State Auditor’s budget request “bombshell”

State Auditor’s budget request
: In her 2017-19 supplemental budget request, State Auditor Pat McCarthy revealed that 55 state agencies have not been audited in more than four years. The revelation sparked outrage among some Republican state lawmakers, while SAO officials have sought to bring attention to the budget cuts made by the state since the Great Recession. Photo: International Technology Law Blog,

The State Auditor’s Office (SAO) hasn’t performed an accountability audit on 55 state agencies for more than four years, and four new state agencies have never been audited due to funding challenges. That’s according to Democrat State Auditor Pat McCarthy’s 2017-19 supplemental budget request seeking $700,000 in order to increase the number of audits.

Whether this is a big revelation, or a known, ongoing funding problem depends on who you ask. Key ranking Republican state lawmakers say it’s the first time they’ve heard of it, and questioned why it hadn’t been brought up during the legislative session when they were putting together the 2017-19 operating budget. However, the SAO argued that the request is the result of playing catch-up from previous administrations’ work along with budget cuts made by the legislature to SAO’s auditing since the Great Recession.

The discrepancy perhaps also reveals tension between legislators and the SAO itself, which in recent years has been rocked by investigations of then-State Auditor Troy Kelley, as well as efforts to re-appropriate funding for performance audits for other uses. Performance audits measure state agency efficiency and have recently inspired bipartisan legislation to improve issues related to how state agencies operate.

Accountability audits determine that agency money is spent lawfully. It’s a task to be carried out by the SAO, then billed to the specific agency, which receives funding from the legislature as part of its budget.

However, there is no specific timeline requirement in state law for when these audits have to be done; that is left to SAO guidelines.

Since the Recession, state funding for accountability audits has dwindled from $8.9 million in the 2007-09 biennium to $2.7 million in the 2015-17 biennium.

“This is one of the lasting effects of the recession,” SAO Assistant Director for Communications Kathleen Cooper said. “This particular funding mechanism really took a hit in those budget years. So those funds were just not available…when everybody was cutting everything.”

She added that even though these agencies have not received an accountability audit, SAO performs other audits on them.

McCarthy’s letter states that the additional funding will allow them to audit smaller state agencies and colleges that have not undergone that process in the past biennia, including:

  • The Traffic Safety Commission
  • Renton Tech
  • Yakima Valley College
  • Cascadia College
  • Bellingham Tech

“Within current funding, the Office is only able to audit agencies with the highest risk such as the departments of Social and Health Services and Transportation,” the letter states. “This decision package will allow deeper insight into issues at larger, higher-risk agencies.”

But Sen. Mark Miloscia (R-30) wants to know why the legislature wasn’t told about the lack of audits while they were in session. The Republican candidate for state auditor last year, Miloscia chairs the Senate State Government Committee and is a member of the Senate Ways & Means Committee. He told Lens that he met regularly with SAO officials throughout the session and never heard about it.

“And so here all of a sudden, after we had our big budget year, now they’re coming in and saying: ‘Where did this come from?’ This is almost immature. You shortfall and you need more money. You come up with a plan and try to sell it. You do this in the dead of night. It’s not how you run a state agency.”

The outrage was shared by Sen. Jan Angel (R-26) on a Facebook post: “This infuriates me that we are now just hearing about this. So they can just not do anything, stating they don’t have the money?? Wrong.”

However, Cooper says that SAO’s budget request for the 2017-19 biennium was submitted last September, months before McCarthy took office.

Nevertheless, Miloscia says the sudden news invites more questions: “What else are they not doing? Do we need an audit of the state auditor’s office?”

“I can guarantee there’re going to be hearings on this to find out what is going on and what else are the blind spots,” he added. “It’s pretty simple: I want to see plans, I want to see metrics and whatever hidden surprises or problems they’re suddenly bringing up.”

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