County Board Sets 2014-2017 Budget Priorities

Washtenaw County commissioners have adopted four priorities to guide the administration as the staff develops a budget for 2014-2017. The priorities, voted on at a special meeting on July 24, 2013, are weighted in order of importance:

  1. Ensure a community safety net through health and human services;
  2. Increase economic opportunity and workforce development;
  3. Ensure mobility and civic infrastructure for Washtenaw County residents;
  4. Reduce environmental impact.

The vote was 6-1, with dissent from Dan Smith (R-District 2), who indicated that his No. 1 priority is long-term fiscal stability, followed by public safety and justice. Rolland Sizemore Jr. (D-District 5) was out of the room during the vote, and Alicia Ping (R-District 3) was absent.

The July 24 meeting also included an update from county administrator Verna McDaniel about the county’s current financial condition and preliminary projections for 2014. At her last presentation – on May 15, 2013 – McDaniel told commissioners that the county needed to identify $6.99 million in structural reductions for the 2014 budget. The approach to addressing this $6.99 million target depended on whether the county moved ahead with a major bond proposal to cover obligations to retirees, she said at the time. That bond proposal was put on hold earlier this month.

Now, the projected general fund shortfall is $3.93 million, which McDaniel indicated will come primarily from operating cost reductions ($3.83 million) as well as $100,000 in cuts to funding of outside agencies, including support for nonprofits. The lower shortfall resulted from a decision not to make a $1 million contribution to the general fund’s fund balance, as well as $2.4 million in higher-than-previously-anticipated revenue. McDaniel noted that if the county had chosen to bond, then the target for operational cuts would be $1.83 million, and the fund balance contribution could be made. She also noted that the general fund budget doesn’t factor in serious state and federal cuts to non-general fund programs. “Revenue is needed,” she said. “We need to figure that out.”

Although the upcoming budget has been an underlying topic of discussion throughout the year, three meetings have been focused primarily on that issue: budget retreats on March 7, 2013 and May 16, 2013, and a July 11, 2013 working session. The four budget priorities were distilled from those conversations, according to the resolution passed on July 24. [.pdf of budget resolution] [.pdf of budget memo and supporting materials]

The resolution also “directs the Administrator to lead a structured and transparent process by which the Board, representatives from throughout the organization, and community partners engage collaboratively to develop a balanced budget proposal that (1) aligns the organization’s programs and services with the Board’s four priorities, and (2) includes a summary set of ‘community outcomes’ that declares benchmarks related to the Board’s priority areas.”

The board has named the framework for this budget decision-making process: “Community Impact Investing.” Part of the framework includes six “decision-making principles” that commissioners are asking staff to use in developing the budget. Those principles are:

  1. impacts and outcomes drive investment priorities;
  2. services are delivered optimally by the right provider, social and financial returns are calculated and articulated;
  3. programs are evidence- and performance-based;
  4. mandates that support outcomes and impacts are better funded;
  5. the excellence of the County’s internal workforce is foundational;
  6. programs and services should be encouraged to achieve the triple bottom line of financial returns on investment, contribution to social equity, and reduction of environmental impact.

Commissioner Felicia Brabec (D-District 4), who’s leading the budget process for the board, described this approach as “both a policy and a paradigm shift” that can’t happen overnight, but one that’s critical for the county’s future. The board is forming work groups focused on each of the four priorities, as well as on the topic of human resources. Each work group will consist of at least one commissioner, county staff and community partners. They’ll be meeting to develop up to five “community impact” goals in each category, in work that’s expected to continue into next year. The goal is to continue engaging commissioners and others in the budget process in an ongoing basis.

McDaniel plans to present the 2014 budget to the board at its Oct. 2 meeting. Commissioners are required to adopt a balanced budget for 2014 by the end of 2013. At its May 1, 2013 meeting, the board had approved development of a four-year budget. However, commissioners have not yet decided whether to actually adopt a budget with that four-year horizon, and some commissioners – notably Ronnie Peterson (D-District 6) – have expressed skepticism about this longer-term approach. For the past few years, budget plans have been developed for a two-year period, though the board must confirm the budget annually.

The upcoming budget will also be prepared without a major bonding initiative that until earlier this month was anticipated to occur later this year. Publicly proposed in May of 2013, the bonding was intended to cover unfunded pension and retiree healthcare obligations – for the Washtenaw County Employees’ Retirement System (WCERS) and Voluntary Employees Beneficiary Association (VEBA). The original maximum amount for the bonds had been estimated at up to $345 million. But updated actuarial data resulted in a lower estimate of about $295 million.

However, on July 3, McDaniel and board chair Yousef Rabhi (D-District 8) issued a joint statement announcing a decision not to put bond-related action items on the July 10 agenda, when initial votes had been anticipated. They cited the need to address unanswered questions, including uncertainty about the state approval process. No date has been set to reschedule action, if any, on the bond proposal. During the July 24 meeting, commissioner Conan Smith said it’s unlikely that bonding could occur this year, although he’s supportive in general of taking that approach.

This brief was filed from the boardroom of the county administration building at 220 N. Main. A more detailed report will follow.