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Making Government Work:Best Practices in Competitive Government

Conference Proceedings


Conference Proceedings

Proceedings ofThe National Conference of Mayors


Grand Hyatt Hotel New York, NYMay 8-9, 2000

Sponsored by Center for Competitive Government

atThe Fox School of Business and Management,

Temple Universityand

The National League of Cities

Hosted byMayor Rudolph W. Giuliani

and The City of New York

Conference underwritten by

Publication of conference proceedings underwritten by

Participating Mayors

James A.AnzaldiClifton, NJ

Victor H.AsheKnoxville, TN

Robert BainesManchester, NH

H. Richard BorerWest Haven, CT

Jerry BrownOakland, CA

Barbara CannonOld Bridge, NJ

Jack CavanaughWinston-Salem, NC

Lee ClanceyCedar Rapids, IA

A. Everett ClarkMarion, NC

Donald T. CunninghamBethlehem, PA

Ernest D. DavisMount Vernon, NY

Joseph DelfinoWhite Plains, NY

Irene EliaNiagara Falls, NY

Gene EriquezDanbury, CT

Betty FloresLaredo, TX

Joseph FlorioUnion, NJ

Joseph P. GanimBridgeport, CT

Rudolph W. GiulianiNew York, NY

Susan GoldingSan Diego, CA

Anthony J. Intinoli, Jr.Vallejo, CA

Richard KosChicopee, MA

Ronald LoveridgeRiverside, CA

Patrick McCroryCharlotte, NC

Lou OgdenTualatin, OR

James A. RurakHaverhill, MA

Bret SchundlerJersey City, NJ

Christina SheaIrvine, CA

James H. SillsWilmington, DE

Marilou SmithKettering, OH

Bob YoungAugusta, GA

John T.YunitsBrockton, MA

Making Government Work: Best Practices in Competitive Government 1

TABLE OF CONTENTS

The Fox School of Business and Management ............................................................................................2

Center for Competitive Government ..................................................................................................................3

Foreword ......................................................................................................................................................................4Dr. Paul J. Andrisani and Dr. Simon Hakim, Temple University

Making Government Work: The Oakland Experience ................................................................................5Mayor Jerry Brown, Oakland, CA

Restoring Accountability to City Government: The New York Experience ..........................................8Mayor Rudolph W. Giuliani, New York, NY

Making Government Work: The San Diego Experience ..........................................................................13Mayor Susan Golding, San Diego, CA

Four Practices that have Led to a More Effective Government:The Charlotte Experience ..................................................................................................................................16Mayor Patrick McCrory, Charlotte, NC

Making Government Work: The Jersey City Experience ........................................................................21Mayor Bret Schundler, Jersey City, NJ

2 Making Government Work: Best Practices in Competitive Government

THE FOX SCHOOL OF BUSINESS AND MANAGEMENT Temple University

Established in 1918, The Fox School has a distin-guished tradition of preparing business leaders,professionals and entrepreneurs for successful

careers. Today, it is the largest, most comprehensive busi-ness school in the Greater Philadelphia region and amongthe largest in the world, with 141 full-time faculty, over5,000 students, and more than 40,000 alumni.

The Fox School is thoroughly committed to qualitystudent-centered education and professional develop-ment relevant to today’s digital, global economy.Ranked 14th in the nation in Computerworld maga-zine’s Survey of Top Techno-MBA Programs and 14thfor international business research in the BusinessSchool Research Ranking Report, it offers AACSB-accredited graduate and undergraduate programs oncampuses throughout the region and around the world.Its suite of techno-graduate programs includes a full-time, day MBA/MS in E-Business and represents thecutting edge of academic programs that integrate busi-ness and technology. International programs include:the Executive MBA Program in Tokyo; InternationalMBA Program (completed in Paris, Tokyo and Phila-delphia); International Business Program in Rome; andforeign executive training and consulting programs inChina, India, Israel, Japan, Ukraine, the United States,and throughout the world.

Supporting and enriching The Fox School’s academicprograms are research and outreach institutes and cen-ters such as the Irwin L. Gross eBusiness Institute,Innovation and Entrepreneurship Institute, Institute ofGlobal Management Studies, Advanta Center forFinancial Services Studies, Center for CompetitiveGovernment, Center for Healthcare Management, andSmall Business Development Center.

The Fox School is one of the 17 schools and collegesof Temple University. A leader in graduate and profes-sional education, Temple is one of only 148 of over3,800 higher education institutions in the U.S. designat-ed a Doctoral/Research Extensive university by theCarnegie Founda-tion for the Advancement of Teaching.This disinction is based on Temple’s range of programsand commitment to graduate education, and the breadthand number of doctoral degrees it awards.

Headquartered in Philadelphia, Pennsylvania, Templeis strategically located for corporate partnerships in ahub of the financial services, information technology,healthcare, pharmaceutical/biotechnology and tourismindustries. Temple’s School of Tourism and HospitalityManagement, affiliated with The Fox School, offersquality undergraduate and graduate degree programs insport and recreation management as well as in tourismand hospitality management.

The Fox School of Business and ManagementM. Moshe Porat, Dean


CENTER FOR COMPETITIVE GOVERNMENT

Temple University’s Center for CompetitiveGovernment is a preeminent resource for federal,state and local governments seeking to understand

and implement best management practices and e-govern-ment strategies. It specializes in applying contemporaryeconomic and management models to public sector prob-lems and is becoming an international center for informa-tion about the management of technology to improveconstituent services and reduce the cost of government.

To facilitate the development and growth of betterpractices, the Center conducts policy-oriented research,engages in consulting projects, develops databases,organizes conferences, and publishes reports, books, andarticles related to the application of private sector prin-ciples to public sector problems. The Center has sub-stantial experience in conducting and analyzing datafrom large-scale surveys for various public and private

entities and has conducted specific studies on topicssuch as: privatization of police, correctional institutions,welfare services and airport management; public-privatepartnerships in free trade zones; and private toll roads.

The Center has obtained grants and has organizedeight academic and professional conferences, includingthe highly successful “Making Government WorkConference,” hosted by the City of New York and under-written by PricewaterhouseCoopers Endowment for theBusiness of Government. The Center maintains workingrelationships with organizations such as the Council forPublic-Private Partnerships, Manhattan Institute forPublic Policy, National League of Cities, MilkenInstitute, National Governors Association, Volunteers ofAmerica, and with mayors and governors throughout theU.S. and around the world.

Professor of management Paul J. Andrisani has taughtat Temple University since 1974. Director of the Centerfor Labor and Human Resource Studies, he specializesin human resource management and labor market eco-nomics. His research focuses on the labor market experi-ences of special groups in the American economy,among them older workers, minorities, women, veteransand persons with disabilities. He has also conducted con-siderable research on the economics of discrimination inemployment and credit markets. His research has beenfunded by many government, educational and private

organizations, published in numerous academic journals,and presented to various societies and professional asso-ciations and to senior management and board commit-tees of numerous companies and government agencies.He has testified before Congress on issues of humanresource management and lectured extensively through-out the U.S. and abroad. He has served as a consultant tomajor corporations, government agencies, and govern-ment entities. He holds a BS and MBA from theUniversity of Delaware and earned his PhD in businessadministration at Ohio State University.

Professor of economics Simon Hakim has taught atTemple University since 1974. His research focuses onanalysis of criminal behavior, police operations, and pri-vatization of police and correctional institutions. He isco-author of Securing Home and Business: A Guide tothe Electronic Security Industry and co-editor of fivebooks. He is also editor for two book series publishedby Paeger Publishers. He has published over 50 scientif-ic articles on crime and security in leading economicand criminology academic journals and more than 40

articles in trade magazines of the security and insuranceindustries. He is often interviewed, and his researchfindings quoted, on national TV and in major newspa-pers throughout the nation. He has conducted fundedresearch projects for numerous government agenciesand for major international companies. He holds a BAin economics from Hebrew University, an MS in cityand regional planning from the Technion, Israel Instituteof Technology, and earned MA and PhD degrees inregional science from the University of Pennsylvania.

Center for Competitive Government

Paul J. Andrisani, PhD

Simon Hakim, PhD


FOREWORDDr. Paul J. Andrisani and Dr. Simon Hakim

On May 8 and 9, 2000, the Center for CompetitiveGovernment at Temple University and theNational League of Cities co-sponsored a

Conference of Mayors in New York City to commemo-rate the publication of our book, Making GovernmentWork: Lessons from America’s Governors and Mayors(Lanham, MD: Rowman & Littlefield Publishers, Inc).The conference was hosted by Mayor Rudolph W.Giuliani and the City of New York and commenced witha luncheon at the Harvard Club that was sponsored bythe Manhattan Institute and keynoted by former MayorStephen Goldsmith of Indianapolis, a true pioneer inefforts to innovate local government. Mayors from 17states throughout the nation attended, representing citiesof all sizes and both major political parties. The confer-ence was underwritten by a grant to the University fromthe PricewaterhouseCoopers Endowment for theBusiness of Government.

The theme of the conference was “MakingGovernment Work: Best Practices in CompetitiveGovernment.” Five outstanding mayors who initiatedmajor innovations in their cities discussed their diverseexperiences and led lively discussions with the entiregroup of mayors and academics in attendance. Theywere mayors Brown of Oakland, Giuliani of New York,Golding of San Diego, McCrory of Charlotte, andSchundler of Jersey City. Their papers are included in

this volume in hopes that their remarks will inspire andbenefit countless more mayors throughout the nationand world. Regrettably, audio problems have precludedpublication of the high-level discussions that followedeach presentation.

Among the most important “lessons learned” from thespeakers was the realization that local government canlearn much from the private sector about improving man-agerial efficiency and effectiveness. Innovations in localgovernments in recent years stem mainly from the real-ization that the role of government in the marketplaceshould be limited to the delivery of only those servicesfor which government has a competitive advantage, sincemany services can often be delivered in a competitiveenvironment by more efficient providers who enjoy com-petitive advantages in terms of specialization andeconomies of scale. Competition can be introduced irre-spective of whether government ultimately decides toprovide the service itself or contract it out to the privatesector. These same lessons have been demonstrated timeand again in the past decade in the private sector, ascountless Old Economy firms have turned themselvesaround by shedding non-core business and support activi-ties and by contracting out to more efficient suppliers.

We are indeed grateful to the University for itsencouragement and support of our efforts, to the mayorswho attended and those who spoke and led the discus-sions, to the Manhattan Institute for sponsoring the kick-off luncheon event, to the City of New York and MayorGiuliani for hosting the event and entertaining all guestsat the Mayor’s magnificent residence, Gracie Mansion,to the National League of Cities for partnering with uson the Conference, and to the PricewaterhouseCoopersEndowment for the Business of Government for theirgenerous financial support.

Dr. Paul J. Andrisani Dr. Simon HakimCo-DirectorsCenter for Competitive GovernmentFox School of Business and ManagementTemple UniversityPhiladelphia, PA

Conference host Mayor Rudolph W. Giuliani with TempleUniversity professors Simon Hakim (left) and Paul J.Andrisani (right), editors of Making Government Work, thebook that inspired the conference.

Henry Olsen, executive director of the Manhattan Institute,fields questions for professors Hakim and Andrisani abouttheir book, Making Government Work, at a Harvard Clubpre-conference luncheon for mayors and the media.


MAKING GOVERNMENT WORK:THE OAKLAND EXPERIENCEMayor Jerry Brown, Oakland, CA

I’ll try to wrap this into the management framework.When I was Governor for eight years, managementnever really bubbled up to my level. And I don’t

understand it in quite the same way. In fact my under-standing of management came in one of my many presi-dential campaigns. In the debate with Jimmy Carter, hesaid he was going to reorganize the Federal Governmentand zero base the Federal budget, neither of which everhappened; however, it was a rhetorical flourish that didseduce a number of voters. So I do think we have to dis-tinguish between the rhetorical flourish and the actualtechniques that are taken.

So with that, let me just focus on some things that Ithink are critical. When a city is on the downturn, peo-ple are definitely looking for optimism and enthusi-asm—a coming together. Oakland is a very diverse city,40 percent African American, slightly less than 30 per-cent Caucasian and the rest Asian and Hispanic. And itis changing in the direction of more Asian and moreHispanic by the year.

The big issues, of course, are like they are every-where, there is no difference: crime, schools, economicdevelopment and jobs. The first thing I did was to changethe form of government from a city manager controlledform to a strong mayor form. And because people werefeeling a bit discouraged, they voted for the change by 75percent, which is unusual because most of the time votersvote against charter changes to give the mayor power.

I then put up another charter change—to give themayor the power to appoint some members of the schoolboard. And that won, too, but by only 52 percent. By thistime people were beginning to perceive what criticscalled “the power grab.” So there were some cautionarywarnings coming out. But in both of these measuresthere were changes, there were opportunities for the civicculture to flourish and there was great debate.

Managing Crime StatisticsI want to talk about crime because here we have both

technique and citizen involvement. In Oakland we took

a chapter from New York. We have data on crime gath-ered and disseminated on a 24-hour basis. Every morn-ing all the FBI indexed crimes, their number, related tothe month, the year and the previous year are on mydesk and the desk of the Police Chief, the City Managerand the City Council—every day. And it is broken downby beat, 57 beats in our city of 400,000.

So we are using the technology to provide the infor-mation to all the community police officers, the lieu-tenants and those who are in charge. Now what thisdoes, of course, is foster competition, creating a realmetric for accountability.

We then took it one step further and put it on theInternet. Citizens now know that if, for example, theyare going to buy a house somewhere, they can look atCrimeWatch to get an indication of the stats in theneighborhood. You can find CrimeWatch if you go tothe City’s website: www.oaklandnet.com. It is not fullyperfected yet; the one on the Internet is about a week ortwo delayed in the data, but all the same functions arethere. So this allows the citizen to put the pressure onthe community police officer, the Mayor and the CityCouncil if there is a rash of crimes.

As it turns out, crime is on a downward path. Themurder rate is 30 percent of what it was in 1992, andthis year it went down another 20 percent. So we areusing data technology and then we are linking it to civilinvolvement. The management is one thing, so it’s veryimportant that you don’t waste money or spin yourwheels, and on the other, if the citizenry is totally demo-bilized or is framed solely in the role of a customer,then you don’t really have a polity. And I would submitthat between the polity, the Commonwealth, the Cityand the business enterprise there are differences.

The key issue, it seems to me today, is involving citi-zens and creating a unity in the city. In order to achievethat, Oakland created, before I was elected, somethingcalled the Neighborhood Crime Prevention Council.

Jerry Brown was elected mayor of Oakland in2000. He formerly served as Governor of Californiafrom 1975 to 1983. While governor he created thecountry’s first energy efficiency standards, enactedthe nation’s first agricultural labor law, played aninstrumental role in ending nuclear power plantexpansion in the U.S., and brought women andminorities into high government positions.

BIOGRAPHY


We’ve hired 19 civilians — that is, non-sworn employeesof the police department — whose only job is to organ-ize the neighborhoods. They have organized neighborsinto crime prevention councils, of which there is one ineach of the 57 beats. And then they meet once a month,neighbors coming together, talking about their problems.

So then we get into a management question becausethere are all sorts of parallel activities called Neighbor-hood Alert and Block Crime Watch. You could say weare now in good management form because we linkedthem together. There are something like 200 Neighbor-hood Watches, and these 57 Neighborhood CrimePrevention Councils provided the link between the pro-fessional police, the crime data and the people. So weare linking the technology, organizing and citizeninvolvement.

Managing ParoleesAnother factor to consider for Oakland is that we

have about 3,000 parolees at any one time. If you lookat the data, you find out that parolees go back to prisonon a fairly regular basis, somewhere between 60 and 70percent. It’s a revolving door to many. So if you arelooking to reduce crime, this is really a good targetgroup to focus on. We created a police parole task force

and got the State to give us the data when the paroleeshows up and when the parolee has stopped checking in.

The program establishes that within a week of themarriving in Oakland they must come to a meeting andmeet an assigned police officer and parole agent. At thattime, they get an inspirational talk from an ex-parolee whohas succeeded, and they get offers of job training and sub-stance abuse help. Now if for some reason the paroleedoesn’t check in, the police go after them. If the conditionof the parole is “no alcohol,” and the parolee is stopped,tested and, in fact, has a blood alcohol reading, they haveviolated parole. It is a very strict regime that is beingimposed, on the theory that you have to keep the pressureon in this particular group that tends to slide back into thecrimes that got them arrested in the first place.

Forty percent of the people in California prisons, andI would suspect it is the same all over, are in for paroleviolations, not new convictions. So it is a revolvingdoor. They are let out and they are reeled back in uponviolation. And it isn’t just some kind of punitive effort;there are other services offered as well. There is real sin-cere engagement with each parolee around motivationand services that they could use. You have to rememberthat these are deeply embedded habits for a lot of peopleand if you can’t add to the pressure, there is no reasonwhy those habits will break. I mean it is not a nice reali-

Mayor Jerry Brown of Oakland confers with Temple University professor Simon Hakim at the Harvard Club.


ty, but you have to apply some sanction and some pres-sure or nothing is going to happen.

So we give them, as it were, the carrot and we showthem the possibility of the stick. And that’s having a verysignificant impact. The factor that is different here is thatit is very city driven. This is not just state driven; it is thepolice department pushing on the parole department.That’s one of the big differences. I think it is the only onein the country where the police and the parole departmentcollaborate as a team and we have segmented a particularpart, you might say, of the market with high yield. Sothat’s been underway for about a year.

That’s in the crime area. And I would say that crimestill is a very critical issue, particularly in the low-income communities and in the spaces between the low-income and the middle income. As you get up into thehills, into the higher income levels, the more protectedenclaves, crime is not really so much the issue. Streetlighting or too much street lighting is the concern. Sopeople living in the flats of Oakland want more light;those in the hills want less light because they want tosee the stars. Those are both management and policyquestions that you have to blend together.

Managing SchoolsLet me jump over to schools, the second big issue. In

the schools there is now mayoral involvement. I haveappointed my three people and told them, “Now youtake a look at the entire school district from a manage-ment point of view.” We said, just take one thing, getreading going. So now the school district is being forcedto adapt a phonics-based reading program called OpenCourt, from kindergarten to sixth grade. And the threemayoral appointees are going to focus on one issue andthat is improving reading achievement as measured bythe Stanford Nine test, which is the statewide test.

Another aspect is charter schools. There are twoschools that I have proposed, the Oakland MilitaryInstitute and the School for the Performing Arts. TheOakland Military Institute is a college prep school runin collaboration with the National Guard. Its characteris-tics will be discipline, uniform, long days, Saturdayschool and summer school. And the goal here is to takeordinary students — a significant number of lowincome, low performing but high potential students —and get them up to the grade where they are supposed tobe, as well as create the esprit de corps, commitmentand leadership that the military training provides.

Before we open in September 2001, we have to getthrough the civic culture debate. The President of theSchool Board has said that a military school in Oaklandis an absurdity. Under California law, the School Boardin the first instance can give a charter to any group ofcitizens, any group of teachers. And in this particularcharter, we have the endorsement of the Governor, theSenator and the Mayor, but we have the opposition ofthe school union, groups in the community like WomenStrike For Peace, and some others. So this will beworked out in the coming weeks.

And one other charter school is the School for thePerforming Arts, which will focus not so much onschool standardized test achievement but rather per-forming arts. It will be audition-based with a focus ondrama, music and dance. Each student will be audi-tioned and accepted if they show promise. That schoolwill start at ninth grade, also in September 2001, with100 students. The military school is going to start with162 students in the seventh grade and then, each yearadd more students to work up to the 12th grade whenthere will be 1000 students at the school.

So these are very yeasty kinds of issues gettingeverybody’s attention. They are somewhat polarizing,but at the same time unifying.

Managing Economic DevelopmentI want to mention one other program which we are

starting to address: economic development. It is anasset-building program for lower-income families. Weare working with churches and other community groupsto identify an initial group of families that will helpdesign and participate in the program called the FamilyIndependence Initiative.

It’s almost on the AA model, where you have to takecare of yourself but as part of taking care of yourself,you have to be available for somebody else. The initia-tive will work with a family and then have that family,as a condition of their participation, work with anotherfamily. And we will help them build assets and credit.And as they save money, we are actually going to matchtheir savings. We haven’t decided yet whether it will betwo-to-one, three-to-one, five-to-one but we are going tohelp families accumulate capital, on the idea that you’vegot to accumulate capital. That’s really when somebodybegins to be independent, when they have some cushion.So we are looking to create an informal network, and weare going to fund it with City funds. And that is quite achallenge because every program, State, Federal, evencharitable, has a lot of strings and a lot of restrictions.

We will also make it as non-professional as possible.It is not going to be a case management program. Byde-professionalizing this kind of effort you ultimatelyaccomplish two goals: helping people build capital,credit and actual savings in the bank, and, secondly, thatthey not become dependent on experts, managers, caseworkers, but rather take responsibility to teach whatthey learn to some family similarly situated.

The final element, of course, is that instead of work-ing with an unemployed person, you assist an entirefamily on the theory that people are influenced by thesignificant people in their lives. You have to get every-body into the conversation if you are dealing with reallydistressed individuals, or you are probably not going tosucceed.

So I think I will stop here and just say there is a lotof work to be done. If our management is embedded invision and ideas, we might just be successful.


RESTORING ACCOUNTABILITY TO CITY GOVERNMENT:THE NEW YORK EXPERIENCEMayor Rudolph W. Giuliani, New York, NY

It is a great pleasure to have you here in New YorkCity. I think this book, Making Government Work, isan excellent contribution to reporting many of the

things mayors across America have done to make gov-ernment more effective and accountable over the pastdecade. It will also help ensure that these innovationsare built upon in the future, as citizens and mayors alikecan study what we’ve done and improve upon it.

When the political history of this particular era iswritten, I believe that the revitalization of Americancities is going to be regarded as one of the most signifi-cant things that has happened. When people reflect backon the 1990s to 2000, I think they’re going to say thatthe whole idea of urban America evolved and changedbecause of many of the things that are described in thisbook. People’s conception of urban America haschanged from a place that was derelict, decayed, filledwith unemployment and union difficulties, to a muchmore realistic and positive place that is dedicated toimproving the quality of life of its residents.

Of course, there are still significant problems inurban America. But over the last eight to ten years, localgovernments have really produced most of the innova-tion that has begun to change people’s concept of gov-ernment. And I think that applies more to the city gov-ernments than the national government and state gov-ernments. We just don’t have time for a lot of the politi-cal gridlock that affects national government and some-times state government — the problems are too great,the issues are too pressing, and the answers have tocome much more quickly.

And in that sense, NYC during the 1960s, 70s, 80s,and into the early 90s, served as a symbol of decline. Ikeep a national magazine cover describing New York Cityin 1990 as “the Rotting Apple,” a city in decline. And atthat time, people in the City of New York accepted it.

They accepted the idea that this was our lot in life — thatwe were an old city that had seen our greatest days. Westill had a lot going for us, we were still a strong city, butthe perception was that things were never going to be asgood as they used to be. We were never going to have asmany jobs. We were going to be lucky to hold on to whatwe had. And we were going to have an inevitable declinethat perhaps we could forestall a little bit.

Our City in the early 90s was averaging 2000 mur-ders a year. We lost about 330,000 jobs in a short timeframe, which was greater than any job loss we had sincethe depression. We had almost 1.1 million people onwelfare in a City of officially 7.3 million.

But the greatest toll that this took was on the spirit ofthe people of the City of New York. And I’m sure this istrue in many of your own experiences. People were cyn-ical and they didn’t think things were going to get anybetter. In fact, a poll in 1993 showed that many NewYorkers would leave the City the next day if they could.

At that time, our City provided an appropriate exam-ple of what was considered the decline of urbanAmerica. Throughout the last half-dozen years, however,things have fundamentally changed in New York Cityand throughout the country.

Mayors from different political parties — Republicans,Democrats — using different combinations of solutionshave made very significant changes in the way governmentinteracts with the people. And they have all kinds of names,in addition to Republicans or Democrats: New Progressives,Pragmatists, Centrists, Common Sense Conservatives. Iactually haven’t been called any nice things like that. Thenames they usually use for me are different.

But the reality is that this is not a Republican or aDemocratic thing. This is something where you have tohave the freedom to select the best solutions that exist.And I think at the core of this is accountability. And thetitle of this book says that, Making Government Work.

You have to be able to show people that governmentcan play a positive role in their lives. And then you haveto be realistic about that. Because if you make excessive

Rudolph W. Giuliani was elected mayor of theCity of New York in 1993 and reelected overwhelm-ingly in 1997. Under his leadership, New York Cityhas experienced historic crime reductions, whichhas led to it being recognized by the FBI as thesafest large city in America. The City has alsoinstituted the largest and most successful welfare-to-work initiative in the country, reducing welfarerolls by over 55% — or 650,000 individuals —while enjoying unprecedented economic growthand tax reductions.

BIOGRAPHY


promises of what government can do, if you promise thatgovernment can take care of all people’s needs and all oftheir problems, then you inevitably deteriorate their viewof government when you fail them. I’ve tried very hard toshow people realistic progress. Maybe it comes from mybackground in law enforcement where you know you’renever going to solve all the problems. You know you’renever going to have a time when there’s no murder, notheft, no crime. That would be perfection, and you’re notgoing to get there. But that doesn’t mean we shouldn’t tryto reduce crime as much as we possibly can.

Reducing Crime and Improving the Quality of Life

With regard to reducing crime — and I think this istrue of all the things that we tried to do — we tried toreplace bad ideas with good ideas. The two primarythings that we’ve done to reduce crime — and there aremany, many things — were the adoption of the BrokenWindows theory and the CompStat program, which wonan award for innovation in government from theKennedy School of Government at Harvard University.

The Broken Windows theory simply means that youdon’t give people the sense that they can violate the law insmall but substantive ways because they are regarded asless important than serious crimes. In the early 1990s, wehad a situation in which there was a sense that there wasn’tmuch we could do about street-level drug use. Likewise,there was a sense that there really wasn’t much we coulddo about street-level prostitution. And there wasn’t reallymuch we could do about graffiti. And there wasn’t reallymuch we could do about aggressive panhandling. We hadover 2,000 murders. We had 600,000–700,000 indexcrimes. With all those serious crimes, how could we bespending time on these less serious crimes?

In that misconception was the very core of our prob-lem. The Broken Windows theory by Professor James Q.Wilson and Professor George Kelling, which is now wellover 20 years old, had been used in smaller cities but itwas never thought it could work in a city as large as NewYork. The name Broken Windows theory comes from themetaphor used to describe the concept. If you have abuilding and it has a lot of windows and somebodycomes along and breaks the first window and you say,“Well gee, that’s not important. I’ve got bigger things tothink about than one little window.” Then somebodycomes along and breaks another window and they breakanother window until finally you have no windows andthe whole structure of the building begins to fall down.

On the other hand, if you pay attention to the firstwidow that was broken and you fix it, and you try to findwho did it and say, “You can’t do that. That isn’t right,”you protect the building at the first, easiest and earliestpossible moment, rather than letting it deteriorate. Andthere is something deeper and more spiritual about it all.By doing it, you reinforce the obligations that we have toeach other as citizens. Which is a very, very importantthing that a city government has to do. You say, “Youdon’t have a right to break somebody’s window if you

want to live in a free society.” A free society is not a soci-ety that says, “I can do violence to you. I can do violenceto your property.” That’s an anarchistic society.

Think about graffiti. We used to be a city that wasabsolutely covered with graffiti. About a year and a halfago I was watching a movie on television, and I saw thissubway train go by. And for about a minute I knew therewas something wrong, and I asked myself, “What erawas this movie representing?” The subway train was allfilled with graffiti. So I went and got the date of it, Ithink it was 1986. Then I went out and had somebodycheck our buses, our subway trains and our sanitationtrucks. And we don’t have graffiti on them anymore.

We started that six-and-a-half or seven years ago. Wesaid, first of all, we were going to get rid of graffiti thefirst moment that we see it. Take the train out of circula-tion, take the bus out of circulation, take the sanitationtruck out of circulation, we’re going to get rid of thegraffiti right away.

The second thing we’re going to do is to try to findthe people doing the graffiti, and we’re going to finethem. Then we’re going to sentence them to cleaning upthe graffiti to teach them a lesson. And, basically, thelesson we were teaching is a very, very simple one. Youdo not have a right to destroy somebody else’s property.

Graffiti-ridden trains, buses, sanitation trucks used totravel through the streets of the City, and everyone whosaw them said, “You can destroy somebody else’s prop-erty and the City thinks it’s OK.” It was like an adver-tisement for disrespecting the rights of others.

Now when people see lots of graffiti-free trains andbuses, in a very subtle way it says to them, “This is acity that really has a growing number of people respect-ing the rights of other people.” It’s a small example, butit’s important.

The same thing is true for street-level drug dealing,street-level prostitution, and aggressive pan-handling. Itdoesn’t mean you pay more attention to that than you payto murder or rape, though very often the press will play itthat way. The reality is you have to pay appropriate atten-tion to all of these things. You have to remove zones oflawless conduct. And it’s not to be punitive. It’s actuallyand ultimately to use the law for the purpose it reallyexists, which is to teach people the lessons they need tolearn in order to have a constructive, productive life.

The CompStat program is the second program that hashad a big impact on the level of crime. I used to be theAssociate Attorney General. I was in charge of dissemina-tion of the national crime statistics. So I’ve been involvedin crime numbers for twenty years. And it seemed to methat we were doing something wrong in the way in whichwe measured police success. We were equating successwith how many arrests were made. A police officer wasregarded as a productive police officer if he made a lot ofarrests. He would get promoted. A police commander in aprecinct would be regarded as a really good police com-mander if his arrests were up this year. This wasn’t theonly measure of success, but it was the predominant one.

Arrests, however, are not the ultimate goal of policedepartments, or what the public really wants from a police


department. What the public wants from a police depart-ment is less crime. So it seemed to me that if we put ourfocus on crime reduction and measured it as clearly as wepossibly could, everybody would start thinking about howwe could reduce crime. And as a result, we started gettingbetter solutions from precinct commanders.

We have 77 police precincts. Every single night theyrecord all of the index crimes that have occurred in thatprecinct and a lot of other data. We record the numberof civilian complaints. We record the number of arreststhat are made for serious crimes and less serious crimes.It’s all part of CompStat, a computer-driven programthat helps ensure executive accountability. And the pur-pose of it is to see if crime is up or down, not just city-wide, but neighborhood by neighborhood. And if crimeis going up, it lets you do something about it now —not a year and a half from now when the FBI puts outcrime statistics. After all, when you find out that burgla-ry went up last year, there’s nothing a Mayor can doabout it because time has passed and the ripple of crimi-nal activity has already become a crime wave.

Now we know about it today. And we can make strate-gic decisions accordingly. If auto theft is up in some partsof the City and down in others, then we can ask why. Andthat will drive decisions about the allocation of policeofficers, about the kinds of police officers.

This is one of the reasons why New York City hasnow become city #160 on the FBI’s list for crime.Which is kind of astounding for the city that is thelargest city in America. Think about the other 159 cities:many of them have populations that are 300,000;400,000; 500,000. And on a per-capita basis, some ofthem have considerably more crime.

It is an excellent system, but the core if it is the prin-ciple of accountability. Holding the people who run theprecincts accountable for achieving what the publicwants them to do, which is to reduce crime.

Improving the EconomyThe next area where we’ve made tremendous strides is

the whole area of our economy. In the past, the City gov-ernment of New York was perennially in fear of bankrupt-cy. And the reason for that is we were spending too much.We were spending more money than the growth of oureconomy would allow. If our economy would grow by3–4 percent in a given year, we would say, “That’s won-derful. So now we’re going to increase spending by 6–7percent.” We were essentially spending more money thanwe had, borrowing against the future. And for 20 to 30years we created a structural deficit of massive propor-tions. We reduced it by cutting spending. We’ve cutspending by over $9 billion. The first year it was cut byabout $2.5 billion, which was difficult. It meant makingvery difficult choices about privatizing. For examplereducing the number of employees in our hospital systemby about 15,000–16,000, because we were staffed for100% bed capacity and operating at significantly lowerlevels. It meant restructuring a lot of the agencies so evenif we did increase the number of employees, they were

going to have to find new ways of paying for them, interms of productivity and work that was done. Because ifwe were spending the same amount of money as we weresix years ago, instead of having an almost $3 billion sur-plus at the end of this fiscal year, we would have probablya $500 million deficit. Even with this good economy.

So again, this is a question of accountability, of say-ing that government can’t do everything. You have tofigure out what government can do, and do that well, sothat citizens will be confident that their government isresponsible, honest, and effective. And the truth is thatthen you’re able to really accomplish things for people.

For example, we’ve cut taxes by $2.3 billion, whichthe City has never done before. We did this to try to stim-ulate our job growth, and to make New York City a moreattractive place for business. And the last three years areour three greatest years for job growth in the history ofthe City going back to 1951, before which we don’t havestatistics. This is now the longest period of sustained pri-vate-sector job growth that our city has ever had.

The tax cut I like the best illustrates the value of cut-ting taxes in terms of spurring private sector growth andcreating jobs. Our hotel occupancy tax used to be thehighest in the country — 211⁄4 percent. That was becausemore than a decade ago the city and the state were facingthese huge budget deficits — there were a lot of servicesthey had to fund — and the only political thinking avail-able was, “Let’s raise taxes and we’ll have more money.”So the city and state together raised the hotel occupancytax to 211⁄4 percent. And they kept it there for quite sometime. The Association of Convention Bookers actually putout an advertisement that said, “New York City has thehighest Hotel Occupancy Tax in the country. Don’t bookyour convention there.” And according to our CityCouncil, we lost maybe $900 million to a billion dollarsin business as a result of this tax. This was a tax thatclearly needed to be reduced. Well, we reduced it byalmost a third. At the time, there was a lot of fear and alot of worry. And now we collect $90 million dollarsmore from the lower hotel occupancy tax than we used tocollect from the higher hotel occupancy tax.

Cutting the hotel occupancy tax also had a tremen-dous effect in helping our welfare reform efforts,because it encouraged the creation of entry-level jobs inhotels and restaurants that have flourished during thepast four years of record tourism in our City. It is a con-crete example that reducing taxes can actually help toachieve job growth and reforms in other areas.

I fought very, very hard to eliminate the sales tax onclothing in New York City. I believe it should be eliminat-ed for all clothing purchases in New York State. We havesucceeded in reducing the sales tax on clothing purchasesof $110 or less. So if you go out and buy a shirt today, ora tie, or shoes of $110 or less, you pay no sales tax. I’dlike to see it reduced completely. That would be the bestjobs program we could create for people who are poor,given our economy, which is a free-market capitalisteconomy. That’s the economy we have and we have tomake that economy work for us. We can’t do things thatare contrary to it. Likewise, the best jobs program in New


York City we could have is to take that $110 sales taxelimination and make it no sales tax on any clothing. Itwould produce another 12,000–14,000 new jobs.

Reforming Welfare I’d also like to speak about the whole area of welfare,

which is maybe the most important thing that needed tobe changed. Our City’s welfare reform program pre-dates the federal welfare reform legislation by about ayear. Our welfare reforms are designed to reinforce, andto teach, the social contract, which is philosophically theidea upon which our democracy is based. The socialcontract says that for every benefit there is an obliga-tion, for every right there is a duty; and for everythingthat you’re given, you have to give something back.Government should be teaching it and reinforcing it —but definitely not doing the opposite, which is teachingand reinforcing dependency.

In the past, it seemed to me that one of the thingsthat was happening in urban America was that we werenot allowing the genius of America to happen for thepoorest people in America. In fact, in some perverseinstances, we were doing just the opposite: we wereblocking the acquisition of the genius of America forlots of poor people. The genius of America is that if youcan acquire the work ethic you can really accomplish alot for yourself and your family.

We realize that there are people who are disabled andthere are people who need help. And there are people forwhom this just isn’t going to work. But our philosophy inthe past was, “Let’s see how we can maximize the num-ber of people who are dependent.” Now our philosophyis, “Let’s see if we can maximize the number of peoplewho can feel the joy of taking care of themselves andminimize the number of people that are dependent.”

Back in 1965 we had about 400,000 people on wel-fare. Between 1965 to 1971, we went from about400,000 people on welfare to over 1.1 million people onwelfare. We went over 800,000 in the late1960s and weremained there through the 60s, 70s, 80s, and throughthe 90s. This was not a result of a change in our econo-my. The American economy did not deteriorate duringthat period of time, it was actually growing. This explo-sion in the number of people on the welfare rolls was adirect result of government’s decision about how to dealwith poverty. The only answers that my city governmenthad for 20–25 years was, “Let’s go to Washington to getmore money, so we can put more people on welfare.”We used to use terms like, “Welfare should be userfriendly,” without thinking about the destructive conse-quences this could have on people’s lives.

So we began a workfare program which said, “If wecan help you get a job in the private sector, we will. Ifyou can get a job in the private sector, take it. But inexchange for welfare benefits, if we can’t get you a jobor you can’t get a job, then we will have you work forthe City, assuming that you’re able bodied, assumingyou’re not sick, and assuming that you don’t have youngchildren that we can’t place in daycare.”

We took that on as our obligation and we spent hun-dreds of millions of dollars to solve the humane problemsand practical problems many people feared would comewith welfare reform. Now, you have to work 16 to 20hours a week for the City of New York — which is themaximum that the law allows — for the PoliceDepartment, for the Parks Department, for theTransportation Department, for the Mayor’s Office.You’ve got to give something back. If other people aresupporting you, you have an obligation to help improvetheir quality of life and to give something back to thiscity. About 300,000 people have gone through the work-fare program. And now, we’ve shrunk the City’s welfarerolls from over 1.1 million to below 600,000. This is thelowest number of people on welfare since the mid-1960s.Last month, even with some court disputes about ourWelfare to Work programs, we had our largest decline ofpeople in welfare — 11,000 fewer people on welfare bythe end of the month than at the beginning of the month.Of course, right now we’re helped by a growing economythat provides lots of jobs for people. We have a situationwhere anyone who wants a job can get one. We’ve got totake advantage of that and try to move as many peopletowards work as possible — in order to help them.

If I took you to a welfare office today — or at leasthalf of them and, hopefully, by the end of the year all ofthem — the sign on the door when you walk in says“New York City Jobs Center.” It doesn’t say welfareoffice. And the difference isn’t just a sign. Inside, awhole different process goes on. When you sit downand ask for welfare, the first thing we ask you is, “Whatkind of work have you done, what kind of jobs have youhad, what kind of work do you think you can do?” Wefight to keep you from dropping out of the work force.We want to encourage you to take the maximum num-ber of steps to take care of yourself, rather than going inthe other direction. And we’re doing that because wecare about you. Maybe because after all these years ofmistakes regarding welfare, we have a little betterunderstanding of the human personality and what canreally help people. Again, it’s a question of accountabili-ty, in a sensible, rational and decent way.

Reforming Public Education — the Challenge Ahead

The last area that I’d like to mention very briefly is thearea of education. We’ve made a lot of changes in educa-tion. We’ve changed the governance of our school systemto some extent, but not as completely as we should. Aftera very long battle, we have ended principal tenure.Principals can no longer remain at a school if they arefailing to really help the children. In addition, we’veintroduced merit pay for principals, so that the good prin-cipals can be paid bonuses. We’ve instituted citywidereading programs such as Project Read. We’ve re-estab-lished arts programs in the schools, which had foolishlybeen removed 25 years ago. We’ve put computers in allof our elementary schools and trained over 1,000 teachersto teach new technology, which the children now have


access to. We’ve changed special education and moved itin a positive direction for the first time.

But I would be less than candid — and I’m not — if I told you that we’ve been able to really reform ourschool system in the same way that we’ve been able toreform other areas of city government that I’ve men-tioned to you. And the reason for that is rooted in phi-losophy. I believe very much in philosophy. Philosophyguides a lot of what happens in a government. The ideasthat you argue for, and discuss, get implanted in peo-ple’s minds. And that’s more important than lots of spe-cific programs, or specific tax cuts, or anything else.

The New York City School System is today a job pro-tection system, not first and foremost a system about chil-dren. And the biggest change that has to be made — andthere are many different ways to make it — is that we haveto change the idea of the school system. The idea of aschool system is not about protecting the jobs of everybodyin the system without regard to their performance. The ideaof a school system is to do the best job in the world of edu-cating children. And then everything else follows from that.That is how we’re going to evaluate this system. We musttake the risk that somebody may not have all his benefitsand perks. Currently, it doesn’t matter if the teacher is thebest teacher in the world or the worst teacher in the world.They’re treated exactly the same — despite the fact thatthere is a real difference in performance. And we’ve got toget the system around to performance.

In that area, New York City has a lot to learn. Wehave a lot to learn from Chicago, where the legislaturein Illinois did away with their Board of Education andtheir local Boards of Education several years ago.Mayor Daley has done an excellent job of making thatschool system much more accountable under his control— because he’s accountable, and he’s putting good peo-ple there that are already putting principles of accounta-bility and competition in place and making big improve-ments. New York City and New York State have notdeveloped the political will to do that. I never like itwhen another city is ahead. In education, I think that’s

particularly terrible. We haven’t had the courage to takeon that type of innovation yet because of the heavy pres-sure of the job protection system.

Milwaukee has also done something really courageous.Mayor Norquist has instituted a school-choice program inwhich the poorest parents in the city end up with the samechoice as the richest parents have. And ultimately then,you break up the job-protection system because then theparents won’t choose the schools that are failing. In 1999,a private organization headed by Ted Forstman offered2,500 scholarships to private and parochial schools. Theyreceived over 160,000 applications from New York Cityresidents. The majority of those applications came fromNew York’s most disadvantaged families. Those familieswere saying overwhelmingly that they wanted a choice.They wanted more freedom, a better education for theirchild and a little more choice about the future of theirchild, rather than the government telling them that theymust put their child in a particular school even if they’renot satisfied with that school. The cities that embracethese changes and honestly say, “Let’s break this jobs pro-tection system and replace it with a system that has oneprimary goal — the education of our children,” will thrivein the years to come.

This is not at all an attack on teachers. There aregreat teachers. There are much better than averageteachers. There are average teachers. And then there areteachers that are below average. And there are teachersthat shouldn’t be teachers. That could be said about anygroup of people, any profession. And the great teachersshould be rewarded. Particularly the ones that are in adifficult school district, and they’re having great results.They should be rewarded. We have to start to find fairprinciples upon which to do that evaluation. That meansputting the children first. And I think that is the greatchallenge of the next three or four years.

All of that, however, is possible because it builds onthe changes that you’ve already made. This book, MakingGovernment Work, is an excellent example of that.

I’d like to close by reading you something. Because it’ssomething that Fiorello LaGuardia, my hero, used in hisfirst inauguration as Mayor of New York City. And I usedit in my second inauguration. It’s the Ancient AthenianOath of Fealty, which the citizens of Athens wererequired to take about their City. It may be the primarymodel on which a lot of our cities, a lot of our social obli-gations, and a lot of our sense of politics, is rooted.

“We will never bring disgrace to this, our city, byany act of dishonesty or cowardice nor ever desert oursuffering comrades in the ranks. We will fight for ourideals and sacred things of the city, both alone and withmany. We will revere and obey the city’s laws and doour best to incite a like respect in those above us whoare prone to annul them and set them at naught. We willstrive unceasingly to quicken the public sense of civicduty. Thus in all these ways we will transmit this city notonly not less, but far greater and more beautiful than itwas transmitted to us.”

That, ultimately, is what we’re all trying to do. Thank you very much.

New York Mayor Rudolph W. Giuliani emphasizes a pointabout reducing welfare rolls through workfare programs.


MAKING GOVERNMENT WORK:THE SAN DIEGO EXPERIENCEMayor Susan Golding, San Diego, CA

Thank you. It is an honor and a pleasure for me toparticipate in today’s forum. My thanks first toMayor Giuliani, for hosting this event, and my best

wishes to him. My thanks also to Temple University’sCenter for Competitive Government for its ongoingexploration to see how to make government work betterthrough effective public policy. And third, my thanks alsoto the National League of Cities, for providing a forumin which we can discuss this topic.

This morning, I’d like to talk to you about SanDiego’s Multiple Species Conservation Program, orMSCP. MSCP was developed as an alternative and, Ibelieve, a better way to preserve the environment.

The Endangered Species Act targets individual specieswithout taking into account in the same way what thatspecies may need to survive. MSCP balances better habi-tat and open space preservation with the need to supporteconomic growth in a major urban area. It better protectsthe rights of property owners and distinguishes betweenthose who hold land in the preserve and those who holdland outside the preserve and wish to develop it. Itemphasizes the habitat that a species needs to survive,and the need to connect wilderness areas.

Before I talk more about what it is, why it is impor-tant, and why it is viewed as the national model by theSecretary of the Interior, I would like to set the stage.

San Diego is the sixth largest city in the U.S. With apopulation of 1.2 million, it is the second largest city inthe State of California. I have had the honor of beingSan Diego’s Mayor for the past 71⁄2 years.

San Diego’s economy is driven primarily by manu-facturing, tourism, defense and aerospace, and advancedinformation technologies such as software development,telecommunications, biotechnology, bio medical anddigital multi-media.

As San Diegans, we are especially proud of the highquality of life in our area. Beautiful beaches, incompa-rable weather, livable neighborhoods and a thrivingeconomy all add to our quality of life.

Open space has always been at the top of thingsthat matter. San Diego is home to over 1,500 plantand animal species that also require open space. The

San Diego region is also expected to grow by 1 mil-lion new residents over the next 20 years. As you canimagine, this creates a conflict between our need topreserve open space and our need to protect the econ-omy, which requires additional housing and trans-portation routes.

This brings me to my topic, San Diego’s MultipleSpecies Conservation Program. The MSCP is a compre-hensive habitat conservation planning program for SanDiego. It is designed to preserve a network of habitatand open space, protecting biodiversity and enhancingthe region’s quality of life. At the same time, it alsoreduces some constraints on future development in thenon-preserve area.

Adopting MSCP was not easy. It took an unprecedent-ed level of cooperation and agreement between variouslevels of government in partnership with the wildlife agen-cies, property owners, environmentalists and developers.In the process, we streamlined government by crafting aprogram that removes multiple layers of bureaucracy,while at the same time creates a plan for a comprehensivepreservation of sensitive plant and wildlife species.

When I took office in 1992, San Diego was in themidst of one of the worst recessions in its history. Formany reasons — jobs, housing supply, etc. — the build-ing industry was a key component of our economic via-bility. Concurrently, a public frustrated with local popu-lation growth and wary of the loss of open space was inno mood to approve many new developments. There wasa fear that we would become the next Los Angeles — allconcrete and no open space.

The result was a political and regulatory climate thatwas bad for the economy, bad for the environment andrestrictive of the rights of private property owners.

So, on the one hand, San Diego is one of the 10 “hotspots” in the world for biological species diversity withover 1,500 species in our 380 square mile region alone.But, on the other hand, much of the undeveloped land

Susan Golding was elected mayor of San Diegoin November 1992 and was reelected in 1996. Shespearheaded the largest redevelopment project inSan Diego’s history and the development of SanDiego’s Habitat Conservation Program, which TheNew York Times called “the most ambitious effortever undertaken in this country to reconcile thecompeting needs of environmental protection andeconomic development.”

BIOGRAPHY


these species survived in was under private ownershipand targeted for development.

Although part of any development agreement wouldnormally call for open space mitigation, the set-asideswere piecemeal at best and not likely linked to otherdedicated open space areas. These cobbled togetherspaces — often not together at all — bore little resem-blance to what was needed to support our 1,500 speciesand their migratory and mating habits. But that is theway the Endangered Species Act has often worked.

On the other hand, things were equally bad for prop-erty owners who wished to develop their property. Costswere high, interest rates were high and most developershad gone bankrupt. Additionally, a public vote is nowrequired for large developments in the Northern part ofour city — an area known as the “future urbanizingarea.” And concern about vanishing open space wasmaking it very difficult to get voter approval.

A local group called Prevent Los Angelization Now —or PLAN — gained a populist appeal by frightening SanDiegans with visions of undeterred urban sprawl, chronicwater shortages and traffic congestion. Land use decisionswere a zero-sum game, pitting environmentalists vs.builders. No one really won. But the process slowed downand became more expensive for everyone.

In addition to this, the city permitting process wasoften a property owner’s nightmare. City planning staffseemed determined to protect the City from develop-ment. Proposals large and small were routinely turneddown by the Planning Commission and appealed to theCity Council, causing lengthy delays (and really longcouncil meetings!). If an Environmental Impact Reportwas required — and in most cases it was — state andfederal permits were often required, forcing developersthrough even more hoops.

By the end of the process, the developer was under-standably frustrated, and our environmental needs onlybenefitted by patch-size pieces of land, unconnected toany other dedicated open space and therefore question-

able in their viability as habitat. That was the climate of our City permitting and open

space protection processes as I entered the Mayor’s office. To address the larger economic issues, I slashed the

business license fee, created a one-stop shop for permitsand embarked upon many public infrastructure projects.

Also at the time I took office, the EPA was suing theCity of San Diego to implement a completely unneces-sary secondary sewage treatment system. This systemwould have cost us billions of dollars to build. It wouldalso have required a tremendous amount of resourcemitigation. It was my view that this challenge was anopportunity to confront the larger land-use issues in arational and comprehensive way. This was the inspira-tion for what is now known as the MSCP.

The goal of the MSCP is simple: create a comprehen-sive habitat conservation network of preserved open spacewhile simultaneously easing the burdensome regulatoryclimate on homebuilders by meeting all the requirementsof the state and federal government under the EndangeredSpecies Act, and upholding private property rights.

Instead of focusing on one species at a time, the planwould cover the needs of multiple species and thepreservation of native vegetation.

This idea of coordinated open space preservation wasnot new to me. As a member of the County Board ofSupervisors, before I was Mayor, I proposed the firsthabitat planning in the county. It was a very new idea atthe time — not mine, but borrowed — and extensivemapping was necessary to find out where species lived.

Ultimately, the City won its case in the federal law-suit and was not required to proceed with the secondarysewage treatment. However, even if we were notrequired to mitigate any longer, I wanted to proceedwith the MSCP because it was the right thing to do (anold fashioned concept these days).

A year before this, a small bird named the Californiagnatcatcher had been listed as a threatened species by theU.S. Fish and Wildlife Service. The gnatcatcher resides inthe coastal sage scrub found on Southern California mesatops. These same mesa tops were heavily targeted for newdevelopment because existing regulations had beendirecting development away from the hillsides and valleybottoms to preserve the character of our region.

San Diego’s development needs were about to crashhead-on with the need to preserve our natural resources.

A public policy needed to be worked out that wouldallow for the permanent preservation of enough land forthe gnatcatcher and 84 other sensitive species, while atthe same time allowing for the development needed tosustain San Diego’s growth.

I proposed a policy that would start with the publicland we already owned, adding critical acres where neces-sary through private mitigation and public land acquisi-tion. The goal was to build a connected reserve that wouldpermanently protect the habitat of 75% of the 93 targetspecies, of which 36 were listed as endangered at the time.

MSCP goes beyond the Endangered Species Act.Under this policy, we would only acquire property from

Three organizations coordinated the mayoral conference,here represented by (l to r): Larry Levy, deputy counsel ofthe City of New York; Don Borut, executive director of theNational League of Cities; and Paul Andrisani, co-directorof Temple University’s Center for Competitive Government.


willing sellers — I feel strongly that the governmentshould not “steal” private property, so condemnationwas not an option.

MSCP is to be the largest urban open space preservesystem in the nation — it wasn’t easy! The buildingindustry would only support the plan if there wereassurances that no “additional” land beyond what wewere identifying for the preserve would be required toprotect the species. We needed to guarantee them that “a deal was a deal” as it pertained to permitting. Wealso needed to guarantee environmentalists and the Fishand Wildlife agencies of the state and federal govern-ment that enough land would be permanently dedicatedas habitat to meet the needs of our threatened andendangered species. They had to have assurances thatthere would be a strict monitoring and managementstrategy to ensure the success of the program.

These guarantees were all part of the ensuing negotia-tions among stakeholders. It took several years to negoti-ate and act on the proposal. Heated and long negotiationsensued. It was ultimately codified and signed by the local,state and federal governments in March of 1997.

Through the MSCP we restructured our governmentto streamline the steps in the development process andensured a biologically sustainable open space preservesystem. It took a community partnership that includeda 3-way public partnership — local, state and federal— along with the private sector and environmentalcommunity.

The MSCP was built over the course of six yearsaround a stakeholders table. This “Working Group” waskey to the partnership establishing trust. A process forconsensus grew out of this trust. The city now has a per-mit granting us “take authority” which enables us tomake good on our promise of expedited permitting withno second hits.

Developers with land inside the preserve are permit-ted to develop 25% of their land and are either paidmore for their land or are not required to mitigate.Those with property outside the preserve can develop100% if they mitigate with land inside the preserve. Thefederal government signed off on a “no surprises” poli-cy, a controversial and significant “first” for theDepartment of the Interior.

A consolidated set of regulations has now beenestablished and the state and federal agencies are out ofour local permitting procedures. By eliminating the fed-eral and state governments from the day to day permit-ting of projects, we were able to provide a one stop shopfor the clients of the city. Property owners are now liter-ally saved up to seven years by not having to go throughthe state and federal processes.

Our public-private partnership also required a sharingof the responsibility to assemble the preserve. Certainamounts of acres were assumed to be obtained throughprivate project mitigation and certain other acreageswere presumed to be acquired through public purchases.

Because assembling the acres is a shared responsibil-ity, a mutual desire to see its completion was created.This partnership provided the framework by which sev-

eral projects found solutions that had previously beendenied by the voters. After the MSCP was adopted, thedevelopers and environmentalists were able to negotiatewin-win solutions that met with voter approval.

The real progress of the MSCP can be counted notby the projects that have been approved, but by theamount of open space that has been preserved. BruceBabbit, Secretary of the Interior, personally signed theFederal part of our agreement. He stated that “MSCP isa magnificent achievement.” It is the beginning of a newchapter in American conservation history. This is amodel which ought to be examined and replicated allover this country because what it says is that it is possi-ble to create a process which brings people from thevarious interests together in search for balance.

At the end of this year, the City of San Diego, willhave purchased, dedicated or protected 44,400 acressince 1993. We now have but a little over 7,000 acres ofland left to conserve to complete our 52,000-acrenaturelands preserve that we set out to accomplish.When it is complete, it will be the largest urban naturalland preserve in the nation — carved out of public andmultiple private lands — something worth fighting for!

The ongoing challenge is how to help the changingstaffs of federal, state and local jurisdictions maintain the“paradigm shift” that was agreed to in the MSCP. This isimperative to the long term success of the program.

Funding is also an ongoing challenge. Under ouragreement with the Federal Government, the feds andstate were to provide 50% of the funding with mitigation,developer agreements and local government funding pro-viding the balance. In California, a $2.1 billion bondmeasure for parks and open space was passed by voters inMarch, with $100 million dedicated to plans such as theMSCP. MSCP is expected to receive a majority of thesefunds because there are only 2 preserves which qualify.

The MSCP was a long and difficult but ultimatelysuccessful effort. Projects are now mitigated in a com-prehensive manner instead of on a species-by-species,project-by-project basis. Secretary Babbit has calledMSCP a model for the nation, and with some effort, itcan be replicated in other regions as well. The MSCP isnot perfect, but instead of piecemeal planning andpreservation, we can now have a connected natural landsystem that we will be proud to leave our children.There are few accomplishments an elected official canbe certain will outlast her. This is one that I am sure willeven outlast my grandchildren — and theirs.

I hope that other communities will be able to replicatethe effort and that our members of Congress will under-stand the need to change the Endangered Species Act tomake this kind of preservation a priority. Postage stampparcels to preserve a single species will not survive. Alarge, interconnected habitat has a much better chance.

I welcome your questions by e-mail or by post, and Iwish my fellow mayors and councilmembers the verybest in the new millennium. May we and our childrenall have trails to walk on and birds to listen to.

Thank you.


FOUR PRACTICES THAT HAVELED TO A MORE EFFECTIVEGOVERNMENT: THE CHARLOTTEEXPERIENCEMayor Patrick McCrory, Charlotte, NC

Over the past decade, Charlotte, North Carolina,has long been recognized as an innovative localgovernment with a pro-business image and a

“can-do” attitude. This recognition and reputation stemsfrom such awards as the City being named one of thefive “Most Livable Cities” in the year 2000 by theCenter for Livable Communities. Pam Syfert, CityManager since 1996, was named one of the top ten“Public Officials of the Year” by Governing Magazinein 1999. In its December 2000 edition, a survey in Inc.magazine ranked Charlotte as the seventh-best businessfriendly city in the country.

Charlotte’s positive reputation is due to many factors:from the strong and diverse economy, to enjoyableSoutheast weather, to a local government that has invest-ed tax dollars in the City and implemented business andmanagement practices to help, not hinder, progress inthe City and region. Four particular practices imple-mented by Charlotte City government have contributed,in large part, to Charlotte’s unprecedented growth andprosperity in the decade of the nineties. More impor-tantly, the four practices of Asset Management,Privatization, Services Consolidation and Smart GrowthPlanning have positioned Charlotte to remain one of thetop local governments in the country well into theTwenty-first Century.

Asset ManagementAsset management is something that is tedious to

track and hard to get a handle on, yet it is crucial forlocal governments to manage. By definition, asset man-agement means to identify and analyze all physicalassets (land and buildings) and evaluate alternativearrangements for ownership and management.Charlotte’s goal is to maximize use and/or return onexisting and future assets. In order to maximize assets, a government has to list and know what they own. Thissimple exercise is an eye-opener and one that can bringmany surprises. Most jurisdictions will find that they

own many of parcels of land throughout all areas of theCity for many, many different purposes: for utilities, forarts, for operations, including old maintenance facilitieswhich have long been closed. In some cases, there mayeven be brownfield sites. It is amazing how much prop-erty local government owns.

One step the City of Charlotte took in its AssetManagement Program was to use half of a previouslyformed Privatization Task Force to serve as an AssetManagement Committee. Many of the people on thiscommittee were people who understood the real estatesector and had experience in development and realestate. Their main role was to review and audit Cityproperty for its present use and potential best use.

Out of this Committee came a City Policy on AssetManagement, and in 1999 it led the City to approachthe North Carolina legislature for authority to sell publicland for its best use, and not just to the highest bidder.This legislative authority was a significant shift, espe-cially for some members on City Council, but one thathas already proven beneficial in giving the City Councilthe necessary tools to influence the type of developmentdeemed necessary in different parts of the City. Moreimportantly, this flexibility in choosing successful bid-ders gives the City a say in the best long-term value fora piece of property, not just for tax roll purposes, but forlong-term viability of the City.

One example of using this new “sell for the best-usepolicy” is the sale of the City’s Old Convention Center.The Old Convention Center is on prime real estate inthe center of the City and adjacent to a soon-to-be-developed light rail line. Although the Old ConventionCenter continues to be on the market, this policy allowsthe City to hold onto the building until an offer for thebest use and price comes forward. When City Councilfirst considered offers to sell the Convention Center,some of the members said, “Sell it, and just get thehighest price.” As it turned out the City had three offers.One offer was for $11 million, yet another offer was for$13 million, but the $11 million offer had a mixed-usedesign that would have had a more long-term value,

Patrick McCrory began his second term asCharlotte’s mayor when he was reelected in 1997.He began his political career in Charlotte in 1989when he was elected to the Charlotte City Counciland was Mayor Pro Tem from 1993 to 1995. Apart-time mayor, he has worked at Duke EnergyCorporation since 1978 and currently serves asmanager of business relations.

BIOGRAPHY


which would have brought in much more tax revenueover time into downtown Charlotte. Although the Cityhas yet to find a buyer who can secure a financing planto build their design, Charlotte has been able to uselong-term value as part of the equation in making adecision on asset management.

However, the Asset Management system is not ascut-and-dried as it appears. When the newspaper head-lines read, “City Accepts $11 Million Dollar and TurnsDown $13 Million Dollar Offer,” many people will startto question their local officials and write letters to theEditor as to why the City turned down $2 million dol-lars? Well, it takes more than a sound bite to try toexplain it, but the answer is long-term value. Becausethe proposal was to build a much bigger building, theland would eventually be worth more, which would thenhelp pay for the schools, police, fire, roads and otherinfrastructure needs, etc.

One issue that must be acknowledged is that there issome danger in having the ability to sell for less thanthe highest bid. The City Council must guard againstpolitics with the freedom of selling at lower than highestbid, as many wonderful non-profit groups will approachCity Council and say, “Well, now that you’ve got thatpiece of property, and you don’t need to take the highestprice, we want to use it.” These types of situations mustbe addressed by the fundamental principle of the AssetManagement Program, which is to identify the bestlong-term use that also maximizes revenue to the City.

Since 1995, 130 parcels of land have been sold orownership transferred to adjacent property owners for atotal of $30 million, in addition to returning these prop-erties to the tax rolls. One piece of property that wassold in 2000 was an old brownfield site that was on theEnvironmental Protection Agency’s Superfund Clean-uplist, but had been remediated by the City and sold formillions, due in large part to its center city location.

While establishing an Asset Management Programand undertaking the process to audit property andparcels of land is enough work for one jurisdiction, it is highly recommended that governments in the regionwork together to do property/asset inventory as well,especially schools. Knowing the ownership of all thepublicly held land in the area could lead to land swapsand other property arrangements that would be benefi-cial for the community and lead to even greater use formany parcels of land.

Privatization and Managed CompetitionThe term privatization means many things to many

people, and this is where some confusion may arise incomparing the activities of cities nationally. At one endof the political spectrum, privatization is touted as the“cure” for bloated government bureaucracy. The privatesector can provide service better than the public sector,this perspective argues, so the public sector should getout of the business of providing some services with itsown employees and, in essence, become contract moni-tors for the private-sector firms hired to do this work.

This perspective has met with considerable resistance in Charlotte, particularly from public sector employeeswho maintain intense pride in their work and fear politi-cians will simply “take” their jobs and “give” them tothe private sector. At the other end of the political spec-trum are those who believe privatization has no place inpublic service. Private companies, they reason, haveprofit, not the public’s best interests at heart and wouldtherefore gouge the unsuspecting taxpayer, leading toinflated cost for services and, perhaps, lesser quality.

Charlotte has taken the middle-ground approach toprivatization, preferring to use managed competition asthe method for determining service providers. Managedcompetition includes the entire spectrum of servicedelivery options from “pure” privatization, to public-private competition and contracting, to outsourcing.Service contracting is not new to Charlotte. Like mostother cities and counties across the United States,Charlotte has for some time contracted with the privatesector to provide many services. As early as 1978, theCity began outsourcing such services as street resurfac-ing and business garbage collection, then multifamilygarbage collection (1980), custodial services (1984),golf course management (1985) and ground mainte-nance (1986). Many of these services have just recentlyappeared on the privatization radar screens of manyother municipalities. In 1995, Charlotte awarded a totalof $204 million in service and construction contracts tothe private sector, and in 2000, the City awarded $360million in service and construction contracts.

Managed competition is the way Charlotte does busi-ness: it is systemic and institutionalized. Benefits arederived when traditional public services — that is, thosedelivered by enterprises owned and wholly operated bymunicipal workers — are subjected to head-to-headcompetition with the private sector. The hallmark of theCharlotte Managed Competition is referred to as the“Yellow Pages approach.” This means that the Cityworkforce must compete with the private sector acrossthe board in any service that is advertised in the YellowPages. If the City is doing a service that is advertised inthe Yellow Pages, we ought to put that service out forbids. That’s the motto — if it’s in the Yellow Pages andthe City does it, bid it.

The ultimate goal of Charlotte’s Managed Competi-tion program is to generate significant financial advan-tages, yet there are many other benefits that have beenrealized, including increased efficiencies and renewedpride in public service when municipal employeesdemonstrate performance levels meeting or exceedingthose of the private sector. Competitive bidding of pub-lic services is not, however, without potential pitfalls.City departments have to learn activity-based costingand management to establish true costs for services inorder to compete for a service. The workforce has to beprepared to work in a competitive environment andunderstand that their jobs truly are on the line and couldbe eliminated at the end of a contract. The entire bid-ding and request for proposal (RFP) process has to beset up on a level playing field or the private sector will


quit bidding if they see favoritism toward the public sec-tor. Also, cities have to be sure the private sector doesnot try to undercut them for short-term gain, just to getin and then raise the price two or three years later.Further, cities have to ensure contractors do not defaulton a service contract, which would only cause additionalproblems and added costs.

The managed competition program, combined withmany other City initiatives has led to some prettyimpressive numbers. To date, the City has had 52 compe-titions, worth over $28 million. The City won 43 of thebids and the private sector has won approximately nine.Charlotte has an annual savings of over $5 million a yeardue to competitive bids. Presently, there are 55 servicesthat are outsourced for annual savings of $3.1 million;and 26 services have been completely reengineered,which has led to another savings of approximately $5million annually. The City has 19 percent fewer employ-ees per one thousand in population now than it did in theyear 1980. It would have been less than that, but thePolice Force was increased by over twenty percent. Theproudest accomplishment that has stemmed in large partfrom the Managed Competition Program is that the Cityhas not had a property tax increase since 1987.

Political/Service ConsolidationThe end of the twentieth century went out with a

bang for the proponents of local political/service consol-idation (of which I am one), when the voters ofLouisville and Jefferson County, Kentucky voted inNovember 2000 for political/service consolidation.Greater Louisville, as the City and County will now becalled, joins 16 other consolidated local governmentsacross the country. While the topic of consolidation hasbeen on the minds of many citizens in Charlotte andMecklenburg County, North Carolina, the motion toconsolidate lost by one vote in the City Council to sendit to a vote of the citizens in 1996. There are many rea-

sons why consolidation is not sup-ported by members of the CharlotteCity Council and the MecklenburgCounty Commission with many ofthe reasons being political, includ-ing the City and County officialshaving to run against each other forseats on a consolidated governmentcouncil.

Aside from politics, one of thekey reasons consolidation is notgenerating much interest inCharlotte-Mecklenburg is becausemany of the services are alreadyconsolidated and the City andCounty enjoy an unusually cooper-ative relationship, such that mostcitizens see the services of the Cityand County as seamless. TheAdministrative Offices for the Cityand County are in the same build-ing; the City Council and County

Commission meet in the same Chamber Room, but ondifferent nights; and most importantly, 16 services havebeen consolidated. In the 1980s, 14 major services wereconsolidated, including Building Standards, Planning,Purchasing, Utility, Animal Control, EmergencyManagement, Crime Lab, Customer Action Line, FirstResponder, E-911, Landfills, Veterans Services,Elections Office, Tax Listings and Tax Collections. In the early 1990s, Parks and Recreation and PoliceServices were added to the list of successful consolida-tions. The City and County even have a consolidatedschool system, which falls under the County and stemsfrom desegregation issues of the 1960s.

One of the biggest consolidations was the PoliceDepartment. The City used to operate its own PoliceDepartment, as did Mecklenburg County. Realizing thatthe City was growing at a phenomenal rate, due mostlyto annexation, the City Police was patrolling more andmore of the County and there were more overlappingservice areas. Understanding that the City would contin-ue to grow and the Police responsibilities for the Countywould continue to shrink, the two governments enteredinto an agreement that Police functions would be con-solidated as a City function for the entire County. TheCounty has a contractual service agreement with theCharlotte-Mecklenburg Police Department (CMPD)based upon the service provided every year for the num-ber of residents (tax base) for the unincorporated areasof the county. During each budget development cycle,the City and County budget staffs negotiate a paymentnumber for Police services. Although CMPD providesPolice services for the entire County, the County stillhas an elected Sheriff for which the County funds hisduties to operate and maintain the County jail facility,provide security for the County Courts, and deliver andserve warrants.

In exchange for consolidating Police services, theCity gave up Parks and Recreation services to

Ernest D. Davis, mayor of Mt.Vernon, NY shares his views with fellow mayors.


Mecklenburg County, in order for those services to beconsolidated. The City does still operate and maintainone small city park and a cemetery, but all the parks andrecreations functions now rest with the County. Whenthe parks and recreation services were consolidated, theCity shifted a portion of its tax rate dedicated to parksto the County in order for them to maintain the parks atthe same funding level.

The consolidation of Police Services and Parks andRecreation was certainly a success — and one of thebiggest and most complex because it involved tax rateand tax base issues — but the most significant consoli-dation was that of the Planning Commission. Over timeit became obvious that it made no sense to have a plan-ning department in the County and a planning depart-ment for the City of Charlotte, especially givenCharlotte’s significant annexations, including up to20,000 people at a time. A Planning Commission ofCity and County citizens was established and thePlanning Director reports to both the City and CountyManagers. Both governments adhere to a sharedMecklenburg County Plan, yet both governments stillhave zoning jurisdiction per state law, although theCounty’s zoning decisions continue to shrink signifi-cantly as the City continues to annex. The PlanningCommission is the Zoning Administrator for both theCity and County, so each maintain consistent Zoningpolicies which make growth standards easier to addressfor developers and to enforce for the City and County.Furthermore, with Smart Growth such an issue thesedays, Charlotte-Mecklenburg has been in a leadershiprole in Smart Growth, namely due to having a consoli-dated Planning function.

Despite the renewed emphasis of the currentMecklenburg County Board of CommissionersChairman, plus my support for political and servicesconsolidation in Charlotte-Mecklenburg, the issue stilldoes not have enough support among the two politicalbodies to bring it to a citizen vote. In many cases, weare victims of our own success with the services wehave already consolidated, yet as time goes on, all citiesand counties will continue to be reminded by their citi-zens that many municipal problems do not recognizepolitical boundaries. Now we just need to get more localgovernments to recognize what most citizens haveknown all along.

Smart Growth PlanningSmart Growth is an overused word, but one that is crit-

ical to the health of cities and counties, and more impor-tant to citizens’ perception of quality of life. Charlotteand Mecklenburg County, through our consolidatedPlanning Commission, have taken Smart Growth to heart,although in Charlotte we call it “Growing Smarter.”Charlotte, like the rest of the State of North Carolina andmany cities and counties around the country, experienceda phenomenal growth boom in the 1990s. Since 1990, thecity has grown from a population of 395,000 to justunder 530,000, according to the 2000 Census. Thenation’s 47th largest city less than twenty years ago,

Charlotte is now the 25th largest city — and our 20 per-cent growth rate is second only to Phoenix among citieswith a population of a half million or more.

Much of Charlotte’s recent population growth —about 81,000 persons (equivalent to the state’s eighthlargest city) — is due to successive annexations thatbegan in 1991 and continue with the addition of another20,000 in 2001. Each year, the City limits of Charlotteexpand an average of 6.7 square miles and add an aver-age of 45 miles of streets. Each year, Fire and Police seea six percent increase in the number of emergencyresponse calls. Each year, Solid Waste adds 5,000 cus-tomers for its sanitation services. Each month, Utilitiesadds 1,000 new customers and the average daily waterconsumption has increased 21 million gallons from1995 to 1998.

To date, the City and County have been able to handlethis growth without much pain, yet the air quality contin-ues to deteriorate, commute times grow longer, and moregreen space is devoured by development. Charlotte is onthe verge of making significant decisions that will greatlyimpact whether or not it maintains its positive image asthe leader of the “New South” or stumbles from theweight of it own success. Charlotte has made great stridesin maintaining a high “quality of life” for its citizens: fromthe development of a 65-mile loop highway (one of thelast major cities not to have an outer beltway); to investingin the Center City with housing, office, and hotel develop-ment; to supporting inner city neighborhoods with infra-structure improvements; to undertaking the massive taskof building a mass transit system, including light rail, in

Christina Shea, mayor of Irvine, CA, enjoys a lightermoment in one of the lively discussions that followed conference presentations.


the City’s five major transportation corridors. The Cityhas been correcting mistakes of the past to promote com-munity and connectivity by doing such simple things asbuilding sidewalks, where there were none, to formingpartnerships and community development corporationsto revitalize abandoned properties.

Because of the many growth demands, the City ofCharlotte has relied on Smart Growth principles toaccommodate the influx of people. Yet there is more tobe done and in a much more methodical and stringentstep to ensure Charlotte is not just a livable city, but adesirable city. Thus, City Council is embarking on a“growing smarter” development process that will pro-vide City and County staff with clear direction on howthe City will grow. City Council continues to investheavily in the Center City, as the Center City reflects thehealth of the City overall, plus the Council is deeplycommitted to driving development along the five trans-portation corridors. In addition to these general deci-sions, the Council is working to finalize eight “GrowingSmarter Principles” as developed by PlanningCommission Director Martin Cramton. The eight princi-ples as proposed include:

● Maintain planning capacity and quality:Prepare comprehensive and strategic plans consider-ing the regional context as well as integrating landuses, natural resources and infrastructure in publicservice policy decisions.

● Sustain effective land use decision making:Support plan implementation through the following:administration of streamlined, predictable reviewprocesses; clear and objective standards; coordina-tion among agencies; preparation and funding ofcapital improvement programs that implementadopted plans; and coordination of all public servicedelivery with development/revitalization plans.

● Strengthen community vitality:Foster development that is directed to desiredgrowth areas, compatible with stable areas or meetsthe revitalization need of older areas.

● Build a competitive economic edge:Support, retain and attract a strong economic base.

● Design for livability:Promote sound, well-designed developmentthrough clear and objective standards.

● Safeguard the environment:Integrate protection of natural resources withdevelopment decisions and practices.

● Develop a balanced, integrated transportation system:Build a transportation system that coordinatesland-use and transportation planning.

● Use public investment as a catalyst for desireddevelopment outcomes:

Support future growth togetherwith meeting revitalization needsidentified by adopted plansthrough coordination of the plan-ning, timing, fair funding andprovision of a full range of infra-structure, facilities and services.

These eight principles still needto be defined and put into actionplans by City staff, yet they repre-sent not only how Charlotte willgrow in the future, but also how itwill grow smarter. By using SmartGrowth Principles, Charlotte willcontinue to promote a highQuality of Life for its citizens andcontinue to be a community ofchoice to live, work, raise a familyand enjoy leisure activities.

Fox School dean Moshe Porat (center) introduces Temple University trustee Joan H.Ballots to Mayor Giuliani at a pre-conference dinner at Gracie Mansion.


MAKING GOVERNMENT WORK:THE JERSEY CITY EXPERIENCEMayor Bret Schundler, Jersey City, NJ

Alot of debate in government focuses on howstrong government should be or how weak itshould be. I think the real issue is where power

should be. And basically, my belief is that you shouldlocate power as closely to people as possible and thenyou will have government that serves people as consci-entiously as possible.

One of the discussions I am sure we are going to talkabout at great length today is competitive contracting.Competitive contracting is all about giving a governmentalentity the opportunity to look at different ways to providea service: whether to do it in-house or go out into the freemarket. That is a power, a power to decide what is the bestway to provide a service at the lowest possible cost.

I would like to talk about going beyond competitivecontracting to empowerment. Empowerment is competi-tive contracting “plus” — competitive contracting withthe caveat that the one who decides who will be theprovider of a service should be the very person or groupof people whom a government asserts it wants to helpwith that service.

Business Improvement Districts are an example ofempowerment. They are characterized not just by thecompetitive provision of various supplementary publicservices — like security and sanitation services — butby the local property owners (those whom these servicesare meant to help) having the power to decide whichcompetitor should get the contract to provide these serv-ices. You shouldn’t have public officials deciding whogets the contract. You have the people who will beeffected by the service making that decision.

School vouchers are another example of empower-ment. They would make schools compete for the privi-lege of educating our children, and would make schoolsdirectly accountable to parents.

I believe power should be kept as close to the peopleas possible, and that only when government empowersthe people does it serve them. When politicians use gov-ernment to empower themselves, I believe they tend toserve themselves.

Providing for competitive provision of public services,and allowing the intended beneficiary of those services todecide which provider gets the business, makes theprovider accountable to the service beneficiary and there-by empowers that beneficiary, or customer, to demandquality. Empowerment, even more than competitive con-tracting, can revolutionize government and improve theeffectiveness and efficiency of governmental programs.

Allow me to provide some examples of how this theory of empowerment applies to inherently communalenterprises, such as building a community center or anew public school, and also to individual essentials ofopportunity, such as education and health care.

I’ll begin by talking about a really sexy issue:garbage disposal. In New Jersey, the State created amandate that you must bring all garbage in the countyto a county garbage incinerator. They wanted to makeNew Jersey garbage disposal self-sufficient. We are notself-sufficient in oil or wheat production. But darn it,we were going to be self-sufficient in garbage disposal.So the State ordered each county to build a countyincinerator, and ordered all municipalities in New Jerseyto channel all garbage to these incinerators, so that theywould have a guaranteed waste flow stream, and cashflow stream, that would assure the bond markets of eachcounty’s ability to pay off the bonds that would have tobe issued to build these many incinerators.

Now, within one year of the State creating thesecounty monopolies, guess what happened? Garbage dis-posal rates tripled — one year: tripled! Now for thosewho believe that monopolies automatically lead to high-er costs, we have a great case study for you.

Of course, it was New Jersey’s mayors who gotblamed by property owners for having to increase theirproperty taxes to pay for these soaring garbage disposalrates. We didn’t like that, so we joined a legal challengethat ultimately went to the U.S. Supreme Court and

Bret Schundler was first elected mayor ofJersey City in a special election in 1992, becomingthe first Republican to hold that position since1917. Using his experience on Wall Street, he cre-ated the first-ever securitization of tax liens in thecountry in 1993, increasing the city’s tax collectionrate from 78% to 100% and saving the city fromimpending financial calamity. He was reelected in1993 and 1997, running on a record of restructur-ing local government by empowering its citizenry.

BIOGRAPHY


struck down New Jersey’s waste flow restrictions on aCommerce Clause provision which denies states theright to interfere with interstate commerce — even, asin this case, interstate commerce in garbage disposal.

Garbage disposal rates have come down in New Jerseybecause we now, once again, have the right at the locallevel to competitively contract for garbage disposal. Thoseof us who will have to pay the bill can choose the leastexpensive, environmentally sound garbage disposal option.

Hooray for the free market. Having competition in theprovision of services does not just save taxpayers’ money, italso fosters continued technological innovation in a marketsector. When the state ordered municipalities to take theirgarbage to county incinerators, it froze the development ofalternate disposal technologies in New Jersey. Now, withlocal governments re-empowered to consider a variety ofdisposal options, you have renewed the possibility of themarket creating innovative solutions that are not just morecost-efficient, but also more environmentally friendly.

Let’s look at something else we have done in JerseyCity. I led the battle to pass charter school legislation inNew Jersey. As a result of Teachers Union opposition,New Jersey’s charter school law is not everything itcould be. One problem is that of facilities construction.Our charter schools are not allowed to borrow money.This prohibits them from being able obtain a mortgageto build a school building. Facilities construction is aproblem for charter schools in many states.

The City of Jersey City had a second, somewhat dif-ferent problem relating to community center construc-tion. We wanted to build some community centers indifferent neighborhoods, but we didn’t have the finan-cial wherewithal to pay for it. Ours was a middle-classand low-income city. Higher-income people are begin-ning to move back because of recent quality of lifeimprovements. But I used to say that Jersey City waslike New York, which has both rich and poor, except wedidn’t have the rich. Our lack of wealth, and our finan-cial inability to afford new facilities construction, was areal problem. We have the same population density asManhattan, yet had no public place where childrencould be off the streets and safe after school. Childrenwere either in school, at home or on the corners. Wecouldn’t afford to build a community center for them.

Then we figured out a way to kill two birds with onestone. We had the City build a community center, whichwe leased to a charter school as a daytime tenant. Thecharter school took advantage of our ability to bond forthe facility’s construction. The City took advantage of thecharter school’s financial ability to pay a rent that wouldcover our construction bond debt service. The charterschool now has a facility that is perfect for its needs. Wenow have a community center for children to attend dur-ing non-school hours that cost our taxpayers nothing. Infact, when our bonds are paid off, we will still earn renton the building, which we will then be able to use to payfor recreational program operating costs.

Not a bad solution to the school and City’s problems inrelation to facilities construction. But notice, please, that itwas only possible because the school and the City had the

power to enter into this agreement. It worked because wehad the power to do what made sense for us to do.

And by the way, we didn’t actually have the Citybuild the facility. Instead, the City sought competitiveoffers from private developers to build a specified facili-ty to sell to us. Doing this allowed us to avoid theincredibly cost-increasing rules that pertain to publicsector construction. We obtained a public building, hada private developer build the center using private sectorprocedures, and saved over 50% on what it would havecost the City to build the facility itself.

Now you know why I hate restrictive rules promul-gated by distant legislatures. The people are hurt whenpower is centralized away from them. We saved a bun-dle on this construction project only because we wereable to find a legal way to circumvent the State’s publicconstruction rules.

Let me provide one last example, in connection withan inherently communal service, of why it makes senseto have power at the local level. Cities in America havea problem with open-air drug markets. The urban jailsare full with drug dealers, so judges often downgradedrug-dealing offenses to a disorderly person charge. A police officer will arrest a drug dealer, spend hoursbooking the arrest, spend hours in court on some futuredate waiting to testify against the dealer, all to have thecharge downgraded and the drug dealer released. Thismakes a mockery of drug law enforcement efforts.

So we decided that if the prospect of jail time wasnot a credible deterrent, perhaps a stiff fine would be:not for drug dealers, for whom a fine would just be anacceptable cost of doing business, but for drug buyers.If we could make Jersey City the high-priced market fordrug buying in the area, we figured we could drive thedrug buyers out of Jersey City and cause the drug deal-ers to follow their customers and go elsewhere.

We set up plainclothes operations, where police offi-cers, dressed to look like drug dealers, set up shop onhigh drug activity corners. When buyers solicited them,we gave the buyers a summons for loitering in a knowndrug activity area. It is a felony to solicit drugs. But if weactually charged the buyers with a felony, we would haveto arrest them. After just one solicitation, your police offi-cer would have to quit the corner and take the buyer intothe central police station for arrest processing. The cornerwould be bare, and the drug dealing would continue. Soinstead, we had the police officer simply issue a sum-mons to the buyer for loitering in such an area, which is acity ordinance violation and does not require arrest. Likea parking ticket, it simply requires that a fine be paid —in this case, a heavy one: $250 for a first offense, $500for a second, and $1,000 for a third.

This approach had many advantages. First, it kept thepolice officer on the corner. Instead of having to quit thecorner after just one solicitation, it allowed the policeofficer to stay there and, the first time we tried this,issue 57 summonses in the first three hours of the sting.Second, a City ordinance violation does not cost asmuch to prosecute, given that there is a lesser burden ofproof required. Third, this approach generated revenues


to pay for the enforcement operation. Fines assessed inconnection with felony charges go to the county court,even though it is the municipal police department whichincurs all of the costs enforcing drug laws. Finesassessed in connection with a city ordinance violationgo to the city. If a policing action can raise the revenuesnecessary to cover its costs, that makes it affordable fora community to expand that policing action to as manylocations as there is illegal activity to be combated. Itliterally makes crime pay, but now, not for more crimi-nal activity, rather for more policing activity.

This strategy worked pretty well to decrease open-airdrug dealing in Jersey City. Some buyers were indigentaddicts. If you could not collect against someone, ourintention was to request that the county jail take them in fora few days, and allow us to assign them to a work detail.We wanted there to be some punishment for all violators.Other buyers had money. I think we successfully drovethem out of Jersey City. Unfortunately, we were sued bysome defense attorneys who argued in court that we shouldhave charged their clients with a felony, not just a city ordi-nance violation. They based their case on a pre-emptionargument, asserting that state guidelines require a moresevere charge. Can you imagine a defense attorney arguingthat their clients should be dealt with more harshly? Theywanted us to up-grade the charges so that they could justget their clients off with a wrist slap. A trial level judgerejected their challenge, saying that the realities of the situ-ation justified our strategy. But an appeals court reversedthe trial judge and struck down our procedure.

So now we have to go to the Legislature to ask themfor permission to do what makes sense in our particularcircumstance. We had a program that was working toremedy a serious problem, but a state court said wecould no longer use it. If you ask me, state usurpationsof what should be local discretion are holding back ourcities from solving many of their problems.

Of course, state usurpation of power is not just aproblem in connection with community services, suchas policing, but also with individual services, such aseducational and health care services.

The Bill of Rights is an empowerment document. Itsecures certain freedoms for individuals. It is necessarybecause people with power are often tempted to takeaway others’ freedom. I wish it applied directly to theissue of educational freedom, because if we could ensurethat all parents, the poor as well as the rich, had the powerto seek out the schools that would best help their childrenlearn, we would have much better schools in America.

This fall, I am going to have two education-relatedtax credit bills being introduced into the New JerseyLegislature. The first will establish a 50% tax credit, upto $500 per child, for parents out-of-pocket expenseseducating their children. The second will provide for apartial tax credit for donations made to scholarshipgranting foundations.

There are private scholarship foundations operating allthroughout the State of New Jersey, which make scholar-ships available to children attending privately managedK–12 schools. If you donate money to them, you receive

a charitable deduction on your federal income taxes. Butyou do not receive any state tax benefits for making sucha contribution. I am proposing a 75% state tax credit, upto $10,000 per individual benefactor and 10% of a corpo-rations tax liability, for charitable contributions made toscholarship foundations. A high-tax bracket giver whocontributed to these scholarship foundations wouldreceive a net 85% tax credit (75% from the state, 10%additionally from the federal government) for giving tosuch charitable foundations. This would enable thesefoundations to raise an enormous amount of charitablemoney, and help a great many children be able to afford a privately managed school of choice.

I support the school voucher concept, but we are opt-ing here to create a private scholarship program insteadof a school voucher program for three basic reasons.First, it will be easier to sell the New Jersey Legislatureon providing a state tax credit for contributions to schol-arship foundations than to sell it on instituting a schoolvoucher program. (The federal government already pro-vides a tax benefit for such contributions, so we are talk-ing about a very non-radical proposal.) Second, a chari-table contribution tax credit will be more likely to sur-vive any court challenges. (After all, you can get a taxbenefit if you put money in your church offering plate onSunday. Why shouldn’t you be able to if you contributeto a scholarship foundation which makes scholarships tochildren who, of their family’s own volition, may chooseto attend a religious school.) Third, it should be easy toprotect religious schools, which accept students bearinga private scholarship, from governmental regulatoryinterference. (I think schools accepting governmentvouchers could also be effectively protected, but thisshould makes it even easier to any new regulation.)

A final example of how empowerment theory mightbe applied to the provision of an individual service, isthe example of medical savings accounts.

I am proud to say that Jersey City became the firstgovernmental entity in the United States to offer med-ical savings accounts to its employees. We got the Stateto permit us, on a pilot project basis, to keep ouremployees in the State Health Benefits plan, but offerthem a fourth option which other plan enrollees do notenjoy. The State Plan normally has three options: a stan-dard indemnity plan with a $200 deductible and thensome co-pays; a preferred provider option; and an HMOoption. I think you understand what those options are.

The fourth option our employees were offered was amedical savings account/insurance policy option. Thisoption combined an insurance policy, with a $2,000 fami-ly deductible, where the policy covered 100 percent ofexpenses above that $2,000 deductible, with a medicalsavings account that we — the City of Jersey City —funded for our employees to the tune of $1,800 per year.

Under this medical savings account option, familiescould choose any doctors they want and obtain any pro-cedures they wanted. If total family medical expenseswere less than the $1,800 the City placed in their med-ical savngs account, we paid out the remnant to the fam-ily at the end of year and put in a new $1,800. If family


medical expenses were above $1,800, our employeeswent into their pockets for the first extra $200, but afterthat the insurance policy kicked in, and covered allexpenses above $2,000 for the family.

Our employees loved this option. They chose their owndoctors and procedures. If they had a good year with rela-tively few expenses, they got money back. If they had abad year, their maximum out-of-pocket expense was $200.Well-care services, like check-ups, counted against thedeductible. They did not under the State’s traditional plan.But they did under the medical savings account plan.

The City saved money, too. The difference betweenthe deductible on the State $200 deductible indemnityplan and the higher $2,000 deductible insurance policywe combined with the medical savings account, wasapproximately $2,300. After using $1,800 of that sav-ings to fund our employees’ medical savings accounts,we still saved a net $500 per employee family electingto take the medical savings account option.

Talk about a win-win situation. We gave our employ-ees control over their own health care, lowered theirpotential out-of-pocket expenses, and saved the taxpayersmoney at the same time. We were able to afford to do thisbecause at the same time that we empowered our employ-ees to take control over their health care decision-making,we also created an incentive for them not to get gratuitouscare: not, in other words, to waste money.

Let me tell you about a personal experience I hadwhich illustrates how this works.

I had back surgery in 1993. When I was finished withmy physical therapy, the physical therapist said: “Whydon’t you keep coming back? We won’t charge you anyco-payments.” Now, legally, that’s fraud, because they willreport to the insurance company that they are collecting

my co-pays, and then not do it in order to tempt me tokeep coming back. But in all honesty, I didn’t need anycontinuing physical therapy. Physical therapy on your backis kind of nice. They give you electro therapy and mas-sage. It’s really rather pleasant. So people, if they don’thave to make any co-payments themselves, might betempted to say “yes” to the proposition that they keepcoming back. But they won’t say “yes,” they won’t getunnecessary care, they won’t drive up health care claimsand insurance premiums, if by saying “no” they get tokeep the unspent funds in their medical savings account.

That’s how medical savings accounts control the cost ofhealth care. They do it through self-rationing. HMO’s usethird-party rationing, where someone else gets to decidewhether you can see the doctor you want, or get the proce-dure you want. Medical savings accounts simply create afirst-party incentive for you not to waste money, and thengive you the power to make all of those decisions yourself.

Medical savings accounts provide affordable healthcare choice. They represent a better way to keep healthcare affordable, where you get the result you want with-out having to give someone else power over whetheryou live or die. They provide for health care empower-ment of the individual.

I was asked to comment about the City’s award-win-ning Bulk Lien Sale Transaction. I’m not going to dothat because you can read about it in the book Dr. Hakimand Dr. Andrisani will be bringing out. Additionally, Ihave some one page articles about it outside.

So I am just going to conclude my comments withthis last thought. If we are the ones who are going to beheld accountable by the people to provide a certain pub-lic service, we should have the power to do what makessense in our circumstances to provide that service as

well as possible, and as inex-pensively as possible. Thereshould not be a separationbetween accountability andpower. Governmental powershould be kept as close to thepeople as possible and, wher-ever possible, those who wesay we want to help with agiven service should be theones to choose from whomthey will obtain it.

Let’s have competition in theprovision of government servic-es. But beyond mere competi-tive contracting, let’s haveempowerment where local offi-cials and the people themselvesdo not have to beg central gov-ernment politicians to be ableto do what makes sense in theirsituation.

Thank you.

Temple professor Paul J. Andrisani addresses the press at the conference as New York’sMayor Giuliani and Temple officials look on.

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Center for Competitive GovernmentThe Fox School of Business and Management

Temple UniversityPhiladelphia, PA 19122

215-204-5037www.sbm.temple.edu

email: [email protected]

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