Opening up the state's booksAccess expanding to state accounting system installed decades ago.
By: Denise Ross, The Daily Republic
As South Dakota lawmakers returned to the state Capitol this week, they have perhaps the best access to the state’s accounting records they’ve had in decades.
A longstanding tension between the legislative and executive branches has eased, several officials tell The Daily Republic, although complaints remain.
“It’s always been difficult to get financial information,” said Bernie Hunhoff, state House Democratic leader, of Yankton.
The tension is rooted in the fact that executive branch officials in the Bureau of Finance and Management, under the governor’s direct control, have physical custody of the records on a 30-year-old mainframe computer system that dates to the Bill Janklow era. Lawmakers and other elected officials need access to the information on that system to carry out their official duties. Sometimes, they have been less than satisfied in how that information has been packaged and delivered.
A decade ago, newly elected state auditor Rich Sattgast pleaded with lawmakers to help him open up the books.
“My signature is on $2.5 billion a year. There’s a great responsibility on me and my staff,” Sattgast said in 2003. “However, our actual interaction with the state accounting system is very limited.”
He told lawmakers that the state accounting system made it possible for staff members in the executive branch to make changes without his knowledge or approval.
Sattgast was not the first South Dakota auditor to express concern about the situation. Vern Larson, who served as state auditor from 1979 to 2003, had commissioned a report by a CPA firm in the 1980s that found the state auditor ought to have more independent access to and control over the financial information of state government.
Longtime former state lawmaker and Appropriations Committee leader Jim Putnam, R-Armour, recalled a years-long tug-of-war over accounting records that culminated in legislation and frank conversations between the governor’s staff and legislative leaders on the Executive Board.
“A lot of times, they knew answers before we did, and when we started talking about budgets, they would say, ‘That’s been resolved,’ or ‘We have new figures,’ ” Putnam said. “And we would say, ‘For crying out loud, why aren’t we on the same page?’ ”
The frustration led to legislation.
In 2009, several lawmakers signed on to a bill to require a searchable website containing the state’s financial records. It was heavily amended after negotiations with then-Gov. Mike Rounds and signed into law. The resulting website, open.sd.gov, is limited in its search functions but has other features.
In 2010, Democrats brought a bill to allow the state treasurer and the state auditor to monitor state money kept in local banks. It was killed in committee.
Beyond the website, the legislative efforts led to more cooperation between the branches of government.
“Pretty soon, we started bringing bills and that made them do things that they didn’t like, so they started working with (legislative staff members),” Putnam said.
Alice vs. Bill
The situation has its roots in two of South Dakota's great political personalities: the late Bill Janklow and Alice Kundert.
Those interviewed for this story all had some knowledge of a battle between the two titans — one a new governor and another a longtime state lawmaker and auditor.
“I know she was very concerned about it,” Putnam said, saying Kundert made her intentions to resist computerization widely known.
Janklow would over time carve out technological advancements as a signature mission, and in the late 1970s, computerizing the state’s financial records proved one of his first achievements on that front. Before he could do that, though, he had to placate Kundert, a seemingly implacable stalwart who, one observer once said, would check the cost of toilet paper in use at the governor’s mansion.
How the two came to agreement may be lost to history, but one anecdote involves Kundert stating her reluctance in the hallways of the Capitol and Janklow draping an arm around her while assuring her that his staff would handle all the details involving the new computers.
“She didn’t have the expertise, so she allowed the Bureau of Finance and Management to go ahead and implement the state’s computer system,” said Sattgast, entering his third year as state treasurer. “It just progressed from there.”
In 1980, the Legislature passed a bill making it official. The governor’s people in the Bureau of Finance and Management would run the computerized accounting system.
Jason Dilges, the governor’s chief financial officer and head of the Burea of Finance and Management, said he and his staff of 30 are now living with the legacy of that decades-old decision. The mainframe system, overhauled in 1987 and upgraded over the years, now has a Windows user interface. Dilges estimates it would cost between $30 million and $40 million to replace it.
“It’s an old system,” Dilges said. “It’s complex.”
On one hand, Dilges describes a byzantine collection of records spanning all of state government accessed via a query system requiring specific upfront information, while on the other hand noting the open access granted to the system.
“There are millions of records out there, and if you don’t know what you’re looking for, obviously, it’s going to be more difficult for you,” Dilges said.
Those millions of records are accessible to many “authorized users” in the Legislative Research Council office, the auditor’s office, the treasurer’s office and other state government offices. Authorized users get a username and a password and, if they want it, training provided through Dilges’ office.
“They have pretty much the same access as we have,” Dilges said of staffers in other state government offices. Only select individuals are granted the authority to draw money from state accounts, he said. “We do conduct training on the accounting system to any user who desires it. We hold classes.”
There is a learning curve to climb, Dilges concedes, but he believes it’s a matter of effort.
“It only rests on the desire and ability of that individual to look at certain things,” he said. “Maybe some people haven’t wanted to put forth the effort necessary to get knowledgeable on how to use the system.”
At the same time, Dilges touts the relatively new website, open.sd.gov, that provides much of the state’s financial information to the public. The site lacks full searchability and graphics, but does provide downloadable data for, as one example, the general ledger revenue in a .csv format.
“In Open SD, we probably have one of the most open systems in the country. As far as real-time, it’s one of the most cutting-edge systems around,” Dilges said.
Open SD was ushered in during the Rounds administration, after some of the bills mentioned above. Officials say things have gotten more open since Gov. Dennis Daugaard took office in 2011.
“Things have gotten better over time. Things are moving in the right direction,” Sattgast said. “We had a couple rough years when I was fighting this fight. But I have worked very well with them (the governor’s staff).”
A similar answer comes from the Legislative Research Council, the nonpartisan staff that conducts research and analysis for lawmakers.
“We’re pretty happy with the way things are working,” said Jim Fry, director of the LRC. “Our fiscal staff believe they have access to significant amounts of information on the state’s accounting system. And they know how to query it.”
The complaints that remain, and they do remain, come primarily from Democratic lawmakers who say the Republican administration manipulates the financial records to make a political case.
Rep. Susan Wismer, D-Britton, is an accountant who nonetheless struggles to grasp the enormity of the state budget. After four years on the Appropriations Committee, she contends that the executive branch unilaterally “sets aside” millions in Medicaid money that could be used to help South Dakota’s poor.
And she wonders whether the state has enough revenue agents in the field to properly enforce the sales tax laws.
When Daugaard slashed 10 percent from the state budget in his first year, Wismer said it was difficult to get straightforward data that wasn’t wrapped in spin, and she believes the cuts hurt South Dakotans unnecessarily.
“I don’t think we know the toll the cuts are exacting on South Dakota’s children,” she said. “You don’t know what you don’t know.”
Hunhoff, the Democratic House leader, makes the same argument about the budget Daugaard proposed in December. The governor touted a 3 percent increase in spending for K-12 schools, but Hunhoff said that calculation leaves out the millions in “one-time” money governors have repeatedly doled out to schools as an addendum to the regular budget amount. The real increase is closer to 1.8 percent, he said.
The whole system that leads to so much one-time money available for a governor to play with is flawed, Hunhoff said. He believes a better system of tracking the accounting information would be an improvement.
“The way the games are played is a much bigger issue. Their intent is to underestimate revenues and overestimate expenses, and that results in this one-time money,” Hunhoff said. “They’ve been stuffing money under every mattress they can find in Pierre. It’s been abused, and frugality has become a vice.”