Tag Archives: Doug Hoffer

Is there a fight brewing over the Enterprise Fund?

Earlier today, VTDigger broke the news that the state Emergency Board (four top lawmakers plus the Governor) had met on very (VERY) short notice to approve two state grants from the Enterprise Fund: $1 million to GlobalFoundries and $200,000 to BHS Composites. And I commented that this is the kind of thing that makes some see the Governor as a slippery dealmaker.

Well, here’s something you didn’t know. TheVPO has learned, as they say, that 50 state lawmakers wrote a letter to the Emergency Board asking it to postpone action on the grants.

The plea fell mostly on deaf ears, as the Board approved the grant on a 3-1 vote.

One of the letter’s signatories was Rep. Chris Pearson (P-Burlington). Via email, he explained the reasoning:

It was my hope that we could consider using the money to help fill the [FY 2017] budget gap or, more urgently, the [FY 2016] budget adjustment challenge.

The letter was written before the EB’s agenda had been publicly warned — which happened only yesterday afternoon. Pearson adds:

Now that it’s clear the money was for Global Foundries it’s puzzling how a company that was given $1.4 billion to take over the plant could find $1 million much of a game changer.

You and me both, but more on that in a moment. First, the political ramifications of this letter.

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The Hoffer report: an indictment of inertia

State Auditor Doug Hoffer did something unusual on Friday: he pre-released one of his reports, embargoed until this morning at 10 a.m. Usually, he just releases them when he releases them.

The reason he did so, I infer, is that this may be the most explosive document to emerge from his office, and he wanted to give us media folks time to digest it. The report is entitled “Sole Source Contracts: Extraordinary Use in Ordinary Times.” The topline: state agencies issue a whole lot of contracts without any competitive bidding. And while sole-source contracts are absolutely justified in many circumstances, the quantity is staggering — and, too often, the stated rationale for bypassing the bidding process was wafer-thin.

Background: In the course of his work, Hoffer had repeatedly come across instances of sole-source contracts. Eventually he decided to assess the scope of the situation. His team reviewed nearly 1,000 contracts issued during FY2015 by five state agencies. (Reviewing all state contracts would have been a monumental task.)

The report paints a picture of administrative laziness at best, corruption at worst. Some key passages from the Executive Summary:

The SAO [State Auditor’s Office] found that while sole source contracts are intended for extraordinary circumstances, this selection method is commonplace for some departments and agencies. … Sole source contracts accounted for 41% of these contracts, and they valued $68 million, or 27% of the total amount.

… While some sole source selections were justified, many were not. Numerous memos lacked a justification for using a sole source selection, and others lacked evidence to substantiate claims. We identified memos based on erroneous information and time constraints that appeared to be of agencies’ own making. …Furthermore, familiarity with contractors often took precedence over an open and competitive process.

… The high frequency of sole source contracts across the five departments and agencies in this analysis raises serious questions about the effectiveness of the State’s contract management.

Yeah, it sure does.

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Redirect: The view from inside the stable

In response to yesterday’s post about the troubles in the Vermont Training Program, I got a nice call from Lucy Leriche, Deputy Secretary of the Agency of Commerce and Community Development, which I believe I referred to as the Augean Stable of state government.

Well, nice to know somebody’s paying attention.

She made some good points, and some not-so-convincing points. Overall, I have to say my view of ACCD hasn’t changed much.

The #1 item she brought to my attention: “the reboot.”

The Vermont Training Program was overhauled in 2014. …The Auditor began his inquiry and report in 2015. What he had to work with was data from before the reboot. We have made a lot of changes, but the report is based on old information.

Hoffer’s response: he was aware of the reboot, and considered it in his report. His view: the reboot made some changes, but fell short in many ways. “It still relies on self-certifications [by applicants],” he wrote in an email. “The program should do some independent validation, as is recommended by the State’s Internal Control guidance. It’s a matter of adopting best practices in order to be accountable. These are taxpayer funds.”

Over to you, Ms. Leriche:

The Legislature made it clear they didn’t want us to build a big bureaucracy. They wanted as many dollars to go to grants as possible. If we did everything Doug Hoffer suggested, it would take at least one full-time person. That would take a lot of money away from grants.

Okay, let’s see here. They didn’t want “a big bureaucracy,” and following Hoffer’s suggestions would take “at least one full-time person.” That doesn’t sound like “a big bureaucracy” to me. It sounds more like a reasonable investment in protecting taxpayer funds.

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The Augean Stable of state government

The Agency of Human Services comes in for a lot of green-eyeshade scrutiny when budget time rolls around. With good reason; thanks to outmoded software and management, I’m sure AHS could do a better job than it does. And thanks to our jobless, middle-class-killing “recovery”, it’s coping with ever-increasing demand.

Mr. Hoffer detects an unpleasant odor. (Not exactly as illustrated.)

Mr. Hoffer detects an unpleasant odor. (Not exactly as illustrated.)

But pound-for-pound, I doubt that any part of state government can top the Agency of Commerce and Community Development for waste, futility, and inside deals.

In the latter category, we had the backroom agreement last spring that landed Lake Champlain Region Chamber of Commerce a $100,000 no-bid grant for developing business with Quebec. And now, in the second category, we have a rather devastating memo about the inadequate structure of the Vermont Training Program, which provides grants to businesses for employee training.

In his memo*, Auditor Doug Hoffer is far too politic to use the most appropriate term — “clusterf*ck.” But that’s the message. As I was reading the memo, my thought was, “Maybe we should just burn down the whole place and start from scratch.” His bullet-point highlights:

*As of this writing, not available online. But check the Auditor’s website; it should be posted soon.

— The VTP has no effective internal controls to ensure that applicants meet the various eligibility requirements or that grant funds are only used for supplemental, rather than replacement, training.

— The wage increases reported for trainees may not accurately reflect changes in hourly wages and may reflect other factors not related to VTP training.

— A substantial portion of VTP’s total resources are directed to a few large corporations year after year.

Yeesh.

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The downside of subcontracting human services

We had an unintended confluence on the Thursday edition of the Mark Johnson Show, hosted by Yours Truly. Back-to-back interviews with VTDigger’s Morgan True and State Auditor Doug Hoffer turned out to cover some common themes.

True had reported on problems at Rutland Mental Health Services, one of the state’s “designated agencies” for providing social services. Hoffer had just released a very critical performance audit of the Corrections Department’s transitional housing program. I was in the middle of the show when the light bulb went off. Both interviews were kind of about the same thing: Inadequate oversight of human services contractors.

In both cases, an Agency of Human Services program is contracted out to nonprofit agencies that get virtually all their funding from the state. In a way, it’s a mutually captive relationship: the agencies are completely dependent on the state, and the state effectively has no options for replacing a poorly-performing contractor.

In their own way, True and Hoffer found similar problems in different areas of AHS: lack of consistent oversight, gaps in service provision, and inadequate methods for tracking performance. (In the case of RMHS, the situation boiled over into scandal.) The result is a system that looks good from a distance, not so good up close. Its failures are partly due to lax oversight; but we should also consider whether poor contractor performance may also be due, at least in part, to bare-bones funding by the state.

After the show was over, I pondered another issue: What does the Rutland situation have to say, if anything, about the Shumlin administration’s community-based mental health care system? Because those designated agencies are the front-line troops in that effort.

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The curious incident of the Prog in the night-time — UPDATED

UPDATE: The Senator in question has spoken to WCAX. Details below, after the jump.

So here’s a heartening piece of party unity: the elective officeholders of the Progressive Party got together this week and enthusiastically endorsed Bernie Sanders for President.

The gang’s all there, from the four Progs on Burlington City Council, Robert Millar of Winooski City Council, the Party’s seven members of the House, State Auditor Doug Hoffer, and both of the Progs’ state senators.

Wait, what did I just say?

“…both of the Progs’ state senators.”

Hey, aren’t there three of ’em? I thought so.

Well, there’s Anthony Pollina… and David Zuckerman…

Hmm. Where’s Triangulatin’ Tim Ashe, the most nakedly ambitious of all the Progs?

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Who watches the watcher?

Under our system of government, the legislature enacts laws and the executive implements and enforces them. But what happens when a law targets the state itself, and the state fails to obey the law?

Don't mess with the Hoffer.

Don’t mess with the Hoffer.

This existential question arises from a new report from Auditor Doug Hoffer (who has an appropriately awesome, take-no-prisoners signature) brings us an example of a self-inflicted U.M. It involves Act 40, a bill that became law during Peter Shumlin’s first year in office. Act 40 was a nobly-intentioned piece of legislation that required each state entity to cut its energy consumption by five percent per year.

 

Great, no? The state leads the way on energy efficiency, providing an example for us all. Except that, according to Hoffer, Act 40 is nothing but an empty shell, its efficacy unknown and unknowable.

A few key findings:

— The state ” had limited information regarding whether, and the extent to which, its focus on reducing energy consumption resulted in reductions consistent with its goals.”

— The state government’s energy plan “failed to establish a systematic mechanism to evaluate progress toward reducing energy consumption.”

— Not all state agencies prepared energy-reduction plans required by the law.

— Key terms in the law were left unclear. For instance, Act 40 called for “right-sizing” state vehicles, but “right-sizing was not defined” and no criteria were established.

— Energy use in leased space was not included in evaluating Act 40 performance. In 2012, leased space accounted for 20% of building space managed by the Department of Buildings and General Services. There’s a big loophole.

And the kicker:

— “State government energy consumption has not been reported since 2011, and the results reported prior to 2011… contained data and formula errors and had methodological flaws…”

Put it all together, and we seem to have a clear picture of administrative failure that undermined a very good piece of legislation.

Buildings and General Services Commissioner Michael Obuchowski acknowledged many failings in his formal response to Hoffer’s audit. He pleaded, surprise surprise, poverty. He says that the state needs an energy management division to implement Act 40 but there’s no money for such an entity. In the meantime, he says, “BGS will continue to provide these services to the best of its ability.”

Judging by past performance, there seems to be an ability gap.

Obuchowski and Hoffer both say that some improvements are already underway. But why did it take an audit to make the state’s energy management system even attempt to follow the law?

If this was a private entity flouting the law, we’d be going after them guns a-blazing. But how do we hold the state to account for ignoring its own statute?

(And, once again, what does this say about the administrative competence of the Shumlin administration?)

Grüberdämmerung

Ah, Jonathan Gruber, the gift that keeps on taking.

The latest twist in this uncomic opera: Auditor Doug Hoffer has examined Gruber’s invoices for consulting work on behalf of the Shumlin adminstration, and found them seriously wanting.

In Hoffer’s words, his review of documents “raised questions about Dr. Gruber’s billing practices and the State’s monitoring and enforcement of particular contract provisions.” More:

Dr. Gruber’s invoices referred only to “consulting and modeling” and offered no details about specific tasks. In the broadest sense, those three words describe the work performed, but such generalities do not appear to satisfy the intent of the contract.

It’s like taking a math test where you’re asked to show your work, and you turn in a sheet with “WORK” in big letters on an otherwise blank page.

Hoffer further states that top Shumlin officials Robin Lunge and Michael Costa “were aware of the need for more details in the invoices, but approved them nonetheless. … [they] had an obligation to request additional detail from Dr. Gruber, and they failed to do so.”

Gruber’s first and second invoices raise suspicion because each showed the same round number of hours worked (100 for Gruber and 500 for research assistants). Hoffer judges the round figures, and the fact that two invoices totaled exactly the same, “implausible.” He concludes that the administration “ignored the obvious signs that something was amiss.”

To me, this is the real Gruber scandal. The conservative shitfit over a handful of intemperate remarks — made during a period of years in which Gruber must have spoken on the record hundreds of times — was nothing more than political opportunism by the opponents of health care reform. But this?

Even if Gruber was invoicing to the best of his ability, it certainly reveals shoddy management by the Shumlin administration. Which is, unfortunately, of a piece with the administration’s general performance on health care reform. Did they take a relaxed approach to spending money because so much of it came from the federal coffers? Perhaps.

Here’s another fact that reinforces my interpretation. Late last year, Gruber submitted two more invoices. In an email to Hoffer earlier this month, according to VTDigger’s Morgan True, Lunge wrote that the administration was “no longer satisfied with the level of detail provided” in those later invoices.

Why “no longer”? Because Hoffer was examining the invoices and they knew they’d be embarrassed? If there’s another explanation, I’d like to hear it.

There are other problems, as reported by True: Tax documents appear to show that Gruber actually paid his research assistant far less than the amount received from Vermont for the RA’s work. DId he pocket the rest? Did the state’s lax oversight let him get away with it?

I’m a liberal, and I’m strongly in favor of universal access to health care. Our current system is an expensive stinkin’ mess, and no amount of wrongdoing by Gruber or others will convince me that reform is a mistake. But in my book, my fandom only feeds my desire for sound management by those we’ve empowered to enact reform on our behalf, and with our dollars.

The Gruber fiasco makes me wonder about the administration’s oversight of all the other consultancies associated with the reform effort. And, for that matter, its handling of the entire process.

Hoffer has referred his findings to Attorney General Bill Sorrell, who says Gruber’s invoicing raises “major questions.” He says he will meet with administration officials to see “what evidence and records are available to justify the billing amount.”

On behalf of health care reform supporters, and those who backed Peter Shumlin because of his promises to institute unversal coverage, all I can say is I hope there are no more shoes to drop. I fear that we’re only just getting our first peek inside the closet.

Hey, maybe those ski leases are on the table after all.

I heard something very interesting on the latest edition of “Vermont This Week,” the usually bland and boring (see below) Statehouse news roundup on Vermont PBS.

One of the topics was Auditor Doug Hoffer’s report on the state’s outdated and not very lucrative public-lands leases with our biggest ski resorts. One of the guests was Tim McQuiston, editor of Vermont Business Journal. He ought to have his finger on the pulse of the Vermont business community, right?

Conventional wisdom is that the leases can’t be reopened, because resort operators would have to agree to the move, and the Powers That Be don’t seem to be inclined to push the issue. McQuiston thinks otherwise:

I would suspect, in knowing a lot of these people, that they would come back to the table under reasonable circumstances. They know their industry has changed a lot.

Interesting. And what kinds of circumstances are we talking about?

There’s a lot of environmental law they have to comply with. Act 250 is still out there. They’re very involved with other regulatory entities.

So they might be willing to negotiate better lease terms if they get their way on some regulatory matters. That’s one of those good news/bad news situations, isn’t it? Redoing the leases would bring the state more revenue, but it opens the door to some backroom weakening of environmental standards.

Postscript. I say “Vermont This Week” is bland and boring because, well, it usually is. It comes across as overly scripted, and the panel acts like they’re walking on eggshells. Maybe this is a natural consequence of our political media tending to be on the young side, and having relatively little experience in a panel setting. But I do wonder if part of the problem is how the show is planned and produced. If there was more free interchange, if they tossed out the script once in a while, it’d become appointment television for geeks like me. As it is, I rarely watch. This morning, I was channel-surfing and happened to catch the rebroadcast. I don’t go out of my way for it.

How to get those ski leases reopened

Last Tuesday, State Auditor Doug Hoffer issued a report on Vermont’s leases with ski resorts. The leases, he said, were outdated and were not bringing a fair return for the resorts’ highly profitable use of public lands.

At the time, you may recall, the state Parks and Rec Commissioner Michael Snyder basically threw up his hands and said there was nothing the state could do until the leases expire — decades from now.

Well, I’ve been reminded by someone more aware of state finances than I (which probably includes a substantial percentage of my readership) that the state does, indeed, have a hammer it could hold over the resorts’ heads.

It’s a tax exemption, granted in 2002, on ski lifts and snowmaking equipment. This exemption cost taxpayers $1.42 million in foregone revenue in fiscal year 2012.

It’s been suggested that this is basically a giveaway to a lucrative industry. Sen. Tim Ashe, chair of the the Senate Finance Committee, has called for a cleanup of Vermont’s cluttered, nonsensical “tax expenditure” system, and cited the ski equipment exemption as a clear example of the problem. As he put it, “every time they pay less, we all pay more.”

Well, hey. Why not dangle that juicy tax break in front of resort owners, and say something along the lines of “Gee, it looks like you’re getting a sweetheart deal on your leases AND a questionable tax exemption. Tell you what, we’re feeling generous; you can have one or the other, but not both.”

Makes all kinds of sense, at a time when the Governor and lawmakers are scrambling to find revenue and/or cut the budget. Problem is, the underlying reality hasn’t changed since I last wrote about this. Resort owners are politically connected (how many trips has Gov. Shumlin made with Bill Stenger?), and generous with campaign contributions. It would be difficult, if not impossible, to take either of their windfalls away.

Need proof? How about the sound of silence from the Statehouse in the aftermath of Hoffer’s report? Nobody wants to touch this one. It’s a shame. I expect better from my Democratic majority.