Bumpy road ahead for state audit bill

A state lawmaker from Federal Way is scrambling for approval of a performance audit bill that some state officials don’t want.

House Bill 2563 — which was substituted twice and engrossed since its first reading in February — made it out of the House but expired in the Senate State and Local Government Committee.

Wednesday afternoon, Rep. Mark Miloscia (D-30th District) began drafting language to amend the performance audit bill onto the House transportation plan.

He also was adding budget provisos to have the state auditor conduct performance audits, though a budget proviso is less detailed than a bill and is only good for a year.

HB 2563 would have established an audit and scoring system that the state Office of Financial Management (OFM) would use to grade every state agency for cost efficiency and management practices.

The bill also would have established a commission made up of seven citizens to develop audit criteria and a scoring system, advise the governor and the director of OFM on the conduct of the performance audit program, develop recommendations on the performance audits and evaluate audit findings and performance scoring of the audits.

Miloscia called his bill unprecedented, but some with OFM wonder why the state needs another auditing body.

The state auditor performs financial audits, and the Joint Legislative Audit Review Committee conducts performance audits plus performance and sunset reviews.

“We see this Miloscia proposal as one more bureaucratic layer that won’t deliver more than what’s already being done,” said Hal Spencer, spokesman for OFM.

The proposal also might have added to the office’s growing workload. OFM currently is involved with budgeting, the state hiring freeze and drafting an increasing number of reports and studies for legislators.

Miloscia said there are reasons the state auditor and the Joint Legislative Audit Review Committee are inadequate for the task at hand.

“There’s so much work that needs to be done,” he said. “Government is so big.”

The committee has only 18 people who perform about 50 audits a year. Furthermore, lawmakers have to draft legislation — and it has to pass through the session — before the committee can conduct its audit.

The committee lacks flexibility, Miloscia said. Members are not able to identify a high-risk agency and move to audit. Essentially, the way the system is now, only politically vulnerable agencies can be audited, he said. Those agencies with more money and political clout can throw around their weight in Olympia and avoid audits, he claimed.

Ultimately, he said, the state’s auditing system is broken.

The audit review committee is ineffective and underfunded because of the process. The Auditor’s Office can only audit financial issues, not performance, so it’s auditing response is limited, too, he said.

Thirty percent of state agencies don’t perform self-audits, he said, citing Auditor Brian Sontag.

“And the Office of Financial Management has its head in the sand,” Miloscia asserted.

Still, Miloscia’s proposed audit system, which would have covered management practices, audit functions, customer satisfaction, fiscal productivity and efficiency, compliance with state regulations and program effectiveness, was expected to cost between $1 million and $3 million to set up.

The money isn’t in the state budget, but the act was drafted with a null and void clause in the event there was no funding by its June 30, 2002 implementation date.

That’s partially the reason Senate State and Local Government Committee chairwoman Sen. Georgia Gardner didn’t call the bill up for a vote.

“Since we knew all the bills that cost money were dead, we went ahead and heard the bills that didn’t cost money,” she said.

With a recently announced increase in expected budget shortfalls — Governor Gary Locke’s administration announced last week that deficits should be closer to $1.5 million, rather than a formerly stated $1.2 million to $1.3 million — securing the money might prove a challenge.

“It’s hard to convince people to spend $1 million or $2 million this year to save hundreds of millions later,” Miloscia said.

Still, he said the payoffs would be worth it.

“If you want to audit, you have to spend money,” he said. “It drives performance like you wouldn’t believe.

“If we don’t do it in a good year and we don’t do it in a bad year, when do we do it?”

Staff writer Erica Jahn can be reached at 925-5565 and

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