February 8, 2013 – Increased independence could improve the confidence of client caseload forecasting that is the basis for two of the largest state agency budgets in Oregon, according to an audit released today.
“Legislators need accurate information to put together the state budget,” said Secretary of State Kate Brown. “The audit released today is an excellent example of this office working with the Legislature to improve the integrity of the budgeting process.”
The Office of Forecasting, Research, and Analysis is a shared service of the Department of Human Services (DHS) and the Oregon Health Authority (OHA). The unit’s client caseload forecasts are used to estimate expenditures for the two agencies’ budgets.
Accurate forecasting is critical to the budgeting process. Over-forecasting means less money for legislative priorities in the initially adopted budget. Under-forecasting results in a shortfall.
The audit determined that the forecasting unit has generally been accurate and getting better in recent years. Auditors found one instance in which senior management influenced the client caseload estimate for the Aid to the Blind and Disabled program, resulting in approximately $4 million more than the program needed. Since the Spring 2011 forecast, DHS and OHA have taken steps to address independence concerns. However, the current governance and oversight structures may not sufficiently protect the unit’s independence.
As part of the normal budget monitoring process, the Legislative Emergency Board learned of the over-allocation in 2012, and re-allocated the money, mostly to other OHA programs. General concerns regarding the independence and accuracy of forecasting prompted Sen. Richard Devlin to request this audit. Dr. Bruce Goldberg, Director of the Oregon Health Authority, and Michael Jordan, State of Oregon Chief Operating Officer, later requested the audit as well.
“Overall, client forecasting for OHA and DHS have been good and getting better,” said Audits Director Gary Blackmer. “We recommend some safeguards to consider to increase confidence in the forecasting.”
The audit makes recommendations to improve the unit’s transparency and the independence of its forecasting. One alternative is to create a policy oversight committee for the unit. Another alternative is to place the forecasting unit under the administrative oversight of an external agency. The Legislature made a similar move several years ago when it transferred prison inmate forecasting from the Department of Corrections to the Office of Economic Analysis.
“The integrity of the budget process is critical to making sure Oregon's tax dollars reflect the priorities of the Legislature and the Governor,” said Sen. Richard Devlin. "I appreciate Secretary of State Brown's quick responsiveness to concerns that I raised."
The audit was conducted by William K. Garber, CGFM, MPA, Deputy Director; Sandra K. Hilton, CPA, Audit Manager; Shanda L. Miller, CIA, MPA, Principal Auditor; and Ian M. Green, MS, Staff Auditor.
The audit report, including the agency response, can be found at www.sos.state.or.us/audits.
The Audits Division of the Secretary of State’s office promotes the wise use of tax dollars, sound management and government accountability.
