Chapter 563 Oregon Laws 2011

AN ACT

SB 676

Relating to state budget policy; creating new provisions; amending ORS 291.200 and 291.216; and declaring an emergency.

Be It Enacted by the People of the State of Oregon:

SECTION 1. Sections 2 to 4 of this 2011 Act are added to and made a part of ORS 291.201 to 291.222.

SECTION 2. As used in sections 2 to 4 of this 2011 Act:

(1) “Continuous improvement” means a set of actions designed to permanently improve state agency performance, either in a specific targeted area or across all levels of an agency, through the use of structured process analysis and problem solving.

(2) “Outcomes-based budget” means a budget that allocates government resources to those uses of taxpayer moneys and fee revenues that will best produce the outcomes most important to the residents of this state, that generates options for funding, that uses service redesign, competition, collaboration and prioritization to drive continuous improvement and innovations, and that can be used to align government, nonprofit and private resources to help produce the desired outcomes.

(3) “Performance management” means a formal, comprehensive set of business processes, including strategic planning, performance measurement, leadership, process management and human resources that help ensure more efficient and effective management operations and practices and reduce costs.

(4) “Performance measurement” means a process of assessing progress toward achieving predetermined program objectives, including information on the efficiency with which resources are transformed into goods and services, the quality of those goods and services, the results of a program activity compared to its intended purpose and the effectiveness of state agency operations in terms of their specific contributions to program objectives.

(5) “State agency” means every state officer, board, commission, department, institution, branch or agency of the state government whose costs are paid wholly or in part from funds held in the State Treasury.

(6) “State government” has the meaning given that term in ORS 174.111.

SECTION 3. (1) As part of the tentative budget plan and the budget report required under ORS 291.210 and 291.216, the Oregon Department of Administrative Services and the Governor shall submit an outcomes-based budget. The outcomes-based budget shall be based on the results of state agency continuous improvement actions, performance management and performance measurement, shall describe and measure state agency efforts to implement process improvements and shall reflect state agency efforts to achieve, through process improvements, quality service delivery at a lower cost.

(2) The budget for each state agency shall:

(a) Identify how the agency is addressing continuous improvement, performance management and performance measurement; and

(b) For each agency program, state the number of persons served, or other units of service provided, by the program.

SECTION 4. The Joint Committee on Ways and Means, the Emergency Board and the Legislative Fiscal Office may review performance management and performance measurement processes for services provided by contract by state agencies or by school districts.

SECTION 5. (1) Not later than December 31, 2011, the Governor, for the executive department as defined in ORS 174.112, and the Chief Justice, for the judicial department as defined in ORS 174.113, shall each report to the Legislative Assembly a comprehensive plan that describes outcomes-based strategies for the respective departments, including descriptions of continuous improvement, performance management and performance measurement strategies.

(2) As used in this section:

(a) “Continuous improvement” means a set of actions designed to permanently improve state agency performance, either in a specific targeted area or across all levels of an agency, through the use of structured process analysis and problem solving.

(b) “Performance management” means a formal, comprehensive set of business processes, including strategic planning, performance measurement, leadership, process management and human resources that help ensure more efficient and effective management operations and practices and reduce costs.

(c) “Performance measurement” means a process of assessing progress toward achieving predetermined program objectives, including information on the efficiency with which resources are transformed into goods and services, the quality of those goods and services, the results of a program activity compared to its intended purpose and the effectiveness of state agency operations in terms of their specific contributions to program objectives.

SECTION 6. ORS 291.200 is amended to read:

291.200. (1) It is the intent of the Legislative Assembly to require the Governor, in the preparation of the biennial budget, to state as precisely as possible what programs the Governor recommends be approved for funding under estimated revenues under ORS 291.342. If estimated revenues are inadequate, the Legislative Assembly intends that it be advised by the Governor as precisely as possible how the Legislative Assembly might proceed to raise the additional funds. It is also the intent of the Legislative Assembly, in the event that the additional funding is not possible, to be informed by the Governor precisely what programs or portions thereof the Governor recommends be reduced accordingly. Finally, if the Governor chooses to recommend additional new programs or program enhancements, the Legislative Assembly intends that the Governor specify how the additional funding might be achieved. The Legislative Assembly believes that the state government must allocate its resources for effective and efficient delivery of public services by:

(a) Clearly identifying desired results;

(b) Setting priorities;

(d) Measuring, reporting and evaluating outcomes to determine future allocation.

(2) In addition to the intentions of subsection (1) of this section, in preparing the biennial budget, the Governor and the Legislative Assembly shall use an outcomes-based budgeting process described in section 3 of this 2011 Act.

[(2)] (3) To achieve the intentions of [subsection (1)] subsections (1) and (2) of this section, it is the budget policy of this state to create and administer programs and services designed to attain societal outcomes such as the Oregon benchmarks and to promote the efficient and measured use of resources.

[(3)] (4) To effect the policy stated in subsection [(2)] (3) of this section, state government shall:

(a) Allocate resources to achieve desired outcomes;

(b) Express program outcomes in measurable terms;

(d) Encourage savings;

(e) Promote investments that reduce or avoid future costs;

(f) Plan for the short term and long term using consistent assumptions for major demographic and other trends; and

(g) Require accountability at all levels for meeting program outcomes.

SECTION 7. ORS 291.216 is amended to read:

291.216. (1) Not later than November 10 of each even-numbered year the Governor shall cause the budget report to be compiled and prepared for printing.

(2) The budget report shall include a budget message prepared by the Governor, including recommendations of the Governor with reference to the fiscal policy of the state government for the coming biennium, describing the important features of the budget plan, embracing a general budget summary setting forth the aggregate figures of the budget report so as to show a balanced relation between the total proposed expenditures and the total anticipated income, with the basis and factors on which the estimates are made, the amount to be borrowed, and other means of financing the estimated expenditures for the ensuing biennium, compared with the corresponding figures for at least the last completed biennium and the current biennium.

(3) The budget plan shall be supported by explanatory schedules or statements, classifying the expenditures reported therein, both past and proposed, by organization units, objects and funds, and the income by organization units, sources and funds, and the proposed amount of new borrowing as well as proposed new tax or revenue sources, including a single comprehensive list of all proposed increases in fees, licenses and assessments assumed in the budget plan.

(4) The budget plan shall be submitted for all dedicated funds, as well as the state General Fund, and shall include the estimated amounts of federal and other aids or grants to state agencies or activities provided for any purpose whatever, together with estimated expenditures therefrom.

(5) The budget report shall embrace the detailed estimates of expenditures and revenues. It shall include statements of the bonded indebtedness of the state government, showing the actual amount of the debt service for at least the past biennium, and the estimated amount for the current biennium and the ensuing biennium, the debt authorized and unissued, the condition of the sinking funds and the borrowing capacity. It shall contain the Governor’s recommendations concerning tax expenditures identified under ORS 291.214. It shall also contain any statements relative to the financial plan which the Governor may deem desirable or which may be required by the legislature.

(6) The budget plan shall use the estimated revenues under ORS 291.342 for the fiscal year in which the plan is submitted as the basis for total anticipated income under subsection (2) of this section, subject to such adjustment as may be necessary to reflect accurately projections for the next biennium.

(7) As supplemental information to the budget report, the Governor shall publish an existing level tentative budget plan for the two fiscal years for which the budget report is required. This summary budget shall reflect only existing revenues estimated under subsection (6) of this section; subject to such adjustment as may be necessary to reflect accurately projections for the next biennium. The supplemental information to the budget report shall be submitted at the same time as the budget report.

(8)(a) The budget report shall present information regarding the expenses of the state in the following categories:

(A) Personnel expenses, including compensation and benefits for state employees, but excluding costs of services contracted out and temporary service costs.

(B) Supplies, equipment and the costs of services contracted out.

(D) Capital outlay.

(E) Debt service.

(b) For each category described in paragraph (a) of this subsection, the report shall show actual expenditures to date.

(A) The amount of merit increases for the existing workforce.

(B) Increases for the cost of replacement and repair of supplies and equipment.

(D) Increases for the cost of inflation.

(d) The report shall show the total increase in the cost of salaries and benefits for all state positions.

(9) The budget report shall include:

(a) The total number of positions included in the budget.

(b) The average vacancy rate in the present biennium.

(10) The budget report shall include computations showing budget figures as a percentage of the total General Fund, federal fund, fee or other source category, as may be appropriate.

(11) The budget report shall include, in a format that provides side-by-side comparison with the State Debt Policy Advisory Commission report of net debt capacity, a six-year forecast, by debt type and repayment source, of:

(a) That portion of the capital construction program required to be reported by ORS 291.224 that will be financed by debt issuance.

(b) The acquisition of equipment or technology in excess of $500,000 that will be financed by debt issuance.

(12) The budget report shall include the outcomes-based budgeting information required by section 3 of this 2011 Act.

[(12)] (13) As supplemental information to the budget report, the Governor shall prepare an alternative budget plan for the two fiscal years for which the budget report is required and shall provide the alternative budget plan to the President of the Senate, the Speaker of the House of Representatives and the majority and minority leaders in the Senate and the House of Representatives. The alternative budget plan shall establish funding for each state agency’s programs and activities at 90 percent of the appropriations requested for the state agency in the budget report, excluding appropriations that are not made to fund recurring activities. For each state agency, the Governor shall describe the 10 percent reduction in appropriated moneys in terms of the activities or programs that the agency will not undertake. The activities or programs that are not undertaken as a result of the reductions in appropriated moneys made in the alternative budget plan shall be ranked in order of importance and priority on the basis of lowest cost for benefit obtained.

SECTION 8. Sections 1 to 4 of this 2011 Act and the amendments to ORS 291.200 and 291.216 by sections 6 and 7 of this 2011 Act apply to tentative budget plans and budget reports prepared for biennia beginning on or after July 1, 2013.

SECTION 9. This 2011 Act being necessary for the immediate preservation of the public peace, health and safety, an emergency is declared to exist, and this 2011 Act takes effect on its passage.

Approved by the Governor June 28, 2011

Filed in the office of Secretary of State June 29, 2011

Effective date June 28, 2011

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