TABLE 4. PERMANENT APPROPRIATIONS, FEDERAL FUNDS AND TRUST FUNDS, FISCAL 1973 Source: Appropriations, budget estimates, etc., 92d Cong., 2d sess. S. Doc. 92-95. Prepared by Appropriations Committees, Senate and House. [Excerpt from The Book of the States, 1972-1973] ADMINISTRATIVE ORGANIZATION (VOLUME XIX) The Council of State Governments, Lexington, Ky. FINANCIAL ADMINISTRATION The department of administration concept continues to remain a basic feature of state financial administration. Such departments combine many central service functions along with finance, and typically include budgeting, purchasing, accounting, building maintenance, central office services, and often personnel. Such departments were established in South Dakota in 1970 and in Missouri and Wyoming in 1971. South Dakota reorganized its department of finance into a Department of Administration, a major aspect being to bring the budget function within the same agency as purchasing, personnel, central services, buildings and grounds, and data processing. However, in 1971 the budget and fiscal management division was taken from the department and again placed in the office of the Governor. The Wyoming Department of Administration and Fiscal Affairs combines under one head the duties of several previously separate agencies. The major divisions of the department cover budgeting, purchasing, personnel, property management, statistics and research. central services, and centralized accounting and data processing. The Missouri Department of Administration contains several functions previously administratively housed with the Comptroller and Budget Director but which were essentially free from his direction. The Commissioner of Administration, on the other hand, is granted the powers and duties previously imposed on separate officials who head units of budget and comptroller, planning and construction, purchasing, and administrative services; the commissioner may reorganize the units within his department, except for the personnel division. The personnel division, which administers the merit system, must retain its functions and identity, but can be assigned by the commissioner to perform personnel functions for non-merit system agencies. The new department becomes effective in January 1973, at the beginning of the term of the next Governor. The new Vermont Agency of Administration includes a Department of Taxes as well as the old department of administration functions. The three divisions and 10 bureaus of the Wisconsin Department of Administration were reorganized into five bureaus to improve the Secretary's span of control. Colorado experienced a reversal of the shift which occurred in South Dakota, described above. The Colorado budget function in 1970 was removed from the Department of Administration and placed in the office of the Governor. However, in 1971 it was shifted back to the department as the Governor sought to place in other agencies all those functions which had come to rest in his office, except for his personal staff. In Michigan the building services function, which had been shifted to the Governor's office when the budget function was moved there in 1965, was put back into the Department of Administration in 1971. The Montana executive reorganization brought about several changes in the Department of Administration; the department picked up the functions of some financially related boards and commissions, and had building code administration shifted away from it to the Department of Law Enforcement and Public Safety. In a major shift in responsibility, the investment function was placed with the department; a Board of Investments was created within the department to perform investment activities previously handled by several separate departments and boards. Budget Organization There were other changes in organization of budget offices. In Michigan a Bureau of Programs and Budgets was established in the office of the Governor, combining the previously separate bureau of budgeting and bureau of programs and policies. The new bureau includes budgeting, overall planning, coordination of functional planning, state policy on local areas, and federal aid coordination. The Hawaii budget division was renamed the Budget, Planning and Management Division, with these three functions put in separate units. New Hampshire created the position of Budget Director in the office of the Governor. The budget function in the Department of Administration and Control is not shifted; the comptroller still collects and prepares budget information, which the Budget Director uses to advise the Governor and prepare his budget recommendations. The new position gives the Governor a personal budget adviser while retaining separately the expertise of the permanent staff. In New Mexico the budget functions was separated from financial control; these two functions are each given division status in the Department of Finance and Administration where previously they were combined. In an opposite move, in Nebraska the previously separate functions of budgeting and accounting in the Department of Administrative Services were combined under one head. Budget Procedure As States move toward annual legislative sessions, they also tend to adopt annual budgeting. Five States formally shifted to annual budgeting during the bienninum: Connecticut, Idaho, Illinois, Missouri, and Nebraska. However, Illinois and Missouri had for some time been operating on an annual budget procedure. This makes a total of 29 States with annual budgets. Hawaii, which had reverted from an annual to a biennial budget, prepared its first biennial budget in 1971, and officials there so far appear pleased with the change. Wisconsin, now having annual sessions, has retained biennial budgets but is instituting a budget review procedure for the non-budget year. A 1970 constitutional amendment in California reduces from 30 to 10 the number of days in which the Governor must submit his budget after the Legislature convenes. The Legislature is also required to adopt the budget by June 15 to give the Governor more time for review of the bills before the new fiscal year beginning July 1. The interest of States in the program-planning-budgeting system (PPBS) or some version of it continues to grow. The California, Florida, Hawaii, Pennsylvania, and Wisconsin budgets were prepared under a statewide approach to their own systems, and Alaska, Michigan, Missouri, and Ohio are taking steps toward presenting future budgets through this or related procedures. The budget office reorganizations in Hawaii and Michigan described above were designed in part to provide in the budget office a strong status for planning and program evaluation, and to provide separately identified staff to accomplish this work. The Hawaii step, mandated by law in 1970, required establishment and review of objectives, longrange planning, budgeting on the basis of these plans, the consideration of alternatives and evaluation of results. Like many other terms, PPBS can mean many things. The pure version would include the features contained in the Hawaii law, and also explicitly would include a capability of developing quantitive measures of achievement and analytical techniques for studying needs and measuring performance. No State and few federal agencies have been able to develop such a system on a comprehensive basis, partly because there are many governmental programs, such as education, in which the factual data necessary for the evaluation do not exist and perhaps cannot be developed. Some States have recognized their inability to go fully to PPBS. but are nevertheless utilizing some aspects of the system to develop their own "thing." For example, Massachusetts has installed a "Program Management System" (PMS), which does not attempt at the beginning to impose a statewide program structure and analytical system. Rather, it works at the operating level within state departments, seeking to have the managers develop objectives, information on resources and cost, and measures and methods of evaluation. The progress made in this approach is expected to be reflected in agency budgets at a later date. New York, which was one of the first States to attempt the PPBS approach has abandoned it in favor of "Program Analysis and Review." The change is essentially one which drops the statewide ef fort in order to focus on particular issues. Agencies in consultation with the Governor determine problem areas which require analysis for the next budget period, and analysis is concentrated on those issues which appear to be significant in the next session. Another version is being tried in Georgia, that of "zero-based budgeting. Like PPBS, it is an across-the-board approach, but can be done without as much rigorous analysis. Each agency organizes its activities and desired activities into "decision packages arranged in order of priority, and each package is aimed toward the accomplishment of a definite level of program achievement. Whatever procedure is followed, a great amount of work is required by both agencies and central staff to utilize it. These new comprehensive systems encourage a planned, long-range approach to budget decisions, and seek to establish the interrelationship of activities in various agencies affecting a program area (manpower training efforts, for example). To this degree, any version of a new budget system helps to strengthen the use of budgeting for policy decisions. One problem is that Legislatures sometimes make minimal use of the results of the new systems in arriving at decisions. System installers will find it difficult to maintain momentum if the results seem to be no different from before. Legislatures are faced with mounting program demands and resistance to increased taxes. The new systems will have their best chance of survival if they can demonstrate their ability to assist decision-makers in resolving this dilemma. Planning The movement continued toward placing the state planning function in an organizational position designed to enhance its ability to assist the decision-making process. In Arkansas the state planning commission was abolished and a Department of Planning responsible to the Governor was established, and in Idaho and Oklahoma planning was separated from an economic development agency and made part of a local/community affairs and planning agency responsible to the Governor. In Illinois, Mississippi, Nebraska, New Hampshire, and West Virginia planning was removed from an economic development, commerce, or research agency and placed in the office of the Governor. The planning function was shifted from a department of finance to the Governor's office in California and North Dakota, and to a department of administration from a line agency in Rhode Island and Vermont. The shift in all 12 of these States brings planning closer to the central management structure of the State than before. On the other hand, in Colorado the Planning Office was moved from the Governor's office to the Department of Local Affairs, as part of the Governor's action in removing all activities from his office except personal staff. Investment The concern for maximizing state income by improved fund management has led to change in investment organization and practice. South Dakota created an Investment Council appointed by the Executive Board of the Legislative Research Council, and the Investment Council appoints a state investment officer. The State Investment Council of New Mexico has been authorized to invest up to 20 percent of state permanent funds in banks and savings and loan associations in the State. Alaska has removed some restrictions on investment, and now up to one-third of its funds may be put into equity-type investments. Virginia has been emphasizing the deposit of state revenues as received into interest-bearing accounts, and plans to use interest receipts for investment or expenditure in economically depressed areas. Economic Reports In three instances the Kentucky and Vermont Councils of Economic Advisers and the Washington Governor's Economic Advisory Committee-agencies have been established for preparing economic reports and advice. These join 10 others established in previous years. South Carolina also began preparation of economic reports, undertaken by the Division of Research and Statistical Services of the State Budget and Control Board. Audit The trend continues of placing the post-audit function under the Legislature. Legislative audit offices during the biennium were set up in Idaho, Kansas and Wyoming, in all cases supplating or supplementing an auditor under the Governor. A similar shift will occur in Illinois under its new constitution. Thirty-two States now have a legislative auditor; in 24 of these he has sole audit responsibility and in 8 he shares it with an appointed official. General Services Agencies Iowa in 1971 established a Department of General Services, containing the functions of purchasing, auto fleet management, buildings and grounds, protection, printing, data processing, and communications. This makes 11 States having a central housekeeping-type agency which does not include the major policy-making areas of budgeting or planning. Many of these departments have recently been established, and in cases such as Florida's have concentrated on operating more efficiently the activities under their control. New York's department marked its tenth anniversary in 1970, and continues its operation over a broad spectrum of activities including telephone, computer services, automobile fleets, insurance of state property, parking, tours of state facilities, courier service between state offices in different cities, reproduction, records management, surplus real and personal property, surplus food, standards and purchasing, facilities planning and operations, and building design and construction. The Oregon Office of General Services assumed the maintenance and operation of the capitol area buildings, previously lodged with the Secretary of State, and also provided field facilities for the grouping of all field offices in the human resources function. The California Department of General Services has centralized facilities planning for all agencies and reports that its records management program has begun to slow the growth in the volume of state records. However, the Legislature abolished the department's management services office, and this function was transferred to the Department of Finance. Procurement A reorganization of the Nebraska Department of Administrative Services resulted in the establishment of a Materials Division, and |