Comptroller John Liu Meets with Our Time Press publishers

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At a time when the Bloomberg Administration is closing after-school programs to save $20 million in a $68 billion budget, the tens of millions of dollars that Comptroller John Liu has been finding in city agency accounts is very meaningful. The comptroller has also created a transparency to the city’s finances that is unprecedented. A visit to the My Money NYC Web site (www.comptroller.nyc.gov/mymoneynyc) allows the examination of city agency expenditures and shows that MWBE businesses received only 2.9% of the city budget, and that the percentage to African-Americans was less than 2%.
We had the opportunity to speak with the comptroller when he met with Our Time Press at Rowe’s Restaurant on Tompkins Avenue January 5. Over a shared plate of okra, saltfish and white rice, he spoke with us about the first half of his term in office and why he seems to work at it with such obvious enthusiasm.

Our Time Press: How’s it going in the comptroller’s office?
John Liu: In a couple of days it’s going to be halfway through and it has gone by so quickly. I remember giving my first speech like yesterday, and the swearing in and boom!, half the term is over. It’s been exciting, no question.
Aggressively pursuing our responsibilities, and some may say, “Maybe you don’t have to pursue it so vigorously”, but I have a job that the people put me in this office to do. And it’s a job that requires independence from other elected officials, especially City Hall. I’m the 43rd person to have the privilege of holding this office. And through auditing and contracts and making good investments, those are responsibilities I take very seriously. Especially in a time when City Hall talks about service reductions and layoffs, one of my main focus points has been on the outside contracting, where it seems too often the reductions of service and layoffs of city employees are kind of at the top of the list of options and somehow the outside contracting escapes the list of options. Maybe we can’t afford all those outside contractors.

Our Time Press: What’s been your “highlights,” major accomplishments, halfway through?
John Liu: Very proud of the transparency we’ve introduced to city government; for example, mymoneynyc.com, and you can get to it through the comptroller’s office. It’s an online tour that allows the public access to everything that is happening with the public’s money. It’s literally the city’s checkbook. You can see every expenditure paid. By agency, by purpose, the date, the amount, you can sort and download, it’s literally like going to a bank and signing onto your own checking account. It’s the city’s checking account, and in fact, it is your account. It’s an unprecedented level of transparency, not only here in New York City, but all across the country. And in fact, we’ve gotten many calls from other states and cities asking us about how we implemented something like this.
We looked at a number of large contracts, City Time being one of them, but other ones too, a project called ECTP, a 911 call system, projects that have been years delayed and suffered severe cost overruns. We’ve been able to, in the case of City Time, put a stop to additional money and additional contact being related to that contract, and in other cases, greatly pared down the amounts of the monies that are being spent on those contracts.

Our Time Press: I saw an article in the Daily News the other day about your office finding $17 million being held by an agency. What happens when you find that money? Does it just go into the general fund? Can it be earmarked for programs, job programs?
John Liu: My office does not have the power of the purse. The power of the purse lies with the City Council and the mayor. When we find money that’s being inappropriately kept or used, the agency has to turn that money back into the city’s treasury, so it does go into the general fund, at which point, through the normal budgetary process, it gets allocated.

Our Time Press: It just seems like you were finding significant amounts of money, $20 million, $17 million, sooner or later you’ve got a pile there.
John Liu: It adds up very quickly, and many of these are several millions if not in the tens of millions-dollar range. The biggest one being an audit we did of the Economic Development Corporation, which netted $125 million dollars. This is money that, we’re not saying that anyone is doing anything improper or stealing. It’s just that no agency gets to say, “We’re going to keep this money on the side and withdraw it as we need.” You have to go through the normal budget process. And when you think of the scale, we have a $70 billion dollar budget, think of how the mayor spoke of closing 105 senior centers earlier 2011, the price tag, or the cost savings of that was $27 million dollars. So the $27 million dollars cost for that versus finding $17 million here, finding $10 million there, it adds up pretty quickly.

Our Time Press: That’s why I asked if it could be earmarked, because it seems every summer that comes around, there’s never enough money for the teenage jobs and you’re only talking about relatively small amounts of money.
John Liu: That’s right. All these millions they add up and the goal is, and this is why the contracts and the auditing has been a primary focus for me. I knew when I took office, I was coming from the City Council, I knew that we were in very tough fiscal times, and for years the mayor’s been saying we need to have reduction in services and layoffs of city workers. We pointed out that it wasn’t that inevitable, because there was still pockets of waste that could be recovered so that those services could be protected.

Our Time Press: Looking in other areas for a moment, if you were mayor what would you do differently in education and health?
John Liu: I would do a lot differently. First, big picture. A fundamental problem of our schools our days is that they have become statistic-generating factories. No longer places of learning. I think we have to restore the learning atmosphere. As opposed to the test-taking, numerical- performance generating, and in many cases, a highly policed atmosphere where none of those things are conducive to proper learning. So we have to restore the learning atmosphere in the schools. That’s going to require a reduction in the emphasis on these once-a-year high-stakes tests. There’s going to be an emphasis on the overcrowding, because the over-crowding in some of these schools leads to a great deal of tension. Not only among students, but among anybody else. That then requires the DOE to flood the schools with a high concentration of police officers and school safety agents, it’s not conducive to learning. Also, paying more attention to what the teachers are saying. So I think the teachers have been pushed to the side in terms of determining how best to educate the kids. It’s all about management and statistics, and the teachers are not being given the opportunity to suggest how better to educate kids. For example, I actually believe there should be more testing. But the testing I’m talking about is not these once-a-year high-stakes standardized tests. We should go back to the days when I went to school when we got pop tests once a week. And you didn’t know what was going to be on the test. But that requires the DOE to treat teachers as professionals. As people who know what they are doing.
Another big area is the idea of co-location of schools. I think the way it’s been executed has been terrible. Has been overly divisive and controversial. I don’t know what the value is in closing a school, and some of these schools have been around for a hundred years with generations of alumni who now have Alma Mater to point to. And replacing these schools with half-a-dozen different management units we now call schools, I’m not sure what the value of that is. Or the value of sticking a new school into a building that has another school, very divisive and unnecessarily so.
So in terms of the learning atmosphere, the reduction of emphasis on the high stakes testing, giving teachers more latitude and relying on them as professionals, reducing the police presence and structuring the schools in a way that’s less divisive. Those are the things that I would do very quickly if I had a chance to.

Our Time Press: Any thoughts on curriculum?
John Liu: I think there needs to be some more emphasis on career and technical education, which is something that has been expanded in recent years, but we need to do more. I’ve been very involved, for example, in Transit Tech, which is a high school in East New York which trains students to maintain subway cars, in getting subway cars to work on. That’s a great school and gives students choices. Many of the students, we want to prepare them to go to college. Some students realize that college is not a part of their immediate goals, let’s get them ready for something else. And these career and technical education schools are there for them. The gifted or talented programs are all concentrated in Manhattan. In Brooklyn, Queens, Staten Island, there aren’t any of these or not nearly enough to satisfy the demand and the need. So we have to provide more choices and providing more choices doesn’t always require closing down schools and opening new schools.

Our Time Press: The work you’ve done with the private equity firms in terms of leveling the playing field, how would you expand that in other government agencies?
John Liu: That’s my prime directive. To level the playing field in this city, and as far beyond as I can. Certainly in the city of New York, where we draw people from around the world, it should be a place of opportunity. And I feel that it is not a place of equal opportunity yet. We have to work towards that goal.
You know what we were able to do last year in terms of some big bond deals. Instead of having the same old people take their turn at selling the city’s bonds, we opened up the process and by doing so, we attracted more offers, got better results for the taxpayers and we were able to have a company that would not have been a part of the process get in the door.
This year we’ve focused on another part of the investment banking world, which is the management of our pension funds. We’re looking to build that kind of capacity among money managers, and as part of that program, we are increasing the piece of the pie that is directed toward developing emerging managers, specifically MWBE’s. We put out an RFP and in this case, Vista Equities. We’ve had experience with Vista and they were able to show great results in the past, and they were able to trade on their great track record and deliver superior results for our city. And your question is how do we get other government agencies to do this.
The playing field has been very un-level for a very long time. It’s hard to change that overnight. It can’t be changed overnight. In fact, it requires a concerted effort. If you look at what we did in my office, that did not come easily. We could have done the easy thing and just do the same-old, same-old; instead, there was a substantial amount of work , it requires a lot more work. I thinks agencies need to step up the effort. They have to make the effort and that has to come from the top. If it does not come from the top, there is no incentive to go the extra mile to level the playing field. And that’s something that I do criticize this administration for. Because notwithstanding all the sweet talk out there, the tone has not been set at the top. You can see it not only in the results of contracting, you can see it in the upper ranks of the administration, you can see it in who is walking in and out of City Hall itself, and all of that translates into the ongoing disparity that we have in unemployment. It’s all connected. Minority entrepreneurs have the strongest track record of creating the jobs and hiring people in the neighborhoods where those jobs are needed the most. And so to me, we have billions of dollars of purchasing power in the city of New York.

Our Time Press: Could you just explain minorities having the strongest track record?
John Liu: It’s been well-documented and is a lesson that Carl McCall taught me some time ago. If the city continues to give these big contracts to the same old big companies, they’re not necessarily hiring from the communities that need it the most. A big company can be hiring from everywhere–NJ, Conn., from all over the place. But if you’re hiring locally, whether an Asian-owned business in Flushing or a Black-owned business in Bed-Stuy, or an Hispanic business in Washington Heights, that’s where they’re going to be hiring people from. And those are the places where the jobs are needed the most. That’s what I mean about a strong track record. Just out of practical reasons. The minority businesses hire from where they are.

Our Time Press: Regarding the city agencies, the DOE increased their book vendor qualification levels to something like $5 million…
John Liu: And that cut out a lot of minority vendors.

Our Time Press: Exactly. Those contract elements, are they under mayoral control and how can those systems be changed?
John Liu: Yes, they are and we first look within our own agency. And the contracts that we do the most are the bond contracts and the pension investment contracts. And we’re trying to pry all those open from within my office. When you look at the other agencies, first and foremost, you have to tell it like it is. For a long time, and I was hearing this all the years I was on the City Council, I kept hearing, “The city’s doing much more business with minority vendors”. And for years I was hearing this and I would ask, “Well, how much more business are we doing” and I could never get the answer. Now as comptroller, we’re still asking City Hall for that information. And all of last year we kept getting stonewalled. They have a report, they just didn’t want to release it to us. So at that point, we just decided, you know what, since we pay all the bills, we know where the money is actually going, and we started tracking what money actually ends up in the hands of minority contractors. And that’s why we developed the MWBE report card. Which is continuously updated, and it reflects the percentage of money that’s actually winding up with minority entrepreneurs as well as with women entrepreneurs. And the statistic is shockingly small. But at least the first step is just laying it out, bit by bit, so that people could start to understand why the problem is persisting and not improving. Identify that this is an issue, that 2% is going to minority businesses is woefully inadequate. That gives city agencies the added incentive to go the extra mile so that their own statistic can improve. And we also help them understand what barriers are existing that make it hard for minority entrepreneurs.

Our Time Press: What kind of barriers have you found?
John Liu: We’ve interviewed dozens of minority entrepreneurs and asked them about the kinds of problems they face doing business with the city. Bonding requirement are one of them. That’s been a big one. Another is that for some of these small companies the threshold is set too high to participate. A company can handle a 100K but may not ber able to handle a $500,000. Another issue “retainage”, where the city holds back 15% even after the job is completed. This can severely impact a small company.
A number of issues have come out regarding procurement rules and we’re looking to make changes in those rules. Now, how to get agencies to perform: Number one, lay it bear so that agencies are, for want of another term, embarrassed. I don’t believe there is actual intent, I think it just has to be demonstrated what the problem is. Secondly, change some of the rules that are impediments. Set a tone from the top that says go the extra work and you will get recognized for it. Why will they do it if they’re not going to be recognized for it.

Our Time Press: In that 2%, any breakdown in terms of ethnicity?
John Liu: Yes, African-American, Hispanic, Asian and women. Those are the four breakdowns. And there are disparities within each of these subgroups. But the disparities are tiny amounts.
The city touts that fact that they do $400 million in business with minorities. That’s in a budget with $18 billion in contracts which is a little over 2%. Which is completely unacceptable and does not reflect the skills and talents of minority entrepreneurs. What it does expose is an ongoing system bias that makes it difficult for minority entrepreneurs.
Our Time Press: What about the Occupy Movement?
John Liu: The Occupy Movement is something that we all have to take very seriously. I see it as a spontaneous outcry not different from the outcry from the general public. The rich keep doing far better and everybody else is being left behind. The fact that they were seemingly not organized. Not that much different from what the general public was thinking. I think it was just wrong to send in police with riot gear in the middle of the night.
Our Time Press: Is there anything else you would like our readership to know?
John Liu: Well, there is an investigation into my campaign financing.
Our Time Press: That was our next question.
John Liu: One guy did the wrong thing. And the FBI complaint clearly states that he lied to my campaign. He actually asked the undercover to tell lies to my campaign staff so that we would not be suspicious. There is an investigation going on, we’re fully cooperating. I want them to get as much done as possible. At the end of the day, I’m proud of the fund-raising we’ve been doing. It is mostly from a community that has not had a voice before and people are proud to be participating. Nonetheless, none of this is going to slow me down from what I’m doing as comptroller, and also getting ready for any options that may lay ahead in a couple of months.
At this point, where I am today is far beyond anything I could have imagined growing up in New York City. Every additional day I’m in office is a bonus for me.