Work in Progress

Phil Puccia says it’s one thing to make changes. To institutionalize change is something else altogether.

And this disparity explains why the Springfield Finance Control Board, which Puccia directs and which started its three-year assignment in August 2004, will need at least another two or three years to complete its work, by his estimate.

“That’s how long we’ll need to do our work thoroughly and completely,” he said in an interview with BusinessWest to discuss what the board has accomplished in 24 months at the helm of city governance — and what remains to be done.

With regard to the former, Puccia listed many forms of progress, starting with city finances. When the board started its work, the deficit was $41 million, nearly twice what was projected, he said. That number was cut in half the first year, and will be down to $2 million or $3 million when the final fiscal ’06 numbers are tallied and certified. By the end of fiscal ’07 (next June 30), the budget is expected to be balanced.

Meanwhile, the city has greatly improved its tax-collection efforts as part of a broad initiative to improve the revenue side of the equation, while also hammering away at the expense column through a number of initiatives, including changes to health insurance coverage for city employees.

Beyond finances, the control board will soon complete long and often painful contract negotiations with city unions that have yielded long-term pacts that provide economic stability and some emotional relief. Meanwhile, the city’s Economic Development Department has been overhauled and enlarged, and many other city departments have been consolidated.

As for the work still to do, Puccia there are many specific projects for which he believes control board oversight is necessary, including efforts to improve a beleaguered school system, install a new accounting system for city finances, implement an expedited permitting process for development proposals, and build a new Putnam High School. But the broad assignment remaining falls under the category of institutionalizing those important changes that have been made.

“We need to keep the hammer down on financial management,” he said, “and we need to make the changes we’ve made part of the culture of Springfield.

“We have a good story to tell — the question is, what will the ending be?” he continued, adding that several more years of control board influence will likely help script a better scenario for a city still very much on the mend.

Controlling Interests

When asked about what his first two years of essentially running Springfield have been like personally and professionally, Puccia flashed back to a conversation he had with a friend while he was mulling whether to take on the assignment.

“I was telling him what was involved and all the challenges the city was facing,” he recalled, implying that there were some questions about whether this would be a career choice he would later come to regret. “He told me, ‘you have to take this job.’

“And he was right. Looking back, I think not accepting this job is something I would regret,” he continued. “This has been the most interesting and challenging work I’ve ever done. I wouldn’t trade it for anything.”

That doesn’t mean any of it has been easy, he said, glancing skyward as he reflected on the hard choices and difficult steps taken, especially the often rancorous contract negotiations.

“This was not easy, it’s emotionally draining and very challenging,” he explained. “It’s tough stuff.”

Looking back over the past two years, Puccia said the control board’s work to date has come in several phases, or steps. The first was to quantify and qualify the scope of the problems, he said, noting that the city was in greater fiscal disarray than was anticipated. “We found that the deficit wasn’t $22 million, it was $40 million,” he said. “and we got a sense for how dysfunctional the communication system and the management structure were.”

What followed was roughly 18 months of what Puccia described as “fiscal triage” to stop the hemorrhaging of fiscal mismanagement and to begin to put in place new management structures and procedures.

Steps in this process included everything from consolidating city departments and reducing the number of direct reports to the mayor from 31 to 11 to making substantive changes to the health plan for municipal workers such as higher co-pays. “There was an effort to begin to institute some financial and management discipline,” he said, “because we had no choice; we were borrowing money to meet payroll and we couldn’t pay all our vendors on time.”

Several new cash-management steps, including aggressive collection of current and back taxes, and more-conservative budget-setting procedures helped quickly improve the bottom line, he said.

“When you start saying to the management team, ‘you better manage your budget, because we have no choice but to manage the budget and we’re going to hold you accountable,’ things will improve,” he explained. “When you start finding nickels, dimes, quarters, and sometimes dollars in a budget like that, you start saving money.”

Budgetary stability and other improvements could only have been accomplished with the cooperation of city officials, especially Mayor Charles Ryan, said Puccia.

“It’s like two guys were thrown into a lifeboat on a raging sea,” he said of his work, and relationship, with the mayor. “We found a way to row in the same direction.”

Part of the triage process was negotiating new labor contracts, he said, adding that the control board entered talks with the mindset that terms of those pacts would reflect fiscal realities in the city — an approach he deemed different than what had transpired in years prior.

He likened the negotiated contracts, and the process for obtaining them, to the settlement of a will. “In the end, no one is completely happy, but everyone agrees that the process was fair.”

Part of the reason those on the control board sought long-term (generally seven years) contracts with the unions, said Puccia was to gain a measure of fiscal stability, or predictability. But there is also the emotional side of the equation.

“A city can’t grow and recover if there’s constant labor turmoil,” he explained, adding that a tentative agreement on a teachers contract may soon bring an end to that long struggle, leaving only a few small unions with which to negotiate new pacts.

Puccia acknowledged that there may be some battle scars remaining from the often-contentious labor negotiations, but he ultimately expects teachers and other employees to focus on the future — and on making Springfield a stronger, more livable city — and not the past.

Change of Pace

With general labor peace soon to be achieved, and noted progress on the budget front, Puccia said the control board will be putting greater focus on several other priorities, including public safety, improving the school system, and economic development — and he believes all three go hand in hand. Meanwhile, it will also move forward with institutionalizing the many changes it has incorporated with regard to city management.

Elaborating, he said the city is primed for economic growth — there is pent-up demand for commercial real estate and many businesses are looking to expand — and developers are seeking assurances that the streets are safe and the public schools are good.

“We need to give people reasons to invest in Springfield,” Puccia explained, adding that he expects continued progress on reducing crime and improving the quality and image of the schools. “If you can’t say to the development community that you’re city is safe and that it’s not corrupt and that everyone gets a fair deal, you’ll never get development.

“We’re putting together a track record that says the city of Springfield can manage its budget, it can deliver on services, it can maintain its buildings, it can educate children, and it can catch crooks,” he continued. “With all that, you’ll have a reason to come to Springfield, or at least to give us a look, and we’re starting to see that.”

Solidifying such a track record will take time, perhaps several years, said Puccia, as will the work to make systemic changes in city management.

These include incorporation of an integrated financial-management system for the city and school department, he said, noting that the software is on order, but the process of incorporating it is probably a two-year assignment.

“That’s the average for a city of this size,” he said, noting that most well-run municipalities now use the Microsoft product. “It will allow us to integrate accounting, payroll, performance budgeting, tax collection, fees, and licenses all in one place.

“These are the kinds of things the board needs to stay on for and make sure they happen and are done right, he continued, adding that the same is true for the Putnam project, which has a projected $90 million price tag. “We need to stay on another two to three years if we’re going to successfully institutionalize change.”

Overall, Puccia said an extension of the control board’s oversight — something he says can be accomplished through legislation or a simple vote of the board — should be viewed as a positive for Springfield, not a negative.

“That’s how developers see it, and that’s how the bond rating agencies like Moody’s and Standard & Poor’s see it, too,” he explained. “They like the fact there’s a control board here helping to manage the place.

“And they ask questions like, ‘have you settled your labor contracts and can you afford to pay them?’ and ‘how do you manage your financials?’ and ‘how are you spending your free cash?’” he continued. “Those are very specific questions on how you’re running your government.”

And the current answers should enable the city to yield an upgrade for its bond rating in time for a $50 million bond issue in the next few months for capital projects, he said. “I think we’re going to do very well.”

Progress Report

As he wrapped up his talk with BusinessWest, Puccia pointed to the front page of that day’s newspaper to offer some perspective on Springfield and its plight. The lead story about was about New Orleans one year after Katrina slammed into the city.

“These people have a challenge,” he said. “We’ve got it tough, but not like they do; we’ve got some things still to do, but we can see many hopeful signs. This city is coming back.”

George O’Brien can be reached at[email protected]