By Sam Waltz
Delaware’s treasurer has not been front and center on page one in 2015, and that’s a good thing, according to Ken Simpler, who was elected to a four-year term in November to succeed politically ambitious and equally controversial Chipman “Chip” L. Flowers, Jr.
The election marked a couple of unusual events in Delaware politics and public service.
First, Simpler became the only new face on the statewide Republican ballot to win election in years. State Auditor Tom Wagner is the other statewide Republican elected official, and former congressman and Gov. Michael Castle years ago was another — neither of whom, of course, would qualify as a “new face.”
Second, the controversy around Flowers, once a rising Democrat star, in his first term – issues involving both his public and his personal life – devolved so quickly and dramatically that he publicly announced his decision to abandon the State of Delaware for Massachusetts long before his term was complete.
“One of the bigger surprises when you’ve never worked for the State, and when you interview for the job through politics, one of the nice things is that the partisanship you hear about, the adversarial side, just has not been there,” Simpler said. “Maybe it’s my ‘honeymoon,’ but I just don’t feel that partisanship is a barrier to working with state government.”
Asked about his biggest surprise since taking office, Simpler said, “I was pleasantly surprised by the opportunity side. I was surprised to see the office is ‘well-resourced,’ not under-resourced or over-resourced.
“I thought it was something I would grow into, given my background. I felt I could get my arms around it, but what I didn’t appreciate was how busy it would be coming in during January, as the legislature is coming back. And the part of the work that is the boards and the councils on which the treasurer serves, that’s just taken a disproportionate amount of my time, based on my expectations.”
Among the more important tasks are working with the Cash Management Policy Board, a group of advisors drawn from across the state, as well as with the governor’s financial leadership team (Budget Director Ann Shepard Visalli, Finance Secretary Tom Cook, Secretary of State Jeff Bullock and others) and with the Delaware Economic and Financial Advisory Council (DEFAC), the financial forecasting group whose evolving revenue estimates are used by the General Assembly in building its annual state operating budget.
“The Cash Management Policy Board, well, it’s been a pleasure to work with them,” said Simpler of the group with whom his predecessor Treasurer Flowers openly feuded over turf and jurisdiction issues, creating a political rivalry where none ever had openly existed.
“We’re doing big things there,” Simpler said. “We’re RFPing (Request for Proposal) for a consultant to the board. We need to do a better job of figuring out how we can invest the dollars we may not need tomorrow for a higher constant return, than if we needed to keep them available for tomorrow. Can we figure what these pockets of money are, and then can we do a better job with them?
“Part of it, too, is that we need to look at the reliability of revenues, e.g., school funds, and then figure out what the architecture will allow or not allow us to do.”
Simpler touched on a couple of other issues, the work of DEFAC, as well as the state’s underlying revenue foundations, an issue of concern in recent years to Delaware civic and business leaders, as revenue growth and the recovery in Delaware appears to have trailed the national economic recovery.
“One question I have is whether we might do a better job in revenue forecasting, a test that we all agree on, using a long-term CPI (Consumer Price Increase) index that’s measured by a state and local deflator, with a long-term average increase in the cost of goods and services provided by the state,” Simpler wondered.
Sounding a theme sounded by others about the operational efficacy of state government, “can we spend that money more efficiently?” Simpler asked. “In education, prisons, roads and infrastructure, we’re in the top decile of states in per capital spending, among the top six to seven spenders. In terms of outcomes, we’re above average on revenue and below average on outcomes!”
“If you read the studies and reports, even the third parties are saying, we have a structural budget framework that may be good for the short-term stuff, but not good for the long-term stuff. You can drown in six inches of water! One of the key things you have to do, and we did it once under Gov. Pete du Pont, is to put in place all these systems to work with. Because there are so many voices in the policy debate, so many disparate places, we don’t think collectively.”
“In the late 1970s and early 1980s, we put together a set of frameworks, but no set of frameworks will survive the political process for 35 years,” Simpler said. “The problems those frameworks did not address have grown larger over time. The larger economy operates in a cycle.
The governor got it right when he asked us to study revenue elasticity, volatility and economic growth!”
The State of Delaware’s operating budget in recent years has ranged to about $4 billion, up from about $450 million 40 years ago. Because of “rainy day fund” put in place during the tenure of Gov. du Pont, the state maintains a budget reserve in that fund of about $215 million, Simpler said.
The treasurer’s office has about 23 employees, and its operating budget – aside from investment management fees that are predicated on asset balances – ranges between $2.5 million and $3 million.
Simpler is a graduate of the University of Chicago, with an MBA with honors from the Graduate School of Business and a law degree with honors from its law school. Simpler earned his undergraduate degree, summa cum laude, from Princeton University as a political economy major.
He was born and raised in Rehoboth Beach, and graduated summa cum laude from St. Andrew’s School in Middletown, where he represented the school in Delaware’s 30th Blue-Gold All-Star Football Game. He and his family live in Newark.
Simpler is an owner of Seaboard Hotels, which develops and manages hotel and retail properties in Rehoboth Beach, Dewey Beach and Nags Head, NC. He previously was managing director at Citadel, LLC, a global investment fund, where he oversaw a billion dollar portfolio at Citadel and managed personnel in Chicago, San Francisco, New York/Greenwich, London and Tokyo. Among other duties, Mr. Simpler served on Citadel’s firm-wide investment committee.
He began his career as a corporate attorney at Kirkland & Ellis, a national law firm.