Finance

Laura Chick Is Watching

It took Laura Chick barely a month in Sacramento to start making waves. As California's new inspector general charged with overseeing how the state spends...
by | June 30, 2009
 

It took Laura Chick barely a month in Sacramento to start making waves. As California's new inspector general charged with overseeing how the state spends its federal stimulus money, she exceeded her job description and pressed for posting online all the state's internal audits. She wanted any flaws in the way state agencies handle taxpayer money--whatever their source--to be accessible to interested citizens, to say nothing of the media.

This very public move toward transparency, announced at a press conference in June with her boss, Governor Arnold Schwarzenegger, was vintage Chick. For her, being open about government's shortcomings amounts to a civic religion: She is, after all, the woman who made a career out of dispensing tough fiscal love to Los Angeles before she moved to Sacramento at the end of April. "People always ask me, 'Why can't you talk about the good things?'" she says. "But that's wasting taxpayer dollars. I wasn't hired to be a cheerleader. I was hired to put a spotlight on where we're messing up."

As the elected city controller of Los Angeles for the past eight years, Chick built a reputation as a fierce proponent of governmental effectiveness and honesty, and as an equally relentless propagandist for her point of view. Now, at the behest of Schwarzenegger, she's taking her vision and style statewide. She is charged with ensuring that the $50 billion California is to receive in federal stimulus spending--including $20 billion for health and human services, $12 billion for education and $5 billion for transportation projects--is spent appropriately. While some states have managers keeping tabs on job creation and economic recovery, California is putting an assertive politician-turned-auditor at the helm of its program.

She will have help in her oversight efforts. California is one of 16 states in which the federal Government Accountability Office will conduct stimulus-package audits. The GAO will be sending teams of inspectors to analyze how these state governments are tracking stimulus funds, what criteria they are using to determine how those funds are distributed and what types of internal controls the states have set up. The 16 states--which also include Florida, New York and Texas--were picked based on population size, geographic diversity and the amount of funds they were set to receive as part of the American Recovery and Reinvestment Act.

California clearly is taking its stimulus-package mission seriously, especially the internal controls piece, which is why Chick holds the position she does. "The governor," says Susan Kennedy, Schwarzenegger's chief of staff, "was looking for someone who is absolutely fearless in shining a light on a bureaucracy that by its very nature doesn't always pay attention to details."

That is precisely what Chick likes to do. She sees her new job as one that entails investigating, assessing and evaluating how entities that receive federal stimulus cash are handling the dollars that flow through their offices. "I'll be scouring, poking and probing to discover if there are problems," she says. She hopes "to find some egregious something or other--soon, fast, early--because I'm going to blast it out there." It is no accident that the lone aide Chick brought with her from Los Angeles was not someone from her audit staff, but Rob Wilcox, her longtime press secretary.

Most auditors in California--as elsewhere--tend to avoid public prominence, hoping that their reports will speak for themselves. "A lot of auditors," says Amanda Noble, a deputy city auditor in Atlanta who is president of the Association of Local Government Auditors, "seem afraid of publicity because they think if they engage with the media they'll be perceived as not being objective or independent. Dealing with the press seems to be political."

Chick, an adroit and ambitious politician with a profound belief in using publicity to pursue bureaucratic change, has no patience for such diffidence--or for the heel-dragging culture of government. "There are 25 things of top priority on everyone's list in government," she says. "Correcting the things exposed in an audit does not rise to the top of that list." But it does, she believes, whenever the media and the public pay attention to the flaws spotlighted in an audit.

This is a uniquely charged moment for both California and for Chick. The new inspector general has an unusual combination of political skills, interest in the fine-grained details of how public dollars get spent and belief in the cleansing benefits of laying bare instances of mismanagement, abuse and outright fraud. She will be applying them in a state whose travails are profound. In the wake of the defeat of five ballot measures in May aimed at helping close the state's $24 billion budget deficit, Schwarzenegger took a cleaver to the budget, touching off bitter debate around the state over Sacramento's core responsibilities. This has brought about a growing recognition that the state may be too broken to operate as is. Civic leaders and good-government groups are talking increasingly of the need either for a constitutional convention or at least a package of reforms that would redo the way the state goes about making budget and fiscal decisions.

Before California can get close to tackling such fundamental issues, Chick argues, it will have to engage in some confidence-building measures. In essence, the public will have to see evidence that its political leaders are capable of being trusted--starting with how they handle the stimulus funds that are about to come rushing into the state. And that is where she comes in: by finding instances where federal dollars go off the rails and helping get them back on track. "I want to be a part of restoring the public's trust and confidence in government," she says. "If all of us--the feds, the state, the counties, the cities--can handle these recovery dollars well, it'll go a long way."

Chick may, in fact, have unusual leeway to press her cause, even in a capital city that doesn't yet know her very well. "State government is in such trouble, it's such a total mess, that she might have more autonomy than an appointed person normally would," says Raphael Sonenshein, a political scientist at Cal State-Fullerton who has followed Chick's career over the years. "There is a desperate need to restore the professional reputation of California government."

A visitor to Chick's office in Sacramento could be forgiven for not knowing where to rest his eyes. Outside the window, directly across the street and dominating the view, stands California's splendid state capitol. Closer to hand, gathered beguilingly on a plate at the center of her conference table, is Chick's collection of voodoo dolls--seven of them, some with pins included.

Chick, who is 65, bought the first one herself years ago, at the French Market in New Orleans. The rest were gifts-with-an-edge during her two terms on the 15-member Los Angeles City Council. "I thought it would be great when I was on the council to have 14 dolls, but I never got to that size collection," Chick says. She professes not to practice black magic but she will tell you, "there were times after a council session when I'd go back to my office and I wanted to just jam those pins in. Of course, I'm sure there are people who in their imaginations are sticking pins in me."

That would be an understatement. While many of the roughly 170 audits the controller's office carried out under Chick's leadership aimed at small-bore issues of interest mostly inside City Hall, she also produced a series of zingers that fed days and sometimes weeks of headlines and permanently changed Los Angeles city government. There was a 2003 "pay-to-play" scandal at the airport authority that forced it to reconfigure its contracting practices and subsequent revelations that the public-relations giant Fleishman-Hillard had overbilled the city's Department of Water and Power by some $4.2 million. Last year, there was a report on the city's disjointed gang-suppression effort that led to wholesale change in how the program was managed. And there was an investigation that same year into a DNA rape test backlog at the Los Angeles Police Department so extensive that, Chick charged, prosecutors had lost the chance to pursue 217 cases because the untested kits had exceeded the statute of limitations. "If I were writing her business card," Los Angeles Times columnist Patt Morrison wrote earlier this year, "it would read, 'Kicking butt in sensible shoes since 1993.'"

Chick's political career is littered with people who got bruised in their encounters with her. In her first run for public office, she took on and defeated the incumbent city council member who had employed her as an aide. The investigation into "pay-to-play" practices at Los Angeles airports wound up forcing the resignation of the airport commission's president, at whose home Chick had held her first big fundraiser in her run for controller. The city's department heads--known as "general managers"--tried hard to stay out of her sights: "I never took Laura's audits as, 'I hate you and I'm going after you with this audit,' but I know some general managers did," says Rita Robinson, general manager of the city's transportation department.

Chick's occasional tangles with other politicians--a face-off with former City Attorney Rocky Delgadillo over the controller's right to audit programs run out of his office; a protracted battle with some members of the city council over supervision of anti-gang efforts--left hard feelings on all sides. "There was a 'Gotcha' mentality that prevailed too much out of her office," says City Councilman Tony Cardenas, her chief antagonist on the gang issue. "A lot of her audits had good things in them, but there was also a lot of flamboyancy and a lot of things I thought were more about catching headlines than actually catching wrongs and making them right." By the time she left City Hall, Chick says, "that place had become toxic for me."

Yet Chick's approach made her wildly popular among Los Angeles voters who came to feel that she was watching out for their interests in a way no other elected city official did. "She was something like a Joan of Arc standing in the way and calling attention to the greater excesses of the system," says Ron Kaye, former editor of the Los Angeles Daily News and now a blogger and civic activist. "At City Hall they hate her guts. But out in the community, she's never been more popular."

Over the years, Chick's office audited everything from loan practices at the Community Redevelopment Agency to fleet maintenance to city agencies' expensive use of bottled water. Her cover letters became legendary for their acidic commentary. The city's hiring practices, she wrote for her final audit before leaving for Sacramento, are "antiquated, convoluted, and short-sighted."

She was careful to let her auditors report what they found. "She never asked us to change a single word we wrote," says one consultant who worked for her. "Sometimes the evidence said that someone had failed; sometimes that they're not doing so well; sometimes that they're doing as well as they can but they need more. Regardless, she never flinched."

When Chick sinks her teeth into a problem and decides on a path to a solution, she is dogged in fighting bureaucratic and political obstacles. The most dramatic example was undoubtedly her analysis of the city's fragmented approach to its deeply rooted gang problem. Chick hired an out-of-town consultant to lay out a blueprint for making changes outlined in a 2006 report by noted civil rights attorney Connie Rice. The consultant's report recommended moving responsibility for anti-gang and youth development programs into the mayor's office; among many other things, this involved dismantling the "Bridges" program, which provided funding directed by individual city council members to community organizations within their own districts. Critics considered it a "trough" for politicians' pet projects. In a long, drawn-out and often bitter argument with the city council, Chick prevailed. "She was relentless," says Mayor Antonio Villaraigosa's chief of staff, Robin Kramer. "It wasn't just a one-audit note. It was a game-changer."

The game change went far beyond the gang problem. She also changed the culture of leadership in City Hall and transformed the position of controller, according to state Assemblyman Mike Feuer, who sat next to Chick when they both served on the city council. "The existence of a muscular controller has an impact on the way day-to-day business is conducted now by the bureaucracy in City Hall," Feuer says. "Cognizance that one is going to be scrutinized with care can lead to better practices."

And this has rippled out in other cities as well. In nearby Long Beach, Laura Doud, the city's elected auditor, reports it's easier now for nearby auditors to get documents. "People see the high-profile audits Laura Chick did, and the coverage," Doud says. "She established the fear of God in everybody, not just in L.A."

Not surprisingly, those who know her are hoping Chick will have something of the same impact in Sacramento. Schwarzenegger, who lives in Los Angeles and "knows her work," says Kennedy, picked her precisely because of her reputation and for her ability to focus on the resources coming to state, local and private entities in California. It's Chick's job, says Kennedy, to make sure "every single dollar is spent as effectively and appropriately as possible."

In truth, Chick faces a variety of challenges that she did not have to contend with in Los Angeles, beginning with defining her job and how it fits in with others who have statewide auditing authority. The state already has an independent auditor--Elaine Howle, who oversees a variety of regular audit functions and responds to legislative requests to look into specific issues. The state finance department also has a group of auditors, as do some of the larger state agencies. In addition, there are two Assembly committees and a group of investigators put together by the Senate leadership that play an oversight role. None seem especially interested in finding Chick on their turf. "It's going to be a real challenge, in part because the job has no real portfolio yet," says Feuer, the Los Angeles assemblyman. "There's no natural constituency here for the work."

To be sure, there are plenty of holes for Chick to explore. Most glaringly, for all the various auditors salted away around Sacramento, none really have the ability to make sure that proposals for change are followed up. Howle's office, for instance, can make recommendations but has no standing to enforce them. The legislature, which theoretically has the ability to drive accountability and improvement, hasn't lived up to that potential. "There's a perception around here that the departments just wait out [term-limited] lawmakers," says Alyson Huber, a first-term Assembly Democrat who chairs the Joint Legislative Audit Committee. "You might make a request and they say, 'We're getting to that and putting a process in place,' but they last longer than you do."

That is why both Howle and Huber hope Chick will be an audit enforcer. "She would have the power of the administration behind her to say, 'You're going to do this!' " says Howle.

Although the general outline of California's share of the federal stimulus is known, many of the crucial specifics of the massive program still are not, including which monies will flow through the state and which will go directly to local or community-based agencies. Chick says that she'll be preaching the gospel of keeping strict and accurate records and that she will be taking note of which particular community-based organizations establish good performance records and which organizations establish bad ones. As she explains it, she'll be telling agencies in the field to "pay attention to that. Look to the people you've done business with who have done well by you. Don't rush to hand out money to entities you've had trouble with."

Tracking where the money ends up is only the start of the challenge. Understanding how it gets used, whether its use comports with federal guidelines and whether it has the intended job impact is also on the state's--and, therefore, on Laura Chick's--plate. Moreover, as Huber points out, the auditing abilities of certain state agencies--let alone of local auditors and auditors who might be taking a look at the way community groups spend the money--remains to be tested. "There are real risks," she says, noting that some of the programs that will be receiving federal funds have never been audited before and that it's not clear what kind of controls they have in place to make sure that the money is not misappropriated. "We don't know if they have the capability of giving the federal government the information that they need, which is part of the strings that come with receiving federal stimulus dollars," she says. "So I cannot say with any degree of confidence that there won't be problems."

This, of course, is precisely the kind of situation that gets Chick rubbing her hands in glee. She already has started piecing together a small team--including a former prosecutor with the U.S. attorney's office who is working pro bono and an auditor on loan from the state's finance department--that will begin looking at agencies where, in her brief time in Sacramento, she has found weaknesses in internal controls or in their capacity to spend the vast amounts of federal aid that will soon start flooding the state. One Los Angeles County agency that is slated to get millions in federal stimulus funds, for instance, repeatedly raised concerns among state auditors in recent years. "How come we keep giving them money?" Chick asks. "How come we're not breathing down their neck harder? These are fabulous clues for me on where to go look on recovery dollars."

Still, the real test will come when Chick actually finds something. How will the governor's office respond? And, more important for her, how will the press respond? She has yet to establish the kind of intimate relationship with the media that she enjoyed in Los Angeles. There, her audits often pointed the way for journalistic investigations that, in turn, helped transform Los Angeles politics. "Laura's audits," says Ron Kaye, "helped open windows into city government that the Times, the Daily News and other media were able to use to tell stories that have created and strengthened what had been really a non-existent level of community organization and activism. It helped to energize people so that today we have an increasingly organized grassroots movement that's coming into being."

It is too early to say yet whether she'll be able to have the same sort of far-reaching impact in Sacramento. For starters, she needs healthy news media to be effective, and that is more of a problem today than it was even a few years ago. "She began as controller at a time when the press was much more viable in its watchdog role," Feuer says. "Life is different now in a very negative way. The absence of a really robust newspaper culture throughout the state is terrible, and contributes significantly to a lack of public confidence in government."

Chick herself says she worries about the whole issue of transparency with less and less investigative reporting going on. It's why she was so adamant in recommending to Schwarzenegger that existing audits be put online, where they will be easily accessible to anyone who wants to use them and, hopefully, written in ways that make them easy to understand.

As for roiling the waters, she's not especially worried. She does not buy the argument that airing the government's dirty laundry will hurt it. "There is a kind of culture of fear that if you tell the truth very clearly, there's going to be repercussions," she says, "that you'll just be feeding the angry people who think that all government does is screw up." To the contrary, she believes that if a government reveals its flaws and says what it will do to fix those problems, then follows up on a timeline and actually fixes them, "the public is not going to beat you up. The public is going to like it."

If Chick is right, then California may be able to take a few steps in a direction that seems implausible right now: toward greater confidence in its leaders. It might even, when all is said and done, be able to applaud them on spending their $50 billion share of stimulus cash wisely and well.

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Rob Gurwitt  |  Former Correspondent
robg@valley.net

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