 Well, good afternoon and welcome. I'm Barry Rave. I'm a faculty member here at the Ford School and the Director of the Center for Local, State, and Urban Policy Close-Up. We're very pleased to collaborate with our colleagues at the Nonprofit Management Center here at U of M in sponsoring this event. You know, a major growing theme in issues of state and local government and governance involve issues of performance, how you measure it, how you manage for it, how one even begins to think about it. And here in Michigan, especially in the Snyder era, we're really in a revolutionary time thinking about how states and localities engage these activities, but it's true across the country. Another emerging theme in state and local government is public involvement, public participation, whether that takes the form of disclosure of information to the citizenry, holding a public hearing, or a ballot proposition. A really interesting question emerges when you put these two issues together. And I'm not sure that anyone has thought more about these issues or as thoughtfully as our guest today, Mark Funkhauser. Mark has a really intriguing background if you've read the biosketch. He's been involved in Academe, a number of public service roles in local and state government. Worked through the auditing ranks and became the auditor of Kansas City during one of those years was named a public official of the year by Governing Magazine. And then did what probably doesn't happen that often for those in the auditing ranks ran for public office and won and became mayor of Kansas City and now finds himself as an alum of public official of the year, working with Governing Magazine, blogging, writing a wonderful column in Governing Magazine, and working very closely with states and localities as they think about a number of these really, really pressing challenging kinds of issues. So we are just delighted to have Mark with us today. We had a chance to meet him last summer when he came to Lansing to convene a summit on different aspects of governance and state and local issues here in Michigan. My understanding is he'll be coming back in the fall. And his plan is to provide a talk on the major theme, but then allow plenty of time for a question and answer and conversation as we go forward. But without further ado, please join me in welcoming to campus Mark Funkhauser. Mark. Thank you, Barry. It's really an honor and a pleasure to be at the University of Michigan. I sat next to a guy, I was telling people flying out here from DC, it was a direct flight from BWI actually to Detroit, it seemed like everybody on the plane was wearing Michigan garb. Apparently, it was a good day to show your blue. And the guy sitting next to me had a shirt that I really loved. Big block letters, it said, another arrogant Michigan alum. Ah, I loved it. And so I'm proud to be here where you produce arrogant Michigan alum. This will be an interesting conversation for you and for I, and I'm looking forward to your questions. I think I'm probably going to approach this issue differently than you would have imagined. And so I hope you're not disappointed. And then we can fill in the spots that you want to fill in when you get a chance to have your say when I'm done and we deal with questions. So civic engagement and performance management are a means toward an end. And that end is the purpose of government. Why, what is government about? What is it trying to do? What's the point here? So my talk today, I'm going to have three parts. The first will be to talk about what is the purpose of government. And then to talk about the challenges to achieving those purposes. And then finally, what I see as a path forward. And the path forward is all about citizen engagement, authentic citizen engagement. But first, let's talk about the purpose of government. What I want out of government is for things to be okay to the point that I can sit on the porch and have a beer with my kids and my friends and not worry too much that things are going to fall apart. I don't want nirvana. I don't want paradise. I just want okay. That's what folks want. They want us to make it okay. And it is not okay in lots and lots of ways. A lot of critics of what we do in government talk about, you know, well, this won't solve all the problems or this is not the silver bullet or this is not the panacea. Nobody wants that. They want to be left to be able to sit on the porch, talk to their friends. They want their life to go on and they don't want it to be upset by wars and plagues and famines and global warming and unemployment and foreclosure and so on and so forth. So, start with Hobbes, Thomas Hobbes. He said without government, there's no arts, no literature, no labor because the fruits of the labor can't be protected, that there is essentially a war of all against all and that life is nasty, brutish and short. We need government to be able to have all the other things that we want. If we don't want our lives and the lives of our loved ones to be nasty, brutish and short, then yes, we depend on government. Those who talk about how wasteful, bad, terrible government is depend on a government employee, a police officer and the bullet in his or her gun to keep them safe. Then you take a more positive view. Hobbes took a negative view. You take a more positive view. Thomas Jefferson. We hold these truths to be self-evident that all men are given certain unalienable rights and among these are life, liberty and the pursuit of happiness. Then the second sentence of that declaration of independence. We put among ourselves government to secure these rights, which derives its just powers from the consent of the government. Those who talk about life, liberty and the pursuit of happiness need to understand that Jefferson thought you needed government. You're on unalienable rights, but if you want to actually have them, you need government. You come forward another 100 years or so and you come to Lincoln. Here you see a shift because up until now we've been talking about laws, regulation as it were. Lincoln says the purpose of government is to do for us what we cannot do ourselves, acting in our individual capacities. Treat the sewage, build the railroads, whatever. I mean Lincoln was big for infrastructure and right, I think. But he looked at government as a deliverer of services. And so we went from governing, regulating, building laws and so forth to building railroads and canals and locks and dams and so forth and so on. We went to service delivery and I'm a big fan of Abraham Lincoln. I've got a huge portrait of Lincoln in my office. I've read tons of his stuff and tons about him. And so I have really, if you look at the Charter of the Governing Institute, you'll see that quote from Lincoln. The little abstract that I sent for this talk has that quote from Lincoln. But I heard another guy recently who talked about the purpose of government, Jim Keen, a city manager with Palo Alto, California who has been lots of other stuff in local government. He's been a city manager in Montgomery County, Maryland, and he's been all over the country. And he said, when we asked him what the purpose of government was, he says, the government, the purpose of government was to allow us to figure out how to live with each other, how to get along with each other, to make agreements and then to enforce those agreements in a crowded and complex world. How can we live next to each other? And Keen is balancing back. We don't think about, we don't think, I almost never hear about people talk about governing. The purpose of a city government is to govern. It is to make and enforce laws. And so far, particularly in municipal government, we started having city managers who were trained engineers and we wanted to run it like a business and we wanted to deliver services and we wanted to manage those services well. And we tipped the balance toward service delivery. And so it has to do both. It has to make and enforce laws, regulate how we're going to deal with each other. And deliver services. But frankly, in 2013, it's less about delivering services now. And a little bit more, we figured out how to run the city more or less. I mean, the initial problems that we had, you know, we needed to have the sanitary city. We figured that out. We pretty much know sewage treatment and so on and so forth and streets and roads and all that. But now figuring out how to live with each other is getting to be kind of a challenge. Now, what did Rodney King say? Can't we all get along? Well, apparently not. And we need some help with that. So government, in order to have the community conditions, in order for it to be okay, there has to be this balance where government has to deliver services and allow us to come together to make agreements and abide by those agreements. So what's the challenge? So that's the purpose of government. That's what we're trying to do here. The biggest challenge is the disconnect between the people and their government. People no longer, and this isn't just in the United States, although it's particularly virulent in the United States, people don't trust government. They don't have any confidence in government. They think government is inefficient, ineffective, and inequitable. And part of that comes from the denigration of politics. More and more, we have forgotten that politics is the sacred duty of a citizen. It is your job. We talk about rights and taxpayers' rights and so on. It is your job to be politically involved. And to the extent that we're not, this disconnect grows. People talk about how bad the government is. You are the government. You are the government. I mean, Lincoln wasn't kidding when he said of the people, by the people, for the people. And so it can't work any other way. That's how it is. We have denigrated politics and we have more and more handed things over to the experts. And I'm reading a book right now by Paul Light. And it's called A Government Ill-Executed. And he talks about the need to have a government that works well. Aside from the issues of big policy and so forth, just a government that trains right on time. The garbage gets picked up, you're down 9-1-1 and a cop shows up or an ambulance, whatever you need. Things work. And he talks about the thickening of government. By which he means more and more layers, more and more bureaucracy, particularly in the federal government, more and more red tape. And here's the way I look at it. When I read what Professor Light is writing about the thickening, I think about how distant the policymakers are from the world they're creating. In the class where Mayor Walling and I were just talking, somebody asked about public education. And I launched into a rant about public education. Reform and so forth. When Bill Gates works to have schools like the ones where he sends his kids, will be in good shape. The people who design the policies are not impacted by the policies. The world is distant from them. They don't understand what it's like. Peggy Noonan, who writes for the Wall Street Journal, was a speech writer for Reagan way back when I read her stuff. Sometimes it's reasonable. Sometimes it infuriates me. She's got a right-wing slant that is a little hard to take sometimes. But she has certain themes, and she is a good writer. In this morning's blog, I woke up early, early this morning rehearsing this in my head. And so I decided to go ahead and get on the computer and read some stuff. And her blog this morning picks up a theme that she has talked about a lot of times. And that is that the people in charge have lived privileged lives. They've gone to the best schools. They've never dealt with adversity. And they're always shocked when things don't work out. And she's specifically talking about the Iraq war, but she means the theme larger. When I get on the bus in D.C., when I go to the metro and get on the metro, I know that the people who designed that system don't ride the bus. They don't ride the metro. When I go to the DMV, I know the people who designed the DMV don't answer by the DMV. When you visit a public school, you know that the people who designed that school probably never will send their children there. That's certainly the case in my town that I was in in Kansas City. And that's a problem. That's a problem. And that leads to this distrust and this disconnection. More and more public means poor. Public service, public transit, that's transit for poor people. Public schools, those are schools for poor people. Public safety, we live in gated communities. We've got private security. More and more of that disconnect is a real problem. And so in terms of citizen engagement, we have to be really, really smart about how to figure out how to make these connections. I'm going to give you a quick example of what I mean. There was a New York Times article, I think yesterday, or maybe Saturday, about the Atlanta school cheating scandal. And I commend it to your reading. It's an interesting, interesting story on like half a dozen different levels. But the part that struck me was how no one seemed to know among the policymakers and the elite in Atlanta that this cheating scandal was going on. And they did not want to know. They were darn upset with Sonny Perdue, the Republican white governor, when he launched an investigation. What the investigation found out, 85 teachers so far have confessed. And it wasn't just sort of idle stuff. I mean, you know, schools that should have gotten more funds because they had disadvantaged kids didn't get the money because the test scores went up. The principals got bonuses. The superintendent, who I'm sure was very well paid, got a half million dollars in bonuses. But anyone who asked the parents, hey, little Johnny's test score last year was 28. This year it's 72. Does he seem like he's doing better? Anybody who talked to the actual parents, anybody who talked to the actual children, this was not hard to find out. 30 years as a performance editor, I know how to do stuff like this and this was like a piece of cake. I wouldn't have to have somebody wear a wire. You know, you know, that's, you know, if you're going to actually manage the performance, you have to actually know the impact. You have to know the roots of it. I mean, altering test scores? Is that like a shock? Oh my God, who would have thought of that? I mean, this is so stupid. You know, and so you have to be able to, if you're going to use numbers, and God knows, I believe in using numbers. I do have an MBA in accounting and finance, but examine the numbers and engage the folks. What do these numbers mean to you? All right, so those are the challenges, you know, this disconnect. I think this is the central deal, is the disconnect between the people and their government. Here's a path forward. First, recognize that the outcomes that you want are co-produced between the citizens and the government working together. Children's test scores will go up when parents read to them, right? I mean, we all know that. Now, there are lots of reasons why parents can't read to them or won't read to them. In some cases, I mean, the kids don't have parents. They're being raised by a grandchild. The parents work in two or three jobs. The parent has mental health issues. There's a million reasons. But the outcomes that we want are co-produced. The school is not solely responsible, and the parent is not solely responsible. The teacher who says, it's the parents. We're the professional, the policymaker who says, it's the parents fault. I blame the parents. No, these outcomes are co-produced. You know, as mayor in Kansas City, whenever there was a disaster, a problem, you show up. You talk to folks. You see what's going on. And we had tornadoes. I mean, Kansas City is kind of a mecca for tornadoes. And so when I would drive to wherever the tornado happened and get out of the car at whatever time it was in the morning, 7, 8, whatever, the sound I would hear, chainsaws, chainsaws. The chainsaws were being operated by regular folks, ordinary citizens who were cutting up the trees. The trees that fell on so-and-so's house, you know, and dragging them to the curb or whatever, where the public works truck with this big grappling arm was picking them up and putting them in the bin to haul them away. And when people were rescued, you know, when we heard, oh, so-and-so's house fell on her, or so-and-so had this or that happen to her, the rescue was never by the fire department that emerged. You know, the fire department is not there when the tornado levels your house at 4 in the morning. You know, who's there? It's your neighbor. You know, so the risk is, you know, the Loma Payeta earthquake. This is the first time this really, like, resonated in my head. As I was reading this public health journal about, you know, emergency response to the Loma Payeta earthquake, major, major earthquake. These researchers counted 35,000 ordinary citizens who drug people out of the car, did this, you know, rescued people. Where were the emergency responders? Well, the freeway had collapsed. They were stuck wherever. You know, the people who saved you were the people who lived next door. You know, and so the public health outcome was influenced by the regular folks. It's the chainsaws in the morning. It's us. Fortunately, we're pretty decent people. So we need to recognize this, that underpinning the results that we get in terms of performance management, underpinning all those results are political choices. Shall we pay the teachers more or less? That's a political choice. Shall we give the fire department more money or less? Shall we put a fire station here or take out a fire station there? Shall we close a police station here, put in a new one? Shall we build new sewers in this part of town? Shall we ignore the sewers that are collapsing in this other part of town? Those are all political choices. And those are all governance kinds of choices. As an auditor, you spend sort of like an ambulance chaser. It's one scandal after another. Every time there's a major scandal, you come in and sort of sort it all out and so forth. And what you find, the big failures over and over are failures of governance. Management's important, but the big failures, the real corruption is always a failure of governance. I mean, y'all are paying a lot of attention to Detroit. They had a what, a kleptomaniac mayor, Kwame Kilpatrick. Those were failures of governance. Those are not management issues. So, recognize that the outcomes are co-produced, rehabilitate politics and recognize that every citizen has political responsibility. Improvements in performance, whether they're educational outcomes or public safety outcomes and so forth, are always the result, real improvements, are always the result of a series of political acts. Showing up, doing stuff, making different decisions in terms of the allocation of resources and so forth. And you want the result that you want with as little sort of gunfire and heat as possible, but you have to understand that if you change the status quo, then there's going to be some pushback. I mean, that's, if I'm improving performance dramatically, then I have to, you know, we can't, what is that old joke, you can't keep doing the same thing and expect a different result, so we need to do something different. Well, if you do something different, people are going to push back. And there's this Frederick Douglass quote that comes to mind when I think about this stuff. You know, you said there is no progress without struggle. Those who want progress without struggle want, you know, they want the rain without the thunder and lightning. They want crops without plowing up the ground. I mean, there's always going to be pushback. And as Mayor in Kansas City, I wanted to change the pension system, particularly for the firefighters. I said so in my inauguration speech after I got elected. And of course, people knew it when I was running. So I had, what, 200 firefighters show up at every public appearance with signs, keeping the funky hands off my pension. That's democracy, folks. You know, that's the way it works. And we worked, that took us four years, but we worked out a deal that worked okay for everybody. But you can't not have that. You can't say, you know what, I want to change the pension system, but I don't want anybody to say anything. Because if nobody says anything, you haven't changed anything. You are all pursuing, at least to be, hey, most of you are probably getting a graduate degree of some kind. And you're going to be an expert at some point. But you need to discard the veil of expertise. You, of course, know certain facts, certain ideas that ordinary citizens who don't have your degree aren't going to know. Although lots of the citizens you deal with are going to have degrees in something else, engineering or chemistry or electric or law or something. Well, you have to deal with them recognizing that they have virtually no respect anymore for institutions or expertise, because those institutions and experts have let them down over and over and over. And so you have to kind of, you can't march in and say, I'm the expert, believe it to me, I'm handling it. You know, you have to engage them where they are and recognize their own expertise. And you have to, as a public official, as a political official, you have to also act as a public official, say you're a professional, say you're a professional city manager, you have to act politically as well. And to pretend that you don't is a fraud. I mean, you have to actually do this. So for example, and you have to shape your profession as well as practice it. So as a practicing performance auditor, as a city auditor, as a state auditor, I would do my job every day and I would try to push the frontiers, you know, do it as better than other folks, more innovative, more interesting. I won lots of awards for being an innovative auditor. I know it sounds like an oxymoron. But at the same time, I would argue and fight and write papers to GASB, the Government Accounting Standards Board, to push them to do things differently than they were doing. I would argue and fight with the Government Accountability Office, GAO, that sets the standards for auditing in the United States. I would, you know, those are political acts. Changing how people do accounting matters a lot. You know, changing what auditors are required to do matters a lot. In fact, it matters so much right now that people are trying to destroy or dismantle GASB or at least put a shackle on it because they've actually gone too far. But you have to recognize that, that you do your job every day and, you know, you think firefighters haven't figured this out? They do their job, but they also lobby city hall. Well, you have to do the professional equivalent of that. So you practice your profession and you shape it as well. Now I'm going to go to three specific strategies that I think will work in terms of citizen engagement. And these things are not sort of packaged discreetly or separately. They're all sort of, they flow together. First is placemaking. You can Google this if you haven't, look it up. There's a lot of elements to placemaking. But essentially it involves working with the people who live in a particular place, particularly in the neighborhood, and make that place better as they understand it, as what they want. The folks who do a lot of research in placemaking say that for a place to be successful, there need to be at least ten different reasons for people to show up at that place. A place that is extremely successful, Bryant Park in New York City. If you've ever been to it, it was a wreck 20 years ago. It was an absolute wreck. Today it is like one of the nicest places in the city. And I was talking to a guy the other day, so I'm beggin this placemaking. Kansas City, we had an affordable housing program where we would build houses in the distressed areas of the city. And we'd build brand new houses and nobody would buy them. Why would nobody buy them? They'd sit vacant literally for a couple of years. Nobody wanted to live there. What does a real estate agent tell you? It's location, location, location. A brand new house and a crappy location. You know, you still have to make the location nice. But then this guy, Rick Baker, used to be the mayor of St. Petersburg. And he was talking to me, one of our former public officials a year when he was mayor, retired from that now. And he said, you know, it's got to be like Winnie the Pooh. I said, excuse me, Winnie the Pooh? He said, yeah, Winnie the Pooh is a theory of downtown development, for example. And I said, so please enlighten me. This is placemaking. He said, you know, Christopher Robin and Winnie are walking along in the Hundred Acre Wood. And Winnie the Pooh says, you know, Christopher Robin, you're my best, best friend. He said, Tigger and New York, they're my best friends. Because with them, I can do anything. But you are my best, best friend. Because with you, I can do nothing at all. What Baker meant about that was that downtown should be a place where you would want to go for no particular reason. Because it was just interesting and fun. And you didn't know what might happen if you went down there, but you would see other people. In other words, you could build a downtown where people would come down for the baseball stadium. You could build a downtown where people would come down to shop. But what you needed was a place where people would come down just because they knew it would be fun and interesting. Where they would go when they didn't have anything better to do. And that's placemaking. What you want, you know you're winning when people make more money and they have a better life. And their number one objective is not to move the hell out of the neighborhood. Because usually, as soon as people get enough money and they're doing well enough, they want to get out of the neighborhood. So your objective is to make a place, a neighborhood that they're attached to, that they're loyal to, that they feel good about and they want to stay in placemaking. And it starts with asking the folks who live there, it never works to bring in a new retail box or bring in a new stadium or bring in a whatever. This is not the kind of thing where you can spend a million dollars or a billion dollars and build something pretty and oh, it's one. In fact, that works. It doesn't work over and over. Community economic development. Real economic development. Again, focused on the people who live in the community. Not bringing something in necessarily, but focused on the people who live in the community. Asking them what do you want? What would you like? What are your hopes, dreams, aspirations? How would you do better? And then allowing them, focusing on them, doing better. Classic deal here. There's a nonprofit called Make Mine a Million. And it's run by a woman who was a co-founder of Take Your Daughter to Workday. And her names popped out of my head. But her whole idea is to focus on women entrepreneurs because and focus on investment, small amounts of capital to women entrepreneurs and training in terms of how to better market their stuff and so forth. And she said the reason for doing this is first of all, their companies are very small. They generally have 1.1 employees. And so if they could make more money and employ more people, employment would grow up and they don't leave. They're not footloose. They're not going to move out of the neighborhood. So Make Mine a Million, she wants to take their average size of one of these companies is about $150,000 and she wants to make it a million dollar company. And she got a real track record of success in doing this. But that's the kind of small entrepreneurial, incremental economic development that is community economic development and taking venture capital kinds of funds and focusing on those kind of people. And then finally, and this is the thing that is the most important and that weaves together all those other things, is deliberative democracy. And you can Google this and look it up. You'll see all kinds of stuff about deliberative democracy. But first, let me tell you what it's not. Okay, so you've gotten a real flavor. We've been talking now for about 45 minutes. You've gotten a real flavor of who I am and sort of where I come from. I'm a raging populist. I started out as a social worker. I wanted to save the world. I still sort of want to save the world. And so I really worked as mayor to try to engage with regular folks. I did 116 town hall meetings as mayor. Take all comers, answer all questions, stay as long as they like and so on. And I'm here to tell you it was ineffective. It did not work because who shows up? It's the usual suspects, no matter how hard you try, who speaks up? You've got 100 people in the audience, 15 of them talk. Is that representative of the 15? Is that a balanced, interested point of view? No, that's whoever could get the microphone, whoever could yell the loudest, whoever could be the most provocative, whoever could call the most attention to him or herself, whoever was most successful in getting a sound bite on the evening news, or in the morning paper. That's, you know, so-and-so told funcals are last night, thoughts and such. And they get their, you know, seven seconds of fame. No, that didn't work. I wish I knew about this stuff when I started. I wish I knew about it as well as I know now. Deliberative democracy is this. And Mayor Welling just left, but he described it in a previous class. He's doing some of this in Flint. First of all, you take a representative selection of the people in the town, in the jurisdiction. And you get, you know, so you deliberately make sure that you have one of these, two of those, and 12 of the others, and so on and so forth, so that income and race and gender and language, everything represents the actual population. And you will have to find, you know, you have to provide transportation. You have to provide childcare. You have to provide food. You know, you may have to provide translation services. But you get these people together, and then you get them together in significant numbers. So at least 100 or so. And maybe several hundred. I've been in deliberative democracy forums with 1,500 people. I've heard about them with four or 5,000 people. And you put them at tables with about eight or nine persons, again carefully selected so that it's a diverse group, at each table with a professional moderator, with a person who's able to moderate a discussion in such a way that the loudest, the most educated, the most articulate doesn't dominate the discussion, that the shy, the quiet get their voice heard also. And you give it time. So it's not just, so what do you think? Put up their hand. But they deliberate. They talk about it. They trade points of view. They share experiences about what they think about the situation. You give them data. You give them real facts about whatever the issue is, whether it's public education or transportation, or whatever the pressing problems are for the jurisdiction that you've convened them to talk about. You give them real data and real facts. And you let them, and you ask them questions. And they debate those questions. And then there are ways to, you know, basically do the instant voting so forth. And so this, you know, each group comes up with their answer to the question. And there's usually the ones that I've seen. So there's the moderator. Then there's somebody sitting there at a laptop pounding in what folks are saying, the major themes and so forth, what the answers to the questions are, and they're feeding this to a central group who are for the whole 100, 500, a thousand folks taking in from all the different tables, the stuff. And then every once in a while, they put it up on a board for everybody to see, and you do the instant voting. How many of you think what we ought to do to deal with transportation, for example, in the Washington, D.C. metropolitan area? You know, we need X dollars to maintain the metro. We have X minus Y. We've got a funding gap. What do you think we ought to do? You know, cut metro service, you know, add tax and so on and so forth, and people vote. You know, and then they discuss, well, seeing 70% of the people want to do X. What do you think about that? And they discuss some more, and they take time. It takes time. But over the course of time, over the course of say six or seven hours a day, the people begin to have confidence in each other. They begin to understand each other. They begin to have a sort of sense of camaraderie, and often what they want to do is stay together afterward. You give them the option to trade phone numbers and so forth, and they say, yeah, you know, I really got to know Susan here. You know, and even though she lives in a different part of town, and she has a different point of view, I think, you know, I think I'd like to stay in touch with her. It's connected to political leadership. This can't go on, this deliberative democracy stuff can't go on sort of over here with the city government or the state government or whatever over here. The political leadership needs to be engaged. They need to be there. They need to hear the discussion. They need to see what's going on. People need to see them. Now, I mean, they need to be visible at the event. They need to give it their support. Yeah, I'm going to listen to what you all have to see here today. And the political leadership needs to commit to follow through. Yes, you all have said that what you would like to do about this is X or Y and so forth, and so I'm going to try and do that. And I'm going to report back in this way or that way. There's going to be a website. You're going to be able to see what we have done. One of the best examples of all this, put all this together. When Tony Williams stopped being the financial manager of Washington, D.C. and ran for mayor and got elected. You talk about, I mean, Tony was XTAO of being counter, you know, and who had been imposed by the federal government and fought with Marion Berry the whole time and ran for mayor, got elected, and every budget that he did for the first five or six years was built on this kind of community engagement. He used a not-profit called America Speaks, and he did this. And as evidence of the fact that it worked, look at the, this is not the only reason, but I think it's a major reason for the resurgence of Washington, D.C. I mean, Washington, D.C. went from being a basket case at about 1998, not a long, long time ago, to leading the nation now in terms of economic growth per capita income, the cool factor, all that kind of stuff. I mean, pick a number, and they're like number one. So, all that stuff, what's that got to do with performance measurement? Those are the fundamentals. It has to be the thing that I talked about in Atlanta. You have to measure stuff that actually matters. You have to continually be engaged with the public, and you have to recognize that whatever you do by yourself isn't going to change anything. Look at things like stop smoking, recycling, now gay marriage, marijuana, legalization. I mean, pick a community condition, and you know you can't change it with just the government, and you can't change it necessarily with just the citizens. The outcomes that you want, to be able to sit safe, in my case, on the porch, and have a beer with my wife and my kids, the only way to get those outcomes is a smart government picking and measuring the numbers grounded in reality, attached to its citizens. So, final word. I talked about the thickening of the government, more and more layers, more and more distance from the people, more and more. More and more the elites come from like five colleges. I mean, both candidates for president last time, Republican and Democrat, both from Harvard. One of the things, you know, we need to push back. The elites are sort of self-selecting after a certain point. Kind of like a self-selecting board. What we need to do, I think, is push back on that. Challenge it. We need less Harvard and more University of Michigan. Go over it. What would you like to talk about? Thank you for talking. So, I'm curious about your experience in performance audit, how it's informed your world view. I'm curious about two specific things. One, if you could talk a little bit more about the issues you brought up with the GAO and GASB in relationship to the conduct of performance audits. And then if you could also touch more on how it's informed your world view as crises, being more governance crises than management crises, because I'm not sure that that's a popularly held opinion. So, that's the other thing I'm curious about. All right. So, first with GAO and with GASB. The GASB fight, I mean, and there have been a number, some of which we have, the good guys have won. Some of which the good guys have lost. One of the things that when I first, so I was already working as a performance auditor when I went to get the MBA. I wanted to get promoted. I wanted to have a good career. I loved doing the performance audit work. I fell into it by accident. But I could tell I was never going to get promoted if I didn't have, I mean, MSW. People looked at me like I was something weird, you know. And I was, you know, so I went and got an MBA and accounting and finance. You know, I'll show you. And in my very first accounting class, the guys talking about the cost of capital and I said, well, what about in government? You know, I mean, we don't, we don't depreciate. There's no recognition of the cost of capital. Surely it's not free. And he said, ah, no. He said, you can't depreciate things like the Statue of Liberty. You know, that's irrelevant for government. Well, that's nuts. The laws of physics weren't repealed for government. I mean, the Statue of Liberty actually required several hundred millions of dollars of repairs. Concrete, deteriorate, steel, rust. GASB35 said we will charge the cost of capital. It was a 15-year fight. The GFOA and others hated the idea. But I think it's part of the reason we have the infrastructure crisis we have today is we were able to carry on our books as if the capital never, the steel never rustic, concrete never deteriorated. It was the stupidest damn thing in the world. And eventually we won. It was not a clean victory, but now if you look at the financial statements for the city of Flint, you're going to see a cost of capital in there. And that's reflecting reality. A battle that we lost was on service efforts and accomplishments reporting. What good are financial statements if you can't tell what you got for the money? Other people have figured this out. Other countries, you know, Canada, New Zealand, you know, you look at a financial statement for the city of Christchurch, New Zealand, and you see the dollars and you see the performance measures and the auditor opines on both. You know, these measures fairly represent and so forth. Now imagine a situation like the Atlanta cheating scandal and I could name a thousand more like it if the auditor for the school district was required to opine on the performance data as well as the financial data. But the forces of evil won that fight and we haven't got that yet. And with GAO, well, the first fight was to call it performance auditing and we won. You know, when performance auditing first came about in the late 70s, it was operational auditing, it was expanded scope auditing, it was whatever. And we couldn't figure out what it was, we couldn't define it and I and others won a fight with GAO. A, it's performance auditing and B, here's the definition and since GAO is sort of the bellwether for the world in many respects, it certainly was in the 70s, less and less so today, the rest of the world went that way. So now if you look intoside, the International Organization of Supreme Audit Institutions, you have performance audit standards called performance audit defined correctly coming from intoside, worldwide standards. You look at the auditor's office, auditor general for Kenya, performance auditing, you know, so that's a fight we won. A fight that got a very, very small partial victory was the audit standards and again, this is what drives all the auditors, they have to do the standards, they're required to do it. They talk about efficiency and effectiveness. I wanted them to add equity. So that we would opine on the efficiency and effectiveness and equity with which dollars are spent. The reason that's important is that the city of Kansas City is not Walmart, it's not, I mean we have a police department. We give the government, you give the state of Michigan, the city of Ann Arbor, you give it money, you also give it authority and responsibility. The police officer has the authority to shoot you dead. The city of Ann Arbor has the authority to issue a permit or not to condemn your property or not. In other words, there are multiple opportunities for the abuse of equity, just as there are for efficiency and effectiveness. I wanted GAO to recognize that and the standards. I've fought with them about 10 years and there's a niggling little something in there now but it ain't much. But that stuff really shapes the world in ways that most people don't understand. Like I said, I think we have, part of the infrastructure crisis we have today is because for 150 years we pretended that capital only managed, mattered if it was a private business. It didn't matter if it was public. Hi, I have a question about your place building and working with communities to build a place where they want to be. And I think that is a very important part of building public policy and meeting the needs of people but the other part of that conversation is what happens after, which is often displacement or justification. So as soon as a neighborhood or community is getting the light shined on them and things are improving it becomes too expensive for those people who are there building it to live there and then they're accused of hindering economic development and growth and new business and new people. So how do you strike a balance when working with communities to both build a place where people can live now and 15 years from now, 20 years from now? Gentrification is, you know, it is, I'm trying to figure out how to say this without sounding too politically incorrect but it is a good problem to have. It is much better to have rising property values and try to figure out how to make it okay for people to keep their houses and stay in that neighborhood and there are ways we could do that. Affordable housing would work in a place with rising property values where people want to live. But it is so much better a problem to have than the problem that Detroit has, that Kansas City has, that Flint, Michigan has where property values are declining rapidly and people are trapped. It's kind of like bad traffic downtown. Whenever somebody comes to visit in DC for example, they talk about how horrible the traffic is. That's because people want to be there. So there are ways to deal with gentrification and we should try to think about that but we should get ourselves to a place that is our problem. We want to get to a place where we have to figure out how to keep so and so in his or her house because what I saw, I used to have maps on the wall in the mayor's office that would show me city blocks where there was one house occupied. Two houses occupied and I'd go see Mrs. So and So because it was almost always an older lady they tend to out-lived men and she'd be there defending her space keeping her picket fence and so on and so forth in absolute desolation. I mean you drive down Euclid Avenue in Kansas City and it looks like you're in the country and there's the only way you know you're in town is that there are concrete steps from the street to nothing. Houses have been torn down 20 years ago and then you come to Mrs. Smith's house you know you know so she's worse off than I think than if she were surrounded by a neighborhood that was sort of trying to price her out and we can find ways circuit breakers, homestead exemptions we can find ways to stay in the house and stay there. It is also true that you know unemployment is always a problem employment for people without skills is always a problem but again to have the tax base from which to work on those to be able to support the community college system the vocational system and so on and so forth that's just a dream in places where the property values and particularly in United States Mayor Walling talked a lot about this in the class that he and I were just in about Flint where most of the money is property values property tax you're just in a world of hurt so gentrification is a problem but it's a good problem. Hi I do research on democratic deliberation so it was really hard to hear your pitch for deliberation. Did I get it right? I think that was great. And so my question for you is what we've seen a lot of sort of experiments with democratic deliberation like the one that you describe in DC and you know sort of small scale things that happen occasionally all around the country but what needs to happen to make that sort of thing a more routine process a more routine part of governing like you know you can think of parallels like public comments on regulations or even like the kind of town hall meetings that you were talking about earlier how do we get it so that democratic deliberation becomes something like that? The politicians who do it need to win. I mean I'm serious about that you know nothing as soon as they start winning that's why I tell the Anthony Williams story because it's sucker one and he won in ways that people wouldn't have thought and Adrian Fenty did not do it and he got beat and so the lesson was not lost on the current mayor Vincent Gray it was his meeting that I attended I mean you know so you know Vince looked around you know Tony won Adrian got beat I'm doing what Tony did I mean really nothing succeeds like success and believe me mayors and governors watch each other like hawks it's not an accident that you know somebody does you know this or that kind of deal proposes this or that kind of tax reform and it spreads like prairie fire if it wins. Right here they're running to you I had a question on your example about the DC transportation system and we had a course at the beginning of the semester talking about transport and one of the things I realized was I represented one of the agencies advocating for the people in the community and yet when asking the president or the director of the organization if she'd ever or she routinely rode the transportation public transport she definitely did not and I guess when you talk about how how to minimize the loudest voice in the room and you go to those public forums but you continue to hear the same people how do you put yourself in a situation where you are hearing the other voices or everyone has an opinion but the people who really utilize the resources what would you advocate for the best way to do that? Well a couple of things. One the techniques of deliberative democracy that I talked about where you recruit people and so forth where you don't wait for volunteers you sort of go get them and make it really really easy for them to come but with regard to transit you do want to listen to the people who don't use it also because you want them to use it you want to figure out why they don't use it I mean you want to grow your customer base so to speak and you want to figure out why they don't use it and get them to use it but I have a friend who is my age who retired from Disney World in Florida and he spent an entire career there and accounts payable and basically the accounting stuff except that every year he had to go out as Chippendale or whatever and mingle with the folks and he had to do the silly stuff that makes Disney World run and so so and so is the operations manager or the chairman or whatever for your transit agency I think they ought to drive a bus a couple of days a year I think they ought to ride a bus a couple of days a year and it ought to be part of the job just like my friend at Disney World I mean you know you can't know what it's like otherwise and you make stupid decisions now there are lots of good marketing techniques in between of course you can do focus groups and you do rider surveys and so on and so forth but until you do it yourself you have no idea what it's like and so here's a guy or a woman regulating say an amalgamated transit union you know 500 bus drivers never once having sat behind the wheel and driven a bus say in DC I mean I ride the bus a lot I see all the public criticism I wouldn't have those people's job for nothing I mean my God I can't even drive in that city I'm not in a resort to Gunfire I mean and does everyone's father be some outrage in the paper oh my God they make $65,000 a year why shouldn't a bus driver make $65,000 a year in DC that is not a lot of money to live there and shouldn't they be able to have a middle class life and raise their kids and participate in the community and so forth so to me I want to know what the non-riders think I want to know what the riders think but you have to cut through that thing where the chairman or whoever is in charge has never ridden the bus, never driven a bus never been involved they're not going to understand what's going on and they're going to make bad decisions I think Hi thanks again for your talk my name is Ebony and my question is what suggestions do you have for a city like Detroit who's already struggling that's already struggling fiscally in terms of implementing direct I'm sorry, deliberate democracy in the way that you described without burdening the city with more cost okay first of all my piece this morning on Governing.com is about Detroit so it's about that question I'm going to comment in there so they've got a new financial manager Kevin Orr and he's saying I believe some of the right stuff which is that it is not going to be it can't be all about cutting, cutting, cutting privatized, privatized, privatized you know that's not what ultimately will not save Detroit and Detroit is in enormously bad shape I mean I look at cities in bad shape and Detroit is an anomaly I mean they're way, way out there but there is a loyal core of people who still are willing and able and happy to live in Detroit and pay taxes and that group of people needs to be respected and dealt with and honored and we have to find a way to grow that base you know there is a reason why there is a city there and whatever that original reason is has to be reconnected with and rebuilt you know of course you want to manage the money well of course you're going to have to bring revenues into line with expenditures of course you don't want to waste money but if you can't get people middle class people moving into your city and staying you're never going to make it you're never going to make it I mean that is the bottom line you have to now more than ever people can live anywhere they want I mean they can my company is a national company we've got people across the United States they live where they want to live so it's more competitive than it's ever been and you have to find ways there are strengths that Detroit has that they have to play to to keep people there Philadelphia seems to have turned around it was in the receivership it was I didn't realize I was telling Barry when I started looking into the whole receiver control board, financial manager yada yada yada I wasn't aware of some of the successes it's actually worked several places and you don't hear about those but where it works the way you can tell it works is an uptick in population Philadelphia got an uptick in population for the first time in like 40 or 50 years I actually did a column where I went and looked in the 2010 census at every city that got an uptick in population for the first time in 30 or 40 years and Philadelphia was the largest of those cities it seems that most people who are elected mayor or to a city council suddenly feel they have the divine right of kings and they really show no interest in the public's participation in decision making in fact they really see it as bothersome and how do you overcome that to implement the things you have been talking about you know I talk to a lot of mayors a lot of them and I don't generally feel that I don't generally hear that but I do see this I do see that city governments including the mayor are frequently incredibly irresponsive to citizens as mayor in Kansas City I was stunned to be able to see how unresponsive we were I mean I do a town hall meeting people would want us to add police officers I would do surveys I would do focus groups I would do everything there was no question I go to the city council I propose a budget that adds police officers we cut police officers literally there is no limit I guess to how stupid cynical venal bad politics can be within the city hall but the chairman the city council chairman of the finance committee looked at me and I said this is stupid we can't do this why are you doing this and she said I don't like the police chief I want to teach him a lesson he wasn't nice to her I mean he had agreed with me yes he would like more police officers he and 4,000 other folks but the decision was you know I don't like him I'm cutting the budget and I got the votes mayor and you don't and you can get away with that I mean you can get away with it again I don't think most mayors like that the ones I've talked to but you can get away with it because you can get the money I mean she she ran for mayor and was considered a favorite for a long time and she had hundreds of thousands of dollars behind her so you don't need the people if you've got the money you know and so there is a huge disconnect to go back to what I said before I don't think my experience is not it's not necessarily always with the mayor it is with the city government it is with the county you know state you all done? have a where you at? you're much easier than a town hall meeting of citizens by the way I could ask this very angrily if you want me to actually I just wanted to say first I'm actually from Kansas City and if you can believe this it's a pretty small world campaign for you door to door in Waldo God bless you I knew you were a fine young man so actually in our public management class and I really appreciated your comments about policy makers being disconnected and trying to get this more deliberative process on the ground or we're getting more of the constituents involved how do you see that competing with larger private or interest groups like maybe in Kansas City like Kauffman Foundation or Sprint or Surner or private interests which are looking at like TIF commercial all these things to get their own advantage where in Detroit we have similar comparisons the Kresge Foundation Dan Gilbert how do you see their interests which are representing a smaller subset but they have much more resources and maybe in a certain capacity can do more but maybe they also have different visions than like the constituents who are still living in Detroit can you just talk about that a little bit it's you put your finger on a real problem and you wrap together two or three different things there the foundation like the Kauffman Foundation or whatever can sort of only work its will through the political process you know I mean ultimately you know they either can get you know in Kansas City's case seven votes on the city council or sometimes they can circumvent the city and go to Jeff City or Lansing the state capitol and get a preemption and so that's you know and other than sort of limiting money into campaigns and of course making it much more transparent and I don't know how you can limit money I mean everybody's tried the various campaign finding and stuff only make it more transparent it's about the only thing I can see but with regard to TIF tax increment financing and that sort of stuff those are flat out bribes those are just bribes I don't know I can't tell you I I would say to so and so prominent individual and so you gotta raise money right to run for mayor in fact in Kansas City you gotta raise a lot of money hundreds of thousands of dollars and you gotta ask people for money and just like Willie Sutton said you gotta go where the money is I never talked to so many millionaires until I decided I wanted to be mayor and so you ask him I'd like your support and he says it depends what's your position on TIF and he said well in very carefully controlled circumstances I think it makes sense but most of the time it's not a good idea he said oh well thank you and you know $50,000 to the other guy who by the way wins so that's just I mean we ought not to do that and there has to be some sort of national law I mean there has to be some sort of stop to that I mean the New York Times recently did a piece really great investigative journalism on this $80 billion a year in tax expenditures tax preferences if I go and pay you essentially you know X thousand in bribes and basically I'm you're given a certain amount of money I will give you so much in future tax donations or tax forgiveness for campaign contribution it's essentially what it is it's just corrupt but you're not going to stop it without some sort of national law and it ought to be illegal it ought to be illegal there's a Walgreens across the street from a CVS and Walgreens pays three times as much in taxes as a CVS because they got a tax deal they had a better tax lawyer that's just corrupt in Kansas City I mean it was virulent and we got elected and we put a squash on it and then when I ran for re-election I didn't know that you were involved there but there were all these grainy photographs of television commercials and you can imagine how I look in those kind of parodies but there's in black and white slow motion this great big bearded guy just stomping on jobs and killing jobs you know whatever it is always good to have a job stomping innovative auditor raging populist in your midst especially when that's Mark Funkhauser please join me in thanking Mark for sharing some time with us today thank you thank you very much