Gene Dodaro, the comptroller general of the United States, fired off 56 PowerPoint slides at state, local and federal auditors attending the recent biennial meeting of the National Intergovernmental Audit Forum. As you can imagine, Dodaro’s message was grim: The United States is now farther along an unsustainable fiscal path. This may strike you as old news, but to me this was different. After all, as comptroller general, Dodaro is the head of the U.S. Government Accountability Office (GAO), the credible source of much of the data that feeds the information market inside and outside the Beltway.
Every slide showed another aspect of the trouble ahead. In one, the historical high for debt held by the public -- 109 percent of gross domestic product (GDP) following World War II in 1946 -- would be exceeded around 2026, quickly rising to 200 percent of GDP by 2040. Clearly, policymakers can’t let that happen.
But another slide really caught my attention. It had a long list of program areas that receive limited or no evaluation of their effectiveness. Dodaro’s point was that GAO and others in the government audit and accountability community must focus on program effectiveness so they can use that information to inform policymakers and the public as they make difficult choices.
As important as that job of auditing and evaluation is, it’s getting harder. GAO is at its lowest staffing levels since 1935. Richard Chambers, president and CEO of the Institute of Internal Auditors, told meeting attendees that state and local government audit organizations were undergoing severe cuts in staffing and funding and, in some cases, were being eliminated altogether. My conversations with individual audit directors bore this out. For example, Jerome Heer, director of audits for Milwaukee County, Wis., says he now has a staff of 14 auditors, down from 28 a few years ago. Kansas City, Mo., Auditor Gary White says he has nine auditors, down from 17 in 2003.
When it came time for questions, I asked Dodaro how he was going to provide more effective auditing, given GAO’s low staffing levels. His answer could be summarized with two keywords: targeting and technology. GAO wants to work better with Congress in choosing which of the thousand or so requests it gets annually from lawmakers ought to result in an audit. It also is trying to get out from under some of the routine audit work that it has been required by statute to do but that provides less bang for the buck. And it is trying, like nearly everyone else in government, to use technology to increase the productivity of its staff.
So what’s the takeaway for state and local government? That brings us to slide 50, which showed that since at least 1977 the largest single source of a state’s general revenue -- more than income, sales and corporate taxes -- has been federal grants. When the people who supply your largest source of revenue run up against tough choices, you can bet a great deal of that money is going away -- and quickly. Tough choices tend to cascade downhill.
State and local governments have a huge stake in how this all turns out. Policymakers at every level of government ought to limit further cuts in audit and evaluation. Cutting back in those areas to save money is like trying to lose weight by shrinking your brain. Like GAO, state and local government auditors ought to target audits as wisely as they can, focus more of their effort on determining whether programs actually achieve the objectives they were created to meet and more aggressively communicate the results of their audits.
This is not going to be pleasant. Studies of audit and evaluation organizations have shown that effectiveness audits are the likeliest to bring political heat on auditors, but that’s their highest-value work. Things will get dicey, but this is no time to be squeamish.