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More at OHEA.org The candidates for state auditor this weekend.

The state of Ohio.

Welcome to the state of Ohio.

I'm Karen Kasler.

We're continuing a month of conversations with the candidates for the four executive offices besides governor.

You can find those previous interviews and our archive at State News.

This week, the candidates for state auditor in alphabetical order.

Here's Democratic candidate Annette Blackwell, the mayor of Maple Heights in Cuyahoga County.

You are in your third term as mayor of Maple Heights, which you call a small suburb with big city problems.

Yes.

Why do you want to leave local government and leap up to statewide office?

I didn't want to leave local government.

It kind of chose me this opportunity.

It came before me.

And after spending some time really thinking about it, it seemed like the next move for me and something that would be kind of leveling up for, for lack of a better word.

You have interacted with the auditor's office as mayor.

Your website says Mayor of Maple Heights, which was in fiscal emergency when you took over in 2016 as mayor.

The city won the Clean Audit Award for three straight years.

Yes.

How did that experience play a role in your decision to run for auditor?

I think it identified me as a candidate, a possibility.

I was recruited to run for this office.

That experience really shaped me as the kind of public servants I want to be known as being effective and efficient and innovative, really just fighting through some difficult challenges.

It's not easy being elected official.

There's not enough money to do everything.

The time frame doesn't always meet the demands of the residents.

They want it.

Yesterday.

Not not not two weeks from now.

They don't understand the process.

And so it just really took all of the business skills that I had that were transferable coming from from the public, you know, the public sector not being an elected official.

It just challenged all of those transferable skills I brought with me to really do something special.

And that was really lived our city above this designation, and we've just enjoyed a tremendous amount of success.

We really have.

You've said that in the process of this, that the auditor's office could have done more, could have maybe given you more information or advice or something to get out of that.

I come from that perspective.

Coming from a consulting practice.

I just believed when we when we did convene the fiscal commission, we had been declared in fiscal watch the year before I became mayor.

We were not able to recover under the previous administration.

So by the time I took my oath of office, we had been declared in fiscal emergency, did not seem to be a way to to avoid that.

I believe that when the commission was set, which included myself, the City Council president, to resident appointments and representatives, of course, from the otter's office and the treasurer's office, there'd be this kind of sit down roundtable discussion about where we were, what they believe, some of them having done the audits and made the declaration that we were not.

We were in a fiscal crisis.

There'd be some recommendations, and we'd worked through those recommendations.

That's not what happened.

I really was challenged with addressing the crisis and coming up with a plan that I could present to the office to be released.

You've said you're running for auditor to root out corruption plaguing Ohio's government.

Now your opponent says something very similar on that.

But he also says that local elected officials are often committing fraud.

So how do you attack it from that side of it?

Or is is it basically the same state and local attacking that fraud, yes, that is the role.

However, I think we have to make a broader statement.

Not everybody's committing fraud.

People don't get up and go to work to do the wrong thing.

Most of them try to do the right thing.

You've got some bad actors, and we certainly want to hold them accountable.

But that's not the story of Maple Heights.

There was no fraud, waste and abuse.

There was a 2008 reappraisal.

Property values dropped more than 30%.

People owed more than their home was worth.

Some people walked away.

A lot of depreciation and people are underwater.

The middle class moved out, and when the middle class moved out, the skilled workforce moved out.

Let's go.

Workforce moved out.

Those companies that employed those skilled workforce, they moved out.

My tax base was decimated.

There was no fraud and abuse.

There was what we ended up with based on what had happened to our economy.

Significant demographic change.

Poverty rate went up in double digits.

That's what happened.

And I think the orders office should balance that.

We focus so much on fraud and abuse.

But what about the ones that are doing the right thing?

There's no fraud, waste and abuse.

But.

But based on circumstances, they've got to find their way.

Push, push, pull their ways out of it.

Find ways out.

Write this recovery plan.

Show the orders.

Office how they think they can achieve that.

And we were able to do that.

One of your primary one of your priorities is to stand against the endless raid of local government funds by state House politicians.

Your opponent has said he feels local governments are sometimes not accountable or transparent, and that encourages waste.

But he also said he'd like to see not only more shared services, but potentially even some consolidation of local governments.

Since you come from a local government background.

You said you'd like to see more of a relationship between the auditor's office and local governments, but is that possible when there's this concern that there's too much local government?

I don't have the same concern.

I don't believe that the waste is happening at the local level.

I believe that we have lost quite a bit in the local government fund.

In addition to decimating my tax base, the local government fund dropped below 2%.

These were all challenges that I was left with to to manage a city of 225,000 residents.

Still have to deliver those services.

I believe the partnership and I think the company level for each city, township or village is very different.

I spent two years as the mayor, president of the Mayor's Association Ohio, which represents over 900 cities, townships and villages.

And it's very different.

The skill set for a finance professional than it is in private.

And so that skill sets different.

I've seen it change.

So I think when the auditor in some cities are subject to an audit every year, I mean, there's three kind of audits.

It's a performance audit.

And those are for cities that may be in trouble.

There's possibly some something in the in the audit that says they may not be able to they'll end up having more expensive than they have revenue.

And that's certainly what we had when we were in fiscal emergency.

Other than that, it's a kind of a test audit.

They'll come in and they'll test to see that accounting practices are being followed.

There are no instances where that that cause concern.

More specifically, they were just there in April.

They asked for my police overtime records.

They asked for bank reconciliation for the last 12 years.

We were able to do that in every single time.

For the last four years, we're going to get a fourth audit award.

We've proven that we are following those procedures.

That's what we're doing.

I believe there are examples when you are responsible for auditing 5900 entities, 800 employees.

You've seen the same thing a couple of times, and you're in there every year where there's a financial audit, which we have now, which is just the test, the kind of test that I talked about, just checking to see if things are are in order.

And then there, of course, is the basic audit.

And those are for any that have less than a $5 million budget.

All of those instances is a chance for those professionals.

And some are individual private firms, as we have now to see you see these kind of the same thing, to make some recommendations, to make some, to find some things that may be very applicable.

You saw this in Maple Heights.

You saw this in another city.

And I think not creating a whole nother audit, but and the management letter at the end of that exit audit interview, we have excellent audio interview.

So you know what, I think you might want to take a look at your what you're spending and outsourcing.

One of the issues was we're outsourcing our collective bargaining agreements.

Should there be more performance audits conducted by the auditor's office?

I don't believe so.

I don't think that is discernment after what you find in the financial audit.

I don't think you start with a performance audit.

I think you start with a financial audit.

And if there's something of concern that brings your attention, I think you move to a performance audit.

Now, the current auditor, Faber, who delivered you your city's release from fiscal emergency all day.

He's often talked about how his office, his investigations resulted in 170 convictions on nearly 400 criminal charges.

Do you think he's doing a good job?

And if not, what would you change?

I think he's doing a good job.

When it's when it's the new, it's hit the news.

But there have been some cases that one would wonder how did we miss that?

How did the auditors miss that?

I know the audit.

What we have to bring for and how we prepare in Maple Heights for the auditors visit to our city to do the review.

So I'm curious of how we miss the ones that make the news that are pretty substantial in number.

So for us, it was less than three $3 million.

But we miss sometimes corruption and fraud and abuse in the millions of dollars and significant dollars.

So I can't say I'm not going to say he's doing a bad job, but I don't think the job is as throw as it could be.

I'm not sure how we miss that.

You've never held statewide office before, though you obviously have held elected office before.

You have local government experience.

You have experience in the private sector working for some well-known entities.

You're running against someone who has a lot of experience in government.

And you said that that's more relevant experience.

How do you stack up your experience to his experience?

Certainly, having statewide experience and going to Sweet Office, it gives him an upright.

But I think the practical at the level, the the what this job is about and that is auditing entities almost 6000.

Working directly with people at local levels, at libraries, at schools is a very personal a very it is a specialized skill.

It is one you get close to the issue and I have the ability to do that.

Although I'll be in executive office, I still do that with my staff right now, getting close to the issue and being able to almost looking at a lot of being able to see what those issues might be and bring some best practices and some very relevant experience of what we might want to look at.

We go into communities like maples.

There's a maple Heights everywhere, and I think that clean audits are attainable in almost every entity that the Otter is responsible for auditing.

And you think that your experience in doing that, he makes the comparison of CEOs not necessarily having to be able to.

A CEO of an airline doesn't need to be able to fly the plane, but you've done a lot more of that on the job kind of stuff, though you're not on account.

That's true.

In addition to working, when I worked at Deloitte, we bought a practice in Hyderabad and I was a US Indian liaison, was over 400 employees in Hyderabad.

Then he was the same language.

They did come here to us for the orientation.

I worked with them remotely.

So I have worked at a high level executive for, for, for many, many years and most of my career and a very broad and very diverse workforce.

I think that is I think that is a gift that I bring to to this position and understanding at all levels, the local level, the executive level and very, very practical, practical experience.

It's easily transferable, making me ready almost day one.

And finally, I don't know if you've thought about this, but Ohio is one of the few states that is allowing cryptocurrency to pay for certain things that the Secretary of State's office would.

You want to see Ohio expand the use of cryptocurrency, which I know a lot of auditors approach very cautiously.

Honestly, I haven't thought about it, but yes, I'm not sure about it.

It's something seems I would have to do more research, but I haven't thought about it to be able to answer it in a way that brings any clarity to you.

Do you have concerns about cryptocurrency?

Most certainly do for sure.

Yes.

Based on the knowledge that I do have, not in the perspective of the orders office, but I do.

All right.

I think that opens up another route for fraud, waste and abuse.

Now, the Republican candidate for auditor, Frank Larose, the secretary of state.

You've said one reason you're running for auditor is to be a watchdog for public corruption.

Is public corruption a problem in Ohio?

And if so, aren't Republicans responsible for that?

Given that Republicans have been in charge at the state and county level for decades now?

Well, public corruption has been an unfortunate feature from the founding, right?

I mean, and so you're always on guard for that kind of thing.

But it's not just at the state level.

We have a lot of issues that our current auditor has put, gosh, close to 200 people in jail, many of them local elected officials.

And let me be clear, though, public corruption of any kind, whether it's somebody stealing Medicaid benefits or a crooked bureaucrat or politician.

This is not a victimless crime.

They're stealing your money.

And in cases of Medicaid fraud, they're stealing from people that deserve those, those benefits.

And so this is something that we take very seriously, the way that you keep it rare, just like with election fraud, the way you keep it rare is by taking it seriously and making sure that anyone who betrays that public trust faces justice for doing so.

You just mentioned the Medicaid fraud that has been talked about for a while.

Everyone acknowledges there's some fraud in Medicaid, just like there's fraud in almost every big government program.

But is the problem as big and as costly as some Republicans have talked about?

I mean, you had me talking about using Medicaid fraud funds returned to Ohio to cover the gas tax suspension.

But also he said that it could cover copay assistance and help people with premiums.

I mean, is it that big a problem in Ohio?

Reasonable expectations are that it could be, you know, well over $100 million, potentially hundreds of millions of dollars.

So, yeah, that kind of fraud is a big deal.

It's not simply a cost of doing business.

It's something that you have to take seriously and go after it and root it out.

And in too many ways, the incentive structures are wrong.

And Vivek has talked about this in too many ways.

The states view this as well.

It's federal money that's being wasted, so why bother?

Well, that's the wrong way of thinking about it.

And what he's talking about doing is entering into a deal with the federal government where the state can, can, can, you know, benefit from from tracking down and cracking down on that kind of fraud.

It's a it's a serious matter also, because it causes people to think that you can get away with it when a law is not enforced.

It's not a law, it's a suggestion.

And so we need to make it clear that, yeah, people that deserve those benefits.

Widows and orphans and disabled children that need those should get them.

But somebody that's too lazy to actually work for a living and just wants to pocket benefits that they're not owed.

That's a serious crime.

You also said you want to get rid of the waste in government, especially local government.

Do you support reducing the number of entities that can actually levy taxes?

And people tend to like their local government.

So should local governments be able to operate the way that their local voters want?

Yeah.

Let's be clear about this.

Part of this is making sure local voters are well informed when they make their decisions about voting for a tax levy or not, about who they support in local offices.

There are too many instances, though, where local governments are really not accountable.

What I mean by that is some of these entities that aren't directly elected.

If you're not happy with your local public waste authority, or you're not happy with your public transit authority, who do you go after?

If you don't like your city council, you vote them out, but it's not as transparent with other things.

To be clear, fraud is a crime.

Waste.

Is this any thing that happens too often in government because government lacks the profit motive in the private sector, the profit motive keeps you on your toes.

You work harder to make a living.

If you're wasting money, you're going to stop doing that.

Otherwise you're not going to be in business very long.

We need to bring that same kind of mentality to local government.

And here's why it matters.

This is not just numbers on a page.

This is a cost of living challenge for Ohioans.

Look at your mortgage statement.

For many of us, you'll notice that your property taxes are as much as your interest and principal on your mortgage.

That's not sustainable.

The top five largest cities in Ohio have grown their budgets, something like 37% just in the last four years.

That's not sustainable, and we need to bring that kind of lean mentality to local government.

They can do this at the auditor's office, do these things that we call performance audits.

I really think of them as affordability audits, though, and we need to tighten the belt.

You asked about consolidating.

I get that that's a touchy subject for a lot of people.

And in many cases, yeah, we do have too many layers of government in Ohio that are stacked up on top of each other.

And I think that there is room for some consolidation, but short of that, we can share services.

I think of where I grew up, I went to high school here for miles up the road as another district.

Four miles down the road is another district.

Each one has their own transportation operation with extra busses and fuel pumps and mechanics and routing software.

Why not share one transportation operation among several school districts, and enjoy the economies of scale that come from that?

The auditor's office can encourage that kind of creative thinking.

You mentioned performance audits, and you said that you want to make performance audits required in certain circumstances.

Won't that mean you'll have to hire a lot more people?

Potentially.

But it's also a matter of targeting these.

And the ROI is there when you're saving money for the taxpayers, it's worth a modest investment in some Lean and Six Sigma experts and that kind of thing that can come in and find where the waste occurs.

But to be clear, right now, they're optional at the local level.

If you are a local library district and you're requesting a performance audit, you're probably not the one we're worried about.

You're being proactive about trying to be more efficient.

It's the ones that are operating wastefully and don't intend to change.

And so what I'd like to do is just make this a quantitative analysis, do it on a per capita basis.

If the going rate to run a local.

To stick with this analogy, the local library district is about $50 per capita, and you're operating at 3 or 4 x that it is not dispositive proof that something's wrong.

Maybe your community has decided that it wants a gold plated library district, but it is at least a data set that the voters should be aware of before they vote on that next levy.

You've talked about a lot of changes that you want to make here.

The current auditor is Keith Faber, who's a Republican colleague of yours from the Ohio Redistricting Commission.

You both served in the Ohio Senate.

Is he doing a good job?

I think he's doing a fine job.

But it's time for new ideas.

That's the cycle that happens here in Ohio.

And it's not unlike what happens in the corporate world as well.

You'll notice that the trend is that a CEO tends to stay in place on average, about 8 to 10 years.

Well, here's an opportunity to bring some new ideas.

Keith and I are competitive.

I think he's done a great job, and I think I can take it to the next level.

You're not an accountant.

Yeah, but only one state auditor in our state's history has been I use this this comparison as well.

The job is not to be the one that actually does the accounting and the and the auditing of the world's ten largest airlines.

Only one of them has a CEO that's ever flown an airplane, because the CEO of an airlines job is not to fly the airplanes, the CEO's job is to set the standards, to hold people accountable, to give them the tools to empower them to do that job.

I've proven that I can do that as Secretary of State.

I can take this really great team of 850, 900 people that work at the state auditor's office, and we can point them in the right direction so that we can root out fraud and find a waste where it occurs, and solve that cost of living challenge for Ohioans.

Your current office, Secretary of State, now excepts cryptocurrency for all kinds of transactions.

Only three other states are accepting crypto in any form.

Auditors have typically approached cryptocurrency with some caution because of administrative costs, volatility, that sort of thing.

Would you advocate for the state to broaden its acceptance of crypto and why?

The way that we've done it, yes, I mean, cryptocurrency is constantly fluctuating.

If you follow this, it can jump by large amounts on a minute by minute basis.

The way that we've done it, though, is that when you push pay to pay your state fees or fines or what have you on on this crypto platform, it is a US dollar cash transaction that occurs.

You're paying with cryptocurrency, but the state is receiving cash in that current value.

It's a smart way of doing it.

It's not as though tens of thousands of Ohioans are ready to make their transactions this way, but it's just another indication that Ohio is an innovative state.

Ohio is a state that is leaning forward in the sort of next technological revolution, and we're a place where you want to do business.

And because we're that modern, kind of innovative state.

But the state tried it before and it didn't.

They didn't do it the right way.

Right.

And we had to get permission this time from this thing called the Board of deposit.

Most people don't know existed.

Once they approved this, then then we went through a long process to make sure that it was done right.

And yeah, we're finally doing that.

I spoke at a Bitcoin conference last week.

People were excited about the fact that here in the Buckeye State, it's not happening on the east coast of the West Coast, but here in America's heartland, the Silicon heartland, as we like to say that we're leaning forward on this and we're putting out the the message that if you are in a blockchain oriented business or a technology oriented business of any kind, Ohio is the place to do business.

And this is just one other one other way of proving that the races for most of these executive offices are starting to sound like they're a revolving door, because you're the secretary of state running for auditor, the current auditors running for attorney general, the current treasurer is running for secretary of state.

Our Republicans now career politicians.

And is that going to be a problem for you in an election where people seem to be pushing back on people who are in office?

I've been a soldier a lot longer than I've been in public service.

I ran for state Senate just over a decade ago when I got out of the Army, and I've enjoyed doing this work as secretary of State.

It does bring relative a relevant experience to the job, though, and knowing how state government works, understanding how things work at the state legislature, and being able to dig into the mechanisms of state and local government to find fraud, to find ways to find abuse, I think that kind of experience matters.

And it's, you know, not not by accident that Ohioans have entrusted Republicans with these important jobs.

We've got a bunch of folks that have experience.

Again, smart companies also tend to promote from within.

The CEO is often somebody that had previously been the coup or the CFO and that kind of thing.

So, you know, again, I put my experience up against my opponent.

I think it's a very clear contrast.

Who's ready to go on day one for this job.

And speaking of your opponent, she has some private banking experience.

You do not.

Does that cause a problem here?

Does that do you need that experience?

I've got I've got much more relevant experience than she has.

And again, that'll be up to the to the voters to decide when it comes to who can lead this big office to do the things that it needs Ohioans to do, who has proven that they are innovative, thinking outside of the box, tireless with the the work ethic that it takes to do this?

I've proven that.

And you know, my opponent has not.

Next week, my conversations with the candidates concludes with the contenders for treasurer Republican Jay Edwards and Democrat Seth Walsh.

You can find my interviews with candidates for governor, Democrat Amy Acton and Republican Vivek Ramaswamy, and interviews with Secretary of state candidates, Democrat Alison Russo and Republican Robert Sprague, and Attorney General candidates Republican Keith Faber and John Kulewicz in our archive at State News or on our YouTube channel.

And that is it for this week.

Please check out our website at State News or find us online by searching State of Ohio Show, you can get our Ohio State House alerts by texting state news to this number and listen for our podcast, The Ohio State House Scoop on Monday morning.

And please join us again next time for the state of Ohio.

Support for the Statehouse News Bureau comes from the law offices of Porter, Wright, Morris and Arthur LLP.

Porter Wright is dedicated to bringing inspired legal outcomes to the Ohio business community.

More at Porter Wright.com.

Porter Wright.

inspired every day.

And from the Ohio education Association, representing 120,000 educators who are united in their mission to create the excellent public schools every child deserves.

More at OHEA.org