 Good morning and welcome to town meeting television. I'm so pleased to be here today with Doug Hoffer our state auditor Welcome. Nice to see you. Thank you and nice to see you now. You've published your What we did in 2023 report and I want to get into some of those Highlights because your office has been quite busy, but first let's remind our viewers What does the state auditor do? That's a good one most people don't know We have three primary responsibilities One is to audit the state's financial statements. The other the second major is a compliance audit for federal money It's called the single audit. We don't do those we farm those out because they're boring They're really important, but they're boring the third and most important and most interesting to me Thank goodness is performance auditing We focus on the work of state government and the extent to which they meet their obligations under statute Which is kind of compliance, but whether they Make good use of the money appropriated for the programs created by the legislature So I don't remember and maybe I wasn't on the email list of prior Auditors and you have been auditor for a while. How many years does everybody have to know that? So prior to that I don't think I ever got any update or report from what the state auditors were doing and then You are very good communicator at least with the people on the list, right? And then there's this list of things from 2023 and I'm thinking you guys are busy I mean, this is a lot of analysis and a lot of work. How many staff people do you have including me 16? We have a vacancy right now though, and there are 11 Professional auditors the rest are non auditors But that my deputy and I both work directly with the audit teams and there's one Administrative person and then another investigator type guy and are those auditors I mean you think of them in financial terms, but these are performance audits You're actually looking at if the outcomes have been achieved correct and is our auditors trained to do that too They are now I mean historically it wasn't a thing in fact when I did some work You may recall in the 90s under contract for Ed Flanagan former state auditor. That's when gas be The national organization of auditors state auditors and others Realized that the financial work was not the end of the story. It's important and must be done But that's the beginning of a different conversation about how well are we using the money? Is it effective and that's that began in the 90s and I'm so grateful because it was long overdue well, one of the Ways that the state has spent money that's on the minds a lot of people because it's been in the news has to do with EB-5 and so And the fact that we are settling with the investors a lot of money and Normally I would say, you know, you don't settle unless you knew you had a problem But you have done a report recently. I think or it's been a couple of years Yeah We could not finish it because as a matter of our professional standards manual if a subject of interest to us is in Litigation we just step back. Okay, because in the course of collecting information, which is what we do We might get in the way or get in between and so forth So we didn't now that it's settled. We are back at it and one of my three senior auditors is completing the job So we will have something for you in March. So are you basically going to look at so? What's the question that you are asking what was the role of state government, which is the part that was never Formally or finally addressed in the litigation because they settled So you'll be able to explain Maybe why it was such a debacle why it's an interesting question Why people made the choices or decisions they did is an interesting issue, which we can't always answer, right? Their judgment is their judgment We can explain exactly what happened and when and who made what decisions or didn't or missed opportunities that kind of thing So it could provide insight into the mind of state government When you're done it better or it's a lot of time wasted Well, is there anything you can say about it now? No, okay because it's March We have to wait for March, okay, you don't talk about audit findings before the job's done Well, there are a number of that that would make me want you guys coming back for more All right, so March on eb5. Yes. Okay. Thank you very much. So you look at state programs For example, let's just take this one. That's at the top of the 2023 report an audit of the Department of Disabilities Agent and independent living in the system of inspecting the assisted living in residential care homes That was a very interesting project in and of itself But it was interesting to me because I lost my father earlier what about about a year ago It was 99 and he lived he was living in an assisted living place in another state and I had never had direct exposure to that world and You know we rely on the state To ensure that those places are safe and are providing the services you're paying for and expect and these are vulnerable people Not all of them are just you know have a bum leg or something there. They have dementia. They have this they've that so Dale the the department within the agency of human services has a very important responsibility among others and as it turned out There were some problems. They weren't Inspecting these facilities as often as they should I should say by the way that the there are nursing homes that are funded with federal money So that's a different world there. They're taking care of business on nursing homes as far as we could tell But that wasn't part of our objective. We looked only at the ones that are not federal assisted living and residential care homes and they are supposed to be inspected every year and Dale disagreed and said no, we read the statute differently That bothered me because the language was unambiguous, but in any case they're good people they work hard But we found some problems and what problems did you well for the most important was that they weren't inspecting very regularly And some of that overlapped COVID which creates a problem for that kind of interaction But even before then they had decided that the statute allowed them to do it every two or three years And that's not what the statute said and they never told the legislature that So and they claimed not surprisingly as is the case for many departments that they didn't have the resources and we said Did you ask for the reason, you know, so it was a back-and-forth and they were a little defensive after the audit and Many folks are nobody likes to be evaluated that way, but we report the facts I don't want to sound like you know TV, but that's what we do and The thing about inspecting is not just because it's to check a box It's that more than half the time they find serious problems when they do inspect right and it's this issue You run into where the legislature requires state agencies and departments to do things But they don't give liberate their resources in order to do them. Is that something that I think if you If you go through state government the major agencies and departments every single one of them would say they don't have sufficient resources and Some of that is just bureaucrats looking for more resources and that's fine, too But some of it's true We have an administration that doesn't want to raise the money necessary to meet all these needs and they say quite rightly We have overwhelming Numbers of needs and we can't do them all that may be true, but you know when your Predicate issue is no more money no more taxes then where's the money going to come from so everybody in the state government is saying We could use more money. They're not going to give it to us. So we'll do the best we can Well when you're dealing with you know vulnerable elderly it kind of bothered me Mm-hmm. So I understand so recently you came out and you do know this in the report With a strategy that could save health care costs for teachers and thereby Take some pressure off the education budget. Could you talk about that proposal? Sure briefly? That's a job. We did a couple of years ago. My deputy Tim Who you know of course Tim Ash former state senator had become aware in his work of some people of West Who were struggling as the state of Vermont is with paying a huge amount of money as an employer? To pay the health care costs of their employees families and retirees and so forth and right now I think it's up to about a hundred and seventy million dollars a year You may recall a few years ago. There was a lot of talk about oh my god We have to deal with the pension issue because it's so much money. So is health care But I don't see any real effort to solve this problem. It's very frustrating So what these folks out west did is to say, you know, we did this research and we've subsequently done the same And we found that of these 15 hospitals the cost of pick a routine procedure colonoscopy Varies enormously from 1500 to $4,000. Why is that? It's the same procedure doesn't matter where you go So one response would be we're going to use our leverage because we're a big employer Which is true in every state to say I'm sorry We don't know why it costs more at this hospital as opposed to this one That's not our business for the moment. Our business is telling you we're not going to pay more than the midpoint That's it. That's what we will pay you and it's a tough fight politically It's challenging economically in some cases challenging, but they did it and a couple of these two states I believe have done it and they're saving a lot of money and that's what we did a report on and when I saw recently this Letter from the commissioner of the tax department to the legislature which happens every year I say we have sufficient information to estimate what we think the ed fund costs are going to be for schools And it's going to go up 18% or that's what they predicted it never does go up quite as high But one of the major drivers and factors of that is health care. So I said hey guys Here's an idea and we haven't been invited to testify just yet. Okay. Well, it seems like a really good idea I mean if you're a hospital manager, you probably wouldn't say that no you wouldn't say that But I mean, I'm thinking that the scale of Vermont is smaller than some of these other states in terms of the market Well that creates a challenge for geography because if you're in if you're in Boston, there's a hospital down the street, right? Here, you know, you have to drive 30 or 40 miles, which is fine If it's not an emergency situation But there's a lot of folks who don't feel like they want to drive from here 30 miles to get a procedure that they should Be able to get here It's a it's a tough issue, but there's not enough conversation about it so the Issue that is always interesting to me as you know has to do with broadband and telecommunications and there's a couple of areas under which you're Intersecting probably with the Department of Public Service and the community broadband board So there are millions of dollars being spent from the feds on broadband deployment What have you found or what have been your concerns about how that money's been spent? It's hundreds of millions Okay, thank you and to be clear as you know better than I this has been an issue Discussed by the last At least three governors. I don't think Howard Dean talked about it but certainly Jim Douglas beach home and now Phil Scott and Now we are making some progress. I personally don't think that the approach Agreed upon by the legislature is the most effective one, but that's the choice they made for the CUDs and all this stuff Those are communications union districts which are meant to develop Small broadband companies to serve under served rural areas thereby creating a market for commercial companies that Preferred not to serve before but do now and are competing with the CUDs. That's another show That's a that's a good one make a good partnership No, and I have nothing against the communities being directly engaged, but they have no experience themselves So they had to hire partners private sector partners and as a result the information that you would hope would be available to residents of Those towns that comprise the CUDs is not those are not public records Nobody can know what agreements have been made with those private sector partners, which may or may not be a problem I think it probably is The board Distributed a great deal of money at the in the early stages of their life cycle, which they're now more mature But before they really were comfortable with the business plans of some of these CUDs. That's our opinion They would say there's some truth to that I think So it's an issue and the some of the CUDs may or may not survive. There may be some mergers Who knows it's a little early in the game, but there were alternatives It's the legislature chose not to pursue if it were me I would have said the state should put up the wire We should own the fiber and then lease it then we control the rollout and the terms But that's not what they did. The other thing about the department is we did a job recently about the 10-year telecom plan Yeah, which even though it's 10 years. It's it's done every three which is cute, but Something among other things one thing really jumped out and that was that the 21 plan which is now being updated Did not include any performance measures Which shocked me? I mean there's a great deal of money at issue now Is the point at which we can begin to ask the questions of of the department and the players, you know How much progress are you making? What can we tell? Citizens and taxpayers and the response oddly from the commissioner was well the statute didn't tell us to do that Do you remember the exorcist when the girls head spun around? That's what mine did and I thought well I'm sorry just because the statute doesn't tell you to do it doesn't prevent you from doing it It's best practice to have performance measures. Well, and when you're paying tens of thousands of dollars for a Vendor to prepare the plan for you That's Matt Dunn's group, right? And what's this the Center for Sustainable Rural Economy something like that? And they did the first study No performance measures and they've been hired to do the second one So that really doesn't just on the face of it It doesn't make a lot of sense It didn't to me because it is a lot of money that's being deployed and it's a giant issue the connectivity of the state That's why we wanted to get this thing out while Matt and his folks working with the department. We're doing their work So your recommendation is put some performance measures in and it'll be interesting to see if they do Yeah, I think it's gonna be done Spring early summer something like that. Yeah, we'll see the Speaking of technology and then we can move off it the agency of digital services is Responsible for large IT projects for the state tell us about What's happening with the deployment deployment such a military term with the rollout? It's a legitimate word. It's okay ADS Was created as you know about five years ago There used to be a department called information and innovation and then they created an agency Literally overnight and there wasn't really a well thought out strategic plan So they just got rolling and they brought all the IT people from all over the state into this one place Which I think some of the departments Resented they liked having their own in-house people in any case what we looked at in particular was project management if your department feels like your your Hardware and your software is at a date and you need to upgrade it and you have the resources you talk to ADS and said help us get from Here to there or you have you want more functionality or the state's security profile is changing whatever it may be you need something and When we did this job there were 64 projects costing more than half a million dollars and the total was over 200 million So you know an organization like the state which provides services primarily uses a lot of IT functionality So it's a big deal. So we looked at six projects Most of them fairly substantial that were later in the process and we could measure their performance And only one of them was meeting its budget and timeline Obligations the others were way off two of them a hundred percent Over their estimated cost and so forth and there were a lot of reasons for this stuff happens along the way It's a fluid situation Maybe the contract in addition to the legitimate stuff Maybe the contractors not as good as you thought they were and a whole bunch of other stuff So they weren't doing very well. It's not entirely ADS's fault, of course they're working with a partner each job represents a partnership between me and your department and You may or may not be as well organized as you should be you may or may not have devoted the resources internally Necessary to work with ADS and on and on and on so it's a it's a problem But the key one of the key takeaways was about data which is what I thought we were talking about today So this would give me a chance to slip this in Because it's not uncommon for ADS and their partner entities to miss their deadlines They know in advance at some point when they're not going to make it so a hypothetical would be there's a million dollar project They expect it to be completed in 12 months They find after three or four months that things are lagging changes are requiring this that the other Okay, it's no longer a million. It's a million and a half and it's going to take 18 months But they don't report that necessarily to the legislature They now have raised the bar or altered the bar so they get to say well We're within our budget the new budget the old one's gone and I just thought that was not intentionally but it doesn't really provide policy makers with the kind of information that they Should have I don't think so that feedback loop to the policy makers I think is an important component of your work the question that comes up for me is How does this how does the state's performance of? Project management of efficacy compare with the private sector. Do you think then the private sector? There's more success there because it's the private sector Do you think there's some a fundamental difference between how the state does business and how other? Private entities do business. That's a very good question. I wish we had the resources to look at that Now, you know private sector entities as a rule aren't interested in sharing their experiences The shareholders might be able to find out if they dig down But if you're the CEO, you're not going to tell people when you screw up, right Wall Street doesn't like that But to answer the question, you know some of the same players that the state Invites to work with them and hires work in the private sector as well some are better than others I wish I could answer the question. It's a good one. I don't know the answer Well, let's talk data a little bit and I'm not sure how you wanted to enter the door on data. I am of course and part of Kind of the subgroup of people that feels like making decisions based on data is a sound way especially when it comes to spending state money and But tell us how you're approaching it. I couldn't agree more It's Almost always the takeaway from our work involves data at one level or another and I'll start with one which is kind of my favorite Some of your viewers and and friends might know what TIF is it's tax increment financing It's a program intended to help towns raise money to build infrastructure that they think will End up with more development and increase the grand list and property taxes and so forth It's not technically a jobs creation program But the legislature asked of Pepsi which is the economic progress council which administers this program to Collect and report information on jobs Now some of them are going to be construction jobs if you're doing infrastructure a new road sidewalk parking lot waste water treatment plant You hire people for a time and then they go As far as the jobs that will be within that defined area your TIF district The state of Vermont's Department of Labor doesn't report that data at that low level So there is no official methodology and I pointed this out to Pepsi long before I became a monitor And they said well, they told us to do it. Well, what are you doing? Well, we're collecting information from the towns and they all do it their own way So it's not verifiable and it's not consistent and so forth So one of the funny outcomes was that Burlington has two tips One of them is the waterfront TIF which includes the old Macy's building and as you and all the Burlington folks know The high school has been torn down because of PCBs and other things is being rebuilt During the closure high school moved downtown to the old Macy's building and all the teachers and employees came with it It's a temporary thing having nothing to do with the TIF program But the town the city of Burlington reported 150 jobs in their TIF report because of the high school And I thought isn't that fun? I mean How can you look yourself in the mirror? Anyway that that I'll just start with that There's another one which is almost as egregious frankly, you know this program that started four or five years ago paying people to move to Vermont Yeah $10,000 Relocation so after several iterations of that some of the the advocates of that on the Senate side We're aware that the House side wasn't keen on this. So they said well, let's get a study Now our office had already done one, but they didn't like the results So they had the Department of Financial Regulation hire someone to do a review of the program and they did and when I saw it I was my head spun around again because it was so bad Yeah, and I contacted some people in the Senate side who you know Eventually asked the Joint Fiscal Office the Legislature's Joint Fiscal Office if they would consider having some of their people review that report Very uncommon as you know, there are lots of reports You know, there's ten of them a day in the legislature from everybody and their brother and they are what they are They're often biased because they represent an interest group and that's okay You know you put them all together and you talk about it. This one was unique Because there's nothing else like it and the the administration was using it to promote this program Well, JFO agreed to have two senior people review this report and they completely trashed it as well They should have it was it was filled with fatal errors methodologically and was a joke Well, that report is still on the Agency of Commerce's website Hmm and but yours but the auditors is not and what did your report find about that program? There's a there's a deep flaw in the whole idea of it because they don't ask people to provide anything other than information about their Income and what their NAICS code what their industry is what they do for a living where they're coming from they don't say Please provide some evidence that you wouldn't have come here, but for this grant What we found is that they think interestingly the Agency of Commerce did a little survey of some of the folks And a bunch of them said well my wife got a job there, so they were yes They were with me coming any way or They had already moved their stuff into a storage place awaiting the availability of this unit They were about to rent or buy so they had already made their decision and I'm happy that they were coming to Ramon Why wouldn't we be happy? But it had nothing to do with this program was gravy complete gravy So we told them that and some of the as I mentioned the advocates in the Senate some of whom are my friends Said oh, we don't like that report next So they asked to have this other report done Anyway, that's that that's another data-driven point and they put the governor still supports this program I don't think the house is gonna provide any more money for this Now and there's also something that the the legislature started a number of years ago They asked the administration to do an annual outcomes report This is the RBA stuff that we talked about before we went on there meaning results based accountability. Yeah, sorry Thank you good Let people know Which is a way of measuring what matters by starting with your end it takes starting with the end in mind and working backwards So that actually instead of pushing spaghetti up a hill you are trying you are achieving You have set yourself up to achieve the result that you desire and you need to report on a regular basis, so We did a job Examining that annual report and it was a mess Not our report their report Administration administrations the legs that you required it, but the administration does it and still does it and what we provided them The administration was basically the principles that that should be behind Not just RBA, which is one iteration one type of results based thing But all of them and I'll give you a couple of examples the first principle really was What you're talking about this data point this goal is it's something that state government can truly influence the outcomes And a good example is unemployment Sounds important and it is can the state make a difference in the unemployment rate in Vermont? Well as it happens if you look back 35 years the state of Vermont's position is it virtually identical to the federal government forever It doesn't matter who the governor is it doesn't matter who's in charge in the legislature We are a speck at the end of the tail of the national economy So that's a macro level thing that we have no control over that doesn't mean it's not interesting but if you're trying to Match an outcome with a programmatic Expenditure you can't do it not for unemployment. It doesn't matter what we do. It's going to keep happening That's one that was a mistake. They made because they said unemployment's important Yes, relation level indicator right and we have no control over and yep So another one that illustrates three items, and I'll make it quick is median household income Which I used to report in my work as a consultant and it's not a bad piece of data, but if you isolate it, it's not terribly useful and That's what they did and furthermore they reported the nominal figures not adjusted for inflation So if we find for example that median household income went up as it did 14% during the preceding 10 years That sounds great, but what happened to inflation? Well, it was actually only 7% when it's adjusted for inflation so buying power didn't increase 14% and increased seven Furthermore, they didn't provide any context. Well, what does that mean for surrounding New England states? How did they do they didn't do that and when you do that? You see the Vermont was the lowest of the four northern New England states They didn't tell you that in this report and Furthermore, they aggregated the data. They only gave you the one data point the median, which is the midpoint 50% below and 50% above when you disaggregate that data you find that Just won't surprise you or your viewers. I suppose that you know income inequality continues The top quintile the top 20% grew at 10% the lowest quintile dropped 3% So by saying hey, we went up 14% you ignored all those things I just said right so how useful is that and furthermore what what kind of control does the state have over median income doesn't well If you were to have the actual information in front of you use the state legislator could identify areas of focus So that you know the well-being of the poorest people or the taxing capacity of the highest people, right? I mean so that we could have conversation. Yeah, we give you data with which to just have some kind of policy discussion Any other Do you want to get back to this or I just want I'm this is We already talked about the telecoms plan that book fun with what remember that how to read a statistic and You know just the basis of what do you mean by an average? Are you averaging at all? Are you picking the mean you're picking median? I mean we We've many people in our world have lost that Literacy about how to read numbers and understand what's being presented in a political context. So this is really important I think so You know the committees of jurisdiction pay attention But I'm not sure many of the others do and they're overworked and that's a whole other conversation about why does the legislature in the 21st century only meet for what effectively is, you know three three and a half months, right? Doesn't seem right to me. You know that's enough of that we can move on to something else Well, I think that I'm interested in what you have coming up for 2024. Oh, okay But we mentioned the EB-5 for sure coming in March. That's in in process We have another interesting project at the agency of commerce. You may recall a couple of years ago. I think They were very near the end of the session The appropriations bill as always was the last big item under consideration And it didn't include something the governor had asked for at the very beginning of the session Which was still some of that monstrous tranche of federal money He said I want an extra 40 million for this program that we created last time and they said now We don't think that's the highest priority. So at the end he said if you don't give me that money I'm gonna veto your budget So they gave him the money and the money was for a project that I think is questionable for a lot of reasons It's you know veggie the the state's sort of flagship incentive program for business It's about job creation by definition. It has a lot of problems including the Mysterious but for but put that aside at least it's intended to create jobs These programs that the governor asked the agency to create are just about giving businesses Capital money for new equipment or a new building or something Well, if you're at the point in your life cycle as a business and you need New equipment because your competitors have it or because the new equipment is going to make you more productive or whatever The case may be then you have no choice. That's what smart business people do. They make the investments required at the right time So how can we answer the question? Would they do it without us if they're a successful growing business? Of course they would in any case There's no requirement for for the applicants for this money to demonstrate that they can't get ahead without this money As is the case with veggie, which is sort of a phantom thing, but nevertheless, there's not even an effort So we're looking at two elements of that program and that should be out in February or March as well It's a lot of money and it's it's disappointing to me that the administration Keeps coming up with these programs just to give money away to businesses in many cases Apparently would have done whatever they're planning to do anyway, and I demonstrated that with some work I did on veggie a few couple years ago So I'm gonna move us to wrap up because I'm sorry. No, I don't want you to be sorry Oh, that's nice. Sorry Because there's so much to discuss that's really of interest to me, and I think don't invite me back So that's what I was gonna say before the election season starts Because when election season starts and you're are you run this filled with politicians? Are you running again? I'm seriously considering it. Okay, that's good to know But we'll come back in March for the EB-5 report that I think that would be interesting But I want to thank you the auditor Douglas Hoffer Douglas And thank you. I enjoyed talking about the work. Thank you Yeah, and well, we haven't even talked about how under reported the work you're doing is but that's another matter That's a good question. That's why we're here making television. So don't watch just watch TV make it and Best to you on Martin Luther King Day When we think about the righteous fight for justice So thanks for being here and thanks for watching stay tuned to town meeting TV and all of your community media channels across Vermont