Tuesday, February 11, 2003
Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, the co-chairman of The IBM Endowment for The Business Government. We created the endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the endowment 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 is changing the way government does business. Our conversation this morning is with Linda Combs. Linda is the Chief Financial Officer at the Environmental Protection Agency.
Good morning, Linda.
Ms. Combs: Good morning.
Mr. Lawrence: In joining us in our conversation is Morgan Kinghorn. Good morning, Morgan.
Mr. King: Good morning, Paul.
Mr. Lawrence: Linda, perhaps you could start by giving an overview of the EPA, tell us about its mission and its types of programs.
Ms. Combs: The EPA's mission is to protect the environment and human health. We have just under 18,000 employees working in many locations across the country. We have ten regional offices as well as laboratories and field offices. And, of course, a large number of our talented people, about half, are located in Washington, D.C. We have many, many talented folks that work in EPA. We have scientists, engineers, attorneys and given the work that we do, science is very important to the core mission of our agency.
Our mission, of course, is to protect the environment and human health. We have generalists as well as environmental protection folks of many different scientific backgrounds, biologists, zoologists, ecologists, toxicologists, right along with the financial expertise we have in my own office. But, we have a very dedicated group of people that work at the EPA and I think that one of the statements that I have heard that capsulizes that is that I know that there are people currently working at EPA that first came in in 1970 when EPA first opened its doors. So, there are a number of dedicated and talented folks that work at EPA.
Mr. Lawrence: In terms of the Chief Financial Officer, that is quite large at EPA, very diverse programs as you mentioned. What are your responsibilities as CFO at the EPA?
Ms. Combs: We have in the CFO Office about 350 of those dedicated people that I spoke about a moment ago. We have many of our folks in the Washington, D.C. area in the CFO Office but we also have some field offices in Cincinnati, Research Triangle Park in Las Vegas. And, of course, our people are primarily accountants and financial specialists, budge and program analysts but we have environmental scientists in our CFO Office as well as writers, policy specialists, and system specialists as well as economists.
Our responsibilities are broad enough to require a very wide range of skills to get our jobs done. As the agency's senior financial manager, my job as CFO is basically to provide executive oversight for all of the aspects of the EPA's annual budget which is approximately $8 billion dollars a year. We are also responsible for the agency's strategic planning efforts in accordance with the Government Performance and Results Act. We have an integrity and accountability function as well as an auditing function in auditing tracking function in our office as well. We have financial computer systems that we're responsible for as well as accounting. Of course, we're the office that pays people. So, payroll is very important part of what we do in the OCFO Office.
We have an integrated budget in performance system. And, we have a web based financial reporting system that is our financial data warehouse. But, in addition to all of that, to keep up with our April $1 billion dollar budget, we do budget formulation, execution, analysis and reporting within EPA's integrated planning and budget and accountability system.
So, we basically have oversight for all the financial operations, all the financial statements and reporting and we have budget formulation as well as execution responsibilities.
One of the responsibilities that I feel is very important for any CFO to participate in and I take that responsibility very seriously as I work with the chief financial officers counsel. I think it is important to have EPA at the table in promoting the things that are important to EPA. But, I also think it is important for CFO's to provide a leadership role across government and we have responsibility in our own office for the President's Management Agenda as many CFO's across government do.
We actually have three of the five areas in our own responsibility. I am very, very happy and one of those reasons I bring that up is we were actually the second agency to earn all green scores in financial, excuse me, in all of the progress areas related to the President's Management Agenda.
So, the President's Management Agenda has served a number of purposes. It's brought CFO's across government together but it's brought people in our own EPA environment together as well around five specific agenda items that is important to each and every manager and that are also important in a CFO Office.
Mr. Lawrence: So, then you're obviously involved in having to write down the appropriations processes and you're involved with them before. Do you see any difference in that process so far in terms of any of the detail or the structure or the craziness?
Ms. Combs: Well, I think one of the differences is that the process seems to be stretched out. This year particularly we are still, of course, in a continuing resolution as we speak. We have a long group retracted period of time. We work on three years budgets at a time. We are currently awaiting our 03 final conference. We currently have just presented the President's 04 budget. And, we have already started some preplanning for the 05 effort.
So, I would say the biggest difference Morgan is probably our -- my impression that the process has become much more protracted. And, that just causes all of us to have a lot of input in how we do our daily jobs in thinking over a span of several years at one time. Part of that's good but a lot of that is some uncertainty that interjected there as well.
Mr. Lawrence: Morgan hinted at your different experiences. Can you tell us about your career prior to coming to the EPA?
Ms. Combs: Sure. I was the Assistant Secretary for the Treasury for Management from 1989 through 1991. I was Acting Associated Administrator for Management at the Department of Veterans Affairs before that. And, Deputy Under Secretary for Management at the Department of Education in the early and mid-eighties. Prior to my Federal career, I was Advisor to the Governor of North Carolina, and an elected Board Member for the Board of Education in Winston Salem for South County, North Carolina. I was Manager of National Direct Student Loan Programs for Wachovia Corporation. Also, in North Carolina. And, in my very, very, very early career, I was an Administrator and class room teacher in the Winston Salem for South County schools in North Carolina.
My husband and I have over the last ten years managed our own entrepreneurial business. So I have seen large, large organizations and have had responsibility for very large organizations as well as small entrepreneurial activities and have wonderful successes and wonderful memories with all of those.
Mr. Lawrence: If I counted correctly, you've had positions in education, Veteran's Affairs and Treasury. And, I'm curious if you can contrast the differences in management styles at those three places.
Ms. Combs: One of the things that I always like to think of are the similarities. The similarities which is not what you asked me about, Paul, but I'll get there.
Mr. Lawrence: It's the opposite.
Ms. Combs: The similarities reflect a lot around dedicated people. And each and every one of those responsibilities because each and every one of those encompassed management areas, I have found such dedicated and talented individuals that work in the Federal Government. I am always, always so impressed with the caliber of people that the Federal Government is able to attract. And, how committed and dedicated those individuals are.
So, the differences I would say relate to the missions of those organizations. The Veteran's Affairs had a very discrete and determined mission. The Treasury Department was broader and much more over arching and encompassing because of the number of bureaus and number of large bureaus within Treasury. Education had a very discrete mission. And, here now at EPA it's one of the regulatory agencies and it, too, has a very different mission.
So, I'm saying the differences rely more in mission. The similarities lie in people.
Mr. Lawrence: That's a good stopping point. Rejoin us in a few minutes when we continue our discussion with Linda Combs of the EPA. How has the EPA created a results based management. We'll ask Linda with The Business of Government Hour returns.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence. And, today's conversation is with Linda Combs. Linda is the Chief Financial Officer at the Environmental Protection Agency. And, joining us in our conversation is Morgan Kinghorn. Well, Linda, one of the things that you talked about in the last segment when you were describing your responsibilities, you mentioned that you were a member of the Federal CFO Council. Could you give us an overview of the kind of work that the Council does?
Ms. Combs: Sure, Paul. The CFO Council itself is a group of CFO's, any CFO that is in the 22 or 24 Cabinet level agencies and we work collaboratively to improve financial management across the U.S. Government. The Council was first established under the provisions of the CFO Act of 1990 in order to facilitate and coordinate the activities of agencies and its members across the U.S. Government.
Since I was one of the first CFO's in Government after the CFO Act became law in 1990 when I was at Treasury, I got a first hand experience there at what this Council could do as well as what the management council across government could and should do relative to more cross cutting issues. It's a special experience for me now to come back and years later as EPA CFO to see how that position and the Council itself has grown over time.
The CFO Council itself has a number of projects right now. One of the projects that I co-chair at this time is a project to look at financial metrics across government. There are things like cash balances, various metrics that we are identifying that would be a small number of metrics that one could look at and if bubbled up through all of the 22 Cabinet level agencies, would create a picture in and of itself what the Federal Government looks like. All the reconciling on a timely basis and various financial metrics functions that business constantly looks at. We think it's important as CFO's to step up to the plate and say we ought to be looking at those things not just in our own individual agencies and departments, we ought to have a representation that could span across government so that these could be looked at on a Government wide basis as well.
Mr. Lawrence: As you know, the CFO Act was passed nearly 13 years ago, 13 years ago this December and you're alluded to the fact there's been a lot change in the CFO community. One of the things folks have talked about since is how the CFOs' sort of partner with the rest of their agencies and colleagues to improve financial and budgetary management within the agency. How did you proceed to do that since you've come back into this kind of position?
Ms. Combs: I think the biggest issue that we face is probably how well we gather, how well we manage and integrate information about costs and pare that up with results to our programs. I think this is a cost cutting issue that many agencies and departments are dealing with a little bit differently now than when I left 11 or 12 years ago.
At EPA, we have looked very closely at budget and performance integration. And, fortunately we are looked to as a leader in this area. We've had our goals and objectives for planning, budgeting, and financial reporting for several years. And, are constantly working to improve those.
That's one of the areas of the President's Management Agenda that I spoke about earlier. And, because we had an early start on this and we are recognized as one of the leaders in Government in this area. We recently earned recognition as one of the seven finalist for the President's Quality Award in Budget Performance Integration. So, we're leaders in Budget Performance Integration, we still have a ways to go in looking at costs information, activity based costing as it's associated with results management in our programs. And, I think it's real, real important as my role as CFO to bring to the table and to bring to the managers of these program areas better business tools with which to operate. I consider that one of my prime responsibilities as CFO is to have a full deployment of business intelligence tools so that mangers can make the best use of these new capabilities that they will have on their desktop. And, whether it's a dashboard approach or different kinds of approaches that help them manage their programs better with better costing information as well as what are the results that they are getting for there programs. That's what I think one of my major roles as CFO is.
Mr. Lawrence: One of the issues that has really existed really probably after that last couple of years, is in the drive to look at performance. Some of the stakeholders, whether it's the Congress or external stakeholders have never seen that interested in looking at results. And, I know that's changed generally and I think it's probably changed in your environment. Can you give us a sense of maybe the last ten years when you moved to go up to appropriations on OMB? I'm sure people are really asking about results including the people who are investing in your programs. Has that changed?
Ms. Combs: I think that has changed. I think when we talk about at EPA our goals being cleaner air, purer water, better protected land, and how that protects the environment and human health as our major mission, it's very difficult sometimes to translate our immediate results to showing long term human health and protection for U.S. citizens. But healthy communities and eco systems is a very, very important element of what we do. And, we have to continue to strive to find better ways to display the results that we are getting for the dollars that we put into our programs. We are looking at better effectiveness measures. We're looking at the way our strategic plan and the geperal (phonetic) results all fold in hand in hand. So, we're really trying to look at this whole area in a broader more encompassing way in order to show to our stakeholders, whether it's Congress, OMB or certainly the American people that here's what you're getting for your dollars. This is important to human health and here's why.
When I talked earlier about science being an important aspect of what we do and how that's a foundation of what we do that makes science even more integral and important to us. It is helping us to show these results.
Mr. Lawrence: What kind of time frame do you use when you talk to people about results? For example, in the examples you gave, you talked about scientific goals which might take decades to achieve yet it sounds like people to you and want to know results on a much shorter interval. How do you translate those conversations into the real thing?
Ms. Combs: That is very difficult. You know, one of the things that we're -- we have previously looked in Government and this is not just true for EPA, it goes for education, some of the other departments that I have been involved in as well. We've been looking at outputs. Now, we're being -- we're hoping to move toward more outcome based knowledge in everything we do. And, you're exactly right, Paul, that that's hard when it's going to take a long time to show environmental results or health results but we happen to think that if we continue to measure some what I would call medium output measures that are leading toward our further outcome based objectives and goals. And, we put these in our strategic plan. We feel like we're much better off today than we would have been without doing that. But, it is going to take a matter of years. But, this is not anything that we're going to be able to look just tomorrow. We're going to have to think longer term and be able to show some short to medium term results that build into our longer term output.
Mr. Lawrence: That's a good stopping point for this segment. Please come with us in a few minutes as we continue talking about management with Linda Combs of the EPA. How's the EPA doing with the financial management portion of the President's Management Agenda? We'll ask Linda from her prospective when The Business of Government Hour returns.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and today's conversation is with Linda Combs. Linda is the chief financial officer at the Environmental Protection Agency. And joining us in our conversation is Morgan Kinghorn.
Well, Linda, can you tell us more about the Managing for Improved Results Steering Group at the EPA?
Ms. Combs: Sure. This group was managed from my office at the initial request of the deputy administrator and it brought together people from all of the agency's offices to think about very practical ways that we could make some real improvements in the way EPA managed its overall programs that the agency could implement right away. The group made some genuinely useful recommendations and it gave some longer-term approaches as well that we could also adopt.
One of the most important recommendations for immediate action was to take a look at our annual performance, goals and measures, and see if we could devise a more rational set of categories. Time I think the agencies can find measures of success over as we establish and maximize our priorities and measures and as priorities change. The longer-term recommendations that came from the steering group focus on enhancements to our overall strategic plan with greater emphasis on the outcomes of EPA's work, reinforcing accountability for specific performance objectives, and building the agency's capacity to indeed manage for results and how those results are costed out, how they're calculated, and how they're determined.
Mr. Kinghorn: You mentioned that you were one of a very select number of agencies that all green on progress for the President's management agenda. Could you share with us some of your activities related to the financial performance piece of that and what are the timetables for these initiatives and what do you expect to get out of them?
Ms. Combs: Sure. We have as our prime objective under the financial management arena continuing to get clean-audit opinions. I think everybody in financial management, private or public sector, would say that that is one of the bellwethers that you must have in order to say that you are fully performing in the financial arena. We have automated our financial statements. That's been a big help to us. And in terms of the financial management scorecard itself we have sat down with OMB each and every quarter over the last year and we'll continue to do so to further define and further refine which specific elements we're going to be responsible for.
And we've laid out our own timetable about moving from our legacy financial systems and making sure that our financial systems meet each and every standard, new or old, for the government financial systems. I mentioned a while ago the reporting tools and how important those are for managers but they're very important for us as well in the financial arena to be able to use this business-intelligent software and these new kinds of reporting tools for managing program results but also to support our financial goals as well.
Mr. Kinghorn: Well, if you look at your budget probably 45 percent of it's allocated in a variety of programs for grants to states, tribes, and other EPA partners, everything from construction grants to Superfund to cooperative agreements. And harking back to what we were talking about on performance, this is tough to measure the success. It's an indirect application. I mean, you give grant money, heaven knows what you get for it. What are some of the things you're looking at as an agency that devotes that much of your budget to other forms of financing in terms of performance?
Ms. Combs: This does go to our discussion on some of the difficulties involved in actually measuring environmental outcomes. The significant portion of the EPA's budget that directly supports state, tribal, and environmental programs does indeed create some important environmental results across the country but it does continue to be a challenge for us to carve out which of those results can be attributed to state efforts and tribal efforts and which can be derived from the actual grant money that EPA gives as opposed to other specific resources. And for those reasons we think partnerships are very, very important.
It's important to emphasize, I think, that we have a very special relationship with our state and tribal partners and that we maintain very close working relationships with state governments and state agencies across the country. We enjoy that close working and growing relationship with the Environmental Council of the States. ECOS is an organization of state environmental commissioners and we consult with them regularly, we've consulted with them on our strategic plans and our annual reports under GPRA, and we continue to take steps to involve those representatives and our state and tribal representatives in our agency planning discussions every year.
The states don't work for EPA but we will continue to hope that they will work with us. We're certainly aware that right now states have some very difficult situations that they're dealing with in terms of their financial situations and we think it's very important that this partnership be closer than ever because we need to know what their difficulties are, understand what their difficulties are, and make that relationship work even better in the times in which we are dealing right now.
We feel like it's important for our office where we deal with accountability as well as strategic planning to further define the regional performance contributions along with our agency goals and see what those obvious connections are that can be made between our states and our tribal partners. We think an important element here could be to develop a set of measures to look across the regions and see how we are being most helpful to our state and tribal partners as well as seeing where we feel like we could end up being more effective as well.
Mr. Kinghorn: EPA has a structure to manage the finances, I think, of your grants, your cooperative agreements, and general contracts delegated to RTP, to Cincinnati, and Las Vegas, which really seems to advance what other agencies are just thinking about doing. Has that structure served you well in terms of specialization in each of those locations, particularly at RTP, which is also closely linked to some of the core programs of EPA?
Ms. Combs: And I have a special place in my heart for RTP since I'm from North Carolina but we certainly think it has. I think, too, in terms of the way we're looking at special provisions that may need to be made as we look toward better protection of the homeland and of homeland security this diversity that we have, I think, makes itself even more important in today's environment.
And one of the things, too, I would offer in terms of not just our own internal structure related to where grants and payments are processed but we have also a very important financing operation that we feel very good about at EPA that's managed out of my own office. It's the Environmental Finance Advisory Board. It's a federally-chartered advisory committee that's composed of independent financing experts from public and private sector organizations who are interested in lowering the environmental cost and increasing investment in environmental facilities and infrastructure and services across the nation. So they produce policy and technical reports that actually leverage better public and private resources.
And as I spoke earlier about the need for better partnerships and closer alignments as we have the situation in this day and time, our environmental finance centers, which are located at various universities around the country, also provide some financial outreach to our regulated community. And these networks and these partnerships as well as information on our own website help communities and environmental programs across the nation in ways that we could not do alone with our own internal financing effort. And they're staffed with a number of volunteers basically, people who dedicate their time and energy, particularly for the Environmental Finance Advisory Board. Those are volunteers, people who spend their own time, effort, and energy in their own local communities. They're just excellent people to have access to.
Mr. Lawrence: That's a good stopping point. We've got to go to a break. Rejoin us in a few minutes as we continue talking about management with Linda Combs of the EPA. What role will EPA have in homeland security? We'll ask Linda for her thoughts when The Business of Government Hour returns.
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Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and today's conversation is with Linda Combs. Linda is the chief financial officer at the Environmental Protection Agency and joining us in our conversation is Morgan Kinghorn.
Mr. Kinghorn: Linda how do you define and measure financial management success at the EPA?
Ms. Combs: Well, Morgan, when I see that green score for progress in financial management on the executive branch management scorecard I think that'll be a splendid indicator of our success. But I must tell you we won't sit on our hands after that. I've dedicated myself to moving financial management at EPA to what I call beyond green. One of my more important personal and professional goals when I came to the CFO Office at EPA was to basically say we're going to have the most respected CFO Office in the federal government. We're well on our way to achieving that and we're not just doing that to win accolades of recognition from OMB or from the public or from any of our constituents.
But if we are the most respected CFO Office in government that means a lot of positive things for our organization. Number one, it means that we do our business efficiently. If we do our business efficiently there are actually lots of rewards that come back to us. We're able to get back for paying our bills on time, for example, some rebates that we would not have access to otherwise. And just last year EPA because we do our business efficiently we got over a million dollars in rebates. Ninety-three percent of the rebates that we could possibly collect we're collecting those because we do our business more efficiently. So part of the success for our efforts at EPA in financial management come directly through the other program offices and maintaining those positive relationships with other program offices at EPA and ensuring that we're doing the right thing to manage our programs better is a particular dimension that I am very proud of now and would like to continue to be proud of.
There are lots of challenges that continue to come our way. One of the things that we have looked at since I've been at EPA is maintaining talented people with the skills and abilities it's going to take to work in the CFO Office of EPA in the 21st century. We've done a lot of work in that arena already and in the coming year we're going to keep looking and working toward acquiring the kind of talent we need to do our job well.
Mr. Kinghorn: The issues that you suggested that you have been successful, I mean, systems help, data warehouses help, but it is people and in terms of future financial managers I know that the market seems to be getting stronger now. People are coming back into government. If you look at the information from Harvard schools and Syracuse a very high percentage relatively compared to past years of people is coming into the federal government. They used to go into state or nonprofits. Have you seen that happen and are you trying to recruit them in to continue to replenish the talent that you have that has led to the successes but to continue that in the future?
Ms. Combs: Yes, we certainly are. This pipeline for future financial managers I think has to start with a recruiting effort in the federal government the likes of which we've never seen before and in my opinion now is a perfect time to do it. The federal government couldn't be in a better position to take advantage of talented MBAs coming out of schools whether it's Harvard or many of my schools that I'm aware of in North Carolina and reaching out to those schools and saying here's who we are and here is what we do is part of what I'm about.
I continue to talk to people as much as possible about the most interesting opportunities that are available in working in a CFO office. The expanse of opportunities that people deal with in federal government positions is not to be found by MBAs going into the private sector for their first five or ten years in business. Having come from a banking background myself I know that to be true and if we are going to optimize on the skills that are necessary for financial managers in particular to come into the federal government now is our time to do it.
And I think it behooves all of us, particularly CFOs, in the federal government to take on this mantle of opportunity and work with the Office of Personnel Management in making absolutely certain that we work with every hiring authority that we currently have available to us as well as creating additional ones because young people are indeed interested in working for something that is greater than their themselves. That's what the federal government opportunities give to them. Where else in the federal government could I when I was at Education and managing then a multibillion-dollar budget at age 35, have the opportunity to do that? Certainly not in the private sector. So I see our opportunity now as a great one if we can take advantage of it and capitalize on it quickly.
Mr. Lawrence: Homeland security's on everyone's mind these days. What role will EPA play in homeland security?
Ms. Combs: Well, we certainly don't know what lies ahead for this country but we certainly can be certain of one thing at EPA, that EPA is going to step up and take part in any task that's presented for us to do. Most recently our EPA people have had some leadership roles in recovering debris from the Columbia disaster, certainly a sad task that none of us anticipated but we certainly are proud that we have the talented and right kind of people and the right kinds of places to be able to immediately mobilize and do the kinds of things that were required there.
Governor Whitman and our senior executives for emergency response are in close contact with Governor Ridge and our other colleagues at the Department of Homeland Security and I think as the Department of Homeland Security comes together over the next few months we'll continue to work closely with them to address whatever needs that the EPA is equipped to fill. I think obviously we're still under a continuing resolution for '03 but whatever resources have to be taken I think that's where our office comes in in being able to fulfill its mission of supporting other areas within EPA itself.
Most people do not readily recognize, I think, the hazards people that we have in our emergency response team and how vital and critical their role is. But it takes something, I think, like, unfortunately, the Columbia disaster for people to realize hazardous chemicals there, call the EPA, and often a disaster has taken place before EPA is recognized as needing to have a role right there. But I think as homeland security itself gets underway our role will become even clearer and more focused and more prominent.
Mr. Lawrence: We have time for one more question so I'd like to ask you to reflect on your career and perhaps give us a perspective about the kind of advice you'd give to perhaps a young person considering a career in public service.
Ms. Combs: I've had a number of opportunities, I think, over the years to talk to young people about their careers and particularly about public service. I think sometimes we don't initially recognize the fact that many people who come into public service believe that public service is a public trust and it's an honor and a privilege to serve your fellow Americans and to uphold that public trust.
As I mentioned earlier, particularly young people and people changing careers want to do something that's bigger than themselves. Yes, that sounds like a job for idealists but there are idealists in every single profession whether it's a scientific professional, whether it's a financial profession. Those people I think over the years of their career have an opportunity to realize that the job that they could do for the federal government would play a large role in making life better for Americans and for the rest of the world as well.
The broad, encompassing jobs that I mentioned earlier, whether it's a fiduciary role or whether it's a scientific role, those broad and encompassing roles can be found in federal service. And combined with the public trust and the experience that people bring to the table some of the best minds that we find anywhere are in the federal government. And with the privilege and honor of serving I think that I would and will continue to advise young people considering a career in public service certainly to consider the federal government.
Mr. Lawrence: Well, Linda, I'm afraid we're out of time this morning. Morgan and I want to thank you for fitting us into your busy schedule.
Ms. Combs: Thank you.
Mr. Lawrence: This has been The Business of Government Hour featuring a conversation with Linda Combs. Linda's the chief financial officer at the Environment Protection Agency. Be sure and visit us on the web at businessofgovernment.org where you can learn more about our programs and get a transcript of today's conversation. Once again, that's businessofgovernment.org.
This is Paul Lawrence. Thank you for listening.