1Providing for accountability in Commonwealth agency program
2performance.

3The General Assembly of the Commonwealth of Pennsylvania
4hereby enacts as follows:

5Section 1.  Short title.

6This act shall be known and may be cited as the Performance,
7Accountability and Results Act.

8Section 2.  Legislative intent and purpose.

9(a)  Declaration.--The General Assembly finds and declares
10that accountability in program performance is vital to effective
11and efficient delivery of governmental services and to maintain
12public confidence and trust in government. To maximize
13accountability, a system of strategic planning, performance-
14based budgeting and performance audits should be implemented to
15measure the effectiveness and efficiency of governmental
16services. It is of paramount public importance that this system

1encourages full and candid participation throughout State
2government. This system will generate information necessary for
3the public to be informed fully and for the General Assembly to
4make informed and meaningful decisions about the allocation of
5resources in meeting vital needs.

6(b)  Purpose.--The purposes of this act are to do all of the
7following:

8(1)  Begin to provide a new approach to the planning,
9budgeting and accountability processes within State
10government rather than an addition to existing procedures.

11(2)  Improve the confidence of Pennsylvania citizens and
12taxpayers in the capability of the government, by
13systematically holding Commonwealth agencies accountable for
14achieving program results.

15(3)  Improve Commonwealth program effectiveness and
16public accountability by promoting a new focus on results,
17service quality and customer satisfaction.

18(4)  Help agency managers improve service delivery, by
19requiring that they plan for meeting program objectives and
20by providing them with information about program results and
21service quality.

22(5)  Improve legislative decision making by providing
23more objective information on achieving statutory objectives,
24and on the relative effectiveness and efficiency of
25Commonwealth programs and spending.

26(6)  Improve internal management of the Commonwealth
27government.

28Section 3.  Definitions.

29The following words and phrases when used in this act shall
30have the meanings given to them in this section unless the

1context clearly indicates otherwise:

2"Administrative Code of 1929."  The act of April 9, 1929
3(P.L.177, No.175), known as The Administrative Code of 1929.

4"Agency."  A Commonwealth agency.

5"Commonwealth agency."  A department of the executive branch.

6"Goal."  A statement of result that is intended to be
7achieved and which may be defined as either:

8(1)  A general goal, which is a general statement of
9result that does not include a measurable target level of
10performance or other objective indicator of success.

11(2)  A performance measure, which is a specific statement
12of result that includes a measurable target level of
13performance or other objective indicator of success.

14"Independent Fiscal Office."  The office established and
15provided for in 71 Pa.C.S. Ch. 41 (relating to Independent
16Fiscal Office).

17"Outcome measure."  A qualitative indicator of the results of
18a program activity compared to its intended purpose and of the
19public benefit derived from the program activity, often used as
20a measure of effectiveness.

21"Output measure."  A quantitative indicator of goods or 
22services that an agency produces.

23"Performance indicator."  A particular value or
24characteristic used to effectively measure program activity and
25performance in a qualitative or quantitative manner. A 
26performance indicator shall be structured as an outcome measure 
27or output measure.

28"Program activity."  A specific activity or project as listed
29in the annual budget of the Commonwealth.

30"Program evaluation."  An assessment, through objective

1measurement and systemic analysis, of the manner and extent to
2which programs achieve intended goals.

3"Secretary."  The Secretary of the Budget of the
4Commonwealth.

5"Performance target."  The measurable level of activity,
6output or outcome. When a performance indicator showing what 
7will be measured is combined with a numerical target showing how 
8much will be achieved, a measurable goal has been defined.

9"Strategic plan."  A plan developed under section 4.

10Section 4.  Strategic planning.

11(a)  Submittal.--In compliance with section 11 and not later
12than September 30, 2014, the head of each agency shall submit to
13the secretary and to the General Assembly a strategic plan for
14program activities, delivering the services and achieving the
15objectives required under the laws of this Commonwealth and any
16Federal program in which the Commonwealth participates. The plan
17shall include all of the following:

18(1)  The statutory and constitutional objectives of the
19agency.

20(2)  A comprehensive mission statement covering the major
21functions and operations of the agency.

22(3)  General goals and performance measures, including
23outcome-related goals and measures, for the major functions
24and operations of the agency.

25(4)  A hierarchy of outcome, output and program activity
26goals and measures whereby the goals at the mid-level and
27lower levels of the agency shall include the performance
28indicators that define the outputs that support the agency
29outcomes. This hierarchy shall clearly link each goal to the
30next lower level goals in the hierarchy that support its

1accomplishment.

2(5)  Descriptions of the strategies for how the goals are
3to be achieved, including all of the following:

4(i)  The operational processes, skills and
5technology, and the human, capital, information and other
6resources required to meet those goals.

7(ii)  Any new initiative or program activity.

8(iii)  Any new approaches or methods to operational
9processes that will be adopted or revised.

10(iv)  The means of avoiding unnecessary costs and
11expenditures.

12(v)  The means of addressing any change in objectives
13or services since the previous strategic plan.

14(6)  A description of any program evaluations used in
15assessing the effectiveness of the programs in achieving
16their goals, with a schedule for future program evaluations.

17(b)  Coverage.--The strategic plan shall do the following:

18(1)  Cover a period of not less than four years forward
19from the fiscal year in which it is submitted and shall be
20updated and revised at least every three years.

21(2)  Include a projection of the information enumerated
22in subsection (a)(1), (2), (3), (4) and (5) for the tenth
23year following the fiscal year in which it is submitted and
24for the 20th year in which it is submitted.

25(c)  Consistency.--The performance budget required under
26section 5 shall be consistent with the agency's strategic plan.
27A performance budget may not be submitted for a fiscal year not
28covered by a current strategic plan under this section.

29(d)  Governmental functions.--The functions and activities of
30this section shall be considered to be inherently governmental

1functions. The drafting of strategic plans under this act shall
2be performed only by Commonwealth employees, while assistance in
3guiding the development of the plan may be provided by an
4outside source.

5Section 5.  Performance-based budgeting.

6(a)  Submittal.--In compliance with section 11 and beginning
7with submissions in calendar year 2015 for fiscal year 2015-
82016, in addition to the budget implementation procedures
9provided for in Article VI of the Administrative Code of 1929,
10the secretary shall submit to the General Assembly and the
11Independent Fiscal Office agency performance budgets as required
12under this section. The submission of agency performance budgets
13shall occur not later than January 1 of the calendar year in
14which the fiscal year begins. Nothing in this section shall be
15construed as limiting or reducing the budget implementation
16procedures set forth under Article VI of the Administrative Code
17of 1929.

18(b)  Agency performance budgets.--In carrying out the
19provisions of this section, the secretary shall require each
20agency to prepare an agency performance budget covering each
21program activity set forth in the budget of the agency.

22(c)  Structure and contents.--Each agency performance budget
23required to be submitted under this section shall include all of
24the following:

25(1)  A hierarchy of outcome, output and activity goals
26and measures whereby the goals at the mid-level and lower
27levels of the agency define the activities and their outputs
28that support the intended agency outcomes. The hierarchy
29shall clearly link each goal to the next lower level goals in
30the hierarchy that support its accomplishment.

1(2)  Planned outcomes expressed as either general goals
2or outcome measures and planned outputs expressed as output
3measures, which shall include a performance indicator for
4each general goal and both a performance indicator and a
5performance target for each outcome or output measure.

6(3)  The measures of activity, level of effort, output
7and outcome generated or supported by each program activity.

8(4)  A per-unit form of each activity, level of effort
9and the resulting output for each program activity.

10(5)  The cost of achieving the level of effort quantity
11target for each program activity which is sufficient to
12support the planned levels of output and outcome.

13(6)  The actual outputs and outcomes achieved for each
14program activity in the agency and their actual costs,
15showing past performance for the most recent year for which
16results are available and planned performance for each
17subsequent year.

18(7)  A recommended funding level for each program
19activity within the agency necessary to achieve the planned
20level of program output, which shall be not greater than the
21funding level for the program activity for the immediately
22preceding fiscal year, adjusted by one of the following
23factors, whichever is less:

24(i)  The change in the Consumer Price Index for All
25Urban Consumers from the immediately preceding fiscal
26year, if expressed as a positive number.

27(ii)  The change in the rate of population growth in
28this Commonwealth from the immediately preceding fiscal
29year, if expressed as a positive number.

30(8)  Additional recommendations regarding the funding,

1the performance, the feasibility and the sustainability of a
2program activity that is not meeting the desired outputs or
3outcomes.

4(9)  Summary descriptions of the strategies for how the
5goals and output and outcome measures are to be achieved,
6including all of the following:

7(i)  The major operational processes to be used, the
8key skills and technology to be deployed and the human,
9capital, information and other resources that will be
10required to meet those goals.

11(ii)  Any new initiatives that will be undertaken or
12activities that will be engaged in.

13(iii)  Any new approaches or methods that will be
14adopted or revised.

15(10)  A description of the means to be used to verify and
16validate the reported results for each measured value.

17(d)  Governmental functions.--The functions and activities of
18this section shall be considered to be inherently governmental
19functions. The drafting of performance budgets under this
20section shall be performed only by Commonwealth employees, while
21assistance in guiding the development of the performance budget
22may be provided by an outside source with expertise in
23performance-based budgeting.

24Section 6.  Independent Fiscal Office.

25(a)  Commonwealth performance budget.--

26(1)  The Independent Fiscal Office shall receive agency
27performance budgets and performance reports submitted from
28the head of each agency under sections 5(a) and 7(a) not
29later than the respective deadlines established in sections
305(a) and 7(a).

1(2)  The Independent Fiscal Office shall utilize the
2agency performance budgets and reports and the information
3contained therein, in addition to State appropriation
4information, to craft a Commonwealth performance budget that
5includes each agency required to submit agency performance
6budgets under section 5(a).

7(3)  The Commonwealth performance budget required under
8this subsection shall be submitted to the Governor and to the
9General Assembly by March 15, 2016, and each March 15
10thereafter.

11(4)  To aid in its preparation of a performance budget,
12the Independent Fiscal Office shall:

13(i)  Establish a performance-based budget division
14staffed with persons knowledgeable and proficient in
15performance-based budgeting, budget analysis and budget
16preparation.

17(ii)  Gather testimony and other data from officers
18and employees of each agency as deemed necessary to carry
19out the provisions of this act.

20(b)  Performance-based budgeting.--The Commonwealth
21performance budget shall include all of the following:

22(1)  A hierarchy of outcome, output and program activity
23goals and measures whereby the goals at the mid-level and
24lower levels of each agency define the activities and their
25outputs that support the intended agency outcomes. The
26hierarchy shall clearly link each goal to the next lower
27level goals in the hierarchy that support its accomplishment.

28(2)  Planned outcomes expressed as either general goals
29or performance measures and planned outputs expressed as
30performance measures, which shall include a performance

1indicator for each general goal, and both a performance
2indicator and a performance target for each performance
3measure.

4(3)  The measures of activity, level of effort, output
5and outcome generated or supported by each program activity.

6(4)  A per-unit form of each activity, level of effort
7and the resulting output for each program activity.

8(5)  The cost of achieving the level of effort quantity
9target for each program activity which is sufficient to
10support the planned levels of output and outcome.

11(6)  The actual outputs and outcomes achieved for each
12program activity in each agency and their actual costs,
13showing past performance for the most recent year for which
14results are available and planned performance for each
15subsequent year.

16(7)  The Independent Fiscal Office's recommendation
17regarding the funding level for each program activity within
18each agency necessary to achieve each performance target.

19(8)  Additional Independent Fiscal Office recommendations
20regarding the funding, performance, feasibility and
21sustainability of a program activity that is not meeting the
22desired outputs or outcomes.

23(9)  If an agency did not meet one or more of the goals
24of a program activity for the immediately preceding fiscal
25year, one of the following:

26(i)  A recommended reduction in the funding for the
27program activity calculated by applying a rate equal to
28the percentage of goals of a program activity that were
29missed in the immediately preceding fiscal year to the
30funding level for the immediately preceding fiscal year

1and subtracting the product from the funding level for
2the immediately preceding fiscal year.

3(ii)  A recommended alteration of the program to
4address the deficiency.

5(iii)  A recommendation that the program be
6terminated.

7(c)  Auditor General assistance.--The Independent Fiscal
8Office or the General Assembly, by concurrent resolution, may
9request the Auditor General to conduct a performance audit of
10any agency program or agency performance report. The Independent
11Fiscal Office shall notify the Governor and the General Assembly
12within five days of the request.

13(d)  Report.--Not before January 1, 2017, and not later than
14March 1, 2017, the Independent Fiscal Office shall transmit a
15report to the Governor and to the General Assembly on the status
16of the implementation of this act. The report shall do all of
17the following:

18(1)  Describe any difficulties encountered by the
19agencies or the Independent Fiscal Office in preparing
20performance budgets.

21(2)  Recommend whether any additional legislation
22requiring performance budgets should be proposed and the
23general provisions of any legislation.

24(3)  Set forth any recommended changes in the other
25requirements of this act.

26Section 7.  Annual performance reports.

27(a)  Submittal.--By January 1, 2017, and each January 1
28thereafter, the head of each agency shall prepare and submit to
29the Governor and the Independent Fiscal Office a report on
30program performance for the previous fiscal year.

1(b)  Goals and measures.--Each program performance report
2shall set forth the goals and measures established in the agency
3performance budget under section 5(c), along with the actual
4program performance achieved compared with the goals and
5performance measures expressed in the plan for that fiscal year.

6(c)  Contents.--The report submitted in calendar year 2017
7shall include planned results for the current fiscal year, the
8report submitted in calendar year 2018 shall include planned
9results for the current and actual results for the preceding
10fiscal year and the report submitted in calendar year 2019 and
11all subsequent reports shall include actual results for the two
12preceding fiscal years and planned results for the current
13fiscal year.

14(d)  Requirements.--Each report shall do all of the
15following:

16(1)  Review the success of achieving the performance
17measures of the fiscal year.

18(2)  Evaluate the performance budget for the current
19fiscal year relative to the performance achieved toward the
20performance measures in the fiscal year covered by the
21report.

22(3)  Explain and describe if a performance measure has
23not been met. The explanation and description shall include
24one of the following:

25(i)  why the measure was not met;

26(ii)  (A)  the plans and schedules for achieving the
27established performance measure; or

28(B)  if the performance measure is impractical or
29infeasible, reasons why that is the case and what
30action is recommended.

1(4)  Include the summary findings of the program
2evaluations completed during the fiscal year covered by the
3report.

4(e)  Financial statement.--An agency head may include all
5program performance information required annually under this
6section in an annual financial statement required under section
7613 of the Administrative Code of 1929, if the statement is
8submitted to the General Assembly no later than the date by
9which the Governor submits copies of original agency budget
10requests and all subsequent revised agency budget requests and a
11State budget and program and financial plan under section 613 of
12the Administrative Code of 1929 for the applicable fiscal year.

13(f)  Governmental functions.--The functions and activities of
14this section shall be considered to be inherently governmental
15functions. The drafting of program performance reports under
16this section shall be performed only by Commonwealth employees.

17Section 7.1.  Progress reports.

18Not later than March 1 of any year in which an agency submits
19a performance report under section 7, the agency shall submit a
20progress report for the first six months of the current fiscal
21year, which includes goals and measures established in the
22agency performance budget for the fiscal year under section 5(c)
23and program performance achieved toward performance measures
24during the six-month period.

25Section 8.  Auditor General.

26(a)  Authority.--In addition to the powers and duties
27prescribed to the Auditor General under Article IV of the act of
28April 9, 1929 (P.L.343, No.176), known as The Fiscal Code, the
29Auditor General is vested with the authority to conduct
30performance audits of any agency required to submit a

1performance report under section 7.

2(b)  Request.--The Auditor General shall comply with any
3request from the Independent Fiscal Office or the General
4Assembly under section 6(c).

5(c)  Report.--The Auditor General shall report the results of
6any performance audit to the Governor and the General Assembly
7upon completion of the performance audit.

8Section 9.  Legislative oversight and legislation.

9Nothing in this act shall be construed as limiting the
10ability of the General Assembly to establish, amend, suspend or
11annul a goal or performance indicator. Any such action shall
12have the effect of superseding the goal or performance indicator
13in the plan submitted under section 5(b).

14Section 10.  Training.

15The Office of Administration shall, in consultation with the
16secretary and the Auditor General, develop a strategic planning
17and performance measurement training component for its
18management training program and provide managers with an
19orientation on the development and use of strategic planning and
20program performance measurement.

21Section 11.  Pilot projects.

22There shall be a pilot project in strategic planning under
23section 4, and performance-based budgeting under section 5,
24conducted by at least five agencies for fiscal year 2014-2015.

25Section 12.  Open records.

26All records produced and maintained under this act shall be
27subject to the act of February 14, 2008 (P.L.6, No.3), known as
28the Right-to-Know Law.

29Section 13.  Annual budget to contain agency performance
30budgets.

1Beginning with budget submission in calendar year 2015 for
2fiscal year 2015-2016, the agency performance budgets prepared
3under section 5 shall be incorporated into the annual budget
4submitted by the Governor under section 613 of the
5Administrative Code of 1929.

6Section 20.  Effective date.

7This act shall take effect as follows:

8(1)  Sections 6(a)(2), (3) and (4)(ii) and (c) and 8
9shall take effect January 1, 2016.

10(2)  The remainder of this act shall take effect
11immediately.