A bill with bipartisan support would allow the Ohio auditor to conduct performance audits of state universities and colleges.
A few years ago, a bill requiring performance audits of state agencies passed through the Ohio House and Senate.
The bill’s sponsor, Ohio Rep. Tim Schaffer, R-Lancaster, is back with another bill, co-sponsored by Rep. Mike Duffey, R-Worthington, authorizing the state auditor to conduct performance audits of higher education institutions.
“We give state universities about $1.9 billion every year,” Schaffer said.
Richard Vedder, distinguished OU professor of economics emeritus, explains it in other terms. Vedder said the state government spends over $4,000 dollars every minute on public colleges and universities.
The bill, also known as H.B. 384, recently passed an Ohio House vote and has garnered support from the Ohio State Auditor Dave Yost, the Ohio Society of Certified Public Accountants and the Buckeye Institute for Public Policy Solutions. Schaffer said the bill has bipartisan support. In fact, it passed through the House unanimously.
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“Performance audits have already saved Ohio’s state agencies millions of dollars, so taking a deeper look at the operations of our colleges and universities is just smart government,” Yost said in a news release.
In a statement to the House Governance and Accountability Committee, the Ohio Society of CPAs said performance audits provide an outside perspective that can be “invaluable.”
In a statement to the same committee, Vedder said traditional financial audits, which basically aim to verify whether money ends up where it’s supposed to, are not sufficient in examining inappropriate spending at universities.
A performance audit, Vedder said, goes deeper than a regular financial audit and examines why an institution spends money the way it does and makes recommendations to increase efficiency.
“The auditor should be able to do more than merely see if the money is spent in accordance with the law,” Vedder said in his statement. “He should be able to identify areas where expenditures are not justified for any legitimate public purpose using cost-benefit criteria.”
For example, a financial audit might catch if someone was stealing money, while a performance audit might examine why the university was doing something in house rather than contract a private firm to do the same job for less, Vedder said.
In a statement submitted to the House committee, Greg Lawson of the Buckeye Institute called the auditor of state’s office “uniquely situated to discover a wide range of potential efficiencies and savings.”
Schaffer said the state saves $33 for every $1 spent doing performance audits. In a House floor speech, he said that eight audits of state agencies by the auditor’s office resulted in $95.9 million in recommended savings.
According to an annual report from the Ohio State Auditor's office, performance audits identified more than $1.7 million in potential savings for the Ohio Department of Transportation and more than $3.7 million in potential savings for the Ohio Environmental Protection Agency alone.
Vedder said universities may be concerned with maintaining independence from the government, but still should be subject to some financial scrutiny.
“They have a level of independence from the political process that other state agencies don’t have, but on the other hand, they’re still taking money from the government,” Vedder said.
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