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Podcast: Performance Auditing to Kansas City Mayor with Mark Funkhouser

Posted on February 25, 2020


Mark Funkhouser GovLove

Mark Funkhouser

Mark Funkhouser
Former Kansas City Mayor
President of Funkhouser & Associates
Bio | LinkedIn | Twitter


Creating good government and fiscal sustainability. Mark Funkhouser, President of Funkhouser & Associates, joined the podcast to talk about his career as an auditor, running for Kansas City Mayor, and more. He talked about navigating the Great Recession as Mayor and the importance of an independent auditor. He also shared his career path into public service and his time as Publisher of Governing Magazine.

Host: Javon Davis

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Episode Transcript

Javon Davis

What’s up GovLove listeners? Coming to you from Philadelphia, Pennsylvania, I am Javon Davis, the Assistant Deputy Commissioner of the Philadelphia Fire Department. GovLove is looking for your feedback. Please visit Govlovesurvey.com and tell us a little about you and what you think about the podcast. Hearing from you will help us make GovLove even better. That’s GovLovesurvey.com. Thanks. Today we’ll be chatting with Mayor Mark Funkhouser about auditing and city fiscal sustainability. Before we jump in, I’m gonna tell you more about my guest. Mayor Mark Funkhouser is a former publisher of Governing magazine and is president of Funk House and Associates LLC, an independent consulting firm focused on helping public officials and their private sector partners to create better, more sustainable communities. He started as a Mayor of Kansas City, Missouri from 2007 to 2011 and prior to being elected mayor, Funkhouser was the city’s auditor for 18 years and was honored in 2003 as Governing Public Official of the year. Before becoming publisher of Governing, he started as Director of Governing Institute. Mayor Funkhouser, welcome to GovLove.

 

Mark Funkhouser

Thank you Javon. Happy to be here.

 

Javon Davis

Great. So before we jump in we are going to ask you a few fun questions so as to get to know you better and learn more about your experience. So you ready to jump in?

 

Mark Funkhouser

Yes.

 

Javon Davis

Great. First question for you. Always is really interesting. What was your very first job?

 

Mark Funkhouser

My very first job after I graduated from college was as a dishwasher at Eddie Palm Hotel in New York.

 

Javon Davis

Great. Were you learning lessons while you were dishwashing?

 

Mark Funkhouser

Well, I thought I was going to be a poet. So I took a job like that so that I could basically write in the evenings and so forth. It was a significant learning experience. I met a lot of interesting folks and a different life than I had ever seen before.

 

Javon Davis

I’m glad you mentioned it because my next question was about that, you know, kind of doing research into you seem like writing has been something that you’ve always been really passionate about and enjoyed. Are you someone who listens to music while you write or do you like to write in complete silence?

 

Mark Funkhouser

I need complete silence. Although I can, you know, I can take like, you know, I can write in a Starbucks, which I’ve done. I could write in a public library which I’ve done a lot. And I can write you know, in the airplane, that’s 35,000 feet. I’ve done that a lot.

 

Javon Davis

I definitely I’m the opposite. I have to like have music on to keep me going. Complete silence is more distracting to me than I think than you know, having music on.

 

Mark Funkhouser

Yeah, I like listening to music when I’m doing something like washing dishes or cleaning and, you know, stuff like that but my mind, my wife will tell you I am not a good multi-tasker. I can think of basically one thing at a time.

 

Javon Davis

Gotcha. That makes sense. So you were Mayor of Kansas City, you were there for 18 years. What are some of your favorite memories from your time in Kansas City?

 

Mark Funkhouser

You know, one of the things that pops right to mind, given that we’re in an election season is when President Obama was running for president. And that was during my time of office, his first run, and the level of excitement at the polls and the way that people were responding was just absolutely over the top. And a lot of a lot of hope, and a lot of fun. That was a very, very exciting time.

 

Javon Davis

Yeah, that does sound like a really great time. Something I like about Kansas City is how, how engaged everyone is. And you know, I’m really happy that the Chiefs won the Super Bowl and they have something else to be proud of and to cheer for. So Kansas is a great city and I really loved living there when I did.

 

Mark Funkhouser

I was thrilled of course to see the Chiefs win the Super Bowl. I love it when Kansas City gets recognition. You know, they’re sort of, they feel like they’re out there in flyover country and you know you know I love San Francisco but they get lots of attention. It’s nice to see Kansas City win.

 

Javon Davis

Absolutely. I moved there the year right after they won the World Series and everywhere you, everywhere I went people were wearing Royals gear like even you know, to work, to the bars to you know, shows doesn’t matter people’s race. I’m sure the same things happening in Kansas City now with Chiefs gear but yeah, they definitely you know, I think it’s really done a lot for morale in the city and people really feel like they live in a great place now that they get recognition like this more often than a lot of cities do. So really happy for them. So when you go to an arcade, what would be your favorite arcade games of the past? Or maybe even now that you if you’re still if you’ve been lately.

 

Mark Funkhouser

Umm….the Space Invaders. {Making sounds] [Laughter] I spent a lot of quarters on Space Invaders. I didn’t like Pac-Man. It made me nervous. But Space Invaders, I liked.

 

Javon Davis

Great. Yeah. Pac-Man is, it is nerve wracking game. But that gets you really into it. So it’s kind of fun too. Yeah, I love going to the arcades. I’m glad they’re kind of having a resurgence as barcades. I think it has been a fun addition to you know, night life in a lot of cities I’ve seen. All right. This is my signature question. I have to ask you this one. If you go to brunch with friends, are you more of a Bloody Mary or Mimosa person?

 

Mark Funkhouser

I probably wouldn’t drink alcohol at all. I’d probably have coffee. Because I you know if it’s brunch, I’ve got to go the rest of the day and you know if I….for me Miller time, alcohol time is in the evening. [Laughter] I’m coffee all day.

 

Javon Davis

Sounds good. Miller time is at night. Okay, great. Well, we’re going to jump into the interview now I really want to eat. I think you have such an interesting story. Can you say your life story in about three to four minutes?

 

Mark Funkhouser

Well yeah, I think so. I grew up in West Virginia. I’m the oldest son, you know, kind of working class family. I liked to read and that sort of thing. And, and then I went, when I went to high school I played all the sports. I played football, basketball, track everything. I’m a huge guy. I’m six foot eight. And they, you know, I basically was recruited for everything to play, but I wasn’t especially good. I was sort of middle of the range guy. But people always thought I had potential and I seemed like I was fairly smart. And so I got a scholarship to go to a small private college to play basketball. And that was really like a real breakout for me. I went to Thiel college in Greenville, Pennsylvania, which at that time was a small private Lutheran school. And I still have four or five really close friends from those days. Basketball, I played basketball for a couple of years, never really made the first team, got disenchanted and quit that and got really involved in campus politics. The this would be 1969-70. There was quite a bit going on in United States. You know, so there was the civil rights movement, the Feminism, the women’s movement, there was the Vietnam War and the protests against the war. And I was sort of deeply involved in all that stuff. And really, when I graduated from college, I graduated with a degree in political science. And I’m very interested in politics and how it all worked. But I thought that the revolution was coming and that, you know, there would be a whole new world after say, 72 or whatever. And that was part of why I went and became a dishwasher and so forth. I was going to be essentially a working class guy. The revolution didn’t come. And life went on. I found myself as a social worker. And so I got an MSW so that I could be a competent social worker. Then I found myself teaching at a small college in West Virginia. I had gone back to West Virginia because that was essentially where I was from. I did that, I met a woman who was a student. I had to leave the college because I was, you know, dating this woman and I had to move in with me. I married her. We’ve been married over 40 years. And I left the college and went to work for the state auditor in Tennessee. And I discovered that I really liked being a performance auditor or looking at efficiency and effectiveness and equity, which social services are provided. So if I was a caseworker, say with a group of foster children, I might have a couple hundred kids on my caseload. But if I could fix the foster care system for the State of Tennessee, I could impact thousands of kids. And so I really became completely immersed in the auditing thing and I got an MBA in accounting and finance so that I could do that better. And then I decided that my wife and I were married. We had a child, a little kid, and we wanted to have another one and she wanted to work in a home, she want to be a full time parents didn’t want to have to have a job, I needed to make more money. And I thought that it would be the action, so to speak, was much more at cities. And so I applied at a couple of cities and I got the job. It’s pretty crowded here in Kansas City. I started there in May May 1 of 1988. And while I was there, I got a PhD in Public Administration and Urban Sociology, because I’m very interested in how cities work, particularly how innovations are spread among cities. I could see that big financial trouble was coming. And I decided to take an early retirement and run for mayor so that I could help the city get through the recession that I was pretty sure it was coming. And I did that. My wife managed my campaign. It was exhilarating and exhausting. But we won. Then we basically spent four years trying to successfully save the city, so to speak from the financial disaster that was engulfing the world. The city actually a Kansas City came out of the recession in better financial shape than it went in. But in doing that, I annoyed a whole lot of people. I was not able to get re-elected. I tried really hard and I couldn’t raise enough money and I just accumulated too many opponents. And so when I lost my re-election, I sort of cast around for what to do and I want to go I’ve been a fan of Governing for years. And the owner asked me to come and start a think tank for them at the Governing Institute. So I did that. That was really, really fun. And I really enjoyed working on that. And then there was an opportunity to become publisher. And so I became publisher of Governing, which was probably the most interesting and fun job that I’ve ever had. It was, I loved what we were doing. I loved writing about what, what state and local government folks are doing across the country, worrying about what they’re doing, and, and being inspired by what they were doing. And so I was really disappointed when Governing closed. And so I put out my shingle and I was doing this Funkhouser and Associates independent consulting thing and that turns out to be pretty cool. I’m enjoying it a lot. I get to basically think about and work with people and the stuff that I care about, which is local government and being, you know, basically doing doing better work for government, you know, kind of a little bit pollyannish about it. Kind of the Leslie Knope. If you can imagine a 70 year old six foot eight male Leslie Knope, that’s me. [Laughter] That’s my story, Javon.

 

Javon Davis

Great. Thank you for sharing. I mean, you have such an interesting story. You’ve done so many different types of jobs, but all of course, very public focus. Can you talk about more of kind of the thought process you were going through, as you were, you know, auditor you’re retiring out of being, you know, city auditors, you know, I would say a more low profile position, and then you go to, you know, being Mayor, how was that transition? What was that like for you and what were you thinking as that was happening?

 

Mark Funkhouser

Well, I had made being auditor fairly high profile. I mean, I wrote a piece for Governing about the activist auditor and I was a big believer in sort of the activist auditor thing so I, I was aggressive and pushed hard as auditor. I also thought that the auditor is basically what an ombudsman and Ambassador for the people. I have a, you know I mentioned that the way I grew up working class, my dad didn’t graduate from high school. They left at 17 to go fight in the Second World War. My mother was an emergency room nurse and I had I was imbued with a real sense of service to ordinary folks and a belief in the wisdom of regular folks. And, and I carry that with me into the auditor’s office. And I was deeply involved in politics always because it seemed to me that, you know, in a democracy, politics is the way that stuff actually happens. And while people thought about politics as being a dirty thing, it’s not. It’s actually a sacred thing. It’s the way in which stuff happens if you want to change the world, if you want to combat things like global warming, racism, whatever the problem is, politics, votes, votes are the way to do it. And political institutions and that, you know, it’s the old saw that good people don’t run, then the bad people take over. If you don’t vote now and you don’t participate, you’re condemned to be run by bad people. So, so I’ve always had that interest. And then when, when I thought about running for mayor, and actually my wife has written a series of books about this since she was my campaign manager. But the, when I thought about it, I, I basically wanted to run, as I said, to deal with fiscal issues, fiscal sustainability, fiscal responsibility, because that really matters a lot. If the finances are wrong, if the city is not able to provide decent services and so forth, the people who are hurt, are the are the most vulnerable. There’s, you know, that’s the people I mean, rich people can, you know, have private cops, they can have gated communities, they can send their kids to private school, they’re basically able with their money to insulate themselves from the vagaries of the world. But ordinary people, ordinary people need government, they need government to provide, you know, transit and schools and clean air and clean water and all that all that kind of stuff. So I think I’ve always had that interest in politics. And then I was fairly sure that I could win the election. I mean, I had been serving the citizens for 18 years. I knew what they thought about the major issues facing the city. And so it was, it was exhausting, but invigorating. It was fun. I loved surprising everybody. I mean, people, you know, really thought I was a joke. You know, what is the being counter, thank you’s, doing, you know he can’t do this. And I loved you know, basically, having them underestimate me catch them by surprise. When I got elected, it was a postgraduate education in politics, it was much harder than I had imagined that it would be. We were successful, but only at great effort and great cost. And it, it gave me a whole new respect for elected office. Now when I look at mayor’s like, like your mayor there in Philadelphia, Jim Kinney, I have a whole new understanding for how hard it is to move things in a community. I mean, he is fighting there to try and change the trajectory of poverty, and he knows that it will take 20 years to do it. And, you know, that’s hard. The status quo is the status quo, because the powers that be want it to be that way. And so in order to change the status quo, you got to go up against the powers that be and they are not going to like that. You know, Frederick Douglass has a great quote, and I won’t get it right. But essentially, you can’t have crops without plowing the ground, you can’t have you know, rain without thunder and lightning and you can’t have the waters of the ocean without the mighty roar of the waves. In other words, it’s good, you know, and nothing, you know power exceeds nothing without the map. And that is true. And so being Mayor, Javon was, it was a life changing experience for me and it was so much harder than I thought it was going to be.

 

Javon Davis

Yeah, I love how you talked about auditing as the ultimate protector of the people you know, making sure that every, the taxpayer dollars are being spent correctly and most efficient ways. I guess I just wonder like, how do you…. I feel like it, it seems like on the outside, it would be a very lonely office to hold. How do you kind of share the benefits of having being an auditor and auditing someone with the city official who was always going to be worried about backlash of a negative report because I feel like when people think of auditing, they always think of, Oh, I’m being audited. You know, this is a terrible thing. This is bad. How did you kind of connect dots and ensure that it’s actually a good positive relationship that you have with them that will ultimately benefit the people?

 

Mark Funkhouser

You know, it’s an interesting thing. Because, you know, you, well, gee, there’s so much to say there that, first of all, you are working on behalf of other groups. So there are, good auditors are connected to the community. They’re connected to citizen activist groups, they’re connected to voluntary service organizations are, they’re connected to civic organizations, and they’re connected to the people in the government that they serve. You know, they’re with you. You are on the same team. Now, yes, people do not like to be criticized and they see criticism sometimes when you’re just pointing out something that needs to be done differently. It’s not hostile. It’s just, you know, well now you painted this red and it would be better if it were painted purple. And, you know, and but, you know, people, you’re right, people don’t like it. When I first became sort of semi prominent in auditing, I got a lot of, you know, criticism or whatever. People said that the reason people didn’t like my audit reports was because I was too aggressive, too loud, too big, so on and so forth. And then I met this woman who was actually the founder of Municipal Auditing in the United States, Jewel Lansing. She was in Portland, Oregon. And Jewel at that time, was this petite, little grandmotherly person who was having the same issue that I was having. So it became very clear to me that this isn’t my personality that’s causing all this, and in addition you know, you know the fact that I’m a large male, this is inherent in the situation. It’s, it’s the way auditing is going to play out. And once you know that, then and you’re not surprised, and you don’t take offense that people don’t like to be criticized, you find a way to make it work a lot better. And often, I had, for example, the Mayor for most of the time that I was the auditor was Emanuel Cleaver, who’s now our Congressman from the Kansas City area. And, you know, Mayor Cleaver, and I had a very complicated and fraught relationship, because he didn’t like it when we criticized, you know, stuff that he was doing and that the government was doing and we, and so on, but on the other hand, when really bad things happened, there was a horrific flood in Kansas City, a flash flood. And a bunch of people were killed. And it turned out that a flood warning system that we had wasn’t working properly. And, you know, so there’s this huge outcry. And Mayor Cleaver, said, well, I’ll tell you what, I’m going to have the City Auditor take a look at this and tell us what went wrong and tell us how to fix it. And that absolutely worked. And I was, you know, essentially useful to him because I had credibility, and because people knew I wasn’t going to tell him whatever he wanted to hear. I’m just going to tell them what I found. And, and it was useful to him to have somebody who was seen as independent and so forth. And there was a couple of other occasions, it was a sort of an outbreak of scandals in the city council where two or three members were accused of taking bribes and so forth. And it was a real problem. And City Hall was being painted with a really negative brush. And Mayor Cleaver, basically said the red flags are flying, I’m establishing the Red Flag Commission and he appointed, you know, some prominent citizens, a prominent Rabbi in town to hit it, and put a bunch of citizens on it, and assigned me as a staff person to the thing because I was essentially independent of all the city staff. I didn’t work with the City Manager, you know, I wasn’t going to be somebody who was going to sort of paper over whatever had happened between city staff and the city council members that were in trouble. So now, that’s if, you can make it work. Independence doesn’t mean isolation. And, and there is a really strong community of municipal performance auditors across the country. The association of local government auditors is vibrant, diverse, you know, young people who are really committed to performance auditing. And so you’re part of this community of folks that are really doing great work and one of the things that you know, so its efficiency and effectiveness, but I fought for years to get the audit standards to include equity. And now auditors are actually embracing me and look at, you know, what the King County auditor is doing and Washington State if you look at what the Portland auditor is doing it, if you look at San Jose, and Sacramento there, lots of auditors are now completely get it that, you know, government has to be efficient, effective and fair, you know, on the basis of race and gender and income and everything else.

 

Javon Davis

Yeah, you know, I think it’s gonna take there’s gonna be people that who aren’t auditors or understand that this is just going to be part of the process to, you know, to be audited. You know, we work with a lot of federal grants and we know that every time we get a grant, we’re going to be audited for it and becomes, you know, part of the culture that it just kind of a normal thing, and that is to make sure that we’re being responsible with, you know, funding and that’s a positive thing overall. You kind of mentioned the performance auditing. How do you see that changing as more cities incorporate performance management in offices of you know, efficiency and having a Chief Data Officer, how do you see performance auditing meshing, or will it always be kind of isolated, to be you know, more of a third party do step becoming a new trend we see?

 

Mark Funkhouser

You know, the, it again, I avoid the use of the word isolated. The auditor ought not to be isolated. He or she ought to be independent, but involved. And to me, that is just another, you know, the growth of these sort of offices of performance management and so forth, is a good thing and a potential ally, to the auditor, and if they’re, if they’re paying attention, they see the auditor, as a potential ally. One of the when, when we I was at Governing and we were partnering with Living Cities, and the Government Performance and Innovation Conference, one of the sessions that we had was we invited in two or three auditors, and we had them talk about their work. And you know, the session was titled, The Auditors Ally. And if you’re trying, if you are truly on the side of good government and serving people, you know, efficiently and effectively and with equity, then the auditor is a useful ally because he or she can give much more credibility to what you’re doing. And they can help you understand issues from an angle that you’re not necessarily looking at. There’s now when you talk about organizational learning, this guy, Chris Arturis years ago, came up with this theory of single loop and double loop learning. Single loop learning, Imagine that you’re trying to shoot a basketball, and if you sort of keep shooting that basketball from about the same spot on the floor, you get a little bit better and a little bit better. You might get your percentages up to you know, 20, 30, 40, 50%. And then some guy comes along and he starts dunking the basketball. Well, now he’s going to be hitting at 80 – 90% when Lew Alcindor, who later became Kareem Jabbar, played for UCLA, and they were 32 and 0, and won the NCAA championship, because he was dunking the ball and people were outraged. That’s double loop learning. Double loop learning is when you change the system, you know, and every time that there is double loop learning in an organization, and every time you change the system, there are sparks, there is controversy. People don’t like it. I mean, immediately after that, the year that UCLA won and had the undefeated season, there was the Alcindor rule was passed, saying, you know, the NCAA said you can’t dunk the basketball because it was unfair. And of course now, you know, five or six years later people realize, well, I’m quite aware, this is a better part of the game and it’s fun, it’s interesting. We want people to watch and so forth. You know, and now, you know, we have dunking contests, you know. But that is, you know, what the auditor can do is come in and facilitate the double loop learning. When the auditor is doing his or her work well, and there is, you know, under just like every other profession, there are people who do it not well, what I call pointy head, a little auditors who come in and argue about trivia, and so forth. But what a good auditor is looking for that opportunity to facilitate double loop learning to make a major change in the way things are done. And you can’t see that major change if you’re in the system. It’s very, very hard to see it in the system. It’s the same reason, you know, I write a piece of column for Governing or know something like that. And I get done. And I think, well, that’s really good. I really like what I wrote here. And then I send it to my editor, and it comes back much better you know because he sees stuff I didn’t see. And he has skills that I don’t have. And you know, and so, you know, either his ally if I were the, you know, innovation chief or their performance chief or the data management person, for a city, I will be looking for the auditor and I would be talking to them or her, and understanding how they do their work and trying to suggest to them that they look at this issue or that issue. And, and basically find a way to work together, even though you’re mutually independent.

 

Javon Davis

Yeah, I think that’s really great. And I think you know, it will be ideal if we thought more about it in that way. And I hope we can start moving towards a direction too, because that sounds like a great way to make sure we’re just again being the best we can be for the people that we serve.

 

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Hey GovLove listeners. Ben here again, to read a few more shout outs from our GovLove campaign. If you haven’t heard, ELGL is accepting donations right now that will help us take GovLove to the next level. And if you know supporting this podcast isn’t enough, one of the rewards you can get by participating is a shout out on the podcast read by yours truly. So we’ve got four more from some supporters of GovLove for you today. First up, Jessica Grandin writes, dedicating this shout out to the City of Portland, Maine. We’re working hard to ensure Portland remains a great place to live, work and play. And the GovLove podcast has covered many topics near and dear to our hearts. And we’ve learned many new tips and tricks from the various guests. Keep up the great work and visit us here someday. Believe me, Jessica, Portland, Maine is on my list. Another shout out we’ve got Dan Rally, he writes his shout out, he wants to dedicate his donation in the memory of Ted Staton. And Meredith Reynolds writes, this one goes out to my retired City Manager father hoping he’s making it a good day this Valentine’s Day. And finally our last shout out of today. Ashley Monroe writes that she’s waving GovLove from Iowa City, the first US city of literature, amazing downtown and fantastic people. She adores the city. Go Hawks. With that, really appreciate Jessica, Dan, Meredith and Ashley for supporting GovLove. Listeners, if you want to learn more, or if you want to donate and support the GovLove campaign, you can find out more at elgl.org. Now back to the interview.

 

Javon Davis

I want to talk to you more about fiscal sustainability and it’s something that you’ve been working on for, for many years now. To you, what does, what does that mean and what does it look like for a city or town to be, you know, fully fiscally sustainable?

 

Mark Funkhouser

So, first of all, let me tell you why it’s so important. And that is because, as I alluded to earlier, if something goes wrong with the finances, people get hurt, and it’s not their fault. They aren’t managing the money. You are and the money needs to be managed in a way that you can withstand the various shocks that come. So sustainable means that you know if there’s an economic downturn, if there’s a major flood, if there’s a major public safety event haven’t prepared a mass shooting or something like that, that you can get through that without a major interruption of services because of the financial issues. So you need to be able to have enough money flowing through the system and enough fiscal reserves, that when you do projections of services into the future, you show a positive balance, you know, you have enough money in reserves, and you have a way to deliver the services of people expect with the amount of money that you have. And, and people don’t think about that enough. They, you know, I tell people that the most important question in government is the second question. The first question is, what do you want to do? And everybody’s got an answer. There are a million things that they think the government ought to be doing. And then I say, how do you want to pay for it? And there is silence. Nobody knows. I mean, that’s the hard part. And I was I was talking to some fiscal experts the other day from overseas. And he told me, he said, you Americans don’t want to talk about the money. You don’t you know, he said, I don’t understand why. You know, you have all these people running for president, for example, on the Democratic side, with all kinds of enormous plans that cost a lot of money and nobody’s talking about it. And then, of course, you know we have President Trump, you know, running an enormous deficit at a time of economic you know, strength. You know, that It doesn’t make any sense. And so, so there’s this natural thing not to talk about the money. But if you don’t, you know, you have a, you know, the fiscal stewardship is like the number one responsibility to me of recovering. I read up a piece the other day, from a bear who I won’t name, who he had the right idea. He’s talking about fiscal stability, and focusing on the budget and all that kind of thing, and that’s good. And then he said, you know, but during the recession, we had to really cut back and we had some significant savings from not investing in infrastructure. No, we deferred maintenance and we had significant savings. Javon, that’s not a savings. If I defer maintenance on infrastructure, I’m essentially incurring debt. That’s not saving money. That’s like putting a bill off, you know. If the roof on my house needs fixed, but I’m short of money this year, and so I put it off for a year, have I saved money? No, I haven’t. And in fact, the roof will be in worse shape next year when I have to fix it, than it was if I had fixed it now. So getting people to understand that and to have that conversation, and to do it in a way that is, you know, broadly inclusive of the population, the residents in the community. I mean, that’s really, really important. And so the process to me, I mean, there’s some obvious things, and the Government Finance Officers Association has some basic policies that sort of every city ought to have in place and that’s like the bare minimum, but yes, you ought to do that. And then you want to have an ongoing authentic conversation with your residents about their fiscal priorities. And I don’t mean just a little, you know, take 100 million dollar budget, what we’re going to do is participatory budgeting on a half a million. I’m talking about an ongoing conversation that looks at the whole budget, and looks at all the priorities. And not just sort of, you know, once in a while, we’ll have a big visioning thing, but an ongoing conversation, where you are involving citizens all along. So you have the fiscal policies in place. You have an ongoing conversation with a broad inclusive swath of your citizens about the options and the possibilities and the alternatives and how they want to spend their money because it’s their money. And then you look at sort of longer term economic development in a way that is much different than what most communities are doing now. Now most communities are doing economic development with those tax incentives, tax increment financing, that sort of stuff. That is really, like 95% of the time, that’s a loser. And it increases inequality and so forth. There’s a lot of evidence to show, there’s a big study that the Urban Institute did. A couple years ago, I was one of several advisors on the thing. There’s a real strong relationship between how inclusive an economy is for a city and how robust it is. Places that are more segregated, racially, are worse off than places that are more integrated racially. Economies that are more inclusive of race and class are much stronger. And the same is true with immigration. I mean, there’s a great deal of research to show that communities that welcome and integrate immigrants into the community have a much stronger economy. That’s the sort of stuff they know. And it’s not a quick fix. It’s organic, it takes time. But it also takes intentionality. You have to focus on it. You can’t just sort of hope it happens. By organic I don’t mean that just sort of accidentally, maybe it has to be a sort of a disciplined focused process on racial and class inclusiveness and on welcoming immigrants. Immigrants often face real barriers, in terms of employment. And so they’re forced to be often entrepreneurs. And entrepreneurship is good for communities economy. And so there’s a much higher rate of entrepreneurship among immigrants than there is among native born Americans. But those entrepreneurs hire both other immigrants and native born Americans. What you know, and all the, you know, the big tech companies, for example, were founded by immigrants, and now they employ thousands and thousands, thousands of native born Americans. So that’s the process. You do the basics. In terms of the financial policies, you engage your citizens in an honest, authentic, ongoing kind of way about how you’re going to spend their money. And you build organically, an economy that is inclusive in terms of race and immigration, and gender.

 

Javon Davis

Those are really great takeaways, I think all of us can really learn to use and be more powerful as we work through budgets and everything. Thanks for sharing that. In your work have you found it’s hard to convince people to save for a rainy day fund or do you what do you see most people as having, you know, pushing backs and they don’t think they can afford to save? Or do you see that that’s happening oft more than people think?

 

Mark Funkhouser

Well, what I have found is that first of all the regular folks as I call them are much smarter and much more what, kind, compassionate, forgiving, etc. than they’re given credit for often by the elites. And so, if if you build, there’s this whole process called deliberative democracy, where you put together representative groups of folks, so representative in terms of race and gender and language and so on and so forth, and age and income, and you have facilitated conversations with them about the issues confronting the community. Umm, that when they have an opportunity to talk it over, and I’m not talking about a focus group, I’m not talking about polling, where you’re just asking, do you favor you know, more money for police or less, but an honest, deliberate and where they talk with each other in a facilitator kind of way and you need a facilitator because you don’t want the sort of louder, you know, or dominant people to dominate the conversation. You don’t want the sort of higher income, better educated folks to dominate the conversation. You want to make sure that everybody has an opportunity to talk. That when they when they listen to each other, across lines of race, and class, and gender, and they understand better the other person’s position, that they’re much more likely to make wise community centered decisions. And I’ve seen that play itself out over and over. If you know it’s hard, and it’s frankly, a little expensive, because if I’m going to get a representative group of Philadelphians, for example, of any significant size, say, I’m going to get 2000 Philadelphians to have this kind of deliberative discussion, then I need to have, I need to have transportation for those who can’t afford transportation. I need to have childcare if I’m going to have people come, who are who have childcare responsibilities, parents and so forth. I need to provide food. I need to have language translators. If English is a second language, I need to have facilitators at every table, you know, so I have like 10 people at a table and then I have an 11th person who is a facilitator and a 12th person who is taking notes. That all costs money, and we don’t spend enough money, building that kind of infrastructure, but the result is absolutely worth it. There is lots of evidence that that sort of deliberative discussion where people of different backgrounds have an opportunity to discover the common ground that they have, and they have an enormous amount of common ground. You know, they all look roughly and we’re all human beings, we all care about roughly the same stuff. And so that that’s a long answer to your question Javon. But the answer is, if done correctly, people make good choices.

 

Javon Davis

Right. That’s really insightful. Maybe something that’s really followed me and something that I’ve heard about from cities across the country is pensions. I’m not sure how much you worked with you know, this pension issue in your time, but do you have any thoughts or tips on how, [indecipherable] kind of right to serve as far as pensions go?

 

Mark Funkhouser

There’s two or three big problems on the pension front. One is because of the sort of organized effort against organized labor, private sector unionism has declined enormously across this country, and with it private sector pensions. So now you’re in a situation where public employees have a pension, and the taxpayers who are paying for that pension, do not have one themselves. And that makes it tough. That makes it very, very tough. The other big problem that you have is that the number of, because of the big demographic changes sweeping the country and so forth and the number of active employees who are contributing to the pension system has declined relative to the number of people who are retired and taking money out of the pension. So you have, where there used to be a say, seven or eight to one ratio of active employees to retirees. Now you have maybe a one to one ratio. Well, that math Javon, just is tough to make work. And so finding ways to fix it, it varies enormously across the country, of course. But when it’s, you know, it’s really hard. I mean, it’s really hard to make the whole thing work and when. And the other thing is, is that it is a legacy cost. So when I’m paying, you know, say I live in Philadelphia now, and I’m paying into the pension system for services that were provided 10, 15, 20, 25 years ago, you know, and the pensioner that I’m paying for, is no longer working for the city. And he or she may have moved away. And yet I have stayed in the city. And I’m now stuck, so to speak, with paying for costs for services that frankly, I may not have received. You know, I may have moved into the city five years ago, I didn’t get the benefit of that service. So those things, you know, the changing demographics, the decline of private sector pensions, and the build up of legacy costs that current taxpayers have to pay for have made the whole thing very, very difficult. Now, again, it varies across the country, pension system to pension system. Some are in much worse shape than others. But it is, it is a math problem that I think it’s going to require some fundamental rethinking of how we do things. So, I mean, some of the things that people are talking about, you know, is that there ought to be some sort of retirement system across the board for everybody. That’s what social security was supposed to be. But it’s not nearly enough. And there needs to be, of course, some sort of public, single payer health care system, whether it’s something that, you know, the various Democratic candidates are talking about, but some kind of, you know, system, of course, because a big part of the pension thing is what is called OPEB Other Post Employment Benefits. Retiree health care is a huge, huge burden for cities. So finding ways to solve those fundamental problems needs to happen.

 

Javon Davis

Yeah, it’s a tough, multifaceted issue. Okay, this is my last serious question. I have a fun question for you. So we’ve been hearing some grumblings of you know, the possibility of another recession coming. As a Mayor who’s served through a recession, what tips would you share for, you know, city budget administrators or anyone who really works or less than the public sector budgeting, tips for getting through a recession and coming out as you say Kansas City did you know stronger than they were when they started the recession?

 

Mark Funkhouser

Well, first of all, it is this whole idea of make sure that you know, I mean, literally go through the list of GFOA policies and make sure you got them all. And make sure that you know you’re building up reserves, I think they recommend something like 16% of general operating revenue, to be held in reserve. And so do the basics. But then do some stress testing, you know, figure out, okay, if you know, if the recession came, you know, what would be the impact on our revenues of a severe recession, a moderate, a mild, so do some stress testing and figure out, you know, basically what the impact of the recession would be. And it’s a twofold impact. People think about the revenue decline, and that’s true, but service costs go up. Also, you know, as people are laid off, and unemployed, they’re, you know, they turn to government for help. So, the leading indicator for the states for a recession is the rise of Medicaid rolls. So, so look at both sides of the equation, you know, do some stress testing, and then begin to plan, do some scenario planning. If this happens, we’ll do this. If this happens, we’ll do that. Do not wait till those substance hits the fan and stand there and whistle in the dark and hope that it goes away. Because it ain’t gonna go. I mean, you know, and that’s what a lot of people do. They burn through their reserves, waiting for things to change. The fact is that a city, a big city, like Kansas City, or Philadelphia is like a big ship. And it’s hard to turn. And so as soon as you see the iceberg, that’s the time to hit the rudder and start turning. Don’t wait, don’t don’t say, well, you know, we’ve got, you know, 18 million in reserves. And we can spend that down. Well, we’ll see what happens. Now, you should start the day that you see a recession happen, implement the plan, the scenario plan that you already have sitting there, ready to go.

 

Javon Davis

Great. Thank you so much. That’s really great thinking, always be prepared always plan. So for a final question then maybe the most important question of the day. If you were the GovLove DJ, what would you want your outro song to be for your episode?

 

Mark Funkhouser

[Laughter] You know, well, you know my campaign song. We want the funk. Gotta have the funk Parliament funkadelic.

 

Javon Davis

Love it. Great. Well, thank you so much for coming on and chatting with me. This has been really insightful and has been really great to hear more of your story and hear all your thoughts about auditing and fiscal responsibility for cities.

 

Mark Funkhouser

Thank you Javon. I appreciate doing it.

 

Javon Davis

That ends our episode for today. GovLove is hosted by a rotating cast of ELGL members and is produced by Ben Kittelson. For our listeners, you can reach us at elgl.org\GovLove or on Twitter @ Govlove podcast. We’re on all your favorite subscription services. Please subscribe to GovLove through your favorite service and leave us reviews so more people know that GovLove is the podcast for local government topics. If you could leave us a five star review, we will send you some sweet ELGL swag. If you have a story for us we want to hear it. Send us a message on Twitter. Thanks for listening. This has been GovLove, a podcast about local government. [Music]

 

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