A Q and A With the Chief Fiscal Officer of the World’s Fifth Largest Economy
By Jennifer Monahan
Cohen serves on more than 70 boards and commissions, including the nation’s two largest public pension funds, which have a combined portfolio of $750 billion. Prior to her current role, Cohen served on the California State Board of Equalization (BOE), where she administered California’s $100 billion property tax system. She was elected to the BOE in November 2018 and served until her election as State Controller. As Controller, she continues to serve on the Board as its fifth voting member.
We caught up with Cohen to get her take on how she is settling in to her new job, and how her career aspirations have led her to this particular moment.
This interview has been edited for length and clarity.
Heinz College: You took office in January. How have the first months of your role as State Controller been?
Malia M. Cohen: It has been like drinking water from a fire hydrant. From the moment I was sworn in, I have been inundated with issues – some inherited from my predecessor, involving much-needed technological changes to a variety of new problems associated with declining revenues. At the same time, I am determining who will be members of my executive team, positioning the office as a leader in financial reporting, and reestablishing the office as a destination agency. These first months have been an amazing and exciting time!
HC: What are your top two or three responsibilities as State Controller?
MMC: The duties of the State Controller cover all aspects of decisions impacting revenues, so it's difficult to narrow it down to two or three top responsibilities. That said, my primary responsibility is to ensure through auditing that the expenditures made by my office are legal and in proper amount. I am also responsible for auditing all state government departments and programs that spend state general funds as well as overseeing the spending of state dollars by local agencies. There are hundreds of billions of dollars allocated in the state budget by the California legislature; that body decides who's going to get what, when, and how much.
The State Controller’s Office issues over $14.4 billion annually in payroll to more than 300,000 state employees.
In addition, the Controller issues California’s annual comprehensive financial report and monitors the cash flow of California’s general fund through monthly cash reports.
To maintain fiscal controls, the Controller sits on 70 different boards and commissions with authority ranging from affordable housing to crime victim compensation to land management. The Controller also chairs the California Franchise Tax Board and serves on the two largest pension funds in the world, CalPERS [California Public Employees’ Retirement System] and CalSTRS [California State Teachers Retirement System].
California Leadership
CA Lt. Governor Eleni Kounalakis, Attorney Warren Pulley (Controller Cohen’s husband), CA State Controller Malia M. Cohen, CA Governor Gavin Newsom, & CA First Partner Jennifer Siebel Newsom
HC: What motivated you to pursue a career in public office?
MMC: My motivation really started on a tour of San Francisco City Hall when I was eight years old. Senator Diane Feinstein was the Mayor of San Francisco when I was in the third grade, and she talked about the importance of public service, how it was the best job she ever had, and how perhaps someone in this class would like to run for office. That seed was planted in me, and I have been on that path ever since.
HC: In October, Bloomberg reported that California is poised to overtake Germany as the world’s fourth biggest economy. As State Controller, how does working with an economy of this size and scale influence what you do?
MMC: For any controller, it’s important to follow best practices and to make sure that all transactions are transparent. You want to make sure that there's money there when you are writing a check. You want to make sure that you're able to account for every single dollar. There are many similarities to the role in smaller states – it’s just the scale that makes it different in California.
HC: As Chair of the State Board of Equalization (BOE), you led the effort to modernize California’s property tax system and worked to stimulate affordable housing in California – a place known for a high cost of living and expensive housing. Can you tell us more about those efforts? How do you take on a beast like that?
MMC: I served four years on the California Board of Equalization, which is the agency responsible for ensuring that property is assessed fairly and accurately. What I learned at the BOE, specific to your question, actually relates to my time at Carnegie Mellon – we had to make sure that we were utilizing available technology to enhance people's lives.
The world shut down three years ago, and people were not able to get into the courthouse. They were not able to pay their property taxes in person. There were a lot of things that they were not able to do physically, so we relied on technology. We needed to make sure that the technology was robust – and it wasn’t robust enough.
It’s also about paying careful attention to the fact that not everyone speaks English as a first language. When I talk about modernization, I mean making sure that you're able to access the information in your native tongue. Technology allows us to do that.
The other thing that we did in terms of stimulating local, middle income – the “missing middle,” as we call it – is looking at how we could use property tax abatements and exemptions as an incentive for developers to build housing that is missing.
Let me explain: Developers will build luxurious housing because that will generate income. They will build low- to very-low-cost affordable housing because the state and federal governments will subsidize it. But that middle-income group of aspiring homeowners – for example, if you're working in a government job, or in nursing, or as an electrician, and you want to own a home – that’s the sector where we don't have enough housing supply. At the BOE, we explored using property tax abatements to make it attractive to developers to build housing that would be affordable to middle-income earners. We used techniques I learned when studying policy here at CMU – benchmarking, looking at best practices. A lot of my policy background from Heinz College informs the work that I'm doing today.
Women Who Lead
Vice President Kamala Harris, who previously served as attorney general of and later senator from California, with State Controller Malia M. Cohen.
MMC: What regular citizens and what the government are doing are congruent – they're one and the same. For all of us, we need to be mindful that we’re speaking to a human being. We need to understand that people have a right to clean water. People should have access to good quality education, healthcare systems that help you, from cradle to grave. We should ensure that if you want to work, you're able to work and have a living wage. Businesses should be able to create and establish themselves without overly burdensome regulation and taxes.
In terms of civil discourse among people from different perspectives and backgrounds, we need to bridge these gaps. That is where the real work begins: being able to speak different languages, to understand different leadership styles, and to work toward a collective goal. That sounds utopian and idealistic. But I believe that is the direction that we need to move.
HC: Switching gears, can you tell me about your time at Heinz College? How did you get interested in public policy?
MMC: I’ve been interested in public policy ever since high school. I'm a graduate from Fisk University, one of the nation's oldest universities, in Nashville, Tennessee. I studied political science there with a concentration of public administration. I've always known I wanted to run for a public office, so I looked for a degree that would marry my desires to be in public office and to serve. As I matured, I began to realize how policy - public policy, as well as policies within businesses and nonprofits – impacts people's lives. That is where I wanted to spend my career, and that's where I spend my energy now.
HC: How did your studies here help prepare you for the work you’re doing now? Were there any particular faculty members who influenced you while you were at Heinz, or lessons that have stayed with you?
MMC: Heinz prepared me in a very full way. Linda Babcock's course on how to negotiate has been incredibly important and valuable in my everyday life, whether I'm negotiating a budget or budget cuts, negotiating with constituents, or asking for financial support from donors. As part of my work now, I train other women in the ways of fundraising – that you must ask, and you cannot be afraid. I learned those principles from Linda Babcock.
Brenda Peyser taught a leadership management communication course, Business Acting, which was pivotal. Being able to speak on your feet, to do an interview, to be comfortable in an uncomfortable space, to communicate your vision, to understand that over 90% of communication is body language – which also matters in being able to communicate to people who don’t speak English or may be hearing or visually impaired - all of these are things I learned from this particular course, that I use every day.
Decision Making Under Uncertainty (DMU) also lends itself my daily job because I am making decisions, and often don't have all the information. I learned to ask the appropriate questions of my stakeholders to glean what I don't know. DMU was a challenging course, but makes a lot of sense in my work today.
David Krackhardt’s course about influencers was critical to my success in getting elected to public office. Going into a neighborhood and understanding who the decision makers are, who the influencers are, and how decisions are made, was essential. Those insights also influence the budget process – understanding who's going to get what, and how much. That's the professional world that I live in.
HC: What advice do you have for students who are interested in a public policy education?
MMC: I'd say that if you want to leave the world a better place, then a degree, a life, a study of policy is where you would start. It may not be where you finish, but it's definitely a place where you can start, because policy is what runs the world. It's policy that tells you how much you're going to be paying in taxes. It's policy that says when you get to a stop sign, you're going to stop. It's policy that governs our life, and policy that can change the world.