Dixon to Quit as County Executive : Government: The chief administrative officer says he has become a ‘source of divisiveness.’ He was accused of misspending funds and some called for his ouster.

Los Angeles County Chief Administrative Officer Richard B. Dixon, buffeted by allegations of misspending taxpayer funds and weakened by calls for his firing, said Tuesday that he will resign by year’s end “in the best interests of the county.”

In a surprise announcement just hours before the Board of Supervisors was to hold a public hearing on a blistering grand jury examination of his office, Dixon sent a letter to the supervisors and his staff, saying, “I am leaving because I have clearly become a source of divisiveness rather than unity.”

Dixon, a 34-year veteran of county service who was described by the grand jury as “one of the most powerful public administrators in America,” said he plans to stay on temporarily in an effort to resolve the crisis over a proposed $13-billion county budget that is more than $2 billion in the red.

“To leave the county at the time of its greatest budget crisis would violate my duty and debt to the county,” said Dixon, 55.

The unexpected announcement shocked officials at the Hall of Administration, where for five years Dixon has maintained a tight grip on the reins of the 85,000-employee bureaucracy that dwarfs many state governments.

As word of his resignation swept through the halls, Dixon was both hailed as a financial genius and condemned as an arrogant authoritarian prone to making decisions in private.

Dixon’s support eroded significantly last week when when Board of Supervisors Chairman Deane Dana, in an election-year turnabout, called for his resignation.

Dana’s defection followed the grand jury report, which found that Dixon exercises unchecked control over public funds, spending millions of dollars without notifying the Board of Supervisors. Auditors alleged that Dixon had discarded virtually all documents related to a controversial $6.1-million renovation of his offices and that he spent twice what the board had publicly authorized for furniture.

Detractors have also taken Dixon to task over executive bonuses, extraordinary perks such as bulletproof cars with chauffeurs, and a decision to increase employee pension benefits by up to 19% at a cost of more than $265 million, without first notifying the Board of Supervisors or studying the financial impact.

But even his harshest critics acknowledge that Dixon only had as much power as the supervisors gave him.

The board Tuesday lost little time in taking back some of the authority it had bestowed on the CAO.

After the hearing on the grand jury report, supervisors voted unanimously to strip the chief administrative officer of his ability to award contracts of more than $25,000 without board approval. Dixon has had extraordinary power to award personal services contracts of virtually any size.

The board also ordered the auditor-controller to regularly review the CAO’s spending and directed the county counsel to develop record-keeping standards for the CAO’s office and other departments.

In addition, Dana said he will bring in a motion next week that would curb the CAO’s open-ended expense account. Last year, The Times revealed that the account was used to pay for more than $100,000 worth of gourmet lunches, flowers, fruit, coffee and doughnuts and international travel for Dixon and the supervisors.

Supervisor Gloria Molina said controversies over Dixon’s spending “have crippled his ability to manage.” She said Dixon’s exit will “give the board an opportunity to take control of this place.”

But Supervisor Mike Antonovich said Dixon’s resignation “represents the culmination of a vicious media and political character assassination based on half-truths and outright lies. To destroy the career and reputation of this man for cheap political currency is reprehensible.”

While most supervisors generally praised Dixon’s stewardship of the county, they also agreed that his series of controversial decisions caught up with him when they became election-year issues.

Retiring Supervisor Kenneth Hahn said it came down to a simple count of the votes necessary for Dixon to retain his job after the November elections.

“Richard Dixon could count the numbers,” said Hahn. “He just wanted to beat the hearing today, and the election in November,” said Hahn, noting that both candidates to succeed him on the five-member board had vowed to fire Dixon.

Already, Molina and Dana have said they would vote to remove Dixon, so Hahn’s successor could provide the crucial third vote. Dana’s challenger in a November runoff election, Rolling Hills Mayor Gordana Swanson, also has called for Dixon’s ouster.

Supervisor Ed Edelman, who has been a strong supporter of Dixon, said the resignation was inevitable. “He’s become an issue in campaigns,” said Edelman. “Right now there are not the votes to remove him. But sooner or later, there will be a change in board membership.”

Edelman said that much criticism of the CAO should be directed at the system and not the individual. “Dixon is only symptomatic of a lack of pinpoint authority” in county government, said Edelman, who proposed a ballot measure earlier this year that will ask voters in November to approve creation of an elected county executive to fill the administrator’s post.

On Tuesday, Dana said Dixon’s departure was “best for the county.” But at the same time, Dana acknowledged, “It’s probably a good idea that he continue on towards the end of the year, so that we don’t have a budget crisis.”

Dixon, who just last week assured his staff, “I do not plan to resign at this time,” said on Tuesday, “While it is sad to leave, I do so without regret, feeling it is best for the county I love.”

Dixon made his decision over the weekend and advised his staff early Tuesday, telling them in a memo, “Do not misunderstand my decision. I have searched my soul and I assure you I would take the same actions and make the same recommendations I have over the past five years . . . because each was best for the county.”

In an interview, Dixon added, “I did what I thought was best, and I’d do it again.”

He said no one thing led to his decision, and he denied that the grand jury report forced his hand: “There’s nothing in the grand jury audit that would have caused me to do anything differently than I did.”

The bespectacled, mustachioed Dixon--the picture of a mild-mannered, businesslike manager--earns approximately $200,000 a year in salary and benefits. Dixon will earn a pension of about $130,000 annually upon his retirement--an increase of about $25,000 as a result of the changes that he implemented.

At Tuesday’s hearing, Dixon defended his office.

He said that all legally required documents relevant to the remodeling have been kept safely by several county departments. The documents destroyed by CAO staff members were duplicates, he said, adding that they were disposed of in accordance with county policy.

Dixon also denied that he overspent on office furniture by more than $700,000 as alleged by the grand jury. He said the grand jury auditor, Price Waterhouse, had depended on some inaccurate documents in reaching its finding.

The embattled CAO also pointed out that the remodeling included the purchase and installation of more than $3 million in computer equipment. The project, he said, enabled the county to reduce CAO staffing by about 260 positions and reduce office space needs by 20,000 square feet--at a saving of about $8 million annually.

Even as Dixon defended himself Tuesday, a county panel issued a legal opinion supporting the legality of the pension changes he authorized. However, the opinion also noted that Dixon implemented the changes without notifying the Board of Supervisors and without studying their financial impact.

In his testimony before the board, Dixon also rejected the grand jury’s assessment of his power.

“I function not as an independent and powerful executive, but as a chief staff officer. I make recommendations and provide information to your board and when your board provides direction, decision and orders, I facilitate implementation,” Dixon said.

Still, Dixon is perceived as the ultimate authority in county government, with powers far greater than his counterparts in other large counties and cities.

Although the county’s 38 departments are autonomous, Dixon wields clout over them because he recommends not only the budgets for departments but also whether the department heads should receive merit raises.

Dixon’s management style is to run the county like a private corporation, which he views as a model of efficiency. He makes no apologies for advocating government salaries and perks that are competitive with those in the private sector.

He is also known to be a demanding boss. A sign in Dixon’s wood-paneled office reads: “To err is human, to forgive is not my policy.” He lists “WORK” on his resume as his primary interest. His chauffeured county car is equipped with a fax machine, and he has a county phone in his bathroom at home, ready to take a supervisor’s call at any time.

Mas Fukai, chief deputy to Hahn, said Dixon was “being made a scapegoat. . . . He was made a political football.” Fukai described Dixon as the “best administrator I’ve ever worked with.”

Mary Jung, chief assistant CAO and a close friend of Dixon, said his resignation was greeted with “shock, disbelief, disappointment and tears.”

“He is irreplaceable to the county,” said Jung. “It’s unfortunate that he got railroaded out of the office.”

County Counsel DeWitt Clinton, another close Dixon ally, said, “I think he’s one of the most brilliant financial officers I’ve ever met. He always had the best interest of the county at heart.”

But Dixon has as many enemies as friends around the Hall of Administration.

David Baker, international trustee of Local 660, Service Employees International Union, which represents 40,000 county workers, said Dixon’s decision “instantly provides a quantum leap in the intellectual, fiscal and moral integrity of Los Angeles County government. . . . For county taxpayers as well as employees, it means no more slush fund, no more pension spiking, no more personal excesses.”

As the shock of Dixon’s announcement wore off, officials began to focus on how to replace him.

Hahn said Jung, Dixon’s chief assistant, should get the job.

When asked whether she will seek the job, Jung said, “I’m really thinking hard about what I want to do. Ultimately, it is the board’s choice. I believe like Richard does, we serve at the pleasure of the board. And when we’ve lost their support, it’s time to move out graciously.”

Most board members said there should be a nationwide search.

And there were lingering questions and concerns about the exact date of Dixon’s departure. They were heightened when Dixon said in an interview, “I have not actually resigned. What I have told the board that it is my intent and desire to stay with them until the budget issue is behind us.”

But he denied that he would drag out his departure like another well-known local figure. Said Dixon, “Is my name Gates?”

Dixon’s Career

Here are some highlights from the 34-year career of Richard B . Dixon, Los Angeles County’s chief administrative officer, who announced Tuesday that he will retire before the year’s end. * 1937: Born in San Diego, the son of a Montgomery Ward store manager.

* 1957: Earns bachelor’s degree in zoology from Pomona College.

* Enters medical school at UCLA but drops out after a year.

* 1958: Begins L.A. County service as a court aide at $303 a month.

* 1978: Becomes chief county budget officer; begins increasing opportunities for women on the budget staff, where proportion of women in professional positions eventually rises from 4% to 50%.

* 1984: Becomes Los Angeles County treasurer and tax collector.

* 1985: Institutional Investor magazine names him one of the 10 best government treasurers.

* 1987: Appointed Los Angeles County’s chief administrative officer, succeeding James C. Hankla.

* 1988: City & State magazine names Dixon the nation’s outstanding county executive.

Supervisors vote to give Dixon authority to approve contracts for “financial, economic, accounting, engineering and administrative services.”

Initiates an extensive remodeling and modernization of his offices at a cost of $6.1 million.

* 1989: Supervisor Pete Schabarum, a persistent Dixon critic, leads an effort to reduce Dixon’s authority by stripping him of control of three county departments.

* Supervisors fire director of Facilities Management Department, a longtime Dixon friend, after Dixon allows him to remain in his full-salaried position while disabled for nearly two years.

* 1991: Dixon recommends pension changes that permit benefits such as car and medical insurance allowances to be counted with salaries in calculating retirement pay for hundreds of senior employees.

* January: Leads Task Force on Civil Service Streamlining, which would eliminate Civil Service protection for many of the county’s 85,000 employees.

* July: Supervisors kill Dixon’s $392-a-month “professional development allowance” program for county officials. It was intended to help pay for books, seminars and home computers, but there was no requirement for an accounting of how funds were spent.

* August: Dixon’s bonus program for top county bureaucrats is suspended after disclosures that the county paid $3 million in employee bonuses the previous year.

* November: Supervisors order a complete review of transportation allowances after Supervisor Gloria Molina charges that Dixon performed a “bait and switch” by creating a program that pays 486 top bureaucrats a car allowance of up to $6,300 annually, regardless of whether the officials use their personal cars on county business.

* December: Dixon initiates a program that allows county executives to defer 10% of their salary for up to 10 years.

* 1992: Receives Outstanding Public Servant Award from the New York Municipal Forum.

* January: Molina calls for Dixon’s resignation, accusing him of attempting to sneak through a pay raise for top officials without telling supervisors. Supervisor Kenneth Hahn calls Dixon “the finest chief administrative officer in America.” Supervisor Deane Dana says: “The reason the county is in better financial shape than other governments is because we have a good CAO.”

* February: Los Angeles County Grand Jury opens review of Dixon’s budget procedures.

* May: Governor signs law allowing supervisors to cancel pension changes that could cost county taxpayers at least $265 million.

Grand jury urges Board of Supervisors to rescind pension hikes.

* June: Grand jury report finds Dixon spent lavishly on a $6.1-million office remodeling project, destroyed public documents relevant to the project and operated with unchecked powers.

* July: Dana calls for Dixon’s resignation. State Sen. Diane Watson (D-Los Angeles), a supervisorial candidate, says the board “should now make it clear to Mr. Dixon that he is out of step with the reforms that are coming to county government and that he must leave.” Watson’s opponent, former Supervisor Yvonne Brathwaite Burke, says: “There’s no choice. He’s put a bad label on the county of Los Angeles. He has to go.”

Dixon vows in a memo to his staff to stay on the job despite calls for his resignation and threats of firing.

* July: Dixon announces he will resign.

Compiled by Times researcher Cecilia Rasmussen

COUNTY HALL HUBBUB: A circus atmosphere at normally sedate County Hall. A13