TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO EFFICIENCY MEASURES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that, at present, projections of state general fund revenues are not particularly robust. Thus, the legislature finds that the budgetary situation of the State may require more scrutiny in the future to better control appropriations.
Present state budget documents do not include efficiency measures tied to appropriation requests. The legislature finds that efficiency measures may provide data to enhance the level of scrutiny and help the legislature make difficult budget decisions to improve and continue important programs on a sustainable basis. The Executive Budget Act, chapter 37, part IV, Hawaii Revised Statutes, requires that state budget documents include measures of effectiveness. Together, efficiency measures and the measures of effectiveness may provide additional, complementary tools by which the legislature evaluates programs and budget requests.
In 2015, the legislature believed that, before requiring the inclusion of efficiency measures in state budget documents, a determination should be made regarding whether efficiency measures may be formulated, collected, and analyzed by the department of budget and finance and other state agencies in a practical and cost-effective manner. Act 67, Session Laws of Hawaii 2015, established an efficiency measures pilot project intended to provide the legislature with the information necessary to make that determination.
Act 67 required the department of budget and finance to submit a report on the pilot project to the legislature before the convening of the regular session of 2017. The department of budget and finance submitted the report on December 30, 2016. The report raised certain concerns, such as the proper definition of efficiency measures and the resources necessary to provide data on efficiency measures. Because of the concerns, the report recommended further discussion with the legislature on the issue.
The legislature finds that the concerns raised in the report are valid and should be addressed. However, the legislature also finds that instead of engaging in further discussion, the legislature should recommence the pilot project with clearer expectations and objectives, most of which were cited in the report. The legislature intends that the recommenced pilot project result in a more intensive effort on the part of the department of budget and finance and the selected state department. Ultimately, the legislature intends that the pilot project produce better data and clearer determination of the benefits, appropriateness, and value of efficiency measures.
The purpose of this Act is to recommence the efficiency measures pilot project first established under Act 67, Session Laws of Hawaii 2015.
The legislature notes that this Act includes general fund appropriations of $ each for fiscal year 2017-2018 and fiscal year 2018-2019 for the conduct of the pilot project. The legislature also notes that the general fund appropriation of $100,000 for fiscal year 2015-2016 under Act 67, Session Laws of Hawaii 2015, for the pilot project was not expended. Consequently, for the purpose of the State's financial plan, the legislature intends that the appropriations under this Act be regarded as cost-neutral.
SECTION 2. Act 67, Session Laws of Hawaii 2015, is amended as follows:
1. By amending sections 2 to 5 to read:
"SECTION 2. For the purposes of this Act:
"Budget document" means the multi-year program and financial plan, executive budget, or supplemental budget.
means the sum of research and development costs and operating costs as those
terms are defined under section 37-62, Hawaii Revised Statutes.
"Budget document" means the
multi-year program and financial plan, executive budget, or supplemental
budget.] "Direct cost" means the cost directly allocable to
the production of a thing or service, including the cost of supervisory, line,
and support staff's salaries, wages, and fringe benefits, supplies, equipment,
facilities, and utilities; provided that the director of finance may refine
this definition if the director deems it necessary or appropriate.
"Efficiency measure" means the [
within the lowest level of a program to provide a single unit of an activity or
effectiveness measure of that level of the program.] direct cost to the
State to do or produce something or some service without wasting funds,
material, time, or energy.
"Measure of effectiveness" has the same meaning as "effectiveness measure," as the latter term is defined under section 37-62, Hawaii Revised Statutes.
"Program" means the same as defined in section 37-62, Hawaii Revised Statutes.
"State department" means any of the
principal departments listed under section [
26-34,] 26-4, Hawaii
SECTION 3. (a) The director of finance
shall select one state department to participate in a pilot project for the
establishment of and data collection for efficiency measures intended to be
included with the budget documents submitted to the legislature [
the fiscal biennium [ 2015-2017.] 2019-2021. To the extent
possible, the director of finance shall select a state department in which the
executive head is willing to participate in the pilot project.
The director of finance [
may transfer a
portion of the appropriation made under this Act to the selected state
department for its participation in the pilot project.] shall select the
state department by August 1, 2017.
(b) The director of finance and selected state department shall conduct the pilot project with the intent of addressing the following issues:
(1) The formulation of the best definition of "efficiency measure" to be used for state budgeting;
(2) The development of program expectations using efficiency measures with corresponding measures of effectiveness;
(3) The determination, based on efficiency measures and measures of effectiveness, of appropriate benchmarks for programs;
(4) The determination of optimal funding levels for programs based on appropriate efficiency measures and measures of effectiveness;
(5) The benefits and detriments of preparing, collecting data on, and analyzing efficiency measures; and
(6) The estimated cost to prepare, collect data on, and analyze efficiency measures.
SECTION 4. (a) No later than a deadline to be established by the director of finance, the selected state department shall submit at least three proposed efficiency measures to the director.
(b) After receiving the proposed efficiency measures and consulting with the selected state department, the director of finance shall approve the efficiency measures to be used by the selected state department. The director of finance may approve efficiency measures that differ from those proposed by the selected state department. The director of finance shall approve the efficiency measures by January 1, 2018, and notify the legislature within ten days of the approval.
(c) If the selected state department does not submit proposed efficiency measures by the deadline established by the director of finance under subsection (a), the director of finance shall formulate and approve the efficiency measures by January 1, 2018, and notify the legislature within ten days of the approval.
SECTION 5. No later than twenty days prior to
the convening of the regular session of [
2017,] 2019, the
director of finance, after consulting with the selected state department,
shall submit to the legislature a report that includes the following [ to
(1) The actual level of the efficiency measures attained
in the fiscal year [
2015-2016,] 2017-2018, the estimated level of
the efficiency measures for the fiscal year [ 2016-2017,] 2018-2019,
and the estimated level for each of the next six fiscal years. The percentage
change from fiscal year to fiscal year of the efficiency measures also shall be
(2) A narrative and comments on the change in
efficiency measures from fiscal year to fiscal year[
(3) Any] any intended action to
improve efficiency[ .];
(3) Data on the cost incurred by the department of budget and finance and the selected state department for the performance of duties under the pilot project;
(4) A discussion of findings on the issues listed under section 3(b)(1) to (6); and
(5) A recommendation on whether to require the inclusion of efficiency measures for every state department, commencing with the budget documents for the fiscal biennium 2021-2023.
information] report shall be
submitted concurrently with, but need not be included in, the budget documents
for the executive budget for the fiscal biennium [ 2017-2019.] 2019-2021."
2. By amending section 8 to read:
"SECTION 8. There is appropriated out of
the general revenues of the State of Hawaii the sum of [
or so much thereof as may be necessary for fiscal year [ 2015-2016] 2017-2018
and the same sum or so much thereof as may be necessary for fiscal year
2018-2019 for the recommenced efficiency measures pilot project
required under this Act[ .], as amended by Act ,
Session Laws of Hawaii 2017.
sum] sums appropriated shall
be expended by the department of budget and finance for the purposes of this
Act[ ; provided that any unexpended or unencumbered moneys appropriated
pursuant to this section shall lapse on June 30, 2017]."
3. By repealing sections 6 and 7.
SECTION 6. The director of finance,
after consulting with the selected state department, shall submit a report to
the legislature on the findings and recommendations resulting from the pilot
project. The report shall be submitted no later than twenty days prior to the
convening of the regular session of 2017 and shall include a recommendation on
whether to require the inclusion of efficiency measures for every state
executive department, commencing with the budget documents for the fiscal
biennium 2019-2021. The report also shall include data on the cost incurred by
the department of budget and finance and the selected state department for the
performance of duties of the pilot project. SECTION 7. No later than March 1, 2017, the
auditor shall submit a report to the legislature evaluating the pilot project,
including findings and recommendations on the pilot project."]
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 2030.
Efficiency Measures Pilot Project; Recommencement
Recommences the efficiency measures pilot project first required under Act 67, Session Laws of Hawaii 2015. (SB722 HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.