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Alice Rivlin speaks

Control board chair discusses her role, board’s work

(Published November 29, 1999)

Control board chairman Alice M. Rivlin recently met with the staff of The Common Denominator to discuss the board’s work, including her role in creating the District of Columbia Financial Responsibility and Management Assistance Authority (the control board’s formal title) when she was director of the White House Office of Management and Budget in 1995. Rivlin was appointed to the control board in May 1998 and became chairman in September 1998. The meeting with Common Denominator staff members Oscar Abeyta, Emory Julian Mills and Kathryn Sinzinger took place at the Brookings Institution, where Rivlin is on staff. What follows are excerpts of what Rivlin had to say.

"I think it’s a very exciting job.

"The control board doesn’t like what the control board represents, but it was a necessary thing given the catastrophe that had befallen the District and its finances. The District was bankrupt in 1995. And it wasn’t paying its bills, and it wasn’t paying its vendors, and it wasn’t collecting the taxes. It wasn’t delivering services. It was a pretty desperate situation. That’s the kind of situation that has occurred in other cities — it’s not unique to the District."

THE FIRST CONTROL BOARD

The first presidentially appointed control board was chaired by Andrew F. Brimmer and included Vice Chairman Stephen D. Harlan and members Constance B. Newman, Joyce A. Ladner and Edward Singletary. The five-member board serves three-year terms.

"I think the first board, which operated from ‘95 through ’98, did the heavy lifting. They did the hard stuff that was necessary to get the finances under control and, basically, I think we should all be grateful to them. It was with hindsight -- while you might have done it slightly differently, the job got done. The taxes began being collected again, the bills got paid, and some drastic cuts were made in D.C. spending, not all of them wise ones.

"What you do when you’re desperate in a situation like that is you cut whatever’s cuttable and, particularly, you defer maintenance because that’s the easiest thing to do. The city had been doing that for some years already, so it’s a very self-defeating thing to do, but it’s what you do in a desperate situation. So there was a lot of maintenance deferral and a lot of cuts in cuttable expenditures, and some of them we’re still living with the consequences – like, they didn’t plant trees for a long time. But if your choice is between planting trees and feeding children, it’s not a hard choice.

"So I think, in general, the right decisions were made and the success was really quite extraordinary in terms of the finances. The District is now not only back in the black, it has paid off the arrears -- the accumulating operating deficit of the period of the mid ‘90s -- and the fiscal situation for the near term is a lot better."

‘LACK OF FAITH’ IN BARRY

"Now the management situation is still a work in progress and that’s an important thing to understand about the control board. It was given extraordinary powers (by Congress) which were greater than (other financial oversight boards in other bankrupt cities), which had financial authority but not managerial responsibility ….

"The chief management officer’s office was created … in ’97, I think, and that was an outgrowth of the managerial problems and the Congress’s lack of faith in (then-mayor) Marion Barry. And so they turned over the management of the major departments of the city to the control board and created the position of the chief management officer."

TURNING BACK CONTROL

"What has happened now is that we have turned the managerial control of the city back to the mayor, which was the first piece of paper that Tony (Williams) signed after he was inaugurated. I had already signed it. We drafted it after the election, and I could sign it because I was the chairman of the control board. He couldn’t sign it until he was mayor, and the minute he took the oath of office, he signed it. And that, I believe, was the sensible thing to do and also was the transition to home rule.

"A board can’t run a city -- a part-time, volunteer board -- no matter how hard you try. That’s not a sensible way to run a city and giving the managerial control back to the mayor was, I think, a very -- not only a sensible thing to do, but I think it was the only thing to do."

OVERSIGHT OF MAYOR

"We meet with the mayor once a week. The other thing that we did at the very beginning was to change the way that the control board operated, so that the mayor and the city council chair are to all intents and purposes members of the control board. We meet together. Linda Cropp and the mayor are at the Wednesday meetings and we operate by consensus. They are not officially members because we didn’t change the statute -- it wouldn’t be worth it -- but we operate by consensus and … we meet with other cabinet officers too. They come in and talk to the board about what they’re doing, and then we’ve played a sort of consensus building role, I think."

THE CFO’S ROLE

Mayor Anthony A. Williams was the city’s independent chief financial officer before he resigned in July 1998 to run for mayor.

"They’ve had a lot of turnover (in the CFO’s office) and I think (CFO) Valerie Holt is trying very hard to recruit some people.…The mayor did bring some of the people from the CFO’s office -- because he knew them and had worked with them -- into his own office, and that leaves the CFO’s office scrambling to fill the shoes.

"And it’s part of the difficulty faced by the whole government in the District that we don’t have a very good reputation as a place to work among the sort of ‘city professional community’ and it is a community—from city auditors and budgeters and treasurers and whatever to each other. And we have got to build a reputation of a good place to be, because we haven’t had it, but I think we’re going to get it."

RELATIONSHIP WITH CONGRESS

"I wouldn’t describe it as a board-to-Congress relationship…

"And it isn’t a daily relationship. My most frequent contact with the Congress is with (D.C. Delegate) Eleanor Holmes Norton. She carries the burden of speaking for the District on the Hill, so neither the mayor nor the rest of us like to operate independently without working with Eleanor…there’s some staff interaction…"

Aside from the control board responding to congressional requests to testify before committees, Rivlin said members of Congress basically don’t work with the congressionally appointed control board.

"They don’t. I don’t mean that we don’t talk to them… I went up and did courtesy calls when I was appointed and I’ve had a couple of phone calls with (Rep. Ernest) Istook and with (Sen. George) Voinovich and I talk to (Rep.) Tom Davis occasionally, but it’s not an active interaction….

"I don’t think it’s curious at all. In fact, I’m rather pleased that the Congress is now working through the elected officials in the District, and I would expect that if … a member of Congress or a chair of one of the relevant committees wanted to know something about the District, that he or she would call the mayor, not me, unless it was specifically a control board matter…."

CRISIS IS OVER

"The crisis is over….I don’t know whether you’ve polled the citizens but I may be naïve but I get out around the community a lot and I speak to community meetings and I shop at a grocery store and I don’t pick up hostility to the control board. It may be there….nobody wants there to be a control board. I mean, I start every speech that I make by saying exactly that … but I’m not doing much speaking anymore.

"The other thing that’s happened is that I think the control board -- or at least I personally have felt that I didn’t need to be out there as much –that it was more for the elected officials to be dealing with the press and dealing with the public. And, in fact as (control board spokesman) Jim (Davidson) will remember, when we did the budget deal and worked the consensus, the elected officials went out to the press conference and I said to Jim, ‘Get me out the back door,’ and he did."

PRESIDENT ‘TWISTED MY ARM’

Rivlin related how she became a member of the control board. At the time President Bill Clinton appointed her, she was vice chairman of the Board of Governors of the Federal Reserve.

"I didn’t get him to (appoint me) — he twisted my arm. I was at the Federal Reserve and Andy Brimmer had served three years and was exhausted and the White House wanted a new chair and several people approached me and I said, ‘Are you crazy? I’m the vice chair of the Fed and I can’t possibly do that.’ But then they were trying to find somebody else and for one reason or another didn’t come up with the appropriate person, so they came back to me and the president personally called me and twisted my arm, and Chuck Ruff talked to me and Jack Lew talked to me and finally I said, ‘Well, OK.’

"It wasn’t that I didn’t want to do it, because I care deeply about the District. But I already had a job and it was taking on something on top of a fairly heavy responsibility, so I didn’t really see how that was going to work. But it didn’t work badly, I think, in the sense that my coming onto the control board coincided, or at least my becoming chair coincided, with the election of the new mayor and that made it possible to down-size the activities of the control board and to do less of the public part of it."

EXPECT TO GO OUT OF BUSINESS

Rivlin was asked what she wants people to know about the control board?

"That we’re working very hard with the mayor and the council to leave the District in good shape when we go out of business. We expect to go out of business at the end of 2001. And I think there are some very important things that have to -- or that ought to -- happen before then.

"One is, we have to keep the budget in the black; otherwise we can’t leave, so that’s very important. We have to strengthen or help the mayor and the council strengthen the managerial capacity of the District, particularly with respect to finances, to budgeting and tax collection, and oversight of expenditures, tracking of expenditures all of that kind of thing -- but not just that.

"There are other parts of the D.C. government management that need to be shored up and a good deal of progress was made under (former chief management officer) Camille Barnett…there’s a lot of work to be done on the management front.

"And then some of the other things we’ve been working very hard on that relate to the general future of the District — one is economic development. In a basic sense, I don’t believe we can solve the financial problems of the District without more tax base and that means more people. It means more residents, it means developing not just downtown but the neighborhoods, both the housing and the neighborhood services — restaurants and movie theaters and grocery stores, all of those things — and that in turn has to be coordinated with improving schools and public safety. Because we’re not going to get a lot of people moving back into the District, especially people with children, unless the schools are better and the streets are safe ,and so all of that kind of fits together. And we’ve been working very hard to work with both the government and the business community on economic development plans."

HISTORY OF MISMANAGEMENT

Rivlin was chairman of the Commission on Budget and Financial Priorities of the District of Columbia, sometimes known as the "Rivlin Commission," which produced the "Rivlin Report" about D.C. government operations in 1990.

"The city had a history of not especially good management under the Congress itself or under the pre-home rule (government). Some of the problems go back to then, particularly the pension liability, and weaknesses in the management…

"I don’t know that I have a good answer….We certainly had, at the time I first looked at the D.C. government seriously which was in 1989-90, a government which was top-heavy -- too many layers of bureaucracy in management, overstaffed for what it had to do, very high ratio of people -- government workers to population, even considering the fact that the District is both a city and a state and it had very out-of-date systems at that time -- still rotary telephones, virtually no computers…there had been very little investment in modern tools. It was true in 1990 and it was even more true in 1995.

"In 1990, we were warning that the finances might be a problem, but they weren’t yet. But by 1995, when there had been five years of deficits and really very little modernization of anything, they had fallen even further behind and that’s not an easy thing to fix. It’s getting there, but it’s not going to get there real fast."

SLOW IMPROVEMENT

"We’re not getting so much better — we are slowly improving. You didn’t hear me say the computer systems were fixed or even close to fixed….the systems are antiquated and the people are not very well trained and the District got a very late start on the Y2K problem and has been scrambling to catch up and not completely successfully. I don’t think we’re going to have a Y2K disaster, but as governments go, the District is behind the curve….

"The essence of the problem is that these systems have not been working well and are in the process of being fixed so that the government itself can have better information. That’s what this is about…That’s why you have a control board. This was a badly broken government with systems that were not functioning. They’re functioning better and it’s partly a computer problem, it’s partly getting new computer systems in place, but it’s partly training people to use them and that’s to actually enter the data in the computer and the computer has to work well enough so the data comes out again. That’s what we’re talking about. …My computer went down here this morning right here at the Brookings Institution and I was furious. This isn’t something that never happens anywhere else except the D.C. government. It’s just that with old equipment and poorly trained people, it happens more often in the DC government."

DORMANT CONTROL BOARD?

Rivlin was asked whether she thinks Congress will abolish the control board in 2001, after the District government operates four years with a balanced budget, as required by the original legislation in order to eliminate the board’s direct authority.

"It’s a good question. I think if we can show that the District government is in better shape, if we have the four consecutive balanced budgets which are specified in the law, with a clean audit opinion -- which is another question -- then I think that the Congress, baring some disaster, will let the control board go dormant. The statute doesn’t abolish it. It just says that it will be inactive….

"I never thought about (Congress abolishing the control board). I just assumed it would be sort of like the draft board -- that it wouldn’t function….If the District doesn’t have a state and if it can’t manage its own finances well, then the federal government has to do something. That’s what happened here and it could happen again.

"My hope is that it never has to happen again. That we can be the beginning of a real improvement in the District government and that it actually becomes an exemplary government — one where things work better than other places, not worse. That would be nice."

Copyright 1999, The Common Denominator