SB 474 — An Act providing for zero-based budgeting relating to the Commonwealth's budget review.

PRINTER'S NO.   429

                   THE GENERAL ASSEMBLY OF PENNSYLVANIA



                       SENATE BILL
                       No. 474
                                              Session of
                                                2025

     INTRODUCED BY PHILLIPS-HILL, KEEFER, LAUGHLIN, DUSH, ROTHMAN,
        HUTCHINSON, COLEMAN, STEFANO, J. WARD AND MASTRIANO,
        MARCH 19, 2025

     REFERRED TO FINANCE, MARCH 19, 2025


                                   AN ACT
 1   Providing for zero-based budgeting relating to the
 2      Commonwealth's budget review.
 3      The General Assembly of the Commonwealth of Pennsylvania
 4   hereby enacts as follows:
 5   Section 1.   Short title.
 6      This act shall be known and may be cited as the Commonwealth
 7   Zero-Based Budgeting Act.
 8   Section 2.   Findings.
 9      The General Assembly finds and declares as follows:
10          (1)   The traditional method of budget development, which
11      relies upon incremental adjustments to expenditures made in
12      the previous financial period, insulates governmental
13      activities from the thorough fiscal review expected by
14      taxpaying citizens.
15          (2)   New and changing demands for public services are met
16      through excessive budget growth rather than by pruning
17      obsolete programs and redirecting existing funds. Some
 1      programs were established so long ago that the original
 2      statutory basis has either been forgotten or is out of date.
 3      In time the budget is driven by inertia rather than by clear
 4      and defensible purposes.
 5            (3)   Zero-based budgeting is an effective way to manage
 6      costs while maintaining a high level of service and to hold
 7      the State accountable for each dollar it spends.
 8   Section 3.     Budget review.
 9      (a)   Review.--The Secretary of the Budget shall subject every
10   program in State government to zero-based budget review no less
11   often than once every five years. In order to implement this
12   schedule, approximately one-fifth of the budget shall be subject
13   to zero-based budgeting in each year beginning in 2026. In 2025,
14   the Governor shall submit a zero-based budget for agencies with
15   a cumulative total of expenditures of at least 20% of the
16   General Fund budget.
17      (b)   Agency plan.--To accommodate zero-based budget review,
18   the Secretary of the Budget shall require agencies to prepare
19   and submit a zero-based budget plan in addition to any other
20   information that may be required by statute, rule or directive.
21   At a minimum, the plan shall contain the following information:
22            (1)   A description of those discrete activities that
23      comprise the agency and a justification for the existence of
24      each agency and activity by reference to statute or other
25      legal authority.
26            (2)   For each activity, a quantitative estimate of any
27      adverse impacts that could reasonably be expected should the
28      activity be discontinued, together with a full description of
29      the methods by which the adverse impact is estimated.
30            (3)   For each activity, an itemized account of

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 1      expenditures that would be required to maintain the activity
 2      at the minimum level of service required by the statutory
 3      authority, together with a concise statement of the quantity
 4      and quality of services required at that minimum level.
 5          (4)   For each activity, an itemized account of
 6      expenditures required to maintain the activity at current
 7      levels of service, together with a concise statement of the
 8      quantity and quality of services being provided.
 9          (5)   A ranking of all activities that shows the relative
10      contribution of each activity to the overall goals and
11      purposes of the agency at current service levels.
12   Section 4.   Educational services.
13      Notwithstanding section 3, the following shall not be subject
14   to zero-based budget review within the Department of Education:
15          (1)   Class size.
16          (2)   School curriculum.
17          (3)   Direct services offered to students by classroom
18      teachers in public schools. Examples of direct services are
19      teaching, coaching, library and media services and career
20      counseling services provided within the public school system.
21      Indirect services, including overhead costs, administrative
22      costs and support services, shall be subject to zero-based
23      budget review.
24   Section 5.   Effective date.
25      This act shall take effect in 60 days.




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