A bill proposed this year aims to increase transparency of state agency finances.

Senate Bill 1 would create the Legislative Office of Fiscal Transparency (LOFT), designed to bring more clarity to state agency budgets. The new office would be run by a bipartisan committee and would conduct performance audits on agencies.

During the recent state Health Department financial-crisis-that-wasn’t, the Legislature appropriated an emergency $30 million to plug the supposed mid-year shortfall. A subsequent investigation by the state attorney general and state auditor showed the funds were not needed. While this may be an extreme situation, it is an example of how difficult it can be to fully understand state agency budgets and spending.

Just finding the total budget for the state can be a complicated process. There are four separate sources where statewide financial information is available: the Comprehensive Annual Financial Report (CAFR) produced by the Office of Management and Enterprise Services; OpenBooks, a transparency website with state agency information; the Oklahoma Senate Appropriations Report; and the appropriation summaries from the Oklahoma House of Representatives. When comparing the most recent year available for all four sources, fiscal year 2017, one finds that each one presents different total revenue numbers.

The CAFR shows total state revenue at $17.6 billion. OpenBooks reports $33.7 billion. The state Senate Appropriations Report shows $25.4 billion. The state House of Representatives appropriation summary shows $22.2 billion when interagency funds are excluded.

There are also multiple revenue streams to account for. As I have mentioned before, state appropriations are not, as often implied, the total state budget. State appropriations are made from state taxes and do not include federal funds or agency fees which can make up a large portion of an agency’s total budget. It was state dollars being disguised as federal grant money that allowed the financial scandal at the state Health Department to take place. Local dollars can also account for a considerable portion of agency budgets, as is the case with the Oklahoma State Department of Education. In fiscal year 2017, it received $2.5 billion in local dollars.

State agencies, afraid of seeing their budgets cut and eager to present a case for spending increases, often lack incentives to assist the Legislature by disclosing financial information. The proposed office would be a welcome step toward increasing fiscal transparency of state government and would allow the Legislature to be more effective in its constitutional duty to craft each year’s state budget.

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