The State of Montana's finances aren't as rosy as we once imagined, and the same people who may have contributed to the mess may be the ones ultimately charged with cleaning it up.
Last week, the Legislative Audit Division told lawmakers that problems, misstatements and omissions are so common (more than 100 that have been discovered) in the state's finances that it could jeopardize Montana's bond ratings.
This wasn't just a single accidental oversight. Instead, the problems are deep -- 125 errors and lack of internal controls. Sadly, those controls, had they been in place, according to the audit division, could have caught these problems earlier. In other words, there weren't even controls in place to catch problems.
Though Montana Budget Director Dan Villa might have you believe some of these were nothing more than just goofy spreadsheet errors, the truth is more sobering. There is approximately $1 billion overstated accumulated depreciation, and $62 million in bonds were omitted altogether, said Tori Hunthausen of the Legislative Audit Division.
Let's pause. $62 million of bonds don't even show up on the books?
One billion dollars overstated? That's billion with a b.
These don't just appear to be simple rounding errors. The amounts aren't insignificant.
The question is: How do they simply disappear? How do those mistakes happen?
That's what remains unclear.
It's obvious that the state (eventually) caught it, thanks to the Legislative Audit Division. What's a bit more troubling is that Villa and Department of Administration director Sheila Hogan had to put a team in place with a new accountant.
The errors and omissions seems like basic accounting, but don't take our word for it.
Villa also told the committee that in a few cases zeroes had been left off figures.
Yikes. What kind of accountants are working for the state?
What still remains to be seen is what how will changes be implemented and how can we be certain this recent history won't repeat itself? How are the Montana leaders today ensuring that future leaders won't have to worry about the same problem?
It may seem like this is just a problem on paper. You know, change a few numbers on a spreadsheet and --viola!-- things get better.
But, if bond ratings get lowered, it means that Montana, normally lauded for its tight fiscal management, may have to suffer higher interest rates when we borrow money. In other words, our dollars won't buy as much and not as much may get done. We'll pay more and get less.
That Villa and Hogan have formed a team is a good start. But they're the ones who helped get us into this mess. Putting them in charge of the solution seems problematic. If they didn't find the errors, how are they so sure they'll stop them?
New procedures, new staff and new systems -- that all sounds great. But, Montanans need to have a better, fuller, deeper understanding about how these millions (and, in one case, a billion) doesn't get counted. The story shouldn't end with Hunthausen's report to lawmakers. Lawmakers need to figure out how the mistakes happened, and if necessary, make sure it doesn't happen again.
For his part, Gov. Steve Bullock called it "completely unacceptable." Wouldn't it make more sense to do a little deeper digging on how the problems happened? Granted, that is hard when folks like Villa are a part of the governor's own administration. A deeper investigation might be politically uncomfortable. The question remains: How members of his staff are being held responsible for such shoddy results?
The buck should stop at Bullock. Then again, with our accounting practices, how would we know where the buck stops or even if it's there?