State higher ed bud­get chief wel­comes job with tighter fo­cus

Connecticut Post - - NEWS - By Keith M. Pha­neuf

Ben Barnes be­gins a new job this month over­see­ing the fi­nances for 17 state col­leges and univer­si­ties, an enor­mous sys­tem in tran­si­tion due to shrink­ing en­roll­ment and lean state bud­get sup­port.

Still, Barnes wel­comes a job with a nar­rower fo­cus, rel­a­tively speak­ing, from his last one.

The new chief fi­nan­cial of­fi­cer for the Board of Re­gents for Higher Ed­u­ca­tion spent the past eight years grap­pling with fi­nances for all of state gov­ern­ment. His of­fice im­ple­mented two mam­moth- sized la­bor con­ces­sions deals and took the first steps to­ward sta­bi­liz­ing a state pen­sion cri­sis of his­toric pro­por­tions.

Though the OPM chief com­monly is re­ferred to as state bud­get di­rec­tor, man­ag­ing fi­nances is just one part of the job de­scrip­tion. The of­fice also is the chief pol­icy devel­op­ment and plan­ning agency for the Ex­ec­u­tive Branch and han­dles the bulk of la­bor re­la­tions for state gov­ern­ment.

“My role is go­ing to be smaller in ways that I ac­tu­ally kind of wel­come, try­ing to make this sys­tem work bet­ter,” Barnes, 50, told the CT Mir­ror dur­ing a late De­cem­ber in­ter­view as he wrapped up his du­ties as sec­re­tary of the Of­fice of Pol­icy and Man­age­ment for Gov. Dan­nel P. Mal­loy. “Ac­tu­ally it’s kind of re­fresh­ing to me. It’s a lit­tle wear­ing, the re­spon­si­bil­ity to have that big pic­ture view all of the time.

It was Con­necti­cut’s poorly funded re­tire­ment ben­e­fit pro­grams that came crash­ing down on the state fi­nances — and on Barnes — like a lead bal­loon. Pen­sion con­tri­bu­tions that to­taled $ 1.1 bil­lion per year, or 6 per­cent of the Gen­eral Fund, be­fore Mal­loy took of­fice, swelled to $ 2.5 bil­lion, or 13 per­cent, be­fore he left.

Barnes ranks pay­ing the full bill as one of the ad­min­is­tra­tion’s proud­est ac­com­plish­ments.

“Be­fore us, I think no­body re­ally un­der­stood what was go­ing on here,” he said. “Things were get­ting worse with­out any­body see­ing it com­ing, or any­body un­der­stand­ing that we should be mak­ing moves to deal with this.”

La­bor con­ces­sions deals in 2011 and 2017 would re­duce long- term obli­ga­tions to the state em­ploy­ees’ pen­sion by bil­lions of dol­lars. The ad­min­is­tra­tion also worked with unions to re­struc­ture pay­ments, shift­ing some of the pen­sion debt it in­her­ited un­til af­ter 2032.

Con­necti­cut still faces some hefty pay­ments in this area for decades to come, but the prob­lem is more man­age­able and pre­dictable.

Barnes also spent con­sid­er­able time re­search­ing op­tions to sta­bi­lize the equally- cash- starved teach­ers’ pen­sion. Con­tri­bu­tions owed to this fund are set to spike be­tween now and the early 2030s.

And while le­gal re­stric­tions don’t al­low Con­necti­cut to re­struc­ture and smooth out pay­ments into this fund un­til the mid-2020s, Barnes said the Mal­loy ad­min­is­tra­tion cov­ered its share of the bill. “I think we laid the ground­work for change,” he said.

Can­did bud­get talk

Barnes and Mal­loy would strug­gle of­ten with bud­get deficits as Con­necti­cut’s econ­omy re­cov­ered slowly from the re­ces­sion of 2008- 2010. That of­ten meant re­duc­ing other agen­cies’ re­quests for dol­lars.

Now the roles are re­versed and, as CFO for the re­gents’ sys­tem, it will be Barnes’ turn to plead for fund­ing.

Still, Barnes is widely re­spected through­out the Capi­tol for the ex­per­tise he brought to the job, even when he had to de­liver un­wel­come news.

“There wasn’t a ques­tion that he couldn’t an­swer,” said Rep. Ja­son Rojas, D-East Hart­ford, co- chair of the tax-writ­ing Fi­nance, Rev­enue and Bond­ing Com­mit­tee. “When we ne­go­ti­ated the bud­get he al­ways had the de­tails of any pol­icy at his fin­ger­tips.”

Rojas also said he ap­pre­ci­ated Barnes’ can­dor, some­times a rare com­mod­ity at the Capi­tol.

“Peo­ple ap­pre­ci­ate it when you are hon­est with them,” he said. “They are tired of the BS.”

Dur­ing the early years of the Mal­loy ad­min­is­tra­tion, Barnes re­peat­edly en­gaged in po­lit­i­call­y­sen­si­tive, high- pro­file fights over pro­posed cuts to state watch­dog agen­cies that rep­re­sented the tini­est of frac­tions of the over­all state bud­get.

For ex­am­ple, a pro­posal that the watch­dog agen­cies share at­tor­neys dur­ing a time of bud­get deficits did not go over well.

“That was not the eas­i­est pe­riod, … and I thought an all-hands- on­deck ap­proach might be a good thing, but no,” Barnes said. “I prob­a­bly should have re­al­ized this was an area where the cost sav­ings aren’t worth it. Shame on me for not see­ing that com­ing.”

Barnes made head­lines in Novem­ber 2014, when he told Capi­tol re­porters. “We have en­tered into a pe­riod of per­ma­nent fis­cal cri­sis in state and lo­cal gov­ern­ment, it seems.”

The state­ment was a face full of cold wa­ter to an elec­torate who, a few days ear­lier, had re- elected Mal­loy amidst as­sur­ances that state fi­nances would be deficit-free.

In Barnes’ de­fense, many news me­dia left out the se­cond half of his state­ment: “But that said, I think that we’ve made a lot of progress in try­ing to find ways to make our gov­ern­ment more sus­tain­able.”

That wouldn’t be the only time he made Mal­loy roll his eyes with his out­spo­ken­ness, nor the last time he would make a tense re­la­tion­ship even more tense.

When asked by leg­is­la­tors dur­ing a Fe­bru­ary 2015 hear­ing why the ad­min­is­tra­tion was rec­om­mend­ing higher taxes for hos­pi­tals, Barnes replied: “Why do you rob banks? It’s where the money is.”

The Mal­loy ad­min­is­tra­tion sparred fre­quently with the hos­pi­tals, ar­gu­ing the in­dus­try was un­fairly claim­ing poverty as a way of jus­ti­fy­ing crit­i­cism for dra­mat­i­cally hik­ing taxes on hos­pi­tals.

“He has one hell of a sense of hu­mor, un­der­stated and dry — a lit­tle bit like mine,” Mal­loy said. “Maybe that’s one of the rea­sons we got along so well.”

Al­ways Mal­loy’s first choice

Some were sur­prised in De­cem­ber 2010 when Mal­loy went out­side of Capi­tol po­lit­i­cal cir­cles to tap Barnes — the chief op­er­at­ing of­fi­cer for the Bridge­port pub­lic schools — to serve as his bud­get di­rec­tor.

Barnes wasn’t a stranger to Mal­loy. Raised in St. Peters­burg, Fla., Barnes had spent most of the pre­vi­ous two decades con­nected to mu­nic­i­pal gov­ern­ment, first as a pol­icy ex­pert for the Con­necti­cut Con­fer­ence of Mu­nic­i­pal­i­ties, and also hold­ing three posts un­der Mal­loy when he was mayor of Stam­ford.

The gov­er­nor was in­her­it­ing a bud­get deficit of his­toric por­tions, an empty bud­get re­serve, $ 1 bil­lion in op­er­at­ing debt, and a slug­gish econ­omy. De­spite the stakes, Mal­loy said the choice for OPM sec­re­tary was never in doubt.

“I knew be­fore I had won the elec­tion who I would fill the po­si­tion with,” the for­mer gov­er­nor said.

Barnes and Mal­loy also faced a new po­lit­i­cal dy­namic, a leg­is­la­ture that shifted re­spon­si­bil­ity for se­lect­ing bud­get cuts — in­volv­ing hun­dreds of mil­lions of dol­lars an­nu­ally — to the Ex­ec­u­tive Branch.

Shift­ing re­spon­si­bil­ity for bud­get cuts

Rather than re­duce spe­cific pro­grams, leg­is­la­tors in­creas­ingly di­rected Barnes’ of­fice to achieve neb­u­lously- de­fined sav­ings tar­gets. This would re­quire the ad­min­is­tra­tion to with­hold fund­ing from agen­cies, freeze hir­ing and re­duce pro­grams, af­ter which law­mak­ers would is­sue a bi­par­ti­san bar­rage of pub­lic con­dem­na­tions.

“We’d try to cut $ 1 bil­lion the old-fash­ioned way, but then we’d get beaten up,” Barnes said, re­fer­ring to pro­gram re­duc­tions rec­om­mended each Fe­bru­ary in the gov­er­nor’s an­nual bud­get pro­posal.

And though law­mak­ers would nei­ther ap­prove the gov­er­nor’s cuts nor rec­om­mend their own, Mal­loy was com­mit­ted to shrink­ing gov­ern­ment.

Barnes did of­fer a word of cau­tion, say­ing it wouldn’t be wise to stick with this ap­proach be­cause Con­necti­cut would con­tinue to face hard fis­cal choices over the next decade and, sooner or later, leg­is­la­tors need to get bet­ter at mak­ing them.

The re­cent, in­creased re­liance on these sav­ingstar­gets rather than spe­cific cuts “is not a great way to gov­ern, and there’s no ques­tion there is a po­lit­i­cal sort of pat­tern that’s de­vel­oped,” Barnes said. “But there are still some folks who un­der­stand. … Some­times you have to say ‘ this is what we can af­ford and this is what we’ve got to do.’”

Arnold Gold / Hearst Con­necti­cut Me­dia file photo

Ben Barnes is the new chief fi­nan­cial of­fi­cer for the Board of Re­gents for Higher Ed­u­ca­tion.

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