Making Oregon State Government Accountable

Every publicly held business utilizes audits to assure its shareholders that its operations are in accordance with commonly accepted financial practices and that those who manage the business are doing so for the benefit of the shareholders and not merely themselves. Many such businesses also utilize performance audits to ensure that operations are efficient and focused on the primary business of the entity. All of it is done in pursuit of a transparency that allows owners/shareholders an opportunity to determine the well being of their investment.

Not so for Oregon government. The managers of Oregon government (the governor and legislature) have steadfastly resisted any such accountability. They (Republicans and Democrats alike) have developed a financial system designed to confuse and obfuscate the use of public monies for virtually any and all purposes. This Byzantine system is paid forward to schools and local government to further mystify the actual expenditure of taxpayer funds.

It is virtually impossible for the average citizen to determine (without the assistance of a team of certified public accountants) how much is spent on K-12 education on a state level, at a school district level or at a particular school. It is even worse when one seeks to determine how much is spent on classroom instruction vs. administration vs. training vs. social programs. The same can be said for the welfare system, the transportation system, the healthcare system and virtually every other operation of state and local government.

There are operating funds, reserve funds, capital improvement funds, special program funds and a mind-numbing array of other funds. So many funds that most legislators are unaware of their totality. So many funds that, unless you know with specificity the identity of each such fund, you will never know whether a bureaucrat has provided full and accurate information when requested. So many funds and movement amongst those funds that the true financial picture of state or local government remains a mystery to those who provide the funds.

Here are two simple examples. First, the State of Oregon is unable on any given day to tell you how many people work for state government. Second, the State of Oregon is unable to tell you the precise amount of liability (funded and unfunded) it has sustained for the Public Employees Retirement System. (For instance, at one point, the state issued press releases noting a dramatic reduction in the unfunded PERS liability but did not state what portion was due to an improvement in the stock market and what was due to the issuance of bonds — the latter simply changing the source of debt rather than the amount. The public was left to assume that the problem was largely solved instead of just shifted.)

In addition, it cannot tell you how many people are receiving welfare benefits and of that number how many of them are illegal immigrants. The average citizen cannot tell how much of its gas taxes are spent on construction or reconstruction of roads, on repair of roads, on mass transit, on light rail, on administrative expense or other services.

But there is a simple solution and one that other states have routinely adopted. It is the creation of a non-partisan legislative audit office for the purpose of doing routine financial and performance audits on all agencies of state government. Other states have routinely adopted such practices and, in some, have extended the impact of such audits by implementing a “sunset process” which automatically terminates programs and agencies unless, based upon the report of the legislative audit office, their continuation is determined to be justified and efficient.

It is pointless to suggest that such an audit function already resides in the Secretary of State. The Secretary of State, under Bill Bradbury, has proven to be one of the most partisan offices in state government. Such partisanship is an automatic disqualifier in providing reliable and transparent information to the public. The lack of accountability is best demonstrated by the fact that Bradbury did not look for, or discover, any problems in the fact that while Neil Goldschmidt’s wife sat on the state board of investments, she and others on the board approved a substantial financial investment in a Texas group seeking to acquire Portland General Electric and which Texas group, the following day, hired Goldschmidt as its CEO for the acquisition.

As much as the transaction should have triggered an inquiry as to other transactions involving Goldschmidt’s clients and state funds, no such investigation was forthcoming.

In order to provide credibility for any such financial and performance auditing function, the following criteria must be met:

1. A joint legislative committee consisting of eight members, two appointed by the majority and two by the minority parties in each house provide the governance. The primary functions of the committee would be to hire and supervise the legislative auditor and to receive reports thereafter for transmittal to the whole of the legislature.
2. The legislative auditor must be a professional auditor (preferably a certified public accountant) with a demonstrated work history in auditing state and local government entities.
3. A work program should be determined that would assure that every state agency and program is subject to a full fiscal and performance audit at least once every six years. The committee could call for audits of specific programs out of cycle when specific problems are identified.
4. The legislative auditor should have free rein to determine the members of his/her staff without interference by the committee.
5. The legislative auditor should be charged with developing accounting practices and financial disclosures in a form that provides the maximum amount of transparency to Oregon taxpayers.

Oregon was once noted for its “clean government.” But today, the lack of accountability and transparency in the fiscal operations of the state make that claim suspect. It is well past time for the legislature to adopt a non-partisan financial and performance audit program that will assure Oregon’s citizens that they are getting what they paid for.

  • Jerry

    Oregon has one of the most inept, corrupt state governments in the nation. The politicians in Oregon will never agree to anything even remotely like what you propose.

    They are completely out of control and completely without any oversight by anyone and they love it.

    I am deeply ashamed of all of them.

  • Alan

    Oregonmay be bad, but you cannot compare us to Lousianna, New York or Chicago. Thsoe states/cities worked hard for their corruption problems.

  • David from Eugene

    Consider the Products of Disabled Individuals program administered (to use the term loosely) by the Department of Administrative Services. Through this program somewhere between $50 and 70 million dollars (the exact amount is unclear as DAS is not accurately tracking the contracts) of no bid public contracts are granted annually to Non-profit Corporations who allegedly employ individuals with disabilities. I say allegedly as DAS is yet to perform a compliance audit on any of the 50 odd non-profit corporations who are utilizing this program, but then the program has only been in existence for 31 years so they may not have had time yet.

  • dian

    Whatever you do, don’t go for an iniative to get that audit office. The unions will hunt you down.

    Alan, don’t muddy the water by trying to compare Oregon to any other state. They that compare themselves among themselves are not wise.

    Oregon is bad. I’m ashamed to tell people that’s where I’m from.

    When are the voters actually going to stand up and be counted. No, we bow our heads and say, YES BUT!!! we aren’t as bad as somebody else, as if that makes Oregon’s wrongness OK

  • Rupert in Springfield

    A non partisan committee hiring a non partisan legislative auditor and then, after about six minutes they will be in bed with each other and pretty soon we will find the same old shenanigans. Weird accounting practices like shifting PERS debt to bonds etc.

    How about this idea? Government spends no small amount of time hiring people with a vested interest, increasing government funds, to check up on the citizenry. These are generally in the form of taxing entities, but they can also be in the form of permit officials etc. These people relentlessly go over every record of your property, income taxes, stock sales etc. to make sure they get every last penny of any tax, fee, or what have you they feel they are entitled to.

    I propose the same solution. An army of people checking up on government, to make sure no dollar is wasted or sent off to cronies like Goldschmidt. This army would be composed of the entire citizenry. All revenue sent to the government would have to be accounted for in standard format just as the citizenry has to do with the 1040 tax form. Individuals and corporations all have to keep records and submit tax forms in standard format, there is no reason government cant be held to the same. All accounting forms would be public record, and available to anyone on the internet. If waste or fraud is found some percentage of that would be due to the citizen or group that discovered it. This is the policy government has with its citizens, I think its high time they submit to the same.

  • Alan

    I do not mean to dimish Oregon’s problem a bit, but I still do not think they compare to other states for the size and scope of cioorruption problems. I mean dead people voting by the thousands? Mafia ties? Oregon cannot compare.

    • Anonymous

      So why even bring it up?

    • dian

      When your own house is clean, then you can go take care of somebody elses, that is unless you are a New Yorker disguised as an Oregonian

  • Rupert in Springfield

    David from Eugene gives a good example:

    The disabled thing. Oh we aren’t accurately able to track no bid contracts but its somewhere between 50 and 70 million? Gee, that’s quite a spread, so given that you don’t know that, have you checked that by disabled, these companies don’t mean someone who walks with a limp because their shoelace broke?

    So, I drive out to the companies. Oh hey, no disabled people. Wow, and they have been getting a contract for 10 years? Well, sorry, that is obvious fraud, and if DAS couldn’t be bothered to drive out there for 10 years, well, I have no idea how the program is justified, what are they doing?

    So, whatever the money involved in that contract to that company is now disallowed. Just the same as if I had taken a disallowed expense in my business. Frankly I think all of that money is due back, but, since I am more generous than government, lets say the fine is only 10%. And that individual who discovered this fraud gets it.

    Oh gee, they cant afford it? Too bad. Id rather see the program shut down than continue to be run as an enterprise to defraud taxpayers.

    • David from Eugene

      Ah, the what is a “individual with a disability” question. The statute (ORS 279.835) has a very god definition which defines an “individual with disabilities” as a person who has a disability which makes them unable to fully participate in competitive employment and for whom a specialized employment opportunity must be provided. But DAS through administrative rules has negated its effectiveness should they ever decide to use it.
      They have come up with some interesting interpretations; state prison inmates who used alcohol prior to incarceration are considered disabled. That was in a reply to a challenge by a for profit company that lost all of its public contracts to supply refilled toner cartridges to the non-profit who employed the prisoners to do the work.
      In the case of the Portland public schools custodial contract was taken over by the largest of these non-profits, the non-profit hired many of the terminated school custodians, at a cut in pay, and left them at their old jobs. The rest of the positions were filled with “individuals with disabilities” who did the same job as the people they replaced.
      One of the non-profits has contracts to provide unarmed security at the Portland and Eugene Airports and the public parking garages in Eugene, the public agencies have little choice as the law mandates that they do business with the non-profit at a price set by DAS.

      • Rupert in Springfield

        Ok – I wasn’t so much speaking to what is and is not a disabled person. What I was speaking to is that no bid contracts to supposedly non profit companies of this nature are quite often rife with negligent oversight at best. The reason for this tends to be some law got passed requiring first dibs for these sorts of companies, then naturally everyone sees the cozy little scam opportunity it sets up and you can guess the rest. The state frequently has little interest in checking up on whether or not these non profits are bona-fide, because they don’t really care, they are simply looking to cover their butts and comply.

        This is just one example of the kind of thing open standardized accounting with a reward system for citizens who catch the government misusing money would solve.

        As an aside – and a very mildly related but humorous point – I have some knowledge of this sort of scam. With the passage of the Americans with Disabilities act, many state agencies in NYC, where I used to live, figured it was better to accept all applications from prospective hires, no matter how profoundly their disability would preclude them from the job, rather than risk a lawsuit. Every job in New York City requires you to take a test of some nature. My mother was in charge of scheduling testing dates and places for the myriad of tests. The disabled would be scheduled separately, they required more time ( testing disabled ), needed wheelchair accessible buildings ( this was at the dawn of the ADA ) etc. The scam was, NYC figured out in no time it could make a fortune administering these tests, which all required a hefty admissions fee, to those with the most ludicrously unsuitable of disabilities. They figured if the person was stupid enough to show up for the test, it wasn’t their job to tell them they only decided on suitableness of disability after the test.

        Her favourite day on the job? She had just finished testing a disabled group to be subway track inspectors. A very hazardous job considering NYC uses a third rail system where the electrified rail is at ground level offset to the left of the track itself by about eighteen inches. Now these guys all had the same disability. Because of the unique nature of this disability they needed the test in a special format, thus their grouping together. What was their disability? Well, when they all came in taping their canes left and right, you could tell pretty quick…..they were all blind.

        True story.