-year periods;
 
22      (4)  Providing decision-makers and the public with clear and
 
23           easily-understandable information about resource
 

 
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                                     S.B. NO.           1508
                                                        
                                                        


 1           allocation choices, decisions, and implementation; and
 
 2      (5)  Providing a means of establishing resource allocation
 
 3           priorities based on desired outcomes and related
 
 4           outputs.
 
 5      The purpose of this Part is to establish a special committee
 
 6 to begin the task of transforming the State's accounting,
 
 7 procurement, and budgeting systems.  This committee shall also
 
 8 develop prototype models for transforming the budgeting and
 
 9 accounting systems of three departments.
 
10      This Part also implements recommendations related to the
 
11 efficient delivery of government services that were made by the
 
12 economic revitalization task force, which was convened by the
 
13 governor, the president of the senate, and the speaker of the
 
14 house of representatives.
 
15      SECTION 3.  There is created a committee that shall develop
 
16 and oversee the implementation of plans for the transformation of
 
17 the State's accounting, procurement, and budgeting systems.  With
 
18 respect to the budgeting system, the committee shall develop and
 
19 oversee the implementation of a performance-based budgeting
 
20 system that incorporates quantitative or qualitative indicators
 
21 to assess the State's budget performance.
 
22      The committee shall consist of nine members, one of which
 
23 shall be the legislative analyst appointed pursuant to
 

 
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 1 chapter 21F, and eight who shall be appointed in the following
 
 2 manner:
 
 3      (1)  One member shall be appointed by the governor from a
 
 4           list nominated by the president of the senate;
 
 5      (2)  One member shall be appointed by the governor from a
 
 6           list nominated by the speaker of the house of
 
 7           representatives;
 
 8      (3)  Two members with budgetary, accounting, financial
 
 9           services, or comparable public accounting experience,
 
10           shall be appointed by the governor from the public
 
11           at-large; and
 
12      (4)  Four members shall be appointed by the governor from
 
13           among the members of the governor's cabinet, including
 
14           the director of finance and the comptroller, or their
 
15           designees.
 
16      The committee shall elect a chairperson and vice-chairperson
 
17 from among its members.  A majority of the members of the
 
18 committee shall constitute a quorum.  The members of the
 
19 committee shall serve without compensation but shall be
 
20 reimbursed for expenses, including travel expenses, necessary for
 
21 the performance of their duties.
 
22      SECTION 4.  To initiate the implementation of the process of
 
23 transforming the State's accounting system and the budgeting
 

 
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 1 system to a performance-based budgeting system, the committee
 
 2 shall select three departments that differ in function and
 
 3 organization to develop prototype models of implementation.  The
 
 4 three departments shall be selected by January 1, 1999.  The
 
 5 committee and the selected departments shall complete the
 
 6 implementation of their prototype transformations by December 31,
 
 7 1999.
 
 8      SECTION 5.  The committee shall submit annual reports of its
 
 9 plans, recommendations, and implementing actions to the
 
10 legislature no fewer than fifteen days before the convening of
 
11 the regular sessions of 1999, 2000, and 2001."]
 
12                              PART II
 
13      SECTION 8.  In recognition that the legislature needs its
 
14 own separate fiscal policy office to provide legislators with the
 
15 information needed to develop sound economic and fiscal policies
 
16 for the State, the office of the legislative analyst was
 
17 established in Act 347, Session Laws of Hawaii 1990.
 
18      Other states have established nonpartisan, highly
 
19 specialized legislative fiscal analysis offices, in addition to
 
20 the professional staffs of each chamber's money committees, to
 
21 review executive branch proposals and to appraise the performance
 
22 of the executive branch in administering legislative enactments.
 
23      Since the legislature meets for only four months of the
 

 
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 1 year, it has come to rely heavily on the use of session-only
 
 2 staff or employees on loan from the executive branch.  Hawaii is
 
 3 the only state in the nation utilizing staff on temporary loan
 
 4 from executive agencies to support the work of its money
 
 5 committees.
 
 6      As a result, the legislature has been at a disadvantage in
 
 7 fulfilling its trust to the people of the State to ensure that
 
 8 approved appropriations are executed in compliance with
 
 9 legislative policy.  The legislature can provide effective
 
10 legislative oversight only if it has its own capacity to review
 
11 and analyze the budget, state economic conditions, and overall
 
12 tax structure and attendant policies.
 
13      Although the office of the legislative analyst was
 
14 established statutorily, it has yet to be implemented.  More than
 
15 ever before, it is critical that this office be made operational
 
16 to enable the legislature to address the fiscal challenges facing
 
17 the State.
 
18      The purpose of this part is to:
 
19      (1)  Appropriate the funds necessary to implement the
 
20           provisions of Act 347, Session Laws of Hawaii 1990,
 
21           which established the office of the legislative
 
22           analyst; and
 
23      (2)  Amend that law to require the legislative analyst to
 

 
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                                     S.B. NO.           1508
                                                        
                                                        


 1           review all performance-based budgets submitted to the
 
 2           analyst, as provided in part I of this Act.
 
 3      SECTION 9.  Section 21F-7, Hawaii Revised Statutes, is
 
 4 amended by amending subsection (a) to read as follows:
 
 5      "(a)  The purpose of the office of the legislative analyst
 
 6 shall be:
 
 7      (1)  To provide the legislature with research and analysis
 
 8           of current and projected state revenues and
 
 9           expenditures;
 
10      (2)  To provide the legislature with a report analyzing the
 
11           governor's proposed levels of revenue and expenditures
 
12           for biennial budgets submitted under chapter 37 as well
 
13           as other supplemental budget submittals to the
 
14           legislature by the governor;
 
15      (3)  To provide an analysis of the impact of the governor's
 
16           proposed revenue and expenditure plans for the next
 
17           biennium;
 
18      (4)  To conduct research matters of economic and fiscal
 
19           policy and to report to the legislature on the result
 
20           of the research;
 
21      (5)  To provide economic reports and studies on the state of
 
22           the State's economy, including trends and forecasts for
 
23           consideration by the legislature;
 

 
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 1      (6)  To conduct budget and tax studies and provide general
 
 2           fiscal and budgetary information;
 
 3      (7)  To review and make recommendations on the operation of
 
 4           state programs in order to appraise the implementation
 
 5           of state laws regarding the expenditure of funds and to
 
 6           recommend means of improving their efficiency; [and]
 
 7      (8)  To recommend to the legislature changes in the mix of
 
 8           revenue sources for programs, in the percentage of
 
 9           state expenditures devoted to major programs, and in
 
10           the role of the legislature in overseeing state
 
11           government expenditures and revenue projections[.]; and
 
12      (9)  To review all performance-based budgets submitted to
 
13           the legislature as provided in section 37-   ."
 
14      SECTION 10.  There is appropriated out of the general
 
15 revenues of the State of Hawaii the sum of $350,000, or so much
 
16 thereof as may be necessary for fiscal year 1999-2000, for the
 
17 staffing, operating, and equipping of the office of the
 
18 legislative analyst.  The sum appropriated shall be expended by
 
19 the office of the legislative analyst for the purposes of this
 
20 Act.
 
21      SECTION 11.  Statutory material to be repealed is bracketed.
 
22 New statutory material is underscored.
 
23      SECTION 12.  This Act shall take effect on July 1, 1999.
 
24 
 
25                              INTRODUCED BY:______________________
 

 
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