Cole Warns of ‘Systemic’ Fiscal Shift for City, Urges Chief Financial Officer Role for Pasadena

Pasadena faces not a temporary economic downturn but a “systemic change in funding” that requires the city’s finance director to formally serve as the chief financial officer (CFO), District 2 Councilmember Rick Cole told the Finance/Audit Committee on Monday.

Speaking during the Fiscal Year 2027 budget workshop presentation by the Finance Department, Cole argued that plateauing local revenue, historic cutbacks at the state and federal levels, and what he characterized as a roughly $2 billion capital shortfall facing the city require a finance leader who carries the full authority and entity-wide perspective associated with a chief financial officer.

“What’s different about this cycle is this is not a downturn per se,” Cole said. “This is a systemic change in funding where we’re seeing traditional sources of revenue plateau and barely keep up with inflation. We’re seeing historic cutbacks at the state and federal level that given their financial situation doesn’t seem like a different administration or a different economy is going to fundamentally change that.”

Cole noted that the United States is “at the highest rate of federal indebtedness since World War II,” and said the combination of revenue pressures and shrinking outside funding makes the current fiscal environment distinct from past crises.

“Again, not that this is the worst crisis we’ve ever faced,” Cole said. “The mayor’s been through several much more dire fiscal emergencies, but this one doesn’t seem to have an end and that I think makes it different.”

Finance Director vs. Chief Financial Officer

Cole directed his question on the distinction between a finance director and a chief financial officer to Interim City Manager Matt Hawkesworth, who previously served as the city’s finance director.

Hawkesworth said that when he held the finance director role, he typically described himself as a CFO because the title is more widely understood, but that the City Charter’s accompanying code provides for a “director of finance.”

“Because the finance director in the city of Pasadena has ultimate responsibility over not just the core city function, but has a role in oversight in all the operating companies function and the utilities function and everything else,” Hawkesworth said. “I think that the position does operate more like a CFO because it really does have an entire entity perspective and not just the core government perspective.”

Cole credited Hawkesworth with operating as the CFO when he served as Finance Director and said the function must be preserved regardless of what position Hawkesworth ultimately holds.

Hawkesworth is currently serving as Interim City Manager during the city’s search for a permanent successor to former CM Miguel Márquez in that role.

Cole pointed to the approximately $2 billion capital shortfall he had cited earlier, and said having a chief financial officer to advise the city and take responsibility for that shortfall is something to keep in mind as a permanent city manager is selected.

“It’s one council member’s opinion and we should have a discussion,” Cole said, adding that Hawkesworth and whoever is chosen as city manager will have input into the decision.

Changing Local Economy Adds Pressure

Mayor Gordo agreed that the city’s fiscal picture has shifted in ways that go beyond cyclical economic forces. He cited both the demise of some long-standing funding streams and the expansion of others, such as property tax, but said the more significant shift is the changing nature of Pasadena’s local economy itself.

“The change in Pasadena’s economy in general… There are going to be infrastructure needs that need to be funded as we attract more high-tech investment,” Gordo said. “And so we’ve got to look at funding sources and funding those improvements concurrent with the expansion of those parts of our local economy.”

Gordo said the central challenge will be how the city funds infrastructure improvements and meets the needs of investors as the local economy evolves.

Cole said his interactions with the city’s new finance director, Karin Schnaider, along with her background, give him “a high level of comfort that we have a chief financial officer who can be a part of the city’s team and take responsibility for leading that effort.”

Gordo said he would be interested in hearing further from staff on the distinction between a finance director and a chief financial officer or chief administrative officer (CAO), noting that many different organizational models exist.

“I’m not sure that substantively there’s all that much difference, but I’ll be curious to better understand it,” Gordo said.