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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: January 5, 2017 01:29 PM
From: Representative Seth M. Grove and Rep. Francis X. Ryan
To: All House members
Subject: SMART Act: State Measurement for Accountable, Responsive, and Transparent Budgeting for the Commonwealth.
In September of 2016, the Independent Fiscal Office release a comprehensive report entitled, “Using Performance Measures in the State Budget.” The report highlights state agencies already collect 686 performance measures. Unfortunately, these measures are used as management tools, not for budgeting. The report stated, “For Pennsylvania, performance measures are widely viewed as a management tool, as opposed to a budgeting tool. Moreover, performance measures are generally used to evaluate requests to increase program funds, rather than facilitate and inform overall resource allocation (which would include program reductions.)”

The last time any major legislative budget changes occurred was in 1978, with Section 610(a) of the Administrative Code and when Star Wars was first released in theaters. In the 39 years since that time we have seen six different presidents, nine different governors, and seven Star Wars movies.

The commonwealth’s current incremental budget process coupled with the Great Recession has led to major budgetary issues in the commonwealth. In order to address this, we will be introducing legislation to mandate the use of performance data in budgeting modeled after Colorado’s SMART Act authored by former House Speaker Mark Ferrandino (D-Denver).
SMART Act overview:
  • Repeals the current budget procedures in the Administrative Code and codifies them under Title 72.
  • Requires each state agency to develop and submit performance plans utilizing the data they already collect.
  • Require agencies to develop a robust system of continuous improvement
  • Requires agencies to submit their upcoming Regulatory Agendas to IRRC and General Assembly with a fiscal analysis
  • Governor’s Budget Presentation
    • Requires analysis of federal funds
    • 15% rebase of the prior year operating budget and rebuilt based on:
      • Mandated expenditures
      • Performance criteria
      • Executive agency requests
      • Governor’s new priorities
    • Limits any increase in Total Operating Budgets by the Act 1 Index
    • Cost-benefit analysis of any new or expanded program
  • Requires standing committees to perform at least 1 oversight hearing on agency performance plans
  • Creates a Revenue Estimate Committee
  • Requires the development of a comprehensive Performance Management System
  • Requires development of an online, real-time checkbook of commonwealth expenditures
  • Requires the Auditor General to perform performance audits
  • Requires a report of unexpended appropriations by May 15
  • Carryover Funds
    • Requires a report of carryover funds by May 15
    • Does not allow carryover funds to exceed Oct 31 of the next fiscal year
    • Requires a close out report of carryover funds by Nov. 30
  • Requires a report of lapsed/encumbered funds by May 15. Further, it requires a vote of both Appropriations Committees to allow the Budget Secretary to waive lapsed funds.
  • Federal Funds
    • Requires a report by May 15
    • Unused federal funds and their corresponding state matching funds
    • Federal mandates attached to the acceptance of federal funds and state costs to meet those requirements
    • Recommendations to meet federal mandates at a lower cost to the commonwealth
  • Requires all savings created by the administration to be reported to the General Assembly and placed in a restricted account
  • Requires each contract and contract amendment, including a fiscal note, be submitted to the Appropriations Committees 60 days prior to their executions and placed on PennWATCH
  • Any costs to implement these provisions shall be paid for by encumbered funds held by the administration.
These financial transparency reforms will allow a more in-depth examination into the expenditures of the commonwealth. I hope you will join us in reforming our budget process.

View Attachment

Introduced as HB201