Senate passes Transparency and Financial Management Reforms

Overview

The Senate passed a strong transparency and financial management reform bill yesterday — it is the final result of a bill originally developed in the Senate before I arrived in the Senate.  I was very pleased to vote for it.  It speaks to basic government management issues which are often neglected.  It puts in place modern procedures for budgeting and financial management and improves transparency.

I particularly like its provisions about better control of debt issuance.  The Patrick administration has done a good job framing the Commonwealth’s financial situation and defining clear policies.   This has helped improve the Commonwealth’s credit rating to a high level.  I think this bill takes the clarification of financial policies a step further.  Having financial policies — as opposed to making ad hoc decisions about spending and debt — forces government to think more clearly about it’s long term financial prospects.

Resources

Below, please find the Senate President’s official press release on the government reform bill which includes more detail.

Click here for a section-by-section summary of the bill.

Click here for the full text of the bill.

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Senate Passes State Government and Finance Reform Bill

Promotes efficiency and performance management in state agencies

BOSTON – The Senate on Thursday unanimously passed a conference committee report on bipartisan legislation that makes fundamental changes in the operations of state government, updating antiquated finance laws and implementing performance measurement requirements for all government agencies and programs to improve efficiency, transparency and accountability.

“This legislation is a major sea-change for the Commonwealth,” Senate President Therese Murray (D-Plymouth) said. “It fundamentally reforms how state government works. It requires all state agencies and programs to start measuring performance and outcomes. Through data-driven evaluations, we can provide real transparency and accountability, and build budgets on what really works.”

“This is a strong bill that will increase the transparency and efficiency in our State Government,” said Senator Stephen M. Brewer (D-Barre), Chair of the Senate Committee on Ways and Means. “As we move forward with technology, we are able to make more information more readily available. This bill will improve the performance of our budgeted agencies and allow us to make decisions with the most accurate information possible. Furthermore, I believe that cities and towns are going to welcome the opportunity to receive local aid payments on a monthly basis rather than a quarterly basis.”

“I am proud of the work that the Senate has done on the State Administration & Finance Reform Conference Committee and thank Senate President Therese Murray for her continued leadership on major reform,” said Senator Karen E. Spilka (D-Ashland), the conference bill’s lead Senate conferee. “This legislation is consistent with our past efforts to increase government accountability and transparency and to ensure it is a responsible steward of taxpayer dollars.”

“I am happy with the bill that came out of our conference committee,” said Senator Kenneth J. Donnelly (D-Arlington), conferee and Senate chair of the Joint Committee of State Administration and Regulatory Oversight. “It is a good government bill that helps bring us into the 21st century by updating laws on state finance and management practices. It continues the Senate’s focus on reforming, streamlining and improving the performance and cost effectiveness of state government.”

“I am pleased with the Conference Committee’s recommendation,” said Senator Michael R. Knapik (R-Westfield), Ranking Minority Member on the conference committee. “I commend my fellow conferees on a balanced approach to a complex issue. This bill highlights the Legislature’s commitment to improving transparency and accountability throughout state government. These initiatives will reduce redundancy among state agencies and will require them to begin measuring performance and outcomes, cutting down on waste, improving efficiency, and saving Massachusetts taxpayer dollars.”

Originally filed by the Senate President in April 2011, the final legislation requires the use of data to regularly evaluate the effectiveness of agencies and programs throughout state government, including the executive branch.

For the first time, each agency will be required to have a performance management system in place and develop a strategic plan for measuring performance that can be evaluated publicly and by the Legislature and Governor.

The bill modernizes state government by pushing agencies toward more efficient electronic accounting and reporting systems with the elimination of outdated paper-based methods, and it also makes the following updates:

• Requires quarterly cash flow reports to compare actual results with prior estimates on spending and revenue and analyze the reasons for any discrepancies to improve future budget forecasts;
• Sets the state’s debt limit at $17.07 billion starting the first day of fiscal year 2012 and changes the arbitrary index rate to make it more responsive to true economic conditions, helping to control the state’s debt limit and further improve the state’s bond rating;
• Requires an independent debt affordability study to be performed before the Governor sets a bond cap and issues bonds for a particular fiscal year, and requires that report to be publicly available online;
• Requires improved reporting of spending on capital projects; and
• Requires monthly distribution of unrestricted local aid instead of quarterly distribution beginning in fiscal year 2014 to help cities and towns better identify their available cash flow and reduce the state’s reliance on short-term borrowing to support cash flow.

Additionally, the bill establishes a commission to make recommendations on the feasibility of moving the Commonwealth from traditional “maintenance”-based budgeting to a modern “zero”-based budgeting process for the fiscal year beginning July 1, 2016. This budgeting method is finding great success in some states, including Utah and Virginia.

The government and finance reform legislation, when filed by Murray on April 28, 2011, received high praise from business groups, including the Associated Industries of Massachusetts, which called the plan “a significant and constructive contribution toward reshaping state government to meet the challenges of our times,” and the Massachusetts Competitive Partnership, which applauded the Senate President for bringing “this level of accountability” and said the legislation “will help make our Commonwealth much more effective and efficient in the future.”

The conference report must now be taken up by the House of Representatives. Final action to send the bill to the Governor is expected next week.