What's New

Yet another federal audit has been released begging our elected leaders to address the country's fiscal situation. The following is from acting Comptroller General Gene L. Dodaro's testimony before Congress today:

"The nation’s long-term fiscal challenge is a matter of utmost concern. The federal government faces large and growing structural deficits due primarily to rising health care costs and known demographic trends. There is a need to engage in a fundamental review of what the federal government does, how it does it, and how it is financed. Understanding and addressing the federal government’s financial condition and the nation’s long-term fiscal challenge are critical to maintain fiscal flexibility so that policymakers can respond to current and emerging social, economic, and security challenges.

While some progress has been made in recent years in addressing the federal government’s short-term fiscal condition, the nation has not made progress on its long-term fiscal challenge. However, even this short-term deficit is understated: It masks the fact that the federal government has been using the Social Security surplus to offset spending in the rest of government for many years. If the Social Security surplus is excluded, the on-budget deficit in fiscal year 2007 was more than double the size of the unified deficit . . .

At some point, action will need to be taken to change the nation’s fiscal course. The sooner appropriate actions are taken, the sooner the miracle of compounding will begin to work for the federal budget rather than against it. Conversely, the longer that action to deal with the nation’s long-term fiscal outlook is delayed, the greater the risk that the eventual changes will be disruptive and destabilizing and future generations will have to bear a greater burden of the cost. Simply put, the federal government is on an imprudent and unsustainable long-term fiscal path that is getting worse with the passage of time."

With Congress and the President demonstrating an ongoing lack of self-discipline on spending, is it time to revive efforts to adopt a constitutional balanced budget amendment? 

On May 23, 2008, Thurston County Superior Court Judge Chris Wickham invalidated three rules the Department of General Administration (GA) adopted to implement the competitive contracting provisions of the 2002 Civil Service Reform. The Washington Federation of State Employees (WFSE) sued to have the rules thrown out. A copy of the ruling was made available by the Attorney General last night.

At issue are WAC 236-51-006, 236-51-010(11) and 236-51-225. The main issue of contention is on what it means to be a "displaced employee" due to an agency competitively contracting work.

I had an opportunity to talk with the Director of GA, Linda Bremer, after today's GMAP session to ask what the ruling means and what the next steps are. She said that at this time GA was reviewing its options and would make a decision in the next few weeks on whether to appeal or adopt new rules.

Even before the ruling, the use of competitive contracting by state agencies under the 2002 reform has been less than stellar. A performance audit conducted by the Joint Legislative Audit and Review Committee (JLARC) in January 2007 found:

“…few agencies have competitively contracted for services in the 16 months since receiving authorization to do so. Agency managers reported two main reasons for not competitively contracting. First, managers perceive the process itself to be complicated and confusing, providing a disincentive to pursue competitive contracting. Second, competitive contracting is a subject of collective bargaining, which creates additional challenges by requiring labor negotiations. Managers must bargain, at a minimum, the impacts of competitive contracting. Additionally, some agency collective bargaining agreements include provisions which proh!
ibit agencies from competitively contracting.”

Regardless of the ultimate outcome of the court ruling on the GA rules, Washington policymakers should simplify the bidding process to make it easier for agencies to use competition to improve services. Lawmakers should also shield contracting out from union and political influence by removing it from the collective bargaining process. Improving service to the public is too important to be a bargaining chip in government labor negotiations.

The State Auditor's Office released an audit of the Department of Social and Health Services (DSHS) today with 4 findings issued against the agency.

The findings are:

• DSHS does not have adequate controls to ensure all payments made through its Social Services Payment System are supported and approved. This resulted in "$88,230.42 in inappropriate payments to 115 clients and providers. The Department had identified 28 of these through its review process and our audit identified the remaining 87. The Department has begun recovery proceedings for 110 of the overpayments identified. The overpayments were a combination of state and federal dollars." - Repeat Finding

• DSHS does not adequately monitor contracts with Crisis Residential Centers to ensure compliance with state law and contract requirements. DSHS "is not in compliance with state law or its own contract. By paying a provider who has allowed clients to stay beyond five days, the Department is not receiving the services – open available space for at-risk youth – agreed on in the contract. These facilities are designed to be short-term residences for emergency situations."

• DSHS Children’s Administration, did not perform adequate monitoring for background checks of foster care providers. DSHS "licensed and paid foster care providers without evidence showing a required criminal background check was completed and cleared. The lack of background checks for all required individuals increases the chance of people with disqualifying criminal backgrounds having access to children served by the Department." - Repeat Finding

• Public funds were misappropriated at the Department of Social and Health Service’s Division of Child Support. "On March 27, 2007, a client notified the Division that a payment, that had been made, was not posted to their child-support account. The client contacted their bank and found the payment was deposited into a personal bank account, not the Department account. The Department recognized the name on the personal bank account as a temporary employee and terminated the individual on March 27, 2007. The Department immediately filed a police report with the Olympia Police Department, which referred it to the Washington State Patrol. The Patrol conducted an investigation and interviewed the former employee on June 6, 2007. During the interview, the individual stated she misappropriated the payment. After further investigation, the Patrol concluded the former employee had misappropriated at least $25,571.58 in public funds between December 1, 2!
  006 and March 27, 2007. As a result of this loss, the Division has made improvements in its internal controls regarding processing of child-support payments."

It's never good to receive an audit finding but it looks like DSHS is making progress with just a handful of problems identified. That said, there should never be a repeat audit finding. Hopefully the Governor and Legislature will make sure DSHS doesn't repeat this year's violations in next year's audit.