California's
Legislative Analyst's Office: An Isle of Independence
By Elizabeth G. Hill, Legislative Analyst
Published in Spectrum: the Journal of State Government,
Fall 2003
Introduction
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.
Office Structure
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.
Impact On Policy Making
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.
Achievements
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.
Lessons Learned
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.
Conclusion
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.