Finance

See-Thru Government

"A new level of transparency" is what President Obama says he wants as state and local governments spend economic-stimulus dollars. But what does that mean?...
by | April 30, 2009
 

"A new level of transparency" is what President Obama says he wants as state and local governments spend economic-stimulus dollars. But what does that mean? Here's one example: $15,482.57 spent on "professional services" and "clothing supplies" at a store that sells women's undergarments.

That's a line item of government spending that recently turned up on a Missouri state Web site. The site, called the Missouri Accountability Portal, was a cutting-edge experiment in openness long before Obama turned transparency into a buzzword. Last year, the National Taxpayers Union combed the site and found $2.4 million worth of spending for "questionable purposes," including the intimate apparel. Matt Blunt, who was governor at the time, asked his staff to look into it. It turns out the purchases at Ann's Bra Shop in Vandalia were legit: The Department of Corrections needed them for female inmates in the state's prison system. Nevertheless, Blunt said he welcomed the scrutiny. "Transparency and openness root out wasteful spending," he said.

Missouri's experience with setting up its accountability site offers some clues to what lies ahead with the stimulus funds. Obama wants state and local governments to feed a federal Web site, recovery.gov, with detailed data on how they're spending the money. In addition, almost every state is setting up its own stimulus site. If there's one thing state and local officials can be sure of, it's this: When spending stats begin hitting the Internet, they can expect more scrutiny of their decisions than they've ever experienced before.

But that may be the least of their worries. Simply complying with what the stimulus law requires on transparency and shaking meaningful data out of their computer systems will be challenging enough. Indeed, Missouri was more prepared than most states are to implement this sort of thing. Before Blunt ordered up the transparency site in 2007, Missouri had already consolidated its IT systems. That experience gave administration leaders the technological and political know-how to steer the many state agencies toward the common goal of opening up their books on the Web. What's more, Missouri had an enterprise-wide financial system to tabulate spending across its agencies. "If you don't have one," jokes former Chief Information Officer Dan Ross, "get out your checkbook and buy one of those hundred-million-dollar systems and get going."

It's probably not, in fact, necessary to spend nine-digit sums on new IT systems to make transparency Web sites work. But figuring out exactly what is necessary has been one of the most frustrating things state and local officials have had to deal with since Obama signed the American Recovery and Reinvestment Act in February. They're being asked to spend the stimulus funds at a furious pace, but also to account for every dollar according to federal rules that were still being written late into April. "There's definitely a lot of concern," says Stacey Mazer, of the National Association of State Budget Officers. "There are so many rules and things are moving quickly. States are supposed to spend the money quickly, do it right and make sure they don't miss a reporting requirement."

Making matters more confusing, the reporting requirements are coming from a variety of different federal agencies. The largest sources of stimulus funds flowing to the states are the Department of Education, the Department of Transportation and the Centers for Medicare and Medicaid Services. But states also will have to sort out additional reporting requirements from any federal agencies they receive funds from.

For the majority of states, this transparency push is a brand new endeavor. The good news, however, is that not all are starting from scratch. Besides Missouri, more than a dozen states already had some experience with trying to track their expenditures online. So there are models for how to work through the technical challenges. Sandra Fabry, of the Center for Fiscal Accountability (an arm of Grover Norquist's anti-tax lobby, Americans for Tax Reform) is one of the few people who has studied what states have done with transparency portals. "There isn't a perfect one out there yet," Fabry says, "but some are better than others."

Fabry says a good transparency Web site is comprehensive, is updated frequently and breaks down expenditures by the items purchased and vendors used. One of the best is in Texas. Comptroller Susan Combs launched the site in January 2007, starting with tracking her own office's outlays. By April, the spending of two dozen large agencies was added to the mix, and by June, every agency's data were up on the site. Information is updated daily and drills down so far that citizens can find out how much agencies spend on pencils, if they want to know. At the legislature's request, a search function has been added. Now, anyone can search the site to see what checks were cut to which vendors doing business with the state.

The site has been equally useful as a management tool. One agency noticed that it was using five different vendors to buy ink cartridges and toner. When it consolidated to one vendor, it saved $73,000. Another agency looked more closely at its spending on pagers, and found several that were used infrequently or not at all. Those plans were discontinued, for a savings of $14,600. Combs says Texas has found $4.2 million worth of such efficiencies, simply by putting its spending online and letting people look at it and ask questions.

Texas, like Missouri, was fortunate to have a new statewide accounting system in place. That helped to get spending data online quickly. But Fabry notes that states need not have top-of-the-line IT systems in place to make a respectable try at transparency. They can achieve a degree of openness with the tools they have, and make improvements over time. That's what happened with Kansas' KanView, which relies on the state's ancient legacy accounting system to provide the site's data.

KanView went online in February of last year. Its creators in the Department of Administration admit that its capabilities are limited. For example, users can find payments to vendors, but not what the payments were for. In addition, the data are current only up to the end of the previous fiscal year. Nevertheless, KanView "gives a sense of openness," says Duane Goossen, the state budget director. "We have nothing to hide." Goossen notes that Kansas is in the process of purchasing a new financial system. By July of next year, the state's ability to track and reveal its expenditures to the public will be greatly enhanced.

By most measures, Missouri leads the pack when it comes to transparency. The Missouri Accountability Portal is updated daily, and contains data going back all the way to the year 2000. Users not only can drill down deeply into what the state is spending money on but can take a close look at whom the state is contracting with. The ability to do this across fiscal years is particularly useful for exploring whether one company might be getting a conspicuously large amount of the state's business.

Two other features distinguish Missouri's system from those in other states. Missouri's site publishes the salaries of all state employees. That information was always publicly available, but never so easy to find as with a Web search. Missouri also is posting information on tax credits given to businesses. The state runs 37 different tax-credit programs, intended to encourage activities from job creation to charitable donations. The multiple agencies responsible for these credits have never coordinated with one another. But now, the site makes it relatively easy for legislators to track who is receiving the credits and how much tax-credit liability the state has incurred.

Missouri's transparency portal gets more than 33,000 hits a day. What are those users looking for? Some are state employees looking for information to help them do their jobs. Others are contractors, checking up on their competition. And a few are fiscal watchdogs, looking to find what they deem to be wasteful spending. When Missouri rolled out the site, officials steeled themselves for "gotcha" comments from the public. But they also were willing to concede that as stewards of state tax dollars, they had to be able to accept blame in some cases.

The key to transparency working as it should is context. And that's where Missouri's site, other state sites, and perhaps Obama's stimulus transparency efforts, all may be doomed to come up a little bit short. In a vacuum, $15,000 in taxpayer funds spent at a bra shop sounds downright scandalous. Only when it is researched and explained does it sound eminently reasonable. Numbers with dollar signs next to them have a way of inspiring people to ask questions. What large numbers standing alone don't do is provide answers.

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