Time to cease more taxpayer funds for the NACEA

October 22, 2012

Findings in the performance audit of the Native American Cultural and Education Authority (NACEA) leave no doubt that it’s time to cease more taxpayer funding for the NACEA, and that lawmakers were right to reject another bond proposal. OCPA has previously recommended the end of more taxpayer funds for the NACEA. The findings of the performance audit are discouraging, especially considering that taxpayers have committed more than $112 million to the project to date.

Findings of the report include:

• Our audit finds that the Native American Cultural and Educational Authority (NACEA) has faced many internal and external obstacles since its inception, from inconsistent funding to inadequate budgeting.
• The board chose “the Vision Plan,” the most elaborate and expensive of the options provided by the project architects in 2004. Projects on such a grand scale require substantial funding, however, and at no time has the board’s available funding closely approached its projected expenditures.
• The legislature assigned the board the monumental tasks of creating and operating a state agency and constructing and operating a museum, despite board members’ lack of experience in both areas. These responsibilities were assigned without the proper support and tools, such as more comprehensive board membership criteria, greater oversight and project leadership.
• Through our procedures, we found a number of inconsistencies and deficiencies that can be attributed to improper planning by both the NACEA board and the legislature. These inconsistencies and deficiencies have negatively impacted the AICCM, as evidenced in the project budgeting, overall vision, management, oversight, funding strategy, fundraising strategy and the conflicting interests of stakeholders.
• Though the agency was created in 1994, began receiving operational funding in 1996 and obtained its first infusion of bond financing in 1998, it appears a project budget was not created until April 2001. According to one project contractor, the April 2001 budget of $169 million was not developed to reflect actual project costs, but solely to secure federal funding.
• The notion of the AICCM as a world-class project has been widely touted by board members and on the AICCM website. Though it is not immediately clear what the board considers to constitute “world-class,” the board provides support for their vision by citing an economic study claiming the AICCM and surrounding economic development could generate up to $3.8 billion in economic activity over the next 20 years.
• What qualifies as “world-class,” whether it is determined by square footage, materials used, or total expenditures, is subject to interpretation. The board appears to have equated cost with quality, with ensuing decisions based on this premise. While this cost may have been statutorily permissible, it might or might not be regarded as reasonable by state taxpayers and officials.
• Not only does the board maintain this vision for the project in the present, but has opted for such an idea since the project’s inception. In August 2004, the main project architects presented the Board with the following six construction project options and corresponding cost estimates:

• The board chose option six, the Vision Plan
• A board and staff lacking relevant experience
• The board compensated for this lack of internal experience by hiring multiple consultants, including architecture firms, project managers, geotechnical consultants, attorneys, design developers and institutional planning services. Multiple board members justified the use of consultants of excellent caliber by referring to their expertise in particular areas of museum development, again citing what should be required of a “world-class” facility. During the audit period, the board contracted with these consultants for more than $18.7 million.

Taxpayers should be extremely concerned that reality and respect for taxpayer burdens appear to have been clearly lacking concerning selection of the most expensive plan option, contracting for consultants for more than $18.7 million and a host of other issues surrounding the NACEA.

This debacle is yet another example of what happens when government expands beyond its core functions. No need for Oklahomans to discuss Solyndra or the Chevy Volt as an example of government waste. Oklahoma taxpayers have a story that hits much closer to home, the NACEA. Given the track record regarding this project, it is no wonder that private participation was minimal until recent pressure to leverage more taxpayer funds. No private citizen or private business could survive with this kind of track record.

Although lawmakers rejected more funds for the NACEA during the 2012 legislative session, some are concerned that the vote was influenced by the looming November election and that the lack of that impending election could result in politicians experiencing "a change of heart" in the next legislative session. Taxpayers and citizens will have to remain vigilant to ensure that more taxpayer funds are not devoted to this project. Let’s hope the legislature maintains its 2012 reaction to the prospect of more funds for the NACEA. It’s time to cease more taxpayer funding for the NACEA.