Latest / The SEANC View / North Carolina's $1B Puzzle: Inside the Auditor's Lapse Salary Report

Transcript

North Carolina's $1B Puzzle: Inside the Auditor's Lapse Salary Report · The SEANC View

0:00
Hello, and welcome to another edition of the Scenic View podcast.
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I'm John Owens, your host, along with Artis Watkins, Suzanne Beasley, and Sammy Klein.
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We have a big show this week. Let's just jump right in.
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Okay, so we have an exciting show this week. We're on location.
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We have a recurring guest as well.
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He's been gracious enough to allow us to have a few minutes with him in his
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office, downtown Raleigh, across from the legislature.
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State Auditor Dave Bullock, it's great to see you again, and thanks for having
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us. Well, I'm glad to be here.
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Hey, welcome to the Albemarle Building in the beautiful downtown Raleigh.
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Love the Albemarle Building. It is great.
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It's been redone, and you guys have walked around, and it really is a nice office
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space. I think it's a really good example of good use of an older structure and modernizing it.
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And particularly for the auditor's office, we have what I believe is a really modern space. It is.
1:05
It's nice. It's very light. There's a lot of light in here, which is really cool.
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Yeah, and for professionals that have a choice of working for the state of North
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Carolina and the state auditor's office with a CPA or going to private practice and private industry,
1:19
you want to be able to provide a workspace that is commiserate to what those
1:25
professionals would get in private sector.
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Yeah, nobody wants to be stuck in a closet.
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That's right. That's right. You know, and so that has been, that was a blessing
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and a luxury that I walked into.
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Well, thanks for being a repeat guest. Oh, yeah, I love it. I am a state employee. That's right.
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The lobby down there was really nice. I remember what it was before,
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and it was a totally different feel when you walk in there.
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That was my non-sequitur. But we do have some very important topics to get to.
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Let's jump right into the toughest question of all that state is thinking about.
2:01
What do you think about UNC's basketball coach?
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See, and you guys know I'm former chair of the board at Chapel Hill.
2:08
Yeah, you've got to get this on the record. So I was part of the team that hired Hubert Davis.
2:13
And so I don't know. I'm excited about the hire. I think it's a good hire in terms of direction.
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Got to move in a different direction. I wasn't seriously asking for an answer,
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but you answered it. I could go there.
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Well, thank you so much for obliging me with that basketball talk.
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We want to talk about a lot of things going on with your office.
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Obviously, we talked a lot before we started recording, and I told you I ought
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to save it for the recording. Yeah.
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But I guess we should jump right in with the lapse salary report that you released in January.
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And you said the report showed that there were 8,800 long-term vacancies in
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state government producing around $1.04 billion in lapsed salary dollars.
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We released a letter soon after that that may be taking you to task on a few aspects of it.
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So you invited us here to hash it out.
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So let's just talk about it. Yeah. So I feel really good about the report for a lot of reasons.
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One of which is that the work we've done here over the last 15 months to create
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the computer capacity to actually compile that report,
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I think is something the people of North Carolina really should be proud of
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from the work our team at the auditor's office has done.
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I'm confident we're the only office in state government that could compile that
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report in a reasonable period of time.
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And that is because of the processing speed and the computer technology that we brought in.
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Now, what we were tasked with doing on the lap salary, and a lot of this is
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sort of tomato, tomato talk in some respects.
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And again, artists, You know, I'm very plain spoken, so North Carolina speak.
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But, you know, what is a lapse salary? So the lapse salary, as defined by the
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Office of Budget Management, is a mixed bag in North Carolina.
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So it includes state appropriated positions. It includes receipt supported positions.
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It includes federal positions. It also includes these temporary placeholder
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positions, which who in the world knew those even existed?
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I had no idea they existed. And I do think one thing that the lapse salary report
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did is actually educate not only the public,
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but some policymakers in North Carolina on both the executive side of the House
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and the legislative side of the House that those positions actually exist in
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terms of budgetary structure.
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And so the overall number encapsulates that long-term view.
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And so what that gives is a macro point of view to the legislature and to executive
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branch as well in terms of what their employment situation looks like.
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I don't think it's necessarily an unusual situation to have the north of 8,700,
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almost 8,800 vacancies in North Carolina, I do think it begs the question of budgetary austerity.
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And are we as a state budgeting the way we should?
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And I think our audit or the report, the DAVAC report, I think clearly states,
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look, we understand agencies and offices use lapse salary dollars for needs in the agency.
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They pay the power bill to pay temp employees.
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And Highway Patrol was a really good example where the colonel had stated they
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have to keep 100 positions in order to pay for gasoline.
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So I don't think it's a question of dollars necessarily. I think there are a couple of issues.
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One is a transparency issue to the public on exactly how the money is being spent.
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If you're budgeting for positions and then the agencies are having to use position
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dollars to pay for gasoline, that's not necessarily transparent in the budget process to.
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Agreed. But what are the agencies going to do? They're being underfunded.
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Yeah. And I'm not complaining that the agencies, and again, our report doesn't
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complain about anything.
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It just lays out the facts. These are the facts. So I do think it informs the
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legislative budget writers of issues that relate to funding and how those dollars
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are actually being used where the rubber meets the road.
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So as they go into their budget process, they know or have a view of,
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all right, now this is a new perspective.
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Did you get a sense from some of the comments in committee? And I'll give you an example of one.
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I think it was Representative Kidwell said, wow, this is about $400 million
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worth of jobs that no one's in.
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And that would be half of what we need to fill this budget gap we have.
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Did that kind of comment, I know you were in the room at the time.
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Now, does that not concern you
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that maybe your report is being misinterpreted? Now, I'll tell you why.
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Because in the year 2009, we had more people in jobs serving the taxpayers in
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North Carolina than we do in 2026.
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That's very clearly. But we have two million more citizens, by the way.
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So you get things like DMV, where we do not have enough people trying to serve
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this much huger population.
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We haven't taken care of that, but I don't think the legislature got any impression
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that, man, we probably should have been funding these services the taxpayers
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are paying for so that they could get good services.
7:37
I think they see some money on the table is what they got out of your report.
7:41
Well, a couple of things on that. Number one, the facts are what they are.
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I think the data is clear.
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And again, giving the full picture is the job of the auditor's office.
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That's our job is to show what the picture is. How it's interpreted by policymakers
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is up to the individual policymaker. I don't think every legislator interprets
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it the same way, necessarily.
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Two, for example, with DMV, I would point back to our audit of DMV where this
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office actually advocated for additional positions. Exactly. And we got them.
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I say we. We as a state got them. And that, the DMV audit— Yeah, you did.
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—is good. —is great. You did. —is really good, is really good because I think the DMV audit—
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created a shared priority across government.
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And that includes the legislature. I think you literally got those jobs.
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Well, maybe so. Did advocate for them.
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Which they had been advocated for in that way for years, and no one was listening.
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So I do think that's good.
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And I think that's a big win for the office.
8:41
Well, yeah, it is. But, you know, in terms of how does this play out long term,
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a couple things on the number of state employees.
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We also have tremendous advances in technology that allows state workers to
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leverage their time better and be more productive.
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So it's not always apples to apples in terms of more population coming to North
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Carolina and needing a commiserate or number of state employees to serve those
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individuals moving to the state because we are able to leverage technology.
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So it's not always apples to apples there.
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Your point is well taken, though, on how employees across government are paid
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and what their pay structure is.
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And we advocated, for example, specifically in the DAVE Act on corrections officers, for example.
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There is something that our team looked at benchmarks around other states, neighboring states.
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You know, that is a position, a correction officer that is important and that
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needs to be properly funded.
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And we have advocated, if you want to call it advocacy, by way of the facts for pay increases.
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We did so with Highway Patrol. We also did so with health care workers.
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We've got to be able, if we want the best and brightest, we're going to have
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to design pay structure to get the best and the brightest.
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We can't even, you know, I know you said you looked at other states.
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The issue with anything correctional or any other kind of law enforcement or
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law enforcement adjacent.
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Is that the counties outpay the state by such a huge measure.
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We were just looking at a flyer yesterday for Wake County. Wake Sheriff's Department.
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Yeah, particularly law enforcement. Law enforcement is where you see that.
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Well, this detention center, like a correctional officer, but for a jail, $71,000.
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And then that was bonuses and
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all kinds of things to drop. That's pretty good. Don't tell my team that.
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So, yeah, well, I know there's no way you could get me to take on the.
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It's a tough job. A lot of these jobs are tough.
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And I will say, that being said, I don't want to imply that we don't need state
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employees because we have technology. I will tell you at least our experience
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here in the auditor's office.
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And we do use, and we've talked about this, and we're beginning to really leverage
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artificial intelligence.
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We've created our own artificial intelligence environment that's within the auditor's office.
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So we're not doing work out in the stratosphere here. we're working inside of
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our own environment, we have not found that that would decrease the number of
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auditors in our office or the needs.
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Actually, what it is, is it's allowing us to broaden our coverage and allowing us.
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Sure. And AI is clearly not the reason we did not invest in employees from 2009
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to 2026 in an appropriate way.
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I just didn't want to imply that leveraging technology would necessarily mean
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we wouldn't need state employees. I actually found we need more because of AI,
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because we can actually do more.
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But, okay, so the auditor's office, you do look at, like you said,
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data's the big thing, numbers.
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Policy is also something that gets audited for. So what is your opinion on a
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workforce that's smaller than it was nearly 20 years ago?
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Well, I mean, I think, first of all, we need to be willing to be creative in
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terms of bringing the best and brightest on board in state government.
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And, you know, I can speak to our experience here. Two months into the job,
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we redesigned a position, an administrative position, and created a recruiter.
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And I have a young lady who works here. She's a great member of the team,
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and she is on the road a lot. I think we've done north of 80 events across the
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state of North Carolina. Those are employment fairs.
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And do we always get team members from every one of these employment fairs? No.
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But we're out there in front of young students.
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And this is focusing our efforts clearly here in North Carolina at both public
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universities and private universities.
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We're there in front of them, and there is an awareness that you do have a potential
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job opportunity at the state auditor's office if you're in the accounting field.
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Very competitive, by the way. You know, private industries are recruiting these
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professionals at a high rate.
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But we are there, and we can then, you know, maybe we get two or three,
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four here, there that apply. They're really good candidates.
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And that, I think, has been a really, really productive thing for us.
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I would love to see that idea spread across the state. And I know other agencies do something similar.
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Our internship program, I came to office. There were no interns in the office.
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We have a robust internship program. We just announced the Ralph Campbell Jr.
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Summer Internship Program. We did that at the previous Council of State,
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where we have a special internship named after former state auditor Ralph Campbell.
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We have 10 to 12 interns that rotate.
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And we've got two that are going to be graduating that have interned here that
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are coming on board at the auditor's office.
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So I really think this internship program, at least in our office,
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and again, all these offices are different, but at least as it relates to the
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type of professional we need in the state auditor's office, this internship program works great.
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And I just use those as two examples. We've got to get creative and we've got
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to take some lessons that private industry uses and put them to work in state
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government and try to be flexible in terms of hiring.
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But I do think agency heads need to have more flexibility in the hiring process.
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Well, and I think everyone agrees on that. That's one of the reasons the modernization
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of the State Human Resources Act passed, I think, with such bipartisan support.
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I would argue we could tweak it even further.
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I would argue it could be. To make more people exempt? I think no, not necessarily.
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I do think, well, I do think that it's a bit unfair if you get elected to office
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and there is an expectation in office that policymakers such as your attorneys
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and your policy advisors would be exempt and then the previous holder of the
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office makes them non-exempt and you're stuck in that situation.
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I do think an office holder, and in my position as state auditor,
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I think I ought to be able to hire my own lawyers.
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I mean, I just think that's the case.
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Now, people may disagree with that, but that is my belief. And,
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you know, having to— I thought you could, actually. Not if they're made, not exempt.
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You could get into a situation where you have—and good people.
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It's not a question of whether a person is good, whether they're smart,
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whether or not. It is a question of you get elected to an office or you get
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appointed, for example, to an agency head. Yeah.
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Got to be able to have, in my opinion, particularly in an elected position,
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you ought to have your own lawyers.
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But if they're made non-exempt and they have the super protections, you're stuck.
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Right. And so you're in the situation where I paid settlements and I did.
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I went ahead and did it because I felt like it was the right thing to do for
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our office. Was it something I wanted to do?
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No, not necessarily. But we also worked really hard to help those individuals
15:52
in the office find landing spots in other state agencies. We did that.
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And, you know, by and large, the State Human Resources Act, I do think there
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are some tweaks that could be made to it to give the agencies and offices across
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North Carolina a little more flexibility.
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I really think there's some room. Well, I don't think anybody's going to care
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what you do to lawyers, to be honest with you. I got it. I know.
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I know. But it's your rank and file that worry about, you know,
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we've had wholesale gutting of employee rights suggested.
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You just take it out. Yeah, I don't necessarily...
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Espouse that particular approach, I do think there ought to be,
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look at the university system, for example.
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The university system has its own sort of human resource way of doing things, right?
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They've got a tremendous amount of flexibility as compared to our office,
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for example, here at the state auditor's office.
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And I think they've got happy employees. I think they do anyway.
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Well, and there's some of that that makes sense. I didn't say get rid of it.
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I said that could use some tweaking, in my opinion.
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And that's just my opinion. I hope we're always tweaking.
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That is my opinion. There has to be a little bit of flexibility.
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And we've worked with the university system, actually, over the years because
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there were particular positions, especially in HR.
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Yeah. Well, there were some, specifically UNC, late 90s, I think,
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for the medical part, and then ECU, what they called family practices.
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And those people ended up, they were told it was going to be so much better
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If they just would willingly kind of go along with giving up their rights and
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they could get bigger raises, they wouldn't be confined by what the state was doing.
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And the unfortunate part was they went for longer with less after that.
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So that was kind of a it really put a whole generation of state employees in
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those type of jobs with a bad taste in their mouth. So everybody's always gun shy.
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I think there's again, it's all a lot of this is cyclical.
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Yeah, I think that's right. That's everything, but especially government.
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But speaking of government, we were talking a little bit before the podcast
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about your office is doing an awful lot.
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And I hope you'll take a moment to crow about the things y'all are doing because
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y'all are looking into so many things around the state that are getting a lot
18:09
of very positive attention.
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And so one of the things we talked about the last time, and that we still would
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love to see the kind of efforts, because I do think your staff's doing an excellent
18:19
job, is some of this privatization.
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We don't ever see anything about that. We've got the big contracts,
18:25
the health plan and the retirement system contracts, that we can't see by law.
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And I think the Treasurer Briner's doing some good things to try to fix those issues.
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But we can't as taxpayers see what's happening with that public money.
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But there's other places where we're interested as well.
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There are some massive contracts. I know DOT is one of the big ones.
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We never see a comparison. What did our dollars get when so much of that agency
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over decades was privatized?
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It seems weird that it's not brought forth.
18:56
Well, that's a fair question. It's
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something that our team is committed to working on as we move forward.
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Again we've been in office here 15 months or so building a good robust team
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and and we talked offline but I'd like to talk about the fact that I have found
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in our office the full-time team members that we have on board of the state
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auditor's office do a really good job and a lot of times outperform contracted.
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And the previous in the auditor's office, there was a reliance on contract work.
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And we do have some contract work that we do, but we have been moving steadily
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away from a reliance on contract work to work produced by full-time state audit
19:39
staff here in the auditor's office because we feel like the product is back.
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And they're churning out a lot.
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They are working hard. They're working hard, and I said this when I got into office.
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One of the great things coming into office is the professionals here at our
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office, and I know they exist all across state government.
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That are really committed to serving the people of North Carolina.
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They're public servants, and that's what they want to do. They have choice,
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right? They could go to private industry if they want, but they want to serve the public.
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And we have found that we can get really, really solid results from folks.
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And one of the things that we will be looking at moving forward in our office,
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there are a couple of big, big picture items.
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And one of those is contracts across state government.
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And to your point, what do those DOT contracts look like?
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What are the provisions in those contracts, because even after the just being
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here 15 months, one of the things I see lacking, and I don't mind being blunt about it,
20:34
are measurable metrics in contracts that the state government has with private industry.
20:42
You know, state government has to contract with private industry in a lot of areas.
20:47
We do certain software programs, certain things we probably need to contract
20:52
with to be able to leverage dollars to get a broader result,
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but we need measurable metrics.
20:59
And we see that, and I've seen it up close, and we've got some upcoming really
21:06
good audits on hurricane relief in Western North Carolina.
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And we saw it in NCORP with a lack of metrics in these contracts, right?
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But now that street goes both ways, right? That's a two-way street.
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If we contract with a private vendor to come in and provide a service.
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We need to have, and, you know, private industry calls them KPIs,
21:28
key performance indicators, metrics, whatever you want to call them, measurables.
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What are the deliverables? You're going to, the contractor is expected to deliver
21:35
A, B, C, D, and E. There needs to be a timeline.
21:38
There needs to be a budget expectation. There needs to be regular check-ins
21:41
to make sure that we're on task and on schedule.
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There also needs to be liquidated damages so that if the contractor does not
21:49
deliver what they promise, that the state of North Carolina is not held responsible
21:54
for what we get without there being a penalty from the contractor.
21:58
That being said, the state of North Carolina has the obligation to provide the
22:03
environment for the contractor to succeed.
22:06
The state shouldn't put up unreasonable barriers for the contractor to actually
22:11
do the work they've been asked to do. Of course.
22:13
We talked about, I use, and I've said this before, you know,
22:16
in Hurricane Relief, for example, when we talk about contracts,
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we're not talking about people that are rolling up on the senior citizen's house,
22:23
knocking on the door, saying, give me 50% down. I want to fix you your roof, right?
22:28
These are corporations that have been asked by the state to come in.
22:33
And anecdotally, I can speak to this, and we're doing a deeper dive on this,
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but as I've done roundtables with contractors around the state,
22:41
one of the constant issues I hear is the state putting up barriers for these
22:46
contractors to be able to complete parts of the recovery process.
22:53
And on the flip side, contractors that don't deliver, right?
22:56
So I've heard it on both sides, right?
22:58
So there needs to be a marrying of expectations on the state and the private industry side.
23:04
Conversely, I think to your bigger point, Artis, is we need to know as a public
23:10
what these contracts say and how much money is being spent.
23:15
Is it more cost-effective to contract it out? And if so, by how much?
23:21
Right. Hard number to get at, but it's something that we've endeavored to start
23:24
off. Because we're going to look at grants, too.
23:27
We're going to look at grant programs. And as part of that grants,
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that is the contracting.
23:31
You know, when you've got tranches of money that get expended,
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okay, you've got X number of dollars going to a project. Yeah.
23:38
You know, there's usually a contract.
23:40
Listen, there's some bold statements out there, though, being made,
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you know, that people think it costs more to contract this stuff out, and it just doesn't.
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Based on what can we see? I mean, it's public money. Can we,
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the taxpayers, see that?
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I think that's a reasonable expectation of our office to deliver some answers on that.
23:57
So look forward to that. Okay, awesome. That'll be one. And because we've done
24:00
some work in that space, I feel really good about the capacity of our office to look at these things.
24:08
Because, for example, in addition to the contracting space, one of the things
24:12
I'm really excited about is, and I'll ask everybody here on the podcast and
24:16
ask you listening, do you know where the money that you may have voted for.
24:24
In a bond referendum at your county level was spent?
24:29
Do you know exactly how that money was spent and what results you got?
24:33
I know about as much about that as I know how the state is spending my tax dollars. Right.
24:38
Well, I mean, so I get that. I asked that question at Aquinas meetings or rotaries,
24:42
and maybe one or two people, maybe the county manager raises his ring.
24:46
I know. Right? I hope they know.
24:48
Right. But so one of the things that we've been working on, and it is not something
24:53
that has been, you can't snap your fingers and get a lot of this stuff done right away.
24:57
But one of the things are the technology increases we've had here at the office
25:01
has enabled us to do is to compile this information from around the state.
25:06
So we're going to be releasing a dashboard detailing where bonds are being spent.
25:11
And that's down to the granular level. How much on the lawyers?
25:15
How much on the consultants?
25:16
How much on bricks and mortar? How much on cement? How much on steel?
25:19
You know, those kinds of things, I think the public really needs to know.
25:23
And what that'll also do is it'll enable us to take a look at the broader picture to say, okay.
25:32
Counties, municipalities on general obligation bonds average X percent on administrative
25:41
costs versus actual boots-on-the-ground work.
25:46
And then we can take a look at which ones of those bond issuances are outside of the average.
25:54
Because those are the ones that really probably deserve a deep audit from the
25:59
state auditor's office as to exactly why you're so off.
26:02
For example, if the average is hypothetically 10% and you have five or six bond
26:09
issuances that are at 40%, like, you know, for example, that might be something,
26:14
if you're the state auditor, that's something you ought to want to look at, right?
26:16
Do you get pushback on that, like people not wanting you to put all their business out there like that?
26:21
You know, there's a lot of trepidation because, and I don't view it this way
26:26
because I actually view our office as kind of, you know, kind of public service office.
26:31
But, you know, I do get calls from people who say, you know,
26:35
I got your letter and it scared me to get a letter from the state auditor, right?
26:39
And we don't mean it that way. And I don't think of it that way,
26:43
but I certainly on the other end of the letter can And I can understand that
26:48
feeling. And I certainly empathize with that and really get that.
26:52
But I'll give you an example, city of Charlotte.
26:56
$650 million special obligation bond issuance that is going 100% to a private entity,
27:07
Tepper Sports, to do renovations of the Charlotte Panthers football stadium.
27:12
Okay. That is the largest single tranche of public money to a private entity
27:17
in the history of North Carolina.
27:19
And so what we announced here at the auditor's office is, is that we're not
27:24
going to wait for that $650 million to be completely spent before we do an audit on how that's going.
27:31
I've met with the ownership and management at Tepper Sports,
27:36
met with the financial team, the mayor and the city manager team of the city of Charlotte.
27:43
And we have engaged both of those entities to do what is described as periodic audits.
27:51
And that's going to be, we're talking about not six months, we're talking about
27:57
month-at-a-time type audits to make sure that those public dollars are being
28:01
spent the way the public expect it.
28:04
Because those are special obligation bonds artists.
28:07
They didn't go to a vote of the public. That was a 7-3 vote from the city council
28:11
to expend those funds collected in occupancy tax and meal tax to the football stadium.
28:20
And, you know, while $650 million is not an unusual number for an NFL city to
28:27
spend, it's unusual for North Carolina.
28:29
It's different for us. And so I really feel like it's incumbent upon this office
28:34
to be the taxpayer's advocate there and the watchdog to make sure that money
28:39
is spent the way the public expects it to be spent.
28:42
So that's an example of what you're talking about in terms of kind of looking
28:46
at these private expenses. Yeah, it's a broad amount of work.
28:48
Yeah, that y'all do. try to take a look at it from a little bit different perspective so with.
28:54
How contracts work across the state of North Carolina, that's something that
28:57
we've really worked on in terms of trying to view our scope and how we would
29:03
tackle that appropriately.
29:04
But on the bonds, I think we've got a really good sort of mission and view of
29:09
how we're going to do that.
29:10
And we need a Department of Transportation dashboard.
29:13
Well, DOT is a complex organization, right? And I still believe that DMV ought
29:18
to be separated from DOT.
29:20
I really believe, our team believed that. This wasn't just me sitting around spitballing it.
29:25
The team really believed that because they believed that DMV is a purely administrative
29:31
type agency that's not laying asphalt, pouring concrete, and that they need
29:36
flexibility to be able to serve the public in the most public place.
29:40
Look, the people that work at DMV say this is just one more way people are trying
29:44
to privatize DMV is saying let's make it sound safe. I know that's what they
29:47
say, but that hasn't been what we've executed. They're the ones that have been
29:50
living this stuff while they've said we need more people and nobody listened
29:53
to them. So, I mean. I listened to them.
29:55
Yeah. I did. We listened. And a lot of people our team went and interviewed
29:58
said the first time anybody asked them.
30:00
Well, we did. We went and asked individual license examiners, what do you think?
30:04
You know, issuing an ID, I do believe there are some areas where privatization
30:10
can help across state government.
30:12
But again, I think you made the point, Artis. If you're going to have privatization,
30:18
and DOT is the example you use with roads, right?
30:21
There has to be some standards, and those standards have to be followed,
30:25
and there needs to be better. And there's homeland security issues when you
30:27
get into the DMV stuff, too.
30:30
So farming that out is scary. No, no, no.
30:33
That's DMV issuance of driver's licenses, like what I learned in social studies
30:37
in sixth grade, is a real, you know, government issue.
30:43
Right? It's very important. Now, on license plates, though, we do privatize.
30:47
License plate agencies are privatized.
30:50
And so there is potential room there for issuance of driver's licenses at the LPAs.
30:55
But is that a good idea when you're talking homeland security as an issue?
31:00
You want to farm that out to the private sector? I mean, I guess it depends.
31:03
I mean, I use Clear at the airport, and that's a private entity that coordinates with TSA.
31:10
So I get it free through my credit card. Otherwise, I wouldn't pay for it,
31:14
but I do. But I mean, there's only a financial duty.
31:19
They're not the government, so there's no moral patriotic duty.
31:25
It's a financial thing. They report to shareholders. They report to their board.
31:30
They don't report to the people. Well, in the example of CLEAR,
31:34
I think the idea with CLEAR coordinating with TSA, and I'm just basing it on the reports I've read,
31:41
is to lessen the line,
31:47
the length of the line.
31:48
That if you can move some people through a little bit quicker,
31:52
it actually lessens the total amount of time spent in line if you don't have,
31:58
for example, TSA pre-check or you don't have CLEAR.
32:00
I think you could explore similar approaches with a driver's license.
32:05
I think it's worth a study. Do I think it should be totally privatized? No.
32:09
Dangerous. Didn't say that. But, you know, in terms of you would just have an
32:14
intermediary that is also basically going through the process for a person.
32:20
You can expedite a passport with a private company. Yeah.
32:23
Should you be able to? Well, I mean, that's policy decisions are made by the
32:27
legislature. Yeah. And it seems to work, you know.
32:31
Good discussion. It is. So I wanted to touch back briefly on DMV anyway. Yeah.
32:37
So we started out talking. My favorite topic. We started out talking about,
32:41
you know, the successes you had or we had in DMV with your report.
32:46
And then your lap salary report showed that some agencies have to use lap salary to pay the bills, right?
32:52
And one that really comes to mind for me and because we interviewed Secretary
32:56
Cooley, this mute. And she said that, you know, they come up about $80 million
33:01
short every year on their allocations.
33:04
Would that be an agency maybe you'd look at as well? I mean.
33:08
Yeah, I mean, she's, I've talked to her at length.
33:12
Secretary of Dismeets, you know, has a lot of experience in her background,
33:16
criminal laws, and with that whole sort of universe that she's working in now.
33:22
One of the structural issues at Department of Corrections is the delivery of
33:27
health care. And that's one of the drivers of costs.
33:30
They've privatized it and they're paying way too much for it.
33:33
Well, it's been a driver of costs.
33:36
I mean, whether it's privatized or whether it's in-house. Well,
33:39
that is the driver of cost at Corrections, by the way. It's the private nurses.
33:43
Yeah, it's the health care costs that have driven those expenses.
33:49
And so that's something I know that she's working on with this legislative session.
33:54
I know she's been working on in her budget structure, is to address the health
33:58
care costs and how health care services are delivered in our prison system.
34:02
That's something that's really going to have to be. I mean, these aren't easy.
34:05
There's nothing easy. Ask Treasurer Briner how easy the state health plan is.
34:09
I mean, it's not, these are not easy discussions. But I think health care is
34:14
a number one driver for her.
34:15
I think also looking at how you can really leverage the dollars that are available to get,
34:25
a productive workforce that wants to stay, right?
34:29
And there are long-term corrections officers, but there's a lot of folks that start and then quit.
34:34
You have a tremendous churn at Department of Corrections. How can you slow that churn down?
34:40
You have to pay more. You can make as much at a fast food restaurant down the
34:44
street that's now paying benefits as well. And that's just reality.
34:47
And we get it. Well, those are policy decisions that are going to be made at the legislature.
34:50
It is. It's not your, that's not your problem.
34:54
That's not the auditor's. I don't mind chiming in if I've got an opinion.
34:57
Yeah. But I think that the other one I remember, Deputy Secretary Lasseter,
35:02
was telling us, look, my lap salary, he said, a bunch of it goes to higher temps
35:07
because by federal law, I have to have a certain number of people.
35:10
These are juveniles that we've got.
35:12
We're in charge of taking care of and keeping away from the public and also
35:17
not just housing them away, trying to get them educated, trying to get them
35:21
turned around. So, yeah.
35:23
He does not have the money. But he's got a mandate.
35:27
Yeah, he also got a legislative mandate on gun safety, but with no money,
35:33
which happens sometimes.
35:34
Do this, but we don't really have money to give you. So there's so much,
35:38
as we've talked to agency heads, with the lapse salary, that seems to be just
35:44
completely unavoidable until we have truth in budgeting.
35:49
Yeah, well, I'm an advocate of truth in budgeting. But that brings me back to
35:53
the discussion, though.
35:54
I do feel, I heard you say that, and I believe that's exactly where you're coming from.
35:59
I do believe that was 100% lost in the conversation. It may have been.
36:03
Well, there wasn't the intent of our presentation for it to be lost.
36:07
But truth in budgeting is, I think, really important. Yes. For a lot of reasons.
36:11
Number one is lapse salary dollars. And I did talk about this at the legislative hearing.
36:17
So a couple of things. One, just from state auditor point of view of transparency,
36:22
the public ought to know exactly how their money's being spent. Yeah.
36:26
And so if we're spending it on gasoline, they ought to know that's what it's being spent on.
36:32
And just because it's their money. One thing I have learned,
36:35
government never spent a dollar of government's money.
36:38
Right. Government spends the people's money.
36:41
So that's transparency. All right, check that.
36:45
Second is trends in costs and what those cost drivers are.
36:50
The more veracity we can have in the budgeting process, the more executives
36:56
at the agency level can keep track of exactly what their cost drivers are.
37:04
Okay. And then the legislature can also see those over periods of time as trends.
37:11
Particularly, and we just talked about Department of Corrections with health care.
37:14
There's something, if you're using lapse salary dollars for health care,
37:20
whatever that structure may be, whether it's privatized nurses,
37:24
whether it's temporary employees,
37:26
whatever it is that you're doing, if there's more veracity in the budgeting process,
37:32
you're able to track those trends and identify them quicker so that you can
37:38
address them in a short session or in the next budgetary long session.
37:43
So that, identifying trends, I think, I know that sounds kind of flippant,
37:48
but I think it's really important from a manager standpoint to be able to identify that.
37:52
And old school at the legislature, we used to have the program evaluation division.
37:57
And then before that, we had different entities where agency heads would be
38:01
called in and be taken through the paces of how are you spending this money?
38:06
There would be tremendous amounts of actually having to go and testify for the legislature.
38:12
We don't see that now. So as lobbyists, we don't know what's happening in the agencies.
38:17
We just see the budget when it comes out. It seems to me it might end up being
38:22
a great marriage to take the kind of thing y'all are going to provide and then go back to having,
38:28
again, I know this isn't your call nor mine, but if the legislature would go
38:32
back to having those kind of public hearings and asking them based on the data
38:38
that y'all provide, what do you have to say about this? I think that might be
38:41
really instructive for everybody.
38:43
Well, I mean, I do think there is appetite for budget structures that are more
38:48
truth in terms of exactly where the money is being spent.
38:52
Again, you know, we want the agencies to have enough money to be able to provide
38:57
the services they were created to provide.
38:59
Right. Sure. Otherwise, we can do away with the agency. And I don't I haven't
39:03
seen a lot of agencies that need to be done away with.
39:06
I'm sure as we move forward, maybe we'll find programs or agencies that no longer
39:10
are needed. and maybe we need something new, right, on the horizon because the
39:14
world's always changing.
39:16
That's true. Yeah. I mean, I do think, though, that truth in budgeting is really important. Amen.
39:22
Well, do you have anything else you want to talk about or any other questions?
39:26
You've already covered. I can talk about this stuff for hours.
39:29
Well, you'll be back, right? I will be back. I told you guys I would be back.
39:33
I love the back and forth in the discussion.
39:36
Well, I like what you call it, getting down to brass tacks. I do.
39:39
I like getting down to brass tacks and talking about what we see.
39:42
I really am looking forward. What I would like to come back on is in the next
39:47
time I come, I'd like to drill down on a couple of things.
39:50
One, we'll have our bond project done.
39:54
I think that's interesting to state employees, not only because of their jobs,
39:58
but because of their taxpayers, too.
40:02
And two, hurricane relief.
40:04
And what we as a state need to do in the future moving forward on long-term
40:09
recovery. It's really important. I would.
40:12
Absolutely. We'd love to. Long-term
40:14
recovery. We do a really good job on first response in this state.
40:19
This long-term recovery and accounting for it is just not up to what I think the people expect.
40:25
And it's really important. I would commend your readers to our website, auditor.nc.gov.
40:32
Sign up to get our newsletter and our audits. You'll get them all right in the
40:35
email box. You can read them or delete them. But read the audit on Speed, North Carolina.
40:40
Smallest municipality in the state of North Carolina. We just happened to cross
40:45
it, found 46 instances of fraud in their bank account.
40:50
But that's not really the bottom line story.
40:55
The bottom line story is a small
40:57
community that never recovered from 1999 Hurricane Floyd floods. Yes.
41:03
And that is the cautionary tale of relief long term in North Carolina on disasters, right?
41:13
We've got to be able to make it so folks who live in a community can return
41:18
to that community, continue to live there,
41:21
continue to work there and have a place to go to work and raise their families
41:25
there so that that community doesn't die.
41:29
It doesn't become a Portsmouth Island.
41:31
Right. And we don't want, you know, Speed is going to, they're going to cease
41:37
to be a municipality, and they probably should at this point,
41:40
and let the county take over vital services.
41:43
But it's a cautionary tale of a community that at one time was a growing, vibrant community.
41:48
And you can also learn about their bank statement that ended up going to a border
41:53
town in Texas. How about that for interest? Wow.
41:56
Never thought you'd hear that out of the state office. What?
41:58
Okay. Yeah. I'd love to hear more.
42:00
You've got good stories. I just Googled it, and it's the birthplace of Hugh Shelton.
42:04
That's correct. General Shelton. Joint Chief of Staff. Is it?
42:08
Yeah. Sure was. General Shelton.
42:10
Proud NC State graduate. That's right. Yeah. Speed North. He's a wolfpacker.
42:13
Well, we usually do a question of the week. I'll make it brief this week,
42:16
and it's only for you. I mean, you guys can chime in. No, we're good.
42:20
What is one thing about the office of state auditor that you didn't expect you
42:25
would deal with when you came into office?
42:27
Oh, that's a good question. I didn't, I did not expect that I would have to
42:33
deal with collecting money due to the state auditor. Oh, okay.
42:39
What? We walked in, you know, we're partly receipt driven and we were owed more than a million dollars.
42:43
I thought, I thought, you know, nobody's going to owe the state auditor money,
42:47
but we walked in and we were, we did end up collecting it pretty quickly,
42:51
by the way, but, but it was, I didn't expect that.
42:55
I did not expect that. I mean, I know that's kind of weird, but I didn't expect
42:59
that. I did not. And I've talked about this before.
43:02
I didn't expect the really, really.
43:06
And it's probably bad of me not to expect this, but I like to be transparent.
43:11
I didn't expect the real. I didn't expect the real.
43:15
Commitment and value that the long-term team members here at the state auditor's
43:20
office have for this office.
43:22
I thought I'd get a stack of resignation letters day one, and that didn't happen.
43:26
So that was a really good expectation. And so I really, really,
43:32
really do value the long-term team members here.
43:35
I push back on them and they push back on me, which is a great back and forth.
43:39
And so that's been really, really, really, really good about our office.
43:45
I think I think it's a great part of our office awesome well thank you so much
43:48
for joining us and always being willing to face the fire from artists anytime
43:53
we all face it daily so we're used to it,
43:58
thank you so much artist is a tough cookie,
44:01
but she's our cookie so yeah well thank you and I hope everyone has a great week.