The Streets Were Paved with Gold (31 page)

Good management requires good employee morale, something that is clearly absent. “If you’re in a war,” says teachers’ union leader Albert Shanker, “you need a goal, a terminal point, some overall plan … a sense of shared sacrifice. There is poor morale because people don’t know there is a plan. And they don’t know there is a plan because there isn’t one.” That requires sensitivity and leadership, and not just from commissioners and middle managers. If New York is in a wartime-like crisis, only the chief executive
can inspire people to “shared sacrifice.” Only the mayor can command people’s attention, define the challenges, set the goals. Only the mayor can hire and fire commissioners. Only the mayor receives a mandate from the electorate.

Good management also requires a system of measuring managers. Goaded by the Emergency Financial Control Board and the Management Advisory Board—not to mention the new City Charter passed in 1975—the city initiated a management-by-objectives program. Each agency was to commit to paper its yearly and monthly goals, and be measured by their results. This is the program Lee Oberst was asked to direct and monitor in 1977. Such a program represented a dramatic departure for government. “There were bright guys in previous administrations,” says Ukeles. “Why were they not successful, and why do I believe we will be? Historically, the criterion for success in the public sector was not performance. It was not how much we’re getting for how much. It was responsiveness. In other words, if I had a pothole in front of my house and I called the department and it was fixed the next day, I felt government was succeeding. There was no balance sheet.” That was political management.

Bad management costs money. Comptroller Goldin has reported, for instance, that “940 dead New Yorkers are continuing to be issued Supplemental Security Income checks four or more months after their deaths” at an annual cost of $1.7 million. The Board of Education, his auditors found, spent 59 percent of its $2.8 billion budget on administration; the national average was 43 percent. The city’s welfare fraud rate was 13.6 percent, compared to a national average of 8.6 percent and California’s 3.5 percent. Approximately $60 million could be saved, says the State Department of Social Services, by eliminating double billing on Medicaid claims. The federal government says almost 25¢ of each Medicaid dollar is misspent due to fraud, waste or mismanagement. In early 1978, the Inspector General’s office reported that the federal Department of Health, Education and Welfare misspent $6.3 to $7.4 billion—largely through waste and mismanagement—in fiscal 1977. One small federal agency, the General Services Administration, admitted to Congress that it wasted more than $100 million of its $5 billion budget. In his first four-year financial plan, Mayor Koch said “management improvements to reduce costs” would save city taxpayers $174 million in fiscal 1979, $337 million in 1980, $452 million in 1981, and $544 million in 1982. These are annual savings,
and when pressed by Treasury Secretary Michael Blumenthal, Koch conceded the city could do even more.

The value of good management can be seen by comparing the police and fire departments. Both cops and firemen, for instance, receive unlimited sick days. Yet in 1977 cops were averaging 16.5 days sick and firemen only 7. Why the difference? Because, unlike Police Commissioner Codd, Fire Commissioner O’Hagan—the same man who asked for a disability pension—personally monitored the performance of his department’s fourteen doctors. If reports showed they were permitting too many “sick days,” the good doctors were summoned to the Commissioner’s office. “He’s not loved,” said Oberst. “But, boy, is he good.” If all commissioners were as demanding, he said, the city could save $30 million in reduced absenteeism and overtime costs.

Good management could also help to save neighborhoods. After the blackout looting in Bushwick, I visited Bushwick Avenue in Brooklyn. A solid row of attached wooden houses, with neat gardens in front, stretched for a whole block. Except for three burned-out hulks on the corner. This was a black working-class block, and worried members of the Granite Block Association complained that despite their fervent protests the hulks remained. They could get no one in the city government to tear them down or cement them shut. Neglected, they remained invitations to arson. In a flash, their dream of owning a home could vanish. Because the city did not act, members stayed home from work, took turns patrolling their block night and day. But how long would they persist before deciding, as so many others had, to flee Bushwick?

Good management is critical to the city’s economic development efforts and its hopes of squeezing savings to close budget gaps and provide raises for workers. Businesses and people look not just at city taxes but at its schools and sanitation and other services before deciding whether to move. “I agree with the unions,” declares Oberst—thinking of the 3,426,000 tons of garbage to be collected, the 6,000 miles of city streets to be policed and repaired, the 437,600 yearly false fire alarms, the 395,000 housing code violations. “The biggest problem we have is bad management. A good manager sets standards. If you play golf, par is a standard. If you have no standard, you don’t tax people to the limit of what they’re capable of doing.”

But Oberst has few illusions. He is a very neat man—three times in the course of a two-hour interview, he got up and walked the
length of his gym-size office to discard, first, an empty pack of cigarettes, then a mint wrapper, then a Styrofoam coffee cup. Democratic government is never as neat. “My greatest frustration,” says this round-faced executive who looks like a construction worker, “is the inability to make things happen as fast in government as in industry. Business is much more autocratic. The President asks you to jump and you say, ‘How high?’ Government is much more democratic. There are so many constituents. There are 100 bureaucracies issuing orders in the federal government. The state has fifty bureaucracies. Then there’s the City Council, the State Legislature, the Board of Estimate, fifty-nine community planning boards—each constituency must be served.”

Managing a business and a government, the late Wallace Sayre, coauthor of
Governing New York City
, observed, “are alike in all unimportant respects.” Were they alike, there are limits to how far good management can take you. Even a good captain on the
Titanic
could not have kept the decks dry. But perhaps the captain could have steered clear of the iceberg.

A business measures its success (or failure) by the bottom line—profits. A politician measures success by winning elections. The attempt to find a comparable bottom line by which to measure a government’s efficiency (or inefficiency) in delivering services is what productivity is supposed to mean. But productivity is a word of many meanings and nuances. In February 1977, for instance, Abe Beame didn’t seem to agree with Abe Beame about what productivity meant.

The city’s first biannual management report carried a signed introduction from the Mayor proclaiming, “In the next fiscal year it will be possible to deliver
better
[emphasis added] services at lower costs.” Yet page 1 of the same report reads, “The basic management goal for the City of New York is to
maintain
[emphasis added] the quality and quantity of essential municipal services.” District Council 37’s research director, Alan Viani, said the Beame administration was confused: “Productivity could mean savings. It could mean better quality work. It could mean increased revenues. It could mean decreased staff over a period of time. The current productivity program gives no credit for improving service. They’re
looking for dollars. They’re not dealing with productivity. They’re dealing with savings.”

At first, there was a sharp difference between City Hall’s and the Emergency Financial Control Board’s definition of productivity. The city’s 1976 agreement with the municipal unions provided new cost-of-living pay adjustments, called COLA II, if funded by productivity savings. The unions objected, saying productivity was often impossible to measure. “I teach a course on it,” said labor leader Victor Gotbaum, “and I can’t define it.” The city agreed, and prodded the Control Board to amend its COLA policy to allow funding from one of three sources: “productivity,” “other savings” or “other revenues.” The Board relented, permitting cost-of-living increases when the city corralled new state or-federal aid, or cut the budget. In March 30, 1978, when I asked Basil Paterson, Koch’s Deputy Mayor for Labor Relations, to define productivity, he responded, “In the fiscal four-year plan that’s been projected by this administration, you’re talking about a 10 percent attrition rate.… That is increased productivity.” By that definition, if the city encouraged its entire work force to retire or resign, there would be improved productivity.

The city’s definition of productivity was—and is—both confused and political. Strictly speaking, productivity is improved, says Raymond Horton, former staff director of the Temporary Commission, if one of three conditions is met: (1) services are increased while costs are held level; (2) services are maintained while costs are reduced; (3) services are increased while costs decline.

The city, however, devised its own definition, increasing costs while simultaneously decreasing services. Though the city said it decreased its work force by 61,000 or just over 22 percent in the first three years of the fiscal crisis, its total labor costs decreased by only less than 1 percent. Fewer workers were earning more money and providing fewer services. The city’s budget continued to expand, admittedly more slowly than in the past. The workers got more money. City officials got peace and continued cooperation. The public got reduced services.

Former First Deputy Mayor John Zuccotti, in March 1977, defended the city’s efforts. “First, we have introduced—and we haven’t invented the wheel—a systematic approach that allows an ongoing review of an agency’s performance,” he said, pacing to and fro across his City Hall office. “We have been able to minimize reductions in personnel in the delivery of services.” He ticked off
areas in which he felt the city received improved services: the Fire Department had a 25 percent greater work load and 2,500 fewer men—yet maintained the same level of service. (A spokesman for the Department said the Commissioner refused to claim the same level of services, preferring to say service was “adequate.”) “And take the police,” said Zuccotti. “They’re down 6,000 cops—yet this year there are more men on patrol than in the previous year.” Day care: “We have defunded seventy-five day-care centers—yet we are serving roughly the same number of children.”

Few deny that the city had improved its management. But the degree of progress depends on where one is standing. If you were John Zuccotti, a talented, hard-driving man struggling to push the rock 200 feet, 20 feet of progress was reason to be grateful—particularly since you knew the obstacles only too well, especially the five-foot two-inch obstacle in the adjoining office. But for someone with a greater distance, the emphasis would probably be on the 180 feet remaining. Take Zuccotti’s police illustration. Granted, the city was doing better—but compared with what? In the spring of 1977, the city employed 25,355 police. Mayoral candidate Ed Koch charged that there was only an average of 1,500 patrol officers on the street during each of a day’s three shifts. Commissioner Codd disputed Koch, asserting that each shift averaged 2,100 officers. If you accept Codd’s figures, only one-quarter (6,436) of the force was on patrol on any given day. By August 1977, the Department reported that the daily average was down to 6,049—842 fewer than the Department’s management plan called for.

“There is yet no measure of what each department should be doing,” complained a former Lindsay administration official who worked for Beame in 1977. The city’s productivity program measures the total tonnage of garbage collected, says former Sanitation Commissioner Martin Lang, “but what counts is the per-man tonnage.” What also counts is whether the streets are clean. The Productivity Council offered one grievous example of the city’s propensity to quantify rather than qualify results: the Office of Code Enforcement, they found, claimed its productivity improved because building inspections per inspector were up from six to eight per day. “Yet the statistic itself is meaningless—the question is what happens as a result of these inspections? Is there a follow-up visit to see if violations have been corrected? If they have not been attended to, is the landlord properly punished? When a landlord
cannot immediately be located, are efforts made to track him down? In other words, how many of the inspectorial visits actually result in building improvements?”

There are other obstacles facing the city’s productivity efforts, some self-imposed, others inherent. To win peace and forge a partnership with its municipal unions, the Beame administration agreed to forgo selective layoffs and substitute a policy of encouraging people to retire early (attrition). The city and unions were implicitly agreeing the work force was too large but would be reduced randomly, as 25,000 earlier layoffs were randomly made on the basis of seniority—last hired, first fired. (A 1976 report by the City Commission on Human Rights revealed that this layoff policy wiped out half of all Hispanic employees and 35 percent of all black employees; 33 percent of those terminated were female, as opposed to 22 percent white males.) The city’s attrition policy was “insidious,” said then Parks Commissioner Martin Lang, who nevertheless presided over a declining department. “An organization that has no influx of new people is doomed. An agency can’t be preserved like a fly in amber. The average age of my field force is fifty-six. All city departments must be dynamic. The Parks Department is dying.”

Productivity efforts raise still other problems. The government’s measure of productivity improvement may not be the same as the public’s. Lang, for instance, was proud of having introduced “mobile crews” traveling from park to park to clean up, replacing stationary crews who simply remained in one park. More parks got cleaned. But the public complained they were being abandoned because they were more concerned with safety and the presence of a uniformed employee than with cleanliness.