Newsletters

Government Transparency & Accountability

This is from a memo we sent to Legislative leadership in March 2019.

State government is a large and complicated enterprise. People understand the basic mission (i.e., public safety, health & well-being, infrastructure, etc.), but, for most, the inner workings are largely obscure. Some Vermonters try to learn about state government by seeking the documents that describe the mission, funding, and performance of state agencies. These documents include budgets, performance reports, strategic plans, and information about contracts with vendors, among others.

These documents are necessary for citizens to understand and evaluate the work of state government. Therefore, I think the State has an obligation to make this type of information easily accessible.

To assess the extent to which the State provides easy access to these materials, my office examined the websites of 38 state entities. Specifically, we looked for each entity’s budget, performance data, and information about contracts for goods and services.

Our initial review found that fewer than half of the entities in our sample provided up-to-date documents on their websites. Even though some documents are located elsewhere, a citizen unfamiliar with state government may not find them without a direct link. Some departments provide relevant documents, but they are out of date.

We shared our preliminary findings with the Agency of Administration, and Secretary Young responded by asking all agencies and departments to include links on their websites to Finance & Management’s Spotlight page, which includes information on budgets, performance, and contracts, as well as links to JFO for reports to the legislature and other budget data.

We reviewed the changes subsequent to Secretary Young’s request. Initially, only 12 of the 38 entities featured current budget information on their site. It is now up to 24 along with another 7 that have links to Spotlight (31 of 38). This is a substantial improvement. Five entities have budget information that is not current and, therefore, were not included in the `yes’ category.

There was improvement for performance data as well. We initially found that 16 entities posted performance information on their web sites, and they have now been joined by 7 others with links to Spotlight (totaling 24 of 38).

Information about contracts was the weakest category, with only 7 entities providing that information at the outset. But, here too there is progress, as 8 others now offer links to Spotlight. With only 15 of 38 entities offering contract information on their websites, there’s still much room for improvement.

A detailed table with the results by Department is included in the memo.

To learn more about my bid for reelection, please visit my campaign website.

Sincerely,

Doug

Paid for by Hoffer for Auditor
161 Austin Drive #71
Burlington, Vermont 05401
Roberta Harold, Treasurer

 

Facts Matter

My opponent has made credentials the focus of her campaign. Specifically, she argues that I am not qualified to be your State Auditor because I’m not a Certified Public Accountant (CPA). Conversely, she would have you believe that she is an ideal candidate simply because she is a CPA.

This is both misguided and misleading, so I’d like to set the record straight.

While the State Auditor’s Office is responsible for financial and compliance audits, our bread and butter is performance audits, which focus on the efficiency and effectiveness of state government. My experience in law, economics, and policy makes me uniquely qualified for this work.

First, voters knew when I was first elected that I was not a CPA, but that I brought other credentials and experience to the task, including a law degree (JD) with honors. And voters knew that I had worked for over 20 years as a policy analyst and was considered a very capable numbers guy who wasn’t shy about asking tough questions, had a longstanding commitment to evidence-based findings, and a passion for challenging received wisdom.

During my consultancy, one of my clients was State Auditor Ed Flanagan for whom I worked in the late 1990s. To his credit, Ed understood that state auditors needed to expand their scope of work to include performance auditing – a field of auditing that was and is relied upon heavily by the federal government and by city and state governments across the country. I was fortunate to be on the ground floor of performance auditing in Vermont.

For decades, the Auditor’s Office has used a contractor to conduct federal audits, and more than a decade ago the office incorporated the State’s financial audit into this contract. The practice of contracting for this work is common around the country, as it is highly repeatable and less expensive when economies of scale are achieved. In Vermont, this decision made by my predecessors leaves us free to devote all of our inhouse resources to performance auditing, which is why I was attracted to the job.

Notwithstanding the fact that I wasn’t a CPA, Vermonters decided to give me a try in 2012 and I’ve been reelected three times since. I’m proud of the work we do, which meets the stringent Generally Accepted Government Auditing Standards (GAGAS) established by the U.S. Government Accountability Office (GAO). The high quality of the office’s work has been recognized in the three peer reviews conducted during my tenure – all of which received top marks.

In addition to my credentials and track record, here are a few things that make it clear why my opponent’s focus on credentials is both uninformed and misguided.

1. Four of the last five Vermont State Auditors were not a CPA.
2. The Comptroller General of the U.S. (head of the GAO) is not a CPA.
3. More than half of the state auditors in the U.S. are not CPAs.

So, while being a CPA is a laudable achievement, (and some of my office’s staff are CPAs), it is not necessary for the job of Vermont State Auditor. This certification alone does not prepare a candidate to be a successful state auditor. Moreover, the suggestion that I’m not qualified is clearly not shared by Vermonters, who have repeatedly honored me with their votes.

To learn more about my bid for reelection, please visit my campaign website.

Sincerely,

Doug

Paid for by Hoffer for Auditor
161 Austin Drive #71
Burlington, Vermont 05401
Roberta Harold, Treasurer

 

Agriculture – Phosphorus – Lake Champlain

Vermont’s waterways are among its most valuable assets. They are critical to public health, vital to sustaining Vermont’s ecosystems, and they attract hundreds of millions of dollars to the economy through tourism, real estate, and business investment. However, phosphorus pollution has compromised the quality of Vermont’s lakes and rivers.

After years of delays, Vermont is finally moving forward with efforts to clean up Lake Champlain. We decided to look into the matter and investigate how the State has allocated resources for these efforts and the extent to which they have succeeded.

The Agency of Agriculture is the lead agency for addressing agricultural nonpoint source pollution of state waterways (mostly phosphorus), so we started with an audit of the Agency’s Best Management Practices Program.

The Best Management Program is the largest of the Agency’s programs related to water quality. It funds construction of farm improvements designed to abate agricultural waste discharges to Vermont waters. Since the program’s inception in fiscal year 1996, the State has appropriated over $22 million in capital funds for these projects.

Our audit found that the Agency issued most of its grants in fiscal years 2016 and 2017 to farms located in the Lake Champlain Basin, which is the highest priority waterway. While the Agency started to rank their grant applications in June 2017, it did not prioritize the three areas within the basin identified in the State’s phosphorous management plan with the greatest phosphorus reduction potential. In other words, it didn’t focus its limited resources on those areas that would yield the greatest result for Vermonters.

We also found that the Agency did not directly monitor farmers’ conservation practices, and it did not effectively communicate to farmers the environmental obligations they had under this program. Furthermore, the Agency did not provide the Department of Environmental Conservation with critical data to calculate phosphorous reductions.

I am pleased to report that our 2019 recommendation follow-up found that the Agency implemented 12 of the 14 recommendations we made in the audit report, and the program is more effectively meeting its goals.

More recently, we analyzed the State’s Interagency Clean Water Initiative, which strives to reduce phosphorus pollution in state waterways. The EPA mandated the State reduce phosphorus entering the lake from 631 to 418 metric tons per year (34%). The State responded to this mandate by allocating $66 million, two-thirds of all clean water spending between FY16 and FY18, to projects in the Lake Champlain Basin.

We decided to examine the cost-effectiveness of these expenditures in the Lake Champlain Basin. This investigation produced two main findings.

First, a majority of clean water funding was allocated to low-impact infrastructure projects. Wastewater and stormwater projects received 53% of State funds, even though most phosphorus comes from agricultural and natural resource lands. Wastewater and stormwater projects are among the least cost-effective solutions to reduce phosphorus. Though such projects are necessary in certain locations and yield other environmentally beneficial results, their comparatively poor cost-effectiveness raises important questions about the allocation of scarce clean water funds aimed at reducing phosphorous.

Second, the analysis identified data quality problems for assessing the impact of clean water projects. State agencies could not measure phosphorus reductions for combined sewer system upgrades and several types of natural resource projects. State agencies also did not consistently measure reductions among the remaining project types. Furthermore, 95 percent of state clean water expenditures did not yield measurable phosphorus reductions. These data limitations preclude my office and other State agencies from verifying whether the State is meeting federally mandated phosphorus reduction targets at the lowest possible cost to Vermonters.

To learn more about my bid for reelection, please visit my campaign website.

Sincerely,

Doug

Paid for by Hoffer for Auditor
161 Austin Drive #71
Burlington, Vermont 05401
Roberta Harold, Treasurer

 

Health Care Part II

As we noted in our recent audit report, the All Payer Accountable Care Model has a target to limit the growth of health care costs. The goal is for annual growth not to exceed 3.5 percent from 2017 to 2022.

This figure was chosen in large part because it reflected the 15-year annual average growth rate for Vermont’s Gross State Product, which was well below the historic rate of growth for health care spending of 5.1%. According to the Green Mountain Care Board, the parties wanted health care spending to be more aligned with overall economic growth.

While this sounds reasonable, it’s not. Reducing the rate of growth is a necessary goal, but economic growth is not correlated with ability to pay, which makes the target unrealistic and unsustainable.

The problem is evident when we examine recent growth in Vermont Adjusted Gross Income (AGI) by class.

 

Percent Average Annual Growth in Vermont AGI by Income Class, 2014 – 2018
Income range Tax Returns, 2018 Percent average annual growth
Number Percent
$0 – $49,999 182,173 57% -1.1%
$50,000 – $99,999 78,082 24% 1.2%
$100,000 – $149,000 32,165 10% 5.1%
$150,000 – $199,000 11,710 4% 8.0%
$200,000 and above 13,206 4% 8.9%

As you can see, on average, over 80% of all filers either lost ground or had very little income growth over the last five years (latest available).  Thus, even if the cost of health care could be held to 3.5 percent per year, it would be well beyond the means of the vast majority of Vermonters. And the problem gets worse over time.

If we assume the income trends persist and the ACO hits its 3.5% target, the cost of health care for those earning less than $100,000 will become increasingly unaffordable. After ten years, health care costs will have increased by 41%, while income for low- and moderate-income filers lags well behind.

 

Notwithstanding the good intentions of the architects of the All Payer ACO Model, the fundamental benchmark is fatally flawed. This needs to be addressed if the State seeks to renew of the Model for another five years.

To learn more about my bid for reelection, please visit my campaign website.

Sincerely,

Doug

Paid for by Hoffer for Auditor
161 Austin Drive #71
Burlington, Vermont 05401
Roberta Harold, Treasurer

 

Audit of the Vermont All-Payer Accountable Care Organization

My name is Doug Hoffer. I’m your State Auditor, and I’m running for re-election this year. After serving Vermonters for over seven years, I’m writing to reintroduce myself and discuss the work of the State Auditor’s Office.

This message is about an audit we released today dealing with the state’s most recent health care reform effort, which is called the Vermont All-Payer Accountable Care Organization (ACO) Model. Vermont’s single ACO is called OneCare Vermont, LLC, which was created by UVMMC and Dartmouth Hitchcock. OneCare’s network includes all Vermont hospitals except for one as well as numerous independent practices and Federally Qualified Health Centers. Its current annual budget is $1.4 billion.

Bringing the lion’s share of Vermont hospitals and many other providers under one organization’s umbrella has the potential to profoundly impact the quality and cost of care for Vermonters.

I am concerned that neither policymakers nor members of the public fully understand how this complex project actually works, so, we decided to begin a series of audits about this subject. We started with a descriptive audit that details: (1) how the ACO Model is structured and implemented and (2) how the Green Mountain Care Board and the Department of Vermont Health Access oversee and monitor OneCare.

Although descriptive in nature, this audit includes two recommendations to the Green Mountain Care Board. The first is that the Board should compare the financial outcomes of the ACO Model and determine whether they outweigh OneCare’s operating costs. And this should be done prior to agreeing to a subsequent ACO model agreement.

Our second recommendation is to devise an alternate method to assess quality improvement for certain measurements to encourage continued improvement. More than 25 percent of the quality measures in the All-Payer Agreement have baselines that are the same or greater than their targets. Using this evaluation design, quality of care could worsen, and targets could still be achieved.

OneCare’s operating budget is $19.3 million in 2020, but it does not provide direct health care to Vermonters. This cost appears to be in addition to administrative costs already built into the health care system. At present, estimates of costs or savings in the model exclude OneCare’s overhead.

In the Chair’s management response to our audit report, he did not directly address our recommendations. I am concerned that the Board in its dual roles as health care reformer and regulator is not taking the latter role as seriously as the former. The ACO model is ultimately aimed at improving the value of health care delivery in Vermont by controlling cost growth and advancing quality of care. If Vermonters cannot determine whether this program accomplishes these goals for the added expense and risk, that poses problems for the viability of this effort. Our recommendations are intended to ensure that the GMCB achieves these objectives and conducts an arms-length evaluation of OneCare’s performance.

Conceptually, the ACO model holds promise. But a consolidated system of any kind (utility, health care, etc.) requires rigorous regulation. While I’m hopeful this effort yields positive results for Vermonters, there has been limited evaluation to determine its benefit. The ACO model and OneCare are too important to the well-being of Vermonters for the State to allow them to operate without consistent appraisal and accountability, and we intend to continue our scrutiny of this effort.

A shorter summary version of the report is available here.

To learn more about my bid for reelection, please visit my campaign website.

Sincerely,

Doug

Paid for by Hoffer for Auditor
161 Austin Drive #71
Burlington, Vermont 05401
Roberta Harold, Treasurer

 

Public Safety

My name is Doug Hoffer. I am your State Auditor, and I am running for re-election this year. I’m writing to reintroduce myself and discuss the work of the State Auditor’s Office.

Today I want to share my thoughts regarding our public safety system.

Recent tragedies and ensuing protests around the country have catalyzed discussions about how police conduct themselves and whether some of the resources devoted to traditional policing should be reallocated. This is an important and long overdue conversation, which I support.

As we take a hard look at the role of police in Vermont, I encourage Vermonters and our elected officials to expand our lens to consider the entire public safety system in our state.

A few years ago, my office examined the total amount spent in Vermont for public safety by state and local governments. We found that a total of $574 million was spent on public safety in Vermont in fiscal year 2017 (the report is available here). We didn’t pass judgment about whether that was too much, too little, or just right. But it is unquestionably a great deal of money. For context, that total equated to roughly 37 percent of the State’s General Fund appropriations that year.

The question for policymakers is whether the current system is optimal. Does it provide Vermonters with a just and safe society? Is it cost effective? Does it minimize redundancies? Are services equitably distributed around the state? Does it disproportionately affect minority and marginalized populations?  How well does the system balance prevention and enforcement? And so forth.

Now is the time to ask these questions and to think strategically about a comprehensive public safety plan for Vermont. We should inventory our assets and the services currently provided and define our public safety needs and goals. We should then align our resources in the most efficient and effective manner to achieve those goals.

We are facing one of the greatest economic challenges in history, and we have a vital system that costs more than half a billion dollars annually. It is ripe for reconsideration. This is an opportunity to zoom out and look at the whole picture.

The graph below shows how our tax dollars were allocated on public safety in 2017 (not including most fire services and public health). When we looked at these categories of spending between 2001 and 2017, we found that (adjusted for inflation) every category increased, even though crime rates remained relatively flat.

 

This conversation is overdue, and I would be shocked if we couldn’t find efficiencies in the system. Can cities and towns share more services?  Do we need both State Police and Sheriffs? Are there services that uniformed police are asked to provide that can be more effectively and efficiently provided by other professionals? Can equipment costs be reduced and realigned? Can we further reduce incarceration rates? Are all the elements of the criminal justice system effectively integrated (i.e., courts, State’s Attorneys, Defender General, Corrections, etc.)? The list goes on.

My office is focused on providing all Vermonters with the greatest value for their public dollars. Savings from restructuring the system could be devoted to investments designed to improve the well-being of Vermonters and reduce the need for some existing services. These issues are too important to ignore, and we simply cannot afford inaction.

To learn more about my bid for reelection, please visit my campaign website.

Sincerely,

Doug

Paid for by Hoffer for Auditor
161 Austin Drive #71
Burlington, Vermont 05401
Roberta Harold, Treasurer

 

Cost overruns, improper payments, and unnecessary government expenditures

My name is Doug Hoffer. I am your State Auditor, and I am running for re-election this year. I’m writing to reintroduce myself and explain how the State Auditor’s Office works for you.

Our primary responsibility is to help Vermont State government operate more efficiently and effectively to maximize the use of public dollars. In doing so, we often identify cost overruns, improper payments, and unnecessary government expenditures. Our work does not guarantee the recovery of pubic dollars since the Administration and Legislature must implement our recommendations and pursue those savings. Here are some examples of cost efficiencies and inefficiencies we’ve identified in recent years.

State Program $ Amount Explanation
Buildings & General Services: Capital Projects $24,600,000 Cost overruns for 9 projects over 5 years.
Employee misconduct: DHR and AHS $7,100,000 Total spent for State employees on relief from duty (a type of paid leave) from 2014 – 2018. Evidence suggests some portion could be saved.
Dr. Dynasaur: Dept. of Vermont Health Access $4,300,000 $2.4m paid for Medicaid health care claims from a sample of 297 ineligible households + $1.9m for two failed attempts to fix the problem
State Purchasing: BGS, DCF, Education., Human Services, & DVHA Unknown Competitive bidding is required except in extraordinary circumstances. We examined 1,000 contracts and found that 41% were “sole source” (non-competitive) and worth $68m.
Judiciary: Defender General $2,181,371 Uncollected assessments over 3 years. Not all could be collected, but improvement is possible.
Beneficiary fraud: DCF $1,800,000 Improper payments identified by the Dept. for Children & Families over 3 years. Limited effort to collect.
Cell phones: ANR, AOT, DCF and DPS $675,000 BGS contractor estimated annual savings from better management and better contracts with providers.
CCS -Health Care Services: Corrections $450,000 Actual drug reimbursement for returned medications over 15 months plus additional savings on bridge medications.
Choices for Care: DAIL $150,000 Improper Medicaid payments over 15 months; most of it recovered.

In addition, we sometimes find that programs cannot be audited for cost-effectiveness. This is intended to inform legislative debates about resource allocation.

State Program $ Amount Explanation
VEGI (business incentives): Commerce $3,000,000 Average annual cost: Unable to determine cost-effectiveness.
Best Management Practices: Agriculture $3,000,000 Grants awarded in FY16 and FY17 for phosphorus reduction. Impact of grants not calculated by Agriculture or DEC.
Tourism & Marketing: Commerce $3,000,000 Annual appropriation: Unable to determine cost-effectiveness.
Vermont Training Program: Commerce $1,200,000 Annual appropriation: Compliance issues and weak internal controls. Likely waste.
Ski industry leases of state land: ANR – FPR Unknown Outdated leases for 8,500 acres of public land not providing taxpayers a fair return.
Lake Clean-Up: Agency of Natural Resources Unknown Millions spent with little or no measurable phosphorus reduction.

To learn more about my bid for reelection, please visit my campaign website.

Sincerely,

Doug

Paid for by Hoffer for Auditor
161 Austin Drive #71
Burlington, Vermont 05401
Roberta Harold, Treasurer

 

State Auditor’s Office Overview

My name is Doug Hoffer. I’m your State Auditor, and I’m running for re-election this year. After serving Vermonters for over seven years, I know we’ve made a difference, but there’s a lot more work to do.

I’m writing to reintroduce myself and discuss the work of the State Auditor’s Office. Leading up to the election, I plan to send regular updates about the work of the office under my leadership. This message includes an overview of my office’s responsibilities, resources, and results. If you would prefer not to receive these updates, you can unsubscribe here.

The State Auditor is a constitutional position, and the duties and authorities of my office are contained in various state statutes, primarily 32 V.S.A. § 163.

Our office has three principal obligations: 1) audit the State’s financial statements; 2) audit the State’s compliance with laws concerning Federal funds; and 3) conduct performance audits of state government.

Our in-house auditors focus nearly all their attention on performance audits, and we look into issues concerning education, health care, environmental conservation, government administration, and much more. We are a small group, with only 16 positions, including 11 professional auditors and a government research analyst. The latter position helps to produce investigative reports addressing various issues, including the cost-effectiveness of Lake Champlain clean water efforts, improving competitive contracting practices, and taking a measurable approach to economic development, to name a few.

Over time, we have identified millions in cost overruns, improper payments, and unnecessary expenditures. And, we’ve done this important work at an excellent value to Vermonters. Adjusted for inflation, our budget is roughly 10% lower now than when I took office in 2013. For more detailed information about our work, please read our annual performance reports (see pages 12 – 17 for the most recent version).

I have enjoyed serving as Vermont State Auditor. I work with a great group of people, and it is an honor to promote transparency and accountability in state government.

I have a history of challenging orthodoxy and looking outside the box for solutions. I am a numbers guy, and a rigorous investigator, who doesn’t take shortcuts.

Tracking the money raised and spent by state government is important, but it is just the beginning of the Auditor’s job. The Auditor must also determine if taxpayer money is being spent wisely. That is, do state programs achieve the goals intended by the Legislature and are the programs cost-effective?

Sometimes this type of work angers powerful interests. After all, government officials and special interests don’t like to read that their programs may be ineffective and a waste of taxpayer money. Yet, asking difficult questions and speaking uncomfortable truths are exactly the tasks of the state Auditor.

Thanks for your time. For more, visit my campaign website.

Sincerely,

Doug

Paid for by Hoffer for Auditor
161 Austin Drive #71
Burlington, Vermont 05401
Roberta Harold, Treasurer

© 2020 Doug Hoffer For Vermont State Auditor :
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