HOUSE OF REPRESENTATIVES

H.C.R. NO.

301

TWENTY-FIFTH LEGISLATURE, 2010

 

STATE OF HAWAII

 

 

 

 

 

HOUSE CONCURRENT

RESOLUTION

 

 

establishing a TASK FORCE to STUDY STRUCTURAL CHANGES AND PROCEDURES TO the office of the legislative auditor TO IMPROVE ACCOUNTABILITY AND INDEPENDENCE.

 

 

 


     WHEREAS, the office of the auditor is established by Article VII, section 10, of the Hawaii State Constitution, and Chapter 23 of the Hawaii Revised Statutes; and

 

     WHEREAS, the Article VII, section 10 of the Hawaii State Constitution calls for the auditor to be appointed by the legislature, and the budget of the office of the auditor is included within the legislative budget; and

 

     WHEREAS, in 2002, the year immediately preceding the tenure of the current administration, the budget of the office of the auditor stood at slightly over two million dollars; and

 

     WHEREAS, in 2003, the legislature overrode a gubernatorial veto and enacted Act 4, Special Session Laws of Hawaii 2003, which established the audit revolving fund; and

 

     WHEREAS, Act 4 compels executive departments to deposit moneys received or generated by an executive department as a result of the cost of financial audits conducted by or contracted for by the auditor into the audit revolving fund; and

 

     WHEREAS, deposits into the audit revolving fund have fluctuated in the years since its creation from $3,013,125 in fiscal year 2004, $1,500,000 in fiscal years 2005, and 2006, $4,221,820 in fiscal year 2007, $2,429,360 in fiscal year 2008, and $2,550,828, in fiscal years 2009 and 2010; and

 

     WHEREAS, over the same time periods, the budget of the office of the auditor, as included in the legislative budget, has steadily increased to a high of $2,910,685 in fiscal year 2008; and

 

     WHEREAS, appropriations out of the audit revolving fund more than doubled the actual expenditures by the office of the auditor during the same time period, with the office of the auditor authorized to expend over $9 million in fiscal year 2009 compared to just over $2 million if fiscal year 2002; and

 

     WHEREAS, prior to 2003, the auditor was universally hailed for executing her duties in a fair and impartial manner; and

 

     WHEREAS, in recent years, the audit process by the office of the auditor has taken a more biased and political flavor, including drafts of audits that present conclusions that overstep the scope of the office, such as in one highly publicized incident where the draft audit recommended the termination of a department director and drew legal conclusions of liability, even after the Attorney General testified in a Senate Investigative Committee that the department director was not criminally liable for purported violations of the law; and

 

     WHEREAS, the accused department director and the Governor criticized the draft as "political", "lacks understanding", "fails to accurately assess factual information", and "completely absen[t] of objectivity."; and

 

     WHEREAS, the final version of this particular audit has yet to be released, indicating major revisions and giving credence to the criticisms of the accused department director and Governor; and

 

     WHEREAS, another example of this disturbing trend of impartiality is the very recently completed draft of an audit of the Department of Budget and Finance which was supposed to entail a financial examination of the department; and

 

     WHEREAS, the auditor chose to implicitly accuse the Department of Budget and Finance of violating state law by investing state funds in student loan auction rate securities, a short term investment that many jurisdictions invest general funds in; and

 

     WHEREAS, the investments have not lost a single dollar, and the Department of Budget and Finance sold at least $10 million of this type of security for par, or face, value; and

 

     WHEREAS, these investments also pay interest periodically; and

 

     WHEREAS, the draft has been criticized by the Governor as "an unfounded, false, and defamatory attack on the integrity of the department and its employees", but even more disturbing, the draft also draws a legal conclusion about the state's purchase of auction-rate securities that the auditor is unqualified to make, is not based on evidence and is at odds with a written opinion by the state attorney general; and

 

     WHEREAS, the only accountability measures currently in place for the office of the legislative auditor is the legislative budget process, for which the legislature has increased the budget over the years, and the appointment process, which is once every eight years; and

 

     WHEREAS, other states strive for accountability and impartiality in their auditors through a number of means, such as creating an office that is not attached to either the executive or legislative branch, making the auditor an elected position, or having another entity provide a check against the auditor, such as a state inspector general; and

 

     WHEREAS, recent events have broached the possibility that structural changes may be needed to increase the accountability and independence of the office of the auditor; now, therefore,

 

BE IT RESOLVED by the House of Representatives of the Twenty-fifth Legislature of the State of Hawaii, Regular Session of 2010, the Senate concurring, that there be a task force created to study the various options for increasing the accountability and independence of the office of the auditor, and the feasibility of the various options; and

 

     BE IT FURTHER RESOLVED that the task force be composed of an equal number of individuals from the majority and minority caucuses of both the House and Senate, as selected by their respective leadership; and

 

     BE IT FURTHER RESOLVED that the task force also include a representative from the executive branch, the office of the auditor, and the legislative reference bureau; and

 

     BE IT FURTHER RESOLVED that the task force elect a chair from its membership, not to include the representative from the executive branch, the office of the auditor, or the legislative reference bureau; and

 

     BE IT FURTHER RESOLVED that the task force submit its written findings and recommendations, including potential legislation, to the Legislature not later than twenty days prior to the convening of the Regular Session of 2011; and

 

     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to Governor, the Speaker of the House of Representatives, the Senate President, the Office of the Auditor, and the Legislative Reference Bureau.

 

 

 

 

OFFERED BY:

_____________________________

 

 

Report Title: 

Office of the Auditor; task force