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Yesterday came the disturbing news about Skiatook Public Schools spending hundreds of thousands of dollars more on janitorial supplies than necessary over the last four years.  So today, let’s talk about what can be done to prevent another such incident or at least catch it faster.

For starters, there is a bill (SB 2034) authored by Senate President Pro Tem Glenn Coffee (R-Oklahoma City) which will have the State Auditor’s Office oversee the accounting firms that currently perform annual audits of school districts.  The bill also requires that any firm performing an audit has at least one person with additional training in education audits every year.  Right now, only 31 firms perform the audits for the hundreds of school districts in the state.  And as we pointed out last year, there is nothing in the law that says the person doing the auditing cannot be related to a school board member or the superintendent.  In fact, it would appear that the superintendent himself could do the audit if he was also a CPA with an office in Oklahoma.

Next, we need school districts to be far more transparent than they are.  There are bills in both the House and the Senate that will make school district spending more accessible to the public by putting it in a searchable database on the State Department of Education’s website.  It would include all expenditures of dollars whether from state, federal or local taxes.  The more eyes we can have looking at spending, the greater the chance of finding funds being misused.

OFRG would like to each school district post their annual budget and audit results on their own website.  Our Blueprint for Transparency review of school district websites found that 97% of districts in the state do not have their budgets online for taxpayers to see and 99% fail to post their audits.  The documents already exist, all it takes is for someone to upload them to the website once a year.  This is hardly a financial burden on school districts.

Finally, there needs to be more accountability on the local level.  School board members are elected to represent taxpayers, not to act as a rubber stamp for a superintendent.  Board members need to ask tough questions about spending and demand to see documents before approving any purchases.  The State Auditor’s report says that a simple comparison of the billing invoices with the shipping invoices would have shown the discrepancy in the Skiatook case.  School board members should trust, but verify. 

And let’s not forget about us taxpayers.  We need to be accountable for electing school board members who will take the time to oversee the spending of our tax dollars.  And we need to follow-up and ask questions ourselves if board members are not doing their job.  Schools are spending the majority of our tax dollars so they need to be answering our questions.  If they don’t, take action!

State Auditor Steve Burrage’s office just released a report on Skiatook Public Schools that should have taxpayers everywhere asking questions of their own school board members and superintendents.  According to the report, between May, 2004 and January, 2009:

• The school spent over $800,000.00 for the purchase of custodial supplies from E & E Sales, Inc. instead of buying direct from the actual retailers. The school often paid double, triple or quadruple the open market price for the items ordered from E & E Sales.
• The school paid nearly $60.00 each for trash cans that are available online from a home improvement store for $8.00 each.  
• The school paid $612,005 for supplies costing $229,286.  The school paid E & E Sales a $382,719 markup over market prices for these supplies.
• The school also paid Austin Security Company over $460,000.00 for security systems during the audit period. Austin Security Company is operated from the same Oklahoma City storefront as E & E Sales, Inc.  Instances were noted where the school paid Austin Security prices that were 400% or more above market prices. The school, for example, paid as much as $6,600.00 for a security system from Austin Security that it could have bought direct for $1,312.99.
• Had the school implemented policy and procedures concerning purchasing and receiving, it is likely they would have discovered years ago that they were paying markup amounts of 100% to 500%.
• In fact, had the school simply compared the shipping invoices they were signing to the billing invoices submitted by E & E Sales, they could have easily detected they were paying substantial markup amounts for using E & E as a middleman.

It’s disappointing to see yet another example of a school district misusing tax dollars that are supposed to educate our children. As our Blueprint for Transparency noted last year, Skiatook is one of many districts in the state that does not post their district budgets or audits online for taxpayers to see. This case also shows why it’s important to know that the tax dollars we are currently spending on education are being used properly before the state commits even more funds, as proposed by State Question 744. We commend the offices of the State Auditor and Attorney General for bringing some sunshine to the Skiatook School District’s budget.

Unfortunately, Skiatook may not be an isolated example.  Pat McGuigan points out in his story on CapitolBeatOK that five other school districts are going through the investigative audit process: Butner, Broken Arrow, Wagoner, Boynton and Seminole.  What happened in Skiatook is further evidence that before the state spends more taxpayer dollars on education, like State Question 744 proposes, Oklahoma first needs to make sure that the money being spent now is done properly and for the benefit of the children.

What can be done to prevent this from happening or at least catch it sooner?  We’ll talk about that in tomorrow’s blog post, so stay tuned!

The Oklahoma Education Association, the driving force behind State Question 744 that is opposed by most everyone involved with the state’s budget, appears to be playing loose with numbers on the website they have devoted to SQ 744.

The site’s FAQ page has been recently updated with new figures showing the state’s per-pupil spending on education and the regional average.  The original figures, based on 2007-08 data said that Oklahoma spent $7,615 per pupil while the regional average was $9,078.  According to the OEA, that difference of $1,463 meant that the state would have to spend $850-million dollars more on education to get to the regional average. 

The new data has Oklahoma spending $8,006 per student with the regional average coming in at $9,633.  That’s a difference of $1,627 per student yet somehow the OEA claims that the cost of SQ 744 is still $850-million!

How can spending an extra $164 per student not raise the total cost of SQ 744?  The answer is, it can’t.

Let’s take a closer look at those figures.  First of all, the original price tag is underestimated.  The State Department of Education website lists the 2007-08 enrollment at 634,251 students.  If you multiply that by the $1,463 that the OEA first required us to spend per student, you’d get nearly $928-million! 

And if you use the “updated” difference of $1,627 per student, the cost of SQ744 jumps up to $1.032-billion!  And that’s still using the 07-08 enrollment figures which have probably gone up as well.

So why is the OEA changing some numbers and not others?  And why don’t the numbers add up?

Senate Bill 1922 by Sen. Dan Newberry (R-Tulsa) has been approved by the Senate Finance Committee and now heads to the full Senate for a vote.  The bill will allow tax credits for donations that go to private school scholarships for low-income or special needs students. 

The tax credit will be 80% of the donation up to a $1,000 credit for someone filing singly and $2,000 for joint filers.  Under the terms of the bill, the state cannot give out more than $10-million in tax credits in any one year and there are provisions laying out what kinds of scholarship groups and private schools would qualify.

This is something being offered in several other states around the country, according to the Friedman Foundation, most notably in Pennsylvania and Florida.  It’s a good example of taking ideas that work in other states and applying them to Oklahoma.  For more information on the school choice movement in Oklahoma, be sure to check out the Choice Remarks blog which is the leading voice on the topic in the state.

Tomorrow marks one year since President Obama signed the American Recovery and Reinvestment Act (ARRA) into law.  The goal was to spend nearly $800-billion in borrowed money in order to help the nation’s economy.  Specifically, there were reports that 3.5-million jobs would be created or saved.  So, one year later, what’s the situation like?

Well, if you look at the front page of the federal recovery.gov website, you’ll see that the stimulus hasn’t exactly worked as it was presented.  To date, less than 600-thousand jobs have been created or saved.  Of the $288-billion in tax benefits proposed, less than $100-billion have been paid out.  Of the $275-billion in contracts grants and loans proposed, less than $75-billion has been paid out and of the $224-billion in entitlements, less than half has been delivered. 

And that’s assuming we can believe the numbers.

Since the reporting of stimulus data relies mainly on recipients of the awards, there have been numerous cases of misinformation including money supposedly going to congressional districts and ZIP codes in Oklahoma that don’t exist and cost figures for vehicles that somehow got doubled, although OFRG still has not received documentation confirming the actual price of the trucks.

A year ago, some lawmakers were trumpeting the stimulus bill as a way to help the nation out of a recession.  This year, many of those same lawmakers want a new jobs bill.  Paid for, of course, with money we don’t have.  Congress would do well to look towards states like Oklahoma that are dealing with revenue shortfalls by making budget cuts.

House Bill 3154 by Rep. Leslie Osborn (R-Tuttle) would allow lawmakers to opt out of the health insurance if they wished, thereby saving taxpayers a little money.  It seems like it would be an issue that doesn’t even need legislation, but it turns out that state lawmakers MUST enroll in the state’s health insurance program even if he or she has existing coverage through their regular job or spouse.  

OFRG is happy to see that HB 3154 passed a House committee today and is now eligible to be voted on by the entire House.  At a time when the state is trying to find every possible way to cut spending, allowing lawmakers to NOT have the state pay for their health insurance is an easy way to find savings.

After months of waiting, the state has finally put a much more thorough database of state stimulus spending on its website.  And as we thought, seeing more detail is raising a lot of questions about how the stimulus funds are being spent.

A quick browse of the Oklahoma Department of Commerce stimulus funding resulted in the discovery of award DE-EE0000153 from the Department of Energy.  It seems pretty straightforward - it’s a grant for weatherization of low-income homes with a listing of 21 local agencies aroung the state that have received those funds.  But at the bottom it lists some other vendors.  It is here that we find that the stimulus money has paid for SEVEN trucks, mostly pickups, at a cost of over $360,000!  That’s right, each truck cost more than $50,000!  Perhaps some homes were so bad the government decided to buy trucks for the low-income recipients to live in.  Imagine how much more weatherization could be done with $360,000! *(see note below)

Another intersting example of stimulus funds is award #0842364 from the National Science Foundation to the University of Oklahoma.  The study, according to stimulus documents, ”will investigate the effects of habitat fragmentation in a group of small fish in the Bahamas.”  The price tag for that is $273,219.

It’s also interesting to look at the progress of stimulus awards.  For example, in the area of education, the only programs listed as “Fully Completed” are federal work-study funds that each state college and university received.  Of the 72 research grants awarded to OU, OSU and the Health Sciences Center, only one is more than 50% completed.  It’s been a year since the stimulus bill was enacted, yet in Oklahoma only $1.5-billion of an estimated $2.6-billion coming to the state has been awarded and of that, only $569-million has been received.

While it’s troubling to see some of this information, it’s important to remember that it’s far more information than we can find out about non-stimulus dollars spent in the state.  That’s why OFRG encourages lawmakers to upgrade Oklahoma’s Open Books website to what we call Open Books 2.0 to provide a searchable database for all state spending.  Taxpayers deserve to be able to see exactly how their hard-earned dollars are being spent by government.

***Editor’s note: The Department of Commerce claims the original numbers were somehow doubled and that corrected figures are on there now.  OFRG is asking for documentation to verify the actual cost including copies of the titles and purchase orders.

As pointed out in a column in the Tulsa World over the weekend, state agencies employ about 250 attorneys other than those in the Attorney General’s Office at a cost of over $21-million dollars.  We agree that the issue needs to be looked at to determine if it is in the best interests of taxpayers to keep the current system or modify it in some way.

Considering the state’s current budget situation, every avenue of saving money needs to be explored.  Lawmakers need to ask agency heads during budget hearings how much they spend on attorneys and whether those duties could be done in a more cost-effective manner.  Of course those same questions need to be asked about purchasing, public information, human resources and every other aspect of a state agency’s budget.

If lawmakers agree that leaving $43-million in the Rainy Day Fund as the Governor proposes is a bad idea, then some serious discussions need to occur about how to cut state spending.

Citizens in Charge is out with their 2010 report card on Statewide Voter Initiative Rights.  Oklahoma scored a C+ which is better than average (only six states scored higher including Arkansas and Missouri), but still shows the need for improvement.  The scoring system used awards points for having citizen-authored constitutional amendments, state statutes, local statutes and a referendum process to repeal laws. 

Oklahoma got a perfect 11 points for having all of those avenues available to the people.  but points were lost because of restrictions to those avenues.  For example, two points were lost because the state has a very short period of time to collect signatures.  At just 90-days, it’s the lowest of any state that allows citizen initiatives.  House Bill 2246 passed the legislature last year by a near-unanimous 128-1 margin which would have increased the signature period to one year, the national average.  However, Governor Henry vetoed that bill.  OFRG is pushing to have another bill to lengthen the signature period this session.  Lowering the number of signatures to collect is another way for Oklahoma to score better.

Oklahoma already has the infrastructure in place to make government more accountable to the people it serves.  Lawmakers need to step up to reduce the barriers in place preventing the people from having more control.

OFRG will be taking some time to look through the Governor’s budget proposal to let you know about the consequences of some of the revenue enhancements he proposes in order to spend $6.9-billion in FY 2011 instead of the $5.3-billion authorized by the Board of Equalization.

Accounting gimmicks are used quite a bit in the Governor’s budget.  One plan would have certain franchise taxes due in June instead of July 1st so that the nearly $8-million would be captured in FY 2011 instead of FY 2012.  Another would require that certain sales and use taxes be sent to the state twice per month instead of once per month.  That would allow half of June 2011’s remittances to be submitted in FY 2011 instead of all of the money being submitted in July 2012 which is a different fiscal year.  The Governor does that in order to have nearly $5-million in his budget instead of the FY 2012 budget which he apparently doesn’t care about since he won’t be in office. 

The problem with that, of course, is that those two accounting changes would increase the budget gap for FY 2012 by about $13-million.  That’s on top of the $696-million gap that will already exist because stimulus funds will be gone.

It’s this kind of short-sightedness that can have long-term effects on the state’s economy.  It would be far better for the state to find $13-million in programs to cut than rely on one-time gimmicks that serve no purpose other than to keep government spending high and pass the problem on to a different governor.

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