Goal: Ensure the integrity of the state's financial resources

Why is this goal important?

The Department of Finance is able to carry out this goal through two primary means--
by minimizing the number of repeat audit findings and maximizing the state's bond rating.

The Office of the Legislative Auditor does continual reviews of state agencies' financial operations. Audits are an after-the-fact review to determine compliance with state and federal legal requirements. Repeat audit findings are an important measure because they indicate that a problem previously reported has not been fully corrected.

The state's AAA bond rating is the highest rating available, a signal to investors that state bonds are of the highest quality and, therefore, carry the least amount of risk. The index rate is based upon AAA interest rates on the day of each bond sale. Selling state bonds at the index rate is a confirmation that investors agree with the rating. 

Through these channels the Department of Finance is working to ensure the integrity of the state's financial resources.

How will this goal be accomplished?

The Finance Department seeks to reduce the number of repeat audit findings by assuring that agencies make the necessary corrections, and assists them in implementing audit recommendations.

Additionally, by maintaining one of the highest bond ratings, Minnesota is able to command the lowest price for borrowing money to build roads, buildings, and other important infrastructure. The Department of Finance is a strong advocate for maintaining Minnesota’s high bond rating.  Finance advises the Governor and legislative leadership on budget options that maintain a high bond rating.

What is the Department's progress to date?

Audits
Since 1996, the number of repeat audit findings has dropped from eighteen to four in 2004, and the latest audit report shows six repeat audits in FY 2006. Our target is five or fewer.

Bonds
Minnesota’s bond rate has been around the index the past four years.  The Department has a debt management team that makes great efforts to ensure the appropriate structuring and timing of each bond sale to maximize public resources.

Why is this goal important?

Outside sources, including three credit rating agencies and Governing Magazine, rate the state's financial performance. Governing Magazine analyzes states' overall management through the Government Performance Project (GPP), a program sponsored by grants from the PEW Charitable trust, and provides a source of comprehensive and independent information about state management performance. Grades by management area provide states comparative information that can be used to improve management. Results and comparative information can be accessed at http://results.gpponline.org. 

Rating agencies also provide the state with financial guidance and critical assessments that aid in determining Minnesota's creditworthiness. Finance officials discuss the state's financial status with these agencies around the time of each major economic forecast, bond sale, and start/end of legislative sessions. The agencies are Moody's Investor Service, Standard & Poor's Corporation, and Fitch Ratings.

How will this goal be accomplished?

Minnesota's financial management practices are rated A-, placing Minnesota among the best nationally. Only three states rank higher. The department uses survey criteria and comparisons to best practices nationally to identify areas for potential improvement.

The State’s AAA/Aaa bond rating is a key measure of the State’s creditworthiness. Currently, Minnesota has the highest rating from Fitch and Standard & Poor's, but Moody's rates the state second highest at Aa1. Maintaining the AAA bond rating from Fitch and Standard & Poor's and regaining the Aaa bond rating from Moody's is one of the Department's key priorities. Although the Department of Finance champions this goal, the state’s bond rating is determined by a myriad of factors, many of which are outside of the Department’s direct control.

Rating agencies track trends and compare Minnesota’s credit worthiness to those of other states.  Thus, regaining the Aaa Moody’s rating is a long-term challenge and we can expect to regain that status if responsible financial management and leadership is prominent in the legislative process. 

Why is this goal important?

Improving the accountability and prudent use of the state’s resources is an important goal that is attained through these strategies: paying vendors within 30 days, increasing the percentage of vendor payments made electronically, and improving the satisfaction with the Statewide Administrative Systems.

Percentage of vendor payments made within 30 days.  This measures how often vendors providing goods and services to the state of Minnesota are paid within 30 days. Prompt payment to vendors is good business practice and state law. Vendors not paid promptly are eligible for interest payments.

Percentage of vendor payments paid electronically.  Payments by electronic fund transfer (EFT) are faster, safer, and save state resources.

Satisfaction with Statewide Administrative Systems (MAPS & SEMA4).
The Departments of Finance, Administration and Employee Relations jointly conducts periodic surveys that assess Statewide Administrative Systems user satisfaction with the major components of MAPS (Minnesota Accounting and Procurement System) and SEMA4 (Statewide Employee Management Application).  Areas assessed include transaction processing, navigation, making inquiries, help desk support, reporting, workgroup participation, training, and operating hours. 

How will this goal be accomplished?

Percentage of vendor payments made within 30 days.  Finance monitors all state agencies and their payment timelines.  When an agency falls below the 98% target for thirty-day payments, Finance contacts the agency to find out what the problems are and offers solutions to ensure that all agencies are meeting their goals.                      

Percentage of vendor payments paid electronically. Finance has upgraded its systems to allow for more payments to be made via EFT. A website provides vendors with free 24 hour access to EFT payment information. The 2003 legislative session passed a Department of Finance proposal to require vendors that receive more than $10,000 or ten payments from the state to do so via EFT payments. 

Satisfaction with Statewide Administrative Systems (MAPS & SEMA4). The survey results assist the departments in identifying both areas where we are meeting or exceeding customer expectations and areas requiring improvement. The results assist us in meeting our goal of continuing to improve systems so they serve our users efficiently and effectively.  Based on input received from our user workgroups, we prioritize and make improvements to the systems. 

What is the Department's progress to date?

Percentage of vendor payments made within 30 days. Since 1997, the state target has had a target of paying 98 percent of vendors within 30 days.  Finance has exceeded its 98 percent target of paying vendors within 30 days since 2003.

Percentage of vendor payments paid electronically. Finance has thus far been successful at achieving its goals and would like to see the shift to EFT payments exceed its projected targets.

Satisfaction with Statewide Administrative Systems (MAPS & SEMA4). The Department of Finance is pleased to see continued high levels of user satisfaction with the SEMA4 payroll system and is evaluating the MAPS accounting system where user satisfaction has declined to 1999 levels.

       MAPS Accounting: 84% Satisfied

       MAPS Procurement: 84% Satisfied

       SEMA4 Payroll: 94% Satisfied

       SEMA4 Human resources: 85% Satisfied

The 2004 Statewide Administrative Systems Survey results have been posted on the Department of Finance’s web site at: http://www.finance.state.mn.us/agencyapps/survey/results/index.html

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