Finance

The Politics of Being a City CFO

It would be naive to say that politics is not part of Chief Financial Officers' job. But for them, the challenge is to prove that their allegiance is to the balance sheets.
by | February 5, 2014
Dr. Natwar Gandhi, chief finanial Officer of the District of Columbia, on Capitol Hill in Washington, Thursday, May 12, 2011, prior to testifying before the House Health Care, DC, Census, and the National Archives subcommittee hearing on the city's budget. Associated Press/Harry Hamburg
 

It’s easy to say numbers don’t lie. But when it comes to politics, numbers are easily (and frequently) manipulated into telling some very tall tales useful for the person delivering the message.

So even though most city chief financial officers are not elected, it would be naive to say that politics is not part of the job. But for them, the challenge is to prove that the numbers on their balance sheets are accurate – that they are doing their job best when their allegiance is to financial stability.

“I’m not here to set policy,” said District of Columbia CFO Jeff DeWitt. “I’m here to make sure that when you set policy, it’s done in a way that you’re fully informed and with the accurate information. It can’t look like [I'm] favoring.”

DeWitt’s comments came during a discussion on the changing role of the CFO at Governing’s Outlook in the States and Localities conference this week in Washington, D.C. His colleagues agreed – the politics CFOs have to play is in staying out of political games.

“For the most part you can get a lot accomplished with a good attitude,” said Lois Scott, Chicago’s CFO.

Still, that doesn’t mean that CFOs will always stay above the fray. Part of the changing role of CFOs is that their roles in city government have become more prominent since the Great Recession as cities have had to swallow budget cuts and tax hikes.

Jefferson County, Ala., has recently had a complicated relationship with its CFOs. In 2007, then-finance director (the predecessor position to the CFO) Steve Saylor resigned amid a federal corruption scandal in which Saylor ultimately testified as a witness for the prosecution. The broken trust stung. Jeff Hager took over as CFO in 2010, only to resign 18 months later after the county declared bankruptcy without consulting him.

In D.C. the politics of budgets earned DeWitt’s predecessor, Natwar Gandhi, some unwanted attention during the summer of 2012 when he was up for reappointment. Local politicians began publically questioning Gandhi’s projections when D.C. appeared headed toward another budget surplus during a year when nine months earlier, council had imposed an income tax increase based on more pessimistic financial projections.

Today, the city’s fund balance is at an all-time high of $1.7 billion, roughly 14 percent of the total budget and 27 percent of the local funds portion of the budget. The city’s rainy day fund hit a low of less than $1 billion in the years following the recession. Reliability and accurate information earns trust, said DeWitt, who came to D.C. after more than four years as Phoenix’s CFO.

“If they trust you and they know you’re going to be honest, and not set policy and not spin it,” he said, “that’s how you’re successful.”

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