A new approach in financial accountability

Portland just released its biennial financial condition report, which is a great tool that auditors in our region use. Auditors for Portland, Metro, the State of Oregon, and Multnomah County all regularly issue financial condition reports. These reports follow the same method of looking at key financial indicators over a ten year period to spot trends. These trends may show the recovery from a problem, or could be a warning that a problem is creeping up, year by year.

They use graphics in creative ways to simply tell these stories. The reports are a great way to inform the public about the sources of a government’s money, and where that money is spent.

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GED Audit wins national award

Audit Manager Sheronne Blasi

Audit Manager Sheronne Blasi

We are very pleased to learn that our

Featured Noteworthy Performance Audit

Auditing and GIS: Visuals Help Engage Readers

In 2013 the Oregon Audits Division began expanding the use of Geographic Information System (GIS) software to improve the quality of our reports.  If you have not heard of GIS before, it is a tool used to create maps.

In our modern world, policy makers face a steady barrage of reports from multiple sources.  No one has enough time to read every page that passes by his or her desk.  The reality is that legislators and their staff skim reports.  As program evaluators, we should be aware of this fact. We must strive to capture the attention of our audience.  The use of striking visuals is a great method to do so.  A wonderful visual can engage the reader, signaling them to read the accompanying text of the report.

One important caveat: the quality of the text should match the quality of the visual.  You can have the best graphic in the world, but if the text is dense and lifeless, you will lose the reader.

Maps are a great example of a striking visual.  Everyone can easily relate to and interpret most maps.  Not only are maps easy for the public to understand, but legislators often focus on issues in the districts they serve.  By creating maps, you can effectively engage policy makers with the information they want.

unemployment

Unemployment Rates, 2007-2009

Maps can tell stories

The adage goes “a picture is worth a thousand words”.  I am here to tell you that maps can also tell a persuasive story.  To the left is an example from our audit of Oregon’s Temporary Assistance for Needy Families’ program.

The program is very sensitive to economic downturns.  When millions of people lost their jobs during the great recession, they sought out public assistance in record numbers.  That should not come as a surprise since helping people during tough times is the raison d’être of these safety net programs.

By highlighting the unemployment rates, we reminded our readers of the economic conditions of the time.  This important context was essential for our readers to consider when evaluating our findings.

Working with the press

The press loves including maps and graphics with their stories. By sharing your work with reporters, you will get more attention from the press and better articles than you would otherwise. Our office recently sent the maps and other graphics we worked on to a reporter who covered our audit. The reporter loved the free materials and the audit report ended up getting a second front page article that prominently featured four of our graphics (see image below).

Remember to check in with your leadership team before working with the press. The last thing you want is that to be a surprise.

Here are some other things to consider:u.s.

(1) Deadlines matter – hand off your materials sooner rather than later.  Do your research and make sure you go directly to people who cover the topic;

(2) Give advance notice when possible. Reporters need time to brief editors, call sources, coordinate with their graphics departments, and then write and fact check their stories. Do not expect that releasing information at 4:55pm will result in an article in the morning’s paper.

(3) Make yourself available. Provide your contact number or arrange an interview. Make sure you coordinate with communication staff and leadership so that the right people are involved.

(4) Learn the lingo. When you tell a reporter that information is “on background” the reporter will not attribute the information to you. This is the origin of all the stories with lines like “Senior officials said…”. When you provide information “off the record”, the reporter can’t use the information unless they can confirm it with another source.

(5) Establish clear expectations about when the material can be published.  Providing an advanced copy of your report with an “embargo” can help ensure the information is published on the right day at the right time. Reporters respect embargos, but there are situations where other sources may leak the same material. In those circumstances, a reporter may publish their article early without your approval. This does not violate the embargo because the source of the information is someone else; and

(6) Build a working relationship with reporters between projects. It takes time to develop the trust needed for a successful relationship. Remember, it is a two-way street.

Maps can effectively highlight issues

One of the best benefits of maps is the ability to spot problems that would not be found without a geographic perspective.

Below is a classic map.  It is 1854 and London is facing a daunting epidemic of cholera.  At the time, no one knew how the disease spread.  Day by day, more Londoners succumbed to the disease. John Snow, a local physician, set out to identify the cause of the outbreak. John believed that once the cause was identified the city would be able to develop a plan of action to stop the outbreak.

John examined the relationship between the location of individuals who had died and the location of their water source.  It was clear from his analysis that the Broad Street Pump in the center of the map was the source of the outbreak. John convinced local officials to disable the pump based on this information and helped quell the epidemic.

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London Cholera Epidemic, 1854

Fraud Detection

Recently GIS has found applications in fraud detection.  GIS supplements other fraud tools by looking at fraud from a spatial point of view.

Consider for example the Medicaid program.  The program has both clients and providers.  It may be suspicious if you find a provider who is serving multiple clients that live hours away. Examining the average diving distance per provider might uncover some fraud that would otherwise be missed.  This concept can extend to any program where you can analyze some geographic component.

lousianaWe can see a real world example of this type of fraud detection in the map to the left.  This analysis was conducted by the Louisiana Legislative Auditor’s office in 2013. They examined the distance clients traveled to use SNAP benefits, a.k.a. food stamps, and found some suspicious patterns.

Some stores had individuals traveling five hours across the state to purchase food. These patterns make a case that fraud is being committed. GIS not only makes your findings stronger, but it will also help law enforcement prosecute the offenders. The best-case scenario is when you provide enough evidence to law enforcement that the individuals plead out, thereby avoiding the cost of a trial.

Another example of fraud detection could include looking at ambulance billings relative to distance traveled.  If the company is billing for more time or mileage a GIS analysis could quickly detect this.

Other Audit Applications

San Diego has conducted some interesting audits of their motor pool and fuel purchases that utilized GIS. This 2011 audit looked at the number of take home vehicles from the motor pool relative to their duty location.  The audit found a number of employees had vehicles they were allowed to take home that resulted in extra maintenance and expense for the motor pool. In some cases, employees were driving over 50 miles per day in a government vehicle.  By reducing the number of take home vehicles the city was poised to save half a million dollars per year.

The audit also looked at fuel purchases.  Each time a car fills up at a retail gas station the city pays full price rather than the wholesale price for city operated facilities.  A number of individuals were filling up at retail locations even though city owned facilities were nearby.

 Exploring Demography

There is a world of free demographic information out there.  The U.S. Census Bureau as part of the decennial census and the American Community Survey collects most of the information.

Analyzing available demographics can add depth to your work.  Suppose you are tasked with assessing economic development projects.  These racial dot maps from the Cooper Center take basic census data and create engaging visuals that highlight the divided nature of many of our communities.  By overlaying economic development projects, you could test if opportunities are being enjoyed by everyone. This same principle holds for looking at educational attainment or income.  When evaluating a human services program it is very easy to pull up poverty demographics, and compare and contrast office locations relative to where clientele live.  Alternatively, it is also possible to check to see what populations are being reached and if certain areas are being underserved.

dotmap

Dot maps emphasize density and grouping

Free tools

The U.S. Census Bureau is an excellent source to find data to map.  Recently, the Census has also put together an easy to use Census Data Mapper. Beyond data and interactive websites, there are a number of free analytic tools out there. A quick internet search for “open source GIS” will yield multiple products to try.  QGIS and GRASS GIS are two great options. Google also has some easy to implement interactive web maps if you feel comfortable working with basic HTML.

Pay the price

For some, the options mentioned above will meet your needs.  For others, you may have to open your checkbook to get the right tool.

The simplest to use, and one of the least expensive options, is SocialExplorer. It takes only a few seconds to create beautiful maps using the intuitive interface.  SocialExplorer even has a free version with limited functionality. One of the drawbacks is that you cannot import your own data and are limited to mostly U.S. Census surveys. It also lacks some customizable features found in other programs. If you want to start somewhere, SocialExplorer is a great place to start.

ArcGIS and Tableau are two power players in the data visualization market.  The features and analytical capabilities of their software are quite amazing.  The biggest drawback though is the cost of the licenses and the amount of staff time you need to invest to learn the software.

A more user friendly alternative is ArcGIS Online. This cloud based software is an add-in for Excel 2010 and 2013. ArcGIS Online is easier to use and much cheaper to purchase than the full desktop version, but you also lose some of the more advanced features. For example, some of the fraud detection tools such as calculating driving distance have not been implemented in the online version.

In either case, the benefits of using GIS can far outweigh the costs when you leverage the tool properly.

Good luck on your journey with GIS!

ian

Ian Green, M.Econ, CGAP Senior Auditor with Oregon Secretary of State Audits Division

Data Wonk Featured

Changes in Federal Spending: How should performance auditors respond?

 

For the past 40 years, the Congressional Budget Office has been issuing independent, non-partisan projections of federal spending.

Why do you need to know this? Because state programs often depend on federal support. If federal support falls, it will have a major impact on the programs you evaluate. You can help your state avoid costly decisions down the road by preparing for these changes now.

The short story of CBO’s projections is that federal support for medical programs will expand and discretionary spending will shrink in the future.

Medical programs on the rise

CBO projects that the share of federal spending on medical programs will increase by approximately 70 percent over the next 25 years. CBO notes “the number of people receiving benefits from government programs will increase sharply during the next two decades”.

CBO Image 1Key medical programs include Medicaid, Medicare, Children’s Health Insurance Program (CHIP), and health insurance subsidies as part of the Affordable Care Act (ACA).

What is driving up medical costs? According to CBO, there are three primary drivers: 1) an aging population requires more medical care; 2) medical costs continue to grow faster than inflation; and 3) the expansion of Medicaid under the ACA and its related subsidies. Aging accounts for roughly 55 percent of the growth, increasing medical cost inflation per beneficiary accounts for 24 percent, and the ACA accounts for the remaining 21 percent.

On average, the federal government pays 60 percent of the costs of Medicaid. As medical costs continue to grow, states will also face rising expenses for their 40 percent match. CBO predicts that many state governments will manage rising Medicaid costs by restraining the rates paid to providers, limiting the services they choose to cover, or tightening eligibility to reduce the number of beneficiaries.

Discretionary spending will declineCBO Image 3

Since the 1970’s discretionary spending has been falling. CBO believes this trend will continue for decades to come. What used to amount to half of federal spending has declined to approximately a third in recent years. Over the next few decades, it will decline even further.

Discretionary spending spans a wide array of government programs. The list of programs is too exhaustive to name them all, but they include areas such as education, workforce development, social services, transportation, housing, research and public health, criminal justice and natural resources.

It’s likely you see at least one program in your workload that will face challenging fiscal times in the future.

What does this mean for performance auditors?

Auditors should consider these projections within the context of their work. Programs with declining federal support are at risk for fiscal problems in the decade to come. By evaluating these programs, such as those in natural resources, with the view that funding will dry up we can make recommendations to get their fiscal house in order, before the roof collapses.

For medical programs, look for fraud and waste. Gear your evaluations around cost effectiveness and tie outcome measures to program costs. As states take on an increasing financial responsibility over the ACA expansion, also consider how this might pose new fiscal challenges for your state. A key legislator in Oregon recently said that two thirds of increased revenue in the next budget cycle are being directed to Medicaid. That leaves few dollars on the table for other programs with growing expenses.

Uncertainty and changes in law

Long-term forecasts are subject to a high degree of uncertainty. Keep in mind that these numbers can and will change. For example, if a new cost-effective cure for cancer is developed in the next decade, this will have a major impact medical spending.

CBO Image 2

Changes in law will also have a major impact on these projections. For example, if the Supreme Court or a future congress repeals provisions of the ACA it will dramatically change how much money is spent by the federal government on Medicaid.

Featured Noteworthy

Community Colleges: Targeted Investments Could Improve Student Completion Rates


Community Colleges: Targeted Investments Could Improve Student Completion Rates


  • Only 24% of the Oregon community college students completed an associate’s degree or certificate, putting Oregon’s education and workforce goals in jeopardy.
  • Community colleges have introduced sound practices to improve student success, but they reach less than one-quarter of the students in need.
  • Coordination, support and analytic capacity are needed to improve student success and to assess proposed changes, such as outcome-based funding.
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2014 Secretary of State Hotline Report


2014 Secretary of State Audits Division Hotline Report


  • The Audits Division Hotline received 180 reports in calendar year 2014.
  • We resolved all but four of the reports at year’s end by performing reviews, referring reports to contacts at other public bodies for their consideration and review, referring callers to appropriate contacts, and providing requested information.
  • We invite anyone with concerns about fraud, waste, or abuse to contact the Hotline at 1-800-336-8218. We can also be reached online here.
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TANF Audit Wins National Award

Congratulations to our very own Jamie Ralls, Sandy Hilton, Ian Green and Scott Learn!

An audit released last April on Oregon’s Temporary Assistance for Needy Families, better known as TANF, was selected as this year’s winner for a national award on excellence in accountability.

You can read the complete audit here!

The Excellence in Accountability Awards are distributed annually by the National State Auditors Association. This year, from a pool of 34 entries across four categories, the Oregon Audits Division took home the prize in large performance audits.

After interviews, extensive data analysis and reviewing more than 80 cases in-depth, the audit found that, despite budget cuts and increased workload, Oregon’s TANF program continued to successfully help dozens of clients across the state.

However, the audit also found that the program was making little to no progress in moving its clients toward self-sufficiency. Auditors identified opportunities for improvement that would help keep Oregon’s TANF program on steady ground.

The award will be presented at the 2015 NSAA Annual Conference in Little Rock, Arkansas in June.

This marks the first time the Oregon Audits Division has won this award.

Congratulations to the team and to the other winners!

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