2002 NLPES-Fall Training Conference Notes
Panel: Evaluating Sacred Cows
Moderator & Panelist: Kate Wade, Program Evaluation Director, Wisconsin Legislative Audit Bureau
Other Panelists:
- Dave Greer CPA CFE, Assistant Legislative Auditor and Director of Performance Audit, Louisiana Legislative
- Dot Reinhard, Performance Audit Manager, Arizona Office of the Auditor General
Ms. Wade introduced the panelists. Most state auditors are likely to encounter entities which are "sacred cows" in some stakeholders' eyes. For example, likely "sacred cows" issues include:
- DARE
- Law enforcement budgets
- Economic growth
- Fair taxation
- Professional sporting events, venues, teams, etc.
- Universities' role in economic development
Ms. Reinhard described the Arizona Office of the Auditor General's experience in conducting a performance audit of the DARE Program.
- What the Office was up against:
- DARE is the mostly widely used drug education program.
- DARE operates in all 50 states and internationally. It reaches 75-80% of all school districts.
- DARE is considered a "feel good" program, and enjoys heavy celebrity endorsements. It even has its own line of products- i.e., T-shirts, hats, golf equipment, etc.
- How the review came about:
- The Arizona office conducted a sunset review of Arizona's Drug and Gang Policy Council a few years ago. One of the Council's responsibilities is to evaluate and direct resources to achieve the best use of state monies. During this review, auditors heard evaluations that DARE was ineffective.
- When the Department of Public Safety (DPS) came up a few years later for sunset review, an opportunity to look at DARE was available. At that time, DPS managed one of 15 regional training centers in the US. (Note: This is no longer true.)
- What the review focused on:
- The team started with an extensive literature search regarding DARE effectiveness.
- The complete literature search was narrowed to the 14 studies which used the most rigorous methods.
- The 14 studies were then summarized. A summary table was eventually provided in the published report as an appendix. The team took care to include information about both long-term and short-term results.
- Lessons Learned
- Timing is Everything - The report's timing helped win some acceptance. There were already ongoing local and other states' concerns about DARE. Additionally, certain federal funding requirements call for proven results for funded programs. As a result, DARE "saw the writing on the wall" and re-formulated itself.
- Media coverage of the report was very high.
- Develop a strong professional relationship with the agency - This was particularly difficult because the agency can be very passionate about their programs. Additionally, agencies do not always understand when auditors do not focus on their administration of the program, but rather on the effectiveness of the program.
- Ensure research is thorough and sound, because the agency will attempt to criticize the report.
- Explain the history and reasons for popular support of the program in the published audit report.
- Keep the tone balanced.
- Consider providing options to policymakers. Although the team elected to not provide options in this case, they could have included options. This would have allowed the policymakers to make decisions and be involved.
- Conclusions:
- DARE to ask hard questions!
Mr. Greer described his agency's experience auditing local tax incentives. The audit objectives were straightforward:
- Were tax incentive contracts awarded and administered in conformity with the law?
- How much state and local tax relief was provided?
- What factors appear to be of most importance to a state's economic well-being, and how does Louisiana rate?
The auditors found numerous problems in the awarding of contracts and the subsequent contract administration. For example, seven percent of the businesses awarded contracts did not qualify because they were not manufacturers. Fifty-nine percent of the exemptions granted were for capital additions, a category not identified as eligible for exemption. Furthermore, outdated census data were used to administer and monitor the program, and businesses were not required to retain the equipment for which they obtained the sales tax rebates.
In terms of tax relief provided, there was no determination of the actual cost of the three largest business tax incentives, but an estimated $2.2 billion in relief was provided from 1997 through 2001. No cost benefit analyses were conducted to demonstrate the effectiveness of the programs.
Finally, in comparison with other states, Louisiana was found to rank nearly last in terms of economic development. While business relocation consultants say employers look for a strong educational system, Louisiana ranks near the bottom in education, as well, and it is educational funding that is damaged with the various tax exemptions.
Some of Mr. Greer's observations:
- Legislators/policymakers sometimes want to avoid difficult questions.
- Media coverage was very heavy and some of the responses were not completely truthful.
- Based on the initial review of tax incentives, Mr. Greer's office will be looking at local tax assessors' offices.
- People responded negatively either because they did not like the auditors looking at this topic or they did not like the result.
Ms. Wade described her office's experience in conducting sports related audits.
- The Wisconsin office has looked at several sports related issues.:
- UW Madison Athletic Department
- Milwaukee Brewers Baseball Stadium
- Green Bay Packers/Lambeau Field
- These entities were audited for a variety of reasons, including:
- Legislative requests to the Joint Legislative Audit Committee,
- Statutory requirements, and
- Legislative inquiries to the State Auditor
- Key findings included:
- At the UW, management improved, but expenditure growth was outpacing revenue growth.
- Brewers Stadium construction costs grew beyond taxpayer expectations.
- The Packers faced several financial challenges.
- What they have learned about sports audits:
- Be willing to take reasonable risks.
- Consider securing audit authority in enabling legislation when special sports districts are established.
- Consider confidentiality agreements to make entities more comfortable.
- Take extra steps to community with sports authorities, including describing the audit agency's role, scope, and procedures. These entities are unaccustomed to working with state performance auditors.
- Be prepared to defend your qualifications and expertise. For example, stress your office's experience in analyzing and presenting complex public programs to a legislative audience and your experience in media relations.
- Pay attention to booster groups and foundations because they represent an additional source of revenue. For example, there may be contracts with shoe companies and millions of dollars available through foundations.
- Expect the financial records and relationships to be unusual. For example, the Wisconsin auditors identified a $72 million separate lease agreement for stadium seating for the fans.
- Be prepared for extensive media coverage. In Wisconsin, audit working papers are public records. The media wanted to see all the details. As a result, the team may want to consider excluding names and other potentially sensitive information from the working papers. For example, the media used Wisconsin's workpapers to identify who had their Rose Bowl tickets paid for by the University.
- Follow-up to ensure recommendations are implemented. This is important because these organizations are savvy, they are often dealing with one-time projects, and there are short memories in sports.
- Enjoy the morale boost for the audit team. Financial and program evaluation staff can enjoy the unusual visibility and there can be recruiting benefits for the agency as a whole.
- Ms. Wade directed questions about these report to:
- Janice Mueller, State Auditor
- Paul Stuiber, PE Director
Ms. Wade moderated a question and answer period.
- An audience member commented that his office hears many challenges to their qualifications when working on these types of reports.
- Audience Question: How can you evaluate economic impact? Mr. Greer: It is very difficult. The state should at least be checking the economic growth numbers provided by private industry.
- Audience Question: Were there hearings on DARE and who attended? Ms. Reinhard's response: They had expected a large crowd. However, this report was heard in conjunction with several other DPS reports and the crowd was minimal. Additionally, DPS' relationship as a training center had been discontinued by time the hearing was conducted.
- Some specific questions about Louisiana's tax incentive programs were asked and answered by Mr. Greer.
 2002
Fall Training Conference Notes
|
