State auditor criticizes governor’s office management of Emerging Technology Fund
What follows are the main conclusions and recommendations of the auditor’s report, which was released yesterday. All text comes from the report. I have not altered anything. My comments are in italics.
* The Emerging Technology Fund (ETF) should make significant improvements to promote greater transparency and accountability.
* Issues in a number of areas impair the ability to administer the ETF in the best interests of the State. It is important to hold recipients of funds accountable. Auditors identified the following weaknesses:
* Decision making related to the ETF and recipients of funds is not open to the public.
* The ETF conducts limited monitoring of recipients’ performance and expenditures of funds.
* The Office of the Governor does not report the value of the State’s investments through the ETF on its financial statements.
* The ETF does not administer its contracts with the seven Regional Centers for Innovation and Commercialization (RCICs) and the Texas Life Science Center for Innovation and Commercialization (Texas Life Science Center) in a consistent manner. Both the RCICs and the Texas Life Science Center evaluate and make recommendations to the ETF’s Advisory Committee regarding applications for funds. The Advisory Committee then makes its recommendations to the ETF’s trustees. Trustees make the final approvals on ETF grants and awards.
* The Office of the Governor, which administers the ETF, was cooperative and provided all of the information the State Auditor’s Office requested during this audit.
* The Office of the Governor did not agree with certain conclusions and recommendations in this report, and its detailed management’s response is presented in Chapter 6 beginning on page 40. The State Auditor’s Office reviewed the information in management’s response but did not modify the conclusions or recommendations in this report as a result of that review.
Key Points
–The RCICs and the Texas Life Science Center do not have consistent processes, and their board members were not required to sign conflict of interest disclosure statements until 2010.
–The RCICs and the Texas Life Science Center do not consistently record board meeting minutes, votes, and recusals.
–Board members for RCICs and the Texas Life Science Center were not required to sign conflict of interest disclosure statements until 2010. Members of application review committees are not required to sign conflict of interest disclosure statements; those members are the first individuals to review a commercialization award application to determine its viability.
–Advisory Committee meetings, subcommittee application review meetings, and teleconferences are not open to the public.
–Meetings of the ETF’s Advisory Committee are not open to the public. Although the ETF is required to follow the Texas Public Information Act, under Texas Government Code, Section 490.057, ETF application information is treated as confidential while an application is considered for an award or a grant. Ten other states with similar programs that auditors surveyed allowed significantly more public access to meetings and documents related to the award of public funds.
–The Advisory Committee does not record meeting minutes, member votes on applications, members’ recusals, or milestones that applicants must achieve.
–Because the Advisory Committee does not maintain minutes of its meetings, it is not possible to evaluate how the Advisory Committee addresses disclosures of conflicts of interest. For example, one Advisory Committee member had consulting contracts with two recipients of ETF awards at the time that those recipients received additional disbursements of funds approved by the Advisory Committee. It is unclear whether the Advisory Committee member who had the consulting contracts voted to approve those additional disbursements of funds because the Advisory Committee does not maintain meeting minutes or record member votes.
* * * *
It’s stunning that a government body with the responsibility for disbursing hundreds of millions of dollars was allowed to operate behind a veil of secrecy and without controls–so much so that it did not maintain minutes or record votes. This kind of slipshod oversight opens the door to all sorts of hanky-panky and cover-ups.
Speaking of hanky-panky, here’s an example. The governor’s office wasn’t at fault, exactly, except that its slipshod management of the fund made it easy for those bent on wrongdoing to take advantage of the lack of oversight and ethics policies:
Readers may have seen a Morning News story documenting the lack of oversight regarding the Emerging Technology Fund. I’m going to summarize it here. The story relates how a Colorado man, Alan Kirchhoff, had two bankruptcies in his past and a job repairing cracked windshields in a Colorado parking lot when he moved to Texas for a fresh start. In due course, Kirchoff rose to become director of the Economic Development Fund despite a lacklustre resume. As director, he struck up a cozy relationship with a member of the fund’s advisory committee, one William E. Morrow. Without going into all the details, Kirchhoff received fees and stock dividends from Morrow worth $118,000 in fees and stock dividends, plus stock in Morrow’s company, the value of which is not clear. The governor’s office stonewalled the Morning News‘ inquiries about how Kirchhoff’s private business dealings went undetected for more than four years. The point here–mine, not the auditor’s–is that if the governor’s office had exercised better oversight and control of the ETF, the Kirchhoff fiasco might have been detected.
Kenneth D. Franks says:
Either more transparency is needed or the money could go to another program or back in the general fund.
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Tim says:
Or you guys could stop voting Republican and finally get rid of this clown (Perry) and the sycophants who give him everything he wants.
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Rog says:
I happened to be with the Rickster yesterday when he complained the President of the United States won’t respond to his letter requesting federal funds to help fight the fires in West Texas.
Can’t imagine what the problem could be. Other than the Governor playing games with federal funds before and giving no indication he wouldn’t do it again.
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anita Reply:
April 29th, 2011 at 3:05 pm
Perry acts like a tone deaf whiner when he gripes that his letter hasn’t been responded to while 200+ people have died from storms a few states over. He complains that they’re getting a response, but we aren’t.
What an a$$.
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Harold Cook says:
Wonder where all the anonymous “mancrush” commentors went?
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Anonymous Reply:
April 29th, 2011 at 2:03 pm
All this nonsense with Perry and his slush fund was known about years ago. Was it made a big deal of BEFORE the election? NO. Lets see how much “traction” this gets in the media. My guess is ZERO!
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Karen says:
Texas Received More Federal Relief Than Any State
Posted on April 30th, 2009 by iwaller
http://www.americaforpurchase.com/american-injustice/texas-received-more-federal-relief-than-any-state/
I am pretty sure Perry was denied a 2nd round of federal funding for Ike and has appealed–I will see if I can find the article but some are claiming it is due to “politics and racism.” (Obama)
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Karen says:
http://thehayride.com/2010/10/the-problem-with-fema-politics-and-racism/
Posted two links that went to moderation.
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Karen says:
Here is the other one.
http://www.thegovmonitor.com/world_news/united_states/washington-denies-texas-additional-disaster-recovery-funds-15227.html
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anita says:
Rick Perry spends 98% of his time bitching about how Texas does everything right and how FED UP he is with Washington and every other state, lecturing folks on how they “just don’t get it” and they “just can’t make government work.”
So now the State Auditor calls him out, not in generalalties but specifically. I’m sure his response will have something to do with a plot by “big government job killer Obamaists” to infiltrate the State Auditors office and “denegrate Texas.” Perry: These pointyheads want to talk about ‘rules’ and ‘standards’ — well let me make this very clear — if I had to choose between ‘transparency’ and ‘record keeping’ to keep the government bureacrats happy, or jobs for Texans — I’ll pick jobs for Texans everytime — guilty as charged”
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Sam Houston's ghost says:
Instead of praying for rain, Texans ought to invest their prayer for a new governor.
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Karen says:
Anita,
He spends some of his time applying for federal funds from the big bad federal govt. he trashes at every opportunity.
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anita says:
Correct — 2%. And he only works about 5 hours a day.
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WUSRPH says:
Anybody but me just a little p….d about a House committee approving a bill to limit the taxes on yachts? On fist view I think there may be just a little constitutional problem…As I remember it, the State constitution says all property shall be taxed at full value UNLESS the constitution provides otherwise. I know all Republicans just love the Constitution so I must be wrong, but I don’t remember any recent amendments giving big private boats a special status. After all, we certainly don’t want to make those big, big contributors unhappy, do we?
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Tellnitlikeitis Reply:
April 29th, 2011 at 9:58 pm
Very poor optics for this one:
Big tax breaks for big yacht owners…while
Nursing home cuts will force grandma and grandpa out to the streets.
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anita Reply:
April 29th, 2011 at 10:35 pm
It will make a very nice direct mail piece.
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Kenneth D. Franks says:
I don’t have the money to buy a yacht however this is another terrible tax policy. Anyone that can afford a yacht can afford the taxes.
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WUSRPH says:
Of course, the nice thing about an unconstitutional bill is that it isn’t really unconstitutional until somebody like a judge or maybe the attorney general actually rules that way. This means you can go ahead and pass it (even when you have good reason to know it is probably a no-no) and take the credit any way. When it does get struck down you can blame it on an “activist judge” or something like that. It may be a year or more before somebody attacks it and, in the meantime, whoever it was supposed to benefit gets to use it. I kind of remember helping a legislator pass at least one bill like that myself some years ago. However, I am sure no current member of the Texas Legislature would such a thing!
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anita Reply:
April 29th, 2011 at 10:48 pm
It’s HB 2187 by John Davis. I don’t see a constitutional issue — the constitution allows the legislature to determine and establish the particulars of a tax. This bill merely caps the sales tax on a type of boat at a certain amount.
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WUSRPH says:
If it is a sales tax that would not be covered by the part of the constitution I was referring to…HOWEVER, what about a problem with the “taxation must be equal and unifrom” provision? Does this require that ALL yachts have to be valued on the same standard? In this case, you are using one standard for smaller yachts than you are for those worth over $250,000.
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WUSRPH says:
I assume the justification is the old “if we don’t give them special treatment” the buyers of these sometimes multi-million dollar toys will “take their business elsewhere”. I understand that fear…but at least once in awhile…and this is a good time…we should just say—Okay, do it….instead of adding one more special interst provision to the tax code. Let’s treat them like the rest of us are treating for a change!
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WUSRPH says:
make that “treated for a change!”
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Karen says:
I love to see this guy get a job as a roofer. Any bets as to how long he would last?
GOP Rep. Blake Farenthold Compares Unemployed Americans To Alcoholics And Drug Users
http://thinkprogress.org/2011/04/29/blake-farenthold-unemployment-drugs/
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Susan Reply:
April 30th, 2011 at 9:22 am
That’s my Congressman, I’m ashamed to admit. The irony is that he had a photo album on his personal Facebook page, titled “Scenes from a Barstool,” if I remember correctly. He had over 50 pictures of different local bars, all taken from his cell phone while he was seated at the bars. He pulled it down when people started laughing about it. He’s a real piece of work.
My bet: 47 seconds before he stumbles and falls off the roof.
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Karen says:
Comment on a blog regarding yacht sales tax exemption:
“glynda says:
April 20, 2011 at 12:32 pm
Ms. Juanita’s assessment that the House Bill 2187 is “a tax break to wealthy yacht-buyers”is sadly missing the point. The benefit to “wealthy yacht owners” is vastly over-shadowed by the benefits that Texas will gain for capping the Sales Tax on recreational boat purchases of $250,000 or more.
Last year the state of Florida passed legislation unanimously to cap their sales tax on recreational boat purchases of $300,000 or more. And since this law has been in effect, Texas has seen their large boat purchases head to Florida to take advantage of this tax break. With those boat sales went fuel sales, retail sales, mooring fees, services fees, restaurant sales, and every other money-generated business sale associated with a large boat purchase.
What’s happening is that those of us who work in a marine-related business are losing business. We are having to shrink our staffs and tighten our belts and close our doors because Florida is getting the business that should be staying in Texas.
You may look at this as a benefit to the rich – we look at this as Saving Our Jobs in Texas.
I have a business in Title transfer. I use to receive a lot of business from Florida dealers and brokers who sold boats to Texas residents. I don’t get that business anymore because those Texas buyers are finding it more cost-effective to keep their million dollar yacht in Florida. If you think about it – they are saving $45,500 to keep their boat in Florida – that pays for a lot of fuel, retail and services. Texas gets nothing.
We have an economic study that shows Texas would glean an additional $36 million on revenue by keeping these boat sales in Texas with a sales tax cap of $15,625.
Why don’t we try to cap for the smaller boats? Because they cannot afford to go to other Boater Friendly states to purchase and keep their boats to avoid Texas Sales Tax.
Ms. Juanita, your thinking is short-sighted. You’re comments are based on you’re ignorance of our industry’s plight. We are rallying to do this to keep our jobs. Rep. John Davis is rallying to keep Texas Boating strong in Texas.
Rich people have options. We’re trying to make it more agreeable for them to keep their boats here in Texas and not feed Florida’s economy.
Kind regards,
Glynda Allison, President
Carol Matthews Vessel Documentation, Inc.”
http://juanitajean.com/2011/04/18/oh-lord-wont-ya-buy-me-a-used-yacht/
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JohnBernardBooks Reply:
May 2nd, 2011 at 10:43 am
Daily Kos, flirty dating and now you’re linking to bankston’s juanitajean?
Now I understand…..
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Karen says:
I’m curious as to why the Texas lawmakers are allowing Texas gambling dollars to go to NM, OK and LA? Not only has Texas lost gambing dollars but the horse racing breeding industry (TB and QH) has left the state. How much revenue and jobs has Texas lost due to this?
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Kenneth D. Franks Reply:
April 30th, 2011 at 8:12 am
2.5 billion a year to NM, OK & LA. just to casinos. We do have some people not that many though, that breed, train, workout, and board horses just across the state line, that race in mostly LA but also end up in other states.
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Karen Reply:
April 30th, 2011 at 8:43 am
Kenneth,
Many of the breeding farms especially TB breeding farms left Texas.
Texas already has a “gambling problem.” Anybody that has been to NM, OK or LA can clearly see this.
The main QH stud farms are JEH, Granada, 6666 Ranch, Southwest Stallion Station, Scarlett Hill and Double S Farms. JEH has divisions in NM and OK.
Polls clearly show that Texans support gambling in Texas.
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Kenneth D. Franks Reply:
April 30th, 2011 at 8:41 pm
I live near the Texas, Louisiana border in East Texas. People from here go to Louisiana for recreation including gambling, going to resorts, to play golf, to buy alcohol,cigarettes, smokeless tobacco products that are cheaper there, and the development on the other side of Toledo Bend, the lake that divides the state in my area is much larger on the Louisiana side than in East Texas. I’ve been to Louisiana several times in the last month but it is only about 30 miles.
Karen says:
The competition between states for Big Corporation is not healthy IMHO because it allows Big Corporations to hold the states hostage until the state give into their Corporate demands–”we will take our toys and leave the state.” Many times, these demands are at the expense of small businesses and the taxpayers.
Novel idea. Perhaps if all the states passed similar legislation regarding Corporate welfare-tax cuts, abatements, grants, subsidies, exemptions, etc. Then, the states could not hold a state hostage. Corporate terrorism.
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Karen says:
Correction: Then the Corporations could not hold the state(s) hostage.
Other losers due to Corporate welfare? Education, our elderly, children, middle class and the poor.
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Karen says:
Same goes for the global economy. Ireland is a real good example of what I am talking about. How is low corporate rates and austerity working out for them?
http://www.sinnfein.ie/ga/contents/20462
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JohnBernardBooks says:
whoa the liberals have got their panties in wad today.
I don’t suspose this is a good time to mention the ETF is just another government agency.
Yet some want a healthcare system managed by MULTI-government agencies.
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Anonymous Reply:
April 30th, 2011 at 10:30 am
Really, is this the best you can offer as a response to our gov running a “pay for play” operation out of the backdoor of his office?
Can’t wait for Perry to run for national office and have the Big Boy Press start digging into the ETF give-a-ways, his windfall profits on a lake lot, and his overall networth.
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Anonymous Reply:
April 30th, 2011 at 10:51 am
don’t hold your breath waiting for an intelligent comment from jbb.
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Julie says:
The governor’s office rarely establishes a specific job milestone for companies that receive money from the Emerging Technology Fund.
It should make such a milestone mandatory in this program.
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JohnBernardBooks says:
and what is the milestone for democrat giveaway programs, besides donate to our campaigns and you will be rewarded.
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Julie says:
Books,
Oh, yea, I remember you. You’re the blogger who insisted that Republicans are liberals because they don’t favor abolishing Social Security, Medicaid and Medicare.
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JohnBernardBooks Reply:
May 1st, 2011 at 8:57 am
Do you really think some republicans aren’t liberal? wow!
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JohnBernardBooks Reply:
May 1st, 2011 at 10:51 am
Julie you didn’t mention the rest of the liberal rant republicans want to:
kill women and strave chillern and kick old people out of their homes.
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WUSRPH says:
To KAREN/GLYNDA
I fully recognize your argument…I saw it again and again while I was involved in state govt…from group after group…ranging from those who sell everything from aircraft pilot trainers to whatever you can think of. All of them would lose business to somewhere else unless we exempted them from this tax or that tax or this fee or that regulation…They all have “a case” as good or better than yours…You can make the same argument for virtually every possible good…and especially for “expensive” ones. What about fur coats, Rolls Royces, etc., etc, etc? But somewhere, somebody has to draw a line. We have gradually eaten away at our tax base…and your exemption would reduce it even more….The result is fewer and fewer goods are covered by the sales tax—our primary source of revenues–and fewer and fewer groups or kinds of people have to pay them. I feel sorry for you… but, if I was a member, I would have to vote against you…Fortunately, I do not think that will be necessary as it appears to me (from long experience with these kinds of things) that what is happening in your case is that the author of your bill and the committee that reported it will get credit and your thanks but the bill was reported so late that there is virtually no chance of it passing. It might by some miracle get out of the House, but it is not likely to be able to get thru the entire process in time. This, of course, is one of the oldest tactics (or you could say tricks) in the Legislature.
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Karen Reply:
April 30th, 2011 at 7:11 pm
WUSRPH says:
To KAREN/GLYNDA
You need to go back and read what I posted–I am Karen. I was reporting what “Glynda” posted on another blog regarding this issue. I do not support capping the sales tax on yachts.
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WUSRPH says:
Great. Glad to see there are some defenders of the tax base left.
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JohnBernardBooks says:
I wonder if Senator John Kerry ever paid his taxes owed on his yatch?
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John Johnson says:
San Antonio Express News – May 2, 2011
PERRY HAS DIPPED INTO RAINY DAY FUND BEFORE
Gov. Rick Perry didn’t always object to spending from the rainy day fund, and that’s one thing that frustrates lawmakers who want to use more of the savings to fill holes in crucial services. The last time the state faced a huge budget shortfall, in 2003, lawmakers appropriated nearly all the money then in the fund — including some, at Perry’s behest, to create his pet Texas Enterprise Fund. In 2005, rainy day money was used for his Emerging Technology Fund. Just two years ago, Perry suggested using part of the rainy-day money for tax relief.
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Briscoe Democrat says:
Perry said he’s not going to dip into the Rainy Day Fund in 2013.
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