March 7, 2008

Who Gets How Much Money and Where It Goes

Sure, public universities generally make their annual budgets available. But how much did the chemistry department spend on copying at Kinko’s – yesterday?

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At Oregon State University, that kind of detailed information on financial transactions is accessible online, albeit only to those connected to computers on the campus. “It’s pretty basic, but it is very transparent. Everybody in the institution can see everything that goes on everywhere,” says Mark McCambridge, vice president for finance and administration at Oregon State.

“There’s always this mystery — ‘The vice president is holding back money,’ or ‘This person got more money than I did’.… There’s always that mystery that surrounds the budget, and in our case it isn’t there.”

On Oregon State’s budget reporting Web site, users can track expenditures, transaction by transaction, by clicking through the various budget lines in an academic department or administrative office, from the president’s on down. As shown in a demonstration of the system, accessible here, users dissecting the biology department’s budget can check out expenditures under “lab supplies” and see, for instance, $49.15 spent at WARD’S Natural Science one day, and $115.47 spent at PETCO three days earlier.

Budgeted monies, actual expenditures, and available balances are displayed for individual line items. Aggregate salary and benefit information is also available on the site, but not on an individual level. (Nor are transactions tied to particular people, only particular budget lines.) Data are updated daily, and are available starting in the 1996 fiscal year.

The site offers an intriguing approach for colleges responding to increasing pressure to demonstrate fiscal accountability and transparency. However, as many point out, Oregon State’s site tends to be most useful for insiders attempting to track a particular portion of the university’s finances as opposed to outsiders looking to answer bigger policy questions about college costs and performance.

“I know I’m biased as a finance guy, but budgets and expenditures are a part of every action and reaction in our day-to-day lives,” McCambridge says of Oregon State’s students and employees. “As those 26,000 people go about their days, at some point in time, there’s a question about expenditures or a question about budget.”

A student pole vaulter might wonder, for instance, how much money is the track team getting? How much went toward uniforms?

“They all know that they can go look,” says McCambridge.

Speaking of the process behind the prototype is, the man behind it says, to speak of an attitudinal shift. “I think of it as sort of a struggle to change the culture. This is the kind of information that in most institutions is closely held and is really not broadly disseminated,” says Gil Brown, who formerly oversaw development of the Oregon State system, which was put in place in 2005. He is now director of budget and financial planning at George Mason University.

“You’re able to look and see what the president paid his speechwriter…. In many institutions the fact that the president has a speechwriter is something that’s not discussed, let alone how much the speechwriter is paid.”

Because of the culture change involved, Brown says that at Oregon State, the support of the president and chief financial officer was essential in launching the online budget reporting system. Logistically speaking, however, the task was relatively simple. Since the university already maintained a central database storing transaction information, the process of bringing it into public view took just a few months, with a price tag below $10,000.

There were, of course, concerns, one being the security and privacy sensitivities inherent in disseminating financial information. Another was one that presidents and public relations staffers reading this article might already be cringing about in anticipation — what Brown calls the “embarrassing revelation risk.”

The risk of a seemingly (or actually) obscene purchase aside, Brown references, for instance, an Oregon law that restricts the purchase of flowers with state funds. “So let’s say someone had a death in the family. There was just no way state funds could be used to purchase flowers. The fact is in an organization that large, people do violate rules and ultimately those errors are usually discovered and corrected. If somebody bought flowers, it would show up in a subsequent financial report, we would go to the individual and say, ‘State rules prohibit this purchase; you have to reimburse it.’ But that whole process would take 30 days.”

“Whereas with this system, somebody buys flowers, it’s there the next day for everyone to see.”

Oregon State’s McCambridge says that to date, he’s not aware of any fodder for a potential FlowerGate circulating online. “We’ve never had a question about flowers or birthday cards [also restricted expenditures under Oregon law], but we do get lots of questions about, you know, ‘Gee, I looked and somebody bought a million dollars worth of equipment. How did they get that money?’ Well, they got the money because they got a million dollar donation from a private donor. That’s on our books,” McCambridge says.

“The detail that we provide allows that internal person to understand that the anthropology department’s budget is X and they can see how the money is spent in anthropology. Or the economics faculty member can see his department’s budget, how his dean distributed funds throughout the college,” McCambridge says.

Amid growing pressures on colleges to be transparent and accountable to their public, Oregon State’s site provides one model for sharing information for analysis and discussion, but no easy answers to bigger, macro-level questions like where revenue from a tuition increase goes (or, for that matter, should go). “I think it shows a really fine attitude and says we’re open about everything we do and how we spend money and come and get it,” says Charles Miller, who headed the Secretary of Education’s Commission on the Future of Higher Education, which focused largely on issues related to accountability and transparency. “I don’t think it’s any final solution, but I think it’s a strong effort to be open.”

Miller adds that the rich availability of data allows for analysis to answer broader research questions. (The budget reporting site includes a function whereby users can export data into Microsoft Excel or Adobe Acrobat.)

“We have this thing going on in the world where information’s just going to be widely available, which is why when universities resist having that data available they’re just fighting a long-term trend.”

— Elizabeth Redden

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