Editor’s note: The Ann Arbor city council has held two retreats to discuss the city’s FY 2012 budget – one in early December 2010 and another in early January 2011. A summary of the material covered in those retreats is provided in previous Chronicle coverage: “Ann Arbor: Engaging the FY 2012 Budget.”
Leading up to the city administrator’s proposed budget in April – for FY 2012, beginning July 1, 2011 – the city council is also holding a series of work sessions on the budget. Their typical scheduling pattern is for the weeks between council meetings. Previous work sessions have taken place on community services as well as the 15th District Court. On Feb. 14, 2011, the council held its budget work session on safety services – fire and police. Also included were a raft of smaller departments – finance, information technology, mayor and council, administrator’s office, clerk’s office and Community Television Network (CTN). One budget work session remains, for the public services area, on Feb. 28.
On Feb. 14, heads of Ann Arbor’s police and fire departments presented the city council with their strategy for meeting budget reduction targets for the next two fiscal years – FY 2012 and FY 2013. They each presented their strategies for meeting the target on two different scenarios: (1) a 2.5% reduction for each year’s projected expenses; and (2) a 4.0% reduction for each year’s projected expenses.
Police chief Barnett Jones, who’s also head of all safety services for the city, told councilmembers he’d prefer to be “wrassling with a bad guy” instead of talking about the scenarios, but sketched out his reduction strategies anyway: On the 4.0% scenario, two years from now the department would have 14 fewer police officer positions than it does now – the force would decrease from 124 to 110 officers. Of the 14 police officer positions that could be eliminated, 13 of them would come through layoffs. That doesn’t include six additional, non-officer positions that would be eliminated in the department, four of them through layoffs.
Fire chief Dominick Lanza, who announced his resignation the day after the work session was held, sketched out a similar picture for the fire department: On the 4.0% scenario, two years from now, the department would have 13 fewer firefighters, with 11 of those reductions achieved through layoffs.
At the council’s first budget retreat, city administrator Roger Fraser and the city’s CFO Tom Crawford indicated that the 2.5% scenarios depend on unresolved union contracts settling with no salary increases and the adoption of the city’s new benefits plan. But even those scenarios would, in the first year of the two-year plan, result in the elimination of three police officer positions (two through layoffs) and five firefighter positions (three through layoffs).
The 2.5% target is the baseline reduction for all city departments, with higher targets established for a department (up to 4.0%) depending on how many of the department’s workers are on the new city benefits plan. The new plan requires higher contributions from employees for health care and pensions.
Besides fire and police protection, the city council received reduction reports from smaller departments, including a group of units in the finance department, the administrator’s office and the clerk’s office. They also discussed how the information technology department works out of a service fund that is external to the general fund.
Reduction Targets: 2.5% versus 4.0%
During the Feb. 14 work session, part of the back and forth – among councilmembers, city administrator Roger Fraser and chief financial officer Tom Crawford – focused on the definition of budget reduction targets, as well as the different scenarios presented for the police and fire departments.
The work session conversation again drew out the fact that percentage budget reduction targets do not arise from a comparison of last year’s budget with next year’s budget. Instead, the level of activities/services from the previous year is assumed for the next year, so the cost of those same activities/services is projected or forecast into next year. Due to overall inflation, contractually-enforced wage increases, increased energy costs, etc., the costs of the same activities/services, when projected into the next year, is generally greater. Budget reduction targets are thus percentage reductions of the forecasted cost. [For more detail on the calculations of budget reduction targets, see Chronicle coverage of the Jan. 31, 2011 working session: "Ann Arbor 2012 Budget: Parks, Plans, People"]
At the Feb. 14 work session, Crawford reminded the council that all departments had been given the basic task of reducing their forecasted costs by 2.5%. To the extent that employees in departments are not on the new health care and pension plans, they’d been given the additional task of reducing their forecasted costs by up to 4.0%.
Fraser explained how a number of city employees are “enjoying much more expensive health insurance than other employees.” He reminded the council of the city’s alignment between its budget and labor strategy. Asking departments to meet greater reduction targets that are keyed to extra health care costs is part of that alignment strategy. [For more detail on the alignment of labor and budget strategies, see Chronicle coverage of the Jan. 31, 2011 working session: "Ann Arbor 2012 Budget: Parks, Plans, People"]
In the case of the police and fire departments, almost all employees belong to unions that have not adopted the new city benefits plan. So at the Feb. 14 work session, police chief Barnett Jones and fire chief Dominick Lanza presented two different scenarios for their departments: a 2.5% and a 4.0% reduction scenario.
Chief of police Barnett Jones walked the council through the strategy he would use to meet 2.5% and 4.0% reduction targets over the next two years. The reduction targets apply to each year. That is, savings identified in FY 2012 are assumed to carry through to FY 2013, and a department’s task for FY 2013 is to identify an additional savings of 2.5% or 4.0%, depending on the scenario. [The city adopts its budget one year at a time, but plans in two-year budget cycles].
Measured in bodies, the 4.0% scenario sketched out by Jones would result in the elimination of 14 police officer positions – 13 of them through layoffs – in two years. That doesn’t include six additional, non-officer positions that would be eliminated in the department, four of them through layoffs. [.pdf of all budget impact sheets from the Feb. 14, 2011 working session]. That reduction in bodies would reduce the police department’s projected costs of roughly $26.5 million per year by $1 million in the first year, and an additional $1 million in the second year:
Police Services Reduction Strategies ------------------------------------------------------ 2.5% SCENARIO 2012 2012 2013 2013 Action Dollars Action Dollars ------------------------------------------------------ LAYOFF LAYOFF 2 Dispatchers 162,659 1 Dispatcher 97,810 2 Plc Offcrs 221,332 4 Plc Offcrs 470,272 1 Plc Svc Spcls 90,246 REDUCE RANK ELIMINATE VACANT 1 Lt, 2 Sgt 24,274 1 Telecomm 78,374 1 Plc Offcr 115,521 MAT/SUPP 31,723 1 Plc Prof Asst 79,144 Addtl Svngs 22,981 Subtotal Svgs 747,276 647,060 2.5% Target 666,049 638,802 ------------------------------------------------------ 4.0% SCENARIO [in addition to 2.5% savings] 2012 2012 2013 2013 Action Dollars Action Dollars ------------------------------------------------------ LAYOFF LAYOFF 3 Plc Offcrs 339,365 4 Plc Offcrs 479,235 Addtl Svgs 14,334 Grand Total 1,086,641 1,140,629 4.0% Target 1,049,330 1,091,071
After walking the council through the impact sheet, Jones stressed that eliminating police officer positions would translate to a shift from other areas into the department’s patrol division, which he tries to maintain at a minimum level. Jones has previously described the patrol division as the backbone of the police department. At last year’s budget work session on police services – when the specter eliminating 12 police officer positions was raised – Jones laid out the contrast between the patrol division and other areas of the police force. From The Chronicle’s report of that May 12, 2010 work session, which also gives some insight into how this year’s reductions might be handled from an operational point of view:
Sixty-four of those are in the patrol division, and 22 are on “special assignments.” Special assignments are as follows: five are on traffic; five are in the critical response unit (CRU); three are school liaison officers; two are transport officers; two are in-service detective officers; one is assigned to LAWNET; one is assigned to AATA; one is a property officer; one is a training officer; and one is a court officer.
If 12 officers are laid off, Jones said, then traffic enforcement would be reduced by four officers. One officer would remain in traffic for licensing, taxi cabs, and investigations along those lines. Those traffic officers would shore up the patrol division in order to spread the workload out among the remaining officers on patrol.
The CRU, Jones said, which represents the proactive part of the force, would be eliminated – the department would go from being a proactive to a reactive department. The CRU includes surveillance, uniformed and plainclothes work, and they make warrant arrests, among other duties, Jones said. Those CRU officers would have to be moved into other areas.
Summarizing, the chief said 12 layoffs meant four positions from traffic, five from CRU, with the other three reduced out of the patrol division. That would leave 61 on patrol. The total number in special assignments would be as follows – in some cases due to contractual obligations: traffic (1); school liaison (3); transport officers (2); in-service detective positions (2); LAWNET officer (1); AATA contract (1); property officer (1); training officer (1); and court officer (1). That’s a total of 13 officers in special assignments. The detective bureau would stay at 13, Jones said, reasoning that “core services have to be maintained.”
Stephen Rapundalo (Ward 2) chairs the council’s labor committee and has recently begun using his communications time at regular council meetings to provide updates and information about the status of labor negotiations. At the Feb. 14 work session, he noted that if the police officers union were to adopt the new benefits plan, then they would save the positions they’d otherwise lose under the 4.0% reduction scenario. [Under the 2.5% scenario, seven police officer positions would be lost over the course of two years; under the 4.0% scenario, 14 positions would be lost.]
Rapundalo said it’s within the union’s purview to affect the number of layoffs, “if they so desire.” City administrator Roger Fraser was somewhat more circumspect, saying, “We’re just showing the difference, not advocating one thing or another.”
In response to a question from Sandi Smith (Ward 1), Jones said there were no longer any vacant positions in community standards – they’d been filled. The community standards division has a total of 10 staff with a vacant supervisor position, he said. Just a few years ago, it had 15-16 total staff. Jones reported that Richard Martonchik, who works in the city’s human resources department, is looking at how the community standards department does business, and would, Jones hoped, provide a better business model.
Rapundalo asked Jones to summarize the impact on the department under the 4.0% scenario: 19 positions would be eliminated from the police department, 14 of those from law enforcement, Jones said. That would reduce the number of police officers from 124 to 110.
Marcia Higgins (Ward 4) asked if Jones would be able to maintain his minimum numbers in the patrol division with that number of cuts. Jones told her that with the 2.5% scenario, he could maintain the patrol division, but under the 4.0% scenario, the sheer loss of bodies would mean that patrol would be reduced. Higgins wanted to know what the patrol division would look like on that scenario. Answered Jones, “I haven’t quite figured that out.”
Tony Derezinski (Ward 2) asked if the layoffs from dispatch could be covered by assistance from other jurisdictions. Jones allowed that in the distant future, that might be possible, but not immediately.
Stephen Kunsleman (Ward 3) said that during the council’s budget retreats they’d talked about “party patrol.” [Party patrol is essentially a special detail that is deployed on certain University of Michigan home football games.] Kunseman wondered if overtime would become a necessity in order to cover police activity like party patrol. He wanted to know if additional overtime would be incurred, and if that had been calculated against the projected cost savings.
Jones said he expected overtime would rise as a result of cutting this number of bodies. He also noted that party patrol enjoyed partial grant support, but that yes, overtime would rise.
Higgins wanted to know where it balanced out: What is the number of bodies you can cut without incurring overtime? Jones said he’d need to study the specific question in more detail before arriving at a number he would say in public. Higgins indicated that they’d need to have that conversation later. “Yes, ma’am,” Jones replied.
In response to a question from Derezinski, Jones said that prospects for federal funding are grim and that the department had moved away from seeking federal grants. Most of those grants require that you hire the officers permanently who have been paid for with federal funds, he said.
Derezinski asked if reductions to the state police force could result in more obligations locally. Jones confirmed that there’s speculation about reductions to state police funding. Since the new governor [Rick Snyder] was elected, Jones said, there’s been speculation. The state police took over the crime lab in Detroit, he said, and he does not think they’ll return operation of the crime lab back to Detroit. There’s a backlog of cases from Detroit because of credibility problems, he said. There’s also speculation about the reduction of funding to the corrections system. And there’s talk of turning patrol of the freeways back over to local agencies and the sheriffs. Another strategy would entail removing state police officers from southeast Michigan and putting them in a backup role. Jones concluded by saying he’s waiting to see what direction the state police are going.
The day following his presentation to the council, Dominick Lanza resigned his position as chief of the fire department after slightly less than a year on the job. He was sworn in last year at the March 15, 2010 council meeting, with an official start date of March 22, 2010. His resignation is effective March 25, 2011.
At the work session, Lanza told councilmembers that he wished he could tell them the situation for the fire department was better than in the police department, but it isn’t. There are a number of additional new expenses the fire department had to reduce in their budget task, including $43,573 due to a budget estimate that was too low from last year and $52,000 in lost revenue that will be assigned to the planning department instead – it’s a matter of complying with the state law on how initial inspections are handled. [The city council approved the change at their Jan. 3, 2011 meeting.]
On the 4.0% percent scenario, after two years the number of firefighters in the department would fall by 13, from 88 to 75. On the 2.5% scenario, nine firefighter positions would be cut. [.pdf of all budget impact sheets from the Feb. 14, 2011 working session] By the specific numbers:
Fire Services Reduction Targets ------------------------------------------------------ 2.5% SCENARIO 2012 2012 2013 2013 Action Dollars Action Dollars ------------------------------------------------------ ADDITIONAL EXPENSES
Plnng Dpt (52,000) Too Low Est (43,573) Too Low (5,406) Rplc Gen FS1 (62,715) New Gen FS6 (62,715) Therm Imagers (13,500) Air bottles (6,900) Air bottles (6,900) REDUCTIONS LAYOFF LAYOFF 3 FFs 324,000 4 FFs 432,000 ELIMINATE VACANT 2 FF 216,000 Subtotal Svgs 361,312 356,979 2.5% Target 349,870 348,840 ------------------------------------------------------ 4.0% SCENARIO [in addition to 2.5% savings] 2012 2012 2013 2013 Action Dollars Action Dollars ------------------------------------------------------ LAYOFF LAYOFF 2 FF 216,000 2 FF 216,000 Grand Total 577,312 572,979 4.0% Target 561,126 584,748
Lanza told councilmembers that a forthcoming study might change the situation. He was alluding to a study that will be done by the International City/County Management Association (ICMA) Center for Public Safety Management to get an analysis of and recommendations for Ann Arbor’s fire protection needs. The contract, for not more than $54,000, was authorized at the city council’s Feb. 7, 2011 meeting. The interest in a study comes in the context of two recent budget retreats conducted by the council, where the council discussed the possibility of transforming Ann Arbor’s fire department to a staffing arrangement that would combine full-time career firefighters with paid on-call firefighters.
At the budget work session on Feb. 14, Lanza told the council that a lot of the numbers are “guesstimates.” He said that after the study, if the city decides that it wants to go in the direction of a combination full-time/on-call department, then everyone – firefighters and administration – would know. Now, he said, he just does the best he can with the numbers he’s given.
He characterized the current staffing situation – which is budgeted for 88 firefighters – as one where the department has checks, but no money to write them. The previous Sunday he’d implemented the intermittent closing of one of the city’s five fire stations. Regardless of the station that would be closed on any occasion when a closure was necessary, Lanza said it would have impact on response times, which means potentially more property damage. A station would be closed only on an “as needed” basis, he said.
By way of background, part of what determines when an intermittent closure is required depends on the number of firefighters available on any given day, and the department’s ability to pay overtime. The department’s firefighting force is divided into three shifts, who work a 24-hour day, followed by 48 hours off. Every 10th day of scheduled work is a “code day,” which works out to a yearly average of time worked by firefighters of 50.4 hours per week.
A fact drawn out by mayor John Hieftje at the Feb. 14 work session is that by union contract, the number of firefighters that can have scheduled time off for any shift is seven. [It's a number calibrated to a firefighting force that previously numbered over 100 firefighters. According to the IAFF Local 693 website, the minimum staffing requirement per shift for the five stations in the city is 18 firefighters. Dividing 88 firefighters by three shifts, subtracting the maximum number for scheduled time off (7), and allowing for coverage of code days leaves little flexibility for staffing, without incurring overtime.]
Tony Derezinski (Ward 2) asked about the possibility of reconfiguring shifts. Lanza said there were a few people who were working a 40-hour week, and one possibility would be to put them back into the fire suppression rotation. Scheduling is a negotiable item for union contracts, Lanza said.
Derezinski asked if the station to be closed on an intermittent basis could be chosen so that it’s near a station in another jurisdiction, so there’d be reciprocal coverage. Lanza indicated that what’s needed in Washtenaw County is a regional approach to fire protection, to ensure that everyone receives the same high level of service.
Non-Safety Services Departments
In addition to police and fire budgets – which together made up 48.9%, of the city’s $81.5 million general fund budget for the current budget year – city council members heard budget reduction strategies from several smaller departments. [.pdf of all budget impact sheets from the Feb. 14, 2011 working session]
The city’s chief financial officer, Tom Crawford, presented the council with the budget impact sheet for the city’s financial services as a group that includes finance, treasury, assessing, risk management, accounting, and procurement.
Savings identified for the first year of the two-year plan include around $60,000 in savings from the new financial system. The group’s impact sheet also includes an additional expenditure of almost $80,000 compared to last year – for a position that has now been reassigned back to accounting. That will be offset by not filling a vacancy in payroll for an employee who’s going to retire.
Another $29,000 of savings is expected from a personnel change next year – an AFSCME union position that is currently held by a Level V employee is expected to retire and the position is expected to be replaced with a Level I employee.
For the second year of the plan, FY 2013, another reduction of a full-time staff position would be required, Crawford said. He’s not yet been able to identify that position, he said, but he would need to do that next year.
Crawford included the IT department as part of the work session presentation. But the 22-person IT department operates with a service fund that’s external to the general fund – it bills other departments in the city directly for the services it provides. Crawford likened the IT department to the fleet services fund – fleet provides vehicles to city departments, and IT provides computers and software.
In discussion with councilmembers, Crawford explained how the brake on IT costs did not come primarily from an attempt to meet reduction targets within that fund – although they did look for direct ways to reduce their costs. Instead, the pushback on IT costs comes from the different departments within the city. As heads of different departments try to meet their budget reduction targets, they might look at reducing people or something else, like IT costs, to remove the next dollar from their budgets.
Crawford told the council he wanted to give councilmembers a flavor of how the IT department works – the budget for the department is over $6 million, which is a lot of money.
One category of IT costs is “multi-year projects,” which are expected to decrease from $552,611 this year to $235,000 in FY 2012 and $160,000 in FY 2013. The $235,000 is primarily for the OnBase document management system, Crawford said, which illustrates the general category of major software implementations included in “multi-year” projects.
OnBase is the last of the major IT software projects, Crawford said, which have in the last few years included systems like the Courts and Law Enforcement Management Information System (CLEMIS) and eTRACKiT. So the line item for multi-year projects is going down. Now, what the IT department will focus on is making sure that the organization is using its software well. That’s an item that shows up as “software maintenance” in the IT department’s budget. In response to a question from Tony Derezinski (Ward 2), Crawford explained that the ongoing software maintenance contracts are struck with the software vendor – it’s not really something that could be bid out separately to a third party. The cost of the ongoing maintenance contract, Crawford explained, is something that’s considered in weighing the merits of the software purchase.
Another category of expenses for the IT department is “two-year replacement projects.” The typical replacement schedule is every five years for desktop computers and every three years for laptops, but the department is looking at the possibility of extending that schedule to every four years for laptops. The idea is to establish a replacement schedule so that equipment failures don’t wind up costing more money than it would to simply replace the equipment in advance of those failures. In the course of the evening’s conversation, city administrator Roger Fraser explained that the iPad he’d been using recently would be returned to the IT department – he’d been evaluating it as a possibility instead of a laptop. He’d found it useful in some ways, he said, but lacking in others.
Besides software maintenance, the other largest expense is personnel, which works out to roughly $2.5 million year. Crawford stressed that the increase from $2,654,689 in FY 2011 to $2,828,319 in FY 2012 reflected the fact that an employee whose costs were charged out to another department in FY 2011 was coming back to IT.
Mike Anglin (Ward 5) was curious to know what the quantifiable impact is on the city’s operation when the public uses the city’s online tools – there are likely fewer telephone calls and more satisfied customers. Do they have hard data on that? he wanted to know. Crawford said that online tools – like the ability of people to use the city’s online tax payment system – have had a meaningful effect. To the extent that it reduces staffing needs during peak periods, it has had exactly the impact you would expect. Sandi Smith (Ward 1) asked if it would be possible to show over the last five years the savings generated from IT work. Crawford indicated that it’d be easier to do that on a project-by-project basis, and he offered in the near future to pull out some examples to share with the council.
Stephen Kunselman (Ward 3) noticed that the IT department itself was charging itself for IT services. Crawford explained that the IT staff all have computers, and there are also licenses for software use – software licenses are assigned by individual. He also explained that the municipal service charge is assessed to IT, because it’s not part of the general fund.
In summing up the IT presentation, city administrator Roger Fraser described how previously, when someone said, “I need a new computer,” the city gave it to them with no consequence to the department’s budget. Now, there’s instead a conversation – between a “customer” and “a provider.” Sometimes software licenses are removed from a department’s budget, because a unit manager decides they don’t need them.
An example of what Fraser meant was included in the community services area budget work session on Jan. 31, which was reported this way by The Chronicle:
Additional budget savings would result from adjusting water charges to reflect what actual usage is. And they’re eliminating some software licenses. Some of the software, [community services area administrator, Sumedh] Bahl said, isn’t used by the staff that much, “so we’re taking it away from them.”
At the Feb. 14 work session, Fraser credited Dan Rainey, head of IT for the city, for establishing the review team for IT, which includes the district court, the city attorney’s office, and the city’s other key leadership positions. The review team helps establish IT priorities. Crawford said the city’s IT governance model had attracted interest from other organizations as well.
Mayor and Council
The mayor and council have their own section of the budget, which includes mayoral and councilmember salaries. Fraser told them that miscellaneous reductions in FY 2012 of $810 were yet to be determined. It’s assumed that for the following year, in FY 2013, the roughly $8,000 reduction target would not be met, because it would mean a reduction of half a councilmember. [For Chronicle coverage of how council salaries are set – 2011 is a year when they can be changed – see: "Ann Arbor Council Service: What's it Worth"]
Mayor John Hieftje pointed out that there used to be 1.75 FTE staff positions in the mayor’s office and now it’s down to 0.75.
Sandi Smith (Ward 1) suggested not printing out everything in color and dropping it in councilmember mailboxes. She told Fraser she looked at most things online, so she didn’t need paper copies. Fraser noted that while the printing cost did not come out of the council’s budget, it was a good suggestion. He did point out that there’s a balance between providing all the necessary information without flooding the council with too much information. If it’s printed out in color, Fraser said, it’s probably because it’s much easier to understand in color. He assured Smith that he did think this through, but his judgment call would be – if he had to choose – to go with the best quality information.
The first item on the administrator’s list was reduced printing costs, with an expected savings of $3,500. Some of the savings were identified simply with the note: “reduced budget to meet required target.” Fraser explained by commenting: ”We’ll have to be frugal.” The line indicating savings in contractual services includes items like membership in the Michigan Municipal League, Fraser said. The reduction strategy includes having those units who actually use the contractual services pay for them. [Membership in the league was not indicated to be cut.]
Community Television Network
Included in the impact sheets was one for CTN, which Fraser indicated was not part of the general fund, but which is also trying to meet reduction targets. The impact sheet indicates an expenditure for a capital investment of $97,431 – to transition to an appropriate digital format. The new format, said Fraser, would allow for live streaming on computers instead of on television.
Savings identified in the clerk’s office include the replacement of someone who is retiring with a lower cost employee.
Cost savings were also identified by assuming only two of the city’s five wards would have city council primary elections. [As of last week, the only person who had filed nominating petitions with the city clerk's office was Stephen Kunselman (Ward 3).] Fraser said they’d made a wild guess about the number of wards with primary elections – they figured it might be two, instead of the three wards that were contested last year. The impact sheet for the clerk’s office indicates that a primary election costs about $7,000 per ward to administer. “It’s up to you guys as to how much we spend,” Fraser said. “Get out there and take out your opposition, and we’ll be all set!” he quipped.
Another measure that will continue from last election season is the Friday closure of the clerk’s office for election preparation work. Previously they had done the work on an overtime basis. Fraser said there’d been no complaints about the Friday closure during the last election cycle.
Another way that overtime will be reduced is to eliminate the clerk’s assistant for city council meetings, who comes in at 1 p.m. on Monday council meeting days – she would work just until 10 p.m., instead of staying until the end of the meetings. [Ann Arbor city council meetings rarely end before 10 p.m.] The rest of city council meeting would be covered by city clerk Jackie Beaudry, Fraser said.