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

1services. It is of paramount public importance that this system
2encourages full and candid participation throughout State
3government. This system will generate information necessary for
4the public to be informed fully and for the General Assembly to
5make informed and meaningful decisions about the allocation of
6resources in meeting vital needs.

7(b) Purpose.--The purposes of this act are to do all of the
8following:

9(1) Begin to provide a new approach to the planning,
10budgeting and accountability processes within State
11government rather than an addition to existing procedures.

12(2) Improve the confidence of Pennsylvania citizens and
13taxpayers in the capability of the government, by
14systematically holding Commonwealth agencies accountable for
15achieving program results.

16(3) Improve Commonwealth program effectiveness and
17public accountability by promoting a new focus on results,
18service quality and customer satisfaction.

19(4) Help agency managers improve service delivery, by
20requiring that they plan for meeting program objectives and
21by providing them with information about program results and
22service quality.

23(5) Improve legislative decision making by providing
24more objective information on achieving statutory objectives,
25and on the relative effectiveness and efficiency of
26Commonwealth programs and spending.

27(6) Improve internal management of the Commonwealth
28government.

29Section 3. Definitions.

30The following words and phrases when used in this act shall

1have the meanings given to them in this section unless the
2context clearly indicates otherwise:

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

5"Agency." A Commonwealth agency.

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

7"Goal." A statement of result that is intended to be
8achieved and which may be defined as either:

9(1) A general goal, which is a general statement of
10result that does not include a measurable target level of
11performance or other objective indicator of success.

12(2) A performance measure, which is a specific statement
13of result that includes a measurable target level of
14performance or other objective indicator of success.

15"Independent Fiscal Office." The office established and
16provided for in 71 Pa.C.S. Ch. 41 (relating to Independent
17Fiscal Office).

18"Outcome measure." A qualitative indicator of the results of
19a program activity compared to its intended purpose and of the
20public benefit derived from the program activity, often used as
21a measure of effectiveness.

22"Output measure." A quantitative indicator of goods or 
23services that an agency produces.

24"Performance indicator." A particular value or
25characteristic used to effectively measure program activity and
26performance in a qualitative or quantitative manner. A 
27performance indicator shall be structured as an outcome measure 
28or output measure.

29"Program activity." A specific activity or project as listed
30in the annual budget of the Commonwealth.

1"Program evaluation." An assessment, through objective
2measurement and systemic analysis, of the manner and extent to
3which programs achieve intended goals.

4"Secretary." The Secretary of the Budget of the
5Commonwealth.

6"Performance target." The measurable level of activity,
7output or outcome. When a performance indicator showing what 
8will be measured is combined with a numerical target showing how 
9much will be achieved, a measurable goal has been defined.

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

11Section 4. Strategic planning.

12(a) Submittal.--In compliance with section 11 and not later
13than September 30, 2014, the head of each agency shall submit to
14the secretary and to the General Assembly a strategic plan for
15program activities, delivering the services and achieving the
16objectives required under the laws of this Commonwealth and any
17Federal program in which the Commonwealth participates. The plan
18shall include all of the following:

19(1) The statutory and constitutional objectives of the
20agency.

21(2) A comprehensive mission statement covering the major
22functions and operations of the agency.

23(3) General goals and performance measures, including
24outcome-related goals and measures, for the major functions
25and operations of the agency.

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

1next lower level goals in the hierarchy that support its
2accomplishment.

3(5) Descriptions of the strategies for how the goals are
4to be achieved, including all of the following:

5(i) The operational processes, skills and
6technology, and the human, capital, information and other
7resources required to meet those goals.

8(ii) Any new initiative or program activity.

9(iii) Any new approaches or methods to operational
10processes that will be adopted or revised.

11(iv) The means of avoiding unnecessary costs and
12expenditures.

13(v) The means of addressing any change in objectives
14or services since the previous strategic plan.

15(6) A description of any program evaluations used in
16assessing the effectiveness of the programs in achieving
17their goals, with a schedule for future program evaluations.

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

19(1) Cover a period of not less than four years forward
20from the fiscal year in which it is submitted and shall be
21updated and revised at least every three years.

22(2) Include a projection of the information enumerated
23in subsection (a)(1), (2), (3), (4) and (5) for the tenth
24year following the fiscal year in which it is submitted and
25for the 20th year in which it is submitted.

26(c) Consistency.--The performance budget required under
27section 5 shall be consistent with the agency's strategic plan.
28A performance budget may not be submitted for a fiscal year not
29covered by a current strategic plan under this section.

30(d) Governmental functions.--The functions and activities of

1this section shall be considered to be inherently governmental
2functions. The drafting of strategic plans under this act shall
3be performed only by Commonwealth employees, while assistance in
4guiding the development of the plan may be provided by an
5outside source.

6Section 5. Performance-based budgeting.

7(a) Submittal.--In compliance with section 11 and beginning
8with submissions in calendar year 2015 for fiscal year 2015-
92016, in addition to the budget implementation procedures
10provided for in Article VI of the Administrative Code of 1929,
11the secretary shall submit to the General Assembly and the
12Independent Fiscal Office agency performance budgets as required
13under this section. The submission of agency performance budgets
14shall occur not later than January 1 of the calendar year in
15which the fiscal year begins. Nothing in this section shall be
16construed as limiting or reducing the budget implementation
17procedures set forth under Article VI of the Administrative Code
18of 1929.

19(b) Agency performance budgets.--In carrying out the
20provisions of this section, the secretary shall require each
21agency to prepare an agency performance budget covering each
22program activity set forth in the budget of the agency.

23(c) Structure and contents.--Each agency performance budget
24required to be submitted under this section shall include all of
25the following:

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

1the hierarchy that support its accomplishment.

2(2) Planned outcomes expressed as either general goals
3or outcome measures and planned outputs expressed as output
4measures, which shall include a performance indicator for
5each general goal and both a performance indicator and a
6performance target for each outcome or output measure.

7(3) The measures of activity, level of effort, output
8and outcome generated or supported by each program activity.

9(4) A per-unit form of each activity, level of effort
10and the resulting output for each program activity.

11(5) The cost of achieving the level of effort quantity
12target for each program activity which is sufficient to
13support the planned levels of output and outcome.

14(6) The actual outputs and outcomes achieved for each
15program activity in the agency and their actual costs,
16showing past performance for the most recent year for which
17results are available and planned performance for each
18subsequent year.

19(7) A recommended funding level for each program
20activity within the agency necessary to achieve the planned
21level of program output, which shall be not greater than the
22funding level for the program activity for the immediately
23preceding fiscal year, adjusted by one of the following
24factors, whichever is less:

25(i) The change in the Consumer Price Index for All
26Urban Consumers from the immediately preceding fiscal
27year, if expressed as a positive number.

28(ii) The <-change in the rate of population growth in
29this Commonwealth from the immediately preceding fiscal
30year, if expressed as a positive number.

1(8) Additional recommendations regarding the funding,
2the performance, the feasibility and the sustainability of a
3program activity that is not meeting the desired outputs or
4outcomes.

5(9) Summary descriptions of the strategies for how the
6goals and output and outcome measures are to be achieved,
7including all of the following:

8(i) The major operational processes to be used, the
9key skills and technology to be deployed and the human,
10capital, information and other resources that will be
11required to meet those goals.

12(ii) Any new initiatives that will be undertaken or
13activities that will be engaged in.

14(iii) Any new approaches or methods that will be
15adopted or revised.

16(10) A description of the means to be used to verify and
17validate the reported results for each measured value.

18(d) Governmental functions.--The functions and activities of
19this section shall be considered to be inherently governmental
20functions. The drafting of performance budgets under this
21section shall be performed only by Commonwealth employees, while
22assistance in guiding the development of the performance budget
23may be provided by an outside source with expertise in
24performance-based budgeting.

25Section 6. Independent Fiscal Office.

26(a) Commonwealth performance budget.--

27(1) The Independent Fiscal Office shall receive agency
28performance budgets and performance reports submitted from
29the head of each agency under sections 5(a) and 7(a) not
30later than the respective deadlines established in sections

15(a) and 7(a).

2(2) The Independent Fiscal Office shall utilize the
3agency performance budgets and reports and the information
4contained therein, in addition to State appropriation
5information, to craft a Commonwealth performance budget that
6includes each agency required to submit agency performance
7budgets under section 5(a).

8(3) The Commonwealth performance budget required under
9this subsection shall be submitted to the Governor and to the
10General Assembly by March 15, 2016, and each March 15
11thereafter.

12(4) To aid in its preparation of a performance budget,
13the Independent Fiscal Office shall:

14(i) Establish a performance-based budget division
15staffed with persons knowledgeable and proficient in
16performance-based budgeting, budget analysis and budget
17preparation.

18(ii) Gather testimony and other data from officers
19and employees of each agency as deemed necessary to carry
20out the provisions of this act.

21(b) Performance-based budgeting.--The Commonwealth
22performance budget shall include all of the following:

23(1) A hierarchy of outcome, output and program activity
24goals and measures whereby the goals at the mid-level and
25lower levels of each agency define the activities and their
26outputs that support the intended agency outcomes. The
27hierarchy shall clearly link each goal to the next lower
28level goals in the hierarchy that support its accomplishment.

29(2) Planned outcomes expressed as either general goals
30or performance measures and planned outputs expressed as

1performance measures, which shall include a performance
2indicator for each general goal, and both a performance
3indicator and a performance target for each performance
4measure.

5(3) The measures of activity, level of effort, output
6and outcome generated or supported by each program activity.

7(4) A per-unit form of each activity, level of effort
8and the resulting output for each program activity.

9(5) The cost of achieving the level of effort quantity
10target for each program activity which is sufficient to
11support the planned levels of output and outcome.

12(6) The actual outputs and outcomes achieved for each
13program activity in each agency and their actual costs,
14showing past performance for the most recent year for which
15results are available and planned performance for each
16subsequent year.

17(7) The Independent Fiscal Office's recommendation
18regarding the funding level for each program activity within
19each agency necessary to achieve each performance target.

20(8) Additional Independent Fiscal Office recommendations
21regarding the funding, performance, feasibility and
22sustainability of a program activity that is not meeting the
23desired outputs or outcomes.

24(9) If an agency did not meet one or more of the goals
25of a program activity for the immediately preceding fiscal
26year, one of the following:

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

1funding level for the immediately preceding fiscal year
2and subtracting the product from the funding level for
3the immediately preceding fiscal year.

4(ii) A recommended alteration of the program to
5address the deficiency.

6(iii) A recommendation that the program be
7terminated.

8(c) Auditor General assistance.--The Independent Fiscal
9Office or the General Assembly, by concurrent resolution, may
10request the Auditor General to conduct a performance audit of
11any agency program or agency performance report. The Independent
12Fiscal Office shall notify the Governor and the General Assembly
13within five days of the request.

14(d) Report.--Not before January 1, 2017, and not later than
15March 1, 2017, the Independent Fiscal Office shall transmit a
16report to the Governor and to the General Assembly on the status
17of the implementation of this act. The report shall do all of
18the following:

19(1) Describe any difficulties encountered by the
20agencies or the Independent Fiscal Office in preparing
21performance budgets.

22(2) Recommend whether any additional legislation
23requiring performance budgets should be proposed and the
24general provisions of any legislation.

25(3) Set forth any recommended changes in the other
26requirements of this act.

27Section 7. Annual performance reports.

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

1program performance for the previous fiscal year.

2(b) Goals and measures.--Each program performance report
3shall set forth the goals and measures established in the agency
4performance budget under section 5(c), along with the actual
5program performance achieved compared with the goals and
6performance measures expressed in the plan for that fiscal year.

7(c) Contents.--The report submitted in calendar year 2017
8shall include planned results for the current fiscal year, the
9report submitted in calendar year 2018 shall include planned
10results for the current and actual results for the preceding
11fiscal year and the report submitted in calendar year 2019 and
12all subsequent reports shall include actual results for the two
13preceding fiscal years and planned results for the current
14fiscal year.

15(d) Requirements.--Each report shall do all of the
16following:

17(1) Review the success of achieving the performance
18measures of the fiscal year.

19(2) Evaluate the performance budget for the current
20fiscal year relative to the performance achieved toward the
21performance measures in the fiscal year covered by the
22report.

23(3) Explain and describe if a performance measure has
24not been met. The explanation and description shall include
25one of the following:

26(i) why the measure was not met;

27(ii) (A) the plans and schedules for achieving the
28established performance measure; or

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

1action is recommended.

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

5(e) Financial statement.--An agency head may include all
6program performance information required annually under this
7section in an annual financial statement required under section
8613 of the Administrative Code of 1929, if the statement is
9submitted to the General Assembly no later than the date by
10which the Governor submits copies of original agency budget
11requests and all subsequent revised agency budget requests and a
12State budget and program and financial plan under section 613 of
13the Administrative Code of 1929 for the applicable fiscal year.

14(f) Governmental functions.--The functions and activities of
15this section shall be considered to be inherently governmental
16functions. The drafting of program performance reports under
17this section shall be performed only by Commonwealth employees.

18Section 7.1. Progress reports.

19Not later than March 1 of any year in which an agency submits
20a performance report under section 7, the agency shall submit a
21progress report for the first six months of the current fiscal
22year, which includes goals and measures established in the
23agency performance budget for the fiscal year under section 5(c)
24and program performance achieved toward performance measures
25during the six-month period.

26Section 8. Auditor General.

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

1performance audits of any agency required to submit a
2performance report under section 7.

3(b) Request.--The Auditor General shall comply with any
4request from the Independent Fiscal Office or the General
5Assembly under section 6(c).

6(c) Report.--The Auditor General shall report the results of
7any performance audit to the Governor and the General Assembly
8upon completion of the performance audit.

9Section 9. Legislative oversight and legislation.

10Nothing in this act shall be construed as limiting the
11ability of the General Assembly to establish, amend, suspend or
12annul a goal or performance indicator. Any such action shall
13have the effect of superseding the goal or performance indicator
14in the plan submitted under section 5(b).

15Section 10. Training.

16The Office of Administration shall, in consultation with the
17secretary and the Auditor General, develop a strategic planning
18and performance measurement training component for its
19management training program and provide managers with an
20orientation on the development and use of strategic planning and
21program performance measurement.

22Section 11. Pilot projects.

23There shall be a pilot project in strategic planning under
24section 4, and performance-based budgeting under section 5,
25conducted by at least five agencies for fiscal year 2014-2015.

26Section 12. Open records.

27All records produced and maintained under this act shall be
28subject to the act of February 14, 2008 (P.L.6, No.3), known as
29the Right-to-Know Law.

30Section 13. Annual budget to contain agency performance

1budgets.

2Beginning with budget submission in calendar year 2015 for
3fiscal year 2015-2016, the agency performance budgets prepared
4under section 5 shall be incorporated into the annual budget
5submitted by the Governor under section 613 of the
6Administrative Code of 1929.

7Section 20. Effective date.

8This act shall take effect as follows:

9(1) Sections 6(a)(2), (3) and (4)(ii) and (c) and 8
10shall take effect January 1, 2016.

11(2) The remainder of this act shall take effect
12immediately.