Comments on: Council Audit Committee to Strengthen Role it's like being there Tue, 16 Sep 2014 04:56:38 +0000 hourly 1 By: Dave Cahill Dave Cahill Tue, 05 Feb 2013 14:19:25 +0000 Thanks! I see it is also in yesterday’s Civic News Ticker.

By: Dave Askins Dave Askins Mon, 04 Feb 2013 23:59:16 +0000 Re: [11] [.pdf of revised letter]

By: David Cahill David Cahill Mon, 04 Feb 2013 22:55:42 +0000 Dave Askins, could you please post a link to the auditor’s revised opinion? I have seen a reference to it in other media, but not the entire document.

Of course, I could have missed this link in all the l-o-n-g comments….

By: Alan Goldsmith Alan Goldsmith Wed, 30 Jan 2013 16:21:20 +0000 “I was rather disappointed at the Ryan Stanton article in which seemed to be one-sided in trying to exonerate Postema.”

Quite the understatement concerning this reporter’s journalism. It’s what he does for anyone in power. The Mayor, the City Attorney, SPARK officials, and pretty much anyone in power gets a free pass or a passionate defense. Not sure what motivates him but obviously creating investigative reporting isn’t it. Good lord, he was ‘explaining/defending’ local Democrats who contributed to Rick Snyder’s campaign for Governor and their motives in a response to my post on

By: Jack Eaton Jack Eaton Wed, 30 Jan 2013 16:01:50 +0000 Re: (8). “Mr. Askins claims that someone might try to distinguish mileage from travel.”

Actually, the City’s practices and the conduct of the City Attorney distinguish mileage reimbursement from travel expense reimbursement.

Travel expense reimbursement it acquired through submission of the travel expense form. Mileage reimbursement is obtained by simply using a computerized request. Separate methods for different kinds of reimbursement.

When the City Attorney submitted his reimbursement request through the computerized request system, he was identifying that kind of reimbursement, rather than a travel expense. He could have used the travel expense form to seek reimbursement for just the cost of his fuel, but instead sought the higher level of reimbursement represented by the mileage claim.

By: Dave Askins Dave Askins Wed, 30 Jan 2013 04:44:21 +0000 “Mr. Askins claims that someone might try to distinguish mileage from travel.”

This is was not a “claim” but rather a description of the simple fact that someone (an elected official) actually did draw this distinction and voiced it during a public meeting – based presumably on her experience and training as a certified public accountant, review of the facts, and discussions with the city’s auditor.

Based on my conversations with accounting professionals on this issue, the distinction between mileage and travel is apparently so commonly made in the field of accounting that it’s taken as axiomatic. That’s consistent with the observation of the auditor, who characterized the idea of allowing employees with vehicle allowances to be reimbursed for mileage as “illogical” – either with or without a written policy. If we granted hypothetically that Postema’s contract justified simultaneous payment of vehicle allowance and mileage reimbursement, I think we would still be left with the conclusion that the contract ensconced an illogical state of affairs. But I suppose it wouldn’t be unprecedented that a legal contract ensconced an illogical state of affairs.

Note that the fact that Postema’s vehicle allowance was a part of his compensation package does not deepen our understanding of the contractual question: Was the vehicle allowance: (1) an arbitrary label as part of a compensation package, unrelated to the need of a person in that position to operate a personal vehicle on city business, or (2) a part of the compensation package that was intended to cover the additional gas and wear and tear on a personal vehicle that necessarily comes with the duties of the city attorney, which include defending the city in lawsuits in courts of relevant jurisdiction throughout the region?

Simply stating that the vehicle allowance was a part of the compensation package is not an argument for (1). In the public sector, the most natural interpretation of Postema’s compensation package was that he received a vehicle allowance to cover increased gas costs and depreciation to his personal vehicle associated with his duties as city attorney, and that he was entitled to other “travel” expenses in the event he actually “traveled” in the sense of the IRS standard of needing to be away for more than an ordinary working day. For example, if he needed to fly or take a train to Chicago to argue a court case, then the “travel” clause in his contract would cover that.

If you wanted to make an argument for (1) – that the contractual vehicle allowance truly was meant to provide an outright perk as Kunselman described it (that could just as well have been labeled “boat allowance”) – then here’s one way to approach it: Look at the specific geography of Ann Arbor and relevant courts. First, if the contractual vehicle allowance was intended to cover the increased wear and tear and the gas expenses on a personal vehicle for Ann Arbor’s city attorney, then it’s fair to ask how much extra gas and wear and tear there’d plausibly be for Ann Arbor’s city attorney. Well, the two main courts are one block away from city hall, where the city attorney has his office (15th District Court and 22nd Circuit Court). So that’s a zero impact. On Election Day this particular city attorney visits most of the polling stations in the city (as a member of the election commission) – so for maybe two days a year, there’s extra driving within the city. But overall, so the argument would go, there’s no way Ann Arbor’s city attorney would need a vehicle allowance as high as $330/month to anticipate that minimal additional wear and tear and gas. If it didn’t need to be anywhere near that high to cover actual additional costs, so the argument would go, the vehicle allowance was not actually for those additional costs. That means the vehicle allowance must have been included in the contract as an arbitrary label, unconnected to any actual driving need, and could in fact be used simply to acquire a somewhat nicer vehicle than the city attorney could otherwise afford, and would not disqualify mileage claims.

A counter to that argument would be that while the location of the local courts results in no additional driving by the city attorney, there are courts of relevant jurisdiction in Lansing and Detroit where Ann Arbor’s city attorney would reasonably be expected to appear at least a few times a year, so the vehicle allowance could reasonably have been included in the contract at that level to accommodate some unpredictable number of trips to those locations – with the idea that those additional expenses would be covered by the contractual vehicle allowance – to relieve the city attorney from a need to submit mileage reimbursement claims for essentially trivial amounts of money compared to his overall compensation.

There’s a sense in which Postema can assign his own interpretation to “vehicle allowance” in his former contract, and if the council as a group were to disagree, then the contract language would not reflect a true “meeting of the minds” on that issue, which would have legal implications for the status of the contract.

The fact that Postema no longer has a vehicle allowance in his contract eliminates this question of inappropriate mileage claims in the future. And as far as rummaging around in the bowels of the former contract, the elected officials of the audit committee, except perhaps for Kailasapathy, demonstrated no interest in doing that.

Finance Man, if you’re not content that the audit committee has asserted with sufficient clarity its collective view on the contractual issue, or if you feel that the council as a body should make explicit through a resolution what is already implicit in the rewording of the auditor’s letter – that Postema’s mileage claims were not inappropriate – then I’d recommend you weigh in with your elected representatives to convince them to do that.

By: Finance Man Finance Man Wed, 30 Jan 2013 02:09:44 +0000 Mr. Askins, thank you for pointing out where the actual policies are, as I missed the location within the quote. Perhaps a direct link might help others not make my mistake.

Mr. Eaton, you are right that there is really nothing left to debate on the issue of the reimbursement and car allowance issue. They are clearly both provided for by City Council in his contract.

Mr. Askins claims that someone might try to distinguish mileage from travel. However, the City policies do not. APR 505, for example, refers to mileage reimbursement for “authorized business travel.” Mileage reimbursement is to pay for one of the expenses of travel. Moreover, now having read the entire one page APR 505, it is clear that this APR has no such limitation as a required “overnight stay.” If that is what was wanted, the policy for mileage reimbursement for authorized business travel would had had this language in it: “Mileage reimbursement under this policy will not be provided unless the travel is done in connection with an overnight stay.” And of course, mileage reimbursement would be at the IRS rate. This is the proper way to do it under the City policies.

Wishing the contract and policies were different do not make them different than they currently are. Therefore, under the circumstances, it seems appropriate to apply some perspective here, particularly given the additional facts that are set forth in the article (and comments) that Mr. Koroi references (and thanks for directing us to this article.): First, that the car allowance is part of a total compensation package, but that the car allowance likely is not included in any pension calculation. So it made sense from the beginning for the City to provide. Second, that one of the court cases actually involved the defense in an out of state court of a 30 million claim against the City. (The above comment only mentions a Lansing case, perhaps because no overnight stay was involved.) Third, that the City Attorney (according to Mr. Crawford’s report) may not have even requested all of the travel expenses he was entitled to related to these travels.

By: Mark Koroi Mark Koroi Tue, 29 Jan 2013 21:11:19 +0000 @Jack Eaton:

Very good points.

Patricia Lesko on her blog has an interesting in-depth article on the Stephen Postema mileage controversy and posted some recent developments as a supplement in response to my observations. She has been critical of Postema regarding these matters.

I was rather disappointed at the Ryan Stanton article in which seemed to be one-sided in trying to exonerate Postema.

By: Jack Eaton Jack Eaton Tue, 29 Jan 2013 15:51:50 +0000 I am dismayed by the need to debate the issue of car allowances and millage reimbursement. This seems so very much like the expense issue County Board of Commission Member Conan Smith became entangled in. This, too, is about a rather insubstantial amount of money but a rather clear question of propriety. When will public officials learn that they can disagree, but simply reimburse the challenged amount so as to end the conflict. It is the petty, self-righteous conduct that does the lasting harm to public trust, not whether you are right or wrong.

I would be interested in how much the City reimbursed the City Attorney per mile for his travel. The IRS allows an employer to reimburse an employee at the rate of $0.565 per mile for business related travel. A car that gets 30 miles per gallon does not require $16.95 (30 miles times $0.565) just for gas. That reimbursement rate provides for more than just the cost of fuel. It is meant to address the depreciation, maintenance and other costs of owning a vehicle.

A City employee’s car allowance likely is provided to offset part of the employee’s cost of owning a car that he or she may use in the performance of the job. The employee’s use of his or her car impacts its depreciation and maintenance costs.

If the employee’s vehicle allowance is meant to offset depreciation and maintenance costs, among other things, then it is inappropriate for the employee to also seek the full IRS rate of mileage reimbursement. The employee would be collecting twice for the built-in costs of having a car.

It is pretty clear that the City’s policies also draw a distinction between travel expenses and mileage reimbursement. For example, the City Attorney did not file a travel cost reimbursement form, he submitted a computerized mileage request. On the travel form, he could have requested just the cost of fuel. Through the mileage request he received the broader reimbursement of total cost of operation of the vehicle.

It is my understanding that prior audits have identified similar problems with employee reimbursements and that staff previously promised to address the problems. More troubling, the fiscal year ended June 30, 2012. Likely, this issue came to light in July or August. The City Attorney was offered a contract without a vehicle allowance and Council was not informed of this issue when it was asked to approve that contract.

I understand the desire to focus on the application of policies in the future rather than dwelling on past actions. I fear that simply accepting this behavior will send a signal to City employees that there will be no accountability. I applaud Council Member Kailasapathy for insisting on higher standards than “business as usual”.

By: Dave Askins Dave Askins Tue, 29 Jan 2013 02:41:43 +0000 Re: [2] “As someone who works in finance, I find lack of clarity in your article. I suggest that linking the applicable policies …”

The article contains a link to [.pdf of Crawford's written response] which actually includes the policies in their entirety.

While the attorney’s contract allows for “travel,” I understand Kailasapathy’s point to be that there’s a legitimate distinction to be made between “travel” and “mileage” reimbursements. In context, the contractual language is reminiscent of the IRS code, which for “travel” includes distances ordinarily associated with an overnight stay or require you to be away from home for substantially longer than an ordinary day’s work.

Re: “The best way to look at this is: Would a person without a car allowance be able to justify the questioned mileage reimbursements under the language of the current City policies as an authorized travel expense?” And that is, I think, exactly where Finance Man and Kailasapathy might disagree, particularly on the 65-mile trip to Lansing. In the city administrator’s view, as reported in the previously published article, the key is that the trip went outside the “immediate vicinity” and that it crossed county lines, and was thus an appropriate reimbursement. So the city administrator, like Crawford, didn’t find the threshold of an overnight stay to be a deciding factor.