Impact of Initiative 900

Shortly after Election Night in November 2004, Permanent Defense began evaluating drafts of what Tim Eyman claimed would be his 2005 initiative effort.

Before, during, and after the signature drive for what became Initiative 900, Permanent Defense corresponded with the auditor’s office about the potential ramifications of what Eyman was proposing as part of our research.

The following are the responses provided by Mindy Chambers of the State Auditor’s Office. The text of the responses is in roman, and the questions posed by Permanent Defense (which were included in the responses as seen below) are in bold.

Jump to a letter:

From: Mindy Chambers, State Auditor’s Office
To: Permanent Defense
Date: November 29th, 2004
RE: Impact of Tim Eyman’s proposed performance audits initiative

Thank you for your recent e-mail containing insightful questions about a proposed initiative on performance audit. We have prepared this response to your questions. Please contact us if we can be of further assistance.

Q: What effect do you think this initiative would have on the Auditor’s Office?

A: While performance audits of state government would be an exciting, doable venture for the State Auditor’s Office, an expectation that we could immediately put in place an independent, comprehensive performance audit function at the state and local level would be difficult to meet. Organizationally, the State Auditor’s Office likely would need to grow to at least four times its current size over the course of the next 10 to 12 years.

The expectation to initiate the program at the local, as well as the state level of government is ill-advised. As we find more direct accountability between local government elected officials and the citizens they serve, we feel that more comprehensive performance audits would best be directed at the state level.

Q: Would it be necessary to hire additional staff?

A: Yes.

We have approximately 300 full-time professionals performing the following legally required work on behalf of the citizens of Washington:

  • Audits of school programs
  • Audits of local government
  • Audits of state government
  • Fraud audits
  • Investigations of asserted state government improper governmental actions (Whistleblower Program)
  • Local government budgeting, accounting and reporting systems
  • Local government financial reporting

For the 2005-2007 budget period that begins July 1, 2005, we are requesting an additional 10 full time professional staff to audit state government. Assuming that this portfolio of statutory responsibilities continues at the same time as we would be beginning performance auditing, the State Auditor’s Office would have to increase its staffing, beyond the 10 originally requested, to conduct performance audits.

It is important to note that the historical authorizing legislation for the State Auditor’s Office calls for financial and legal compliance auditing. Performance auditing, by contrast, requires different competencies.

Highly skilled performance auditors have all the competencies required of financial and legal compliance auditors, plus knowledge of operational and management principles such as strategic planning, resource allocation, human resource modeling, leadership technique, production methods and coordination of people and resources. A key difference is the requirement that a performance auditor have specific knowledge and skills relating to what he or she is auditing.

Where a financial auditor can perform audits on different governments with relative ease, a performance auditor must have specific knowledge, skills and abilities relative to the agency’s mission and programs. For example, health sciences experience is vital to successful performance auditing of Medicaid programs.

The competence of performance auditors can be achieved through a combination of education, work experience, auditor training and audit experience.

Q: How difficult would it be to conduct audits of all government agencies, programs, and accounts-including both state and local governments?

A: We estimate it would take 10 to 12 years to build an audit organization capable of meeting the expectations envisioned under the initiative. In addition to the 147 state departments, agencies, board and commissions, the state has more than 2,400 local governments of 33 different types.

Q: Could you provide a rough estimate on how much it would cost to implement this initiative, if it were passed?

A: It currently costs approximately $23 million annually to conduct state and local government financial and legal compliance audits. We estimate that the annual cost of performance audit as envisioned under the initiative once implemented would be approximately $90 million every two years.

Q: Does the auditor believe that this initiative would help improve the efficacy and effectiveness of government, or are there other solutions that the auditor believes would be better than this initiative?

A: We believe the intent behind the initiative is good, however, we also firmly believe that there is a better way. We were nearly successful in getting a measure passed during the 2004 session of the Legislature. We feel action by the 2004 Legislature and subsequent elections have generated significant public debate about performance audit. In our view, the optimum means of accomplishing an independent, comprehensive performance audit function is to have the Governor and Legislature embrace it and enact authorizing legislation and funding to support it.

From: Mindy Chambers, State Auditor’s Office
To: Permanent Defense
Date: January 11th, 2005
RE: Impact of Tim Eyman’s proposed performance audits initiative – followup

Here’s the answers to your latest set of questions. Hope this helps. Please contact us if you need additional information.

Q: Tim Eyman claims in his initiative’s text that, “The performance audits required by this common sense initiative will identify solutions to our public policy problems, savings the taxpayers billions of dollars.” Does the Auditor’s Office believe that savings of a billion dollars or more could possibly result from passage of this initiative?

A: We believe that enhanced performance audits in Washington would generate savings over a span of years. Efforts initiated in other states have produced savings in the billion dollar category, which we also feel would be possible here. Beyond quantifiable “savings”, we believe there are opportunities to dramatically improve business systems and service delivery as well as enhance revenues. We are attaching summaries describing recent performance audit efforts in California and New Mexico.

Q: Tim Eyman now says all of the costs of his initiative will be funded by 1/100 of 1% of the state sales and use tax, which is supposed to generate $10 million per year. Is this funding now adequate to cover the costs of implementing the new initiative? (In reading your previous reply, you said that the SAO needed “approximately $90 million” to fulfill the requirements of the initiative.)

A: A $10 million funding level would mean that the full scope of the initiative, as currently written, could not be implemented.

Q: If not, what could be done with just $10 million, if there was no other revenue source? (In other words, how much of the initiative could be implemented with just $10 million?)

A: This level of funding could get the program up and running with a core group of employees and contractors and, conceivably, could get some performance audits done. The audits could include cross cutting areas, such as building or road construction, or selected individual governments or programs.

The investment at the front end will pay for recruiting and training human resources, establishing contracts for expertise not needed on a full-time basis, developing and implementing audit protocols, equipping and housing the performance audit team, etc.

Q: In your previous response, you mentioned that the auditor’s office was nearly successful in getting a bill passed during the 2004 session of the legislature. Which specific bill were you supporting?

A: I have attached with this document a bill that is being introduced by Senator Roach this year. It provides a simple approach to performance audit.

Q: Tim Eyman claims that, “Washington is the only state in the nation that prohibits the independently elected state auditor from doing the job he or she was hired to do without explicit legislative permission.” How much truth is there in this statement? Does the Auditor’s office feel that current state law impedes their ability to perform audits in any way?

A: Currently, the State Auditor’s Office is not allowed to do performance audit unless specifically directed to by the Legislature.

Q: What roles do other officials (i.e. Governor, Director of Financial Management) have in the process of conducting performance audits? What role does JLARC have?

A: Neither the Governor’s nor the Director of Financial Management has a role in conducting performance audits. JLARC does performance audits at the direction of the Legislature.

Q: Since this initiative requires Auditor Sonntag to report to the legislature, would JLARC become irrelevant?

A: No. We believe the Legislature needs to have the ability to call for performance audits that it deems necessary in consonance with their policy-making role. And, there is no lack of performance audit work that needs to be done. Having said this, it would be critical for JLARC and State Auditor to continue to ensure that our audit efforts are not redundant.

Q: If this initiative were to require performance audits for only state (not local) agencies, accounts, and programs (including education and transportation), how much would that cost to implement? What staff would be required?

A: We estimate that the annual cost of performance audits of state government under the initiative once implemented would be approximately $27 million. We would plan to use a combination of staff and contractor resources. More planning would be required before we would be positioned to state the number of employees and level of contracting that would be necessary.

From: Mindy Chambers, State Auditor’s Office
To: Permanent Defense
Date: July 12th, 2005
RE: Impact of Initiative 900 – followup

Thank you for contacting our Office with your questions about Initiative 900. I hope the following answers your questions.

Q: What effect do you think this initiative would have on the Auditor’s Office?

A: We would be conducting performance audits under both the legislation that passed and the initiative.

Q: Would it be necessary to hire additional staff?

A: Yes.

Q: How difficult would it be to conduct audits of all government agencies, programs, and accounts – including both state and local governments?

A: We already conduct financial and accountability audits of all state and local governments. Conducting performance audits is an additional responsibility. Under HB 1064, we would do performance audits of state agencies. The initiative requires us to do local governments as well. We do not believe, however, that we are required to audit every local government every year.

Q: How long would it take to fully implement Initiative 900? Could you provide any kind of an estimate?

A: The state Office of Financial Management is preparing a fiscal impact statement on the initiative that should answer this question. We anticipate the statement will be done by the end of the week.

Q: Could you provide a rough estimate on how much it would cost to implement this initiative, if it were passed?

A: See answer to No. 4.

Q: Would the initiative (if it passed) supersede or overturn the bill passed by the Legislature – HB 1064 – and get rid of the citizen advisory board?

A: No.

Q: Would the state auditor be forced under Initiative 900 to try and audit every agency and program in the state, every year, including local governments?

A: No.

Q: Since this initiative requires Auditor Sonntag to report to the legislature, would JLARC become irrelevant?

A: JLARC is a legislative committee. It is up to the Legislature to determine what work it will do.

Q: Is it reasonable to say that the passage of Initiative 900 will result in the saving of “billions and billions” of dollars?

A: This remains to be seen. However, other states have realized significant efficiencies and dollar savings. These are wide-ranging, but significant.

Q: Is the state auditor satisfied with the passage of HB 1064, and does he have any concerns about it not being adequate enough?

A: We are glad the Legislature finally addressed this need. However, we preferred a version of the legislation that did not create an oversight board. As we have stated, we are working diligently to get a performance audit program up and running under HB1064.

Q: Does the auditor’s office believe it is wise to become heavily involved conducting performance audits on the local level?

A: We will apply our same, risk-based approach to these audits, choosing specific governments, or types of governments, where performance audits can produce the greatest benefit for citizens and those we audit.

Q: Does the state auditor see Initiative 900 as necessary?

A: If the initiative passes, we will carry out the voters’ wishes. We are long-time supporters of performance audit and have every confidence that we will be able to set up a professional, efficient performance audit system.

Thank you for your interest in our work.

You are here:

Mobilizing for 2024 to counter new threats

Stop Greed: Vote no in 2024
Visit to learn about three harmful right wing initiatives we're opposing that are headed for the November general election ballot

What we do

Permanent Defense works to protect Washington by building a first line of defense against threats to the common wealth and Constitution of the Evergreen State — like Tim Eyman's initiative factory. Learn more.

Protecting Washington Since 2002