Can an Honest Man with Honest Numbers Solve the City's Budget Crisis?
Controller Ben Rosenfield is the earnest numbers guy working behind the scenes on San Francisco's pressing financial problems
Rosenfield, the city’s earnest young controller, holds the possibly impossible job of keeping the city solvent in the face of an estimated $380 million budget deficit and a bitter political battle over ballooning employee costs. But with his almost messianic belief that honest numbers can pave the way for a “right” answer to the city’s budget crisis, he may yet emerge as Superman.
Rosenfield, 37, is a public servant in the old sense of the term, and sui generis at San Francisco’s rough-and-tumble City Hall. Everyone trusts him, and he is regarded as incapable of lying or proffering a number tweaked for political purposes.
With such a yawning gap between the city’s financial obligations and its revenue, there is only so much that any executive-branch bureaucrat, however capable and politically skilled, can do. Rosenfield is not a policy maker and cannot unilaterally decree cuts or raise revenue. His role is to work behind the scenes, as a financial consigliere, using his deep knowledge of how the city’s finances actually work to prod the mayor and supervisors in directions that will produce significant results.
Rosenfield is “a true believer that government needs to do good,” said Edward M. Harrington, his former boss and predecessor as controller, who is now head of the San Francisco Public Utilities Commission.
“Not that people in government lie, but he can actually, physically, not have that happen,” Harrington said.
When his fellow city executives put forth financial untruths, Harrington said, “Ben gets physically uncomfortable. He fidgets; his face turns red. He has a physical reaction when someone is not telling the truth. It just doesn’t sit with him.”
That is not to say that Rosenfield is naïve. The numbers may not “lie,” but he is more aware than anyone else how malleable they can be.
Take the current debate raging around pension reform. With a union-city working group toiling on a consensus proposal, and Jeff Adachi, the public defender, readying another contentious ballot initiative, Rosenfield is striving to produce numbers for all parties that will provide rare and bracing clarity.
“Better information, numbers without bias to all participants, leads to better outcomes,” he said in an interview.
Rosenfield’s journey to his present post was serendipitous. Raised in Chicago, he cut his teeth in city politics in notoriously corrupt Providence, R.I., while he was still an undergraduate at Brown. As a 23-year-old, he wrote a letter to San Francisco’s mayor at the time, Willie L. Brown Jr., asking for an internship. Four years later, he was the mayor’s budget director. In 2008, he was appointed to a 10-year term as controller.
In his quiet, nonconfrontational way, Rosenfield insists almost as a point of personal honor that San Francisco is in no danger of bankruptcy. When asked about Mayor Edwin Lee’s recent comment that rising employee costs, if unchecked, could tilt the city into insolvency, Rosenfield shook his head in dismay.
“There is no way that San Francisco goes bankrupt,” he said. “As costs increase, services are reduced. The debt service will be paid.”
That services for residents could, in theory, be reduced to zero to cover debt and retiree costs is not Rosenfield’s chief worry. His job is to keep San Francisco Inc. solvent and its debt-rating high.
It would seem to be a thankless grind. But Rosenfield views his job with Clark Kent-like equanimity: “I find the current situation intellectually interesting.”
But he is human, after all, and at the end of the day he goes home to his wife and two young daughters at their house in the city. So he is not immune to the worries that dog everyone with an economic stake in the city’s economic viability. Because right now, things do look grim.
“As a San Franciscan,” he acknowledges, “it is alarming.”
For Clark Kent, that’s pretty bleak stuff.
This article also appears in the Bay Area edition of The New York Times.
Jim Corrigan
“There is no way that San Francisco goes bankrupt,” he said. “As costs increase, services are reduced. The debt service will be paid.”
If this sentence was all I knew about Mr. Rosenfield, I could interpret it that to Mr. Rosenfield, the status quo in high salaries, bountiful pensions and superior to the common man, city-worker benefits may continue unfettered in San Francisco, as long as Government continues to reduce services to taxpayers.
I believe that is just what we are doing, have been doing and the very reason we are in such a position.
Honesty is good and admirable but perhaps not enough to solve our problem.
The Commish
Last week, Rosenfield and the head of the pension fund, Gil Amelio, gave presentations to the Budget & Finance Committee. The presentations were maddening to watch. They both wanted to stress the point that San Francisco's pension fund, while facing trouble, is still much better than most. (So the point is that while we're screwed, others are even more screwed?) They then focused on rosy projections, the impact of actuarial "smoothing", etc. As usual, Amelio touted how great the pension fund's investments performed in the last year while not wanting to talk much about the approximately $4 billion loss the fund took in one year a few years ago. And while talking about how great returns could be in the next few years, the point was made that they could even be better going forward. (Guess what, they could also be worse. That point wasn't made.)
The presentations seemed to starkly conflict with the fact that the City has to contribute hundreds of millions of dollars to the pension fund this year; it has to contribute even more next year; and even more the year after that. If the outlook is so rosy, why is that the state of affairs? Meanwhile, the Supervisors want to float a huge bond measure to pay for street repair, the most basic of city services that should be--and should have been--paid for on a pay as you go basis. The fiscal priorities are just so out of whack in this town.
h. brown
Rosenfield's a gem,
Great that you caught his blushes. I was shocked when they named him Controller. Peskin was pissed that Ben was so popular across the spectrum: "Now we can all sing 'Kumbaya'." (said in sarcastic tone).
The City has some very able bean counters but Ben Rosenfield is the only one who is structurally (potentially) independent. It makes for interesting viewing. Can you believe that he has 45 auditors in just that section of his office?
You didn't mention 'City Economist' Ted Egan. He's been the happiest surprise for me. Is he a Phd? Must be. He really does apply traditional Ivory Tower models to determine the effects of legislation. I'm loving the 'Ben and Ted Show'.
Go Giants!
h.
Seej Cane
VERY disappointing piece.
The Controller's office has been the real villian in this whole financial mess- consistently underestimating EVERY single employee benefit increase on the SF ballot and NEVER overestimating anything.
Ed Harrington - you mean they guy who said police and fire benefits "should not cost anything for ten years." They probably cost $500 million.
Rosenfield wrote on the ballot that Prop D 2010 pension reform would generate "$250 to $400 million" in pension savings when in fact, it doesn't save $10 million a year until 2023. Rosenfield also vastly understated the cost to taxpayers of the police DROP program. The list goes on - these people are border-line crooks, robbing taxpayers of their dollars and they have sent the City spiraling to bankruptcy.
As noted above, Rosenfield's "don't worry, be happy" reporting to the Board on the state of the pension system was a joke. We don't even have money to repair our streets but according to this clown that's okay because we can avoid bankruptcy!!
What about the basic conflict of interest- all of these employees in the Controller's office directly benefit from all these perks and they are being asked to evaluate their cost. Funny how they always seem to underestimate costs. It is the Calpers SB 400 disaster all over again.
Clark Kent??! Bernie Madoff would have been a closer comparison. Please drill down and do better reporting on the Controller's office.
h. brown
Seej,
You're wrong. The guy is honest. Prop D would have had the cops and firefighters paying for the increase in their plans if the Mayor and City Attorney had enforced it. That's certainly not Rosenfield's fault.
The DROP program? He and Harvey Rose's numbers have been right on the nose with the only question of how many officers would stay on (so many have stayed that the department became overstaffed for the first time in this cowboy's stay here).
He's right that the City won't default too. SF simply has too many options.
I'm getting just a hint of jealousy here. You a little jealous of the boy?
Bottom line is that all you can hope for from a bean counter is that they count the beans accurately. He does that. If various department's give him phony data that's not his fault.
You know what the biggest difference is in him and Harrington? Other than Ed being a genuine crook, I mean. It's that Harrington always lied to you. Always. Without exception. Guy'd give you the wrong directions to the bathroom.
Rosenfield's a numbers guy and numbers have no emotion. We add that. Given the data he has, he'll always give you an honest read on the outcome he see's. Unpopular or no.
Lenin that he read all of the capitalist press despite his belief that they were all lies. He noted: "I try to deduce part of the truth by comparing the lies.".
Go Giants!
h.
Seej Cane
H-
We will agree to disagree.
Btw- I didn't say Prop H 2002 (I think you inadvertently said "Prop D") was Rosenfield's problem. I said Harrington misstated the cost. That is a fact.
The Controller's office has been historically wrong/misleading in stating the cost of employee benefit changes...Read the "Let it Bleed " piece in the SF Weekly. This is an important topic that the media has ignored.
Of course, he's right that the City won't default if it can just stop repairing streets, close the parks, cut the public safety etc. but that's not the point.
-The Prop D 2010 savings estimate from the Controller's office was highly misleading. This was confirmed in the Civil Grand Jury report.
-We'll disagree on the Drop Program cost estimate. It was wrong and I have no doubt an INDEPENDENT audit would demonstrate this.
-Prop B 2008 was ostensibly to reform retiree health costs when unfunded retiree health costs have actually increased $300 million a year since it passed. A provision was also inserted such that retirees could be paid $200 million bonuses after the fund lost $4 billion in a previous year. This type of provision could cost taxpayers hundreds of millions every other year. Where was the Controller's heads up on this?
- The Controller's office has been doing five year pension cost estimates based on a flat City payroll for five years even when employee contracts say otherwise as does obvious City history. This is a fact. The intent is to understate the costs so as to reduce attention to the problem.
- Rosenfield testifying to the Board about how the pension situation will improve/get better when he has no idea whether it will get better. It depends on unknowable pension investment returns.
- How about the cost estimate of flipping the Health Services Board to the control of City employees/retirees? How many hundreds of millions in employee benefit debt did that simple manuever dump on taxpayers - where was the Controller heads up on this...?
I could go on...Yes, my post was over the top but I lost it when the Controller's office was painted as some kind of paragon of integrity...gimme a break. If you think we're getting honest work from this department - great. I do not.
Hank E. Panky
Can an honest man solve the problem? Yes! But, here's the question, does the honest man have the testicular fortitude to do what is needed in order to balance the budget? All that is needed is for the rich and the corporations to pay their fair share of taxes. Something tells me though that he ain't gonna be going there. It's always easier and 'more honest' to take from the little guy.
Gordon
I would not trust anything from the City's Controllers Office, and Rosenfield's so called honesty, is really a matter of technicalities, much of what he states is "qualified" for very specific situations, most of them not realistic, he is the perfect stooge for the politicians to continue to exploit the City's budget, while reducing services every year.
For example, fixing potholes, has to be one of the cheapest services to provide, it doesn't take any one with a engineering degree, that's for sure, but why are the roads in such bad shape? Because the politicians decided that letting the city's roads rot away would be the perfect tool for getting more tax increases, it's their way of strong-arming the voters. Don't fix the streets, close the parks, make the voters suffer, then they ask for more taxes, but we know where all that new tax revenue would go, don't we? It wouldn't be for potholes...
voltairesmistress
I think I have to join the chorus of skeptical dissenters here. I recall Rosenfeld withholding dire budget projections until AFTER the most recent election (Nov. 2010). Miraculously, a week or two later, Rosenfeld announced some startling figures. Those projections included ballooning future pension costs.
Possession of such facts might have influenced voters contemplating Prop B, the pension and benefits reform measure. Without them, voters simply were not convinced that there was a pension problem that the City's governors were not already addressing.
To me, it seems Rosenfeld cooperated with Mayor Newsom and others at City Hall in obfuscating the pension crisis and keeping its resolution away from direct voter initiative action.
h. brown
You're probably right,
I admit that I haven't looked into Rosenfield's individual reports as closely as you have. I do recall him hiding the pension figures until after the Prop B election. He's doing a pretty good job of not returning costs of the 'Hellman Group' plan too. Maybe he's bought and paid for as y'all indicate. It would be something of a surprise but not a shock. I'll watch with a more critical eye.
Brandon Belt for 1st base!
h.
Seej Cane
To VM, H and others who may be interested:
Please watch the first two items before the Budget Committee:
http://sanfrancisco.granicus.com/MediaPlayer.php?view_id=7&clip_id=11848
This is the core of the City's financial problems, benefits and employee contracts. The deception is rampant:
- Rosenfield literally said the City's pension fund return estimate of 7.75% is "comparatively conservative" when everyone from academics, to accountants to Bill Gates has called it Enron accounting.
-The worst case scenarios Rosenfield shows the Supes on the pension fund's future performance is 4 to 5% returns, see- the stock market can't go down.
- See Martin Gran deceptively put up an apples to oranges slide stating that Fire is paid 18% over market when they are paid 35% over market.
- See Martin Gran admit that of the $235 million in labor concessions that Gran hailed as "historic" (and we heard about ad nauseum during the Prop B campaign) are actually all gone with the exception of $3 million in increased dental payemnts.
- See Martin Gran say the City will ask current employees to pay 2% of wages to "pay down" unfunded retiree health care debt when such a contribution does not pay down the debt at all - it would still grow.
I could go on...The scary part is the City's Human Resources Department, which negotiates all MOUs, is an advocate for City employees not the taxpayer...
voltairesmistress
Thanks Seej Cane. I'll look at it. In this case, it seems the more you know, the more outrageous the situation is.
I hope there is a more informative pension/benefits reform campaign next fall, one that hammers home these points.
The problem is not going to go away, even as the stock market improves. That 7.75% expected return on investment is definitely not something many European governments count on. I don't think we should either.
In any case, I think the case for govt pension and benefits reform (separated from short-term financial panic) will convince voters to reform the system. Demonizing city or other govt employees is beside the point and a trap, no matter who (right or left) suggests that tactic.