Washtenaw County Board Gets Budget Update

Washtenaw County board of commissioners meeting (Aug. 3, 2011): A second-quarter budget update and final approval of a major multi-department consolidation were highlights of Wednesday’s meeting.

The budget update showed the impact of higher-than-anticipated property tax revenues, which had first been announced in April. Because of higher revenues than originally projected, the county now expects to use only $2.9 million from its fund balance during 2011 – previously, the budget called for drawing $5.3 million from the fund balance to cover a shortfall between revenues and expenditures.

Without the $2.9 million transfer from the fund balance, however, there would be a projected $2.5 million deficit for the year, on a general fund budget of roughly $100 million. Among several shortfalls on the expenditure side, about $1.034 million in anticipated non-departmental lump sum reductions have not materialized.

Expenses for attorney fees are higher than budgeted, but the county’s corporation counsel Curtis Hedger noted that there’s at least one case that won’t be costing the county in the future. It was an allusion to the end of a 2006 lawsuit against the county over the cost of police services. Hedger later told The Chronicle that the two townships still involved in the case – Ypsilanti Township and Augusta Township – paid the county this week the nearly $750,000 recommended by a court-ordered facilitator.

There was little discussion about most of the action items that the board approved. Most notably, a final OK was given to creating a new office of community & economic development – the result of merging three county departments. The new unit, to be led by Mary Jo Callan, will employ about 31 full-time workers, compared to 40 that are now employed in the three separate departments: the office of community development (OCD); the economic development & energy department; and the employment training and community services (ETCS) department. Other jobs within the county government have been identified for all but one employee so far. The consolidation will take effect in 2012.

Commissioners also set public hearings for their Sept. 7 meeting to get input on two millages: one levied under the Veterans Relief Fund Act, and another collected under Public Act 88 to be used for economic development purposes. Because Act 88 and the veterans relief act predate the state’s Headlee Amendment, they can be approved by the board without a voter referendum.

The Act 88 millage of 0.05 mill would be an increase from the 0.043 mills currently levied. It would generate an estimated $688,913 annually. In previous years, it has been used to fund several entities, including Ann Arbor SPARK. The veterans relief millage of 1/40th of a mill does not represent an increase, and is estimated to bring in $344,486 to provide services for indigent veterans in Washtenaw County through the county’s department of veterans affairs.

Republicans Dan Smith and Alicia Ping led the back-to-back ways & means committee and regular board meetings on Wednesday – as vice chairs of those respective bodies, they were filling in for chairs Rolland Sizemore Jr. and Conan Smith. Both Democrats were out of town.

Second Quarter Budget Update

Tina Gavalier, the county’s finance analyst, gave a formal presentation on the 2011 second-quarter budget update, for the first six months of the year. County administrator Verna McDaniel and interim deputy administrator Kelly Belknap were on hand to answer questions.

Gavalier reported that expense reductions haven’t materialized as much as expected, but property tax revenues were higher than anticipated. [The news of higher-than-expected property tax revenues had been announced at the board's April 20, 2011 meeting, when the equalization report was presented. The equalization report is the basis for determining the taxable value of property in the county, which in turn indicates how much tax revenue is collected by local taxing entities.]

When commissioners originally approved the 2011 budget in late 2010, they had anticipated using $5.289 million from the county’s fund balance. But because property tax revenues were about $3.5 million higher than initially projected, less of the fund balance will be used.

The county now expects to use $2.9 million from its fund balance during 2011. Without that transfer, there would be a projected $2.5 million deficit for the year, on a general fund budget of roughly $100 million. As of June 30, the fund balance stands at $12.8 million.

Among several shortfalls on the expenditure side, about $1.034 million in anticipated non-departmental lump sum reductions have not materialized. [.pdf of county general fund budget as of June 30, 2011]

Other highlights:

• Revenue surpluses of about $368,000 are anticipated from the clerk/register of deeds office due to higher-than-expected revenues from fees and transfer taxes. Budgets for the treasurer and prosecuting attorney also are showing revenue surpluses.
• The office of the water resources commissioner is seeing a roughly $80,000 revenue shortfall, caused by lower-than-expected construction-related fees and licenses. That amount is offset by about $49,000 in higher-than-budgeted savings for employee development and reimbursements.
• The sheriff’s office is about $481,000 short of its goal in anticipated expense reductions, but that’s offset by a projected revenue surplus of $877,o00. The additional revenue comes from new contracts for court security, additional contract deputies, dispatch services, and fees, among other sources.

The finance staff will give the next budget update – for the third quarter of 2011 – in November. McDaniel anticipates presenting the county’s 2012-2013 budget to the board for its review in September.

Second Quarter Budget Update: Commissioner Discussion

Wes Prater asked why the IT maintenance contracts were “out of whack.” Gavalier explained that about $221,000 in savings that the department had expected to get this year by renegotiating some of its contracts didn’t materialize.

Prater pointed out that the corporation counsel’s budget showed that expenses were $125,000 over budget – at $250,000, expenses were double the amount anticipated. Curtis Hedger, the county’s corporation counsel, quipped: ”There’s at least one case that we won’t be expending attorney fees on in the future.” The remark elicited laughter – it was a reference to the anticipated settlement of a years-long lawsuit filed against the county in 2006 by three townships over the cost of police services contracts.

[At its July 6, 2011 meeting, the board voted to approve the recommendation of a court-ordered facilitator, who set $749,427 as the amount owed by Ypsilanti Township and August Township to the county for police services provided in 2006. The county is not seeking payment for its legal expenses related to the lawsuit, which are estimated to be more than $1 million since 2006. Responding to a follow-up query from The Chronicle, Hedger said the paperwork has been completed to dismiss the lawsuit, and the townships paid the county this week.]

Prater also asked about the shortfall in a lump sum reduction that the 14A District Court had been asked to make. Gavalier clarified that the original target for expense reduction was $375,000. However, the court wasn’t able to reduce its operating budget by that amount, falling about $205,000 short of that goal.

Also related to the 14A District Court, Barbara Bergman questioned whether the board should revisit a policy of setting aside funds for future expansion of the courthouse in Saline. A portion of the fees collected by the 14A District Court – about $140,000 annually – are put into a public improvement fund. A portion of those funds are used to reimburse the county for the Saline courthouse construction in the mid-2000s. Some of the funds are also set aside to be used to pay for future expansion of the court – the current building, located at 1000 N. Maple, was completed in 2009. Bergman said that given the current economic condition, those funds might be put to better use.

Dan Smith noted that there were shortfalls in the budgets funded by the indigent veterans relief and Act 88 millages. Given that the board was setting public hearings later in the meeting for renewals of both millages, he wondered if there were any plans to increase the rates. [Because Act 88 and the veterans relief act predate the state’s Headlee Amendment, they can be approved by the board without a voter referendum. The Act 88 millage is currently levied at 0.043 mills. The county levies 1/40 mill for indigent veterans relief.]

McDaniel said that no change is being requested for veterans relief, but they are asking for an increase in the Act 88 millage to 0.05 mills. It’s expected that the board will be asked to increase the rate of the veterans relief millage next year, she said.

Mid-Year Budget Adjustment

The board was asked to approve a mid-year budget adjustment that increased the general fund budget by $1.42 million. The adjustment also increased the county Community Support and Treatment Services (CSTS) department’s budget by $150,003.

The general fund adjustment reflects an increase of $3,476,225 in property tax revenue for 2011. The 2011 budget approved by commissioners in late 2010 included the use of $5,289,000 from the county’s fund balance. In light of increased property tax revenues, only $2,921,391 will be used from the fund balance for the current budget year, which ends Dec. 31. On the expenditure side, there is a $1,034,000 shortfall in anticipated lump sum expense reductions. Several other more minor adjustments were made on both the expense and revenue side. [.pdf of staff memo detailing budget adjustments]

The total 2011 general fund budget is $100,696,000.

The CSTS increase reflects an adjustment in the cost allocation plan (CAP) – an amount charged to each department for items like the county attorney and administration. According to a staff memo, the expense will be offset by additional revenue from the Washtenaw County Health Organization (WCHO), a partnership between the county and the University of Michigan Health System.

The WCHO had been one of the topics of a July 7, 2011 board working session, where WCHO executive director Patrick Barrie briefed commissioners on a proposed transfer of about a half-dozen employees from the county payroll to the WCHO, as part of a restructuring aimed at limiting the county’s financial liabilities. The WCHO is an entity that receives state and federal funding to provide services for people with serious mental illness, developmental disabilities and substance abuse disorders. At this point, WCHO “leases” its employees from the county, and contracts for services through the county’s community support and treatment services (CSTS) department, which employs about 300 people.

Commissioner Ronnie Peterson, at a June 28 agenda briefing, had advocated strongly for reordering the working session’s agenda in order to give more time to the WCHO discussion, but he did not wind up attending that meeting. On Wednesday, however, he again raised concerns about the WCHO changes. He said he’d watched a video of the July 7 working session, and would be asking more questions about the restructuring in the future.

Commissioner Barbara Bergman, who also serves on the WCHO board, urged Peterson to meet with Barrie directly to address any questions Peterson might have. Peterson responded by saying that others are free to meet in whatever ways they choose, but he prefers to hold his discussions at a public meeting.

Outcome: Commissioners unanimously approved the mid-year budget adjustment as part of their consent agenda.

Office of Community & Economic Development

A departmental consolidation long in the works got final approval on Wednesday, after only a few questions from commissioners. The move combines and reorganizes three county departments: the office of community development (OCD); the economic development & energy department; and the employment training and community services (ETCS) department. An initial vote of approval had been taken at the board’s July 6, 2011 meeting, though some commissioners had asked for more details about the proposed changes, which would take effect on Jan. 1, 2012. [.pdf of responses to commissioner questions] [.pdf of business plan for the new office]

OCD director Mary Jo Callan will lead the new office of community & economic development. The goal is to cut costs by eliminating duplicated services in the face of declining revenues, while finding ways to deliver those services more efficiently to citizens.

Commissioners were briefed on the restructuring at a May 5, 2011 working session, and also discussed it at a June 28 agenda briefing.

Office of Community & Economic Development: Commissioner Discussion

Ronnie Peterson asked whether other jobs had been found for employees whose positions were eliminated because of the consolidation.

Diane Heidt, the county’s human resources and labor relations director, reported that the change resulted in a net loss of eight county jobs. [The office of community development, which will be part of the newly merged entity, is a joint operation between the county and city of Ann Arbor. An additional city job is being eliminated. Overall, the three departments are shrinking from 40.35 full-time employees to 31.85 FTEs in the new office.]

Heidt said that jobs in other departments have been found for all but one of the affected employees. She told commissioners that she’s continuing to work to find another position for that remaining employee, whose current job won’t be eliminated until the end of the year.

Peterson asked whether the department is also planning new hires. Yes, Heidt said – a couple of positions have already been posted.

Peterson then spoke at length about his concerns regarding these changes. Loyalty should count for something, he said, expressing dismay that some county workers had seen their jobs eliminated even as the county plans to hire other employees. Workers are being asked to take cuts in wages and benefits, he noted – it affects morale to then see some employees lose their jobs while other positions are created, he said.

Peterson also talked about the importance of economic development, especially on the county’s east side. [Peterson represents District 6, covering Ypsilanti and part of Ypsilanti Township. In the past he has voiced concerns that the departmental reorganization will downplay the county's role in economic development.] Ann Arbor is doing fine, and that helps the entire county, he said. But the eastern side is struggling, and will continue to struggle for years to come. He said he trusts Mary Jo Callan to direct the new department and he’s been pleased with her advocacy. He said he’d support the resolution to create the new department, but that he’ll raise these same concerns later in the year during budget deliberations.

Responding to a question from Yousef Rabhi, Heidt said that of the eliminated positions, four had been temporary jobs funded by a federal stimulus weatherization grant, and two other positions had been vacant. She said that multiple meetings with union representatives had been held as part of this process. Administrators had originally thought that more jobs would be affected, she said, but they were able to keep most employees within the new structure.

Outcome: The board unanimously gave final approval to the departmental consolidation as part of the consent agenda.

WISD Contract for Juvenile Programs

The board was asked to authorize a contract with the Washtenaw Intermediate School District, funding educational programs at the county’s Juvenile Detention Center and the Daybreak Residential program.

The agreement provides $380,379 for the 2011-12 school year, and gives the county administrator the authority to sign second-year contracts for the 2012-13 school year. The county expects to be reimbursed by the state for all but $75,370 of the annual cost. According to a staff memo, the WISD would provide two certified teachers and a half-time school social worker for up to 30 youth, based on the program capacities and a ratio no greater than one teacher to 10 youth, as required by state and federal regulations for special education programs. [.pdf of contract with WISD]

Lisa Greco, the county’s director of children’s services, attended Wednesday’s meeting but did not address the board.

Outcome: Without discussion, the board unanimously approved authorization of the WISD contract as part of the consent agenda.

New Contract for Nurses Union

A resolution on Wednesday’s board agenda gave final approval to an agreement with the Michigan Nurses Association – Unit I. The agreement covers the period from July 1, 2011 through Dec. 31, 2013.

The collective bargaining agreement, which affects 13 public health nurses and nurse coordinators in the county’s health services department, was given initial approval on July 6. It’s the first of 15 union agreements being negotiated as part of the 2012 and 2013 budget cycle, and is expected to achieve an annual savings of $132,000.

In total, the county hopes to see about $8 million in labor concessions for the two-year budget cycle, to help address a projected $17.5 million deficit. [There are 17 unions representing the county workforce. In January 2011, the county reached agreements with two other unions – the Police Officers Association of Michigan (POAM) and the Command Officers Association of Michigan (COAM) – for a four-year period through 2014.]

According to terms of the agreement with the nurses union, union members will not have raises in 2012 or 2013. The nurses will bear a greater share of health care expenses, pension contributions and retiree health care contributions. For example, the co-pay for emergency room visits will increase from $50 to $250.

Union members will now pay deductibles, and a percentage of the cost of their medical expenses, up to an annual maximum. Prescription drug co-pays will also be increased under the new agreement. In addition, the number of annual “banked leave” days – similar to unpaid furlough days – will increase from 6 to 12.

Outcome: Without discussion, commissioners unanimously gave final approval to the collective bargaining agreement with the Michigan Nurses Association – Unit I, as part of the board’s consent agenda.

Urban County Expands

The board gave initial approval to continue the county’s participation in the Urban County program – from July 1, 2012 to June 30, 2015 – and to expand the program to include six additional jurisdictions. A final vote is expected on Sept. 7.

“Urban County” is a designation of the U.S. Dept. of Housing and Urban Development, identifying a county with more than 200,000 people. With that designation, individual governments within the Urban County can become members, making them entitled to an allotment of funding through a variety of HUD programs, including the Community Development Block Grant (CDBG) and HOME Investment Partnerships. Those two programs provide funding for projects to benefit low- and moderate-income residents, focused on housing, human services and other community development efforts.

Washtenaw County and the townships of Ann Arbor, Ypsilanti, Pittsfield, Superior, Northfield, Salem, and Bridgewater got the Urban County designation in 2002. Later, the city of Ypsilanti and Scio Township joined, and in 2009 the city of Ann Arbor – which previously received HUD funding directly – joined as well, roughly doubling the amount of money available in the Urban County’s funding pool. New jurisdictions that plan to join the Urban County for the next funding cycle are the city of Saline, the village of Manchester, and the townships of Dexter, Lima, Manchester, and Saline.

Outcome: Without discussion, the board unanimously voted to give initial approval to continue participation in an expanded Urban County program.

Agreement Set with Regional Energy Office

Commissioners held a public hearing and subsequently voted on an interlocal agreement with the Southeast Michigan Regional Energy Office (SEMREO) Community Alliance. The Ferndale-based entity provides technical services to the county in identifying and implementing federal Energy Efficiency and Conservation Block Grant projects. [.pdf of interlocal agreement]

The energy office is a division of the Michigan Suburbs Alliance. County commissioner and board chair Conan Smith is CEO of the alliance. The board voted to join the energy office at its March 17, 2010 meeting. Smith abstained from that vote. He was absent from the Aug. 3 meeting.

Sam Offen, director of the alliance’s Southeast Michigan regional energy program, attended Wednesday’s meeting but did not address the board. Offen, an Ann Arbor resident, also serves on the Ann Arbor park advisory commission and is a board member of the Leslie Science and Nature Center.

Regional Energy Office: Public Hearing

One person – Thomas Partridge – spoke during a public hearing about the interlocal agreement. He began by asking for clarification about the hearing’s topic. He said it was incumbent upon the board to publicize the hearing more broadly and to ensure that adequate background material is provided. He asked that funding for energy and energy conservation be directed to help the county’s most disadvantaged residents, and called for a resolution that asked public utilities like DTE to stop discriminatory billing practices against the disadvantaged. No one should have to go without heat or air conditioning, he said.

Outcome: Without discussion, commissioners unanimously approved the interlocal agreement with the Southeast Michigan Regional Energy Office Community Alliance as part of their consent agenda.

Public Hearings Scheduled for Millages

The board scheduled two public hearings for its Sept. 7 meeting that related to countywide millages.

The hearings are intended to get feedback from the public on a millage levied under the Veterans Relief Fund Act, and a millage collected under Public Act 88 to be used for economic development purposes.

The veterans relief millage would not exceed 1/40th of a mill, to be levied in December 2011 for use during the calendar year 2012. It’s estimated to bring in $344,486 and would be used to provide services for indigent veterans in Washtenaw County.

The Public Act 88 millage of 0.05 mill would generate an estimated $688,913 annually and would cost homeowners $5 for every $100,000 of their homes’ taxable value. [The Act 88 millage is currently levied at 0.043 mills.]

According to a staff memo, the county could assign some of the funds “to a non-profit organization which is engaged in the purpose of advertising the advantages of and encouraging trade within the County.” In previous years, Act 88 revenues have been used to fund the economic development agency Ann Arbor SPARK and other groups.

Outcome: The board set public hearings for its Sept. 7 meeting to get input on the veterans relief and Act 88 millages.

Grant for Sheriff’s Office

Commissioners were asked to vote on a resolution authorizing the Washtenaw County sheriff’s office to apply for a Edward Byrne Memorial Justice Assistance grant. The $42,587 grant would be awarded by the U.S. Dept. of Justice’s Bureau of Justice Assistance. The funds would be used to support the sheriff’s community outreach program, according to a staff memo. Specifically, the grant would fund a part-time community engagement coordinator and two of the program’s five peer outreach workers.

Commissioners also set a public hearing for Sept. 7 to get input on how the grant will be used. The U.S. Dept. of Justice requires a public hearing before awarding these grants, to get input about projects or programs that might be funded by the money.

Sheriff Jerry Clayton and Greg Dill, director of administrative services for the sheriff’s office, attended Wednesday’s meeting but did not address the board.

A final vote is expected at the next board meeting on Sept. 7.

Outcome: Commissioners gave initial approval to apply for the Edward Byrne Memorial Justice Assistance grant, and set a Sept. 7 public hearing for how the grant will be used. There was no discussion on this item.

Misc. Communications, Public Commentary

In addition to the public hearing mentioned earlier in this report, Thomas Partridge of Ann Arbor spoke during each of the four opportunities for public commentary. He was the only person to speak during public commentary at Wednesday’s meeting. Describing himself as a Democrat and an advocate for the disadvantaged, Partridge said the budget discussion for the next fiscal year was a moral, ethical and civil rights subject, not just a financial one. He advocated for accessible and affordable health care, transportation, housing and education for all, but especially for the disadvantaged, including senior citizens and the poor.

He said that although he was an early supporter of Barack Obama in the 2008 presidential race, he’s been very disappointed in Obama’s performance and he called for other Democratic candidates to come forward to run for president in 2012.

Partridge also expressed concern about tactics the county administration is using to get employees to accept cutbacks – he did not give details, but said he’d been talking earlier in the meeting with a county employee who’s a member of the AFSCME union. Commissioners should be working to raise revenues so that the county can employ enough workers to adequately deliver services to residents, he said.

Partridge also called for changes that would make the county administrator an elected position. [That job is currently a hire made by the board of commissioners.] The officers of the board should also be chosen by the electorate, he said. [All commissioners are elected positions, but commissioners then elect officers for the board, ways & means committee, and working sessions.] Partridge also said that the speaking turn for commissioners should be limited in the same way that time for public commentary is limited. [Speakers during public commentary are limited to three minutes during each turn at the ways & means committee meeting, and five minutes during the regular board meeting.]

Misc: Communications: Congratulations to Jason Brooks

Commissioner Yousef Rabhi thanked Jason Brooks for his impressive service. Brooks, a deputy county clerk, attends all public meetings of the board and handles many of the board’s procedural logistics, including taking minutes of the meetings.

Rabhi noted that Brooks hadn’t missed a meeting since 2006. He also congratulated Brooks on recently receiving The Ann Arbor Chronicle’s Bezonki award. [Brooks and deputy county clerk Matt Yankee were joint recipients of a Bezonki, recognizing their service in the public sector. More details about award winners will be provided in the September 2011 Chronicle monthly milestone column.]

Rabhi said he looked forward to working with Brooks in the future. In mid-August, Brooks will take a new job as management analyst in the county administrator’s office, replacing Joanna Bidlack, who left that position earlier this year. County administrator Verna McDaniel said she’ll be working with county clerk Larry Kestenbaum on the transition.

Brooks received a round of applause from commissioners.

Misc. Communications: Working Sessions

Rabhi, who chairs the board’s working sessions, noted that commissioners had canceled their Aug. 4 working session, “so don’t come – nobody will be here.” However, he reminded his colleagues that they had added five working sessions focused on the 2012-2013 budget, and the next one is set for Thursday, Aug. 18. The topic will be the consolidation of dispatch operations between the county and the city of Ann Arbor.

Misc. Communications: Stuff the Bus

McDaniel highlighted the 2011 Stuff the Bus event, a United Way fundraiser that this year will run from Aug. 15-19. It will be held from 9 a.m. to 3:30 p.m. each day in the parking lot of the Target at 3749 Carpenter Road. The public is asked to donate new school supplies – backpacks, pencils, notepads, binders, crayons, glue and other items – that will be distributed to children in need throughout the county in grades K-5. Participating school districts include Ypsilanti, Willow Run, Chelsea, Manchester, Whitmore Lake and Lincoln Consolidated schools.

Closed Session

The board ended its meeting by voting to go into closed executive session for the purpose of discussing the confidential opinion of legal counsel and the settlement of pending litigation. The specific topic wasn’t revealed, but the session appeared to have been a contentious one. Leah Gunn left early and several commissioners later reported that the discussion had been heated.

Present: Barbara Levin Bergman, Leah Gunn, Ronnie Peterson, Alicia Ping, Wes Prater, Yousef Rabhi, Rob Turner, and Dan Smith.

Absent: Kristin Judge, Rolland Sizemore Jr., Conan Smith.

Next regular board meeting: Wednesday, Sept. 7, 2011 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.

Next working session: Thursday, Aug. 18, 2011 at 6:30 p.m. at the county administration building, 220 N. Main St. The working session will focus on the 2012-2013 budget.

The Chronicle could not survive without regular voluntary subscriptions to support our coverage of public bodies like the Washtenaw County board of commissioners. Click this link for details:Subscribe to The Chronicle. And if you’re already supporting us, please encourage your friends, neighbors and colleagues to help support The Chronicle, too!