WILLIAM DONALD SCHAEFER, Governor                        S.B. 254

In accordance with Article II, Section 17 of the Maryland Constitution, I have today
vetoed Senate Bill 254.

Senate Bill 254 would allow the Office of Legislative Audits to audit each unit of State
government every four years rather than every two years. It further would establish the
criteria under which the Office would determine the audit schedule for a unit of
government.

In November 1992, a report was released entitled "Review of Legislative Staff Agencies in
the Maryland General Assembly" (the report), prepared by the National Conference of
State Legislatures (NCSL). This report analyzed the staff functions of the General
Assembly, including the Office of Legislative Audits, and contained a number of specific
observations and recommendations pertaining to that Office.

In addition to recommending the one change embodied in Senate Bill 254, the report of
the NCSL suggested that the General Assembly consider several additional changes in
the Office. Unfortunately, the General Assembly has sought to implement only this one
change, and none of the other recommendations has been pursued, thus threatening the
checks and balances implicit in the overall report.

The report commented that the rating process used by the Office is unique to Maryland,
and that the "General Assembly should assess the effectiveness of this process in gaining
agency compliance with audit recommendations and determine whether it is worth the
controversy and suspicion it engenders." Indeed, a number of State agencies have had
significant complaints about the rating process and believe that it may be subjectively
applied and arbitrarily used to force a failing audit. I am not aware of any effort to
address these complaints.

The report also indicated that most states have separated their auditors from other
legislative agencies. In Maryland, of course, the Office of Legislative Audits is a part of
the Department of Fiscal Services (DFS). The report formally recommended that the
General Assembly "remove the Office of Legislative Audits from DFS and authorize it as
a stand alone legislative agency." Again, I am not aware of any effort to independently
establish the Office.

It was also a recommendation of the NCSL that the General Assembly consider
privatizing a "select group of audits." The potential for privatizing various government
services has received much attention. While the budget does contain language raising the
possibility that a small portion of the Office's budget could be used for "contracting with
private firms to undertake audits...," the proviso is open-ended enough that it is unlikely
to occur.

The report also makes numerous negative comments about the senior management of the
Office and problems with communication to staff, concluding that the comments of staff
"point to a significant problem with the management system" in the Office. These
comments underlie many of the same concerns raised by agencies of the Executive
Branch.

In addition to the recommendations of the NCSL, for some time the agencies of State
government have questioned the practices of the Office and have encountered difficulties

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