Jack Evans, Councilmember Chair, Committee on Finance and Revenue The Council of the District of Columbia 1350 Pennsylvania Ave, N.W. Suite 106 Washington, D.C. 20004 October 19,2013 Dear Chairman Evans, Thank you for the opportunity to be considered as the Chief Financial Officer of the District of Columbia through the confirmation process. As requested, I have attached the questions and my responses in advance of the public hearing. I look forward to the opportunity to discuss my qualifications and experience before the Committee on Finance and Revenue. Thank you again for the honor and privilege to be considered for this important position. Questions and Responses to Committee on Finance and Revenue OCFO Confirmation Hearing October 23,2013 Jeffrey S. DeWitt 1. Please list any professional or occupational licenses you hold. None 2. Please list any professional organizations of which you are currently a member. Member Government Financial Officers Association (GFOA) Member American Water Works Association (AWWA) 3. What is your current home address? If not in the District, what are your plans to establish residency in the District? 3422 W. Zuni Brave Trail, Phoenix, AZ 85086 I have spent considerable time researching and touring potential apartments and rental properties across the District. If confirmed, my plans are to move into the District and establish residency a few weeks prior to beginning employment. 4. Do you h,ave any outstanding liability for taxes, fees, or other payment to the District, federal or other state or local governments, either contested or uncontested? If so, please provide documentation of attempts to pay the amount owed or to resolve the disputed claim. None 5. Please list any and all jurisdictions in which you currently pay income and property taxes. State of Arizona Maricopa County Phoenix, Arizona 6. Please list any and all contributions you have made to political campaigns within the previous five years. None 7. If confirmed to the position of the Chief Financial Officer, how would you fulfill your duties to the District if these obligations conflict with policy direction taken by the Executive branch? Although the Chief Financial Officer (CFO) in the District of Columbia is established as an independent office, efforts should always be taken to work cooperatively with the elected officials, whether it is the Mayor or the Council of the District of Columbia. When a policy of the Executive branch conflicts with the CFO's duties, a respectful and candid dialog should occur to understand the goals and objectives of the policy direction. Potential solutions that do not conflict with the CFO's duties should be developed and recommended as an alternative, if possible. As the CFO for the City of Phoenix, on numerous occasions I would point out issues and concerns about policies or plans of the elected officials that were not fmancially viable. In all cases I worked to fmd alternative solutions. When a policy direction is ultimately found to negatively impact the financial health and credit of the District, I would be obligated and willing to hold a firm position. Many of the governmental entities that are prominent in the recent media did not get into their negative financial position overnight. This is why strong financial leadership is critical to identify issues and avoid policies that put an entity at financial risk. I have performed that role in the City of Phoenix and would do so for the District. 8. If confirmed, what is your plan to implement budget autonomy? One of the most important ways the CFO can assist with budget autonomy is to continue to ensure that balanced budgets, strong reserves and strong credit ratings continue. The significant progress made over the last several years places the District in a strong position that must be maintained and would be a priority of my tenure. Recent success in securing an exemption from an additional federal shutdown provides excellent opportunities for long-term autonomy. My plans would be to work with the Mayor, Council of the District of Columbia and the business community to continue to inform members of Congress about the facts of District finances. Other options such as looking at how reserves can be strategically used as was the case in the recent shutdown would be explored. A primary objective, discussed under question] I below, is the development of a five year strategic plan for the OCFO that would include efforts related to this issue. 9. Do you or any member of your immediate family have any interest, financial or otherwise, that may directly or indirectly pose a conflict of interest in performance of your duties as Chief Financial Officer for the District of Columbia? No members of my immediate family have any type of interest, financial or otherwise, in the District. 10. What emerging trends and best practices do you see in the field ofthe Chief Financial Officer that are relevant to the District's Office of the Chief Financial Officer. The emerging trends in the field of government fmance and the Chief Financial Officer that are relevant to the District revolve primarily around transparency and technology. This can range from access to timely and accurate fmancial information in an understandable format, to the ability to do business with the government exclusively online. Over the last three years, under my leadership, the City of Phoenix has completed and has significant initiatives underway. These efforts include a simple 20 page summary of the fmancial status of the City in an easily understandable format that is completed in conjunction with the City' s Comprehensive Annual Financial Report (CAFR). The CAFR has won the Government Finance Officers Association (GFOA) award for "Excellence in Financial Reporting" continuously since 1976; however, this document is difficult for the average citizen to understand. This new document provides a summary that can be read and understood in less than 20 minutes. In addition, Phoenix now has an online checkbook so all payments made by any department are available to the public online in a downloadable format. Furthermore, a decision was made two years ago to post all audits from the City Auditor online for easy public access. Many of the internal audits review functions of the Phoenix Finance Department. Previously, the audits were distributed to the Mayor and City Council but not easily available to the public. Finally, the most significant initiative is a new e-procurement, budget integration and business intelligence project developed and led by the Phoenix Finance Department. This project will allow all procurements to be completed online and integrates all contracts into the budget system that creates a complete online process for procurements that is transparent to the public and contractors. In addition, the current budget system will be integrated into the accounting system and integrated with business analytics. This will provide the ability to ensure budgets stay on track in real time, inefficiencies can be easily identified, and performance measures are developed. This project is managed through the ERP Division of the Finance Department that I established four years ago to lead initiatives of this type and is fully funded and scheduled for completion by January 1,2015. If confirmed as the CFO, one element of a strategic plan for the OCFO would be to complete a comprehensive review of technology and the associated transparency alternatives. 11. If confirmed, what are your immediate, short and long term goals? What is your planned approach for these goals? The immediate goals as the Chief Financial Officer would be to ensure a seamless transition so that all critical tasks are completed timely and accurately. This would involve developing a transition plan with Dr. Ghandi and meeting with the management team immediately to evaluate issues or concerns that require attention. Once the immediate transition is completed, a detailed approach would be followed to complete a full assessment of the Office of the Chief Financial Officer that would include reviewing mission statements, policies and procedures of the Office and gaining the perspective of current management, employees, external stakeholders, and especially that of the Mayor and Council of the District of Columbia. From my experience of being responsible for new areas and observing new department heads come from the outside into Phoenix, the most common mistake is not taking the time to understand the current work culture of the organization and the reasons for its existence. I would work to ensure I fully understood the culture of the organization and the reasons for current processes before proceeding with any potential changes. The long-term goal would be to establish a clear vision and direction for the Office of the Chief Financial Officer that will result in a five year strategic plan that would be vetted with the Mayor, Council ofthe District of Columbia and stakeholders in the District. I would break the goals into 90 day increments with the high level objectives listed below in no particular order of priority. First 90 Days o Meet with management team (central operations and agency CFOs) to ensure completion of critical tasks o One-on-one meetings with supervisors and division level meetings with all staff o Identify key vacancies and staffing issues and address any needs immediately o Establish meetings to listen to key stakeholders on expectations and issues for the OCFO to consider. The list of stakeholders both internal and external would be developed from discussions with the Mayor, DC Council, business and community leaders. o Review recent changes for the Office of Tax and Revenue to ensure issues are fully addressed o Review key policies and procedures of the OCFO and the District and the availability of information to elected officials and the public such as the OCFO website o Examine the financial reporting system (SOAR) and the Tax System projects o Review all systems (technology) used to support the functions of the OCFO Next 90 Days (90-180) o Continue discussions with key stakeholders and take feedback received to management team o More detailed discussions on technology needs o More in-depth review of business processes and effectiveness of each area, including issues related the Office of Tax and Revenue and revenue growth for the lottery system o Complete first draft of a five-year strategic plan for the OCFO to achieve mission and objectives and to address issues of key stakeholders Next 90 Days (180-270) o Review draft five-year strategic plan with staff to ensure the plan is achievable and present to key stakeholders for feedback o Complete any organizational changes or identify transition plans for any changes that may be necessary to achieve the strategic plan grounded in the mission of the OCFO o Evaluate the Districts financial capacity to meet long-term capital and infrastructure needs o Take necessary actions to improve processes and acquire or implement cost effective technology enhancements outlined in the strategic plan o Establish communication procedures with key stakeholders for continuous improvement of the OCFO that enhances fiscal and financial stability, accountability, and integrity of the government of the District of Columbia 12. What are your five greatest concerns with the Office of the Chief Financial Officer, and what is your plan to deal with each. Through the interview process for this position, reviewing information on the OCFO website, media reports, and discussions with individuals in the District, five areas emerge that would be a focus of the review discussed under question 11, above. The areas of focus would be related to the Office of Tax and Revenue (OTR), specifically tax liens, system or technology replacement and possible changes to the tax structure that are being evaluated. The second area would be revenue generation from the District Lottery system. A third area would be effective coordination between the agency CFO and the specific agencies. The fourth and fifth area would be related to the status of technology and transparency of information. All of the areas would be an early focus of the strategic plan mentioned in question 11 with more immediate attention on the OTR to ensure that public concerns are fully addressed and plans are in place to make any necessary improvements, particularly if technology is involved. For both the Lottery and OTR, a review of best practices would be completed and plans for any potential changes would be developed. I would meet with each agency CPO and the agency director to understand any concerns or issues that could be addressed to improve coordination and collaboration. Any changes would have to be consistent with the mission of the OCFO and the individual agency. The technology and transparency areas would again be a review of best practices and a full assessment of possible improvements and projects gathered from management and employee feedback and discussions with stakeholders. As discussed under question 11, these efforts would be prioritized under the five year strategic plan of the OCFO. 13. What are the advantages and disadvantages of changing the start of the fiscal year from October 1 to another date? Currently, the District' s fiscal year runs from October 1 to September 30, matching that of the federal government. Most other cities and states operate under a July 1 to June 30 fiscal year. According to the National Conference of State Legislators only Alabama, Michigan, New York and Texas do not have a July 1 to June 30 fiscal year. Prior to 1976 the federal fiscal year started on July I and was moved to October 1 with the intent to provide three additional months to put appropriations in place and to reduce continuing resolutions. The advantage of changing the fiscal year from the current October 1 to September 30 period to the more common July 1 to June 30 period is that the District budget schedules and financial reporting would be consistent with most states, particularly neighboring states. This allows for better comparisons and coordination with local governments on fmancial matters and schedules. The fiscal calendar would also better align with the school year that ends in the summer which is the traditional reason this period is common among state and local governments. The disadvantages of changing the fiscal year are the complexities and costs of a transition to a new fiscal year and the difference that would then occur between the District and the federal government. Transitioning to a new fiscal year is not without challenges. I have been through the process of changing the Phoenix Downtown Hotel Corporation's financial statement from a June 30 ending fiscal year to a December 31 ending fiscal year to make the hotel consistent with data availability and standards used in the hotel industry. The challenges include reporting a partial or year for the year of transition, bond documents that may need modified to comply with covenants made to investors, difficulty comparing historical information that is on a different fiscal year basis, and possible changes to budgeting schedules and the timing of revenue estimates. In addition, fmancial systems may require changes and reprogramming to change to a new fiscal year. The cost and time for the transition should be examined and weighed against the benefits before proceeding. This is an area I would examine with the Mayor, Council of the District of Columbia, agency departments, business community and other relevant parties to understand the desire for the change and to quantity the impacts before making a full recommendation. 14. What is your vision for the Office of the Chief Financial Officer? How do you want the agency to be perceived after and as a result of your tenure in office. My vision for the Office ofthe Chief Financial Officer is to continue the standards established of balanced budgets, strong reserves and high bond ratings that have placed the District in an excellent financial position. My goal would be to take the agency to the next level in areas that include customer service, transparency and improved technology with a focus on long-term strategic planning. The perception of the Phoenix Finance Department during my tenure is one I would want to achieve and improve upon for the Office ofthe Chief Financial Officer. My goal would be to have the agency perceived as a forward thinking with high professional standards, a high level of technical expertise, providing quality and accurate information, working collaboratively within District government, transparent, trusted by the public and a model for other governmental entities. 15. How do you see yourself carrying out your managerial role with the various operations of the Office of the Chief Financial Officer? The Office of the Chief Financial Officer has a large span of responsibility which requires a quality management team and clear expectations and goals as an organization. My primary goal would be to set those expectations and goals for the various operations, to meet regularly with the management team and to be aware of issues related to each area. This would include weekly status meetings with the management team and one-oil-one meetings with each operations area when necessary. Direct involvement would depend on the issues for the particular operation and the experience of the management staff. Daily status meetings would be held with the chief of staff and other key management teams to stay abreast of operations and to address daily issues. 16. Who is the primary customer of the Office of the Chief Financial Officer? The primary customer of the Office of the Chief Financial Officer, like any governmental entity, should be first and foremost to the citizens of the District of Columbia. This includes their elected representatives in the form of the Mayor and Council of the District of Columbia. The role and mission of the Office of the Chief Financial Officer should include providing quality customer service to the citizens of the District. 17. If confirmed as Chief Financial Officer, how long do you anticipate remaining in the position? If confirmed, I would fulfill the five year term of the appointment. My goals are to continue to work for 15 to 20 years before considering retirement. I enjoy my career in public finance and plan to continue as long as requested and able to perform at a high level of competency. 18. As Chief Financial Officer what would you do to address any morale issue within the office? The best way to address any morale issue is to listen to supervisors and employees and to fully understand the culture and history of a work area where the morale may be poor. As the Chief Financial Officer I would work with the management team to set a positive example for the employees and set reasonable expectations and goals for the organization. For most employees, high morale will exist if they feel valued, respected, their contributions are recognized and they know where the organization is headed. 19. As Chief Financial Officer, how would you respond to concerns in the community? As the Chief Financial Officer, I would develop regular processes to reach out to the community. This would include being available to speak at organizational meetings and to develop regular contacts in the community. Workshops on relevant topics may be considered to gather customer and citizen feedback. Community involvement is a major element in Phoenix. For example, we have over 20 public budget hearings each year to gather public input on budget issues. Our general obligation bond programs have included up to 700 citizen participants to set the priority of capital programs that are monitored by over 30 citizen leaders, selected from the initial group during the duration of the projects. More recently I led numerous vendor workshops to gather information and perspectives to improve our procurement process. This process was a critical element in developing new procurement regulations and an e-procurement system to allow all bidding and evaluations and contracts to be completed online. This project is scheduled for completion by January 2015. The level of community involvement would depend on the issue and would be discussed and coordinated with the Mayor and Comlcil of the District of Columbia. Regardless, I would work to establish a culture that would allow the community to give regular feedback to continuously improve the customer service levels of the OCFO. 20. How would your past and current employees describe your management approach and your style of leadership? Both current and past employees would describe my management approach as one that is professional and decisive but brings in opinions and perspectives so that the best available information is considered. I work closely with the management team to drive the strategic direction and vision of the department to achieve citywide goals while personally setting the example for everyone to follow. I am adaptable to the needs and experience level of the staff. I spend more time with a newer employee to fully explain the reason and background of an issue where a seasoned and experienced employee is given general direction and asked to make a recommendation or the final decision. The result of my management approach and style is a department that is recognized for its high level of expertise, quality of information, and fmancial analysis. As a result, the Finance Department is frequently requested to by staff and other departments throughout the City to assist them with their initiatives. One employee recently mentioned that my style and approach can best be described by the value statement of the Phoenix Finance Department that was developed collaboratively with the management team and all employees. It states, "Each day I will contribute to a positive employee empowered work environment where I am accountable for quality results, high ethical standards, excellent customer service and continuous improvement." 21. Please describe your experience with organizational restructuring, staff development and succession planning. The "Great Recession" impacted Phoenix significantly requiring staff reductions across all departments. Central service departments like Finance were hit more severely while impacts to public safety areas were reduced as much as possible. As a result, staff reductions of25% to 35% were required in many areas from peak levels. I led an effort to do a complete and comprehensive review of the Finance Department. This resulted in week long workshops with the management team, reviews offmance organization structures in the public and private sector, and employee and union meetings. The goal was to indentifY and focus on the core mission, maintain financial excellence, internal controls and increase efficiencies through improved processes and the use of technology. The result was the elimination and consolidation of three divisions into new functional areas and the creation of a central Enterprise Resource Planning (ERP) division to assist with business process improvements and technology. Furthermore, the building was "restacked" to place staff with common functions together to improve workflow and collaboration. Expansions over the year had staff placed in available locations with little consideration of workflow. Finally, all job duties and responsibilities were reviewed in detail. The result was a long term strategic plan that lays out how each vacancy will be used when an employee retires, is promoted, or leaves the city to achieve the long-term objective of the most efficient organization possible. Most importantly, employees were actively engaged for their ideas on how to increase efficiencies. Currently, an employee team, made up primarily of new employees and employees eligible to retire, was formed to develop a training and business succession program to address the associated challenges they both face. The employees are developing recommendations for the management team and myself to review for implementation. This team was developed based on comments from employees about the difficulties they were facing in their new assignments. 22. Have you led or been involved in a significant ERP software or technology implementation and if so, please describe the implementation, the time it took to complete and whether the program was on-time and on-budget? Please also describe any obstacles you encountered and/or lessons learned from this experience? Over my career I have significant experience with ERPimplementations and the challenges and obstacles these types of project involve. In the late 1990s, the Phoenix Finance Department undertook a full replacement of all financial systems in what was its first major ERP system implementation. My role on this project was as a team member and liaison with the Water Services Department as it affected their operations. Although not a leader of this project, the experience was invaluable later in my career. The project was highly successful and finished on schedule but at a cost approximately 30 percent above the original budget. The primary reasons for the increased costs were an underestimation of the staffing levels to backfill existing staff dedicated to the project and the cost of additional consultants to address complex data conversion and configuration issues. Additional hardware and software expenses were also needed to successfully implement the project. This experience was invaluable in my later role as the CFO for the City where significant upgrades or the financial system were required. These upgrades were completed with internal resources from within the Finance Department ERP Division and were on time and on budget. Currently, a citywide e-procurement, budget integration and business intelligence project is underway that is discussed in more detail under question 10, above. That project is due for completion by January 1, 2015 . An additional ERP project was the full replacement of the tax and licensing system for the City. This project occurred in 2008 with the replacement of an old mainframe type system to more modem technology. The project was completed on time and on budget. Similar challenges to the financial system implementation were experienced but anticipated and handled for this project A review of large scale public and private ERP system implementations would indicate that many fail the first time they are attempted or come in late and over budget. In terms of the specific lessons learned from the implementations listed above and from examining failed projects, there are at least five key areas that have to be addressed. 1. Be realistic about the full cost and include consultant services and the cost to backfill staff assigned to the projects. Going cheap in the middle of the project ensures problems later. 2. Be realistic about the timeline. Implementing a new ERP system while running the current system is a complex task. Issues like data conversion, process changes, user acceptance testing, staff training and community outreach, if the system impacts the public, can take time and planning. 3. Plan to dedicate experienced staff full time to the project. Expecting someone to do their regular job and implement a complicated ERP system in their free time is not realistic. Most important is a strong project manager that manages to the schedule and holds team members accountable for their roles and deadlines. 4. Change or modernize business processes to match the new technology. Customizing a new system with old inefficient processes will make the system more likely to fail and will make future upgrades more difficult. 5. Do not go live until you have a successful full scale test without changes. Changes in a production system critical to the business are much more difficult than prior to implementation. 23. Please explain why this role appeals to you. How does it compare to other opportunities you have pursued or are pursuing? The CFO position for the District of Columbia is one of the top public sector fmance positions in the country. Currently I have the role of the CFO of the 6th largest city in the United States tbat has long been recognized for excellence in financial management. This role was never more important than when Phoenix was bit hard by the "Great Recession," reducing the property tax base by 4 7% and causing sales taxes to decline for tbe first time in the history of the City. The experiences of the last four years in Phoenix have been challenging and priceless. As a person who bas been in public service most of my career begi1l1ling with military service out of high school to pay for college, college internships with the State of Illinois, to nearly 25 years of service with the City of Phoenix, moving to Washington D.C. and serving in the role of the CFO would be the pi1l1lacie of public service. As a person who loves U.S. History and is dedicated to public service, there really is no comparison to this opportunity. 24. Please discuss any past experiences not already mentioned that you believe are relevant to your appointment as the Chief Financial Officer of the District of Colum bia. One important element of the position not mentioned above relates to debt and investment management. I have extensive experience in this area as the CFO for the City of Phoenix. Over my career I have been involved in and led the issuance of more than $8 billion in municipal bonds for a variety of credits related to water and wastewater facilities, transit facilities, streets, schools, libraries, parks, police and fire stations, senior centers, convention centers, hotels, parking garages and all types of aviation facilities, including the recent "Skytrain" at Sky Harbor Airport. As a result, I do frequent rating agency presentations and communicate regularly with the rating agencies and investors and have worked with a variety of underwriters and financial advisors. Another area of experience is related to economic development. I have been directly involved in several key projects. This includes developing the plan of fmance and participating in the negotiation of key agreements for a new 15,000 student downtown Arizona State University (ASU) campus, the new downtown Cityscape retail development as well as the development of a 1000 room downtown Sheraton Hotel and the expansion of the Phoenix Convention Center. I also directly manage the City's fmancial relationship and operating agreements with the Phoenix Suns NBA franchise and their venue, the U.S. Airways Center, that is owned by the City. 25. Please submit a copy of your responses to the search committee.