I’m gonna level with you: I’m writing this because I need $150 this month.

David Erik Nelson

Here’s the situation: My Lovely Wife is a dirty rotten greedy school teacher. In order to teach her (and her cohort) a valuable lesson, the state – on your behalf – is giving no cost-of-living wage increases for the foreseeable future, moving no one up in seniority for at least two years [1] (thus stalling everyone’s progress toward tenure, which the legislature is hot on killing anyway), and forcing teachers to cover an additional ten percent of their healthcare costs.

In our case, as a family of three (with one more on the way – more on that below), this means that her pay is going down $150 per month and her benefits being decreased, even as her workload increases.

That’s because staff has been cut to the bone – example: last week she worked a 14-hour day with one brief break. That’s not “8 hours, plus commute, plus grading while sitting on the sofa at home, rounded up.” She worked 14 hours in the school building in almost constant contact with students, staff, or parents.

Fortunately for us, while my Better Portion has a fixed wage (she being on an annual contract), I’m a freelancer; if her salary takes a hit or our expenses pop up, I hustle for more work to close the gap. Over the past four years, almost all increases in our expenses have been covered by expansions in my hustle, because, you know, she’s a dirty rotten lazy school teacher and needs to be put in her place.

When presented with this $150 gap, I contacted the publishers of This Fair Periodical of Note.

I made the following pitch to The Chronicle:

I want to write you a column because I need $150 per month. For the purposes of this project, I am an honest capitalist living in a consumer democracy. I will happily exchange a good (this column) and a service (whatever I pitch in to the ensuing discussion) for cash-money. In the spirit of full and complete disclosure, the first column must make perfectly clear that I am writing this column in order to make up the $150 we need so that my pregnant wife, our five-year-old, and I can continue to enjoy something akin to the healthcare benefits available to every ne’erdowell, miscreant, and convicted scamp in the rest of the industrialized world. That rate, again, is $150 – let there be no question as to my motivations.

But what would this column be about?

Money and Time

For 99% of the population, Money is the transferable literalization of our one real, finite, non-fungible asset: our Time. For individuals, Money is Time and Effort: We swap Time/Effort to get Money that we can then swap with others for their Time/Effort (or the fruits thereof).

Each of us gets a finite amount of Time in our lives. Money/Time/Effort spent on one thing cannot be used for another. It is, at rock bottom, the Human Resource.

But to corporations and governments – who, like Lovecraftian creatures, are deathless and eldritch beings not bound by time on the human scale – Money is different. Unbounded absurdities arise when a human is in an economic interaction with a Deathless Thing from a Dimension Beyond Time.

In future columns I’ll offer examples of where that Money-Time exchange becomes kind of crazy, and give you, Gentle Readers, a place to share your related examples or counter examples.

First Installment: Color of Risk

To kick us off, here is my inciting incident: At his annual school physical my five-year-old was confused by the colored stripes on the eye-chart. This could be nothing, except for that his maternal uncle and maternal great-grandfather (on his mother’s maternal side, no less!) are/were both red-green color blind, meaning that my wife (the boy’s mother) is likely a carrier of this gene that largely afflicts males (and, interestingly, often coincides with sharper visual pattern recognition: red-green colorblind men make excellent hunters, just like my boy’s maternal uncle and great-grandfather).

At the physical, his doctor began writing a referral to an eye specialist who could ascertain exactly how far skewed the boy’s color perception is, and whether or not this might have educational ramifications (I know that might sound kind of absurd to folks without first-hand color-blindness experience, so you’ll either have to take it on faith or do some Googling of your own in order to confirm that undiagnosed colorblindness in early elementary often maps to a whole cluster of developmental issues, especially regarding literacy and classroom behavior).

In abstract, this is how we expect the system to work: A fully qualified, licensed professional, knowing the limits of her training and equipment, decided to turn things over to a specialist. When I asked if my insurance would cover this visit to the eye guy, the doctor’s pen stopped moving mid-referral and she stared at the paper. I’d better call Blue Cross first, she said carefully, Just to be sure.

That afternoon I spent my own unbillable hour on the phone bouncing between Blue Cross Blue Shield (BCBS) and the University of Michigan eye clinic in order to ultimately discover that no one could say for certain whether or not my insurance would cover our five-year-old’s impending visit to the ophthalmologist. This is because none of them could determine in advance if his possible color blindness was or was not “medical” (their term). “Medical” color blindness they’ll pay for. “Vision” color blindness they won’t. As you might guess, these divisions are not recognized by science or medicine. These are boxes on a form, and have to do with how much Money (if any) the insurance we’re paying for will offer the doctors we’d like to pay.

Did I mention that my lovely pregnant wife is pregnant? As someone over 35 she’s entering a slightly higher risk pool of potential mothers; this has already mandated an extra $1,800 in testing. Insurance? They might cover this. Who can really say, you know? I mean, can we prove that these were medical tests on her body and that of the potential human in her guts?

Maybe we’re on the hook for this additional expense, maybe not. But that possibility wracks hell on our financial planning, as I both need to budget for the extra Money to pay for the tests, and for the extra Time in unbillable hours spent on the phone with BCBS. If I get that second estimate off, then it will monkeywrench my ability to scratch together the actual cash-money to pay the bill if I lose the argument and end up having to ante up on the full amount. That hour on the phone is very dear to me, but costs BCBS next to nothing. This is why you are put on hold. It’s the same reason an army will blockade a city instead of attacking.

This is precisely what our column is about: Highlighting the places where the party with the stronger negotiating position (e.g., BCBS and, to a lesser degree, the entire UM medical system) forces the weaker to bear all of the risk in the transaction: They are enormous and evolved to shed risk like a duck sheds water. In the grand scheme, BCBS has infinite Time, a minuscule sliver of which they budget to deflecting weaker parties like me.

I was born and shall die; I cannot budget as much Time to this argument as they can, cannot scrap together as much Money as they can demand (SPOILER ALERT: More hospital billing in future columns!) At the base of it all is the core Free Market axiom: They have a scarce resource I need – Delivering Potentially High-Risk Babies – and the only resource I have that they want is Money, which is Time, which is ticking away as I type this very word.

Anyway, to recap: We are a highly educated married couple with no debt (apart from a very prudent mortgage on a right-sized home) living a nominally middle-class life in Middle America. My kid can’t see green and has a heart murmur and is damn lucky to have a bus to school, and a school to go to. My wife is a greedy, terrible, pregnant, unionized public servant; to punish her for these sins, her employers – all of us citizens, which is to say You and Me and Her and Our Squinty Kid and Everyone Not Reading This – cut her pay. Ironically, this means my family has less Time and Money to support the work of our Fellow Citizens (i.e., You).

But, in terms of our own self-interested personal finances, we needed an extra $150 per month.

And I just earned that.

[1] My First, Last, and Everything was concerned that I may have inadvertently misled you Dear Readers on this point, so to clarify: The seniority freeze was technically negotiated at the local level by the districts that have implemented such freezes; there is no across-the-board statewide freeze (in contrast to the healthcare contribution cut, which is statewide, and impacts many public servants). So, My Best Beloved argues that this is a local smackdown on teachers, not a state smackdown. But I’d like to point out that this concession was only necessary because of an artificial budget shortfall created at the state level. In other words, a strawman might seem to have great fashion sense, but he’s still only wearing what the farmer gives him.

About the author: David Erik Nelson has written columns previously for The Chronicle on topics like medical marijuana and glass-eating clowns. Nelson is the author of various books, including most recently, “Snip, Burn, Solder, Shred“.

The Chronicle relies in part on regular voluntary subscriptions to support our publication of local columnists like David Erik Nelson. 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!

The revisions to the ordinances resulted from a collective bargaining agreement with AFSCME and a binding arbitration under Act 312 with AAPOA. The changes are similar to ordinance changes already enacted for non-union city workers.

The pension contribution for AAPOA and AFSCME workers will rise from 5% on a post-tax basis to 6% on a pre-tax basis. The vesting period for new hires will increase from 5 years to 10 years. Also for new hires, the final average compensation (FAC) calculation will be increased to a five-year period. The previous FAC was based on a three-year period.

On the health care side, the AFSCME and AAPOA employees would have the same access-only retiree health plan as non-union employees have. Like all ordinance changes, the city council will need to give these revisions a second and final approval no sooner than its next regular meeting.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]

Caryette Fenner, president of AFSCME Local 2733, the labor union representing the largest number of Washtenaw County government employees. (Photo by the writer.)

The deals affect 675 union employees, as well as 271 non-union, court non-union and elected officials – or nearly 70% of the county’s total 1,369 employees.

AFSCME Local 2733 represents about half of the county’s employees – 644 people. The Local 2733 agreement was ratified by a 2-to-1 vote earlier this week, but only 325 members voted. Caryette Fenner, president of Local 2733, described it as a typical turnout.

County administrator Verna McDaniel said these three agreements, coupled with those already approved, will yield $7.7 million in savings over 2012 and 2013. The county has a goal of gaining $8 million in labor concessions for that two-year period, to help overcome an estimated $17.5 million deficit.

McDaniel is expected to present a draft budget to the board at its Sept. 21 meeting.

There was no discussion before the board vote, which occurred after the board emerged from a 30-minute closed session to discuss labor negotiations. Commissioner Dan Smith (R-District 2) cast the lone vote against the agreements.

In a follow-up interview with The Chronicle, Smith cited concerns over health care provisions that would cost the county more than he had been led to expect, based on previous agreements already approved by the board for Michigan Nurses Association Units I and II.

And because of “me too” clauses in other union agreements, the more favorable terms negotiated by AFSCME Local 2733 will likely be applied to other union contracts as well.

In addition to the agreement with five bargaining units of AFSCME Local 2733, Tuesday’s approved agreements were with: (1) the two bargaining units of TPOAM (Technical, Professional and Officeworkers Association of Michigan); and (2) one of two bargaining units of AFSCME Local 3052. Also, the same benefits that AFSCME Local 2733 receives will be extended to the non-union, court non-union and elected officials.

The second bargaining unit of AFSCME Local 3052, representing 55 general supervisors, voted down its agreement this week. Nancy Heine, president of AFSCME Local 3052, told The Chronicle that union leaders would be polling their membership on Wednesday to determine what issues caused members to reject the tentative agreement.

In addition, agreements have not yet been reached with four other bargaining units: Two units with the Assistant Prosecutors Association, representing 24 employees; and two units with the Public Defenders Association, representing 13 employees.

Two other bargaining units – the Police Officers Association of Michigan (POAM) and the Command Officers Association of Michigan (COAM) – earlier this year reached agreements that aren’t part of the $8 million goal. The POAM and COAM deals are for a four-year period through 2014.

Details of the Agreements: AFSCME

AFSCME (American Federation of State, County and Municipal Employees) Local 2733 represents a total of 644 members. There are five bargaining units within Local 2733. The largest is Unit A with about 340 members, including all general county professional employees who have a four-year college degree or higher, excluding supervisors and jobs in several other categories.

Other Local 2733 units are:

• Unit B – general county employees whose job requires less than a four-year degree, excluding supervisors, administrative staff, and personnel in several other categories.
• Unit C – all employees of the 22nd Circuit Court and Friend of the Court program, excluding supervisors.
• Family Division/Juvenile Center – all employees of the Washtenaw County Trial Court’s Family Division/Juvenile Center, excluding supervisors, court bailiffs/officers, and temporary or seasonal employees.
• Juvenile Detention – all employees of the county juvenile detention facility, excluding supervisors, court bailiffs/officers, and temporary or seasonal employees.

Agreements for the AFSCME units run through Dec. 31, 2013. [.pdf file – summary of AFSCME agreement] The agreements stipulate no wage increases unless property tax revenues increase by at least 2% on or before Dec. 31, 2012. In that case, a 1% wage increase will take effect on Jan. 1, 2013.

Other items include:

• a 10% employee contribution to the Washtenaw County Employees’ Retirement System (WCERS). The vesting period will increase from eight years to 10 years, though current employees will be grandfathered in at eight years.
• $75/month premium sharing for the core health care plan. Currently, employees do not pay premiums.
• Co-pays will increase or be added. For example, the co-pay for an emergency room visit increases from $50 to $250. Co-pays for prescription drugs will increase ($0 to $7 for generic drugs, $30 to $70 for brands).
• 10 bank leave days for 2012 and 2013. No furlough days will be imposed. Though bank leave and furlough days are similar – both are unpaid – the bank leave days do not affect calculations toward an employee’s retirement or longevity pay. In contrast, furlough days are deducted from the calculations toward retirement and longevity pay.
• Longevity payouts will be eliminated for new hires after Jan. 1, 2012; for other employees, longevity payouts will be reduced by 25% in 2012. There will be no reduction in longevity pay in 2013. (Longevity pay is a benefit provided to employees based on years of service with the organization – generally available after 5 years of service. Employees would receive between 3%-9% of their prior year’s wages, paid out either in a lump sum payment or bi-weekly throughout the year.)
• Step increases – automatic increases in wages that are built into an employee’s contract – will remain in place for 2012, but will be frozen for 2013.
• Tuition reimbursement is frozen at 0% for 2012 and 2013.
• Payout for excess vacation will be eliminated for 2012 and 2013.

Details of the Agreements: TPOAM

TPOAM (Technical, Professional and Officeworkers Association of Michigan) represents 27 total members in two bargaining units: (1) Unit I – all senior deputy district court clerks, deputy district court clerks and probation secretaries at the 14-A District Court; and (2) Unit II – supervisors and probation officers at the 14-A District Court, excluding magistrates and the deputy court administrator. Until last year, these employees had been represented by the Teamsters, but they voted to de-certify and become certified as part of the TPOAM union instead.

The TPOAM agreement also includes a 1% wage increase, effective Jan. 1, 2013, if property tax revenues increase by at least 2% on or before Dec. 31, 2012. [.pdf file – summary of TPOAM agreement] Though the “me too” clause will likely cause some of these items to be modified, other elements of the agreement approved by the board on Tuesday include:

• a 2% employee contribution to the Washtenaw County Employees’ Retirement System (WCERS).
• a $150/month premium sharing for the core health care plan for nine months.
• 10 bank leave days for 2012 and 2013.
• Longevity payouts will be eliminated for new hires after Jan. 1, 2012. For other employees, longevity payouts will be reduced by 50% in 2012 and 2013.
• Step increases will be frozen in 2012 and 2013.

Unlike the AFSCME agreement, the TPOAM agreement also states that if Gov. Rick Snyder does not sign the 80/20 legislation into law, the union can re-open negotiations with the county. That legislation would require public employees to pay 20% of their health care costs, effective Jan. 1, 2012, or would cap the amount that local governments would pay as premiums for employees.

Labor Agreements: Commissioner Vote

All resolutions are voted on twice by the board. First, they’re voted on at the meeting of Ways & Means, a committee of the entire board.  Resolutions are given a final vote at the regular board meeting. Ways & Means and regular board meetings are held back-to-back, but typically a resolution that’s passed at the Ways & Means meeting is considered at the regular board meeting two weeks later.

However, for some items that the administration or board wants to expedite, votes are taken the same evening at both meetings. That was the case with the resolution on the labor agreements at the Sept. 13 special meeting.

Early in the Ways & Means meeting, commissioners entered into a closed session to discuss labor negotiations, which lasted about 30 minutes. When they emerged, they handled the main action items on the agenda – resolutions to approve the three labor agreements.

There was no discussion about the agreements. Generally, commissioners follow the advice of the administration and corporation counsel not to publicly discuss labor issues, particularly during contract negotiations.

Outcome: The board’s vote at its Ways & Means Committee meeting passed unanimously. Wes Prater and Ronnie Peterson were absent.

The board moved immediately into it regular board meeting. Again, the main action items on the agenda were approval of the three labor agreements. And again, there was no discussion on these items.

The final vote taken at the board’s regular meeting passed on an 8-1 vote, with dissent from Dan Smith (R-District 2). Wes Prater and Ronnie Peterson were absent.

Reached later this week by The Chronicle, Dan Smith indicated that his vote against the agreements was due in part to the health care benefits, which he described as significantly different from what he’d expected to see. He had believed the benefits would be similar to agreements previously approved by the board for the Michigan Nurses Association Units I and II, representing a total of 15 employees.

In those agreements, for example, health insurance premium sharing was $150 per month. In the AFSCME agreements, the premium sharing is half that amount – $75 per month. He noted that with “me too” clauses in other union agreements, the premium sharing will likely be lowered for other employees too.

Smith also noted that the AFSCME agreements aren’t congruent with the state law that’s expected to take effect Sept. 15, and he objected to rushing the agreements through at the last minute.

The state law that Smith referred to is the “Publicly Funded Health Insurance Contribution Act,” which was passed by the Michigan legislature on Aug. 24, 2011. It is scheduled to be signed by Gov. Rick Snyder on Sept. 15. Agreements that are in place before that date do not have to conform with the act, which is also often referred to as “80/20″ legislation. [.pdf of the bill]

The legislation stipulates maximum “hard cap” dollar amount equivalents that public employers can contribute toward employee healthcare: $5,500 for single-person coverage, $11,000 for individual and spouse coverage, and $15,000 for family coverage – for coverage years beginning on or after Jan. 1, 2012. There’s another option that an employer can follow, if approved by a simple majority vote of its governing body, which would limit the benefit contributed by the employer percentage-wise instead of using a hard cap. On that option, public employers could contribute no more than 80% of their employees’ health care costs for coverage years beginning on or after Jan. 1, 2012.

However, on a 2/3 majority vote, which must be repeated each year, a governing body of a public employer can opt out of these requirements. In an email to The Chronicle on Monday, county administrator Verna McDaniel stated that the board will be asked to opt out, which would exempt the county employees from the requirements of this law.

Reaction of Union Leaders

Several union representatives attended the Sept. 13 meeting, though they did not address the board during public commentary.

Caryette Fenner, president of Local 2733, said it had been a difficult negotiation, especially since union members had already given concessions in 2009, for the 2010 and 2011 calendar years. [At the time, those concessions were expected to save the county about $5.8 million over two years.]

She noted that one significant difference between the previous contract and the current one is the stipulation that members will receive a 1% raise in 2013 if the county’s property tax revenues increase 2% or more in 2012. They didn’t have that assurance when they made wage concessions in 2009, she said, and it turned out that tax revenues had been better than originally projected. [Though the county's property tax revenues have been better than projected, revenues still declined – falling 5.33% in 2010 and 2.85% this year. For this year, the county's equalization staff had originally projected a drop of 8.5%.]

Fenner also observed that even with the concessions made in this labor agreement, there’s no assurance that the county won’t cut jobs.

Nancy Heine, president of AFSCME Local 3052 – which voted down their tentative agreement – told The Chronicle that the membership would be polled to determine what issues caused them to reject the tentative agreement. There’s a question about whether everyone is bearing their fair share, she said, as well as concerns over whether employees who are already struggling will be able to absorb even more cuts. Some union members have already lost their homes to foreclosure, she said, and others are worried that they won’t be able to make mortgage payments if their longevity pay is cut – that’s a direct hit to their paychecks, she noted.

Heine also said that only nine of the Local 3052 members are “general fund” employees – that is, employees whose salaries and benefits are paid for out of the county’s general fund, which gets the majority of its funding from property tax revenue. Savings from concessions made by non-general fund employees won’t help the county deal with its projected $17.5 million deficit, she noted. [Examples of non-general fund departments include the parks & recreation commission and CSTS (community support & treatment services).]

Present: Barbara Levin Bergman, Leah Gunn, Kristin Judge, Alicia Ping, Yousef Rabhi, Rolland Sizemore Jr., Dan Smith, Conan Smith, and Rob Turner.

Absent: Ronnie Peterson, Wes Prater

Next working sessions: Thursday, Sept. 15, 2011 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. An additional working session is set for Thursday, Sept. 22 at 6:30 p.m.

Next regular board meeting: Wednesday, Sept. 21, 2011 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. [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.

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The first was a change in the pension system for members of its police service specialist union. The council had approved the collectively bargained changes at its June 20, 2011 meeting. And the council had given initial approval to the ordinance change at its July 18 meeting.

Under the old ordinance, members of that union made a 5% post-tax contribution to their pension. That will change to a 6% pre-tax contribution made by members of the police service specialist union. The change will be effective starting Aug. 14, 2011.

The council also gave final approval to a revision to the city’s ordinance that covers how a city retiree’s health care is paid for. The council had given initial approval to the ordinance change at its July 18 meeting. The revision to the ordinance distinguishes between “subsidized retirees” and “non-subsidized retirees.” A non-subsidized retiree is someone who is hired or re-employed into a non-union position with the city on or after July 1, 2011. In their retirement, non-subsidized retirees will have access to health care they can pay for themselves, but it will not be subsidized by the city.

At its June 6, 2011 meeting, the city council had directed the city staff to prepare an ordinance change along these lines.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]

At its June 6, 2011 meeting, the city council had directed the staff to prepare an ordinance change along these lines.

Because it is a change to a city ordinance, the initial approval given to the change in the city’s retiree health system will require a public hearing and a second, final approval at another meeting.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]

The goal is to develop a plan to provide better health care for the county’s low-income residents, the uninsured and people on Medicaid – prior to changes that will be mandated by the federal Patient Protection and Affordable Care Act.

The Washtenaw Health Initiative (WHI) is a collaboration led by retired Saint Joseph Mercy Health System chief executive officer Bob Laverty, former county administrator Bob Guenzel, and retired University of Michigan treasurer Norm Herbert. The effort is jointly sponsored by the UM Health System and Saint Joseph Mercy Health System, and faciliated by Marianne Udow-Phillips, director of the Center for Healthcare Research & Transformation – a joint venture of UM and Blue Cross Blue Shield of Michigan. Several other groups, including Washtenaw United Way and the county public health department, are also involved.

Organizers say they hope this initiative will become a model for other communities nationwide that are facing similar issues.

Details of exactly what kind of services will be provided, what funding and other resources will be tapped, and how a coverage plan will be implemented haven’t yet been determined. Initial steps that could occur as early as this year include reaching out to enroll about 6,000 county residents who are eligible for Medicaid but not currently signed up for that coverage. Another project that could be implemented this year entails coordinating local dental clinics to offer sliding scale fees for low-income residents.

More information is available on the initiative’s website. [.pdf of WHI press release] [.pdf of Washtenaw County health care overview]

Verna McDaniel, Washtenaw County administrator, at the June 1, 2011 board of commissioners meeting. At a June 16 working session, McDaniel updated commissioners on the county's progress in developing a budget for 2012-2013. (Photo by the writer.)

County administrator Verna McDaniel updated commissioners on the budget process, including expedited labor negotiations that began formally on June 9. The county has targeted $8 million in concessions from employee compensation and benefits to help address a projected $17.5 million two-year deficit in 2012-2013.

Also in the works are business plans being developed by the managers of each county department – the goal is to get another $8 million in cuts from organizational changes and departmental reductions. Outside agencies – including human services nonprofits – are targeted for $1 million in cuts.

After her presentation, McDaniel fielded questions that covered a range of issues and concerns. She was asked to provide an update on efforts by former county administrator Bob Guenzel and local health care providers to develop a broad-based health care plan for Washtenaw County. She conveyed few details, but noted that the board would be briefed on the plan – called the Washtenaw Health Initiative – at their Sept. 8 working session.

Related to labor issues, commissioner Dan Smith urged the administration to identify potential layoffs as early in the year as possible. Saying that the board was resigned to the fact that there would likely be layoffs – though they hoped to keep them at a minimal level – Smith said it would be better for affected employees to know sooner rather than later, so that they can plan their next moves.

2012-2013 Budget Update: Presentation

The county works on a calendar fiscal year, from Jan. 1 through Dec. 31. The administration and board develop the county’s budget in two-year periods, with adjustments made at the end of the first year for the following year’s budget. They are currently developing the budget for 2012 and 2013.

McDaniel covered much of the same information she’d presented to the board at its May 4 meeting. The projected budget shortfall for the two-year period of 2012-2013 is roughly $17 million, and the changes they’ll make to address that shortfall need to reflect long-term changes in the organization, she said – it’s a new reality. ”This is a call for us to retool Washtenaw County,” she told commissioners.

She reviewed the strategy for dealing with the projected deficit: (1) an $8 million cut in employee compensation and benefits; (2) $8 million in reductions from organizational restructuring; (3) $1 million in cuts to nonprofits and other outside agencies.

When they started the budget planning process, the county’s financial staff had anticipated lower revenues and a higher deficit – closer to $20 million. Under that scenario, the administration’s plan had called for departments to generate $2 million in revenues as well as additional targeted reductions, McDaniel noted. But because revenue projections were later revised – following completion of the county’s annual equalization report, which is the basis for determining the taxable value of property in the county – the administration is no longer asking departments for that $2 million in new revenue, she said.

McDaniel then laid out a budget timeline for the remainder of the 2011 calendar year:

• June-July: Labor negotiations.
• July-August: County board holds working sessions on budget, administration develops draft budget.
• September: Administrator presents draft budget to the board.
• September-October: Board reviews draft budget.
• November: Board adopts budget for 2012-2013.

Decisions are being guided by priorities and principles set by the board, McDaniel said. Priorities are to support programs that: (1) help residents feel safe and secure; (2) address the basic needs of children and families; and (3) increase economic opportunity for residents. Other priorities are to partner with other entities to meet these goals, and to ensure the county’s fiscal responsibility by focusing on long-term institutional stability.

McDaniel also reviewed six principles that the board has identified to guide budget decisions:

1. Impacts and outcomes drive investment priorities.
2. Services are delivered optimally by the right provider – not necessarily by the county.
3. Social and financial returns on investment are calculated, articulated and balanced.
4. Both immediate needs and root causes are strategically addressed.
5. Programs are evidence- and performance-based.
6. Mandates that support outcomes and impacts are better funded.

As an example of service delivery by the “right” provider, McDaniel pointed to the Library for the Blind and Physically Disabled. It was previously run by the county, but was transferred to the Ann Arbor District Library in early 2009 – that was a move that made sense for everyone, McDaniel said, and has resulted in better services for library patrons.

McDaniel next gave an overview of budget-related initiatives that are in progress:

• The merger of the Washtenaw Community Health Organization (WCHO), the Washtenaw Health Plan and the county’s Community Support & Treatment Services (CSTS) department is underway. The WCHO is a partnership between the county and the University of Michigan that provides services for people with developmental disabilities, emotional problems, mental illness or substance abuse. Many of those same services are provided by CSTS. The board was briefed on the merger in September 2010, and will be updated again at its July 7 working session.
• A county building/space plan is being developed in conjunction with the organization’s overall restructuring, McDaniel said, because space needs will likely change. A briefing on the topic is set for the board’s July 21 working session.
• The move of the county’s juvenile court division – from its former Platt Road site to the downtown Ann Arbor courthouse – is complete. The move came in under its $300,000 budget, McDaniel said. It included renovating the second and third floors of the courthouse. Renovation of the courthouse’s first floor isn’t finished, she said – much of the work will be done in-house to keep costs down. [Board members had been briefed on these efforts by Donald Shelton, chief judge of the Washtenew County Trial Court, at their Jan. 19, 2011 meeting.]
• The administration is exploring next steps in moving ahead with collaboration among other local units of government, McDaniel said. The board held a working session on that issue on March 17.
• The board will be asked to give initial approval at its July 6 meeting to a merger of three county departments: the office of community development (OCD), ETCS (the employment training and community services department) and the economic development & energy department. [For details, see Chronicle coverage: "Three County Departments to Merge"] The move is expected to save $500,000 annually, McDaniel said. A final board vote on the merger is set for Aug. 3.
• The Michigan State University Extension program is restructuring statewide – the county is working with MSU on an updated memorandum of understanding regarding the Washtenaw extension services, McDaniel said. MSU has asked the county to indicate what levels of service they’d like, she said – that work is ongoing, and will be presented as part of the draft budget.
• Other ongoing work includes pursuit of new revenue sources and grants, updates on the county’s cash management policy, and a look at revising the policy regarding the county’s cost allocation plan (CAP). [The CAP sets a charge that’s levied on each county unit and 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.] McDaniel said it might be time to “unfreeze” the CAP for the coming budget cycle.

Organizational changes at the departmental levels are being planned, McDaniel told the board. Originally, a target of $8.5 million in total departmental reductions had been set, coupled with a goal of increasing revenues by $2 million. But when the county’s equalization report was released in April, property tax revenues had declined by only 2.7%, rather than the projected drop of 8.5%. This lowered the projected deficit and allowed the county to consider the $2 million revenue increase as completed, she said. The targeted reductions were also lowered to $8 million.

Each department had been provided with a summary of its budget reductions over the past 4-5 years, McDaniel said, including a report on whether the reductions were structural or one-time cuts. The department heads have been given targets for reductions in 2012-2013, and have three weeks to complete a business plan and list of outcomes, as well as an assessment of how their plan will impact FTEs (full-time equivalent employees). It’s possible that some programs will be eliminated. The department heads will then need to work with union leaders to work out details – that’s the heart of the collective bargaining process, she said.

The equalization department has already completed its plan – McDaniel provided a copy to the board. [.pdf of equalization department business plan and "dashboard" metrics]

Another $8 million in cuts is targeted from employee compensation and benefits. That’s “not an easy target to achieve, but that’s what we’re going after,” McDaniel said. Formal negotiations began on June 9, and they’re working in an expedited process with the goal of reaching a deal by July 1. Union leaders have been given sample scenarios that McDaniel said commissioners had vetted in executive session earlier this year. [The scenarios describe different possible ways to address the $8 million in cuts.]

Finally, the administration has set a target of $1 million in cuts to funding for outside agencies over the next two years – currently the county budgets about $3 million annually to nonprofits and other outside agencies, including membership dues to organizations like the Southeast Michigan Council of Governments (SEMCOG).

By way of background, membership/dues for 2011 total $795,551. The highest amount in this category – $500,000 annually – is paid to the Humane Society of Huron Valley. In other categories, an additional $1.46 million in funding is budgeted to human services agencies in 2011, and $660,000 is categorized as “special initiatives” – including $200,000 to the economic development agency Ann Arbor SPARK. [.pdf of 2011 outside agency funding]

A board working session on outside agency funding is set for Sept. 22.

Finally, McDaniel provided a list of topics for budget-related working sessions in the coming months:

• July 7: Updates on the WCHO split from the county, the Western Washtenaw Recycling Authority, and the Ann Arbor Skatepark
• July 21: Head Start
• Aug. 4: Retirement funding, unfunded accrued liabilities, debt, and time owed to employees
• Aug. 18: County building/space plan, county/city of Ann Arbor dispatch consolidation
• Sept. 9: Health care reform, tax increment financing (TIF)

The remainder of scheduled working sessions for September, October and November will be budget-related, but specific topics have not been identified at this point.

McDaniel emphasized the need to be nimble and responsive in this process, and said that with the board’s direction and support, the administration can be successful in addressing the projected budget deficit.

2012-2013 Budget Update: Commissioner Questions, Comments

Conan Smith began by complimenting the new business plan that departments will be completing, saying the format made the information much more accessible.

2012-2013 Budget Update: Juvenile Detention

C. Smith then asked McDaniel to talk more about plans for the county’s juvenile detention program.

McDaniel reported that several meetings have been held regarding juvenile detention services and facilities – the group at the table includes representatives from the Washtenaw Trial Court and District Court; sheriff Jerry Clayton; Lisa Greco, director of the county children’s services department; and county commissioner Barbara Bergman, among others. The discussions have been robust, McDaniel said, focusing on whether to continue services at the juvenile detention center, or to move to an outplacement model.

Greco is drafting a report with recommendations, which will be given to the board later this year, McDaniel said. The group has decided it wouldn’t be prudent to close the center, she added, saying they’d just be shooting themselves in the foot. Instead, they are working on other strategies related to court sentencing, and possibly transferring some of the younger jail inmates to the 40-bed juvenile detention facility, to abate jail overcrowding.

Bergman noted that the facility is also being used as more of a community center – details about that will be included in Greco’s report.

2012-2013 Budget Update: Revenues, FTEs

Kristin Judge referred to a point that McDaniel made about completing the $2 million in revenue generation. Judge said she was uncomfortable with stating that it’s done, and noted that she’d made this point before.

From The Chronicle’s report of the board’s May 4, 2011 meeting:

Kristin Judge also weighed in against taking new revenue generation off the table. She reported that Macomb County has hired a grant writer who’ll be paid only based on the grants that person is able to bring in to the county. [Judge later learned that the grant writer hadn't been hired for Macomb County.] There’s revenue to be had from aggressively seeking grants, she said. If they take revenue generation off the table because there’s some good news in the short term, they’re missing the long-term view.

At the budget working session, Judge reiterated her concerns, and asked McDaniel to convey to department heads that they need to be continually seeking ways to raise revenue. ”Don’t take that off the table, please.”

Judge also asked if the administration was on track to give the board an update about the number of county FTEs (full-time equivalent employees). Such updates had been requested every six months, she said, and the next one is due July 1. McDaniel said she’d remind Diane Heidt, the county’s human resources and labor relations director, about the report.

Later in the meeting, Wes Prater asked for more details about the budget’s targeted revenue number – what was the administration expecting for 2012? McDaniel said that for the current year, the county’s total general fund revenues are about $99 million, including $61 million in property taxes. They’re anticipating a 5% decline for 2012 – so revenues will likely total $94 million in the 2012 budget, she said.

Prater clarified that the board would be seeing a draft budget for 2012-2013 in September. He asked that it also include audited financials from 2010, as well as estimated actual revenues/expenses from 2011.

2012-2013 Budget Update: Courts

Alicia Ping thanked McDaniel for a private tutorial she’d given Ping on budget issues – as a new commissioner, it had been extremely helpful. [Ping was first elected in November 2010 and took office in January 2011. Other commissioners elected to their first terms are Yousef Rabhi, Dan Smith and Rob Turner.] Ping noted that they were already looking ahead to 2013-2014, and specifically at costs associated with courts and the jail. Those are two pieces of the same pie, she said.

Ping related an anecdote that her husband, an attorney, had conveyed: A man had been given a jail sentence and a $1,000 fine, but told the court he didn’t have the money to pay; the judge said that would extend his sentence. Ping pointed out that in this case, the county not only didn’t get revenue from the fine, but it also incurred more expense by keeping the man in jail longer. Is there a solution to this? she asked. Are the courts working to address this issue?

McDaniel reported that the county’s criminal justice collaborative council (CJCC) – a group of elected and appointed representatives working in the criminal justice system – had developed a jail management plan, which in part addressed the situation that Ping described. McDaniel said she’s also been talking personally with court administrators and judges, and knows that they’re working aggressively to collect fines. In some cases, they’re using collection agencies – they know that those revenues are needed to keep the courts functional, she said. Revenues have dropped sharply for all the courts over the last three years, she said.

Turner said he’d met with Kirk Tabbey, the judge who presides over the 14A-2 District Court in Ypsilanti. It’s routine for people to tell the court they have no money, Turner said. Now, a new program is researching financial records, and finding that in fact many people do have the ability to pay. Once people are confronted, Turner said, they usually agree to pay the fines.

Bergman, who’s a member of CJCC and the community corrections advisory board, said the community corrections staff is working on that issue, too. It might be time to consider a work release program, she said – people could go to their jobs during the day, and return to jail at night and on the weekends. ”It may not happen immediately, but it’s certainly in the thinking stages,” she said.

Bergman also criticized the state Dept. of Corrections, saying it didn’t provide enough funding for the Michigan Prisoner ReEntry Initiative (MPRI), a program to help prisoners transition back to the community. [For background, see Chronicle coverage: "Panel: MPRI Transforming State Corrections"]

2012-2013 Budget Update: Principles

Turner asked McDaniel what kind of feedback she was hearing about the budget principles that the board had developed. McDaniel said the other elected officials she’d met with were pleased with the board’s principles and priorities. [Other elected county officials include sheriff Jerry Clayton, prosecuting attorney Brian Mackie, treasurer Catherine McClary, clerk Larry Kestenbaum, and water resources commissioner Janis Bobrin.] Kelly Belknap, the county’s interim deputy administrator, has met with appointed officials about the budget plans, and those meetings also have been positive, she said.

Turner confirmed that it would be worth developing budget principles and priorities in future years as well.

2012-2013 Budget Update: Future Challenges

Leah Gunn pointed out that in the future, the county – like other local governments in Michigan – will face two major challenges. First, as of Oct. 1, 2011, people who’ve been receiving Temporary Assistance for Needy Families (TANF) will be cut off from funding, if they’ve been getting it for the past four years. [This change would occur assuming the current proposed budget for the state is passed. Its fiscal year begins Oct. 1.] This change will be a major challenge for local communities, Gunn said, as families turn to other resources for help, including many of the services that the county provides. This has been a safety net, she said, and it will no longer exist.

Secondly, the county’s state revenue-sharing trust fund will be depleted, Gunn noted, and she doesn’t expect there will be more funds forthcoming from the state. The county needs to plan for both of these challenges, she concluded. ”The economy may recover, but things are not looking good.”

Bergman also expressed concern regarding the housing market, and the number of people facing foreclosure. She said she didn’t really know how the county could prepare for this “perfect storm.” ”To me it becomes daily more scary,” she added.

Bergman then noted that former county administrator Bob Guenzel is working on a plan to bring broader health care coverage to Washtenaw County. She asked McDaniel for an update.

McDaniel reported that Guenzel is working with Ellen Rabinowitz, executive director of the Washtenaw Health Plan; Doug Strong, CEO of the University of Michigan Hospitals and Health Centers; executives of St. Joseph Mercy Hospital and others to prepare for federal health care reforms – specifically, the Affordable Care Act – that take effect in 2014 and that will expand Medicaid significantly. It’s a systemwide approach, she said, and the board would be briefed on details at their Sept. 8 working session.

Rabinowitz later told The Chronicle that the collaboration is called the Washtenaw Health Initiative and is being led by Guenzel and Norm Herbert, a retired UM finance executive who’s active on several community boards. She said a July 7 press conference is being planned to reveal additional details.

According to the group’s website, the initiative is “a voluntary, county-wide collaboration focused on how to improve access to coordinated care for the low income, uninsured, and Medicaid populations. The work of this group is on both how to improve care today for these priority populations and on 2014, when federal health care reform is expected to be more fully implemented.” The effort is exploring how to deliver primary care, mental health care, substance abuse services and dental care.

2012-2013 Budget Update: Handling Layoffs

Dan Smith asked when the board would see the results of structural changes that the administration is planning. He said the commissioners have all resigned themselves to the fact that there will probably be layoffs at some point, though they hope there will be as few layoffs as possible. His own workplace had layoffs in 2009, he said – one wave in June, and another in January. The people laid off in June were at least able to enjoy the summer and regroup. He hoped the county could let employees know as soon as possible if they are going to be let go, rather than to do it during the holidays late in the year.

McDaniel told the board that expedited negotiations with labor unions are intended to push the budget process ahead as quickly as possible. It’s complicated, she said, because there are 17 bargaining units representing county employees. The administration won’t know the full impact of restructuring until multiple pieces are in place, including labor concessions and departmental reductions. She also noted that they’re not just focused on FTEs. They’re looking at program changes and enhanced services in some areas too, as part of the restructuring.

D. Smith confirmed with McDaniel that the impact of restructuring won’t likely be known until the fall.

Present: Barbara Levin Bergman, Leah Gunn, Kristin Judge, Ronnie Peterson, Alicia Ping, Wes Prater, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, and Dan Smith. Rob Turner was absent for most of the meeting, arriving after the start of the board’s executive session.

Next regular board meeting: Wednesday, July 6, 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.

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The working session also included a presentation by executives of the Southeast Michigan Council of Governments (SEMCOG) and a brief update on the progress of the jail expansion. This report focuses on the health benefits presentation.

Cost of Health Benefits

Jennifer Watson, the county’s budget manager, began the report by giving an overview of current costs and a comparison of expenses over the past five years in the major categories of health care: medical, dental, life insurance and long-term disability. Medical costs are the largest expense, projected to be $19.779 million in 2010 – an amount that includes coverage of about 1,350 employee positions as well as about 700 retirees. That cost represents a 33% increase from $14.833 million in 2005.

Washtenaw County employee health care costs from 2005 to 2010. (Links to larger image)

Dental costs climbed 19% during that five-year period, from $1.09 million in 2005 to a projected $1.3 million this year.

However, medical and dental costs were even higher in 2009 – $22.8 million and $1.44 million, respectively. Union concessions and a shift from HMOs to Blue Cross/Blue Shield PPOs accounted for much of the cost savings in 2010.

The health benefit costs include amounts paid by the county as well as modest employee contributions. Most union employees pay no contribution toward their health care. However, all of the county’s 184 non-union employees contribute $600 annually. Members of four unions – representing a total of 51 employees – pay $400 annually. Those include members of the Assistant Prosecutors Association, the Public Defenders Association, and two bargaining units of the Michigan Nurses Association. There are 17 bargaining units representing county employees, and each negotiates its own contract with the county.

The county is self-insured for its medical and dental costs, buying its coverage through Blue Cross/Blue Shield – that company is projecting significant annual increases in the coming years, Heidt said. In addition to standard benefits offered by the county, employees can choose to buy additional optional coverage, at their own expense.

Impact of Federal Reforms

Going year by year, Heidt outlined several changes anticipated from recently passed federal health care legislation. Starting this year, the county will be reimbursed for part of the health care costs for retirees over the age of 55 who aren’t yet eligible for Medicare. Only $5 billion in subsidies were available nationwide and employers had to apply to be selected. Heidt said that the county’s application was accepted, and reimbursement began in July.

In 2011, employers must extend coverage to the married or unmarried dependents of their employees through the age of 26, unless the dependent is covered under another plan. This is expected to add a 1% to 1.5% cost increase, Heidt said.

Also in 2011, employers will be expected to offer plans that include preventive health care services. This won’t impact the county, Heidt said, because their coverage already includes preventive care. Nationwide, the change is expected to increase costs for employers by 3.5% to 4%, she said.

An additional change next year is that health care plans can’t put lifetime dollar limits on certain coverage. However, the county has never had an employee hit their lifetime limits, Heidt said, so she doesn’t expect this to be a factor. Also starting next year, employers will be required to enroll their workers in a new public long-term care program starting in 2011, unless the employee opts out. It will be paid for through a mandatory payroll deduction.

Fewer details are known about changes coming in 2012 and beyond, Heidt said. There will be significantly more reporting requirements to the federal government in 2012, she said, and in 2013 there will be a new Medicare payroll tax for people with wages over $200,000 for individuals or $250,000 for joint filers.

One fairly significant impact would occur in 2018, Heidt noted, when the county would be required to pay a 40% excise tax on its health coverage, which is considered a “Cadillac” plan by the federal government. A “Cadillac” plan is defined as a plan in which the aggregate annual value of an employee’s health coverage exceeds $10,200 for an individual or $27,500 for a family. Heidt said they’ll need to decide how to address this issue in the coming years.

Heidt also informed commissioners that as part of their open enrollment this fall, the county would be doing a complete audit of its employees to determine whether dependents that are claimed for coverage are actually eligible. She said that typically, up to 12% of employees in an organization have ineligible dependents covered by their health care plan. It’s possible that savings from this effort will amount to 5% of the county’s overall health plan.

Heidt also described a fringe benefit workgroup that’s being formed, with representatives from most of the county’s labor groups. It’s in preparation for contract negotiations that will begin next year, she said, and will be a comprehensive review of benefits. The idea is to make sure that everyone has an understanding of how costs are derived for benefits. The effort will start later this month, and likely continue through mid-2011.

Commissioner Comments, Questions

Leah Gunn asked whether the reimbursement for retiree health coverage would save the county money. Heidt said they expect that it will – retirees account for about 30% of the county’s total health care costs. The federal program will reimburse employers 80% of the cost per retiree in excess of $15,000 and below $90,000.

Gunn asked if they had any details about the long-term care coverage that would be required in 2011. Heidt said that it’s one of the things they know very little about – it hasn’t been defined by the federal government. She said she’d update the board as details emerge.

Jessica Ping said that the company she works for has a wellness program, which offers incentives when employees do certain things, like quit smoking or get regular cholesterol testing. She wondered whether the county had explored offering something similar. Heidt said they’d looked into it, but that there are significant upfront costs for these programs. It would likely be three to four years before they’d see a return on that investment, she said.

Wes Prater asked for more details about the dependent audit that the county planned for this fall. He wanted to make sure that employees are informed about it. Cheyenne Cooper, the county’s benefits manager, told Prater that employees would be asked to provide some kind of validation, such as a birth certificate, to prove that their dependents are eligible for coverage. She said they would be communicating with employees well in advance. The county’s roughly 700 retirees won’t be part of this audit.

Kristin Judge said that she’d like to see more consistency among the different employee groups – among the unions, as well as with non-union employees. Heidt said it was one of the administration’s goals, too. Judge clarified that if an employee waives the insurance benefits, they’re entitled to a cash stipend.

Judge noted that the National Association of Counties (NACo) had been active in developing the federal health care legislation, and that the organization had resources that Washtenaw County – as a member – might tap. She also urged the human resources staff to be sensitive in their audit of dependents, saying she didn’t want employees to be embarrassed.

Mark Ouimet asked whether the county had identified a total aggregate amount that they’d be able to afford for employee health benefits. Heidt said that they hadn’t approached it that way, but that she’d appreciate direction from the board as they tackle the 2012-13 budget deficit. Ouimet praised the staff for being forward-thinking on this issue.

Ken Schwartz commented on the 40% excise tax, saying it seemed counter-intuitive that the federal government would want to tax good benefits while at the same time encouraging employers to offer better benefits. Heidt said that the county has eight years to explore its options.

Ping asked whether the county had considered increasing the premiums that employees pay, noting that $600 and $400 annually is “nothing.” [For many employees, those contributions are negotiated as part of their union contracts. Most county employees with union contracts make no contributions to their health care costs.]

Prater noted that the fringe benefits workgroup provided an opportunity to establish a standard for benefits, and to include benefits in a discussion about total compensation. It’s important that employees understand that the more they receive in fringe benefits, the less they’ll get in salary increases. He pointed out that the county will be facing some very difficult times in the coming years.

The briefing, which previewed items on the March 3 board agenda, drew more than just commissioners and administrative staff. In addition to The Chronicle, two others attended Wednesday’s meeting: A candidate for the 11th District county board seat, currently held by Jeff Irwin; and the county treasurer, Catherine McClary.

McClary was there to answer questions related to two resolutions she had proposed – only one of them made it onto the March 3 agenda. In discussing the resolution that will be considered on Wednesday, McClary noted that delinquent taxes are on the rise, expected to reach around $40 million this year – more than double the amount just five years ago.

Refugee Health Program

Commissioners voiced several concerns over a new refugee health program, funded with $7,800 from the state Dept. of Community Health’s Office of Refugee Services. The program would pay for health screenings at the county health department’s clinic at 555 Towner St. in Ypsilanti.

In briefing the commissioners, Joanna Bidlack of the county administrator’s office reported that about 50-100 refugees settle in Washtenaw County each year, primarily in the Ypsilanti area. Currently they get health screenings from a clinic in Dearborn. The county was approached about this program by the state and the Jewish Family Services nonprofit, which serves as a refugee resettlement agency.

According to a cover memo on the resolution, the proposed medical screenings are designed to identify people with communicable diseases, or whose health conditions may impact resettlement – by affecting their ability to get a job or attend school, for example. The screenings would also identify conditions that might be grounds for exclusion (affecting their refugee status) or that would be significant enough to alert authorities at the relevant consulate.

The county health department currently provides some services to refugees – including tuberculosis screening and immunizations – without reimbursement.

In discussing the program, Wes Prater asked if these refugees are illegal immigrants. “I think we need to know if they’re illegals,” he said. Ken Schwartz said the status of “refugee” was a legal designation. His concern was whether they’d be bringing communicable diseases into the county.

Barbara Bergman raised another issue – if the screenings turned up a medical condition that needed treatment, then what? Who would pay for treatment?

Bidlack said she’d follow up, prior to their March 3 meeting, on the issues raised by commissioners.

Funding for Low-Income Families

A nearly $600,000 federal grant that requires $240,000 in county matching funds stirred discussion at Wednesday’s briefing. The board will be voting on a resolution to accept the funding at their March 3 meeting.

This community services block grant, administered by the county’s Employment Training & Community Services (ETCS) department, will help pay for a range of services for low-income families, including food assistance, job training and emergency emergency services.

The funds must be used for families at or below the 125% of the poverty level – for a family of four, they’d need to be making $27,000 or less to qualify, Joanna Bidlack told commissioners. Usually, eligibility is in the 200% or lower range.

“That’s an awfully mean grant,” Barbara Bergman said. Her objection was that the funding was too restrictive, and that perhaps the county’s share could be better used to serve a broader range of residents.

Wes Prater pointed out that the program is designed to help extremely low-income residents. “Other programs do exactly what you say, Barbara,” he added.

For Leah Gunn, the benefit was the matching funds. The county is leveraging its $240,000 into a total of $840,000, she said, and she’d hate to lose that additional funding.

Bergman conceded those points. “I’m really angry at miserly programs like this,” she said. “But half of something is better than all of nothing.”

Borrowing for Delinquent Taxes

Washtenaw County treasurer Catherine McClary attended Wednesday’s briefing – a resolution she’d proposed had been added to the board’s March 3 agenda. But commissioners decided not to add a second agenda item she had put forward.

The resolution that’s on the March 3 agenda permits the treasurer to borrow against the amount of delinquent property taxes in all 80 taxing jurisdictions throughout the county, including cities, townships, schools systems and libraries, among others. After March 1, these jurisdictions turn their delinquent taxes over to the county, and are reimbursed for that amount. The county treasurer then assumes responsibility for collecting these delinquent taxes.

In a cover memo to the board, McClary wrote that delinquent taxes have been increasing. Five years ago, the delinquent amount was $20 million – last year, that grew to $36 million. McClary expects it could reach as high as $40 million this year, and plans to borrow $50 million to hedge her bets. From the memo:

This bond issue is needed more urgently this year than in the past 13 years that I have served as County Treasurer. For the first time last year, we were not able to self fund our delinquent taxes. This year the County is facing cash flow issues more acute than in the past. The County ended 2009 with approximately $29 million dollars in cash in the General Fund of which $24 million represented a transfer in from the Revenue Sharing Reserve Fund. We will need the borrowed funds to operate the first half of this fiscal year.

This is a standard process, and commissioners treated it as such.

But they were not enthusiastic about a second resolution that McClary had put forward – one that corporation counsel Curtis Hedger did not add to the draft agenda for the March 3 meeting. Hedger told commissioners that McClary was requesting that the board appoint the treasurer as a special agent, which would give her certain powers. One of the powers it would give the treasurer is the ability to supplement her salary by up to 20%.

McClary objected to Hedger’s description, saying that the salary supplement isn’t in the resolution she proposed and that she’s made it clear in writing that she wouldn’t be increasing her salary. Hedger noted that the authority rests with the state statute that outlines the authorities of a special agent, not with the resolution granting her that status.

Hedger said the agency resolution is a regular request and that in the 16 years he’s been on the job, the board has never put it on the agenda. Commissioner Leah Gunn said that when it was discussed at a previous briefing, there’d been unanimous consent not to consider it.

Commissioner Jeff Irwin asked McClary what the advantage would be to passing the resolution. It would give the county’s budget office more flexibility, McClary said, to fund the treasurer’s office from the county’s general fund or from the delinquent tax fund.

Commissioners agreed not to put the special agent resolution on the agenda.

Bond Refunding in Sylvan Township

The board is being asked to approve a bond refunding for Sylvan Township, which would restructure the debt, lower the township’s bond payments and save an estimated $485,000 over the life of the bonds.

In 2001, the county issued $12.5 million in bonds for Sylvan Township, which has a contractual agreement with the county to make the bond payments. The township, located west of Chelsea, used the funds to build a water and wastewater treatment plant, intending to serve future development. The plan was to use revenue related to that development – from connection fees to the system – to cover the bond payments. Since then, however, the economy has soured and development hasn’t materialized.

The township hopes to take advantage of interest rates that are lower than they were at the time the bond was issued. In outlining the resolution, Joanna Bidlack of the county administrator’s office noted that timing is important, because a bond payment is coming due soon.

Some commissioners were concerned about whether the county would “get stuck with the bill.” Curtis Hedger, the county’s corporation counsel, said the county was the guarantor and would be required to pay, but they had several options. One of those would include going to court and getting a judgment levy – allowing the county to levy a court-ordered tax on residents to cover the bond payments. Such a tax would be exempt from Headlee rollbacks, he added.

Commissioner Wes Prater noted that this wasn’t the first time they’ve had an issue with Sylvan Township. Ken Schwartz recalled that a developer failed to pay a special assessment a few years ago, which caused problems for the township.

If the board does nothing, Hedger said, the situation will become much more difficult. Another factor: The township is hoping to sell the water and wastewater system, he said. Later, it was clarified that neighboring Chelsea might be the buyer.

Hedger also clarified that the current bond ended in 2023. In the refunding, the county would be putting out a new 20-year bond issuance of $10.4 million, starting this year.

Schwartz reported that the county’s board of public works, on which he serves, had held a special meeting on Monday – this kind of financing is “just one of the things the county does,” he said. Hopefully in four or five years, he added, the situation will right itself.

Internal Financial Controls

A resolution by Wes Prater to form a committee that would review the county’s internal financial controls was on the March 3 draft agenda. Prater had initially brought up the topic at the board’s Feb. 17, 2010 meeting, but it was tabled by commissioners.

At Wednesday’s briefing, Prater said he wanted to remove the resolution from the March 3 agenda and push it back until the county’s auditors had a chance to make a presentation to the board. County administrator Bob Guenzel had previously suggested scheduling a working session to bring in Mark Kettner of Rehmann Robson and county accounting manager Peter Collinson, to review with commissioners the existing internal controls.

Request for Proposals, Drug Discount Plan

Commissioner Jessica Ping brought up two items for consideration that weren’t on the March 3 agenda.

RFP on Spending Patterns

First, she suggested that the county issue a request for proposals (RFP), soliciting bids from vendors who analyze spending patterns and identify ways for the county to cut purchasing costs. At the board’s Nov. 19, 2009 working session, which Ping chairs, commissioners had heard a presentation about this kind of service from Fred Manuel of Alliance Cost Containment.

Barbara Bergman said she didn’t think the board had decided whether they needed this service. Ping said it was just an RFP, not a decision to proceed. Ping also noted the way the business model works doesn’t have a downside for the county. Alliance Cost Containment, for example, takes a percentage of whatever savings it identifies and implements. “It doesn’t cost us anything,” Ping said. “Why wouldn’t we do that?”

Wes Prater supported the RFP, saying that with this economy, they need to be looking at ways of doing business less expensively, “and this is one of them.”

The consensus was to direct staff to develop an RFP. Issuing an RFP does not require board approval.

CVS/Caremark Drug Discount Program

Ping also wanted to move forward on considering a drug discount program offered by CVS/Caremark. Commissioners discussed the program at their Sept. 2, 2009 board meeting. From Chronicle coverage:

Steve Rohm from CVS/Caremark told commissioners that 1,250 counties nationwide participate in the drug discount program. If Washtenaw County participates, cards would be offered to any resident not covered by insurance – there’s no enrollment, fee or registration required, no age limitations or limits on usage. Residents would take the card to participating pharmacies to get some type of discount on their prescription drugs. The discounts would be set by each pharmacy – Rohm said that consumers typically get around a 22% savings. Pet prescriptions are also covered, he said.

At Wednesday’s briefing, Ping said she knows several people who are out of work, who could use the help but who wouldn’t sign up for a county program because of pride. The CVS/Caremark plan is structured in a way that would be more likely for them to participate, she said.

Ping also noted that because the plan is offered to members of the National Association of Counties – Washtenaw County is a member – “we’re already paying for this.”

Kristin Judge, who was taking part in the briefing by phone, said the savings for county residents would be considerable. “I think it would be wrong of us not to do this,” she said. Ping added that the city of Saline is already participating in the program, and that residents have saved over $50,000 in the last six months.

Leah Gunn asked if it would be limited to CVS, or whether participants could use the plan to get discounts at other pharmacies. Ping clarified that many pharmacies offer discounts through the plan, including independents like Wenk’s.

Barbara Bergman objected to the program. She said it gave an unfair advantage to CVS, since that pharmacy’s name would be displayed on the cards given to participants. Ping said that it wouldn’t be prominent on the cards.

Bergman said it made more sense if pharmacies would just lower their prices in the first place. Ping pointed out that this was a larger issue over which the board had no control.

Curtis Hedger, attorney for the county, reported that CVS/Caremark agreed to grandfather in existing drug discount plans like the one offered by the Washtenaw Health Plan. [The WHP, designed for low-income residents, has reached capacity and is not accepting new participants.]

Other than that, the contract with CVS/Caremark stipulates that the county can’t use competing plans – that was a concern to some commissioners. Jeff Irwin suggested eliminating that item in the contract. He recalled that at the CVS/Caremark presentation in September, Rohm had indicated they wouldn’t enforce that part of the contract. Gunn noted that as long as it was written into the contract, CVS/Caremark could enforce it, if they wanted to.

Hedger wasn’t sure CVS/Caremark would agree to that change. He said he hadn’t reviewed the contract or talked to their representative since October, and that he needed to review it again. Commissioners agreed to put the item on the March 17 meeting agenda for further consideration.

Public Commentary

The bi-weekly briefings of the county board of commissioners, though informal, must conform to the requirements of Open Meetings Act. That means that a representative from the county clerk’s office – deputy clerk Jason Brooks – attends and takes minutes. There’s also opportunity for public commentary, though typically no one from the public attends.

On Wednesday, however, when Joanna Bidlack asked if anyone wanted to speak during public commentary, all eyes turned to Alice Ralph. Ralph noted the attention, but demurred – she said she’s running for the board’s 11th District seat, and was just there to observe. The 11th District is currently represented by Jeff Irwin, who is running for state representative this year.

John Dingell, the longest-serving member of the U.S. House of Representatives, spoke at the Saturday morning meeting of the Ann Arbor Democratic Party. Dingell represents the 15th District, which includes Ann Arbor. (Photos by the writer.)

U.S. Rep. John Dingell got his biggest round of applause at Saturday morning’s meeting of the Ann Arbor Democratic Party when he described his preference for health care reform as a single-payer system – a proposal he’s been pushing for decades.

But during much of the 45 minutes spent talking and fielding questions, Dingell described a compromise working its way through Congress that falls far short of that goal.

Dingell is the lead sponsor on the House of Representatives health care reform bill, which differs in substantive ways from the Senate’s version. Those two versions of the legislation will need to be reconciled over the coming weeks.

President Barack Obama is urging Congress to deliver something for him to sign before he makes the annual State of the Union address, Dingell said, adding that it’s not clear if that deadline will be met.

Dingell covered much of the same ground on Saturday as he did when The Chronicle last encountered him at a meeting of the Obama Caucus of Ann Arbor in August. But by now, the massive health care reform legislation is closer to completion – though it’s not, Dingell reminded his fellow Democrats, a done deal.

Legislation “We Can Be Proud Of”

Dingell told the group of about three dozen Democrats, meeting at the Ann Arbor Community Center on North Main, that Congress was on the road to wrapping up health care legislation “which I hope we can be proud of.” While the final version will likely provide coverage for an additional 30 million Americans who are now uninsured, it won’t go as far as Dingell would have liked. “Is it enough? The answer is no, it is not enough,” he said.

Ned Staebler, who's running for state representative in District 53, shoots video of John Dingell at Saturday's meeting of the Ann Arbor Democratic Party. Another candidate for the state District 53 spot – Jeff Irwin, a current county commissioner – also attended the meeting.

Dingell laid much of the blame for that on his colleagues in the Senate, saying he’s had a “structural dislike” for the Senate – ever since he saw as a boy the many ways that senators could delay action. And since then, he said, “they’ve only gotten better at it.” [Dingell's father, John Dingell Sr., was first elected to the House in 1932. Dingell himself has served since 1955, the year his father died.]

During his talk, Dingell touched on some of the major differences between the House and Senate versions. [Copies of an Associated Press article, published by the Detroit Free Press and explaining the House and Senate versions, were passed out at Saturday's meeting.]

One of those differences is the public option – a government-run health care plan that’s part of the House bill, but not in the Senate version. At the August meeting Dingell attended, held at the Ann Arbor home of Judy Dooley (who was also at the Saturday gathering), he said he’d do everything he could to keep the public option component. On Saturday, he told the group not to give up on the public option, but that it would be a hard fight to keep it in the final bill. [Later in the day, news reports described the public option as "doomed."]

Another battle could be fought over the new insurance exchanges called for by both the House and Senate versions. These exchanges – a mechanism for consumers and small businesses to buy insurance from providers – would be run by the federal government in the House version, while the Senate would give that role to the states.

Dingell said he thinks House speaker Nancy Pelosi will stand firm on the House version, but he described the process of reconciling the two bills as a “game of legislative chicken.” It will probably involve “ping-ponging” the versions from the House back to the Senate and vice versa, he said, coupled with extensive discussions among Congressional leaders. This approach is more likely than hammering out an agreement in conference committee, Dingell said.

Dingell acknowledged the controversy over the fact that conference committee meetings for health care legislation haven’t been opened to the media, a move that recently prompted the head of C-SPAN, Brian Lamb, to write to House and Senate leaders in protest. [.pdf file of Lamb's letter]

In addition to his comments about health care reform, Dingell offered an opinion on the 2010 elections. They’ll be difficult, he said, but he urged the group not to buy the story that Democrats will lose control of the House and Senate. He suggested that the federal budget and jobs will be among the major campaign issues. While some of the federal economic stimulus efforts show signs of success in producing jobs, Dingell said he hopes Obama doesn’t make the same mistake that Franklin D. Roosevelt made in the 1930s when he pulled back on some of the New Deal initiatives too early.

In concluding his remarks, Dingell noted that his own legislative priorities include passing a food safety bill that would be the biggest overhaul of that industry since 1938, plus similar legislation to better regulate the prescription pharmacy and cosmetics industries.

Lou Glorie, vice chair for programs for the Ann Arbor Democratic Party, pressed Dingell on whether he would vote for the Senate version of the health care bill, if a compromise couldn't be reached. Sitting in front of her are Doug Kelley and Stu Dowty – officers of the Washtenaw County Democratic Party.

Questions for Dingell

Several people had questions for Dingell, focused primarily on the health care legislation.

Lou Glorie commended Dingell for his health care op-ed published by Yahoo! in November. She asked him to clarify his remarks on the “ping-ponging” process, and wanted to know if he’d be willing to vote for the current Senate version of the legislation.

Dingell said he was only speculating about the course of action that Pelosi would take in reconciling the two versions – he wouldn’t swear that this would be her approach, he said.

Describing the current state of the U.S. health care system as “intolerable,” Dingell said he wouldn’t commit to voting on anything at this point. He said at the end of the day, they’ll all have to decide if the legislation is good enough to move forward – but he’d be loathe to throw away the progress they’ve made, saying this was the most difficult undertaking he’d experienced in his career.

It’s not the bill he would have written, Dingell added. However, he wanted to wait and see what the final version would look like. “Let’s push the process as hard as we know how,” he said.

A woman who told Dingell she was a nurse by profession asked how long it would take before health care reforms were enacted. Her patients are dying – they didn’t have health insurance, and therefore didn’t get the screening tests necessary to diagnose diseases before they became life-threatening, she told Dingell.  “I want as much as we can get, as soon as we can get it,” she said.

Dingell said that after legislation was passed, there’d be a period required to write the accompanying rules and regulations, plus put the financial component in place. The Senate version sets the year for enactment at 2014 – the House version is a year earlier. He hoped the final legislation stays closer to the 2013 timeframe, and that they can address some issues even earlier – like closing the Medicare Part D “donut hole,” or addressing the practice by some insurers of denying coverage because of pre-existing conditions.

Jeff Pearson's son, Henry, was identified as the youngest Democrat attending Saturday's meeting – and got a shout-out from Dingell.

In response to a question about new recommendations regarding mammogram screenings, Dingell said he was “thoroughly outraged” about it. [In November, the U.S. Preventative Services Task Force recommended that women wait until they reach the age of 50 to begin mammography screening. The advice has been controversial, with groups like the American Cancer Society speaking out against it. Some have suggested that the timing was politically motivated to coincide with the debate over health care reform.]

Dingell reported that he’d met with medical professionals from the University of Michigan Medical School on Friday, who told him they weren’t planning to follow the new proposed guidelines.

In a question unrelated to health care, Gus Teschke asked about financial regulatory reforms being proposed by Sen. Chris Dodd and Rep. Barney Frank, noting that their legislation doesn’t call for the break-up of big banks. Teschke asked what could be done to make that happen.

Dingell said he’d like to see the Glass–Steagall Act reinstated – it kept the industry honest. That legislation, passed in the 1930s in the wake of the banking crisis of the Great Depression, was repealed during the Clinton administration. Dingell recalled that Dodd was a strong advocate for the repeal, and said that Frank’s bill is much better than current law regulating the industry.

The meeting wrapped up at noon, though Dingell and his wife, Debbie Dingell, stayed to talk with people who attended, including Ann Arbor city councilmembers Sabra Briere and Tony Derezinski. Dingell also spent a few minutes chatting with The Chronicle – we are unable to break any news about whether the 83-year-old congressman will run for reelection. That announcement will come at the appropriate time and place, Dingell said [which wasn't Saturday at the Ann Arbor Community Center].

U.S. Rep. John Dingell shakes hands with Conan Smith, chair of the Ann Arbor Democratic Party and a Washtenaw County commissioner, at Saturday's meeting at the Ann Arbor Community Center.