DC chief financial officer brings new meaning to ‘When the going gets tough … ’
Talk about inopportune.
Here we are in the middle of tax season, the middle of budget season, and the middle of a public health emergency that has wreaked havoc on DC’s economy — and the person responsible for managing those various portfolios has decided to hit the road. The District’s chief financial officer, Jeffrey DeWitt, submitted his resignation last week; it is effective March 9.
Essentially, he will leave the $16 billion corporation that is the District government with less than 30 days’ notice. Who does that? What does that indicate about his professional ethics and standards?
“I’m stunned,” said Marie Drissel, a civic leader who has engaged in issues surrounding DC’s fiscal management, growth and development for decades.
“Seven years is a long time for a job that involves a lot of public exposure and pressure. [Still], I am surprised. But I won’t disparage him for leaving,” said one businessperson with whom I spoke.
“It is a huge job, and he did a good job in many parts of it,” said DC Auditor Kathy Patterson, adding that he “excelled at building new systems.”
Undoubtedly DeWitt deserves praise for what he has accomplished during his tenure. I was especially impressed with his refusal to play politics — unlike his predecessor Natwar Gandhi, who made tons of questionable moves to placate mayors and council members.
My criticism— consistent with what I have heard from others — isn’t about the quality of DeWitt’s work. It’s about the way he has decided to leave.
Despite media requests, including my own, for an interview, DeWitt has remained mum. His spokesperson, David Umansky, told me in an email that “Jeff will not be doing interviews through March 9.”
Wait, wait. Isn’t that his last day?
District residents didn’t learn about DeWitt’s pending departure until the evening of Feb. 17, when Mayor Muriel Bowser, DC Council Chairman Phil Mendelson and Chair Pro Tempore Kenyan McDuffie all released formal statements lauding him and his achievements. Tom Sherwood of the Washington City Paper and WAMU’s Kojo Nnamdi Show broke the news on Twitter only moments earlier.
How many District residents have Twitter accounts and check them compulsively?
“We thank [CFO] Jeffrey DeWitt for his steady leadership and prudent stewardship of the
“Jeff DeWitt is the fundamental reason for the District’s current financial health,” said Mendelson in a prepared statement, noting that the CFO had steered the city through “the economic damage of the COVID pandemic”; revenues had “grown by over 40% — almost $3 billion … and Wall Street has given the District a triple-A rating.”
“We will surely miss Jeff DeWitt, but our fiscal capacity is his legacy,” added Mendelson.
DeWitt was the city’s fourth independent CFO since the position was created after the mid-1990s financial crisis. He has accepted a post at the University of Kansas as its CFO and executive vice chancellor for finance. Sources at the John A. Wilson Building told me he was approached by a recruiting firm in December. Once selected for the KU job, he asked about delaying the start of his new assignment but was warned the job couldn’t be held until June.
“I don’t know why he’s going in the middle of a pandemic to a university,” said Drissel, adding that many appear to be on shaky ground.
KU Chancellor Douglas A. Girod hinted as much when he announced DeWitt’s appointment. Girod said the school had “already begun to make some important changes to our finance and administration structure that better reflect our current challenges and opportunities.”
Maybe KU sees DeWitt as a financial superman. For his part, DeWitt said a primary reason for hitting the road in the middle of an economic crisis is, you guessed it: family. The KU job “places me nearer to my family and my recently born granddaughter,” he wrote in his resignation letter.
In DC, the CFO is no ordinary government official. By an act of Congress, the person holding that position has sway over every fiscal decision and action in the city — from the sale of bonds to the use of income, sales and property taxes. Legislative proposals often cannot move forward without that individual’s signature indicating that “funds are sufficient.” The CFO can hold up the entire budget process by declining to certify the four-year financial plan as balanced.
A couple of years ago, DeWitt got into a battle with Mendelson over the legislature’s attempt to dip into the reserve account of Events DC, an independent agency that manages the convention center, the DC Armory, the Southeast Entertainment and Sports Arena and similar venues. They eventually reached a compromise.
More recently, some council members have expressed dissatisfaction with the CFO’s fiscal impact statements, offering that they are too restrictive. Last month, he was grilled by legislators over the fact that the city had a surplus of nearly half a billion dollars at the end of fiscal year 2020 — although DeWitt had at one point projected a possible $700 million deficit without corrective measures. Blame all of that on the uncertainty of the pandemic’s impact and the rally on Wall Street that generated more income tax revenue than predicted. Still, the dust-up contributed to the continuing devolution of the relationship.
DeWitt’s departure presents an obvious challenge to a city where key elected officials, including the mayor, council chairman and attorney general face reelection in two years and there already are signs of people positioning themselves for highly competitive races. Further, many of DC’s legislators are bona fide spendthrifts; as the budget process begins without the strong voice of a seasoned CFO, council members could see this as an opportunity to push through increased spending or engage in dangerous raids on the city’s reserve funds.
Given those concerns and economic projections that remain less than ideal, many people have urged that the mayor act quickly to begin the process of identifying a permanent replacement. I have argued, however, that haste can create a lot of problems — as it did when Valerie Holt was appointed the second independent CFO in the city’s history. While she had the support of fiscal legend Alice Rivlin, Holt should never have been chosen for the post. She was a disaster. I consistently argued for her termination. It wasn’t until she was more than 60 days late delivering the city’s annual financial audit that she was made to resign.
Finding a qualified CFO in the mold of DeWitt will require a national search. Bowser should appoint former DC Mayor Anthony A. Williams, the city’s first independent CFO, and Barbara Lang, the former president and CEO of the DC Chamber of Commerce, to lead that effort. Lang, a longtime business leader, has a strong fiscal background and a deep understanding of how the District government operates; Williams, who now serves as CEO and executive director of the Federal City Council, is a natural for this task.
“Now more than ever, Washington, D.C. needs a strong and experienced CFO, one that understands the unique nature of the District’s economy and will help guide the District from recession to recovery,” McDuffie said in a prepared statement released last week. “I look forward to participating in the process to identify the next person to fill this critical role.”
“We need somebody who is very much like DeWitt,” said Drissel, hinting that the city is not out of trouble yet, despite the sizable surplus it saw in 2020. “Can you imagine all the empty buildings whose owners are going to be appealing their property tax assessments?”
Neil Albert has been suggested by several people as a potential candidate for the job. Albert is the current president of the Downtown DC Business Improvement District and a former deputy mayor for planning and economic development under Mayor Adrian M. Fenty. Albert has a deep background in financial management. “Neil’s an interesting and tremendous executive,” said another business leader.
The federal law that created the Office of the Chief Financial Officer requires that when there is a vacancy, the DC treasurer or any of the deputies in the CFO’s office must be selected in an interim capacity. The top deputy CFO is Angell Jacobs, who, in my opinion, should be passed over for either the temporary or permanent gig, given her past history under Gandhi.
The one good thing about DeWitt’s departure may be that officials have an opportunity to evaluate the effectiveness of the independence and structure of the Office of the Chief Financial Officer (OCFO). Should there be some adjustments, perhaps including the length of time someone can serve as a deputy CFO in the same control area?
In 2018, Patterson conducted an audit of the Housing Production Trust Fund and made specific and global recommendations concerning financial controls. “The OCFO should conduct a written assessment on how it will reassert its independence from the agencies it serves by instituting new safeguards, such as a prescribed rotation of key OCFO employees between agencies and/or clusters to reduce entrenchment and bias,” according to the audit report.
During an interview with me earlier this week, Patterson compared the change to the law that limits to five years the contract for the audit firm that conducts the city’s annual financial assessment. She said she had found that aggressive oversight frequently suffers when the various financial officers, because of the longevity of their specific assignments, get too close to the agencies.
“I do think it’s worth having a conversation,” she added.
Patterson’s right. One thing is certain, however: Ensuring the city doesn’t slide off the fiscal cliff as it comes out of this coronavirus pandemic requires a steady, seasoned financial officer with more — not less — control and authority.
This article was initially published on TheDCLine.org, where my column appears every Thursday.