HJR 159: Joint Subcommittee to Study the Operations, Practices, Duties, and Funding of Virginia's Agencies, Boards, Commissions, Councils, and Other Governmental Entities

June 19, 2002
Richmond

Organizational Session

The joint subcommittee opened its organizational session by hearing from the patron of the resolution, Delegate McDonnell, regarding his reasons for introducing HJR 159. Delegate McDonnell explained that he had observed a disturbing tendency of government to grow and expand in a vacuum. While the number of boards and commissions has grown virtually unchecked in recent years, no one knows whether these entities are attaining desired results. He believed that the legislature needed to take a systematic look at each board’s statutory mission, budget, duties, and responsibilities and compare these with the board’s actual activities and practices. While he acknowledged that the scope of HJR 159 was broad enough to give the subcommittee wide discretion in examining any entity of state government, he suggested that a good place to start was with the boards and commissions in the executive branch. He also emphasized the importance of developing a uniform set of criteria to evaluate objectively these entities.

In his opening remarks, Chairman O’Brien outlined his vision of the subcommittee’s work and proceedings. After selecting entities for further review based upon objective criteria, the subcommittee would invite representatives of those entities to appear at future meetings to answer questions and provide additional information. Based on the criteria and testimony provided, the subcommittee would determine if certain changes were needed, including (i) the elimination or consolidation of the entity, (ii) redefinition of its mission, (iii) clarification, expansion, or reduction of its responsibilities and duties, and (iv) right-sizing of its staff and other resources.

Spending Trends in Virginia

Staff of the Joint Legislative Audit and Review Commission (JLARC) presented an overview of state spending trends. The presentation material was drawn from the JLARC report, Interim Report: Review of State Spending (HD 30, 2002) and an updated version of that report not yet published. The presentation documented growth in state expenditures and appropriations between FY 1981 and FY 2001. In addition, the presentation reviewed the legislative role in performance evaluation and performance budgeting.

In FY 2001, 52 percent of the state operating budget was funded by general funds. Since FY 1981, spending increased at a 7.4 percent annual average rate not adjusted for inflation or population. Per capita, inflation-adjusted spending increased at a 2.3 percent annual average rate (see Figure 1). Spending growth can be explained by inflation, changes in state demographics and economic activity, Virginia-specific initiatives, and federal mandates. For instance, Virginia’s population and economic growth exceeded the 50-state averages. Service populations in major programs also increased over the 21-year period: primary and secondary education (up 10 percent), college enrollment (up 25 percent), registered vehicles (up 54 percent), Medicaid-eligible individuals (up 131 percent), and the state prison inmate population (up 296 percent).

Figure 1: Total Spending per Capita, 1981-2001.

Total Spending Per Capita

Total spending in FY 2001 was $18.5 billion more than in FY 1981. Most spending growth was concentrated in the education and individual and family services functional areas, which grew by $5.7 and $5.0 billion, respectively. In terms of percentage growth rates, however, general government and administration of justice grew the fastest, at 184 percent and 131 percent, respectively, in per capita, inflation-adjusted terms. These fastest growing functional area increases were driven largely by personal property tax relief and prison system expansion.

Functional spending growth is directly related to spending growth in the programs and agencies contained within functional areas. Spending growth was concentrated in a relatively few agencies. The Departments of Education and Medical Assistance Services accounted for over 40 percent of general fund budget growth. The universities and the Department of Transportation accounted for over 40 percent of non-general fund budget growth.

This budget and spending growth was, however, not unusual when compared to spending growth in other states. Between FY 1981 and FY 1999, Virginia’s total spending rank did not change from 36th place among the 50 states. The per capita, inflation-adjusted dollar increase in Virginia was less than the 50-state average increase, yet Virginia did experience a slightly larger percentage increase than the 50-state average. Virginia ranks higher than most states in spending on police protection, corrections, and transportation; slightly below the middle of all states in total education spending; and well below the middle in terms of spending on public welfare, hospitals, health, natural resources, and parks and recreation.

Virginia began its performance measurement activities as far back as 1990. Performance measurement information is maintained by the Department of Planning and Budget. The General Assembly, through JLARC and the Auditor of Public Accounts, reviews the performance measurement process. The General Assembly does not currently play an active role in developing performance measures for state agencies. Virginia is a leader among the states in performance management, yet more intensive involvement by executive and legislative decision makers is necessary to reach a system that provides the most effective information.

State Agencies and Collegial Bodies

A JLARC analyst described the number and type of agencies and collegial bodies within Virginia state government. Using the definitions below, a preliminary count indicates that there are 144 agencies and 353 collegial bodies.

State Agency: A unit of state government located in the legislative, judicial, or executive branches, or one of the independent agencies that:

• Is created by statute,
• Is designated in the Appropriation Act with a three-digit agency code,
• Has administrative responsibilities, and
• Has staff responsible for program implementation.

• Collegial Body: A state government body, usually designated as a board, commission or council, that:

• Has power vested equally among colleagues/members,
• Is established by law or executive order, and
• Is typically charged with providing advice to an agency, promulgating public policies or regulations, or overseeing the operations of an agency.

Entities excluded from the preliminary count include regional and local bodies such as planning district commissions, community services boards, and local health departments; nonstate agencies; administrative agencies associated with interstate compacts; and ad hoc groups formed by secretaries or agencies for a limited time to address a specific issue or problem.

The highest number of collegial bodies (79) is associated with the commerce and trade area. The second highest number is associated with health and human resources (53), and the third highest is associated with natural resources (51). As shown in Figure 2, 327 (nearly 93 percent) of the 353 collegial bodies have been created through legislative action.

Note: information based on initial review of Secretary of Commonweatlh's Blue Book, May 2002, and is preliminary.

Staff reviewed the general Virginia code provisions regarding collegial bodies. General statutory provisions require collegial bodies to follow a standard nomenclature. Collegial bodies are classified as either advisory, policy, or supervisory depending upon their level of authority in developing budgets and hiring key personnel. Members of collegial bodies are reimbursed and compensated at a standard rate. However, staff informed the subcommittee that specific provisions in the enabling statute or the Appropriation Act could override these general provisions.

Executive Branch Collegial Bodies

Given the extremely broad scope of the mandate, the subcommittee decided to focus its efforts this year on collegial bodies, specifically those within the executive branch. Collegial bodies excluded from the subcommittee’s review this year include those in the legislative and judicial branches; collegial bodies associated with independent agencies, political subdivisions or authorities; interstate compacts; and collegial bodies created in 2002.

Following presentations by staff, the subcommittee heard from two speakers, the executive director of the former Hopkins Commission and a former Secretary of the Commonwealth. The Hopkins Commission was a similar study in the 1970s that examined ways to restructure state government to promote efficiency and effectiveness. The director shared several insights on reorganizing and advised the subcommittee to keep in mind the following principles:

• Match authority with responsibility.
• Create independent agencies only through the Constitution and make them accountable.
• Use modern business principles to enhance government operations, but don’t try to transform government into a business.
• Guard against creating superagencies that become entrenched and unaccountable.
• Equip agencies with all the tools and resources to perform their mission and statutory duties.

The former Secretary of the Commonwealth related some of the difficulties she encountered in coordinating the appointment process for the Governor. She noted the failure of agencies to forward information about address changes and resignations of board members to her office and the inability to obtain information directly from the boards regarding frequency and duration of meetings, amount of per diems paid to board members, practices regarding the reimbursement of expenses, and the existence of any by-laws for specific boards.

She offered several suggestions to improve the process.

• Keep term expiration dates staggered during the calendar year. Approximately 75 percent of the appointments expire on June 30.
• Extend all terms to four-years to reduce duplicative paperwork.
• Require functions and activities of boards to be electronically filed with the Secretary of the Commonwealth.
• Establish an automatic process for the repeal in the Virginia Code of boards that fail to meet at least once a year.

2002 Workplan

Research activities of the subcommittee and staff this year will include surveys in July of all collegial bodies within the scope of this year’s review; structured interviews with key collegial body and agency staffs; a review of the Virginia Code; compilation of legislative history; a functional analysis comparing statutory missions to actual activities and results; reviews of various documents such as board meeting minutes; testimony from collegial body representatives, agency heads, and secretaries; and receipt of comments through public hearings and other mechanisms. Selected collegial body representatives, agency heads, and secretaries will be invited to address the subcommittee beginning in September and continuing through December.

Next Meeting

The next meeting is scheduled for September 25, 2002, in Richmond, at which representatives from selected boards and commissions will respond to questions and provide the subcommittee with more information about their activities.

Chairman:

The Hon. James K. O'Brien, Jr.

For information, contact:

Ginny Edwards
Division of Legislative Services

Website: http://dls.state.va.us/hjr159.htm

THE RECORD

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