PDT 2020 — Session T106: The Future of Finance

By Mary Margaret Yodzis 

Crises accelerate change. As a result, the government response to COVID-19, including relief measures such as the Coronavirus Aid, Relief and Economic Security (CARES) Act, ushered in new ways of working. AGA’s Professional Development Training (PDT) 2020, held online in July, included a panel discussion about recent events and their implications for the future of finance.

Led by Deloitte Consulting principal Christie Johnson, the session (T106) explored areas of concern in government financial management that had been broached during a recent CFO series hosted by Deloitte and the Partnership for Public Service. The recommendations and perspectives from those talks, in preparation for the 30th anniversary of the CFO Act, became especially relevant in COVID-19, said Johnson.

While the pandemic accelerated the prevalence of remote work, it also broadened the concept of work, said panelist John Hill, Assistant Commissioner for Financial Innovation and Transformation (FIT) at the U.S. Department of the Treasury (Treasury). “I’m not simply talking about telework or work-from-home,” he said, “but work shared across large geographic distances and, in fact, shared across organizational boundaries. Treasury’s Bureau of the Fiscal Service had to get payments out for the CARES act and disperse $170 billion to cities, states and tribal governments within a few weeks. We did not have a standing organization to do that, so we had to rethink how payments are processed and dispersed. We had to move to where the resources are; that's really what I mean by remote work.”

Hill said the model Treasury used to address the rapid CARES Act disbursements came from World War II, when insufficient shipyards in the U.S. demanded remote production of large parts of warships that were then assembled in a shipyard. Based on this idea, initial reviews of relief applications were performed in Austin, Texas, while other aspects of the process took place elsewhere, including Birmingham, Ala., and Parkersburg, W.Va. “All of the pieces came together to make the payments within 18 of the passage of the act,” Hill said. “What happened in the 1940s transformed how ships are built today, so [Treasury’s] approach to remote work during the pandemic could be a model for the future.”

At the Department of Housing and Urban Development (HUD), CFO Irving L. Dennis said the first step in pandemic response was understanding existing needs and anticipating future needs. “This had a dramatic economic impact on the people we serve. It would put pressure on the rental assistance we provide, the Federal Housing Authority (FHA) and Ginnie Mae loan portfolios, and homeless programs,” Dennis said. “The money was going to come at us fast and have to be disbursed fast. Knowing it would put pressure on our infrastructure for processing, monitoring, and all the compliance that comes with the CARES Act for the recording and auditing functions, we asked Congress for money to put the right processes in place.”

Because the agency has been actively modernizing over the past few years, including implementation of a compliance response team and a new governance structure, Congress appropriated $50 million for resources to help HUD handle CARES Act responsibilities. Dennis said the changes improved accountability for the funds.

The Office of Personnel Management (OPM), where panelist Dennis Coleman serves as CFO, received funding to keep pension and health care benefits flowing throughout the crisis. The IT improvements to handle changes related to the CARES Act were already needed in the agency, Coleman said, “so the funding helped us accelerate [modernization] and put in proper tracking mechanisms.”

Coleman said OPM formed a team of specialists, including the CIO and external stakeholders, to “triage” the use of CARES Act resources. “Having them manage that activity outside our normal business processes took a huge load off the financial management operations,” he noted. “It was also a great communications vehicle to share problems and resolutions, which is critical for agencies in emergency management even in the future, since the pandemic won’t be our only emergency exercise.”

Looking to the future, Dennis said the private sector sheds light on what is to come in government financial management. “There has been a transformation in the CFO role. CFOs have a seat at the table. They are focused not only on operations, but also on risk management, dealing with boards and with innovation and IT monetization. Having to focus on HR and make sure all operating cycles work in coordination, the CFO is no longer just rolling up numbers and reporting, but becoming a visionary, part of the strategy sessions of corporations. I see that happening in government,” Hill said.

“As an example,” Dennis continued, “we have very dated technology that goes back 40 years [in government]. We're still running on COBOL! Now you know, it is going to take a big number to bring the IT systems up to where they need to be, but we can lay the cheaper technology that is out there on top of what we have to bring out data and do analysis. Then, all of a sudden, we will get different information to make our decisions.”

Coleman said he “would wholeheartedly concur” with Dennis’s assessment of today’s CFO role. “At OPM, we're exploring AI and shared services and how to incorporate that into our strategic planning. So, keeping abreast of technology is one piece of the CFO job now, which I enjoy, but it also involves our people and our business processes. We partner with our CIO, but we also have to make sure we are transforming and including the “people part” into what we are doing. Our people realize their jobs are going to change, and it is incumbent upon the CFO to show folks how they are included in this process and what the other side of implementation is going to look like for them,” Coleman said.

Transformation, added Coleman, requires good training and communication so employees understand the changes coming to their work environment. “A kind of cross pollination has to happen. Partnerships go a long way toward transparency in leadership as well.”

At HUD, Dennis noted, “each program operated independently. The Secretary wanted to create a structure [for] working together agencywide, so I set up a formal task force with the leader of each program and each C-suite office, and the offices of the Secretary and Deputy Secretary. The 12 of us met each month and identified areas for finance transformation and modernization, then tracked our progress. It was a great avenue to force us to work together and break down silos.”

In response to an audience question about government’s slow entrance into innovation, Coleman said the obvious answer is “resource constraints” but that the federal government also “struggles with where to make the most important investments, whether they need to be made, and how to make them.”

Coleman offered the example of a long-term project that receives funding initially but then loses appropriations to complete the transformation. “The redirection has to do with the political landscape and changes in leadership and priorities,” he said. “Over the long haul, it has been to the detriment of consistent modernization in government. We think these projects will benefit not only the operations of the federal government as a whole, but also the American taxpayer.”

Dennis added that his 37 years in the private sector showed him the importance of real cultural change in transformation. “In government, it’s hard to change quickly, primarily because you don’t necessarily control your resources due to the appropriations process or control your human resources,” he said. “Also, you have a very short time under each administration. That makes change in government slower and maybe a little more difficult than in the private sector.”