County Board Agenda: Health, Finance Issues

Refugee health screenings, drug discount plan, delinquent taxes

Discussion at the Feb. 24 briefing for the Washtenaw County Board of Commissioners covered a broad range of topics, including health screenings for the 50-100 refugees who settle in the county each year, federal funding for low-income families, a drug discount card for local residents, and a bond refunding for financially-strapped Sylvan Township. Some commissioners had questions and concerns about all these topics.

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.


  1. By Bob Martel
    February 28, 2010 at 12:55 pm | permalink

    I am HORRIFIED that the County would consider BORROWING money against delinquent taxes. That is the epitome of foolishness. Not only will this action incur additional interest costs, but there will be situations where the taxes will never be collected, then what? The County needs to live within it’s means, period, end of story.

  2. By Mary Morgan
    February 28, 2010 at 1:13 pm | permalink

    Re. borrowing against delinquent taxes: This is a regular practice, not unique to the current economic climate. My understanding is that it’s a standard process practiced in other counties as well, but I’ll have to follow up on that.

  3. By Bob Martel
    February 28, 2010 at 1:17 pm | permalink

    Hi Mary, it may very well be standard practice but it’s still foolish in this economic climate to add more debt to cover operational shortfalls. I’m OK with going into debt for necessary capital and infrastructure items, but to fund operations out of debt is like using your credit card to go on vacation in Las Vegas.

  4. By Richard Dawn
    March 1, 2010 at 5:44 pm | permalink

    Wonder what the Treasurer’s motivations are for special agent authority?

    Treasurer McClary already made a substantial “money grab” by taking a couple of hundred thousand dollars from the increase in the hotel room tax to do the same job her office did before ….simply collecting the tax. Couldn’t that money save jobs and services elsewhere in County government?

  5. By Catherine McClary, Washtenaw County Treasurer
    March 1, 2010 at 6:05 pm | permalink

    Mr. Martel and other readers – I am writing to clear up misconceptions regarding “borrowing to pay delinquent taxes.” Once a Delinquent Tax Revolving Fund is established by the Washtenaw County Board of Commissioners (nearly 40 years ago), the County is required by State law (the General Property Tax Act) to pay every taxing jurisdiction – all cities, townships, school districts, community colleges, etc. – the taxes they could not collect so that they can function and provide essential government services already budgeted at the time they adopted their levies. This is not a borrowing solely for the County – it affects every unit of government and every public service; the County government is a small portion of the borrowing.

    There are safeguards written into the law to prevent the County from bearing the brunt of the cost of borrowing or the expense of any uncollectible taxes. The Treasurer, also by State law, must charge a 4% administrative fee and 12% interest per year to the delinquent tax payer to cover the costs of borrowing. The County Treasurer collects the delinquent taxes, and if not collected, forecloses and auctions the property.

    If the auction does not pay all of the taxes, the Treasurer can “charge back” to the taxing jurisdictions the pro rata taxes not collected. This happens most often when the Michigan Tax Tribunal adjusts a property’s value downward and the Treasurer must refund the extra taxes paid to the tax payer. The only time I can remember this happening in the past 14 years was when the former hotel at Huron and Fourth Ave. went into bankruptcy and was later sold for affordable senior citizen housing for $1.00 and no back taxes.

    The state law says “shall” and it is not discretionary. The County does not have $40-50 million dollars in reserves to pay delinquent taxes to local jurisdictions until they are collected. In better economic times, as the County Treasurer, I did self-fund a portion of the delinquent taxes. Last year was the first year that the County’s cash flow was insufficient for me to self-fund partially and this year I expect it to be worse.

    Here are the key points and I’ve included excerpts from the State law.
    1. Once a County has established a Delinquent Tax Revolving Fund as Washtenaw did 40 years ago, the County is required to pay the local taxing jurisdictions their delinquent taxes whether it borrows the money or has the money in reserves.
    2. The County is required to pay the local taxing jurisdictions interest if it doesn’t pay the delinquent taxes timely.
    3. The County has the ability by state law to borrow under certain conditions specifically to pay the delinquent taxes to the taxing jurisdictions.
    4. The County Board of Commissioners must adopt a resolution to borrow if they want to issue Notes. The County Treasurer is always, under State law, the special agent for the County in issuing Delinquent Tax Notes. (There was an error in the Chronicle’s report, probably because of the confusion in the meeting during the attorney’s report.)
    5. The Treasurer cannot borrow more than the actual uncollected delinquent taxes. (I will not borrow $50 million “to hedge her bets.” The borrowing resolution allows to the Treasurer to borrow an amount not to exceed $50 million.)
    6. The County Treasurer collects fees and interest from delinquent tax payers to offset its expenses.
    7. The County Treasurer can “charge back” uncollectible taxes so the County is not stuck with the liability.
    8. While Michigan’s system of Townships and County’s for real property tax collection may seem strange (it is too convoluted for modern times), it was created by Thomas Jefferson as part of an elaborate plan for making education available to every citizen.
    “I have indeed two great measures at heart, without which no republic can maintain itself in strength: 1. That of general education, to enable every man to judge for himself what will secure or endanger his freedom. 2. To divide every county into hundreds, of such size that all the children of each will be within reach of a central school in it.” –Thomas Jefferson to John Tyler, 1810. ME 12:393

    I have included only excerpts and bolded sections to make it easier to read. You can go to the website to read it in its entirety. The delinquent tax borrowing section 211.87 begins on page 132 approximately.
    [.pdf file of Act 206]

    Act 206 of 1893 as amended
    Michigan Compiled Laws (MCL) 211.1 – 211.154

    211.87 Adjustment of accounts; statement of account; interest on delinquent payments; charge back lists.
    Sec. 87.
    (1) The accounts between this state and each county and local tax collecting unit in this state shall be adjusted on the basis of crediting and paying to each county and local tax collecting unit the taxes collected by and for each county and local tax collecting unit with interest on those taxes. . . .
    (3) . . . the county treasurer shall pay to this state all money collected and due from that county to this state . . . . The county treasurer or collector of each assessing district in the county shall also pay to the state treasurer for the use of this state 1/2 of 1% for each month or fraction of a month as interest on all money in his or her possession belonging to this state and not remitted on the fifteenth of the month.
    (4) . . . The county treasurer shall deliver the statement to the treasurer of the local tax collecting unit and pay the amount shown by the statement to the local tax collecting unit. The county treasurer shall notify the clerk of the local tax collecting unit of the total amount paid and provide a description of the property upon which the taxes were paid. The county clerk shall charge that amount to the county treasurer, and the clerks of the local tax collecting units shall charge that amount to the treasurers of the local tax collecting units on the books of their respective offices.
    (6) The county board of commissioners by majority vote may authorize the county treasurer to pay directly to the school districts all money shown on the statement to be due to the school districts within the county
    Sec. 87a.
    The township or city clerk shall within 10 days after receiving the notice from the county treasurer of the amount of delinquent taxes and a description of the land upon which said taxes were paid, make out and deliver to the moderator or secretary of the district board or board of education of each school district situated in whole or in part within such township or city to which money may be due from delinquent school taxes as shown by the statement of the county treasurer, a detailed statement showing the amount of such delinquent school tax together with the interest thereon and the year of assessment thereof and deliver a copy of such statement to the township or city treasurer. The township or city treasurer shall forthwith pay all moneys shown by such statement to be due such school district to the proper receiving officer of such district and notify the secretary or director of each respective school district of the total amount paid to the school treasurer.
    Sec. 87b.
    (1) The county board of commissioners of any county may create a delinquent tax revolving fund that, at the option of the county treasurer, may be designated as the “100% tax payment fund”. Upon the establishment of the fund, all delinquent taxes, except taxes on personal property, due and payable to the taxing units in the county, except those units that collect their own delinquent taxes after March 1 by charter or otherwise, are due and payable to the county. The primary obligation to pay to the county the amount of taxes and the interest on the taxes shall rest with the local taxing units and the state for the state education tax under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906. If the delinquent taxes that are due and payable to the county are not received by the county for any reason, the county has full right of recourse against the taxing unit or to the state for the state education tax under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, to recover the amount of the delinquent taxes and interest at the rate of 1% per month or fraction of a month until repaid to the county by the taxing unit. However, if the county borrows to provide funds for those payments, the interest rate shall not exceed the highest interest rate paid on that borrowing. A resolution or agreement previously executed or adopted to this effect is validated and confirmed. For delinquent state education taxes under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, the county may offset uncollectible delinquent taxes against collections of the state education tax under the state education tax act, 1993 PA 331, MCL 211.901 to 211.906, received by the county and owed to this state under this act. The fund shall be segregated into separate funds or accounts for each year’s delinquent taxes.
    (2) If a delinquent tax revolving fund is established, the county treasurer shall be the agent for the county.
    (3) The county treasurer shall pay from the fund any or all delinquent taxes that are due and payable to the county and any school district, intermediate school district, community college district, city, township, special assessment district, this state, or any other political unit for which delinquent tax payments are due within 20 days after sufficient funds are deposited within the delinquent tax revolving fund or, if the county treasurer is treasurer for a county with a population greater than 1,500,000 persons, within 30 days after sufficient funds are deposited within the delinquent tax revolving fund. In a county with a delinquent tax revolving fund where the county does not borrow pursuant to section 87c or 87d, if the county treasurer does not make payment of the delinquent taxes to the local units within 10 days after the completion of county settlement with all local units under section 55, the county shall pay interest on the unpaid delinquent taxes from the date of actual county settlement at the rate of 12% per annum for the number of days involved.
    (5) In the resolution authorizing the borrowing and issuance of notes, the delinquent taxes from which the borrowing is to be repaid shall be pledged to the payment of the principal and interest of the notes, and the proceeds of the collection of the delinquent taxes pledged and the interest on the proceeds shall be placed in a segregated fund or account and shall not be used for any other purpose until the notes are paid in full, including interest. The segregated fund or account shall be established as a part of the delinquent tax revolving fund and shall be accounted for separately on the books of the county treasurer.

  6. March 2, 2010 at 8:56 am | permalink

    Thanks to Catherine McClary for her conscientious service. She has been a prudent and careful Treasurer as well as giving people the best chance to stay in their homes. We are fortunate.