THURSDAY, May 16 — Lansing City Council members are looking to hire a full-time “chief restructuring officer” to help keep the budget balanced and “set a better direction” for the city, Council President Carol Wood said today.
“A number of us are looking at the potential of hiring either a CFO or chief restructuring officer or chief strategy officer — either a full-time or contracted position — to look at different departments and see where there are redundancies or things we can do save more money or produce additional revenues for the city,” Wood said.
She hopes to have the yet-to-be created position filled by October.
The concept was first floated publicly in a recent letter to the City Council from the Lansing Financial Health Team, an 18-member board initially appointed by Mayor Virg Bernero in 2012. Its message: Unfunded pension liabilities are eating up too much revenue. It’s time to craft a better “long-term” financial strategy.
As part of that strategy, the Financial Health Team suggests hiring a new senior-level position. And fast. Wood and Councilwomen Patricia Spitzley and Jody Washington support the idea.
“If we had someone who could look at the bigger picture, that would make a difference,” Spitzley added. “Our core functions should be neighborhoods and public safety and providing services to our residents. We need to do a better job prioritizing that. We need a strategic plan to find new priorities, and then find a way to fund them.”
The new hire “would be empowered to evaluate all departments and positions throughout the city in a manner not attempted by any prior administration,” according to the Health Team’s written recommendation, and would “seek to identify efficiencies and cost-savings strategies” with a specialized focus on unfunded liabilities.
He or she would also likely become one of the highest paid executives on the city’s payroll, Wood recognized.
“We’re digging our heels in on this one,” Washington said. “We’re absolutely badly in need of this type of position. Our finances are a mess and we need someone to come in and look at them. I have all the faith in the world in our mayor, but we don’t ever really know if they’ll be able to be around another four or eight years.”
In 2006, the cost of unfunded pension and other post-employment benefits represented about 13.5% or $25 million of the city’s $184 million revenue. In the city’s latest budget, that figure climbed to about 22% or about $49.5 million of the city’s $226.4 million in annual revenue. And the Health Team is urging some quick action.
Among the recommendations: Take a more “holistic approach” to address the issue before it gets worse through the creation of a new Council committee to address unfunded liabilities and a a long-term “budget forecast.” They also encourage officials to engage with the community and “resist the temptation” to delay the changes.
Mayor Andy Schor recognizes Lansing’s mayor typically handles bigger picture items for the city, but he said he would welcome the addition of a new “almost cabinet-level position” within his administration. He said another set of eyes to “restructure” city finances would be welcomed — just as long as he can find the cash to hire another executive.
“I’m very open to the idea, but we haven’t explored what that’s going to look like or how we’d move forward,” Schor added. “If we can find an opportunity to make that work, I’d love some additional recommendations.”
Schor appoints members of the Financial Health Team.
Wood recognized potential for redundancies in executive-level staffing, but she said the new hire would allow the mayor and other department heads to focus on daily operations.
“I’m not saying the mayor should lose his authority by any means,” Washington added. “I’m saying that in some respects, we’re paying the price with that turnover. The time is now to get somebody on board that can go from one administration to the next and help keep us on track. We don’t have time to do anything else at this point.”
The letter further cautions the City Council that continued investment in economic development will not allow the city to “grow its way out of this problem.” Development should be a major priority, but it ultimately won’t play a role in adequately addressing the city’s unfunded liability costs, according to the Financial Health Team.
“Every budget year that goes by without fundamental reforms makes the problem bigger and more difficult to address,” according to the letter. “Failure to seize this opportunity to develop a true, comprehensive plan to address these issues will result in fewer and more painful options available to current and future city leaders.”