State Health Care Law Prompts AATA Debate

Also: Two planning efforts to move ahead – WALLY and connector

Ann Arbor Transportation Authority board meeting (June 21, 2012): Deliberations by Ann Arbor Transportation Authority board members were uncharacteristically animated as they discussed how to comply with a state-imposed limit on the amount that public employers can contribute to their employee heath care costs. Ultimately the 4-2 vote was to act now, not later, to impose a cap of 80% on the amount that the AATA will contribute to its non-union employee health care costs.

AATA board member Roger Kerson

AATA board member Roger Kerson argues against immediate action on Act 152, which limits the amount that public employers can contribute to employee health care. (Photos by the writer.)

That action meets the requirements of last year’s state Act 152, signed into law in September 2011, which limits employer contributions to a fixed dollar amount. But Act 152 also allows for the governing body of a public entity – in this case, the AATA board – to vote to cap the employer contribution at 80%, leaving 20% to be covered by employees. And that’s what the AATA board did at its June 21 meeting. Dissenting on the vote were Charles Griffith and Roger Kerson, who felt that the timing was perhaps too early – because the contract for AATA’s unionized workforce goes through the end of the year.

Based on the way that some other transit agencies in Michigan had handled their Act 152 compliance, Griffith and Kerson felt it might be possible to delay action for its non-union staff until AATA was required to act on its union workers’ health care costs. That approach is based on the idea that all employees participate in the same health care plan. However, the advice of the AATA’s own legal counsel was that Act 152 doesn’t explicitly provide for that uniform treatment of employees, just because they participate in the same health care plan.

Kerson urged that the board consider taking the AATA’s “windfall” from its compliance with the state law and reinvesting in non-health care compensation. Just because the state had given public entities a hammer, Kerson said, did not mean that they had to use it against their employees.

In other board action, the expenditure of funds for planning a north-south commuter rail project – from Howell to Ann Arbor, known as WALLY – was authorized. The money had previously been included in the AATA’s approved budget for fiscal year 2012, which ends Sept. 30, 2012. But the board had passed a resolution that requires explicit board approval before the money in the budget could be expended. AATA’s portion of the $230,000 in planning costs is $45,000, with the remainder contributed by a range of other public entities – the federal government, the city of Howell, the Ann Arbor Downtown Development Authority, and Washtenaw County.

Another planning effort that’s moving forward did not appear as a voting item on the agenda, but was included in CEO Michael Ford’s written report to the board: continued study of a possible Ann Arbor transit connector for a corridor running from US-23 and Plymouth southward along Plymouth to State Street and further south to I-94.

The AATA received a $1.2 million federal grant for an alternatives analysis phase of the study – which will result in a preferred choice of technology (e.g., bus rapid transit, light rail, etc.) and identification of stations and stops. That federal grant comes with the requirement of a $300,000 local match, which now appears to have been secured in the form of $60,000 from the city of Ann Arbor; $150,000 from the University of Michigan; and $90,000 from the AATA itself. A feasibility study for the connector has already been completed.

In other action, the board authorized the purchase of five new lift-equipped vehicles for its paratransit service. The five vehicles will replace existing vehicles that have reached the end of their useful life.

Another non-voting item on the meeting agenda, but one that was included in the CEO’s written report, was news of a collaboration between AATA and the Ann Arbor Public Schools. Starting this fall, the AATA will provide transportation for three existing school bus routes – one for each of Ann Arbor’s comprehensive high schools – by extending existing AATA routes. AAPS will pay AATA $0.50 for each student who boards, which will be counted with a pass that can be swiped through the fare box.

80/20 Health Care

The board considered a resolution in order to comply with the Michigan legislature’s Act 152 for non-union employees, which was signed into law on Sept. 27, 2011.

The law limits the amount that a public employer like the AATA can make to its employee’s medical benefits plans – $5,500 for single-person coverage, $11,000 for two-person coverage, and $15,000 for family coverage. However, the act provides another option – under which a public employer can choose through a vote of its governing body (in this case, the AATA board) – to not apply the hard dollar cap. Instead, the employer can limit its contribution to 80% of the medical benefit, leaving the employee to cover the remaining 20%. It’s this 80/20 option that the AATA board exercised in its June 21 vote.

As part of its compliance with the 80/20 provision, AATA put together health plan options for non-union employees that would essentially make their health care costs roughly the same as current costs – if they choose to opt for higher co-pays.

The options outlined for the board by its legal counsel were as follows:

1. Ignore the statute, stand in violation of the law, and continue providing benefits to management employees on a status quo basis (AATA pays 90% of premium, employee pays 10% of premium). (This option is not recommended to the Board).

2. Take the “CATA” (Lansing) approach to the law which is to adopt an exemption for one year for both union and non-union employees based upon the fact that both groups utilize the same health insurance benefit. CATA’s health insurance plan is selfinsured. This benefit is mutually negotiated with the Union, and therefore is temporarily exempt from the effects of Act 152 until January 1, 2013 (this option effectively “kicks the can down the road”). (This option has not been tested, and is not recommended to the Board.)

3. Take “The Rapid” (Grand Rapids) approach to the law which is to go on record that AATA’s 13-C agreement with the Union and the US Department of Labor prevents it from unilaterally making any changes to its health benefits, and since both the union and non-union employees are covered by the same plan, changes cannot be made in it until a new contract is negotiated January 1, 2013. (This option “kicks the can down the road”). (This option has not been tested, and is not recommended to the Board). [Note: Subsequently, it was learned that Grand Rapids has costs that are low enough to meet the fixed-dollar amount cap in Act 152.]

4. Take “The Metro” (Kalamazoo) approach and comply with the law by allowing the “cap” to become effective. This would limit AATA’s annual contributions to employee benefits to $5,500 for single, $11,000 for two persons, and $15,000 for family. (This option would do great economic harm to employees and is not recommended to the Board)

5. Comply with the law, elect the percentage alternative by a majority vote of the Board, and provide the 80% contribution to the employees’ health benefit plan offered by the Authority. Under Act 152, the employee will be responsible for the balance. (This option is recommended to the Board).

Before the board reached the item on its meeting agenda, Charles Griffith had reported from the performance monitoring and external relations committee that the committee had had a long discussion about revisions to health benefits offered to salaried staff. He noted that as a result of Act 152, there’s a cap on the amount that public employers can contribute to employee health care. But there’s an option in Act 152, Griffith explained, to waive the fixed-dollar amount cap and make a 20% contribution to employee health plan coverage.

AATA board member Charles Griffith

AATA board member Charles Griffith.

The committee had looked to some of its “sister agencies” for guidance. Because – like AATA – both union and non-union employees are part of the same plan, some “sister” agencies had delayed implementation, Griffith said. Based on that idea, it was felt they could delay until the unionized workforce adopted a new contract. For AATA, that would translate to Jan. 1, 2013 instead of Aug. 1, 2012.

Griffith also reported that the committee had looked at other public bodies in the Ann Arbor area. They’d concluded that the AATA board, as an appointed board, did not have the ability to waive Act 152 altogether under the statute – which could be done on a 2/3 majority vote. [There was some confusion on the board as to how the city of Ann Arbor had handled Act 152 compliance, but city CFO Tom Crawford confirmed via an email to The Chronicle sent subsequent to the meeting that the city's benefits plan met the hard-dollar cap requirements of Act 152. The city council did not act to waive the requirements of Act 152.]

Griffith indicated that he uncomfortable jumping to the conclusion that the AATA needed to implement the requirements of Act 152 – which reduced non-union employee health benefits by half – as early as Aug. 1.

When the board reached the item on its agenda, Ed Robertson, AATA’s human resources manager, was asked to read the entire resolution into the record, which essentially followed option (5) – the 80/20 option. An alternative resolution, which was not considered by the board, would have delayed compliance with Act 152 until Jan. 1, 2013.

Griffith thanked Robertson and the rest of the staff for helping to find a solution to a problem that the state legislature had imposed on the AATA. The solution put a limit on the disruption of benefits that AATA employees receive. “It’s going to be a hit,” Griffith said. If you took the same health plan they have today, it would mean a doubling of the premiums, he said. Right now, employees pay about 10% of coverage – and this action would raise it to 20%. So what Robertson had worked out was a health care plan that increases co-pays and provides a plan option that’s similar to what they pay today, Griffith explained [Essentially, it's a way for employees to continue to pay the same amount for their health care coverage plan, with the caveat that the coverage plan isn't as good – due in part to the increased co-pays.]

Griffith explained that if the automatic fixed-dollar cap were implemented, that would reflect a four-fold increase in the amount that AATA employees would have to pay. So it’s incumbent upon the board to prevent the automatic fixed, hard-dollar cap from applying, Griffith said. That could be done by implementing the 80/20 option.

The only question, Griffith said was whether to delay the implementation of the Act 152 requirement, until all employees are affected – including the union employees. He based that approach on the way that some “sister transit agencies” have handled the issue. The legal opinion of the AATA’s counsel, Griffith said, is that there’s nothing in Act 152 that would explicitly allow that approach. However, Griffith indicated they’d also heard there’s little evidence that there would be any compliance action taken in the near term. By not taking action that night, it would buy employees another several months of coverage under their current plan, before the board had to take action at the end of the year.

“We’re reluctant to force this on the employees any sooner than we have to,” Griffith concluded.

Roger Kerson noted that the resolution had come from the AATA’s governance committee. The alternative resolution, Kerson said, would have followed the example of the transit agencies in Grand Rapids and Lansing by waiting to implement action until all employees were affected. The thinking was, said Kerson, “If it’s good enough for those guys, why not good enough for us?” In the Grand Rapids case, Kerson allowed, it turned out that the hard cap on dollar amounts was already met. He wasn’t sure why Lansing had taken the action it did.

Basically, Kerson said, the state legislature has imposed a cut in compensation for every public employee in the state of Michigan. What the AATA was doing is offering employees at least a choice of continuing to receive the same health benefit and to pay more for it, or pay the same for the plan, but pay higher deductibles. That’s an approach that is based on the idea that public entities are in trouble because public employees get paid too much, Kerson said, which he characterized as a “blissfully fact-free analysis that’s especially absurd in the context of [the AATA] …”

Kerson noted that AATA had addressed pension liabilities by creating a situation where employees contribute, if the pension fund performs under market. Retiree health care has also been addressed, he said. He said he’s asked the AATA’s auditor if there is some kind of unfunded liability that is being overlooked and the answer has been no, Kerson said. So the state’s “cookie-cutter” imposition of cutting costs is, for the AATA, a solution in search of a problem, Kerson concluded.

What’s on the table, Kerson stated, is whether the “solution” is imposed in August or in January. In any case, Kerson wanted to put on the record that AATA will have a “windfall” as a result of implementing Act 152. There’s no law about what the AATA does with the money, he said. The AATA could put more bells and whistles on the website or more benches in the Blake Transit Center – or the AATA could put that extra money back into compensation for employees. If the AATA did not put the extra money back into compensation, he’d want to know why, said Kerson. He’s more conformable with implementing in January, Kerson said, because that’s more consistent with treating all AATA employees as a team in a fair manner.

AATA head of human resources Ed Robertson.

Ed Robertson, AATA's head of human resources.

CEO Michael Ford and Robertson confirmed that Grand Rapids was initially planning to exempt the non-union contract from Act 152 until the union contract came up for renewal. But after further analysis, Robertson said, it turned out that Grand Rapids was under the dollar amount cap in Act 152.

Sue Gott wanted clarification about the advice of the AATA’s legal counsel. Is there a clear preference between the resolution on the table and the alternative?

Robertson indicated that the AATA’s legal counsel has not seen the alternative resolution, and has given advice based only on the interpretation of Act 152 itself. The AATA’s labor attorney, David Kempner, was out of town that week, but the AATA’s counsel for general issues, Jerry Lax, had gone through Act 152. Robertson reported that Lax felt there’s no legal interpretation that allows the non-union employees to be grouped together so that Act 152 applies to non-union health care benefits only at the point when it applies to union health care benefits.

Kerson returned to his earlier point – that while the AATA’s legal counsel had reached one conclusion, it was not clear why the transit agency in Lansing had reached a different conclusion.

Robertson noted that more information had been obtained from Lansing – that CATA (the Capital Area Transportation Authority) has a self-insured health plan. That meant it’d be difficult to determine if the state’s mandate had been exceeded until the end of the year – because the agency would have to wait until the year’s end, and then charge back to the employees.

Griffith indicated that he was uncomfortable “rushing” to action. He did not have as much information as he’d like about what other public employees in the community are doing.

The other piece of information that the committee had picked up in its discussion, Griffith said, is that there’s no enforcement action that the state has been taking on Act 152. So even though there’s not a special provision that allows AATA to lump all employees together, there’s not clear evidence that any action will be taken. It’d be a matter of accepting some risk to take the step.

Griffith contemplated a friendly amendment to the resolution: If there’s a determination that the AATA cannot consider a change to all employees at the same time, then this change will be imposed when and if that determination is made. Griffith wanted to be on record as supporting the 80/20 approach – when it’s required to do so.

Eli Cooper, an AATA board member and the city of Ann Arbor transportation program manager, asked for clarification about whose opinion it was that had been given to the board – not on letterhead, but entitled, “Compliance with Act 152.” [It included the five points presented above.] He felt that it speaks to options that are not recommended to the board. Robertson indicated to Cooper that he had actually authored the memo, but that he’d written it after consultation with legal counsel. Cooper concluded that he could interpret the memo as AATA staff’s “best understanding of what the authority’s attorney has recommended” – which Robertson said he could.

Gott picked up on Kerson’s idea that the board could take the approach of returning the “windfall” to employees in other compensation, if the board wanted to pursue that. Board chair Jesse Bernstein liked the idea of Griffith’s amendment because it eliminated the risk of being out of compliance resulting in some kind of punishment. He also liked the notion of making employees whole. He suggested that an amendment to the AATA’s resolution be made to use the 80/20 option but also to state that if an employee’s net compensation decreases due to that decreased heath care payment, the AATA would make that up to them.

Bernstein asked Robertson if that made sense from an operational point of view. Robertson called it an “unusual proposition” to be put forth. Robertson also called it possibly a slippery slope. He wondered when the provision about making employees whole would end – because benefits are renewed every year. Robertson ventured that Act 152 is not going away. How you calculate making an employee whole would depend on the level of coverage that an employee chose, he continued. If someone chose the “buy down” option, Robertson said, he wondered if the employee would be reimbursed for the co-pays.

Bernstein called those good questions that Robertson had raised. He suggested that the board should either have an amendment to ask staff to figure out a plan, or have that money set aside. Either way, the AATA needs to protect itself from the liability. He suggested an amendment with the direction to staff to come up with a plan to return the extra money to the employees. Gott called that “a reasonable amendment to put forward.”

Cooper said he found himself falling on the other side of issue. Legal counsel has said the law takes effect upon expiration of a plan, he noted. The law is effective and the legislature has acted, he said. Speaking to the commentary of the city of Ann Arbor’s health care program, he said the city’s program includes a “low” and a “high” benefit that’s similar to the new approach that the AATA is now taking.

As a public employee for over 30 years, Cooper said, the cost of his health care that he pays out of pocket and the amount of coverage he receives has changed annually. At this point, he said, he wanted to separate what the board had to do to be in compliance with the law, and what it chooses to do if there is a “windfall.” Cooper stated, “I want to first and foremost comply with the law.”

He said he’d be voting to support the recommendations that were written in consultation with the AATA’s attorney. The financial implication of the decision should be subject to staff doing the thinking they need to do to bring a bona fide recommendation back. He did not want to do both things at the same time. He’d oppose any amendment to the resolution that contemplates the work of the staff [in coming up with a way to distribute the extra money] in advance of that work having been done.

Bernstein got clarification that Act 152 is already in effect. It affects the AATA on Aug. 1, because that’s when the non-union employees’ health plan gets renewed. For union workers, the contract runs through the end of the year.

Bernstein asked Cooper if he’d be opposed to including an amendment that asks the staff to present the board with a plan to make some kind of compensation to employees with the excess.

Cooper said that the action taken by the board needs to be “clear and crisp” about compliance with the law. The decision that’s made on a budget issue is a separate issue and needs to be treated separately. So yes, he would oppose such an amendment, Cooper said.

Bernstein asked Cooper if he’d be willing to sponsor a separate resolution that directed staff to find a way to compensate staff between now and the end of the year. Cooper responded with a question of his own: Is that the normal process for making amendments to the budget? Cooper felt it’s not the purview of a board member at the table. Bernstein felt that it was within a board member’s purview. Funding has been adjusted periodically by the board, when asked to do so by staff, Bernstein said. Instructing staff to bring the board a plan doesn’t mean the board has to act on it. It just means that it’s a direction the board would like to take.

Kerson ameliorated the disagreement between Bernstein and Cooper by saying that the discussion he’d heard by the board had addressed some of the long-range concerns he had about the issue. He heard clearly amongst board members that “just because the state gave us a hammer to use against our employees, we don’t have to use it.” Kerson said he also appreciated Cooper’s point of view – that compensation is a complex issue and has budget implications. Just as the board should not rush a resolution about compliance, he said, the board should not rush a resolution about compensation – because it could be misunderstood. The sense of the board, Kerson felt, was that if there’s a “windfall” then the AATA ought to think creatively about how to treat employees fairly as a team.

Kerson said he was still not comfortable with the attorney’s recommendation. However, he said he did not mind delaying the direction to staff about how to restore the compensation. He said he appreciated Bernstein’s efforts to tie the two issues together. Kerson felt it was okay if the two things were on separate tracks. He felt it’s clear that, “We don’t want to hammer our employees unless we have to.” Kerson felt like that issue could be put into the committee process and that would be okay. When Kerson indicated he’d vote against the resolution, even with the kind of amendment that Bernstein had described, Bernstein moved the issue to a vote.

Outcome: The board voted 4-2 to pass the resolution adopting the 80/20 approach to Act 152 compliance. Dissenting were Charles Griffith and Roger Kerson. David Nacht was absent.

WALLY: North-South Rail

The board considered authorization of the funds for north-south commuter rail planning that were already part of its approved fiscal year 2012 budget, which runs through Sept. 30, 2012. The total in the line item for the WALLY (Washtenaw and Livingston Railway) is $230,000, of which $45,000 are AATA funds.

Other entities that have contributed money to the WALLY project include: the Ann Arbor Downtown Development Authority ($50,000); Washtenaw County ($50,000); city of Howell DDA ($37,000); and a federal grant ($48,000). The planned expenditures are for station design work and for other consulting work on railroad operations and liability issues.

Ordinarily, the expenditure of funds from the budget would not necessarily need an explicit board authorization. However, in the case of the WALLY project, the board stipulated in a Sept. 15, 2011 resolution that the money designated for WALLY in the FY 2012 budget would not be expended without the explicit consent of the board. [See Chronicle coverage: "AATA on WALLY Rail: Forward with Caution"]

At its April 19, 2012 meeting, the AATA board had already received a written report in its board packet with an eight-page update on the status of WALLY, which is envisioned to provide north-south commuter rail service between Howell and Ann Arbor.

The conclusion of the report was a staff recommendation to expend funds already included in the FY 2012 budget that are designated for the WALLY project.

One of the challenges for WALLY is the cooperation of the Ann Arbor Railroad in the use of the tracks south of roughly Barton and Plymouth roads on the north side of Ann Arbor. Ideally, the commuter service would extend farther south into Ann Arbor. The report contains a description of an Oct. 12, 2011 meeting between Ann Arbor Railroad president Jim Erickson and AATA CEO Michael Ford, when Ann Arbor Railroad expressed continued general opposition to passenger service on its property. However, the meeting offered some possibility that Ann Arbor Railroad would at least work with the AATA on the issue of railcar storage immediately south of a WALLY station. And the report describes Ann Arbor Railroad as willing to entertain a “business proposition.” [.pdf of April 2012 WALLY update]

The resolution considered by the AATA board at its June 21 meeting indicates that the expenditure of the funds for station design should not be analyzed as a commitment to future capital expenses or funding for operations:

AATA makes no commitment to providing either capital or operating funding at this time, and AATA currently takes no position regarding the start date of service due to the uncertainty with respect to funding. AATA will continue to work with MDOT and the local communities to seek and apply for federal funding of the project. Once funding issues are fully resolved, AATA will commit to a service start‐up date.

At the June 21 meeting, board chair Jesse Bernstein asked AATA strategic planner Michael Benham to provide an overview of the board’s previous position on WALLY funds and why the board was voting – so that if people see the vote on the Community Television Network, they’ll know what’s going on.

Benham reviewed the background of the resolution. He said as a result of the Sept. 15, 2011 resolution on the expenditure of WALLY funds, AATA staff had checked with other communities and other organizations to confirm the project’s viability. Benham reported that the Michigan Dept. of Transportation is 100% behind the project. Ann Arbor Railroad, he allowed, is opposed to passenger service on their track, but left the door open to a business proposition that would respond to concerns about liability and passenger safety. Benham said that the AATA considered that positive compared to what they’d been hearing previously. [AARR owns the track from around Barton Road southward into Ann Arbor, so AARR's opposition is significant.]

Of the other communities along the route, Benham told the board, Howell is the most supportive – and has contributed money to the project. Others are less supportive, he allowed – like Genoa Township, which has not taken a position for or against. The AATA is working with Howell to get a presentation before the Livingston County board of commissioners. The funding for the WALLY planning effort is current a mixture of funds granted to the AATA by different bodies: the city of Howell, the Ann Arbor DDA and Washtenaw County. There’s also $48,000 from a federal grant that’s coming through the state of Michigan for station design work. What’s being proposed to expend from the FY 2012 budget, Benham said, is station design work and miscellaneous consulting. [.pdf of June 2012 WALLY update]

Bernstein asked for confirmation that the funds contributed from other organizations were “in hand.” Yes, answered Benham. Roger Kerson got confirmation that the funds “in hand” are not fungible, that is, could not be used for some other purpose by the AATA – a purpose besides WALLY.

Outcome: The board voted unanimously to approve the expenditure of the previously budgeted WALLY funds.

AATA Connector Study

Pending the signing of a memorandum of understanding with the city of Ann Arbor and the University of Michigan, the AATA will be moving ahead with an alternatives analysis of a connector study – for the corridor running from US-23 and Plymouth southward along Plymouth to State Street and further south to I-94. The alternatives analysis phase will result in a preferred choice of technology for the corridor (e.g., bus rapid transit, light rail, etc.) and identification of stations and stops.

That study will move forward, based on a total of $300,000 of local funding that has been identified to provide the required match for a $1.2 million federal grant awarded last year for the alternatives analysis phase. The breakdown of local support is: $60,000 from the city of Ann Arbor; $150,000 from the University of Michigan; and $90,000 from the AATA.

A feasibility study costing $640,000 has already been completed. That study was also funded through a partnership with the city of Ann Arbor, the Ann Arbor Downtown Development Authority, UM and the AATA. Chronicle coverage of that feasibility study includes: “Transit Connector Study: Initial Analysis“; “AATA: Transit Study, Planning Updates“; and “Washtenaw Transit Talks in Flux.”

A total of $1.5 million for the connector alternatives analysis study – of which $1.2 million is a federal grant – is included in the AATA’s capital and categorical grant program, on which the AATA held a public hearing at its June 21 meeting. In November 2011, AATA CEO Michael Ford had updated the board on the possible timeline for the alternatives analysis, saying that phase would take around 16 months.

Outcome: The information was provided in the written report to the board from Michael Ford, which was included in the board’s June 21 meeting information packet. However, it was not an agenda voting item and received no board discussion.

New Lift-Equipped Buses

The board considered the purchase of five new wheelchair lift‐equipped paratransit vehicles for $390,000 from Mobility Transportation Services. These vehicles are to be purchased using federal formula funds with matching funds from the state of Michigan. The vehicles are to be used for the AATA’s paratransit service, which is marketed under the name A-Ride.

After the meeting, AATA manager of maintenance Terry Black told The Chronicle that these are the same vehicles mentioned in the AATA’s capital and categorical grant program. The program, on which a public hearing was held at the June 21 meeting, includes “5 Small Replacement Buses for Paratransit Service” with a federal share of $600,000.

The reduced cost, compared to what had been specified in the grant program, was attributed to the ability of the AATA to purchase the vehicles through the state of Michigan’s MiDEAL program.

At the meeting, Black clarified that the vehicles are replacement vehicles – and those vehicles to be replaced will be sold at auction. They were purchased in 2005, which is consistent with a seven-year useful life. The AATA has looked at options for replacement over the course of the last year, Black said. Those that they’d selected for purchase have a Chevrolet chassis with a 2010 “clean diesel” engine. The body is made by Champion, which is produced in Imlay City, Mich., he said. They will be “lift style” vehicles instead of “low-floor ramp” style, which is what the AATA has currently in service. There’s not a suitable manufacturer that builds a good low-floor model in that smaller-size vehicle. Black reported that the AATA’s local advisory council (LAC) is comfortable with the selection.

Among the options the AATA had explored was alternative fuel vehicles. One manufacturer produced a vehicle that is a hybrid, but that manufacturer went out of business. A natural-gas fueled vehicle was also considered, but that could become a fueling challenge for Select Ride, which is the AATA’s current contractor for its paratransit service.

Sue Gott expressed her thanks to staff for the effort to explore clean-fuel vehicles.

Outcome: The board unanimously approved the purchase of the five lift-equipped buses for paratransit service.

Capital and Categorical Grant Program

On the agenda was a public hearing on the AATA’s capital and categorical grant program – the set of projects and expenditures for which the AATA is applying for federal funding.

Chris White, AATA manager of service development, introduced the hearing, describing it as a required public hearing on a series of applications. He also described it as a culmination of a public involvement process by the AATA that includes the Washtenaw Area Transportation Study (WATS), which conducts a hearing in connection with its transportation improvement program for Washtenaw County. AATA participates in that process, White said. White suggested that WATS is really the place where you can have an effect on transportation, because that’s when planning is being done on projects.

For AATA, the five-year program of capital and categorical projects is developed over several months, from November to January, by the board’s planning and development committee, and all of those meetings are open to the public, he said. [The staff memo accompanying the board packet also notes that the PDC meeting summaries are transmitted to the board as part of the written material provided to the entire AATA board for its monthly meetings, and that material is available on the AATA website.]

That night’s hearing, White said, is the current fiscal year’s component of the five-year program for capital and categorical grants. He characterized it as a very complex program this year – much larger than usual. One of the elements of the program that is published, White noted, is the amount of available funds. White noted that the Section 5307 funds are an estimate, because Congress hasn’t finished the appropriations yet. But he felt it would be pretty close to $6 million. In addition, he said about $4.6 million in funding is carried forward from the previous year.

Saving money from previous years is something AATA does regularly, White explained, so that it can, for example, take care of major bus replacement needs. The categorical funds include about $2 million in clean fuel funds and $2.6 million of a “livability fund” – which covers the five new buses to be used for additional service on Washtenaw Avenue. The “flex funds” from the Federal Highway Administration – about $1 million – will be used for the Blake Transit Center reconstruction. The $1.2 million for “alternatives analysis” is for the connector study, White said. [The area of study runs from US-23 and Plymouth, down Plymouth to State and further southward along State to I-94.]

Designated Recipient: AATA FY 2012
$ 6,000,000  (estimate) Section 5307 Apportionment
$ 4,638,981  Section 5307 Carryover Funds
$ 2,079,000  Section 5309 Clean Fuels Funds
$ 2,625,000  Section 5309 Livability Funds
$ 1,200,000  Section 5316 Alternatives Analysis
$   993,500  Section 330 Flex Funds from FHWA
$17,536,481  (estimate) Total Funds Available


The total program of AATA projects comes to $15.7 million, White said. That program includes: 11 large replacement buses; 5 additional buses for expansion of service; 25 vans for the vanpool program; 5 small replacement buses for paratransit service; computer hardware and software. There are some funds for the bus storage facility and bus hoist project, which the AATA is completing, he said. Money also is included for the downtown Ann Arbor Blake Transit Center.

There’s a small amount of money for constructing and improving pedestrian walkways, White said. It’s a new category for the AAATA, he explained, because the eligibility has been expanded for these types of projects by the Federal Transit Administration. If there’s money left over after buying buses, the amount for pedestrian improvements could be increased, he said. [.pdf of the FY 2012 capital and categorical grant program]

No one spoke at the public hearing.

AATA/AAPS Bus Service

Starting in the fall of 2012, the AATA will provide bus service for three public school routes – one for each of the comprehensive high schools in the Ann Arbor Public Schools system. The AATA service will be provided in lieu of services currently provided for those three school bus routes, for which the AAPS contracts with the Washtenaw Intermediate School District.

The information packet for the AATA board’s monthly meeting on June 21 includes as part of CEO Michael Ford’s written report to the AATA board: “… we have agreed to replace three school bus routes – one from each comprehensive high school – with AATA service. These high school students will use regular AATA service with their fare paid by AAPS.”

AAPS director of communications Liz Margolis confirmed in a telephone interview with The Chronicle that three school bus routes will be replaced with AATA service by extending existing AATA routes: #18 to serve Skyline High School students; #16 to serve Pioneer High School; and #22 to serve Huron High School. The fare, said Margolis, will be paid by AAPS at a rate of $0.50 per ride. The rides will be counted and regulated by issuing swipeable cards to those students who are entitled to use the bus service. The cards can be swiped through the bus fare box when students board.

The regular fare for students on an AATA bus is $0.75. After the June 21 board meeting, AATA manager of service development Chris White explained the lower cost charged to AAPS, compared with the standard fare. For AAPS, a transfer will count as two rides – because of the card swipes that will determine the amount of the payments.

The pending agreement between the AATA and AAPS was noted in The Chronicle’s April 19, 2012 AATA board meeting report. Context for the agreement includes this year’s AAPS budget discussions, which included the possibility of eliminating all busing service provided by AAPS. In the budget finally approved by the AAPS board on June 13, 2012, most of the basic school bus service was preserved. However, some specific transportation services were eliminated, including the midday shuttles for Community High School and some bus stops for Ann Arbor Open.

The AAPS board decided to preserve most transportation services for the coming 2012-13 school year – in part by tapping the district’s fund reserves. The reasoning for that decision was based in part on the concern that the timing of a decision, in May, to eliminate school bus service for the fall would not leave sufficient time for families to plan for contingencies. At its May 23, 2012 meeting, the AAPS board directed the district’s staff to form an ad hoc transportation committee that is supposed to bring forward a recommendation on school transportation in early 2013. AATA’s Ford and other community members will be part of that committee.

Outcome: This was an item of information only, and there was no board discussion of the issue.

Communications, Committees, CEO, Commentary

The board entertained various communications at its June 21 meeting, including its usual reports from the performance monitoring and external relations committee, the planning and development committee, as well as from CEO Michael Ford. The board also heard commentary from the public. Here are some highlights.

Comm/Comm: Special Meeting – July 16

CEO Michael Ford reported that he was requesting a special board meeting on July 16, 2012 to cover a few items: the five-year service program associated with the possible transition to a countywide authority; bus advertising; the relocation of a fire hydrant; and the 2013 work plan. [The board does not typically schedule a monthly meeting in July, hence the need to call a special meeting. The July 16 special meeting is tentatively scheduled for 4 p.m. at the AATA headquarters at 2700 S. Industrial Hwy. ]

Comm/Comm: Countywide Transit – Four-Party Agreement

As part of his verbal report to the board at the June 21 meeting, Ford gave an update on the status of the legal framework under which the AATA could transition into a broader transit authority based on Act 196 of 1986.

By way of background, the most recent session of the Washtenaw County board of commissioners – a June 14 working session at which they did not vote – resulted in a long discussion of the documents that would be used to establish a new transit authority. [For recent Chronicle coverage of that working session, see: "Differences on Countywide Transit Debated"]

County commissioners weighed possible amendments to the four-party agreement and articles of incorporation that are associated with a possible expansion of governance and service area of the AATA. The four parties to the agreement are the cities of Ann Arbor and Ypsilanti, Washtenaw County and the AATA.

The city councils of Ann Arbor and Ypsilanti, as well as the AATA board, have approved the documents.

A committee with representation from each of the parties met the afternoon of June 18. [Members of the committee are: Sabra Briere and Christopher Taylor (Ann Arbor city council); Paul Schreiber and Pete Murdock (Ypsilanti mayor/city council); Conan Smith and Alicia Ping (Washtenaw County board); Jesse Bernstein and Charles Griffith (AATA board); David Read and David Phillips (U196 board).]

At the Ann Arbor city council’s meeting on the evening of June 18, Briere reported on the consensus of the committee. They felt that the possible amendments discussed by the Washtenaw County board would not be brought before the city councils of Ann Arbor and Ypsilanti or the board of the AATA at this time, and that the original language would be allowed to stand.

At the AATA’s June 21 board meeting, Ford confirmed what Briere had reported at the city council’s meeting earlier in the week. Ford also reported that the four-party agreement and the articles of incorporation are scheduled to appear on the Washtenaw County board’s July 11 ways & means committee meeting.

That session, according to one Washtenaw County commissioner, is expected to be a “brawl.”

Comm/Comm: Countywide Transit – U196, Five-Year Service Plan

Board chair Jesse Bernstein reported that progress continues to be made on the possible governance of a new transit authority. The unincorporated board (the U196 board) will not have a July meeting, he said, and that time will be used instead to meet with municipalities throughout the county. A third round of district advisory committee (DAC) meetings is scheduled for August and September. [More information about the U196 board and DAC are on the AATA's Moving You Forward website.]

Part of the possible transition of the AATA to a countywide area of governance and service is the creation of a five-year program of expanded service.

Bernstein asked for an update on efforts to test new routes in the five-year service plan to make sure they’re viable and doable. AATA manager of service development Chris White explained that it’s not just the routes that are tested – it’s all the service components. The scheduled headways and frequencies have to be tested to make sure the various routes can work together as a whole. That testing starts the following week, White said. That same kind of testing will be done with commuter services and with the proposed circulators, White said.

Comm/Comm: LAC

Cheryl Webber gave the report from the AATA’s local advisory council – a body that advises the AATA on issues related to the disability community as well as seniors.

Doug Strong, CEO of the University of Michigan Hospitals and Health Center

Doug Strong, CEO of the University of Michigan Hospitals and Health Centers, at the UM board of regents June 21, 2012 meeting.

Webber reported that they’d received no response from the University of Michigan Hospitals and Health Centers about the need for sheltered walkways from bus stops to medical center facilities.

Although Sue Gott – who is UM’s university planner, and sits on the AATA board – had indicated she’d facilitate a response, Webber reported the LAC had received no response.

The issue also had been raised at the AATA board’s April 19, 2012 meeting. At that meeting, Clark Charnetski reported that the LAC had sent Doug Strong a letter. Strong is CEO of the UM Hospitals and Health Centers. The LAC had inquired about UM’s plans to provide sheltered walkways for riders of public transportation so they can get from bus stops into the medical center. The LAC had not yet received a reply to the letter, Charnetski reported at that meeting, so they’d be sending out a follow-up letter.

In response to Webber on June 21, Gott said she thought that LAC was going to send her the information that had already been conveyed to UM Hospitals. With that information in hand, she said she could facilitate some kind of response.

Comm/Comm: Vanpools

As part of his verbal report to the board, CEO Michael Ford noted that the AATA has now launched its vanpool program, with five vanpools – two originating out of Adrian and three from Jackson.

By way of background, in the vanpool program, the vehicles are owned and maintained by AATA. The vehicle is stored by the driver, who is a member of the vanpool and who does not need to pay for the service. For vanpools that start and end in Washtenaw County, the minimum number of riders in a pool of four plus the driver is charged $99 per rider per month. For 5-6 riders plus a driver, that per-rider cost drops to $79 per rider. Outside of Washtenaw County, the respective rates for different numbers in the vanpool are $139 and $119.

All five vanpools are affiliated with the University of Michigan. Ford reported that the AATA also is working with Zingerman’s to provide vanpool service to its employees. He noted that 20-25 Zingerman’s employees are interested in a vanpool.

Comm/Comm: Internal AATA Organization

In her report from the planning and development committee, Anya Dale noted that the committee had received a presentation from the Generator Group, which is analyzing AATA’s readiness to change as an organization [in the context of a possible transition to a countywide authority].

Board member Anya Dale reports out from the planning and development committee.

Board member Anya Dale reports out from the planning and development committee.

A survey of employees had been completed, Dale said, and there’d been a great response rate. One of the areas of study is employees’ levels of engagement and connection to AATA’s mission. A key finding was that the level of engagement is higher at AATA than other organizations. Board chair Jesse Bernstein asked Dale later in the meeting what was meant by a “high level of engagement.” Dale described that as meaning employees are connected to the overall mission. Bernstein ventured that meant that there’s an alignment of what the board wants to do and what employees believe they should do.

Comm/Comm: Performance Update

Charles Griffith gave an update from the performance monitoring and external relations committee. The AATA is continuing to show increased ridership on the fixed-route service, but he said it’s still a bit down for the demand-response service. The operating expenses per passenger are up, Griffith said, because the AATA has added service [along the Washtenaw Avenue corridor]. It’ll take a while for operational expenses to catch up, he said. Overall, the committee is feeling good about performance levels, Griffith concluded. [.pdf of June 2012 performance report]

Present: Charles Griffith, Jesse Bernstein, Eli Cooper, Sue Gott, Roger Kerson, Anya Dale.

Absent: David Nacht.

Next meeting: A special meeting has been requested for Thursday, July 16, 2012. The tentative location and time are: 4 p.m. at the AATA headquarters at 2700 S. Industrial Highway. [confirm date]

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One Comment

  1. By Jack Eaton
    June 25, 2012 at 2:06 pm | permalink

    For those unfamiliar with transit funding issues, the reference to the “13-C agreement” in the list of options available to AATA regarding its P.A. 152 duties refers to what was Section 13 (c) of the original Urban Mass Transit Act of 1964. That clause of the statute requires that recipients of federal transit funding certify their ability to continue the collective bargaining rights of their employees as a condition of receiving federal funds. The Section 13 (c) requirements now appear in 49 U.S.C. Section 5333(b).

    Under the requirements of the statute, transit systems have agreements with the unions representing their employees that provide minimum labor protections for the employees. It is generally recognized that the employees must retain the collective bargaining rights they possessed when federal funding first became available to the local transit operation. See, Amalgamated Transit Union v. Donovan, 767 F.2d 939, 947-949 (D.C. Cir. 1985). While a state is not precluded from making changes to its collective bargaining laws, those changes may impact the ability of the local transit operation to continue receiving federal funds.

    The Michigan legislature has passed a series of laws that diminish the ability of Michigan transit operators to certify compliance with their bargaining obligations. PA 54 affects the ability of transit agencies to maintain the status quo between contracts. PA 4 (the emergency manager act) has the potential to eliminate bargaining for affected transit employees. And, PA 152 diminishes the ability of transit unions to bargain employee health insurance contributions.

    An attempt to comply with the PA 152 limitation on union employee health insurance contributions may cause the U.S. Department of Labor to withhold its certification that AATA has complied with its section 13 (c) obligations.