County Board Says Farewell to Guenzel

Washtenaw County Board of Commissioners meeting (May 5, 2010): At his last board meeting before retiring later this month, Washtenaw County administrator Bob Guenzel received an extended standing ovation from commissioners, staff and others in attendance, including his wife, Pam Guenzel.

The board’s tribute to the outgoing leader came at the end of a meeting that included a first-quarter budget update with news both good and bad. Though the county’s general fund budget is on track to show a surplus, it’s not as much as needed to carry over into 2011 – which means the budget could be tighter next year. And Guenzel cautioned that 2012 and 2013 could be even more challenging.

Also during the meeting, two finalists for the job of deputy county administrator were introduced: Bill Reynolds, who leads the Chippewa County (Wisc.) government and is former chief of staff for Sen. Arlen Specter, and Jose Reyes, CEO of a Southfield management consulting firm. They had been interviewing all day for the position now held by Verna McDaniel, who’ll be the next county administrator.

And what was expected to be a relatively short meeting was lengthened by a discussion about the Washtenaw Urban County‘s annual plan, which commissioners were being asked to approve. Despite some apparent confusion on the part of one commissioner over funding sources in the plan, it ultimately received unanimous support.

After the meeting, commissioners and staff headed over to Argiero’s to give Guenzel a send-off. A larger farewell party is planned later this month at The Ark, where he is a long-time board member.

2010 Budget Update: First Quarter

Bob Guenzel reminded commissioners that because the county prepares a two-year budget, it’s important that cost cuts and revenue gains in 2010 carry over into 2011. The challenge for this year, he said, is whether they can accumulate what they need in 2010 to avoid problems in 2011. He also noted that the presentation was only reporting on the first quarter of 2010. “As we move through the year,” he said, then laughed – “as you move through the year,” it will become clearer if the budget is on target. This year and next year should be fine, Guenzel concluded. But 2012 and 2013 “are another issue.”

Jennifer Watson, the county’s budget manager, gave the formal presentation, starting with an update on revenues. As reported at the board’s April 21 meeting, $1.7 million more in property tax revenues is now projected for 2010 than was originally expected. Fees collected by the Register of Deeds office are slightly down but close to 2009 levels. Compared to the steep declines seen since 2003, Watson said, it’s good to see those revenues stabilize. Revenues from the office of the water resources commissioner – generated mostly from fees – are also down slightly, but that’s offset by a reduction in expenses.

Watson said revenues from the 14A district court in 2009 were down $420,000 from the $3.457 million that was budgeted, and that trend continues into 2010. Revenues are expected to be closer to the $3 million range this year. The decrease is caused by a drop in the amount of fines collected, as well as fewer tickets being issued – reflecting smaller law enforcement staff in many jurisdictions. To address the revenue decline, county staff has been working with chief judge Kirk Tabbey and Gene DeRossett, court administrator. The goal is to generate additional revenues from new programs and an emphasis on collections.

Revenues from police services contracts are down about $1 million, due to a reduction in the number of contracted sheriff deputy patrols for Ypsilanti Township – that change took effect in January 2010. [See Chronicle coverage: "County Board OKs Ypsi Twp. Deputy Cuts"] The revenue loss has been offset to some degree by cost savings and new revenues generated by the sheriff’s department, leaving a net loss of $370,000, Watson said.

Interest income has also declined, Watson told commissioners – from $1.3 million in 2007 to $146,000 last year. Lower cash balances, coupled with low interest rates, have contributed to the drop. [Much of the decrease in cash balances is related to a declining balance in the county's state revenue-sharing reserve fund. When the state suspended revenue sharing in 2004, counties were required to create a reserve fund, which was intended as a substitute for revenue-sharing from the state. Washtenaw County has been drawing over $6 million annually from its fund – at the end of 2009, its balance stood at $24 million. The fund will be depleted sometime in 2013, and it's not clear whether the state will refund that reserve or reinstate revenue sharing.]

In 2010, it now looks like interest income will be $458,000 lower than the $668,800 originally budgeted, Watson said.

On the expenditure side, concessions from the county’s labor unions were substantial, Watson said, but about $1.5 million less than expected. Four unions made no concessions at all: two Teamsters unions for the 14A district court; the Police Officers Association of Michigan (POAM); and the Command Officers Association of Michigan (COAM). Those four unions account for 48% of the 613 full-time positions covered by the general fund budget. Employee attrition is on track with the budget, Watson said.

The two-year budget for 2010 and 2011 originally had a projected deficit of $30 million – the budget was balanced with a combination of expense cuts and new revenues. Now, the county staff needs to make sure their budget targets are realized, Watson said. In some cases, substantial operating changes are needed to make that happen.

Overall, the general fund is now projected to have a $4,370,289 surplus in 2010. However, the 2011 budget assumes that a $5,289,000 surplus will be carried over from 2010. At this point, the county is projecting they’ll be $918,000 short of that amount.

Watson said it’s still early in the year, and the second quarter will provide additional data – commissioners will receive their next budget update in August.

Budget: Commissioner Questions and Comments

Observing that there was some positive trending news, Mark Ouimet said it would be critical to monitor the county’s fund balance, as a percentage of net operating expenses. Cash flow will be important, and they can’t lose sight of that. He asked what specific percentages were targeted. Watson said the board policy targets 8%, and they are currently exceeding that. The undesignated general fund balance of $9.773 million is just under 10% of the budget’s $99 million in net operating expenses. Watson said they’ve been able to build up some non-general fund balances as well.

Ken Schwartz commented that while 2010 looks fine, he’s worried about 2011. He wondered whether administration had given any thought to offering incentives, working with the retirement board, to get more savings through attrition. If there’s a program that would work, he said, any 2011 budget problem would “disappear.”

Guenzel responded, saying that over the past 15 years the county has made two early retirement offers that have yielded significant savings. At the time, however, the Washtenaw Employees Retirement System (WERS) was overfunded – that’s not the case now, he said. They’d need to do an analysis to see if early retirement offers were possible, and he noted that it would be mandatory to negotiate with the county’s labor unions.

In her budget presentation, Watson had indicated that several areas outside the general fund are projecting a surplus – including the child care fund, public health, environmental health and building inspection. Schwartz asked whether any surpluses from non-general fund departments could be rolled over into the general fund. Yes, Watson said, but some of those surpluses are already accounted for in the general fund projections. In addition, the staff needs to evaluate the source of those surpluses, she said – for example, are they due to general fund allocations or outside funding. Those factors will determine how much eventually might get rolled over into the general fund.

Kristin Judge spoke about the shortfall in savings from labor union concessions. She said she thought that they’d achieved their total goal in concessions – but they hadn’t? Watson said the budget had been based on $3.5 million in concessions in 2010, and $5 million in 2011 – they fell $1.5 million short of that, over the two-year period. Judge pointed out that when the board approved the budget in December, it had been based on the original assumptions. But since negotiations were completed by then, why didn’t the budget at that time reflect the $1.5 million shortfall, she asked. Judge was also sensitive to the fact that it seemed the administration was laying blame on the unions. “We want to be good partners,” she said.

Guenzel said that the administration knew by December that they would fall short in their hopes for labor concessions, but the staff didn’t have time to finish calculations on the budget impact before year’s end. “The short answer is, we ran out of time,” he said. Coming up $1.5 million short in no way minimizes the concessions that many unions made, Guenzel said. Their actions saved over 100 jobs.

Later in the discussion, Conan Smith said they knew they wouldn’t hit their goals in labor savings, but that he’d felt the two-year budget would give them enough time to address the shortfall. If they had dealt with the shortfall in December and incorporated it into the budget, it would have meant layoffs, he said. It’s important to watch the financial trending closely, he added, so that they can react and make corrections if necessary.

Regarding the fund balance, Judge said she was in favor of saving, since the financial situation isn’t likely to improve soon.

Jeff Irwin urged the administration to communicate the full nature of the county’s financial position, so that the unions understand how important their concessions were. The county ended the year with a small surplus, then got the good news that they’d be seeing $1.7 million more in revenues this year than was projected – but that’s not the whole picture. He said it wasn’t possible to overdo communication on this.

Guenzel reported that he’d talked to department heads and the labor management team earlier that day, and that he assumed Verna McDaniel would continue to communicate the county’s financial status when she takes over as administrator later this month. If labor concessions hadn’t occurred, he said, the county would be having serious problems now and in 2011.

Jessica Ping asked whether the administration was continuing to look for opportunities to consolidate services. McDaniel reported that they were, and she plans to update the board at a future working session.

Wes Prater said they needed to keep a close eye on revenue as the year unfolds. And he repeated a request he’d made at a previous meeting, asking staff to provide a list of all of the county’s debt and liabilities, both funded and unfunded, “so that we know how much this county actually owes to somebody.”

Leah Gunn said she was pleased that the county had been pinching its pennies, but also expressed caution. “I try to be an optimist,” she said, “but I think we have some big problems ahead of us.”

Rolland Sizemore Jr. asked whether the expenses from the jail expansion were part of the financial picture presented in this budget update. Watson said that those expenses hadn’t been included. [Additional staffing approved by the board earlier this year will result in a projected two-year shortfall of $2 million for the county's corrections division in 2012 and 2013. See Chronicle coverage: "Sheriff Requests More Staff for Expanded Jail"] McDaniel said the board would be getting a full report on the jail expansion at an upcoming working session.

Candidates for Deputy County Administrator

Verna McDaniel, who’ll be replacing Guenzel as county administrator, introduced two finalists for the job of deputy administrator, which she now holds.

She’ll likely be making a selection later this month.

The candidates – Bill Reynolds and Jose Reyes – spent all day Wednesday being interviewed and meeting with county staff.

A reception for them was held prior to the board of commissioners meeting, and both spoke briefly during the meeting, saying they wished the county well, regardless of whether they were hired.

Reynolds is chief administrative officer for Chippewa County, Wisc.

He has served as chief of staff for U.S. Sen. Arlen Specter of Pennsylvania.

He led the teams that oversaw the Senate confirmation hearings of both Chief Justice John Roberts and Associate Justice Sam Alito to the U.S. Supreme Court.

Reynolds also was deployed to Iraq in 2004 with a Marine Corps reserve unit, and was a senior officer leading civil/military operations in Al Anbar province.

Reyes, a Washtenaw County resident, is founder and CEO of the management consulting firm Prism Solutions, based in Southfield.

One of his most recent consulting jobs was as quality assurance director for the Detroit Healthcare Career Center.

He was previously chief information officer for the Detroit-Wayne County Community Mental Health Agency.

A University of Michigan graduate, Reyes also previously worked as an aid to UM’s vice provost for minority affairs.

Urban County Annual Plan: A Bit of Confusion

At their April 21 meeting, the board held a public hearing on the Washtenaw Urban County’s annual plan for 2010-11. They voted unanimously at their Ways & Means Committee meeting that night to approve the plan. On Wednesday’s agenda for the regular board meeting, commissioners were scheduled to take a final vote. [For background on the Urban County, see Chronicle coverage: "Urban County Allocates Housing Funds" and "Washtenaw Gets More Housing Funds"]

Though there had been no discussion of the plan at the April 21 meeting, on Wednesday commissioner Ronnie Peterson said he had concerns, and asked that a separate vote be taken on the item. [Typically, all action items are voted on collectively.]

Peterson said he had concerns over the plan’s human services funding. He said he didn’t want the county board to hand over its funding authority to the Urban County. In particular, funding for children’s well-being was important to him, he said, and the allocation for that should be done by the board of commissioners, not the Urban County executive committee.

Leah Gunn, who chairs the Urban County executive committee, clarified that the Urban County was allocating federal dollars, not county general fund money. Specifically, 15% of the funds received through the federal Community Development Block Grant (CDBG) program can be allocated to human services. For 2010-11, $360,014 is being allocated to Ozone House, SOS Community Services, Northfield Township’s human services program, and the Shelter Association of Washtnaw County – with nearly $27,000 as yet unallocated. [.pdf of 2010-11 Urban County plan]

Peterson repeated that the county board shouldn’t delegate its authority to allocate funding. He said he’s not concerned over federal dollars, just the county’s general fund dollars.

Again, Gunn attempted to clarify, telling Peterson that he was mixing up the two types of funding. The board did allocate general fund dollars for human services, she said – they’d done it as part of the budget process, and voted on 2010 and 2011 funding at their December 2009 meeting.

Wes Prater said the communication seemed clear to him, but suggested that since Peterson wasn’t satisfied, perhaps they should discuss it more and postpone the vote to accommodate him.

Peterson said he had no problem approving the plan if they removed the portion related to children’s well-being. Gunn, exasperated, said that there was no county funding for children’s well-being in the Urban County plan: “I don’t know how many ways I can say this.” The vote was time-sensitive, she added, because the plan must be submitted this month to the U.S. Dept. of Housing and Urban Development (HUD).

Peterson then made a motion to remove the children’s well-being funding from the Urban County annual plan. Prater supported the motion, though he added that he didn’t think there wast any such funding in the plan. Gunn confirmed that, and urged commissioners to vote down the motion and support the annual plan.

Peterson said that if there wasn’t any children’s well-being funding in the plan, then why not support his motion? It couldn’t do any harm, he said.

As a point of order, Jeff Irwin asked Curtis Hedger, the county’s corporation counsel, whether such a motion was permissible, if it’s not germane to the resolution. Hedger said it was a tough call.

A vote on the motion to remove children’s well-being funding from the Urban County plan was taken. The motion failed, with commissioners Irwin, Gunn, Schwartz, Ouimet and Sizemore voting against it. Jessica Ping was out of the room and did not vote. Barbara Bergman was absent.

The vote on the main resolution to approve the Urban County plan was then taken. It received unanimous support.

ACH Brownfield Project Public Hearing

A public hearing was held on a proposal to amend the county’s brownfield plan to include a project in the city of Saline at the Automotive Components Holdings plant. The Saline ACH plant, located at 7700 Michigan Ave., needs the brownfield designation in order to apply for $1.2 million in Michigan Business Tax credits.

Only one person spoke. Bob Brewster, human resources manager for the Saline plant, said he was on hand to answer any questions that commissioners might have about the request. They had none, and passed the resolution unanimously without comment.

CVS/Caremark

At their April 21 meeting, commissioners had a heated debate over a resolution authorizing the county to enter into a contract with CVS/Caremark for a drug discount program, which would be offered to residents. The resolution passed during a vote at the April 21 Ways & Means Committee, on which all commissioners serve. Only Conan Smith, Leah Gunn and Barbara Bergman voted against it.

At Wednesday’s board meeting, a final vote was taken and again, Smith and Gunn voted against it. [Bergman was absent.] There was no discussion and the resolution passed.

Communications from Commissioners

Ken Schwartz reported that he was recently driving through the south side of Ypsilanti and saw a significant number of houses that had signs announcing they were in tax foreclosure by the county treasurer. Many of them, he said, were “blighted junk on the landscape.” He wondered what the county’s options were if the houses didn’t sell at the July tax auction, and proposed having a discussion about it at a future meeting.

Kristin Judge reported that she had been among those who lobbied Lansing legislators by attending a recent meeting of the House judiciary committee, on which local Reps. Pam Byrnes and Rebekah Warren both serve. She was there to support HB5797, a bill addressing the problem of unfunded mandates. It would require that any new state mandates include a financial impact statement.

Judge also made a plea to the public to help the residents of Camp Take Notice, a homeless community that’s looking for a new location to settle. She said that she and a few other commissioners had been trying to see what the camp’s options are. They were hoping a church or other faith-based organization would help house the group. Judge said she recently wrote about how the county’s Blueprint to End Homelessness was one of the reasons she was inspired to run for commissioner. It was one of Bob Guenzel’s finest projects, she said, and they shouldn’t lose sight of his vision.

Finally, Judge expressed disappointment that the Thursday working session had been canceled. The board needs to get to work setting its priorities and getting public input, she said. Next year they’ll have to set the budget for 2012 and 2013, which will be a difficult effort. It’s already May, and they haven’t made much progress in preparing for that. “We have a lot of work to do,” she said, adding that she hopes they’ll start to make faster progress soon.

Public Commentary

Tom Partridge was the only person who spoke during the night’s four opportunities for public commentary – he spoke twice. He referenced the speech that President Barack Obama had given at the May 1 University of Michigan commencement, and called for leadership during this critical election year, when all 11 seats on the board are up for election. Evoking presidents John F. Kennedy and Lyndon Johnson, Partridge urged commissioners to put forward an agenda for progress to tackle issues of accessibility and affordability of health care, education, housing and transportation.

County Administrator Bob Guenzel Honored

Wednesday’s board meeting was the last one that Bob Guenzel will attend as county administrator – his retirement from that job takes effect May 14.

During the meeting, Verna McDaniel – the current deputy county administrator who’s been hired to replace Guenzel – read a resolution of appreciation from the board, thanking him for his 37 years of service to the county and the leadership he’s shown. As he accepted the framed resolution and hugged McDaniel, Guenzel received a long standing ovation from commissioners, staff and others attending the meeting, including his wife, Pam Guenzel.

Standing at the boardroom’s podium, Guenzel told commissioners he’d been getting more emotional as the day wore on – the county government has really been a home to him for 37 years. He’s worked with over 65 commissioners during his tenure, and said the county is fortunate to have such a high caliber of people elected who really care about the community – the current board demonstrates that well.

He then spoke to each commissioner directly, one by one, citing specific ways in which he appreciated their service. Several of them he’s known for years – as many as 40 years for Leah Gunn and Wes Prater. He joked with Ronnie Peterson, saying “I was here when he was born.”

Guenzel described the county organization as strong, saying that the challenges they’ve faced over the past few years have made them more resiliant. Now, he said, Verna McDaniel will lead the county forward with a fresh perspective. “I’m really optimistic about the future of Washtenaw County,” Guenzel said. As he’s often noted since announcing his plans, Guenzel said he’s retiring from county government, not from Washtenaw County.

McDaniel, who has worked for the county since 1982, described working with Guenzel as “an amazing journey.” Noting that he was well known for championing a business improvement process within the organization, she said they had prepared a document that detailed the history of his tenure and the work he’s done in that regard. Copies of the document were distributed to commissioners during the meeting.

Commissioners praised Guenzel and spoke affectionately about their relationship with him. Jeff Irwin thanked Pam Guenzel for the sacrifices she’d made in giving her husband’s time to the community over the years. Guenzel cared about the county, Irwin said, and that caring could be seen in many different ways, large and small. “The good work you’ve done is going to last for many, many years.”

Ronnie Peterson credited Guenzel with initiating the Harriet Street corridor project, an effort to improve Ypsilanti’s south side, as well as the Washtenaw Literacy Coalition and the Eastern Leaders Group. Peterson said he’d been around for six county administrators, and he’d seen Guenzel on the eastern side of the county more than any of the others combined.

Rolland Sizemore Jr., who serves as board chair, thanked Guenzel for his support. He said one of his best memories is of sitting in a “quiet” meeting with Guenzel and Washtenaw County Trial Court chief judge Donald Shelton. “You can take ‘quiet’ any way you want,” he joked.

Sizemore then announced that Peterson would be buying drinks at Argiero’s – and the meeting was adjourned.

Present: Leah Gunn, Jeff Irwin, Kristin Judge, Mark Ouimet, Ronnie Peterson, Jessica Ping, Wes Prater, Ken Schwartz, Rolland Sizemore Jr., Conan Smith

Absent: Barbara Bergman

Next board meeting: The next regular meeting is Wednesday, May 19, 2010 at 6:30 p.m. at the County Administration Building, 220 N. Main St. The Ways & Means Committee meets first, followed immediately by the regular board meeting. [confirm date] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public comment sessions are held at the beginning and end of each meeting.