Delaware state treasurer puts his focus on efficiency

Matt Bittle
Posted 8/15/15

DOVER — Last fall, Ken Simpler was the darling of the Delaware Republican Party. A former hedge fund manager with an MBA and a law degree from the University of Chicago, Mr. Simpler, 48, was …

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Delaware state treasurer puts his focus on efficiency


DOVER — Last fall, Ken Simpler was the darling of the Delaware Republican Party.

A former hedge fund manager with an MBA and a law degree from the University of Chicago, Mr. Simpler, 48, was elected state treasurer in 2014, becoming the first non-incumbent Republican to win a statewide election since 1990.

After winning the primary by 8 percent of the votes, he triumphed in the general election by 10 percent. He’s the first member of the GOP to hold the treasurer’s office since Janet Rzewnicki was defeated in 1998.

Jack Markell, the candidate who defeated her, went on to win two terms as governor while the Democratic Party has largely dominated the state.

But a Republican such as Mr. Simpler who demonstrates he can break the Democrats hold on the state might be expected to go on to bigger and better things, political observers acknowledge.

Ken Simpler Ken Simpler

Immediately after getting election to the treasurer’s post his name was thrown about as a possible candidate for governor in 2016. Never mind that at the time of that talk he wouldn’t be taking the oath of office for two months; there was speculation on Return Day, just two days after the election.

Mr. Simpler has consistently denied any possibility he’ll run for governor after just two years in the state treasurer’s office. That’s something he reiterated last week.

He says he’s focused on the treasurer’s office which, from the outside, appears to be running rather differently than it was during the tenure of Mr. Simpler’s predecessor, Chip Flowers.

Mr. Flowers, a Democrat, was elected in 2010. He soon became known not just for being the first black politician to be elected to a statewide office in Delaware or for his financial knowledge, but for being at odds with his own party.

Mr. Flowers publicly feuded with top state officials, including legislators and cabinet secretaries, over his authority.

That led to the General Assembly passing a bill that clarified the Cash Management Policy Board, not the treasurer, held the responsibility to manage investments.

His deputy treasurer was also revealed to have charged NFL tickets to her state credit card. Mr. Flowers repeatedly denied he was at the game before ultimately admitting he did attend, although he insisted he was unaware of his deputy’s actions and accused her of theft and harassment.

The saga grew ugly and led to a primary challenge before Mr. Flowers dropped out of the race in August, claiming he was mistreated and was a victim of racism.

A year later, all of that has been absent.

Little has been heard from the treasurer’s office, and Mr. Simpler has received media coverage only for his service on several state panels — not for public clashes.

Those committees, such as the State Employee Benefits Committee and the Advisory Council on Revenues, have taken up much of his time, the treasurer said Wednesday. He laid out a number of ideas during an interview, occasionally referencing finance buzzwords that may mean little to someone with no background in the field.

In the words of Mr. Simpler, there’s more governing and less politics going on in the treasurer’s office.

Much of his first seven months was spent familiarizing himself with the state government and the budget in a way he was unable to from the outside.

“I would say that I am starting to feel like I have a good grasp of everything that’s going on in the office,” he said.

He appointed a deputy treasurer, Nora Gonzalez, last month. That’s one of two positions the treasurer has the sole authority to fill. The other is executive assistant, which has been occupied since Mr. Simpler was sworn in in January.

He’s been able to concentrate more on the office itself and less on those outside panels since the legislature broke for the year on July 1.

The state’s portfolio is “doing as well as we could hope to do in this environment, but if we could undertake reforms it’d be looking better,” he said.

Mr. Simpler believes officials need to shift the conversation away from whether the state budget issues are due to high spending or low revenues and focus instead on efficiency.

As of June 22, the state was facing a deficit of about $157 million for the upcoming fiscal year, assuming revenues do not rise and expenses increase by 3 percent.

Those are not certainties, but several of Delaware’s main revenue sources are not growing. The corporate franchise tax, the lottery and abandoned property are unpredictable and seem to have largely peaked.

Republican legislators in the state have repeatedly said the state government’s fiscal woes are due to irresponsible spending. Making cuts should be easy, they say, while Democrats say the main issue lies in stagnant revenue.

The bipartisan Advisory Council on Revenues issued recommendations in May that called for lowering income tax rates, eliminating itemized deductions and repealing the estate tax.

Doing so shifts the burden by broadening the base, making the state less reliant on smaller subsets.

It’s a similar principle that led Mr. Simpler to oppose the option taken by the State Employee Benefits Committee in May. Rather than increasing deductibles, the committee chose to cut erectile dysfunction drugs and increase prescription drug costs.

That may have satisfied the unions and lawmakers who fought against deductible hikes, but Mr. Simpler believes it also exposes Delaware to greater risk and could be unfair to a subset of state workers.

With health care costs growing faster than revenues, the state cannot hope to avoid increases forever unless it considers large scale changes, he said. Officials have to fight the challenge of pushing the problem off until sometime in the near future, he believes.

“When the tide is out and you see litter and debris on the ocean floor, you can either choose to pick it up and clean it up, or you can wait for the tide to come back in,” he said. “If you just wait for the tide to come back in, (the litter is) still going to be there.”

In a quarterly newsletter issued earlier this month, Mr. Simpler laid out his thoughts on efficiency.

“The inescapable background fact, however, is that our state and local governments already spend an amount per person that is among the highest in the nation — greater than 43 other states and 20 percent above the U.S. average,” he wrote.

He expounded on that Wednesday, noting that while politicians on opposing sides may argue about the merits of spending more versus spending less, very few people would be opposed to efficient spending.

“If I say it’s a value problem there’s a good chance I can get everyone in the room, because everyone wants good value,” he said.

Figuring out how to increase efficiency is the trick.

Sen. Greg Lavelle, R-Sharpley, who engaged in some public disagreements with Mr. Flowers, praised Mr. Simpler.

Both men served on the Advisory Council on Revenues over the past year.

Mr. Flowers was more confrontational, he said, whereas his successor has been more even-handed and has helped settle down the office “after some of the tumult” it went through in the prior years.

Mr. Simpler mostly avoided criticizing the former treasurer, although he believes the office is functioning better now.

Whereas Mr. Flowers and top officials in the executive branch feuded on occasions, Mr. Simpler has had a difference experience.

At the January inauguration, Gov. Markell pledged to welcome the Republican and work with him — something Mr. Flowers said at the time he believes he didn’t have.

Mr. Simpler said he has done little work directly with the governor but has teamed with some of his top surrogates on various occasions, such as on committees. He described his interaction with the executive branch as positive.

He’s committed to the position of state treasurer, he insisted. Over the next year, Mr. Simpler said he intends to sit back and enjoy the 2016 election cycle not as a challenger or incumbent but simply as a spectator, a different position from last year.

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