B. Explaining the Governor's Influence
V. SURVEY OF STATE BUDGET OFFICES
Budgeting 167
also limit the amount of revenue allotments to agencies; however, most choose not to do so. In fact, the states vary widely in allotment request using quarterly, annual, or "as requested" time frames. Only Utah has allotment requests on a monthly basis (NASBO, 1997). The ability to transfer funds between programs or departments is another widely used form of control over agencies. In per- forming this function, budget offices must achieve a balance between adhering to legislative intent as expressed in the appropriations act, and permitting agencies to accommodate changed circumstances or respond to unforeseen events. Only 11 states permit the agency to transfer appropriations between programs or units in a department, and no agency is allowed to transfer funds between departments without approval of some other entity such as the legislature, budget office, or controlling board. In nearly half the states (21), these kinds of transfers are not even permitted (NASBO, 1997).
168 Lauth and Steinbauer Most of these spending-control activities are performed by budget offices in three-fourths or more of the states. Stipulation of spending limits is performed by budget offices in two-thirds of the states, end-of-year reconciliation is per- formed in fewer than one-half of the states, and quarterly allotments are per- formed in fewer than one-third of the states. A large majority of respondents from states performing each activity reported that the activity is effective or very effective in maintaining control of spending.
Management enhancement activities include the following:
Perform program evaluations for efficiency Perform program evaluations for effectiveness
Perform management studies as directed by the governor Review implementation of new programs
Coordinate development of statewide strategic plan
Establish statewide standards and procedures for agency plans Facilitate development of strategic plans of state agencies Review or approve final strategic plans for state agencies Facilitate development of agency performance indicators Oversee agency achievement of performance indicators
Oversee agency adherence to legislative directives or management recom- mendations
Oversee agency compliance with legislative audit recommendations or findings
Most of the management enhancement activities are performed by budget offices in approximately one-half of the states. Three activities are performed by budget offices in approximately two-thirds of the states: management studies as directed by the governor, review of the implementation of new programs, and oversight of agency adherence to legislative directives. The point to be emphasized is that activities generally associated with results-based budgeting, such as strategic planning, performance measurement, and program evaluations, are being carried out by budget offices in approximately one-half of the states. Respondent percep- tions of the degree of effectiveness of management enhancement activities differs somewhat from their perceptions of the effectiveness of spending control activi- ties. Respondents from states performing each activity reported that the activity is effective or somewhat effective in improving the management of state agencies.
Spending and management control activities also include the following:
Maintenance of personnel position counts Review and approve new positions
Review and approve position classifications Review and approve agency contracts Review and approve equipment purchases Pre-audit other categories of agency expenditures
Budgeting 169
The budget offices in three-fourths of the states review and approve the creation of new personnel positions, and budget offices in approximately one-half of the states maintain personnel position counts. However, budget offices in fewer than one-third of the states perform the other functions. Review and approval of posi- tion classifications, preaudits, and approval of contracts and purchases tend to be performed by other state government agencies, not the budget office.
Several respondents listed one or more additional activities they use to control spending and enhance management in their states. However, with one exception, most activities appeared to be state-specific. The activity listed by four respondents is a form of impoundment—the withholding of funds appropriated by the legislature. One budget office described the activity: ''With the governor's approval, authority to restrict appropriated funds during the fiscal year." A sec- ond budget office called i t ' 'withholding." A third wrote, ' 'We can reduce appro- priations if we believe revenues will be short." The fourth budget office described it in the following way: "As needed institute contingency plans whereby a per- centage of operating funds are held in reserve and released upon compelling justification." Each state characterized such activity as "very effective." Im- poundment sometimes signals policy or partisan disagreement between the gover- nor and the state legislature. At other times, as when faced with revenue shortfall, it is prudent fiscal management.
Based on the literature summarized in the previous section, one might con- clude that state governments are actively engaged in results-based or new perfor- mance budgeting. However, our survey results suggest caution in embracing this conclusion. Many state budget offices report engaging in activities usually associ- ated with results-based or the new performance budgeting. Yet, those activities are judged by respondents to be only moderately effective.
Approximately one-half of the state budget offices (n = 23) report using program evaluations to enhance the efficiency and effectiveness of their govern- ments. However, only one respondent judged program evaluations to be "very effective'' and none reported that program evaluations were ' 'not effective." Ten respondents judged program evaluations to be "effective," and 12 judged them to be only "somewhat effective."
Approximately one-half of the budget offices are involved in the strategic planning process, either generally, by coordinating development of a statewide plan or establishing statewide standards and procedures for agency plans, or spe- cifically, by facilitating the development of agency plans or by reviewing and approving final drafts of agency plans. The majority of state budget offices found these activities either "effective" or "very effective" with percentages ranging from 62% for review and approval of agency strategic plans to 87% for establish- ing statewide standards. Interestingly, budget officers found the more general coordinating function rather than the more specific review and approval function to be where they achieved the greatest degree of effectiveness. This may be be- cause state budget offices possess the expertise to develop a statewide strategic
770 Lauth and Steinbauer plan but lack the programmatic expertise to evaluate individual agency strategic plans.
Budget offices are involved in the development of agency performance indicators (83%), but only 52% of the offices oversee agency achievement of performance indicators. Of those budget offices facilitating the development of agency performance indicators, 53% consider this activity "very effective" or
"effective" for managing state government. Similarly, of those budget offices overseeing agency achievement of performance indicators, 58% consider that activity ' 'very effective'' or ' 'effective'' for managing state government.
There are several activities that budget offices consistently undertake and find useful. For example, 45 of 46 budget offices responding to the survey recom- mend funding levels to the governor for individual agencies, and 42 of those offices (93%) find this activity either "effective" or "very effective" main- taining control over state spending. Thirty-nine budget offices review and analyze the effect of agency fee increases on the public, and 73% of them find this activity
"effective" or "very effective." Budget offices also are concerned with budget amendments and supplemental appropriations. Seventy-one percent of budget of- fices find the examination of budget amendments "effective" or "very effec- tive," and 87% of budget offices find analysis of supplemental appropriation requests "effective" or "very effective" for controlling state spending.
These response patterns suggest that not only do state budget offices con- tinue to perform traditional budgeting activities, they also perceive those activi- ties to be effective in their efforts to control state spending and manage state government. Despite the efforts in the past quarter-century to move state govern- ment budgeting from traditional approaches to a greater utilization of program and performance information, from an emphasis on items purchased to an empha- sis on program results, the traditional budget has had strong staying power (Wil- davsky, 1978).