Following the money government spends isn’t easy in Hawaii: Report gives state an ‘F’ grade for transparency

BY MALIA ZIMMERMAN– HONOLULU — A new study confirms what many reporters and taxpayer watchdog groups already know: Hawaii’s public records are difficult to get.

Hawaii received an “F” in the Annual Report on Transparency of Government Spending released March 26 by the U.S. PIRG Education Fund.

The report, “Following the Money 2013: How the States Rank on Providing Online Access to Government Spending Data,” said many state governments across the country are getting better about documenting the movement of public money. But Hawaii isn’t one of them.

Hawaii’s online government websites put the state in the category of a “failing state,” according to the report, “because it has limited checkbook-level information, is hard to use, and does not include links to the state’s tax expenditure reports or information on the projected and achieved benefits of economic development subsidies.”

Hawaii’s “F” grade is a dramatic decline in last year’s C grade, and reflects a relative failure: so many other states are improving their web sites and online data access that Hawaii looks relatively worse, said Phineas Baxandall, senior analyst for tax and budget policy with the U.S. PIRG Education Fund.

“This year’s higher standards call for searchable checkbook-level information for contracts, grants, economic development tax credits, and other expenditures. Hawaii currently only meets these standards for grants and contracts,” said Baxandall.

“Open information about the public purse is crucial for democratic and effective government. It is not possible to ensure that government spending decisions are fair and efficient unless information is publicly accessible.”

Kalbert Young, director of the state Department of Budget and Finance, said he “totally agrees” with the report.

“This is one of the things that the State Chief Information Officer Sonny Bhagowalia and I have been saying for the last two years. Hawaii’s state technology systems are so antiquated that they do not have the capacity to provide robust online access for transparency,” Young said.

What is even more problematic, Young said, is the internal systems for accounting, budget construction, execution and financial reporting are antiquated to the point where business managers do not have access to real time data or analysis.

“It is not a problem of willingness to provide transparent financial information, it is plainly an inability to provide that type of information,” Young said.

“You may have heard me say at a number of events that, as the state’s finance director, I can tell you more about the fiscal condition of the State of Michigan or Massachusetts sitting at my desk than I can tell you about the fiscal condition of the State of Hawaii.  There is no real-time data for me to analyze,” Young said.

Hawaii has stood still for more than four decades with minimal investment in information technology infrastructure while other states have continued to move forward, Young said.

But the state budget director had some good news for taxpayers and watchdog groups interested in following their money: the state is making some important changes.

“CIO Bhagowalia and I have embarked on a project to bring contemporary technology into the state. The biggest project to note is the Enterprise Resource Planning project, which will modernize revenue systems (tax modernization), financial accounting systems, HR and Payroll, with budget and execution processes,” Young said.

“This is a significant project with major investment implications that will take more than 6 years to deliver. Once implemented, Hawaii can look forward to real time transparent financial analysis for public access, but more importantly, state business managers and staff will have better access to real data for making financial and operational decisions.”

Baxandall said Hawaii should try to model itself after the most transparent spending states, because they include data on economic development subsidies, expenditures granted through the tax code, and quasi-public agencies.

“The best state transparency tools are highly searchable, engage citizens, and include detailed information—allowing all the information to be put to good use,” Baxandall said. Those states include Texas, Massachusetts, Florida, Illinois, Kentucky, Michigan, and Oklahoma.

Kam Napier, editor of the respected city-magazine Honolulu, annually compiles a report called “Grading the Public Schools” and the magazine also prides itself on investigative reporting and in-depth features.

Napier said he looks forward to taking a closer look at the “Following the Money” report.

“I can’t speak to the Department of Education’s financial transparency as it stands in 2013; the last really intensive look we’ve taken at the cost of education was in our 2001 “The Death of Public School” feature. I remember that the data was there, but difficult to find.”

“Websites then weren’t what they are now, that’s part of it. But a big challenge was that funds for the public schools were distributed across a wide range of departments. The Department of Accounting and General Services had all the Capital Improvement Project and maintenance money; a huge expense not reflected in the DOE’s per-pupil cost.”

“Another department had the cost of pensions, another major expense. Even the budget for the governor’s office at that time had a line item for education. I spent months in 2001 hunting all that down and I’m still not confident I found everything,” Napier said.

In recent years, Honolulu magazine’s “Grading the Public Schools” chart has used the DOE’s School Quality Surveys and student performance on the state’s math and reading assessments.

“Both are pretty easy to find online, so our research effort goes into tracking changes in both instruments over time and extracting and combining the measures we’ve selected into a single snapshot of each school’s performance. The next edition of this chart will be published in May,” Napier said.

Baxandall maintained the improvement of the state’s transparency website should be a priority in order to “shine a light” on Hawaii’s government spending.

“States that have created or improved their online transparency have typically done so with little upfront cost. In fact, top-flight transparency websites can save money for taxpayers, while also restoring public confidence in government and preventing misspending and pay-to-play contracts,” Baxandall said, adding ”Given the state’s difficult budget choices, Hawaii taxpayers need to be able to follow the money.”

MORE ON THE WEB 

To access the state’s transparency website, click here.

To read the report, click here.

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