Department of FinanceThe First 100 Years
The Department of Finance (Finance) was created in 1921, along with dozens of other departments, by Chapter 603, Statutes of 1921 (SB 876) during the Progressive Era. Later, Chapter 251, Statutes of 1927 (AB 1113) created the position of Director of Finance.
The budget formulation process was adopted from federal standards where the Legislature gave Finance “supervision over all matters concerning the financial and business policies of the state and shall whenever it deems it necessary or at the instance of the governor, institute or cause the institution of such investigations proceedings as may be deemed proper to conserve the rights and interests of the state” [Chapter 251, Statutes of 1927 (AB 1113)].
In 1945, Finance was transformed to resemble its modern structure, although it differed slightly as Finance was responsible for a wider range of state fiscal affairs such as acquiring property for the State of California. Finance was composed of three divisions: (1) Division of Budgets and Accounts, (2) Division of Fairs and Expositions, and (3) Division of State Lands.
Finance has historically held a multitude of responsibilities that are now separate state entities or departments. Today’s Department of General Services, Department of Food and Agriculture, State Transportation Agency, and the Governor’s Office of Planning and Research were all once part of Finance.
Although the duties of Finance have changed dramatically over the past 100 years, its guiding mission has remained constant—to serve as the Governor’s chief fiscal policy advisor and promote long-term economic sustainability and responsible resource allocation for the state.