Transparency in Spending for the Long Haul

States have been on the front lines of a stimulus-driven revolution in accountability. A new report urges them to build on the lessons they have learned.
by | July 30, 2012

Since 2009, the public has been able to track the outlay of more than $275 billion in federal contracts, grants and loans as a result of the unprecedented transparency and accountability requirements of the American Recovery and Reinvestment Act. What was the impact of this massive transparency effort?

While the economic-stimulus law envisioned millions of "citizen IGs" serving as the eyes and ears of accountability for the hundreds of thousands of projects funded under the Recovery Act, it turns out that the biggest beneficiaries of the push toward transparency have been state governments, which were key conduits for stimulus expenditures.

That's among the findings of a new report from the IBM Center for the Business of Government. Francisca Rojas, research director of Harvard University's Transparency Policy Project, examined the Recovery Act's requirements to understand what the disclosure of spending data accomplished, who used the information and how it was used. The report draws lessons from the experiences of six states: Colorado, Maryland, Massachusetts, Mississippi, Texas and Washington.

Rojas had plenty of raw material to analyze. Three years into the stimulus program, more than 276,000 recipients of funds had submitted quarterly reports to the federal Recovery Board. All of these reports are public information, accessible online by anyone at any time. All of the states created similar websites.

First off, Rojas found that hopes for a corps of citizen watchdogs were not realized. The transparency websites typically were not used by the public to search for fraud and waste. Instead, the public most frequently visited them to find what stimulus-funded jobs might be available — information that was not available on the websites.

And while advocacy groups and journalists initially showed interest in the information, their attention was more focused on the decision processes for allocating the funds, which the transparency provisions did not address: The data on the websites described only how stimulus funds were spent.

Instead, Rojas found, the real users — and beneficiaries — were the state governments themselves, because the data provided a much greater capacity for state officials to manage federal funds than had any previous systems. Among the report's findings:

State compliance with federal spending disclosure requirements was very high. States exceeded the Recovery Act's transparency requirements, with many building comprehensive online portals for the data.

Transparency requirements did, as was hoped, serve as a deterrent, which likely contributed to low rates of fraud, waste and abuse.

The quality and timeliness of transparency data improved over the course of implementation. There was, however, a lack of consensus on performance metrics, particularly with respect to job creation.

Spending transparency became institutionalized — not only at the federal level but also in some states. For example, Maryland Gov. Martin O'Malley extended his existing StateStat process to serve as a RecoveryStat, merging the state's existing performance-management system with the new spending transparency requirements.

As states and the federal government institutionalize greater fiscal transparency — which is being proposed both by Congress and by the White House — Rojas urges policymakers to pay special attention to two areas so that the right data are collected: the design of any new requirements and those requirements' implementation. For example, if advocacy groups are seen as important users, they are likely to be interested in greater transparency in the decision-making processes for funding.

Overall, Rojas concludes, the goal should be to preserve these transparency gains and build on them for the long term, with governments developing accountability systems for their spending "that are more accessible, actionable, and ultimately more valuable in the years to come."

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