IG: Accountability Reports “Fictitious,” “Nonsensical”

October 21, 2015

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Inspector General wants better system

In South Carolina state government, annual accountability reports (AARs) no longer are meaningful measurement tools based on international standards designed to promote efficiencies and provide metrics by which to measure agency performance.

After a decade-long format emulating the internationally renowned Malcolm Baldridge National Quality Award Standards that typically ran 50 pages or more, last year new standards out of Gov. Nikki Haley’s office changed reporting standards to no more than five pages (seven with charts), a move hailed as one designed to streamline data evaluation but that in reality has achieved confusion, fewer accountability metrics and the same level of oversight and enforcement as before: nearly none.

Absent any meaningful accountability enforcement, Maley said state agencies regularly submit annual reports with “fictitious” strategic plans and metrics, regurgitate “boilerplate” copy with “nonsensical” data and that the process itself has become nothing more than “a superficial annual exercise” that’s “more of a self-serving marketing tool.”

Welcome to accountability in South Carolina.

Agencies already “stretched thin, if not overburdened”

Maley articulated his objections to the state’s accountability measures in a Sept. 1 memo sent to Gov. Nikki Haley, Sen. Hugh Leatherman, House Speaker Jay Lucas, Comptroller Richard Eckstrom and Treasurer Curtis Loftis.

From 2004 until 2013-14 the state used the rigorous Malcolm Baldridge National Quality Award Standards, internationally recognized as a tool for performance excellence whose annual awards are presented by the President of the United States. While exhaustive – most agencies’ reports were around 50 pages in length – they were good tools when used effectively.

Maley says many agencies did not use the tools effectively, however.

“A small agency failed to produce an AAR (agency accountability report) in two of the past five years, and the three AARs produced were virtually boilerplate copies lacking meaningful performance data,” Maley wrote. “Yet the agency’s budget has nearly doubled.

“A cursory review of this agency identified substantial deficiencies with meeting its statutory mission.”

That’s just one example Maley cited. Others were worse.

“(One) agency’s AARs for years were essentially fictitious in describing a strategic plan with metrics, which literally did not exist,” Maley wrote. “This agency asserted, in a recalcitrant manner, it was so unique the agency did not require basic performance measures for its operations, nor could it develop benchmarks for success because it was not comparable to any other entity.

“In reality, this agency operated in a highly benchmarked industry which would have long ago exposed this agency’s systemic weakness if its AAR required standardized industry reporting.”

Maley wrote that with no clear metrics to measure agency performance and a fundamentally flawed accountability system, state government continues to function poorly with agencies already “stretched thin, if not overburdened” who abuse a system that allows agencies to select their own measurements and benchmarks that the state “has no capacity to validate.” This system, Maley writes, leads to “reports containing inaccurate/nonsensical performance data or hollow management jargon creating the impression of a well-honed operation.”

The switch from Baldridge’s seven-tiered criteria to the new format in 2014 meant the requirements now are only that the reports “must contain the agency’s or department’s mission, objectives to accomplish the mission, and performance measures that show the degree to which objectives are being met.” (Section 1-1-820). The only further guidance comes from Proviso 117.31, which states that agencies must “identify key program area descriptions and expenditures and link these to any key financial and performance results measures.”

The result of the change from clearly articulated standards to vaguely worded guidelines and a sample template using a Microsoft Excel spreadsheet available on the Department of Administration’s Agency Accountability Page was that in its first year, 2013-14, agency responses were all over the map in terms of consistency, a problem the new department acknowledged in a June 18 memo.

“Last year, language, quantity and specificity of the goals and objectives varied widely from agency to agency due to varying interpretations of the guidelines,” the memo from the Governor’s Executive Budget Office wrote.

Some agencies even complained about the new procedures in their own AARs, such as this response from Clemson University’s Public Service Activities.

“PSA is grateful for the departure from the Baldrige criteria; however, it is difficult to present a multifaceted complex agency in a user-friendly format using Excel. Please see the Appendix for very brief information regarding Clemson University and PSA’s accountability systems both external and internal.”

Before Haley’s office limited AARs to no more than seven pages with charts in its June memo, Clemson PSA’s report was 19 pages for 2013-14. That’s four pages longer than the Department of Motor Vehicle’s 2014 report (15 pages) and nine pages longer than the report the Department of Transportation submitted (10 pages). Confusion over how properly to comply with the new, shortened standards led to the June 18 memo, which also outlined a framework for agencies to follow with “idealy” three to five annual goals and from two to four strategies per goal recommended in keeping with the five written page maximum. The memo also provides instruction on how to complete the Excel worksheet and the establishment of technical assistance/training sessions that took place in July and August.

Considering the “significant changes in the requirements” of AARs,  the memo reads, “he executive-level leadership and senior management of agencies are STONGLY RECOMMENDED to attend training sessions.”

In Maley’s opinion, as things stand South Carolina simply “does not have a system of requiring agencies affirmatively (to) present data in a rigorous performance based framework that will sufficiently focus attention to the problem to stimulate hard questions and action.”

To tackle this problem, Maley recommends an expanded Dept. of Administration staff that would “play a key budget role” as well as probatively scrutinize and evaluate agency data and leverage. Maley also wants an increased role for the state’s existing internal audit workforce by directing “as many of the 120-150 executive branch internal auditors as needed” away from what he calls “low risk compliance and financial audits” in favor of “risk management, control and governance processes.”

“These internal auditors’ collective impact on state effectiveness would be astronomically higher (than at present), and I can think of no better cost/effective option to reduce waste in government,” Maley wrote.

“I hope this memo to the most influential state leaders served as a catalyst for action.”

Maley told The Nerve that nothing concrete has yet come of his memo, though he hopes something will.

“The guts of good government is providing public assurance that we’re doing the right things, we’re doing them well and we’re measuring them accurately,” Maley said.

Fiscal Year 2014-15 agency accountability reports were due Sept. 15.

Reach Aiken by email at ron@thenerve.org or 803-254-4411. Follow him on Twitter at @RonAiken and @TheNervesc.