The Cost of Transparency

Last week I wrote the following post on the Association of Government Accountants (AGA) website and thought it would be of interest to you.

Accountability and transparency are two concepts on everyone’s minds (and blogs) these days, thanks to the American Recovery and Reinvestment Act (Recovery Act). Accountability has been around for a while; it means that someone specific is responsible for achieving performance results. (Most of us know that AGA’s mission is Advancing Government Accountability.)
Transparency is a newer concept. It means that the things you are doing to achieve performance results are open and (more important) understandable. Simple openness is not enough, and posting every financial transaction to a website is not transparency. That’s obfuscation. USAspending.gov started to make federal expenditures transparent, but I think the jury is still out on how effective it has been.
While most people support the goals of the Recovery Act, not everyone is confident that it is the appropriate or sufficient approach. The Administration addressed this concern by promising unparalleled transparency for Recovery Act funds. We won’t need someone else’s assessment about whether or not the Recovery Act is successful; it will be so transparent that we can see for ourselves.
Accountability is absolutely essential for all government programs. We must know that someone is achieving performance results. Agencies already report on results under the Government Performance and Results Act (GPRA). Transparency seems like a good idea, but, as I read OMB’s 62 pages of “Initial Implementing Guidance,” it occurs to me that it is also expensive. There is going to be a lot of new tracking and reporting of Recovery Act spending by agencies. There is a new website, Recovery.gov, to provide a portal to Recovery Act transparency. Of course, all this tracking and reporting will come on top of everything else that agencies are already doing.
Fortunately, the Recovery Act includes provisions for agencies to use a small percentage of those funds for “management and oversight purposes.” I looked at one agency, EPA, and saw that it received $7.2 billion in Recovery Act funds, primarily for State and Tribal Assistance Grants. The “management and oversight purposes” funds were up to $90 million, with another $20 million for the IG. I don’t know if EPA will need this $110 million (or more), and admittedly it’s not a lot of money compared to the overall Recovery Act funds in the agency, but we should recognize that transparency for the Recovery Act could cost $110 million just at EPA. That money could have gone to climate control or clean water, or maybe not have been borrowed at all, saving future interest costs. As funding for transparency, this money doesn’t actually improve any program.
If transparency is good for the Recovery Act, would it be good for the entire budget, or do the circumstances of the Recovery Act require something special? Does USAspending.gov provide sufficient transparency for the budget? Would the cost of transparency drop if all major government expenditures were required to be transparent? Is transparency where we want to spend our money? Is transparency a necessary condition for accountability or can you have accountability without transparency? Does transparency mean that we don’t trust government employees to do the right thing?
And finally, how much transparency do we really want? I can hear Jack Bauer now as he rescues America one more time: “Just tell me what you want, give me the money, and get out of my way.”