How Closely Will Stitt, Legislators Scrutinize State Agencies?

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Stung by their lack of financial details during the recent state Health Department scandal, legislative leaders are ramping up efforts to increase scrutiny of agency finances and processes.

They likely will be helped by incoming Gov. Kevin Stitt, who promised to run the state like a business and campaigned on a platform of financial transparency and accountability.

Among the legislative efforts are a Legislative Office of Financial Transparency proposed by Senate Pro Tem-designate Greg Treat, R-Oklahoma City, and the Agency Performance and Accountability Commission, which began its work earlier this year. They give the Legislature more control over agency audits and financial data but have encountered criticism that they duplicate efforts at other agencies, such as the State Auditor and Inspector and the Office of Management and Enterprise Services.

Mismanagement at the Oklahoma State Department of Health, which secured a $30 million special appropriation from the Legislature last year amid its financial crisis, put agency budgets and financial transparency in the spotlight. Almost 200 health agency employees were laid off, but a later multicounty grand jury report and investigative audit found the agency had plenty of cash to pay its bills.

“That really illustrated that we really don’t have the information at our disposal to be able to contradict that they weren’t able to make payroll without us giving them $30 million,” Treat said. “We didn’t have the tools at our disposal to analyze it.”

Under Treat’s Senate Bill 1, the financial transparency office would have six to eight staff members who are employed by the Legislative Services Bureau. A bipartisan committee from the House and Senate would oversee the office, which would have the power to issue subpoenas for agency financial and program details.

Treat hosted an interim study earlier this year with experts from New Mexico, Indiana and Mississippi, which have legislative budget offices. He said the Oklahoma office’s bipartisan, bicameral oversight committee would ensure its work couldn’t be used solely for partisan gain. It also would put better financial information in the hands of legislative leaders during budget negotiations.

“One of my big frustrations going into budget negotiating rooms is you spend a big part of your time just trying to reconcile the differences in the numbers between the House and Senate, and then you throw the governor’s office into the mix and many times you have different numbers there as well,” Treat said.

The office could also evaluate specific agency programs to see if they are working as intended, taking a complementary role to audits from the Auditor’s Office.

“We don’t have an independent part of the Legislature to be able to make really thorough investigations into expenditures and go back after a program is enacted to see if it’s effective or not and recommend adjustments,” Treat said. “We’re completely dependent on either agencies, lobbyists or sometimes think tanks.”

The performance and accountability commission, which was created under House Bill 2311 in 2017, spent $1.37 million to hire four firms for performance audits. The auditing firms are reviewing six agencies, including the Tax Commission and OMES, and are expected to issue their reports by Dec. 31. The commission got a late start in hiring the audit firms after several missteps related to open meetings and bidding requirements.

The nine-member commission has members appointed by the governor and legislative leaders. The OMES director serves as a non-voting, ex-officio member.

The commission’s chairman, Bob Sullivan, said the pace of the commission’s discussions with the firms has quickened as it reaches the year-end deadline. The commission is expected to meet in January to review the recommendations and present its findings to lawmakers.

Meanwhile, legislative leaders are likely to find common ground with Stitt’s desire to expand the governor’s power to directly appoint agency heads, most of whom are hired and fired by governing boards. Although the governor’s office has appointment power over many agency boards, most of their directors don’t answer directly to the governor.

The powers of boards are a legacy of the early populist days of statehood, where the prevailing wisdom was that spreading powers around would lessen government corruption and cronyism. But it also makes it harder to bring rapid change to state government.

Stitt spokeswoman Donelle Harder said newly elected lawmakers heard about the need for more gubernatorial appointment powers during their campaigns, too. She said the accountability audits, the financial transparency office proposal and expanded gubernatorial powers would work together to promote good government.

“That’s where their concepts come into play: How do we constantly keep a check on the government? What we know right now is it’s not working,” Harder said.

Stitt also wants to appoint a chief operating officer for the governor’s office, a new position that has been developed in states like Tennessee and Oregon.

“They are the person that’s going in and looking at the agencies, not in a blue or red spectrum, but in a business spectrum,” Harder said. “Why are services not being delivered? What services need to be delivered? What services need to be transitioned out are no longer necessary? It’s really looking at the function of each agency and making sure that we’re customer-centered in how services are delivered, not bureaucracy-centered.”

The tension between agency governing boards and elected officials isn’t new. Outgoing Gov. Mary Fallin clashed with the Board of Education early in her first term when Republican Janet Barresi took over as state superintendent and the board resisted some changes. Fallin and the Legislature then worked together to change the board’s terms. More recently, the education board and State Superintendent Joy Hofmeister haven’t complied with a Fallin executive order asking for details on instructional expenditures.

Harder said Stitt will look for common ground with agencies and boards and wants to build consensus.

“He’s not inclined to start it off rocky. He’s more inclined to inspire and push people to really be here for the right reason,” Harder said. “And that’s to move the state forward and not continue recycling ideas that have left us in last place since we were founded.”

Among Stitt’s first official acts will be presenting his executive budget to the Legislature on Feb. 4. Agencies have already sent their budget requests for fiscal year 2020 to OMES’ budget division. As part of the transition process, the agency provided a 330-page budget briefing book to Stitt’s team.

Updating and renewing some of the state’s financial transparency tools, like an online checkbook and an open data portal, are also among Stitt’s priorities. Both were put in place almost a decade ago and are showing their digital ages.

“Those things definitely need a refresh and we’re working on that,” OMES spokeswoman Shelley Zumwalt said.