Auditor's findings, opinions sometimes differ from GOP spin

Editorial from News and Observer, November 7, 2013.

State Auditor Beth Wood grew up on a Craven County farm where money was scarce and little was wasted. She had two pairs of shoes, one for church and one for school, and it was big trouble if she mixed them up. During summers, she worked barefoot.

It was a good background for acquiring a work ethic, a respect for thrift and an awareness of how resources should fit needs – all qualities to be valued in one who watches over the spending of taxpayer dollars.

Given Wood’s no-nonsense approach, her work should fit well with Republican Gov. Pat McCrory’s pledge to make state government more efficient. But in several cases, the auditor’s findings have been distorted or ignored.

In a recent meeting with reporters and editorsat The News & Observer, Wood, a Democrat, discussed her background and her commitment to a nonpartisan assessment of how best to serve taxpayers.

“People ask me on the campaign trail whether I’m a Republican or a Democrat. I tell them I’m a CPA,” she said. “We audit the blue dollars and the red dollars. I don’t care who you are. If you’re wasting my tax dollars, quit it. Quit it.”

That down-the-middle philosophy was strained early this year when Wood appeared at a news conference with Gov. Pat McCrory and DHHS Secretary Aldona Wos. The governor and the secretary leaned heavily on the findings of a state audit to assert that the state’s Medicaid system was fat with administrative costs and had repeatedly exceeded its budget by hundreds of millions of dollars.

That audit was used to justify the decision by the governor and Republican leaders in the General Assembly not to accept federal funds to expand Medicaid under the Affordable Care Act. The decision deprived an estimated 500,000 North Carolinians of becoming eligible for Medicaid. It also cut off a crucial source of money for hospitals, especially in rural areas, and cost the state a boom in health care-related jobs.

But last week, Wood said her audit didn’t find actual waste in Medicaid spending or administration. What it found was a need to improve oversight and a failure to realize savings that the General Assembly requested.

“I’ve said in interviews that ‘broken’ is the governor’s term. I never said it. My audit doesn’t say it. The governor said it was broken before my audit ever came out,” she said.

Another issue was why DHHS went ahead on July 1 with a faulty new computer system for paying the state’s 70,000 Medicaid providers after Wood’s office had repeatedly warned that there were signs of trouble. “We gave enough evidence that July 1 was not a good go-live date,” she said.

The reason DHHS pushed ahead, Wood said, was an unwillingness to pay to keep the previous system as a backup during the roll-out of the NCTracks system. The federal government paid 90 percent of the old system and 90 percent of building the new system, but it would not continue paying for two systems after July 1. “The state was going to be stuck with one cost or the other,” Wood said.

On other changes McCrory has hailed as efficiency moves, the state’s financial watchdog is skeptical.

To attract more jobs to North Carolina, McCrory is pushing to privatize some Department of Commerce job-recruiting operations under a nonprofit corporation. He says it will allow for a “more nimble” effort to lure companies, but such efforts in other states have been plagued by charges of misuse of public funds and a lack of transparency.

“If North Carolina doesn’t watch over this nonprofit organization, we’re going to have the same write-ups other states have,” Wood said.

Flexibility and accountability also are the justifications for McCrory’s stripping civil service protections from more state jobs. New legislation increased the number of “exempt” positions to 1,500. During the Perdue administration, about 400 exempt positions were allowed.

McCrory says the changes will make employees more responsive and accountable. Critics say the shift creates a new swath of patronage positions. “With no qualifications attached to those positions, I don’t know that that helps state government,” Wood said.

Wood has the right independent attitude about auditing “the red dollars and the blue dollars,” but she should be wary of having her impartiality used as political cover and of how others twist her findings into their justifications.