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On September 21, 2000, Ed Harrington was reappointed to a second ten-year term as city controller. This makes him perhaps the highest placed local official whose job is to promote good government. ���ϴ�����Deputy Director Gabriel Metcalf interviewed Harrington shortly after his reappointment to find out what’s working and what isn’t, in the quest to make San Francisco’s government as good as it can be.

Metcalf: What do you see as the most important parts of your job?

HARRINGTON: Well, actually it’s interesting because the controller’s job gives the controller access or entrance into a lot of areas in the city. A very strict interpretation of the controller’s job could be just financial. That part of the job is very technical—to make sure that our expenditures don’t exceed our revenues. The Mayor and the Board approve the budget and we try to make sure that the departments stay within their budgets.

The larger view of the job grows out of the audit function. The charter gives the controller the authority to audit departments and programs of the city for effectiveness and efficiency, not just for correct accounting. Also, I have a new seven-person group within my department called the City Projects Team, which is kind of a fix-it group.

So this is essentially a sort of management consultant SWAT team?

It is, but we didn’t want to call it “Management Consulting,” because it’s not consultants coming in and telling you what to do. Our point of view is, “Let’s come in and do it for you.”

Is this the internal good government working team?

HARRINGTON: Yes. And it’s also a way to bring in people who can be the next department deputies or similar positions. It’s building some people strength that can go out into the rest of the city. Departments can hire these folks after a year or two, and they’ll know how the city operates, they’ll know how to get some things done. We’re hiring a mix of people with some government experience and people that are fresh out of college with degrees in public policy. What are the kinds of projects you see this City Projects Team taking on in the next couple years?

HARRINGTON: We’re already doing an analysis right now of the needs for office space around the civic center. We’re working on Adult Probation. We’ve brought in people to help them evaluate proposals for new management systems.

We did an audit last year of the Public Administrator/Guardian, and out of that came a recommendation to create a new department in the city, taking the old Commission on Aging, the Mental Health Conservatorship Group from Public Health, and the Public Administrator/Guardian positions and putting them all in one department and calling it the Department of Aging and Adult Services. We have a deadline of January 15, 2001 to report back to the board on whether we should add in Adult Protective and In-home Support Services from our Department of Human Services. Then, if you are an aging person who is vulnerable or if you are a caregiver, you can go to one place and you can get access to food, and maybe In-home Support Services. You can determine if a person needs mental health care, whether they need a guardian who can pay their mortgage, and if they get to keep their home instead of ending up in a hospital.

Next, we’re looking at our Health Service System. It has a variety of problems, and we’re sitting down and saying, “Okay, again, you need new systems, can we help you with that?”

We’re looking at 911 right now to look at the call-taking workloads for police and fire dispatchers. We’re trying to figure out whether there needs to be some scheduling changes at 911, and what kind of reports you need to be able to let people know how they’re performing. This Special Projects group could be a whole lot of fun, and it will attract really good people to the city.

In addition, the Mayor really has allowed me to be part of the general management of the city. As part of the general management, I have special projects all the time that have nothing to do with the finances, but they’re part of trying to make the city run well. For example, right now I’m in charge of the Elections Council, so I am working many hours making the new election system work. And recently, we brought the new 911 dispatch system on line for police. Four years ago, the Mayor asked me to play a role in that project. I’ve been having monthly or weekly meetings for the last four years on that project. So on D-Day, I got up at 2:00 am to get there for them to switch over at 6:00 that morning, thinking, “I’m too old for this.”

What were you doing before you were the controller?

HARRINGTON: I was the assistant general manager of finance for the Public Utilities Commission, and that was back in the days when Muni was still a part of the PUC, so I helped oversee Muni, Water and Hetch-Hetchy Power. I was at the PUC from ’84 to ’91, and I was the assistant general manager for the last several of those years. Before that I was with KPMG, in charge of the audit of the city. That’s how I first started working with the city.

You have a longer term than anybody else in the city. How important is that for the job of controller?

HARRINGTON: The only other fixed term in the city is five years for the City Administrator. Having a fixed term appointment is much more important than I would have thought.

The history is that in the 1920s there was clear corruption in the city. At one point, a good chunk of the City Council was in jail or under a cloud, and so in the 1932 Charter they said, “We need to have a strong independent fiscal presence to keep us out of trouble.” The term was originally for life. In the early ’80s they changed it to ten years, and ten years is certainly sufficient. Your view of the world and how to get things done can take in a wider horizon than termlimited elected folks.

The other part is that it really is important is to be able to say to the Mayor or other elected or appointed officials, “You can’t do that,” and over the years I’ve had to say that a number of times. I’m very clear when this comes up that I’m not an elected official. I’m not trying to set policy, so if somebody says they want to do something in a certain way, I’m able to say, “You know, that’s just not the way you can do it. If you’d like, I’d be happy to work on a legal and financially appropriate way to do it.” It’s hard to say that to people who are strong leaders. But if the authority is used right, it doesn’t have to be used very often.

During the early ’90s, the long-term revenue and expense projections showed that the city was going to spend more than it was going to take in, so you put the city payroll on a diet. What do the long-term financial projections for the city look like now?

HARRINGTON: In general it looks good. If you look at locally-generated taxes, we’re doing very well. But there are cycles, and I think most economists now are saying this is unusually strong growth and you should not expect to have it forever.

There are certain dark spots within the local economy, the single biggest of which is the business tax litigation where we’re being sued by companies saying our business tax is unconstitutional. [Prop. I, which was rejected by the voters in November 2000, would have amended the city’s business tax to address this legal challenge.] The other dark spot is what I call our funding partners, particularly the federal government. It is not meeting its share of the obligation for things like public health in the way that it used to. If we continue to have public health needs, which I assume we will, and if they keep balancing the federal budget by cutting back on federal spending for health, that’s a continuing drain.

What do we do about that problem in terms of public health?

HARRINGTON: Well, I guess the good news is that many people in the federal government are becoming aware that they’ve made some wrong decisions and those have to be fixed, because hospitals all over the country are going bankrupt. So the first hope is that they wake up and say, “Gee, if we have to balance the federal budget, maybe we can balance it in a different way than cutting out public health.”

Cut the military and not public health?

HARRINGTON: Yes. Or, you know, maybe we don’t do as big a tax cut. If you’ve cut public health on the national level, but then local government has to make up the same money from somewhere else, what did that accomplish overall? If you look at the last five years, the Department of Public Health total budget has been increased by about a hundred million dollars, and all of that is from the general fund. So in spite of all those additional needs, the federal government has not kicked in anything. We can’t keep going that way.

People in the city have very high expectations. They don’t mind voting for tax increases, so we’re very lucky there. But certainly the expectation for the level of service Muni should provide, for example, is different from any other city in the western United States. There are a lot of expectations out there that cost money. We want to take care of people. Some places in the United States have said, “Oh, so Public Health has no money? Well, get rid of the Public Health hospital.” That’s just not the way we think here.

If and when the economy takes a downturn and we have less money coming into the city, what is the right process for coping with a smaller budget?

HARRINGTON: Well, the first thing you try to do is to prepare for it by doing one-time things with one-time money and not letting temporary windfalls ratchet up the overall budget. And Mayor Brown, actually, has tried to do that. We’ve also put aside a $15 million reserve, and we have the highest reserves every year that we’ve had in years, so the general contingency reserves are $30 million this year. The idea is that if there is a small dip in revenue we are more able to cope with it without impacting real city services.

But if you are looking at a more prolonged recession, after you’ve used up all your reserves and things still aren’t going very well, you do have to make some hard choices. We should look around and decide what it is that we do that’s the most critical and the most important and the level at which we do it.

One of the problems we will run into is that there are a variety of different charter, state and federal requirements that have taken away our ability to cope with budget cuts. For instance, we have put in the charter that we must have 1,971 fulltime police officers. When the state electorate passed Prop. 172 a few years back, they created what’s called a maintenance of effort requirement, so if you take that money for public safety, and that includes fire in our case, you promise in the future to spend as least as much as you did then, and then some. So to keep your flow of money coming in, you promise not to cut back. This is the reason why we cut Rec. and Park in the early ’90s—this was one of the few areas of public service that retained any budget flexibility. Today we have requirements for the library and we have requirements for the Children’s Fund and Muni and park funding. So the ability to set priorities in the face of budget cuts has really been hemmed in.

On the bright side, most of these new set-asides are percentages instead of fixed amounts, so they should automatically contract with the overall budget. But if you’re trying to keep Police whole, if you’re trying to keep Public Health whole, and all of these other departments you can’t touch, it’s going to be very hard. That’s why putting aside reserves is the first, second and third choice right now.

We haven’t allocated more than a hundred percent of the budget to set aside, but we must be getting close.

When people become members of the Board of Supervisors, they think they have all this power. But their options are actually very constrained. Besides the set-asides, a good chunk of the city’s budget is enterprise funds like the airport and the Water Department, where they are self-maintaining and they keep their own money. Another chunk of the budget is federal and state, where if you’re not providing a certain service in Public Health or in Social Services, you don’t get the money. So it’s very limited and we have to be willing to rethink how we do business.

For example, the San Jose Fire Department cover 208 square miles with 31 fire stations, while we have 45 stations for 46 square miles. Why do we have 45 fire stations? What are firemen doing in the fire stations in between fires? Why aren’t they doing fire prevention? Why do we have this little tiny budget for fire prevention, and this huge budget for fire suppression?

Looking forward now to both your next ten-year term and the next new crop of supervisors, where in the city do you see real opportunities for good government reforms?

HARRINGTON: The thing that I’ve been the most interested in for several years is what’s called performance-based government, and we’ve been building in performance measures. We started doing a citizen survey four or five years ago, asking citizens if the different city services were being performed well or not. We started doing pay-for-performance with the city managers, so the 600 top city managers now have a bonus program based on performance. And now some of those people are basing their performance goals on our citizen survey. Every year, trying to do a better job at getting real performance measures in the budget.

The hope is that if the time comes when we need to cut back, we’ll be able to have discussions where we say, “Okay, this is what it costs to provide this level of service.” We should not go back to the old days where we said, “Oh, just keep doing it, but we’re going to cut your budget,” and then the service never gets done. When you cut departments without being explicit about it, there’s no real decision made to change the level of service, it just happens “mysteriously” and makes everybody unhappy. Performancebased budgeting allows us to say, “If you want an ambulance response time of two minutes, this is the cost. If you want one that’s three minutes, this is the cost.”

So you essentially know how much and what quality of public service you are buying.

HARRINGTON: Right. The other piece is trying to do things better with a given amount of money, and that’s where the auditing function comes in and our new City Projects Team. We did an audit of Adult Probation and they don’t know how many people are on probation. They need new systems and somebody to manage the place from a financial point of view. Now my project team is going in and helping them do those things. We’re helping them select a new system to really track and manage the people that are on probation.

A lot of departments are just swamped trying to do today’s work and put out yesterday’s fires. The idea of doing long-term planning is hard even to fathom because they’re so overwhelmed, and so part of our job is going in and saying, “Okay, here’s a bright person for two months to work on this project and give you a deliverable.”

What do you think about the “re-inventing government” idea of guaranteeing all city departments a fixed percent of the city budget—telling departments that any internal savings they generate, they can use to improve public services instead of “losing” it to the general fund?

HARRINGTON: It’s a good idea that we have not yet been able to do in San Francisco. We did start a program several years ago that says you do get to keep a certain percentage of your budget in an incentive reserve and you can ask for it later. Last year we told people, “If you have any savings in Workers’ Comp, you get to keep it.”

The problem is that it’s very hard, particularly at the Board level, to guarantee anything for departments. The Board receives the Mayor’s budget and their budget analyst Harvey Rose reviews it, and he cuts the budget based on last year’s spending—so if you didn’t spend the money last year, you get it cut. That’s the only thing that gives the Board their $10 to $20 million for proposed changes to the budget. They used to not even have the ability to do “add backs” to the budget, but now they do, and it’s really the only source for these Board spending priorities.

I have talked about that with every Finance Committee Chair for the last ten years. How do you change the mindset, so you can make a long-term promise to department heads to get rid of this crazy incentive for each department head to spend as much as possible? But so far, no one’s been willing to do it.

What would need to change structurally to fix this problem?

HARRINGTON: I would love to have the Board have a real substantive discussion about what it is that departments actually do. For example, what does Rec. and Park do with the money we give it? Not how can we cut $600,000, because they didn’t spend it last year. Do we think the allocation between what they spent on Golden Gate Park and neighborhood parks is the correct allocation? How important is it? How much money is going into Laguna Honda versus into General Hospital and mental health and substance abuse?

That’s a different discussion than details, like “Are we going to keep the pharmacy open or not?” We discussed the pharmacy for months, and there’s very little discussion about how many wards, and how many beds, and how big a hospital do we want to have here? We never have those big-picture discussions about whether or not the departments are doing the most important things.

For instance, why are we sending out fire trucks to every emergency call? Why is it that we have so many more emergency calls now that we’re responding to? Because we don’t screen anything. Every call that comes in, the ambulances go out, the fire trucks go out. For another instance, perhaps we should revisit the 1994 decision to have 1,971 police officers. At the time, I said, “If I had $20 million and I asked people how I could spend it to make them feel safer, I can’t imagine that the single biggest way they would pick is adding cops.”

That $20 million is going to give you a couple of cops more per district per day, and if you put that much money into after-school programs for kids and things that give teenagers something to do, if you put it into mental health services so that people who are crazy had someplace to go other than the sidewalk, I’d feel safer.

We have to change the discussion by talking about what are the performance goals of the city, what are the things that are important, what are the outcomes we expect from government? If the Board knew it had money, not for cops, but for making the public feel safe, they could engage in a very substantive discussion about how San Francisco should provide public safety. That same discussion could be going on for everything the city does.

Ed, if there is one last thing you would want to say, what is it?

HARRINGTON: I think the city is a wonderful place to live and work. We have great potential for dealing with the issues I’ve discussed in making a difference at a real human level. Even though I see a long way to go, my hope for the future is sustained by seeing the small steps we take each day in providing better service.