For Immediate Release
February 26, 2009
Transparency: Crucial to the State’s Financial Well-Being
By Susan Combs
The world recently saw a perfect storm of secrecy in money matters when financier Bernard Madoff was charged with criminal securities fraud for his Ponzi scheme. Investors were duped in a classic case of something being too good to be true. The scheme imploded because virtually no one verified the details. This is a telling case where a lack of transparency caused billions of dollars to evaporate.
Within our own state, a transparency-related scandal erupted when reports showed the management of Pedernales Electric Cooperative did not open its books to members and conducted management decisions in deepest secrecy, costing co-op members millions of dollars.
We in Texas must do better about shedding light on finances, and our government entities must work proactively. While there are no angry shareholders or investors to complain, we are accountable to the taxpayers who fill state coffers with their hard-earned dollars. I would argue that while lack of transparency can lead to serious financial losses, the opposite effect holds when shedding light on expenditures.
Furthermore, passage of a $787 billion federal stimulus package underscores the importance of transparency. When spending stimulus dollars, it is imperative that Texas be held accountable by showing where the money is going and tracking how it is spent. We must continue to act in a fiscally responsible manner so taxpayers can make sure money is spent efficiently.
Transparency in state accounting means not only publishing Texas expenditure data in great quantity, but also examining our reporting practices to ensure quality. The 2007 Legislature asked the Comptroller’s office to create an advisory council with other state agencies to examine uniform financial accounting in state government. The council’s report on uniform accounting practice, what our office refers to as using a single set of books, is nearly complete.
Uniform financial reporting across all state agencies and higher education institutions will shine the brightest light on the state’s finances and allow our state’s leaders to obtain real-time, reliable information to make well-informed decisions. In fact, a single set of financial accounting languages would have prevented the Texas Department of Transportation from miscounting the dollars available for road work by an overstatement of $1.1 billion. To its credit, the agency is now working to remedy that situation and should be in significantly better shape to do so in the coming months, but this example shows why a single set of books is so important.
Beyond the state level, Texans have the right to inspect the books of the various government entities, such as schools, cities, counties or any other quasi-governmental entities, such as electric co-ops. Some would argue that it is too expensive to make the information available, but I believe it is too expensive not to do so.
Many Texas counties have found thrifty ways to offer transparency: Bastrop County scans budget information, at no extra cost, into a PDF file for the public to view. Smith County was one of the first to post its check register and other financial data online. And Collin County added a robust financial transparency page to its Web site. We stand ready to help local governments post information, since we believe so strongly in its vital importance.
The Comptroller’s office was the first in Texas to open its books and reveal how we spend your money, and we have persuaded other state agencies to do the same through Where the Money Goes, the state’s online check register. Going forward, we must do more to ensure openness and efficiency in our government. In this uncertain economic climate, expanded transparency initiatives are vital, and open books will improve the health of our economy.