Compensation Change for County Board?

As part of their upcoming vote on the 2013 budget, Washtenaw County commissioners are considering possible changes to their own compensation. The issue will likely be addressed initially at the county board’s only meeting in November, one day after the Nov. 6 election.

The topic was brought up at an Oct. 18 working session, which was attended by county clerk Larry Kestenbaum at the invitation of board chair Conan Smith. Kestenbaum’s office is responsible for administering the requests for per diem and mileage payments that commissioners make for attending certain meetings.

During that working session, Smith indicated there had been a number of recent conversations about commissioner compensation, and that he might bring to the Nov. 7 board meeting a proposal about possible changes.

No public discussion of this issue has taken place by the board of commissioners since the spring, when Dan Smith brought forward a proposal in March to cut commissioner compensation and benefits for 2013 and 2014 – by 5.7%. His intent was for the board to vote on a change before the May 15 filing deadline for county board candidates, so that candidates would have a clear understanding of their compensation before entering the race. His proposal gained no traction among other commissioners at the time.

Based on comments by Conan Smith at the Oct. 18 working session, he’s exploring the idea of replacing the current per diem system – which requires that commissioners submit a request for payment – and instead paying commissioners an automatic stipend as part of their compensation. Per diems came under fire during the 2010 election season, and resulted in repayment – by most commissioners who were on the board at that time – of a portion of their per diem requests that were determined to be ineligible under board rules.

The determination had come from an independent review conducted at the direction of the county administrator. In gathering background on this topic, The Chronicle learned that Conan Smith and Kestenbaum later struck an agreement under which Smith agreed to repay some of the money he had been deemed ineligible to claim, in an arrangement that appears to have taken place outside the independent review process.

When asked by Conan Smith at the Oct. 18 working session for his opinion on the issue of stipends, Kestenbaum was supportive of the change to stipends, describing the current system as a lot of bookkeeping for a small amount of money. He also observed that the approach of having stipends would eliminate the kind of political vulnerability that commissioners have experienced.

Board Compensation: Background

The process for setting compensation for county commissioners is governed in part by state law – Act 261 of 1966, Section 46.415. Changes for an upcoming term must be set by the board prior to the start of that term. So for the two-year term beginning in January 2013, any changes in compensation must be made before the end of 2012. The board has two more scheduled regular meetings this year – on Nov. 7 and Dec. 5.

The line item for the board of commissioners is a relatively small percentage of the county’s general fund budget of nearly $98 million. In the county’s 2012 general fund budget, the line item for commissioners is $505,664. That includes $176,005 for salaries, $55,000 for fringe benefits, and $39,050 for “flex accounts.” Fringe benefits include $1,163 that the county pays into a retirement account for each commissioner, as well as payment of 50% of health care insurance if the commissioner chooses to obtain health care through the county as a part-time employee.

Other major expenses for the commissioners’ budget include $55,150 for consultants and other contracts, and $32,597 in dues for state and national county associations. The $505,664 line item for the board also includes $104,602 for a “cost allocation plan” (CAP). The CAP is a charge that’s levied on each county unit, designed to cover general costs like administration, technology, building use, and insurance, among other things. It’s intended to reflect the county’s true cost of doing business.

Seven of the 11 commissioners are paid a salary of $15,500. Officers of the board earn more. The board chair, Conan Smith, is paid $18,500. The board vice chair, Alicia Ping, earns $16,000, while chairs of the board’s ways & means committee (Rolland Sizemore Jr.) and working session (Yousef Rabhi) are each paid $16,500.

All commissioners also have a $3,550 flex account to use for per diem and mileage reimbursements, training or other authorized expenses. For example, a per diem of $25 per authorized meeting is allowed, as is mileage driven to those meetings – at a current rate of $0.555 per mile. Some commissioners don’t use their flex accounts, however, and most don’t use the entire amount. The payments are administered through the county clerk’s office. [.pdf file of flex account rules]

A spreadsheet of 2012 payment requests from flex accounts through early October shows that only five of the 11 commissioners have tapped those accounts: Barbara Bergman ($925 in per diem, $351.88 in mileage); Felicia Brabec ($675 in per diem, $209.79 in mileage); Wes Prater ($800 in per diem, $529.47 in mileage); Yousef Rabhi ($150 in per diem, $67.94 in mileage); and Rolland Sizemore Jr. ($375 in per diem, $275.28 in mileage). [.xls spreadsheet of 2012 per diem and mileage requests] [Google spreadsheet of same data]

The administration of per diem and other compensation is governed by the board’s rules and regulations. [.pdf of county board rules & regulations]

Board Compensation: Background – Per Diem Controversy

Commissioner compensation became an election issue in 2010, when local attorney Tom Wieder charged that then-commissioner Mark Ouimet and others were inappropriately reimbursed for per diem and mileage, and that they should repay the county. Wieder raised this issue at an Oct. 6, 2010 board meeting, during Ouimet’s ultimately successful campaign for state representative in District 52. Ouimet, a Republican, was running against Democrat Christine Green. Wieder was one of Green’s supporters.

A review of the payments was conducted for all commissioners, including an initial report by county clerk Larry Kestenbaum presented to the board on Oct. 20, 2010. It was found that several commissioners – including Ouimet – had been reimbursed for amounts to which they weren’t entitled, based on board rules. An independent audit was later conducted at the direction of the county administrator, and resulted in identifying overpayments for 10 of the 11 commissioners. [Ronnie Peterson did not make any requests for per diem or mileage payments.] The overpayments ranged from a high of 14,385.88 by Ouimet to a low of $25 by Kristin Judge and Leah Gunn.

Most of the commissioners repaid those amounts relatively soon after the audit was completed. But Wieder returned to the board during public commentary on March 2, 2011 to note that some commissioners still hadn’t repaid the county: Democrats Barbara Bergman ($1,875.33) and Conan Smith ($591.39), and former commissioners Jessica Ping ($5,002.68) and Ken Schwartz ($1,054.60). [Ping, a Republican, did not run for re-election in 2010, and Schwartz, a Democrat, was defeated by Republican Dan Smith in the November 2010 general election.]

Bergman subsequently made a repayment, as did Smith. Smith’s repayment came only after he took an adamant initial position against repaying, which he maintained at least through June 30, 2011, as he announced that he would be seeking re-election in 2012. He wrote a lengthy post on his Facebook page describing his reasons for not repaying the money deemed ineligible by the independent reviewers. An excerpt:

… paying the consultants’ assessment would essentially be an admission of guilt. Those of you who know me know that I am never hesitant to admit when I’ve made a mistake and I’m quick to rectify it if I can. In this case, the mistakes were made by others.

At that time, Smith refused requests by The Chronicle to be interviewed on the topic, and deleted one such request from his Facebook page. However, Smith wound up repaying money, though he paid a lower amount than the independent reviewer had deemed ineligible –  $175 compared to the $591.39 he was originally deemed to have owed.

A letter dated Jan. 11, 2012 and signed by Smith and Kestenbaum, also a Democrat, stated that some of the payments that were previously deemed ineligible were reviewed again and found to be eligible. [.pdf of letter] The letter also included this statement:

It should be noted that all of the meetings deemed ineligible occurred during the Commissioner’s first year of service. The current per diem processing system is designed to prevent simple clerical mistakes. It seems that had this system been in place in 2005 then the Clerk’s office would have worked with the new commissioner to determine which meetings he was eligible for and the commissioner would not owe the County any money.

Once Commissioner Conan Smith pays the per diems deemed ineligible then it will be the opinion of the Clerk that this matter is settled. Meetings were only declared eligible if it was proven that Commissioner Conan Smith was in attendance per his role as a County Commissioner. This is the same standard that is applied to per diems currently.

Board Compensation: Background – Previous Attempts to Cut

The issue of per diem payments – as well as the county’s overall budget crisis – were factors in previous efforts to make cuts to commissioner compensation. At the board’s Nov. 17, 2010 meeting, Leah Gunn had floated a resolution to abolish all per diem, mileage and travel payments, but it failed to secure enough votes to pass.

At the board’s last meeting in 2010, a resolution that would have cut flex accounts for commissioners from $3,550 annually to $1,500 wasn’t even brought forward for a vote, though Conan Smith had circulated a draft of the resolution via email. He said he decided not to introduce it because after talking to individual commissioners before the meeting, it was clear that he couldn’t marshal enough votes to get it passed.

More recently, earlier this year Dan Smith made another attempt to address commissioner compensation. He brought forward a proposal in March to cut compensation and benefits for 2013 and 2014 by 5.7%. His intent was for the board to vote on a change prior to the May 15 filing deadline for county board candidates, so that candidates would have a clear understanding of their compensation before entering the race. [.pdf of Smith's proposal]

Smith’s proposal called for an increased base salary of $16,250 per commissioner, but the county’s pension contribution would be eliminated. Each commissioner would also receive $2,813 in optional benefits, including a county pension match of $813 (5% of their salary), $1,000 for education and training, and $1,000 for stipends to replace mileage and per diem payments. Overall, the proposal would have cut total compensation by 5.7% per commissioner – from the current $20,213 to a proposed $19,063.

Smith stated at the March meeting that he hoped to get feedback from commissioners and make a formal resolution in April. There was no additional discussion at the March meeting from others on the board, however, and Smith did not bring forward a formal resolution.

Possible Changes to Compensation

Within the past few weeks, several options for compensation changes have been floated among commissioners – though none have been presented at a public meeting. [.xls spreadsheet of compensation options] [Google spreadsheet of same information]

In response to a request from The Chronicle, Kelly Belknap, the county’s finance director, emailed a spreadsheet of the 2012 budget for commissioners and the proposed 2013 budget, which will require approval by the board. The proposed  total budget for commissioners shows a 2.5% decrease from $505,664 this year to $492,623 in 2013. [.xls spreadsheet of proposed budget for board of commissioners] [Google Spreadsheet of same information] The vote on the budget for commissioners would come in the context of approval of the overall 2013 general fund budget.

The number of commissioners will decrease as of Jan. 1 – from 11 to 9, due to redistricting – but the total amount budgeted for salaries in 2013 shows a slight increase from $176,005 in 2012 to $176,684 in 2013. Belknap pointed to a separate line item labeled “personnel adjustment” of negative $21,499 as part of the accounting for fewer commissioners, adding that the administration didn’t want to make any final assumptions about personnel funding until after the Nov. 6 election.

At this point, the amount allocated for flex accounts is unchanged at $39,050, according to the spreadsheet. If divided evenly, that means each individual commissioner would have a higher flex account available of about $4,338 compared to the current $3,550.

Fringe benefits are set to increase from $55,000 to $60,000. In part that reflects increases in health insurance, according to Belknap. Because they are considered part-time employees, commissioners can get health insurance through the county, with the county paying 50% of that cost. Belknap noted that not all funds are used from the board’s budget – for example, if commissioners don’t use their flex account funds or health insurance benefits. Any unused funds at the end of the year are transferred back as revenues for the general fund.

All of these budgeted amounts for 2013 are still tentative, and could change depending on budget amendments that might be brought forward by commissioners on Nov. 7.

Based on a discussion at the board’s Oct. 18 working session, commissioners also might vote to replace their per diems with stipends. That means commissioners would automatically receive a stipend payment for meetings that they are currently authorized to receive a per diem for – if and when they request a per diem payment. With stipends, they wouldn’t need to submit a claim for payment, although they would likely be able to waive the entire stipend amount for the year, if they chose to do so.

Conan Smith had invited county clerk Larry Kestenbaum to attend the Oct. 18 working session to discuss the issue. Saying that Kestenbaum is intimately familiar with the strengths and weaknesses of the per diem compensation – because the clerk’s office administers the per diem and mileage payments – Smith asked for Kestenbaum’s opinion of replacing per diems with stipends.

Kestenbaum was generally supportive of the change. The current system requires a lot of bookkeeping for a small amount of money, he said, and he’d be in favor of any way to reduce or eliminate this “rigmarole” of paperwork. The board would need to clearly establish which committee appointments would qualify for a stipend payment, he said. But overall, the approach would eliminate the political vulnerability for commissioners, he noted, including their vulnerability to public opinion of payments that can be scrutinized. There would be no more dispute about it. ”The simpler we can make it, the better,” Kestenbaum said.

Dan Smith wondered about the feasibility of expanding the approach to appointed boards, commissions and committees that also receive per diem payments, like the Washtenaw County parks and recreation commission. That might be something to consider in the future, he said. Kestenbaum replied that the idea hadn’t occurred to him, but if there were a simple way to do that, it might be a step forward.

On the issue of instituting stipends versus per diems, Wes Prater wondered how they’d handle the potential situation of someone not attending meetings. They’d still receive the stipend – which wouldn’t be the case if they were being paid a per diem. “I think that comes into play also,” Prater said.

Yousef Rabhi, who chairs the board’s working sessions, said there needs to be a broader discussion about this issue, but at another time. The working session’s agenda did not actually include this topic – the board was being briefed on local educational issues, including the proposed consolidation of Ypsilanti and Willow Run school districts.

Conan Smith wrapped up the discussion by inviting Kestenbaum to attend the board’s Nov. 7 meeting to give additional input. Kestenbaum indicated he’d be happy to do that.

Present: Felicia Brabec, Wes Prater, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, Dan Smith, Rob Turner.

Absent: Barbara Bergman, Leah Gunn, Ronnie Peterson, Alicia Ping.

Next regular board meeting: Wednesday, Nov. 7, 2012 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to 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 commentary is held at the beginning of each meeting, and no advance sign-up is required.

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