The Division of Agriculture has not established formal policies regarding program funding. Without funding policies, it is unclear if program fees are recovering appropriate levels of associated costs. In addition, the Division does not always generate reliable or sufficient cost information needed by management to monitor and evaluate program activity. In excess of $1.6 million of costs should have been distributed to specific programs to appropriately reflect actual program expenses. As such, the Division cannot provide management and policy makers with accurate and complete program information.

Principal Findings

•  Although the Division developed a strategic plan in accordance with the Governor's instructions in 1994, it lacks any funding strategies or goals. (page 10)

• The Division has inconsistently funded programs over the years with no evidence that these changes reflect Board or management intentions. Our examination of the weights and measures program found the funding mix has fluctuated significantly over the past five years. The lack of a consistent funding policy could result in the disproportionate sharing of program costs. (page 10)

• The Division does not charge fees for certain services that may directly benefit specific individuals or groups. We identified several programs providing free services to specific groups that are either supported by general funds or fees from other programs. We found no policy identifying those services the Division intends to charge or not charge a user fee. (page 11)

 
• The Division has not established a process to periodically review or assess the adequacy of its funding levels. Consequently, funding actions have been untimely and are often reactionary and crisis driven. (page 12)

 
• The Division is not fully utilizing the state's accounting system to generate accurate and complete program costs. Program costs are often commingled, not charged to any specific program, or charged to the wrong program. Without a proper accounting of costs, the Division cannot provide management and policy makers with information necessary to make informed decisions. (page 14)

 
• The Division's indirect cost allocation plan has weaknesses that cause an inappropriate distribution of expenses. During fiscal year 1996, the Division allocated $260,000 in indirect costs. Since program costs provide an important basis for management decision making, inaccurate cost information could lead to improper decisions. (page 17)

• The Division has not developed cost information necessary to make fully informed management decisions. As a result, management decisions are often made without complete information. Our examination identified one program that has had a continuing decline in its financial condition over many years. A condition we attribute, in part, to the lack of complete cost information. (page 18)

Recommendation
Number                                                                                             Accepted     Rejected

1 Conduct comprehensive planning and develop a
formal funding policy...............................................                              X

2 Review funding levels periodically to ensure they
remain sufficient to achieve funding goals...............                                 X

3 Utilize the state's accounting system to fully identify,
allocate, and accurately record all costs to operate
each state and federal program..............................                                X

4 Allocate all indirect costs on a consistent and logical
basis........................................................................                             X

5 Document the methodologies used to allocate each
indirect cost..............................................................                            X

6 Develop cost reports to help management monitor
program activities and facilitate informed decisions..                               X

TOTALS                                                                                              6                         0