Thursday, October 7, 2004
Mr. Lawrence: Good morning. Welcome to The Business of Government Hour. I'm Paul Lawrence, partner in charge of the IBM Center for the Business of Government. We created the Center in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about the Center by visiting us on the Web at www.businessofgovernment.org.
The Business of Government Hour features a conversation about management with a government executive who's changing the way government does business. Our special guest this morning is Christopher Burnham, Assistant Secretary and Chief Financial Officer of the U.S. Department of State.
Good morning, Chris.
Mr. Burnham: Good morning, Paul; good to be here.
Mr. Lawrence: Thank you. And joining us in our conversation, also from IBM, is Kim Hintzman.
Good morning, Kim.
Ms. Hintzman: Good morning, Paul.
Mr. Lawrence: Chris, let's start by talking more about the mission of the State Department's Bureau of Resource Management and its activities.
Mr. Burnham: Our mission is built upon the mission of the State Department. The mission of the State Department is to create a more secure, democratic and prosperous world.
Now, when I was on the board of a dotcom out in California before coming to government from the private sector, we all walked around in Silicon Valley, and on the back of our cards, we had mission statements on the back of them. From my experience as a Marine, we also know how important mission is. The mission of the Marine Corps is to locate, close with, and destroy. Every PFC knows that; every general knows that.
What we're trying to do is inculcate a culture where everybody within the State Department knows that our mission is to create a more secure, democratic and prosperous world. Therefore, even though my mission is, obviously, to go out there and do the strategic planning, the budgeting, budget and performance integration, gather the assets necessary to execute the President's and the Secretary's foreign policy priorities, it all ties back to that mission of creating a more secure, democratic and prosperous world.
Whether or not I have a travel voucher examiner, an accountant, a secretary, I want everyone within the resource management family to understand that our mission is not to do strategic planning, budgeting, and gather the resources; our mission is to create a more secure, democratic and prosperous world. So everybody throughout the department, from voucher examiner up to ambassador, up to the Secretary, like PFC up to general, knows exactly what we're there for and what the overall mission of the Department is.
Mr. Lawrence: Tell us about your team in the Bureau and the types of skills that they have, and even the geographic spread. I'm curious.
Mr. Burnham: Well, we have almost a thousand people spread out between Bangkok; Paris; Charleston, South Carolina; Washington, D.C., and then indirectly through the financial teams that exist at every embassy and post. They don't work for me directly. Only the thousand I mentioned first work for the Resource Management Bureau to aggregate all the information around the globe.
We have everybody in there, as I said earlier, from voucher examiners to accountants, to bookkeepers, cashiers. We have five Deputy Assistant Secretaries at either the SES or the senior Foreign Service level that are in the Bureau. It is widespread. We can talk about the structure of the Bureau in a little bit here, but it's really all kinds of skill sets that come to us, even though we have our primary focus on the financial sector.
Mr. Lawrence: Now, as I understand it, the Bureau has received numerous awards from organizations like the Association of Government Accountants and the League of American Communication Professionals, just to name a few. Could you tell us about these awards and accomplishments?
Mr. Burnham: Well, in fact, thank you very much for bringing that up, because it's a tremendous credit to the talent that we have within the resource management family.
Coming from the private sector, from Wall Street, as well as the government of the state of Connecticut, I really wondered when I was going to come down here, what we were going to find. Let me tell you that there isn't a corporation in this country that has a finer financial team than I do. I mean, they really are the tops.
They have delivered to us an unprecedented three CEAR awards. This is the Certificate of Excellence in Accountability Reporting. It's the number one award within the government CFO world. We now have won three. I think only two other agencies have won more than we have, and we're one of four departments that won the CEAR award, in fact, this year.
We've also, as all agencies and departments, are rated by the Mercatus Center from George Mason University. When I got here three years ago, we were second from the bottom, the penultimate. We have moved up from 20th just two years ago. We are now third. We're the most improved third of any major department. And so this is also a credit to the men and women I have working for me within the resource management family, just to name a couple of the rewards we've received.
Ms. Hintzman: Well, Chris, can you tell us about your responsibilities and duties as a Chief Financial Officer?
Mr. Burnham: Well, Kim, you know, it doesn't differ all that much from the CFO role at IBM. I think that knowing a little bit of something of IBM, because I used to live in Connecticut, obviously, and there are plenty of IBM ers around us, and the headquarters, of course, is right up there in White Plains. The responsibilities are similar in that we have absolute stewardship over the taxpayer dollars or the shareholder dollars. I like to refer to the State Department and what we do there in corporate terms. I guess some guys use football analogies or sports analogies. I like to call visiting an embassy visiting the factory floor, where the widget we produce is a widget called diplomacy.
So we have a bottom line responsibility; careful stewardship of the money, understanding where every dollar comes from and where every dollars goes. In addition to that, it's also the reporting. It's also the budgeting, creating the budget, proposing the budgets to the Secretary. The Secretary then submits the budget every September to the President, and the President, of course, submits it every February to the Congress. So it's budgeting.
It's also strategy, long-term strategy. My office has written the first ever joint strategic plan between the Agency for International Development and the State Department as we coordinate long-term strategic goals. And now we're breaking out beyond that, because there are about 30 other government departments and agencies that are co located with us abroad that have similar or parallel goals as we do, being the factory floor in a foreign country. Let me explain what that might be.
The Department of Agriculture has many, many hundreds of people, or dozens of people, overseas. The Department of Justice does. The FBI does; the Department of Interior, Homeland Security. Lots of people are abroad, and we have to make sure that all of that is coordinated. So as we have coordinated our efforts between State Department and AID, we're now trying to coordinate our efforts between other government agencies as well so that we're all on the same strategic vision.
Ms. Hintzman: We've talked a little bit about some of your previous experiences, but can you tell us more about your experiences before becoming the CFO at the Department of State?
Mr. Burnham: Well, you know, it's funny because I've now spent more time in public service with this job than I have in the private sector. It's about 10-1/2 years in public service and 10 years in the private sector.
After I got out of college, I joined the United States Marine Corps and was an infantry officer in the Marine Corps and the Marine Corps Reserve for 23 years. I always had a passion for Wall Street, and you can't grow up outside of New York City as I did, in Stamford, Connecticut, and not have an interest in Wall Street, because the whole economy is driven by FIRE: finance, insurance, and real estate that we have there.
In any case, between a career in investment banking at the First Boston Corporation in New York, at Advest in Hartford; I made the switch from investment banking to asset management; ended up running an asset management company, the equity arm of PIMCO, the Pacific Investment Management Company, called Columbus Circle Investors, and then the PIMCO family of mutual funds, where I was vice chairman.
I think it's a terribly valuable experience to have that kind of background. Of course, in between, I served three terms in the Connecticut House of Representatives and was elected Treasurer of Connecticut in 1994, so that experience as well, having the exposure to government. Government works differently. You can't run government like you run a business. There are a lot of similarities. We try and find those similarities so that we can bring proper management controls. Some of the other things I hope we can talk about this morning, such as The Sarbanes Oxley Act of 2002- like controls. But it's important when you're coming to government, particularly as a Presidential appointee, that you understand the difference between the world you're coming from and the world you're entering.
Ms. Hintzman: Well, you have a number of different positions. Can you tell us a little bit more about how those positions prepared you for your current position as CFO?
Mr. Burnham: Well, it's interesting. When you hear the letters CFO, you think, oh, my gosh, this has to be major accounting and what not, when in fact, accounting is just a portion of what we do. We obviously do global financial services. We obviously produce a clean, timely financial opinion with an independent outside audit. So of course, the CFO of the State Department has all those responsibilities.
But the primary responsibility is not being an accountant; the primary responsibility is being a manager and leader. You can't work for someone like President Bush or Colin Powell without bringing management and leadership skills to the job. I think working for Colin Powell-- that is the number one criteria that he has in choosing his senior team: are you going to be a manager/leader and give proper management oversight to the bureau or the division that you're in charge of? I look at my experiences from the private sector as well as my experiences as Treasurer of the State of Connecticut, that the most valuable have been the management challenges. And that is in fact what I think brings the best skill set to government.
Now, that's not just true for political appointees. That's also true for senior financial managers. You can be a great accountant. You can be a great examiner. You can be a great auditor, but if you don't have the management skills-- those are the most critical to entering into the senior levels of government, in my opinion.
Mr. Lawrence: That's an interesting point, especially about management and leadership. Integrating budget and performance information is a key challenge throughout the federal government. How is the State Department handling this? We'll ask Chris Burnham of the U.S. Department of State more about this when The Business of Government Hour returns.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Christopher Burnham, Assistant Secretary and Chief Financial Officer of the U.S. Department of State.
And joining us in our conversation is Kim Hintzman.
Ms. Hintzman: The Bureau of Resource Management has five major priorities: improving financial performance; streamlining budget preparation; integrating budget and performance; enhancing customer service; and promoting greater State USAID cooperation.
Let's begin with the first priority. Can you describe what it means to improve the Department's financial performance?
Mr. Burnham: Well, obviously, that has a lot to do with the President's Management Agenda item known as improved financial performance. It's part of the President's leadership in making sure that we have careful stewardship of public funds. You can't have careful stewardship of any funds, public or private, if you are not reporting on them until months after the close of your fiscal year; that you are doing it all on an antiquated financial system; that you're not aggregating on a daily basis, certainly weekly, but I would expect daily basis in a modern Internet based age such as the one we live in; and that you don't have the proper internal controls overseeing the funds to which you've been entrusted.
There is a little history, and it's urban legend far before I ever came to government. It wasn't too long ago, perhaps a decade and a half that the State Department literally had no general ledger, and they kept their books with paper and pencil; a little bit of the old green eyeshade, I guess.
It is true that when I arrived at the Treasury of Connecticut in 1995, I was shocked to see that we were running the financial system of the State of Connecticut on a Wang computer system. Wang, of course, had gone out of business a number of years earlier, and to have one of these great big boxes sitting there was sort of shocking to me. Little did I think that I would ever see a Wang again. Well, guess what? When I got here in 2001, there was a Wang. There was a Wang in the basement of the State Department, a Wang in our facility down in Charleston, South Carolina. And I am absolutely thrilled to say we have now gotten rid of that Wang.
We are building one global financial platform, getting the data that is no longer batched on a weekly or monthly basis but on a minute to minute basis all over the Internet through a new process we call Direct Connect. We're completely upgrading our financial systems. As we do that, we're also instituting the kinds of oversight and internal controls, assurance statements that we need to do. The one thing we have not done is create an internal audit capability, and that will be a goal, without a doubt, for the second half of the administration. That's, obviously, an essential ingredient.
Now, in the private sector, you have an audit committee, and you have a board of directors. And the audit committee will use the talents of the internal audit capability as well as the external auditors. We don't have that. We do have an inspector general. The inspector general hires the independent outside audit. But the next phase of sort of making sure we have the proper controls over these things is, no doubt, to bring in an internal audit capability.
Ms. Hintzman: Over the last several years, the Department has seen an increase in staffing and funding. Can you tell us, what are the factors that have led to this upward trend, and what impact has this had on the Department's mission?
Mr. Burnham: Well, when the Secretary got to the State Department, he found an organization that had suffered through pretty significant cuts in the 1990s. We had two things from a human resources standpoint. One, we had the bulge that was going through baby boomers who were reaching their 20-, 22-, 25-year point, and pulling the trigger and getting out. And we had great gaps in there where we hadn't recruited to smooth over that generational transition that began a number of years ago and will continue for another decade.
We also had an increase in our mission, but without any additional increase in personnel. So the Secretary launched the Diplomatic Readiness Initiative, which was a three-year program to bring in approximately 1,100 new people. And in reality, because of the increase to security requirements and the increased focus on our consular operations, the operations that issue visas abroad, we've brought in over 2,000 positions. In fact, it's 2,068 positions since fiscal year '02. It's a credit to the leadership of the Secretary, the support of the President, and the fact that Congress in fact, to our listening audience, I know we're in the general congressional area of Frank Wolf of Virginia, and Frank has been a tremendous supporter of the State Department in getting us these resources that we need.
Now, understand that literally the new mandates upon us in the last three years have included Afghanistan; Iraq; Libya, let alone what we would simply term "proper human resources management," which means that if you take someone back from post from an embassy and train them, you need to have a certain amount of training flow, or at least someone who could parachute in there and fill that gap while that person is back for training.
The military does this far better than we had done it. But we have a general for a secretary, and the general absolutely wanted to bring in and make sure that we had mid career development, and leadership development programs. And so we needed to also not only fill the gaps for the new mandates placed upon the Department, but we wanted to make sure that our people could take time off and be trained, and that was also a key ingredient in that human resources initiative of the Secretary.
Mr. Lawrence: Let's shift gears and talk a little bit about the budget process. Could you talk to us about the way the State Department has sought to streamline the budget process?
Mr. Burnham: Well, it goes back to improved financial performance, and it's also tied to the other Presidential Management Initiative, which is budget and performance integration. It is perhaps one of the primary cultural clashes that I've faced in coming to the State Department, which is to put the Department worldwide on a proper business plan footing.
When we enhanced the existing structure, what we call the Mission Performance Plan, the MPP Program, leading up to bureau business plans, the BPP, Bureau Performance Plan Program I call them business plans. There was, I think, a little bit of resentment that all of a sudden you get a guy coming in here from Wall Street who says we've got to all write business plans now, and let's face it, some of the smartest people in the United States are at the State Department. They have tremendous experience, and many of them have advanced degrees. Frequently, they speak numerous languages, and these aren't the easier languages or the romance languages. It's a lot tougher when you're trying to pick up Farsi, Urdu, Chinese and Japanese. And yet we have this kind of talent pool there. And then all of a sudden I come in and say, look; now I want you to write a business plan.
Well, we're getting there because what we've done here is we've automated the foundation, the first phase of that business planning process. All embassies around the world, 182 of them, now submit business plans to us every February. The vision for this was not "go out and write a business plan and send it to us," which was how it was in the past. I had the vision of the Turbo Tax model. I think the Turbo Tax, one of the greatest inventions in software known to man where I claim a 10-year-old could fill out their taxes on Turbo Tax and submit them electronically to the IRS. I wanted to make sure that we built a simple business plan process, where someone who had never done a business plan before, who had never taken a business course before, never taken a planning course before, could go online, fill out the questions, create a business plan, and submit it. So it's an online business plan template that we've created. That's the first phase.
The second phase was then also doing that at the bureau level. We have 38 different bureaus and groups within the State Department. They also particularly the regional bureaus, the western hemisphere, Asia, European bureaus, et cetera, Africa had to all then aggregate the business plans for the embassies in their region, and then bring those together and submit those, again, electronically, on the Web to us at the Resource Management Bureau.
That then culminates with the Deputy Secretary's, Rich Armitage, senior reviews, where he will spend anywhere from one to two hours with each bureau, where they have to come in, the Assistant Secretary has to come in, or the Under Secretary who oversees that general responsibility, will also come in, present, and talk about exactly, a) what their plan is; b) what their goals are; c) what their performance has been in the past; d) what they think their performance is going to be going forward; and then most importantly, e) what kind of resources, what kind of money, funding, do they need to get the job done.
Ms. Hintzman: As the CFO, how do you facilitate the process of integrating the planning and the budgeting process?
Mr. Burnham: I'm fortunate that I have an incredibly skilled Deputy Assistant Secretary, Sid Kaplan, who has been running the new Office of Strategic Performance Planning, a brand new office. When I got to the State Department, we had two people really working on the MPP/BPP process, the strategic plan process, the performance and accountability process from a strategic viewpoint. Now we have about 22 to 24 people, working full time to make sure that we are integrating, planning and budgeting.
My financial accounting back office, global financial services world works extremely well, doing great things. As I mentioned earlier, I'm rolling out one global financial platform. And then, of course, our factory floors continue to churn out great diplomatic efforts, great widgets of diplomacy out there. But no one was tying them together. My Office of Strategic Performance Planning is the one which is tasked with that.
I'm thrilled that OMB has recognized this, and not only initially a year ago gave us green for progress on the President's Management Agenda, but just recently gave us green for status as well. So we're now double green on the PMA for budget and performance integration, one of very few departments that have achieved that ranking.
Mr. Lawrence: That's interesting. Congratulations.
Many CFOs belong to the Chief Financial Officer Council. What's this group and what does it do? We'll ask Chris Burnham of the State Department to tell us about it when The Business of Government Hour returns.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Christopher Burnham, Assistant Secretary and Chief Financial Officer of the U.S. Department of State.
And joining us in our conversation is Kim Hintzman.
Well, Chris, in the previous segments, we talked about the Bureau of Resource Management's five priorities. In this segment, let's talk about some of the management challenges the Bureau faces. Can you describe the human resources challenges you face as CFO?
Mr. Burnham: The human resource challenge has focused primarily on the ever increasing demands for accounting, bookkeeping, and oversight capability. One of the most important things anyone can do in the public sector or private sector, but particularly the public sector, is not get a government job and rest on your laurels. You have to continually take advantage of the training that's available to you. You have to go out there and seek the training. I think the very best people within the financial community within government are those who also then take night courses or go out to pursue college degrees or graduate degrees in these areas. I think it's absolutely essential.
We obviously have benefited from the slowdown in the economy in 2000 and 2001. And then add post 9/11 into that; there was certainly a recession going on, and we were able to attract people with strong financial and accounting r�sum�s to come to work for us. When the economy really gets going again, we're going to fall back to what happens within government is that you're competing with the private sector, and the private sector is always able to pay more. That said we have more regular hours, the quality of life, the benefits of the government, so we do have certain advantages in attracting people.
Now, we've also had the additional management challenge in that we've been consolidating our efforts, not only here in Washington, D.C., but we had a very large office in Paris with 125 individuals over there, and we have consolidated most of that operation down to Charleston, South Carolina. So there is really quite a synergistic community now down in Charleston, where you have the DFAS, the Defense Accounting Agency. We're down there. Most of my global financial services folks are working down there. Doing that consolidation, while rolling out a single global financial platform, has been, I think, the greatest management challenge so far within the Resource Management Bureau.
Mr. Lawrence: In the earlier segments, you talked about some of the challenges about having a team deployed around the world, especially in hot spots, one might say. What challenges do you face balancing the immediate needs of, say, the Department's operations in Iraq versus sort of addressing some of the longer-term issues?
Mr. Burnham: Well, Iraq is difficult because not only are people operating in an environment where the security situation is a minute to minute issue and while we all anticipate that will improve dramatically after the elections in January, at least for the past few months, it's difficult.
By the way, it's not just applicable to Iraq; it's applicable to the rest of the world. We are looking for ways we can either bring those jobs back to the United States that we have overseas, or regionalize them so we don't need as many people in countries, a) because it's expensive to keep an American abroad; but b) because in some of the places, not just Iraq, but many others, there are real security issues associated with Americans living and working there. And if we can regionalize them or bring those jobs back to the United States, we're going to do that.
In Iraq, there are the two added areas that are a real concern. One is that the urgency of this situation requires that we do everything by yesterday, and that is not always conducive, a more slow and methodical application of financial oversight. The second thing is, there's just a huge volume-- $18.6 billion Iraqi Relief and Reconstruction Fund, and many, many others� The Development Fund for Iraq, which was the Iraqi oil money� all this stuff. We're not overseeing all of that, but we have a responsibility for overseeing a portion of that. Again, due to the security situation over there, how quickly we need to execute these programs to get the reconstruction going over there for the Iraqi people. Lastly, this sheer size of it has been a real challenge.
Ms. Hintzman: Well, Chris, switching gears a little bit from Iraq, one of today's hot topics in the financial management community is Sarbanes Oxley. I know you mentioned it earlier. Could you expand a little more on your thoughts on that?
Mr. Burnham: I'm one of those who come from the private sector and am not offended by Sarbanes Oxley Act of 2002. I think Sarbanes Oxley was an absolutely important application and focus on the kinds of internal controls, assurance statements, stewardship that we saw lacking in the Enrons of the world and in a slew of other lawsuits by the SEC and elsewhere against corporations that have either misstated their earnings, have to restate their earnings, or have to answer questions on why they use certain accounting techniques.
I think Sarbanes Oxley has been an important improvement. I understand there's a cost to the private sector, and there's going to be a cost when we apply Sarbanes Oxley-like applications to the federal government, but that's coming. If Congress doesn't mandate it, we certainly have to voluntarily do it. The most important, of course, being internal controls. It's one of the things we do within the CFO Council, not only in my own best practices committee that I chair, but also with a specific group within the CFO Council that is now focused exclusively on what does Sarbanes Oxley mean for federal financial managers, how can we take those pieces which are applicable to the federal government and begin to apply that so that we will be at the same level as the private sector in terms of the public's confidence in our numbers and in our reporting.
Ms. Hintzman: You mentioned the CFO Council. Can you tell us more about this group and what its objectives are?
Mr. Burnham: It is a phenomenal group. It's led by the Comptroller of OMB, Linda Springer, who brings all the chief financial officers of the major departments and agencies together once a month. And then there's an executive committee, which I'm thrilled to sit on, that meets a couple of weeks before the regular meeting. And we bring together all of us to talk about what's going on within the community, to get guidance from OMB, obviously, on their numerous edicts or circulars of different things that we have to do-- from cash reconciliation to getting our audited financials and performance and accountability report to them-- by November 15th of this year.
A little aside there� again, when we all got here with this administration, we weren't closing our books for weeks. We weren't reporting for months and months, really March 1st, February 28th and February 1st. Finally, OMB, under Linda's leadership and the President's leadership, we've moved back to December 15th last year, and it's going to be November 15th this year. So in other words, we are holding government to the same standards as the private sector, and that's an important leadership aspect of the CFO Council. When we get together, we talk about not only the struggle to meet these increasing requirements of OMB and the President it's also a matter of meeting the requirements of improved financial performance of the PMA, as well as budget and performance integration. We're also working on those things as well as a council.
Ms. Hintzman: What are some ongoing initiatives of the Department that have been the result of your findings on the CFO Council?
Mr. Burnham: Again, going back to what we call GFMS, the Global Financial Management System, when you require improved financial performance, and then you require budget and performance integration, you can't do this. You can't do the seeds of managerial cost accounting. You can't do the seeds of budget and performance integration or lay the foundation for that until you have accurate and timely financial data.
I think the number one result of the efforts that are being made within the CFO Council and OMB in the White House are that we have: a) laid the foundation by bringing in a global financial platform; b) we're now rolling that out on a direct connect basis, so we have second to-second, minute-to minute timely information. We've consolidated three legacy financial systems down to one. By the way, we're terribly lucky in that, because I understand the Department of Defense has a thousand legacy systems. Can you imagine anything more difficult? IBM, GE, Coca-Cola, Sony, they've all faced the same issues that we've had.
In fact, we've gone out there, as part of the CFO Council, and reached out to industry to come in and tell us what are your lessons learned, what is your best practice? We've met with companies like IBM and others to talk about that, because no one is really on the cutting edge here. We're really all in this together. Government, and particularly the State Department, though, is very lock step. I think we're leading government, and I think we're leading the private sector as well in this initiative.
Mr. Lawrence: The CFO Act is now 14 years old. What has happened to financial management in government since the Act was passed, and what's needed in the future? We'll ask Chris Burnham of the State Department for his perspective when The Business of Government Hour returns.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Christopher Burnham, Assistant Secretary and Chief Financial Officer at the U.S. Department of State.
And joining us in our conversation is Kim Hintzman.
Well, Chris, you've talked throughout our interview about the importance of management. And in government, as you know, there's a lot of Cs: CIO, chief human capital officer, chief procurement officer, that work alongside the CFO. I'm curious. There's even been talk about maybe assigning a chief management officer to work with these; perhaps oversee. What do you think about that idea?
Mr. Burnham: I can't speak for other departments or agencies, but we certainly don't need that at the State Department. We have an Under Secretary for Management. That's a very, very important role. It's now filled by Under Secretary Grant Green. One of the rare joys of working in the State Department for the last three years has been that there's a leadership team there between Secretary Powell, Deputy Secretary Rich Armitage, and the Under Secretary for Management, Grant Green, and all three have worked together for the last 20-23 years. One person can start a sentence; the other person can finish the sentence.
From the standpoint of the State Department, we have a Chief Operating Officer; his name is Rich Armitage. We have a chief executive officer; his name is Colin Powell. And we have a chief management officer, really, who is Grant Green, except we call it the Under Secretary for Management. As far as I know, most other departments and agencies have the same thing. So I don't think we need to add chief to anyone's title, as long as, a) you have an Under Secretary or Assistant Secretary for Management; and b) that you then have the kind of leadership cohesion at the top.
Now, one of the reasons we have this at State is because Colin Powell is a brilliant manager and leader. He focuses on management, and human resources, and budgeting issues. I think he has, really, unprecedented focus on that within recent Secretaries of State. We're blessed with that at State Department. Other agencies have to make sure that their leadership team is also focused on management issues.
You just can't go out there focusing on policy. That may be the sexy stuff, but it's not what's going to get the factory floor humming. It's not what's going to produce the widgets day-in and day-out. And that's exactly what Secretary Powell's focus has been. And I'm going to tell you, this place is absolutely 0 to 60 in 3.2.
Ms. Hintzman: Since the CFO Act was passed in 1990, can you tell us a little bit about how the financial offices in government have evolved, and additionally, what do you think these offices will look like in the future?
Mr. Burnham: Wow. Well, that's a mouthful to answer. A lot of it goes back to the fact that, as I said, years ago, there was no general ledger at the State Department, and I would guess that that probably applies to other agencies and departments as well. So the CFO Act was absolutely necessary. That the CFO Act then required that the CFO, by law, report to the Secretary or agency head was also a very important thing here.
Corporate America has learned the dangers of a CFO that is not completely on top of all the accounting and reporting. And, obviously, the CFO has taken on one of the two or three most important roles in corporate America. That said, we live in a town that's built on policy, and so the CFO has not always had that kind of access to the Secretary. The law made it so, and that's been an important addition there.
I think that when you see Sarbanes Oxley, or increased focus on Sarbanes Oxley-like controls and reviews being applied to government; that that's going to increase the responsibilities of the office of the Chief Financial Officer. People are going to continue to look at us for increased management leadership and accounting and financial competence. I think that the responsibilities will increase, and reflective of that is the fact that we've gone from our financial reporting and independent outside auditor's report from months after the close of the fiscal year to six weeks after the close of the fiscal year. I think this is an important step. Again, going forward, only increased scrutiny and increased professionalism will be required, and increased importance placed on our financial managers and leaders our there across government.
Ms. Hintzman: Where do you see the Bureau for Resource Management in the next 5 to 10 years?
Mr. Burnham: I think the last three years we have spent inculcating a culture of planning, of budget and performance integration; of linking our performance to budget decisions. This is not -- again, like corporate America-- just because the factory is producing a widget that's not selling doesn't mean we're going to close that factory down.
Let me put that in terms of the State Department. We've had tremendous successes within the Administration, for bringing the Pakistanis and the Indians together, for decreasing the amount of tension between the two parties, particularly over the Kashmir region, in an effort to either denuclearize or at least stabilize the region and keep two nuclear powers from going to blows over the issues associated with Kashmir.
It has taken a number of years of hard diplomacy to get that done. Just because year one, or year two, or year three didn't produce any results, or the Clinton administration may have had limited results, does that mean that we're going to stop funding that? I mean, how do you measure progress when year-in and year-out, there's no progress?
When it comes to foreign relations, when it comes to diplomacy, you can't do that. In fact, the budget and performance integration means there that we look at how much are we spending and what we are earning in return what I call return on effort, ROE; return on equity in the private sector; ROE, return on effort in the public sector it may mean that we need to put more money at that, more resources at that, more personnel at that; that we're, in fact, not focusing enough on that. So it could be the other end of the spectrum, that we're not spending enough and not doing enough to meet those critical calls of diplomacy, of creating a more secure, democratic and prosperous world.
Ms. Hintzman: What advice would you share with other public sector CFOs and financial managers?
Mr. Burnham: I think my other public sector CFOs have in fact not learned from me-- I've learned from them. The CFO Council is made up of a tremendously talented pool of individuals; many, many career individuals. I think the political appointee is less prevalent within the group. You have these folks out there with 20 and 30 years of experience. They have tremendous insight. They're not lacking for innovation at all. Without a doubt, the President's Management Agenda I think has, at the very least, caused everybody to focus on innovating, improving, becoming more responsible and accountable, and greater stewards of the public funds. I am told by those who work for me who are members of the senior executive service, who have been here for many, many decades, that this is the first time we've had such a concerted focused effort on these kinds of improved financial performance and budget performance integration.
I think to anyone who is starting out in a career in the government financial area, again, going back to an earlier statement I made, the training, education, is so important to your career, so important to progressing in your career. The rules are changing. The technology is changing. The skill sets are going to continue to change going forward. You've got to stay on top of those things. You can't just take 12 hours of bookkeeping or 36 hours of bookkeeping, get your rating as a government accountant or government bookkeeper, and then stand still. You've got to continue to pursue all educational and training opportunities available to you.
Mr. Lawrence: Chris, it's clear that even though you spent a long time in the private sector, public service is an important thing in your career. You've talked to us about your military service, your time in elected office, as well as now, working for the federal government. I'd like you to reflect, and ask you, what advice would you give to a person interested in a career in public service?
Mr. Burnham: I think that it's a tremendous career to come here. We are in need of very skilled people who are dedicated, who don't mind that our work hours can go from very regular work hours to practically 'round the clock when we get to the end of the fiscal year; when we get to reporting time to OMB; when we get to budget time. So there are peaks and valleys in here. I don't know whether in the private sector, you have quite as much variety as you have here.
It's exciting, though. I don't want anyone out there to think that government accounting is boring; it's not. There are lots of challenges out there. I think that the greatest challenges are when you're trying to do that in the environment of the State Department, where you're operating in over 170 countries, 250 locations, and 131 different currencies. I can't even begin to count the number of languages. And, obviously, the State Department is just not made up of Americans abroad. We employ a lot of host nation nationals also to help us out specifically in accounting and reporting within the embassy staff. So it's just a really terrific and exciting opportunity to come and work at the State Department.
Mr. Lawrence: Well, Chris, that will have to be our last question. Kim and I want to thank you for joining us this morning, and squeezing us in your very busy schedule.
Mr. Burnham: Listen, Kim and Paul, this has been my great honor. Thank you.
If I could just say, if anyone wanted more information, we have an excellent website, www.state.gov. I would hope that if anyone had any follow up questions, they could go right to that, particularly if they're interested in working at the State Department.
Mr. Lawrence: Thank you, Chris.
This has been The Business of Government Hour, featuring a conversation with Christopher Burnham, Assistant Secretary and Chief Financial Officer at the U.S. Department of State.
Be sure to visit us on the Web at businessofgovernment.org. There, you can learn more about our programs and research, and you can get a transcript of today's very interesting conversation. Once again, that's businessofgovernment.org.
This is Paul Lawrence. Thank you for listening.