Compromises, Frustrations Spurred Reed’s Resignation

In the end, the challenge was simply too big for Sally Reed.

She came to the seat of power in Los Angeles County government on a mission: to bring spending in the nation’s largest county government into line with its resources--even if that meant cutting jobs and programs. That was not a welcome approach for many.

“I could take the arrows,” Reed said in an interview Friday. “What I couldn’t take were the compromises.”

So, after 2 1/2 years of being a lightning rod, telling all who would listen that the county cannot continue its deeply entrenched way of doing business without risking its very survival, Reed announced Friday that the time had come to move on.

She is resigning as the county’s chief administrative officer to become the director of another vast bureaucracy, the state Department of Motor Vehicles, on June 1. In doing so, Reed will take a $72,193 pay cut and give up the toughest job of her long career in government.

Family considerations played a major role in her decision, Reed said, since her husband, son and daughter still live in Northern California.

But so did the sheer frustration of trying to change a vast government that has long resisted a new approach. “For me, the only appeal of this job was to come and do things differently,” Reed said. “I would have never wanted to come here and do things the same old way, because it is not me.”

While she was true to her beliefs, her style sometimes got in the way, even her admirers agreed.

“She came in to take on this very difficult task,” said Joel Fox, vice chairman of the county’s Blue Ribbon Budget Task Force and executive director of the conservative Howard Jarvis Taxpayers Assn. “Part of the difficult task was forcing that medicine down [the supervisors’ throats], forcing down the castor oil without sugar. Would a little bit of sugar have helped? I don’t know.”

Like others, Fox declined to speculate on whether Reed was hurt by her independent streak and her willingness to challenge the supervisors.

Looking relaxed as she sat in her office conference room with its rich wood paneling and custom table emblazoned with the county seal, Reed said running Los Angeles County government is like riding a roller coaster.

“I enjoy this job tremendously one day and am very discouraged the next.” The frustration, she said, comes from being “one voice against thousands.”

Reed said the bureaucracy, the labor unions, the contractors who do business with the county and the constituents of county programs all want to maintain the status quo.

“It’s a tough culture,” she said. “There are huge vested interests in preserving what the county has always done.”

And that pressure is brought to bear against her bosses, the five elected members of the Board of Supervisors. They heard her advice but often took a different course when it came to making tough decisions.

Harry Hufford, a former chief administrative officer of the county, summed up the challenge that Reed faced: “If you make hard decisions in this day and age--and that is a job where you do that--you don’t always make friends. That’s for sure,” he said. “But she is widely admired for her integrity, her determination and her ability. She did it her way.”

Reed, 53, a straight-talking, no-nonsense administrator arrived at the Hall of Administration in October 1993 determined to move the financially ailing county onto a firm financial footing. She was able to wean the county off a borrowing and mortgaging spree that had masked a deep deficit in the county budget.

But she became discouraged after last summer’s rancorous budget battles when the supervisors rejected her advice to drastically downsize the county health system, including closure of County-USC Medical Center, and instead bet on a bailout from Washington.

Reed said she had “been willing to be the lighting rod, been willing to be out front, taking the tough stands, in order that a fallback position might be found that would move us strongly in that direction.”

By this spring, one of her strongest backers, Supervisor Zev Yaroslavsky, was expressing concern that Reed had surrendered in her fight to overhaul the county’s byzantine budget practices.

Her proposed budget for the fiscal year that begins July 1 is expected to maintain basic programs by relying on one-time revenues from the county’s pension funds and another presidential bailout for the health system.

That is exactly the kind of practice that Reed railed against last summer. She warned that one-time financial fixes had been used to mask a deep deficit in the county budget.

To the dismay of some supervisors, she publicly discussed the prospects of insolvency if the county did not balance its books. Such talk caught the ear of Wall Street in the wake of Orange County’s bankruptcy. As the fiscal troubles worsened, the county’s credit rating dropped.

Yaroslavsky said Reed’s “departure is a great loss to the county. She helped begin the process of restoring credibility to the county’s financial management.”

As the supervisors start to look for a replacement, Yaroslavsky said, they should seek “someone who will keep the county on a strict regimen and not go back to the old way of doing things.”

Board Chairman Mike Antonovich said that Reed’s departure is a major loss but that there are other individuals within the county who can take the leadership role, including Sandra Davis, Reed’s top assistant, and Treasurer-Tax Collector Larry Monteilh.

Veteran political observer Sherry Bebitch Jeffe of the Claremont Graduate School’s Center for Politics and Economics said few should be surprised that Reed is leaving. Her post, during the fiscal crisis, is considered to be one of the toughest and most thankless public service jobs in the nation.

Jeffe said it is somehow ironic that Reed ended up clashing with the supervisors in her efforts to do exactly what they said they had hired her to do--slash a bloated county bureaucracy and bring spending in line with income.

“They needed what they got [in Reed], and then they didn’t like what they got. They didn’t want what they got,” Jeffe said. “There was no courage of their convictions in getting control of their fiscal crisis.”

“If they didn’t ask her how she was going to gain control of the budget crisis before she came on board, that was really stupid,” Jeffe said of the supervisors. “If they did ask her and she did explain and they voted to accept her and what she planned to do, they should have committed to it. If they got static from their constituencies, they should have at least explained to their constituencies why they backed off.”

Maybe Reed was a bit naive in assuming the supervisors would back her plans to downsize government, Jeffe said. “Perhaps she misunderstood that vote [to hire her] as a political commitment,” she said. “It was a commitment only until the political heat got too great for them to bear.”

Reed’s bluntness and drive to shrink the county’s 85,000-strong work force made her the enemy of the county’s powerful labor unions. She became a leading target in their protest marches last summer. As layoffs loomed, her image appeared on pink slips printed by the Service Employees International Union, and security had to be tightened because of threats against her.

“She was simply inappropriate for the job,” said Gilbert Cedillo, general manager of SEIU Local 660. “A CAO has to be innovative enough to come up with ideas that will generate the revenue to provide these services. She wasn’t.”

Reed conceded that her strength is not defining the needs for services and then getting Sacramento or Washington to pay for them. Instead, she took credit for helping set the county on a course to fiscal stability in several years.

“We always wish we could have accomplished more, and I certainly wish I could have accomplished more. In terms of the board members, most of them have been particularly good to me. They moved in the direction that I’ve tried to recommend.”

The one board member who did not embrace Reed’s approach was Gloria Molina, whose liberal approach and union backing were at odds with Reed’s fiscal conservatism.

When Reed contacted the supervisors Thursday to arrange private meetings to inform them of her decision to resign, only Molina refused to meet with her.

“I know I was tough on her. I was tough on all the CAOs,” Molina said. “She’s a very skilled person, a tremendous talent. She doesn’t need anyone to lighten up on her.”

Molina said she faces huge demands for services. “I can’t just say, ‘Oh, well, there go parks. There go libraries.’ ”

In announcing his choice of Reed to take over the DMV, Gov. Pete Wilson cited Reed’s “exceptional record of achievement in all of the important positions she has held in California government.”

Wilson’s spokesman Steve Tatum said the governor has known Reed since the 1980s, when she was the top administrator for Santa Clara County.

“The governor has always been impressed with her ability to manage large bureaucracies, and that’s what made her such an attractive candidate for [the DMV] position,” Tatum said.

He said that about three weeks ago, Reed contacted Wilson’s office and let it be known “she was interested in serving the administration.”

Soon thereafter, the governor’s office contacted Reed and made the offer for her to head the DMV. Her response, said Tatum, “was enthusiastic,” and she accepted the position soon after the first contact with her was made.

“Under her leadership,” Wilson said, “cities and counties throughout the state have experienced sound financial direction, quality personnel relations, successful implementation of automated systems and responsible construction management.”

Reed will need that at the DMV, which has had myriad problems, including an enormously expensive computer system that is plagued with problems.

“It’s a major gain for the Department of Motor Vehicles,” Antonovich said. “People will be receiving their driver’s licenses on time.”

Times staff writers Max Vanzi and Miles Corwin contributed to this story.