Dysfunctional. That’s the way Jan Mittermeier describes the Orange County government she used to head before the Board of Supervisors ousted her last month. It’s a “disaster waiting to happen,” said Bill Popejoy, who served as county executive in 1995 before the board sacked him, too.
In a rare joint interview with the Business Journal, the only two county executives since OC suffered its 1994 bankruptcy said they believe another bankruptcy could happen,not necessarily because of risky investments but because the same lack of accountability still exists today.
Popejoy is a long-time businessman who now is chief executive and president of Pacific Capital Investors, where he invests in Japanese loans. Mittermeier, a county employee since 1974, was CEO from 1995 to early June. While some say she was fired, she said her contract was breached and she left.
The pair sat down for an interview with the Business Journal’s Peter Brennan and talked about why the OC government has trouble functioning and why the CEO position should be elected. They also talked about their clashes with the five supervisors, the infamous El Toro airport and what Mittermeier might do next.
OCBJ: What is your take on the recent series of events?
POPEJOY: Jan is afraid this is another step back to the way it was before the bankruptcy when you had five different people who felt they ran the county. The (county administrative officer) at that time had too little authority. I agree with her. This is another step backward. It’s almost understandable because (the supervisors) are elected, and they feel they have responsibilities. They want to be proactive and not just be policymakers. They want to be managers. That’s fine. But what you have is an organization that worked when the county was agricultural but just doesn’t work today. They could have five Warren Buffetts and they would still end up with a process that wouldn’t work.
MITTERMEIER: You wouldn’t run any other type of organization like that. The cities have managers and they function just fine. Their city council members have their own jobs and serve part time. They don’t have a lot of assistants working for them. The cities don’t have other (elected officials). The county has electeds (the sheriff, treasurer and assessor) who don’t report to the CEO. They don’t report to the Board of Supervisors. It creates another level of dysfunctional government.
POPEJOY: The real problem with the bankruptcy wasn’t an error. The real problem was that no one was responsible. You had a lack of accountability.
MITTERMEIER: The CEO structure is difficult, but it works far better than the old CAO structure. My concern is that the board stays the course. If they don’t make some decisions right now, the board will face a $20 million deficit in five years.
OCBJ: If you could compare problems of the OC county government to a business, what would it be like?
POPEJOY: Think of the county government as an IPO. But it has five CEOs. It has a treasurer who reports to no one. It has an auditor-controller, and that’s a conflict of interest because the auditor is supposed to oversee the controller. I don’t think you would have an easy time selling it as an IPO.
With the way the setup is, the supervisors start to get disenchanted one by one. You can mathematically figure out when you will lose the support of the board. I think most managers would spend all their time trying to be diplomatic. If you spend two hours with each one every week, that’s 10 hours. I was so busy trying to get Measure R passed (a sales tax increase) that I would talk to the media. The supervisors read about what I did in the newspapers. I wasn’t that patient with the supervisors. If I had to do it again, I’d keep my mouth shut.
MITTERMEIER: I tried to not be the focus of attention while I was CEO. I felt the focus of attention should be the supervisors. I didn’t want to get between the camera and my bosses. I made a deliberate decision not to talk to the press.
The supervisors complained that I didn’t communicate with them. I did spend two hours a week with each supervisor. It didn’t do any good or they just didn’t understand it.
A problem is that the Brown Act makes it difficult to discuss things with three or more supervisors. So the board made sub-committees with two supervisors. You’d report to a subcommittee of two supervisors and they are responsible for communicating with their fellow board members. That didn’t happen.
If you’re a business planning something,say like El Toro,that project will go through a number of iterations. As you go through iterations, you don’t put them in the newspaper. It evolves. Those evolutions went through the subcommittee, but other supervisors weren’t always aware of those evolutions. They felt they were left out of the process and they didn’t understand that’s how a process works. It’s very difficult working in that environment with five elected officials.
If you got someone in there who was a kinder, gentler CEO, which they seem to be asking for, that person is not going to get anything done. You’ve got to stand up and say, “No, this is the right thing to do.” You’re going to get on the wrong side of a supervisor almost every time you do that. Rarely do they unanimously agree to something.
POPEJOY: They’re not going to agree on everything. The CEO’s responsibility is to deal with the majority’s position. You cannot have a minority position. When you do that, you automatically alienate someone. If you do that on enough issues, you alienate everybody. They’re all mad at you and all you’re doing is your job.
The problem is the organization doesn’t work. It should be reorganized, but it might take another bankruptcy for that to happen.
When the county government was set up 100 years ago, you had five supervisors who were responsible for supervising geographical areas of the county. They were the bosses of their little precincts. Now you have 100-plus government entities in Orange County and they won’t go away. I would like to see some effort to have various cities absorb the job of the county government. Some say it might be difficult to do.
MITTERMEIER: I would disagree. What do you do about regional planning? City A is not going to say, I’ll take the airport if you, City B, take a landfill there. The cities will not take those responsibilities. Nobody will be happy shifting those responsibilities to Sacramento. One solution may be to have supervisors elected countywide. Others have suggested the CEO be elected countywide. I would like to see that individual meet some certain qualifications.
POPEJOY: Governors are elected and they don’t always have managerial qualifications. Maybe you can have a governor of the county. Maybe you have a board of supervisors that’s expanded but not full time. Citizen supervisors who are there to vote on policy issues to make sure the governor doesn’t go off the reservation.
The whole thing goes back to accountability. What you don’t have right now is accountability. It’s an accident waiting to happen.
MITTERMEIER: One of the problems is that Bill had to get out there and stay out front. You were the one pushing Measure R. But that should have been the electeds’ job. For the most part, the electeds have problems taking positions on highly controversial projects. I tried to step back and not take a leadership role, even on El Toro. I tried to stay removed and let the board members take that role. That didn’t happen. You didn’t have one board member standing out there telling the story and making a concerted effort that it’s a great idea. If you have a countywide elected, they can get out there and take the role. You could have a natural leader speaking from the bully pulpit.
POPEJOY: It would take a constitutional amendment, but I don’t think it will get there. It’s being done on the East Coast.
OCBJ: Mrs. Mittermeier received a severance package in the neighborhood of $200,000. In the business world, that’s not considered a lot, but it sure received a lot of press. What did you think of the fuss?
POPEJOY: Just look at the payments made to others. Mark Willes of the (Los Angeles) Times got $64 million. Jill Barad (ex-CEO of Mattel Inc.) got $38 million, and she failed at her job.
MITTERMEIER: You choose whether your goal is to make money or work in the public sector. I had made that choice some time before. We all know we’re not paid as much as in private industry. Orange County particularly has fallen behind other counties in pay for a variety of reasons. We did an analysis and looked at all other counties to see what their officials were paid. Their officials are paid much more, which is silly because of the wealth of our county and its size. The CEO should make a minimum of $200,000, and that doesn’t include benefits.
OCBJ: What would you recommend as requirements for the new CEO and will it be difficult to find someone?
MITTERMEIR: It will be very difficult to find someone who wants to go in and make a difference and take that job because of the way the board has handled this. If I were going to uproot my family and come in and take a job like this, I would want to know that my contract meant something. Unfortunately, they chose to breach my contract. They can argue legal technicalities all they want, but they breached the contract.
The other concern is you want someone who wants to be a CEO, not a CAO. You need someone with a strong personality. You’re not going to get anything done if you’re a shrinking violet. There are always people who challenge your authority. If you hire someone who is not willing to be very strong and goes in there wanting everybody to like them, you’re not going to have a CEO.
Anyone who looks at this job from the perspective of a real CEO is going to have second thoughts. There are two of us now. Both of us ended in the same type of difficulties.
POPEJOY: Before I became a CEO, one of the things that was said about me was that I was too nice a person. I sure dispelled that myth. There’s nothing wrong with being nice. Being polite is a way of life. That doesn’t mean you’re a dictator. What they want is someone who is much more malleable than Jan.
They may get what they want and a year from now,they’ll be sorry. It’s not an easy job to run the county. It’s very underpaid. You work with other people’s egos and personalities. You have to know when to push. That requires a talent.
MITTERMEIER: The county has hugely diverse responsibilities, all the way from law enforcement to public health to welfare to taking care of seniors. You have different types of personalities running those agencies. You can set the basic financial parameters for the county, but you cannot tell Sheriff (Mike) Carona how to run his jails.
Financial planning was one of the things we did successfully. The first time we had a meeting, the department heads had faces that looked like they were carved in stone (Popejoy laughs). By the time we got through that process, they were laughing and joking. They never worked together before. Previously, each one went separately to the board and got whatever resources they could persuade the board to give them.
OCBJ: What type of private sector company would you like to go into?
MITTERMEIER: I haven’t gotten that far. I’m busy taking care of my mom (who is ill).
POPEJOY: I think it would be a good idea for her to take some time off. Maybe there is something therapeutic in taking care of someone else.
Jan shouldn’t sell herself short. Companies from high tech to the conventional could use Jan. We have an explosion of corporations being formed. They have a great amount of creativity and inventiveness of new products, but they don’t have management skills. I think a firm like that could dramatically improve their position and their perception on Wall Street if they brought Jan in.
I hope she looks at the emerging industries. Right now, the amount of money being made in the emerging industries is phenomenal. I don’t mean just go with the dollars. Get involved with a product or an industry where you can make a contribution. There are plenty of opportunities.
OCBJ: What would you like our readers to know about the job you did?
MITTERMEIER: The job I did speaks for itself. The county is stronger now than it was when I took over, even though we have a billion dollars in debt. Our reserves are greater than they were pre-bankruptcy. We have built jails and more are on the drawing board. We have a more efficient organization. We have financial plans. Those things were not present pre-bankruptcy. I’m very proud of what the department heads and I have done.
POPEJOY: I know Jan’s done a great job. The most divisive issue going forward is El Toro,that’s another no-win proposition. That effort is splitting the county. But the fact of the matter is, the economic well-being of Orange County will be enhanced with an airport.
OCBJ: Some have suggested that you infer El Toro is dead.
MITTERMEIER: I never said it’s dead. But I wouldn’t bet on El Toro.
POPEJOY: Maybe we could carve a piece of Camp Pendleton. Take 20,000 acres away from the Marines and run a high-speed rail out there.
MITTERMEIER: Maybe we should look at Camp Pendleton. But it’s my prediction that folks will come out of the woodwork to protest it. No matter where an airport is located, people are convinced that planes will fly over their heads.
POPEJOY: I think we just found Jan a new assignment.
MITTERMEIER: Oh, no.
