October 14, 2010
The State appears one step closer to implementing new performance measurement requirements that may significantly improve the General Assembly’s annual budget appropriations process.
Illinois Senate President John Cullerton announced this week that Senator Dan Kotowski would take a leadership role in the implementation of the “Budgeting for Results” provisions included in Emergency Budget Act of FY2011.
The Civic Federation has consistently urged the State to develop a performance measurement system to determine spending priorities, most recently in its analysis of the Governor’s FY2011 budget recommendation and its Fiscal Rehabilitation Plan for the State of Illinois published earlier this year. The Federation recommends that all government agencies be required to set goals and priorities and then report annually on the success of the taxpayer-supported programs. Through this process, officials can begin to budget for results. By relying on predetermined priorities and desired outcomes of government programs, officials can more effectively manage scarce resources and undertake strategic budget reductions when it is necessary to reduce spending. Ideally, spending cuts from government budgets should be based on a careful assessment of programs and service performance rather than an across-the-board approach.
A performance management amendment was included in the FY2010 Emergency Budget Act and originally required all state agencies to create performance goals and prioritize their programs in FY2010. These reports would have been provided to the legislative appropriations committees prior to the enactment of the next annual budget. However, this provision was revised before enactment and the mandatory language was changed to make participation in the initiative voluntary.
During a Senate committee hearing in February of 2010 on the FY2011 budget, legislators questioned David Vaught, Director of the Governor’s Office of Budget and Management, about the lack of performance management at state agencies and whether they would be provided any reports on budget priorities and effectiveness to help guide legislative leaders in their deliberations. Mr. Vaught responded that the reports were being prepared but were not yet available in time for legislators to review as part of the FY2011 budget negotiations.
Later in the spring legislative session, Senator Kotowski introduced SB3938, a more comprehensive performance management bill than the optional measures that were included in the Emergency Budget Act of FY2010. The legislation proposed that departments under the Governor and all state agencies be required to undertake extensive budgeting for results and prioritizations of functions. Among other details, the legislation proposed requiring:
- The Governor and all constitutional officers to prioritize outcomes that are most important for each state agency of the executive branch under their jurisdiction for the next fiscal year;
- Goals to be set in order to accomplish those outcomes according to the priority of the outcome;
- Outcomes to be prioritized by each agency specifying which are most important to achieve for the next fiscal year; and
- The Governor and each constitutional officer to conduct performance analyses to determine which programs, strategies and activities will best achieve those desired outcomes.
The legislation also called for the Governor to recommend that appropriations be made to state agencies and officers for the fiscal year based on the above agreed upon goals and priorities. Quarterly financial reports detailing actual revenue results were also proposed so the Governor would have the ability to change appropriations during the year. This would allow the State to fund the most important priorities first while cutting expenditures of lesser importance to match available revenues. The bill was proposed as a permanent amendment to the State Budget Law of the Civil Administrative Code of Illinois and would have applied to all future budget years.
Although SB3839 did not advance out of the Senate, the Emergency Budget Act of FY2011 was amended to require all State agencies to undertake all of the proposed performance management and prioritization steps in the coming fiscal year to prepare for the FY2012 budget. Under Public Act 96-0958, the Governor and all constitutional officers are required to undertake the process of prioritizing outcomes and goals and developing assessments to gauge the performance in achieving these predetermined benchmarks prior to the publication of the Governor’s FY2012 budget recommendation. PA 96-0958 also includes a requirement that quarterly revenue and expenditure reports be released throughout the year. However, the provision allowing appropriations to be changed during the next fiscal year to fund priorities first is not included and the act. The requirement that all departments provide comprehensive performance measurement only applies to the FY2011 budget year and the results of these reports will ideally be used to budget for results in the FY2012 appropriations process.
There is no specific mechanism for enforcing compliance with the new “Budgeting for Results” provisions. However, by beginning the process well in advance of the FY2012 budget, which is usually proposed by the Governor during the third week of February each year, there is ample time to undertake this major overhaul of the budget process. The successful implementation of these measures also seems to have bipartisan support, as legislators from both parties have included performance measurement in their budget reform proposals for the coming fiscal year.
The Emergency Budget Act of FY2011 also requires that all of the performance measures and outcomes be posted on the Comptroller’s website and published with the Comptroller’s Public Accountability Report. The budget act also requires that the State allow residents to prioritize government spending through an online survey and that the results to be posted on the website of the Governor’s Office of Management and Budget.