Breaking: Pfeiffer Retires as Finance Secretary, Guv Proposes Eliminating Department
Governor Markell has just announced a proposal to eliminate the Department of Finance, and to distribute the Department’s responsibilities among other State agencies.
Secretary of Finance Gary Pfeiffer, who recommended that the Department be eliminated, is retiring and will be replaced as Acting Secretary by Tom Cook. Here is the press release in its entirety:
DOVER – Following through on his commitment to make Delaware’s government smaller and more efficient, Governor Jack Markell today announced a proposal to eliminate the state’s Department of Finance and consolidate its functions into other state agencies. With this announcement, the planning process to transfer the department’s responsibilities to existing state agencies has begun.
“Government needs to be smaller and my administration is committed to making that happen in a thoughtful way,” Markell said.
“Last week, that meant eliminating hundreds of positions from the state budget. Today, it means proposing to consolidate the functions of an entire department, which will capture significant savings and efficiencies,” said Markell, who signed a budget last week that de-authorized 485 positions in state government and that spends significantly less than the year before.
“Just like businesses and individual households, state government must cut costs during these difficult economic times. I believe this initiative will do that, while still maintaining and performing the important functions performed previously by the Department of Finance,” Markell said. The Department currently houses the Division of Accounting, the Division of Revenue and the State Lottery office, which also oversees the state’s Racinos.
While this initiative will not require layoffs, the Governor is committed to significantly reducing the number of state employees by aggressively and carefully managing attrition. Over time, as service delivery is made more efficient, as employees are transferred to other responsibilities and as the state carefully manages attrition, there will be fewer employees providing the combined array of services across departments.
His first day in office, Markell launched his ongoing “Honest Assessment” of state government to drive down costs and make government more efficient, effective, responsive and responsible. As part of that effort, Secretary of Finance Gary Pfeiffer, who was the Chief Financial Officer at DuPont, determined that the state could be run as effectively and, over time, less expensively, without the Department of Finance existing as a stand-alone department. As a result, Secretary Pfeiffer recommended the elimination of Department of Finance, with its functions consolidated into other state agencies.
Pfeiffer has resigned as Secretary of Finance and Markell has named Deputy Secretary Tom Cook to the role of Acting Secretary to lead the Department’s transition until the legislature can formally pass legislation to accomplish the transfer of these functions.
“Gary’s experience was an important factor in getting us through the historic challenge of an $800 million shortfall. We appreciate his service and his guidance. His fresh set of eyes and experience helped make clear that citizens can still be served without the Department of Finance existing independently from other agencies,” Markell said. “Acting-Secretary Cook brings decades of experience within state government that will be important to maintaining service levels and the orderly transfer of responsibilities into other agencies.”
Prior to his job as Deputy Secretary of Finance, Cook worked for the Office of Information Systems and the Department of State and served as Delaware’s Commissioner of Elections.
“Tom Cook works as hard as anyone I have ever seen in either the public or private sectors. He has the drive and the knowledge to make the Governor’s recommendation a reality and help lead this significant step to shrink the size of government,” Pfeiffer said.
Cook added: “The Governor has made his vision for a smaller, more effective and efficient government clear. We will get to work implementing it immediately while maintaining our levels of service to the citizens. I am honored by the opportunity to help make that change a reality.”
This reminds ‘bulo of something that Smitty said after the legislative session, something to the effect that the Administration and the General Assembly were basically forced into crisis mode during session, but that they were now ‘on the clock’ when it came to developing a more efficient state government.
The Beast Who Slumbers agrees with Smitty, and sees this as a meaningful first step.
Tags: Governor Markell, Local Government
Now watch. I guarantee you the same Republicans that have been screaming like petulant children about cutting waste will attack Governor Markell for doing this.
This is a meaningful first step in reorganizing the state government.
Did they put a dollar figure on the savings?
I see there will be no layoffs, so the savings will be minimal at first, but will be realized over time via attrition.
Personally, I could never understand why these functions (except for the lottery) were not part of the State Treasurer’s office.
Anon, there should also be economies realized by consolidation of office usage and efficiencies of interfacing between agencies.
Having lived through these consolidations in previous agencies I’ve worked for (twice), the devil is in the details, but generally you immediately lose the cabinet sec’s salary and a few other higher ups and see the salary savings as anon suggests, through time.
I still think the biggest savings will come with the consolidation of IT, HR, and Accounting (the accounting people at each agency, not the Division of Accounting). DD is right, assuming the legislature goes along with it, these are the types of steps needed to trim State government’s payroll.
MJ, I agree, since the treasurer’s office is a pretty small agency.
No matter how short term the appointment of Cook is, it’s too long while his mommy heads up JFC. It’s even worse than having Pro Tem DeLuca heading up the Labor Committee while being an administrator in the Dept of Labor.
Every government needs a chancellor of the exchequer; it’s doubtful the position of Secretary of Finance, one of the two most indispensable positions in the Cabinet, will be removed.
Division of Revenue has already shed many jobs over last 10 years due to e-reporting, but has overdue need to hire more auditors and other skilled positions.
Financial controls belong in Executive branch subject to ultimate control of governor, not with the independently-elected Treasurer.
PI: Interesting point, especially as regards DeLuca. To wit: About 10 years ago, an active state trooper (as opposed to a retired one) sought permission to run for the General Assembly. The courts ruled he couldn’t, because he was working in the executive branch and it would have meant a conflict of interest.
Why isn’t the same true for DeLuca, Keeley and others who essentially hold executive-branch jobs in the administration while serving in the General Assembly?
I know a couple of you DLers are lawyers. Why is this OK but the state trooper wasn’t?
Geezer’s question is especially interesting as it pertains to DOL employees–especially since so much of DOL’s funding comes from the Federal gov’t. What are the Hatch Act implications?
The Hatch Act will only come into play if the position is 100% funded by the Federal government (such as USDA jobs at colleges and universities and state extensions services). Otherwise, no state employee (teachers, state workers, etc.) would be able to run for partisan office since the state receives Federal funds.
In ’98, trooper Doug Salter ran against Mike Mulrooney for the seat to be vacated by Jeff Mack. In response to a request from Gov. Carper, the Supreme Court of Delawsare ruled, 5-0, that an active state trooper cannot serve in the General Assembly.
Each of the Justices independently has concluded that Sergeant Salter’s position with the Delaware State Police is an “office under this State,” as that term is used in the second clause of Article II, § 14, and not mere employment. The record reflects that his position with the Delaware State Police, in varying degrees, satisfies all of the non-exclusive criteria that define an “office.” See Opinion of the Justices, 672 A.2d at 7. Most important, Sergeant Salter’s duties with the Delaware State Police require him to perform the sovereign function assigned to the executive branch of enforcing the laws of the State of Delaware. If he were simultaneously to occupy a seat in the Delaware House of Representatives, he would be called upon to perform the sovereign function assigned to the legislative branch of enacting the laws of the State of Delaware. The combination of those two sovereign functions in one person is antithetical to Separation of powers between the three branches of government in Article II, III, and IV of the Delaware Constitution of 1897. Our analysis reflects that is exactly why Article II, § 14, of the Delaware Constitution has always prohibited such dual office holding.
Larry Hamermesh and Matt Denn successfully argued the case. Mulrooney won the election a week later by 300 votes. Salter would not have been able to serve as a state cop had he won.
Service as a rank-and-file classified employee is not considered to violate this prohibition. 29 Del. C. § 5110, enacted in the 1960s, provides: “In the event any employee of this State, including any employee of the public schools, is elected to any public office provided for by the Constitution of the State or the Delaware Code, such employee shall be granted such leave of absence without pay as is reasonable and necessary to perform the duties in such office …”
Thanks for the info, John. Your memory is much sharper than El Somnambulo’s, but it’s all coming back to him now…
Decent first step but the consolidation/reduction must be more aggressive, definitive and ongoing.
What is the goal in savings and jobs? I suggest 15%-20% over the next four years.
Mike
Thank you, John. Knew there had to be some difference; interesting that it was enacted to allow teachers to serve.
Mike, I believe Markel’s stated (long-term) goal is a total of 4000 employees, which if not counting school districts, hits your number.
I think it would be equally wrong for detractors to dismiss this as simply window dressing as it would be for supporters to declare it meaningful. At least for now…
There simply isn’t enough information available to objectively determine if this would result in real savings or not (and by “real” I mean attrition of employees and other savings over and above what would have occurred if the Department of Finance were to remain intact).
The Governor’s release indicates that:
“His first day in office, Markell launched his ongoing ‘Honest Assessment’ of state government to drive down costs and make government more efficient, effective, responsive and responsible. As part of that effort, Secretary of Finance Gary Pfeiffer… determined that the state could be run as effectively and, over time, less expensively, without the Department of Finance existing as a stand-alone department. As a result, Secretary Pfeiffer recommended the elimination of Department of Finance, with its functions consolidated into other state agencies.”
What form did Secretary Pfeiffer’s recommendation take? What type of analysis did he do? Who did he speak to during this process? Who else was involved? Did he reach out to his counterparts in other states? What, specifically, are the areas where he believes that savings can be realized? What risks are associated with this consolidation?
These are all questions that should receive public scrutiny. I’m going to go ahead and assume that a recommendation by a member of the Governor’s cabinet to reorganize an agency that collects the majority of State revenue was in writing. So where is it? Will it be released to the public, or to legislators? If not, why not?
As someone who helped reorganize a state of Delaware agency (ironically, to implement the recommendations of a task force headed by then Treasurer Markell), I’m willing to withhold judgment on this until I’m able to get hold of more information.
But without that information, its very hard not to take a cynical view of this – the size of state government is not measured by the number of state agencies.
In the absence of this information, this kind of feels like a “Selander Special” – where the sizzle is more profound than the steak. What specific, quantifiable information is to be released to the public or to legislators for review to support this proposal?
I hope that others interested in seeing the Markell Administration live up to its promise of being the most open and accountable Administration in Delaware history will join me in calling for the release of Secretary Pfeiffer’s recommendations for public review.
Is there any reason that the public shouldn’t get to see what he recommended to the Governor?
Hmmm… I take from the lack of follow up comments that it means you only pretend to support open government on this blog.
This thread started with a reference to petulant children, yet it seems you all are content to have your Governor treat you like children when it comes to sharing information on this proposal.
Can any one of you explain how this is a meaningful step toward reorganizing state government? (emphasis on meaningful.)
Do any of you have the slightest notion of how much this will save the state, if anything? Or when the state will realize any savings?
Does anyone know how Secretary Pfeiffer came up with his recommendations? Did he listen to the counsel of his peers? His employees? His tarot card reader?
Carry on kiddies.
Mark – we have jobs that sometimes make it so that we cannot respond in a timely manner. Also, I think that we have been pretty consistent in challenging assumptions, so a lack of emphatic “YESSS!” from us withing 118 minutes is hardly some indictment of our commitment to open government.
Glad to hear it.
And your reaction to my assertion that the Markell Administration releasing the Pfeiffer recommendations and cost/savings assumptions for public scrutiny would be:
a) a good thing in general; and,
b) entirely consistent with his pledge to make his Administration open.
What say you?
I have already lobbed an email asking what the anticipated savings for this move would be. I would like to know what assumptions have been made with regard to the budgeting impact of this next year.
I listened to Selander on WDEL today and got the distinct impression that they are expecting this change to precipitate retirements. I am guessing, but it could be that they are waiting on a few decisions in that regard before making it final.
For example, if Pfeiffer estimated that 1/3 of the staff would opt for retirement rather than move to a new reporting structure, the savings could be large. However, saying that publicly, right out of the chute could be damaging to the process. I’ll see what comes back from the Guv’s office.
But yes, we should know what the thought process is/was and what we can expect.
Finance is a curious place to look for savings. It has three divisions.
1. As noted above, Revenue actually needs more professional-grade personnel.
2. The State Lottery Division just got more duties this spring. A GOP administration might try to outsource this work, but this usually has gargantuan long-term costs to the public.
3. Perhaps Pfeiffer has ideas on how to reorganize the Division of Accounting, but those proposals would have more heft if the proponent didn’t leave his high-profile, high-responsibility position just six months into the administration.
“if Pfeiffer estimated that 1/3 of the staff would opt for retirement rather than move to a new reporting structure”
LG, I honestly think that’s the rational for a lot of the things that Markel has done. He proposes 8%, not that he thought that would fly, but because he wanted people to retire that could/should. I think the same thinking is going on here. I’m not saying that’s a bad thing, but I think with some of the “efficiencies” that the administration is looking for is retirements without having to offer an early retirement package.
In the case if consolidation of IT staff statewide into DTI, I know more than a few people that will retire than go work for DTI. Again, not saying that’s bad, but you will lose a lot of institutional knowledge that way.
“The State Lottery Division just got more duties this spring”
John, you’re right. Although I think that the number they came up with is high, the commitee looking into table gaming estimated that the Lottery Office would need to grow by 60 people or so. Now that can be paid with from Racino funds, so that the General Fund isn’t on the hook for it, but it is still a large increase in responsibility.
“As noted above, Revenue actually needs more professional-grade personnel. ”
John my guess is that Revenue would be folded into OMB. There is a 2 to 3 month downtime for the budget analysts, and I’m guessing that they’d tap that resource for personnel.
Geezer: you hit the double dipping nail on the head! Why are we giving these representatives a double pension, double salary? You are right about the policeoffice as well, so why is this Labor Dept. dude able to do this? Its time to retire many of these legislators who are simply building up their pension plans at the expense of our economic downturn. Some of them will get as many as three pensions!
Relative to Cook…dont be surprised if Markell doesnt push Mr. Cook, (Cooks son) to run for State Treasurer. He knows where all the bodies are buried and laid to rest years ago. Isnt it time the “Cooks” retired from public office? Nepotism at its very best.
Hey other Mark. If you read the epilogue language in the budget, there’s a section in there mandating Microsoft Software (it’s in the DTI section) for messaging. So much for any of the Open Source stuff I’ve been doing 🙂
Mark H has read the epilogue language, and El Somnambulo, who has not yet done so, encourages everyone to read the epilogue language. It is generally where the ‘deal-making’ portion of the process can be found, if one is able to decipher it.
Anon has raised a depressing, but plausible, possibility. Either Treasurer or (even worse) Auditor. That’d be the ultimate coverup.
Mark H. – yes, that language has been there for quite some time. It was originally inserted to prevent different agencies from going off and procuring different messaging solutions.
An early attempt at IT standards – I think its just been carried over from year to year. (I doubt that the current leadership at DTI even knows its there. But I digress…)
LG – the relevant issue is not how many people retire. Its how many MORE retire because of this change than would have retired anyway. Otherwise, this is just window dressing on activity that would have occurred anyway.
But even more than that, one would hope that some detailed analysis went into this – including some risk assessment. What exactly was the thought process that went into this? Who was a part of it? How was this analysis communicated to the Governor’s office?
Lets not forget, Finance is not a small agency. It collects the lions share of revenue for the state and touches every single taxpayer in the state (and many outside it).
If anything the Markell Administration has done during its first 6 months in office warrants public scrutiny, this is it.
I got a non-answer to my first email. I have pressed for some of the details. I’ll let you know what I hear.
Its how many MORE retire because of this change than would have retired anyway.
Obviously. But if it speeds the decision by 6 months to a year, it does what it is intended to do. Everyone in every job will retire (or die trying). The savings come when those guys at finance go home and talk to their spouses tonight and decide if they can make it on what they have now.
“… my guess is that Revenue would be folded into OMB. There is a 2 to 3 month downtime for the budget analysts, and I’m guessing that they’d tap that resource for personnel.”
This would be dangerous. Revenue is a 12-month cycle, with constant emergencies and the need for a departmental memory. The Division of Revenue has to address to chiselers, non-reporters, tax evaders and others who game the system. It can’t do so with the civil-service equivalent of rent-a-cops.
John, regardless of the merits or lack therof 🙂 , this is some what will happen when you start attrition and don’t replace certain people. I’d really don’t know of a good answer to this and please remember, my speculation was just a guess 🙂
Mark – Indeed, I realize that you’re only the messenger of possibilities. The research, experience and comments that you’ve brought to this thread are impressive and thought-provoking.
I’m still baffled at how a comparatively young and reportedly talented secretary of finance can quit 6 months into his job amid a financial crisis.
The only precedent I can think of was when Mike Hargrove [like Pfeiffer, 57 years old] resigned his manager’s job two years ago this week, saying he no longer had the passion for the job. The difference: the Mariners were on an 8-game winning streak, Hargrove had 16 largely successful years as a manager, and decided after 35 itinerant baseball years to enjoy life with his children’s mother.
No such explanation for the short-term Secretary of Finance. No doubt Gov. Markell’s disappointed.
Sorry, nothing really to do with this thread.
Liberalgeek, did you get a chance to talk to your econ friend?
I did. I’ll get a post up on it soon.
Mark, there is no reason why the recommendations made to the gov should not be public record. The governor’s office was never exempt from FOIA requests, except for the usual reasons. You should send his office and email asking for the report and see what they say.
Mike and Mark – The Delaware courts have held that records of the governor’s office are presumptively exempt from FOIA under executive privilege.
“The executive privilege is not absolute. Unlike most evidentiary privileges, it is for the benefit of the public, not the executive who asserts it. The privilege serves the purpose of protecting the effectiveness of the overall governmental system. Thus, in a criminal case, where ‘the very integrity of the judicial system and public confidence in the system depend on full disclosure of all the facts’ the legitimate need for disclosure of relevant evidence may outweigh a generalized claim of public interest in the confidentiality of Presidential communications. See United States v. Nixon, 418 U.S. at 709. Conversely, in a civil case, ‘when the danger of possible unjust censure of a candidate for appointment . . . is balanced against the need for effective pre-appointment screening of prospective appointees, the latter interest is far more compelling.’ Nero v. Hyland, 386 A.2d at 853. Whether a claim of executive privilege is sustained, therefore, depends upon whether the need for protecting the confidentiality of executive communications outweighs the litigant’s need for disclosure.”
I suspect that under this standard, Secy Pfeiffer’s recommendations to the governor would not be required to be disclosed.
“…depends upon whether the need for protecting the confidentiality of executive communications outweighs the litigant’s need for disclosure.”
I’m not so sure that would apply here. With Markell making the announcement, as well as already appointing a sucessor, why would he have to shield the communication?
JM’s likening of Gary Pfeiffer’s resignation to that of Mike Hargrove inevitably leads El Somnambulo to recall the sage words of Phils’ skipper Eddie Sawyer, who resigned during the Fightins’ 23-game losing streak in 1960:
“I’m 60 years old, and I want to live to see 61.”
On a serious note, the scope of suggestions/ideas, cautionary notes, historical context, and skeptical analysis in this thread is really of the highest caliber.
The Beast Who Slumbers never ceases to be amazed by what DL readers can bring to the table.
He urges those in the Markell Administration who read this blog to seriously incorporate what DL readers have provided into their deliberations.
Just great stuff!
“we think 1/3rd will retire cause we are changing the department name on their letterhead and biz-cards”
why are we putting crackheads in postitions of authority?
no, methheads 🙂 or is it meatheads I can’t remember