The best financial investment managers rigorously evaluate their own performance and identify needed adjustments as results and external circumstances dictate. Most importantly, they do this acting as fiduciaries, putting their clients’ interests ahead of their own with a duty to preserve good faith and trust.
That same commitment and ethic should drive government and government investment – as many prefer to call government spending these days. State government’s massive “portfolio” of spending programs supporting the health, safety, social and economic welfare of Minnesotans require the same type of diligent oversight and monitoring of performance and results. This analysis and evaluation must also be undertaken in a setting in which the efficient and effective use of taxpayer dollars and the advancement of the public interest is the priority.
For 50 years, the Office of the Legislative Auditor (OLA) has served in this capacity for the state. OLA performs financial audits of agencies, organizations and programs within and funded by state government to ensure safeguarding of public resources and compliance with laws that govern state operations. OLA also performs special reviews to ascertain the facts behind a specific concern or question raised about government operations. The office’s program evaluations are in-depth examinations of how well state-funded programs or organizations are managed and what results they are achieving. All this work is accomplished in an independent, non-partisan manner that commands attention, respect and credibility across the political spectrum.
So given the unique and vital role this office plays, it’s worth looking at how the OLA’s resources and capacity has matched up with growth in the size and scope of state government over time. The numbers tell a story that should make any supporters and advocates of good government cringe. As we figure out what to do with $9.3 billion, consider the following:
- Since 2003, total state spending per year from all government operating funds has increased 147%, or more than $33 billion. Over that same period, OLA’s staffing has declined from 80 to 56 full time equivalent employees.
- Over the past 10 years, total state government employment has increased by more than 4,600 full time equivalent employees as new state programs have been created and others expanded. OLA staffing has been flat.
- OLA current fiscal year base budget appropriation of $7.7 million must be split between its three divisions of responsibility. About 25% supports program evaluation. Thus, in an annual all-funds budget totaling about $53.9 billion, the OLA is able to spend about $2 million a year to fulfill the program evaluation division’s statutory purpose of determining “the degree to which the activities and programs entered into or funded by the state are accomplishing their goals and objectives.”
- OLA base budget increases have been historically modest, at best (for example between fiscal years 2014 to 2019, OLA’s base budget allocation increased by $281,000, an annual growth rate of less than 1%). The office’s budget has recently been supplemented by some sizeable statutory appropriations to perform several legislature-mandated financial audits, and the office was permitted to carryover any excess from these special appropriations. But going forward OLA still faces the prospect of delivering on its “regular” auditing and program evaluation responsibilities without this one-time project money made available to it in recent years.
Available resources belie the continuing interest in and demand for OLA’s work. A news report this year described OLA as being besieged by “audit fever.” This year, 67 potential program evaluation topics submitted by lawmakers, organizations, and citizens needed to be winnowed down to just five for inclusion in OLA’s annual workplan. Lawmakers have had to urge colleagues not to overload the office by writing new investigations into statute.
What explains the discrepancy between the demand and support for its work? Most of the answer undoubtedly lies in a reality that plagues all critical “backroom” areas of government. Programs that have no one repeatedly lobbying for their interests and do not benefit a particular constituency are always at a disadvantage come appropriations time (and are also easier to cut in times of budget stress as occurred in 2003). But another factor may be the politically-charged environment served by its work. Even though the OLA is strictly non-partisan, investigations can be and are leveraged for political purposes creating political exposure to the party “in charge” at that time from whatever concerns and criticisms may arise from those investigations.
Nevertheless, as the size, scope, cost and complexity of government only escalates, our need to examine whether programs are achieving their objectives and how they can be improved is greater than ever. Minnesota lawmakers can be guilty of using “investment” as a euphemism for “spending” too casually. But with respect to OLA, the concept applies. Efficient, effective, accountable Minnesota government demands a strong OLA. The state needs it, and taxpayers deserve it.
Mark Haveman is the executive director of the Minnesota Center for Fiscal Excellence