By Elizabeth G. Hill, Legislative Analyst
Published in Spectrum: the Journal of State Government,
Fall 2003
The three branches of government often experience tension in carrying out their constitutional responsibilities. The California Legislature became concerned about the balance of power over the state budget in the early 1930s. The Legislature wanted an independent source of information and analysis, directly responsible to it, to serve as a fiscal watchdog and ensure cost effective implementation of programs it established. After several failed attempts, a bill was passed in 1941 to establish such an office, only to be vetoed by Governor Culbert Olsen on the recommendation of his fiscal office, the Department of Finance. The Legislature was not to be deterred, however, and established the office by a Joint Rule of the Senate and Assembly—giving the office the mission to ”. . . ascertain facts and make recommendations . . . concerning the state budget . . . with a view to reducing the cost of the state government and securing greater efficiency and economy.” The Legislative Analyst’s Office in California was the first office of its kind in the nation. Throughout its 62-year history, the office has served as a nonpartisan fiscal and policy advisor to the 120 Members of the California Legislature earning the title of “an isle of independence” from a longtime capitol observer.
As an advice giver, the office is charged “to call it as we see it” or, as my academic mentor Aaron Wildavsky might have put it, the office has a mandate to “speak truth to power.” By serving as the Legislature’s eyes and ears to ensure that the money it appropriates is spent efficiently and economically, one of my colleagues has referred to us as a “cross between academics and espionage.” We use analytical tools to study how the state economy, tax system, and governmental programs work, combined with a lot of field work and listening to others to evaluate the real world implications of policy initiatives.
The office is overseen by a joint committee (the Joint Legislative Budget Committee), which consists of 16 Members—eight from each house. Traditionally, a Senator chairs the committee with an Assembly Member serving as the vice chair. Both the committee and the office have statutory authority in the Government Code (statutory authority was enacted in 1951—a decade after adoption of the joint rule establishing the office and the committee). This provides continuity when there is a change in either the executive or legislative leadership. Funding for the office comes equally from the Senate and the Assembly. In order to protect the office from elimination by a line item veto, the budget bill contains an appropriation of zero for the office but references the transfer of funding from each house to support our operations. Employees of the office are legislative staff, with the Legislative Analyst serving at the pleasure of the committee and the balance of the staff appointed by the Analyst. The committee does most of its work by correspondence—largely reviews of changes in the adopted budget plan proposed by the administration after budget enactment.
The success of the office is reflective of the collective talents of the staff we employ. The office recruits nationally in order to attract the best candidates. Analytical staff members are expected to have a master’s degree or equivalent experience. Most analysts have degrees in economics, business, public policy, public administration, or a related field, and have strong analytical and quantitative backgrounds. We also place a premium on strong written and oral communication skills. Each analyst is responsible for a portion of the state budget. Analysts present and defend their recommendations in public hearings held by legislative committees. In order to develop in-depth program expertise, analysts are expected to travel out in the field to see how programs work, talk with clients receiving services as well as employees delivering services, and gather first-hand knowledge of program operations in different areas of California. Given the geographical diversity of California, it is important for our staff to visit both rural and urban areas.
The office is divided into subject area sections headed by front-line managers who not only mentor and train staff, but also provide the first level of editorial review for analytical content. Traditionally, our managers have risen through the ranks and typically are some of the office’s strongest analysts. To take advantage of their strengths, many of our managers have program responsibilities of their own in addition to their management responsibilities.
Our office has benefited from a confidential relationship with each Member of the Legislature. This has functioned much like an attorney/client relationship. This enables each Member of the Legislature to ask us to do research for him or her and respond back on a confidential basis. These “assignments” (as we call them) only become public if the requestor releases the analysis. In this way, Members have confidence that they are in charge of the information. We also have a long-standing policy regarding our analysis of legislation. If a Member, other than the author, asks us to analyze a bill, we provide the bill’s author the analysis as well, without divulging the requesting Member’s name.
California’s budget process is quite accessible to the public. Executive branch budget documents are accompanied by detailed schedules. The legislative process is open to the public from initial hearings through conference committee and debate on the Assembly and Senate floors. Budget analyses prepared by our office are publicly available as well. As an institutional fiscal and policy advisor, we want not only to produce high quality, objective products, but we want them to be used to frame and influence policy discussions and to help legislators make better decisions. There are a number of ways this can occur as discussed below.
Critiquing. Perhaps the most important way the office contributes to policy making is through the critical review of budget proposals and program operations. We annually produce an Analysis of the Budget Bill critiquing the Governor’s proposed spending plan for the coming fiscal year and making recommendations regarding spending cuts, legislative oversight, and program changes. This document becomes the agenda for legislative deliberation of the proposal. This is a “negative” type of influence in that it focuses on what does not work and forces the administration to do a better job in making its case.
Setting Budget Agendas. Our annual budget analysis helps to set the legislative agenda for deliberation on the annual Governor’s budget. In order to assist the Legislature with its long-term fiscal planning, the office publishes a fiscal forecast each November analyzing the state’s current fiscal condition and projecting, on a current law basis, what the fiscal condition will be for the next five years. This independent assessment of the outlook for California’s economy, demographics, revenues, and expenditures gives the Legislature an early evaluation of where the enacted budget stands in the first half of the fiscal year. It also helps to set the budget agenda before release of the administration’s budget proposal for the next fiscal year on January 10. Given the Legislature’s appropriations role, such information is critical in assisting the Legislature with the establishment of its fiscal and programmatic priorities.
Neutral Third Party. As a nonpartisan institution, the office is in a unique position to assist the Legislature in resolving various issues. For instance, the office has often been asked to perform an evaluation of a program or agency in cases where the Legislature does not trust the administration to perform the job adequately. Similarly, the office has been asked to be the Legislature’s contracting agent for major independent program evaluations which have gone out to bid to private contractors. Recently, for example, RAND conducted an evaluation of charter school operations and performance in California under a contract administered by our office.
Another example of this role is the function typically played by the office during the conference committee on the budget. The office makes a recommendation to the six-member committee on virtually every item of difference between the Senate and the Assembly. Members are often looking for a “neutral” voice that can frame the issue before them, provide factual information about program operations, and offer ways to resolve differences between the two houses and/or two parties. In performing this function, it is critical that Members have confidence in our ability to “get the numbers right” and our knowledge about the state’s revenue structure and expenditure programs.
Statewide Ballot Measures. The initiative process is well established in California. Our office plays a key role in assisting the public with its decisions on pending ballot measures. State law requires the Department of Finance (the executive branch budget office) and our shop to prepare jointly the fiscal estimates of all initiatives before they are circulated among the voters for signature. Our estimates assist voters in evaluating whether to sign a proposed initiative petition by helping them understand its fiscal impact on state and local governments were it to be adopted.
When the Legislature places a measure on the ballot or an initiative qualifies for voter consideration, our office has the sole responsibility to prepare an analysis of the measure for the state voter’s pamphlet. Typically, our analyses explain the proposal, provide some background information to put the proposal in context, and describe the fiscal effect on the state and local governments. This document, containing both candidate and proposition-related information to assist the voters, is distributed to approximately 11 million households in California. Our office also is charged with the responsibility of advising voters what a yes or no vote means on each proposition. This has to be a neutral description in about two sentences or less. Our office was given this ballot-related responsibility nearly 30 years ago because of our nonpartisan fiscal advice function. In many respects, it is the ultimate “third party” role played by the office.
Crosscutting Issues. Given the committee structure of the Legislature, it is often difficult for Members to deal with problems that cross different program areas. For example, alcohol-related issues may be in the jurisdiction of the budget, taxation, social services, and criminal justice/public safety committees. While the office’s organizational structure also is divided by program areas, we have been able to assemble staff teams using officewide resources in order to provide the Legislature with some perspective on crosscutting issues. One of the largest areas on which we have focused is the state/local relationship. This involves not only California’s tax structure but also the expenditure of state and local revenues for education, health, social services, and criminal justice programs.
Institutional “Watchdog.” Tension will always exist between the legislative and executive branches regarding the operation of government. We try, however, to guard jealously certain legislative functions and responsibilities. For example, the Legislature uses various budgetary control mechanisms so that funds appropriated in the budget bill are spent in particular ways. An important part of our budgetary review is ensuring that the administration has complied—in both letter and spirit—with legislative intent. As a long-standing legislative organization, we have the institutional memory and history to identify issues that challenge the powers of the legislative branch.
Policy Alternatives. Finally, the office is able to affect decisions by offering various policy and program options. For example, when states were required to revamp their cash grant programs in response to federal welfare reform in 1996, our office offered a comprehensive approach to the Legislature, which highlighted not only a recommended course of action but an assessment of program impacts and long-term fiscal effects. Similarly, the office has offered a comprehensive approach to restructuring the governance structure for K-12 education, reform of the state/local fiscal relationship, and an alternative approach to providing health care coverage for uninsured Californians. Identification of such alternatives provides the Legislature a starting point for its deliberations, as well as a framework for evaluating the range of policy alternatives to address complex policy and fiscal choices.
The Legislative Analyst’s Office plays a unique role in a legislative environment. Unlike our federal counterpart, the Congressional Budget Office, or its sister agency the Congressional Research Service, our office is directed in statute to make recommendations. The office has been a trusted source for information and analysis throughout its 60-plus years. Even though making recommendations poses challenges for the office in a partisan environment, it provides Members of the Legislature with our best action-oriented advice. Because our recommendations flow from data and analysis, we believe that they assist Members in making decisions that are more informed.
We are often asked how many of our recommendations are adopted by the Legislature. We do not track such data out of the belief that we are doing our job by getting the best information and advice we have to offer on the table and available to inform decisions. However, recommendations have a long “shelf-life” in the public domain. Even when the Legislature rejects our suggested action, the executive branch or other “players” in the budgetary process often embrace our recommendations. While we do not always “get the credit,” we take satisfaction in influencing the debate from a variety of vantage points. We also have often found that the political climate was not right to make a change in the year that the recommendation was first offered. However, as times and conditions changed, our advice was taken at a future point in time. A long-range view is important in this business.
Finally, we are aware that organizations have to adapt and change with the times. Our office has reinvented itself over the years as the Legislature moved from a part-time, to full-time, to a term-limited body. We have been able to adapt, attract top-flight staff, and keep our eye on our statutory mission.
Culture and History Matter. There are many legislative offices similar to our own across the country. A number are organized as we are, serving both houses of the Legislature. This is the case in Texas, Arizona, Utah, Wisconsin, and Iowa to name but a few. Other states employ a similar concept, but have an office serving each house of the Legislature. Michigan, Washington, and Oklahoma, for example, use the two-house model. For those states that do not have such a function and are thinking about establishing one, however, it is critical to recognize that culture and history matter. What is the problem that an office would be trying to address? Is there a broad enough range of support that the office can effectively carry out its mission? In our own case, the office benefited greatly during our first two decades from strong leadership, access to Members, few competitors, and the time to develop extensive program expertise.
The office established strong working relationships and a reputation for quality analysis with legislative leaders, committee chairs, and Members (particularly those serving on the fiscal committees) in the early days. This history served the office well in later years as the Legislature moved from a part time to a full time body. Over time, an extensive alumni network of former employees working in the legislative and executive branches in Sacramento has facilitated information exchange and resolution of problems.
Presentation Is Important. While our office has always produced professional products, we have found in the last 15 years that it is critical to pay attention not only to the quality of our analysis but the “look” and “marketing” of our products. We cannot take for granted that our publications will be brought to the legislator’s attention when they are delivered to Member offices. Due to the limited time Members have to digest large volumes of materials across a broad range of program issues, we have found that executive summaries and graphics that tell the story with a descriptive title and straight forward message assist Members in getting to the “bottom line.”
One innovation that we initiated a number of years ago to assist the Legislature during committee hearings was the committee “handout.” The handout—a compilation of graphics and bulleted text—has assisted the Legislature’s consideration of issues and made it easier for the public to follow legislative debate.
Communicating with the press corps regarding our analyses is an important part of the marketing efforts of the office. On major budget-related publications, we hold a press availability in order to answer questions directly. Unlike many agencies in Sacramento, we have no communications officer or press contact. We operate on the philosophy to talk on the record, speak to the facts, and leave opinions to decision-makers. We want members of the press to talk with the most knowledgeable person on our staff in order to get the most unvarnished information and perspective on individual programs and budgets. We have learned to accept the notion that the world is not going to beat a path to our analytical door. As a result, we make it a priority to market our products through our Web site and contacts with the capital press corps.
Nonpartisan Approach in a Partisan World. Many California legislators come to Sacramento with a strong perspective reflective of their district’s constituency. As such, they tend to associate closely with definable interests and groups and rely on them for guidance in dealing with policy proposals. It is understandable that Members, whose schedules are incredibly overburdened, come to rely on partisan “shortcuts” to help them make a myriad of decisions. Anything that challenges these shortcuts, as nonpartisan analysis often does, can be viewed by Members as being unhelpful or even counterproductive. Recognizing this tension is important to understanding the environment in which we operate.
Similarly, it is important to recognize the difference between policy analysts and policymakers. Analysts by training (and perhaps also by disposition) tend to be quantitatively oriented, rely on written products, and devise comprehensive solutions. Members, on the other hand, tend to be qualitatively oriented, rely on personal communication, and focus on solutions that can fix the immediate problem. Some fundamental differences exist in the way the two groups address issues and approach problem solving.
Maintain Comparative Advantages. When our office was established in 1941, there were few other legislative staff and virtually no other budget/fiscal staff. Today, we are only one of many staff entities serving the Legislature. We recognize that we must produce products that help the Legislature solve the state’s fiscal and policy problems and perform well the tasks we do better than others. Our comparative advantage is in budget-related work. For that reason, our staff is expected to know their budget assignments from both a programmatic and fiscal perspective. Our budget-related products cover a broad range from virtually a line-by-line analysis of the Governor’s budget to multiyear projections of the fiscal impact of competing budgetary proposals. These and many other budget tasks are our bread and butter and the key to our influence on policy makers.
Longer-Term Time Horizon Needed. As an institutional office, we are in a unique position to assist the Legislature in broadening its time horizon. The need for a longer-term perspective is particularly important when dealing with such capital investment issues as transportation and water. However, taxation and spending decisions have long-term implications as well. For that reason we prepare a long-term fiscal forecast that also examines demographic trends that have a direct bearing on the state budget, such as the number of Californians in their peak earning years and the number of children who will be attending school. Our job is to assist the Legislature in lengthening its planning and budgeting horizons.
The California Legislature launched a successful experiment in 1941 when it established the Legislative Analyst’s Office. This vision of a legislative fiscal office led to the creation of similar state offices across the country as well as the Congressional Budget Office in our nation’s capital. By focusing on our mission, we have served both the Legislature and the public.