Rick Perry
© unknownRick Perry
Perry's office says some changes already made

Gov. Rick Perry's highly touted fund for aiding start-up technology companies lacks sufficient transparency and oversight and needs sweeping reform, a state audit released on Thursday concluded.

After a five-month review of the Texas Emerging Technology Fund, State Auditor John Keel found that the program does not meet many standards for being a responsible overseer of hundreds of millions in taxpayer dollars.

The governor's office does only "limited monitoring of recipients' performance and expenditures of funds" and decisions are "not open to the public," Keel said.

"Issues in a number of areas impair the ability to administer the (tech fund) in the best interests of the state," the 39-page document concluded. "It is important to hold recipients of funds accountable."

Perry, in a written statement, described the auditor's report as a mixture of helpful and wrong-headed criticisms. While the fund could be improved, he said, it had been cleared of assertions of fraud or political influence because there was no mention of them in the audit.

His office, he said, "is already implementing many recommendations from the report and will continue utilizing the ETF to invest in emerging technology companies and bring top researchers to Texas."

Lt. Gov. David Dewhurst, who, along with Perry and House Speaker Joe Straus approves disbursements from the fund, offered a somewhat different reaction to the auditor's report. Dewhurst said he asked for the audit after growing frustrated with what he called a pattern of not getting enough information about proposed projects.

The audit calls on the legislature and governor to strengthen ethics requirements for the 17-member committee that recommends which applicants get money, including barring them from investing in or receiving money from tech fund recipients.

The program, created by the Legislature in 2005 at Perry's request, is intended to spur development of the state's technology sector.

Perry's office said in a 20-page response that it agreed with almost all of Keel's recommendations but adamantly disagreed with others. It accused the state auditor's office of misunderstanding the "nature and role of the entities and individuals involved in the program and, at least in some respects, the very purposes of the program itself."

One area of disagreement was Keel's criticism that the governor's office does not track or calculate the value of the state's investment in tech fund recipients.

The state has the right to buy stock in each company that receives an award. The governor's office told the legislature in December that it owned 16.7 million shares in recipient companies but it did not quantify the total value of those shares.

"If it does not determine the value of its investments, the Office of the Governor lacks a basis for measuring the performance of the ETF,'' the audit says.

The governor's office said the value of most investments is not "realistically determinable" because the shares are in privately-held firms.