At its May 1, 2013 meeting, the board had approved development of a four-year budget. Looking at that period from 2014-2017, McDaniel told the board on May 15 that she hopes to identify $6.99 million in structural cuts in the first year of that four-year period. That’s a slight increase from the $6.88 million in structural changes that McDaniel targeted in her previous budget briefing, delivered at the board’s Jan. 16, 2013 meeting.

If the $6.99 million in structural changes can be identified in that first year, it would eliminate compounded, projected deficits over the four-year period that would total $34.45 million. [.pdf of 2014-2017 budget estimate] The projections do not factor in a possible major bond proposal that the board is considering.

The approach to addressing this $6.99 million target depends on whether the county moves ahead with a major bond proposal that’s in the works, to cover the county’s pension and retiree healthcare obligations. [See Chronicle coverage: "County Board Debates $345M Bond Proposal."] If the board does decide to bond for those obligations, McDaniel said, then the goal in 2014 is to reduce operating costs by $1.83 million, cut $100,000 from outside agency funding, and realize $5.06 million in cost savings from bonding for obligations for the county’s pension and retiree heathcare.

If the board decides not to bond for those obligations, however, then McDaniel said that most of the $6.99 million would need to come from a reduction in operating costs, as well as $100,000 in cuts to outside agency funding.

Both scenarios assume an additional $2.4 million in revenue for 2014. It’s expected that will be achieved from an increase in property tax revenues, as property values in the county climb.

McDaniel told the board that she and her staff need direction in terms of setting priorities and identifying core services. She indicated that the county can no longer provide the broad range of services that it has in the past.

The board held its first budget retreat on March 7, 2013. Commissioners will convene for a second retreat on May 16, starting at 6 p.m. at the county’s Learning Resource Center at 4135 Washtenaw Ave., near the county jail complex. The meeting is open to the public.

For 2013, the county’s financial staff is now projecting a $818,999 shortfall for the year. That amount is lower than the $3.03 million shortfall that was originally projected for 2013. The county had anticipated covering that $3.03 million by tapping its fund balance, but it’s now expected that the county will need $2.21 million less than that from the fund balance to cover the shortfall. The projected fund balance at the end of 2013 is expected to be about $16 million.

This brief was filed from the boardroom of the county administration building, 220 N. Main in Ann Arbor. A more detailed report will follow: [link]

The county works on a two-year budget planning cycle. In late 2011, commissioners set the budget for 2012 and 2013. However, because state law mandates that the board must approve the budget annually, commissioners voted in December 2012 on a budget “affirmation” for 2013, making several adjustments to the $102.8 million general fund budget. This year, they’re beginning the two-year cycle anew, planning for 2014-2015, with a longer-term view through 2017.

At the Jan. 16 meeting, financial staff provided preliminary estimates that show a general fund deficit of $3.93 million for 2014, which translates to 45.9 full-time-equivalent employees. That’s followed by projected deficits of $4.88 million in 2015 (56.9 FTEs), $6.53 million in 2016 (76.4 FTEs), and $9.27 million in 2017 (108.1 FTEs). McDaniel stressed that the projected deficits reflect what would happen if no action is taken. In addition, the FTE figures were merely a translation to show how many employees would hypothetically be affected in order to balance the budget – it’s not a policy decision to have layoffs, she said.

The projections include an assumption of only minor increases – 1% annually – in property tax revenues, lower state funding, and the same level of fringe benefits for employees, with no across-the-board salary increases. However, the projections assume that step increases and longevity pay would be reinstated for union employees.

The budget presentation also included targets to tackle a $6.88 million structural deficit in 2014. If that happens, “we’d be done – we’d have no deficit” going forward,” McDaniel said. The goal is to generate an additional $1.2 million in revenue, reduce operating costs by $2.96 million, cut $100,000 from outside agency funding, and find $2.62 million in reductions to employee compensation and benefits. In that regard, McDaniel noted that 327 employees currently have what’s called a “Cadillac” health care plan. Under new federal health care laws, the county government will pay a 40% tax starting in 2018 if those plans remain in place.

McDaniel noted that for 2012-2013, the county overcame a $17.5 million deficit – but only about $7.3 million of that came from structural changes. Yousef Rabhi, the board’s chair, noted that even though the $6.88 million target is lower, the cuts will be a challenge because many services are already cut to a minimal level.

McDaniel also floated some questions that commissioners should consider in their upcoming deliberations: (1) Do current budget allocations have the impact that commissioners desire? (2) Should the general fund be used when there are federal/state revenue reductions in non-general fund programs? and (3) What community area(s) can the county least afford to impact any further?

The board has set a planning retreat for Thursday, Feb. 21 at 6 p.m. – to be held during its regular working session – to talk about budget priorities. Update: The retreat has been rescheduled for March 7 at 6 p.m.

This brief was filed from the boardroom of the county administration building at 220 N. Main in Ann Arbor. A more detailed report will follow: [link]

Before the meeting started, Robert Allen, deputy superintendent Ann Arbor Public Schools, distributed spiral bound copies of the report from a transportation working group.

The board received two informational reports — one from a cross-governmental working group charged with assessing the viability of continuing to provide non-mandated school transportation, and another one on the district’s partnership with the University of Michigan Depression Center (UMDC).

The transportation report generated significant discussion, as the board examined the working group’s recommendations and considered the impact of making significant reductions to transportation. Even if the district were to eliminate all except mandated transportation for students, that would save only about $5.5 million of the roughly $17 million gap projected in next year’s budget.

A key element of the transportation discussion was a suggestion to consider redistricting – that is, reassigning some students to different school buildings based on where they live. Trustees discussed redistricting in the context of possible steps like eliminating some or all busing and closing schools.

The board directed administration to begin looking into a redistricting process.

Transportation Working Group Report and Discussion

AAPS Superintendent Patricia Green introduced the transportation report by saying that the working group was formed as a result of a significant fiscal crisis. She described it as a broad-based group including representatives from the city government, the Ann Arbor Transportation Authority (AATA), AAPS administration, the Washtenaw Intermediate School District (WISD), and community activists. She said it had been a huge undertaking, and that the group had done a lot of research and information-gathering in a short amount of time.

AAPS deputy superintendent of operations Robert Allen presented a summary of the working group’s conclusions, and noted that a full report of their work had also been presented in spiral-bound form to each board member, including maps of each bus route by school and the set of laws applicable to transportation. [.pdf of working group report] Allen said the overall goal of the working group was to study and report on the financial sustainability of student transportation. The group’s objectives were to identify and analyze the options.

Allen reported that total transportation costs for the district are $6.96 million. But that amount falls to $5.59 million after subsidies for special education are applied. He noted that the law requires AAPS to transport special education students as well as homeless students.

Allen reported that the working group had evaluated nine main options:

1. contracting or privatizing transportation;
2. improving pedestrian infrastructure;
3. re-routing;
4. changing school start times to consolidate levels on buses;
5. using more common stops;
6. using more AATA routes;
7. increasing walk zones;
8. eliminating all choice busing;
9. eliminating all transportation except that which is legally required.

Allen reported that the group had concluded that privatization would not save much – because contract rates are rising, as more and more districts outsource transportation services.  Walk zones could not be increased due to state law, Allen said.

But parts of all other options were recommended, except for complete elimination of all busing, an option the working group recommended keeping open for the next five years.

Transportation: Working Group Recommendations

Ultimately, Allen reported, the transportation working group suggested the following:

• Requesting that the city improve sidewalks, and place additional crossing guards in order to reduce required safety busing of students who live within the 1.5-mile walk zones;
• Re-routing buses, possibly as part of increased common stops;
• Increasing use of AATA bus routes;
• Eliminating all 60 routes of choice busing, including those for Ann Arbor Open, Skyline lottery students, and Roberto Clemente.

Allen added that other options that had been reviewed but considered not feasible were: using University of Michigan buses (would not match with student needs); creating vanpools (would not be less expensive); and facilitating subscriptions for private transportation services (would need to be organized by parents, since the district is legally prohibited from charging for transportation).

Finally, Allen closed the presentation of the working group’s recommendations by noting that the working group members felt that substantial savings could not be gained by eliminating just pieces of the school transportation system, but that transportation in its entirety may need to be gradually eliminated. At the same time, they acknowledged that eliminating transportation is not good for education, and could increase the achievement gap. They also felt the process would require open communication with the community regardless of what the board decided.

Transportation: Clarifying Questions

Trustee Irene Patalan asked whether the committee had considered combining students from different levels (elementary, middle, and high school) on the same bus. Allen explained that the working group had not considered that, because it would require purchasing more buses. Lightfoot added that the committee also considered the safety issues that might arise if six-year-olds and 16-year-olds rode the same bus. Lightfoot also mentioned as a concern the reduction in the number of hours driven per day, saying it would affect the quality of the available drivers, because a schedule with fewer working hours provides lower benefits.

Allen noted that an important factor to consider – for any reduction in transportation service – is the possibility the district would lose students to other schools. The district would lose the state funding associated with those students, so it’s important to weigh the costs savings in transportation against the potential loss in revenue.

AAPS trustee Simone Lightfoot

The board requested more information on how the elimination of busing could impact student achievement and attendance. Trustees asked what the experience of other districts had been. Trustees also asked if AAPS had studied the effect of the transportation changes the district had implemented two years ago (such as enforcing walk zones, increasing common stops, etc.).

Allen explained that other districts reviewed by the working group had reversed their decisions to eliminate transportation. Green added that in other jurisdictions where a private group had tried to contract buses, the approach didn’t tend to be feasible in the end, and also raised equity issues regarding affordability of the service.

Lightfoot questioned whether buildings in AAPS had adequate infrastructure to handle additional traffic if busing in the district is eliminated.

Transportation: Board Discussion — Redistricting

Baskett asked if the working group had considered redistricting, which means changing the schools to which some students are assigned. She noted that children from west of Clark road are bused past four closer elementary schools to attend Burns Park elementary. She suggested that redistricting could increase efficiency, and thereby decrease costs.

Allen said that redistricting was outside the purview of the working group. But Green responded that the topic was “skirted all around as a reasonable option” and that “the words rerouting and redistricting were being used somewhat interchangeably.” Green said redistricting would need to be approached with caution. She noted the importance of looking at the history of past choices about how school boundaries have been set. She said any redistricting would need to be done in a committee specifically charged with that purpose, and would need much longer than the six months the transportation group had taken to do its work.

Nelson and Lightfoot, who had served on the transportation working group, weighed in with their opinions on the working group’s view of redistricting. Nelson said, “If the committee had gone into redistricting, it might have been a case of the tail wagging the dog.” Lightfoot stated: “There was a willingness to look at redistricting on the committee.” Baskett responded that she was pleased to have the route maps provided, and that there was no loud opposition to redistricting.

Mexicotte asked if redistricting would be done for transportation savings, or for other goals as well. Green responded that school closures and transportation could both be part of the redistricting process, and that she recommended the board look at opening a discussion on redistricting sooner rather than later.

Transportation: Board Discussion — General

Allen thanked the trustees who were part of the working group — Nelson and Lightfoot. Nelson thanked the other participants, and encouraged everyone to look at the appendices of the full report, which he said contained a lot of useful information that could inform the trade-offs between different options. Lightfoot said the process of working with the group had been phenomenal. She noted that this process could be used to engage community members on other issues as well.

Board vice president Christine Stead responded to the idea that eliminating transportation is not consistent with the district’s educational goals. She pointed out that none of the cuts the district has had to make are consistent with educational goals. That’s because education in the state of Michigan is not viable right now, she said. “We have been talking about this item [transportation] for three years, not because we want to, but because we have really horrible tradeoffs that we have to make,” she said.

Trustee Andy Thomas expressed his appreciation to the committee for their hard work, but also indicated lack of complete satisfaction with the results. He stated two concerns. First, he said that the recommendations were not very creative, and seemed to dismiss some items he saw as worthy of more consideration (i.e. contractual busing and vanpools). Second, the report does not address the primary question of whether transportation is financially sustainable. Thomas asked, “Are we saying we would rather spend $5 million on transportation rather than have 50 teachers?”

Nelson took issue with the question, saying that it was not within the scope of the working group to compare transportation to other budget elements. Nelson said the question of which jurisdiction pays for crossing guards came up during the working group meetings. Currently, the city does, but they would like to move it out of their budget, he said.

Lightfoot stressed how the working group’s conversation about sidewalk improvements was a great example of working cross-governmentally for solutions.

A few board members expressed interest in the idea that the AAPS Educational Foundation could be used as an entity to help secure funding for transportation. Allen responded that he would consult with AAPS deputy superintendent for human resources and legal services Dave Comsa regarding the possibility of working through the foundation on transportation.

Mexicotte asked, “What if we just decide to do something that violates state law because we think it’s best for kids?” She expressed frustration at the legal constraints that would prevent the district from charging for transportation offset by a scholarship fund, or from providing transportation only to areas of the district most in need. Thomas responded that he assumed Mexicotte had “her tongue at least partially in her cheek,” and pointed out that being sued by even one parent would cost the district too much in legal fees.

Transportation: Next Steps

Board members wondered what next steps they should take and what the timeframe for those steps should be. Thomas told his board colleagues that his interpretation of the report is that the board basically needs to choose between the status quo and eliminating all transportation. Nelson disagreed, saying that there were intermediate steps that could be taken to save the district significant chunks of money – such as eliminating choice busing and working with the city to reduce the need for safety busing. Mexicotte suggested bringing a list of necessary sidewalk replacements and locations for crossing guards to the transportation safety committee, a joint committee of school and city officials that already meets quarterly.

Mexicotte pointed out that everything is interconnected — high school transportation, choice busing, redistricting — and that everything is on the table as the board moves to plug the $17 million budget deficit it faces for next year. She suggested that the administration should come up with their best thinking on the issues and questions raised by trustees during this discussion by mid-winter, including the redistricting possibility.

AAPS superintendent Patricia Green

Green agreed that AAPS administration should continue internally the research of the larger working group, so that the board’s remaining questions could be answered, but noted that “this is only one piece of a jigsaw.”

Redistricting, Green said, will take time — at least a year, if not more — to do it justice. That would include outsourcing a feasibility and demography study to a third party, and ensuring significant community involvement. Though the recommendation for how to redistrict can come quickly, she said, it’s a hugely emotional issue for those who are affected. To illustrate her point, Green noted how many people had addressed the board regarding the possible movement of the Roberto Clemente program into another building last year. “The community has to come along with it — it cannot just be by fiat,” she said.

Stead argued that the fiscal realities facing AAPS might mean the district has to make decisions about redistricting faster than it would like. Mexicotte agreed that many of the budget decisions will need to be made quicker than the board feels comfortable with, but that redistricting cannot be rushed. “I would like to see us do this, but we are looking at a year and a half cycle,” she said. “It can’t be done for fall 2013.”

Stead countered that allowing the redistricting process to take a year and a half would cause unappealing consequences. Doing it faster, she said, could help save class sizes and programs. Mexicotte pointed out that the question is ancillary costs. For example, she said, “If we stop transportation to an area, do we lose enrollment? … There are things we can do, but thinking of the unforeseen costs is also very important.”

Mexicotte closed the discussion by thanking the transportation working group for putting the presentation together, saying it had given the board a lot to think about.

UM Depression Center Partnership Report and Discussion

Green introduced this report, by saying that AAPS has a very significant partnership with the University of Michigan Depression Center (UMDC) that helps with recognizing depression in adolescents.

Trustees Susan Baskett and Andy Thomas share a laugh before the meeting started.

Assistant superintendent for secondary education Robyne Thompson reviewed the history and scope of the partnership, explaining that it began in 2007 to provide training systematically to AAPS administration and staff  –  to raise awareness of depression and prevent suicide among adolescents. Since the program’s inception, Thompson said, over 750 administration and staff members have been trained, and 150 students have become peer-to-peer mentors.

Thompson explained that the peer-to-peer work focuses on students referring peers to school counselors, not providing any sort of counseling themselves. She reviewed some of the slogans used in anti-depression campaigns at each of the high schools, and introduced three students who had worked as peer mentors in the program to speak. The students who addressed the board shared how their focus is to reduce the stigma of depression, educate their peers, and be a resource to peers in need.

Trish Meier of the UMDC then thanked the board for the district’s continued support. After this first five years of successful training, she said the partnership is now looking at how to improve in the future.

Trustee Andy Thomas thanked the presenters, and the peer-to-peer mentors especially, saying their role was very valuable in the schools. He also noted how the presentation was very timely given the recent events in Sandy Hook, which have created an awareness and concern about how mental health is handled in our schools. He asked how the district is ensuring that students identified by the program as possibly experiencing depression are connected with appropriate resources, and what follow up there is to be sure they are receiving the services they need. Thompson told Thomas that longitudinal tracking of students’ interactions with school counselors is done in Power School, a student information management computer software system.

Nelson noted that the UMDC programs are important to families as well as students.

Patalan asked how the peer-to-peer element of the program keeps going. The students explained that their health teacher was the staff person who coordinated it, and that so far, peer mentors have simply volunteered.

Mexicotte asked the students what they have learned by volunteering as peer-to-peer mentors. They said they have learned about depression, and have found a way to give back for the help they have received in their own lives. Mexicotte thanked them for stepping up to the plate and for the work they have done in their schools.

Sound Field Purchase

AAPS executive director of physical properties Randy Trent presented a proposal to purchase 35 mobile sound field amplification systems through REMC, a regional purchasing consortium. The total cost of the purchase would be $27,405, just over the limit requiring board approval, Trent explained. He added that these systems will replace systems purchased as part of the 2004 Comprehensive School Improvement Program, which are now failing to maintain their battery charge. Sound amplification, Trent said, helps teachers not to lose their voices, and allows any child in the room to hear in the same way.

Baskett requested to see the REMC bid as part of the second briefing. Thomas asked how the systems that would be purchased differ from those used by teachers in the classroom, and what the expected life of the equipment would be. Trent clarified that these systems would be mobile rather than having speakers in the ceiling, and could be expected to last from three to five years, depending on the battery life.

The purchase of the sound systems will be brought back to the board for a second briefing and vote at the board’s next regular meeting.

Sandy Hook Elementary School Shootings

Mexicotte began by saying that there are no words that will adequately address the Sandy Hook shootings, but that the incident deserves reflection.

AAPS board president Deb Mexicotte

On behalf of the district, she expressed deep and abiding sorrow for the loss of the 20 young students and six dedicated educators, and said that none of us will ever be the same. Mexicotte then said when hearing the news coming out of Connecticut, she was struck by the stories of bravery among teachers and first responders. “The teacher-student bond is foundation to who we are as a people and as a species,” she said. “I want to thank those teachers who lost their lives protecting their students … Their heroism is an affirmation of what we know in our hearts — every one of our teachers would do the same … It is my hope that they will never have to.”

During her superintendent’s report, Green also reflected on the Sandy Hook shootings, saying it was hard to witness, but also acknowledging the acts of bravery during the crisis by fellow educators and first responders. Green said she also wanted to acknowledge the very dedicated staff here in Ann Arbor, who supported AAPS students as they came back to school on Monday while grappling with their own emotions about the tragedy. She also expressed gratitude to Ann Arbor’s police chief John Seto for reaching out to her and meeting with the AAPS cabinet to continue planning jointly for the safety and security of all AAPS schools.

During the agenda planning section of the Dec. 19 meeting, Christine Stead requested a review of the district’s emergency plans. Green said that she has already embarked on that process, and that Seto had been involved. Green explained that the plans have been reviewed and practiced, and that some amendments were made. She invited Liz Margolis, AAPS director of communications and head of the district’s crisis team, to speak to the issue.

Margolis explained that the AAPS had secured two REMS (Readiness Emergency Management for Schools) grants over the past ten years, allowing the district to perform risk assessments of all buildings, and train hundreds of staff. She expressed confidence in the district’s preparedness, but said there are always ways to improve. Stead asked if the district should consider video surveillance or keeping the front doors of all buildings locked. Green indicated that AAPS executive director of physical properties Randy Trent has already been authorized to study the cost of such improvements. She also said that there are opportunities being considered for additional AAPS staff to be trained in incident management systems. Seto had pointed out that having everyone using the same terminology is very helpful.

Communication and Comment

Board meetings include a number of agenda slots when trustees can highlight issues they feel are important. Every meeting also invites public commentary on subjects not necessarily on the formal agenda or that are not covered elsewhere in The Chronicle’s meeting report.

Comm/Comm: Celebration of Excellence

The board honored Katie Lewit, a physical education teacher at Allen Elementary School.

Katie Lewit received an award for her work as  a physical education teacher at Allen Elementary School.

Trustee Irene Patalan introduced the award, noting that Lewit had been nominated by one of Patalan’s own former students, Shawn Ricoy, who is now a district parent herself. Ricoy and her husband Mark nominated Lewit for her significant influence on the development of Allen Elementary students’ physical, emotional, and social well-being.

Lewit thanked the Ricoy family, her nephews, and her students, for making every day special. She also expressed appreciation for her former principal Jeanette Jackson and her current principal Joan Fitzgibbon, who she said have been amazingly helpful in steering her to be the best teacher she can be.

Comm/Comm: Association Report – AAPAC

The board invites regular reports from a set of community and school groups, but only one was present to speak to the board at the Dec 19 meeting. The co-chair of the Ann Arbor Parent Advisory Committee (AAPAC) read a statement written by an AAPAC member who could not attend the meeting. The statement spoke to the transition from preschool to kindergarten for special education students, and suggested that parents could benefit from receiving more information about elementary school options for their students. The letter also thanked Green and her cabinet for the time they have spent addressing special education issues. Finally, the report asked that the district educate the public regarding the budget offsets to special education made by the federal government and the county, as well as publishing the actual number of students who receive special education services rather than the Full-Time Equivalent (FTE) calculation often presented in budget documents.

Comm/Comm: Superintendent’s Report

In addition to her comments on the Sandy Hook shootings noted above, Green’s superintendent report included several examples of successes achieved by students, staff, and schools across the district.

She included accolades for students who received perfect ACT scores, successful music programs, Skyline High School’s design, technology, and environmental planning magnet program, the student building industries program, Forsythe’s knowledge master open participants, and various elementary programs and fundraisers.

Comm/Comm: Board President’s Report

Mexicotte reviewed the board’s work at its recent committee of the whole meeting. She noted the board’s discussion about potential budget reductions, community outreach, and a series of items unique to the high school environment. She said that the board would continue dialogue on these issues. About the board’s goals, Mexicotte said the trustees have been moving forward on their financial goal. But for its trust-building goal, the board is still looking for avenues other than a facilitated dialogue to achieve better trust among board members. Finally, she noted that the board’s next meeting on Jan. 16 would be its organizational meeting, and will be used to set up the board’s work for the next year.

Comm/Comm: Consent Agenda and Canvassing Votes Approved

With no discussion, trustees unanimously approved conference reimbursements, meeting minutes, and donations. The board also voted unanimously to accept the board of canvassers report of the Nov. 6, 2012 election, certifying that Deb Mexicotte won re-election to the board.

Comm/Comm: Agenda Planning

Glenn Nelson requested trustees’ input on topics that he and Christine Stead should take to the Washtenaw Alliance for Education to consider. He suggested the School Aid Act rewrite and preschool programming throughout the county as possible topics for countywide networking. Trustees suggested superintendent evaluation, teacher evaluation, transportation, and upcoming legislation as well as the ramifications of what gets signed into law as possible topics for the WAE to address. Nelson added that at recent WAE meetings, Stead was mentioned explicitly as someone who has provided very constructive leadership, and the entire county was very grateful for the that work.

Comm/Comm: Items from the Board

Stead thanked her colleagues from across the county who worked with AAPS during the lame duck session to advocate against the expansion of the Educational Achievement Authority (EAA). She complimented the hard work that people did to review materials and put their name on them quickly, and said she anticipated the WAE would continue to build on that.

Lightfoot thanked Nelson and Stead for their leadership on the advocacy work being done, and added that it has been challenging to separate her hats as a trustee from someone who does public policy. She urged her colleagues to be ready to “hit the ground running back up to Lansing as soon as the school year begins again.”

Patalan said she hoped district families would take the winter break as an opportunity to slow down, take a breath, and connect with each other.

Nelson and Baskett complimented the teachers’ union on holding a very nice holiday luncheon. Baskett also reported on her recent trip to a rap session at Roberto Clemente Student Development Center about student profiles. She said Clemente principal Ben Edmondson “really gave it to students” about how these profiles were a reflection of who they are, and staff talked about what it meant to earn high school and college degrees. Baskett called her visit to Clemente “food for the soul,” and noted how all Clemente students have all their teachers’ phone numbers in case they have a stressful period over the holidays.

Thomas thanked Governor Snyder for doing the right thing and vetoing the law passed by Michigan legislators last week which would have allowed concealed weapons to be carried in schools, among other currently prohibited locations. Thomas said the veto required “a good deal of courage and integrity to go against the mainstream of [the Republican] party in doing that.” He also thanked the thousands of people across the state who let the governor know what they thought.

Mexicotte closed the meeting by wishing the AAPS community a happy, healthy, and safe holiday. She also thanked voters again for her re-election to the board.

Present: President Deb Mexicotte, vice president Christine Stead, secretary Andy Thomas, treasurer Irene Patalan, and trustees Susan Baskett, Simone Lightfoot, and Glenn Nelson.

Absent: None.

Next meeting (the AAPS board’s annual organizational meeting): Jan. 16, 2013, at 7 p.m. at the fourth-floor boardroom of the Ann Arbor District Library’s downtown branch, 343 S. Fifth Ave.

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Several reasons were given for the additional shortfall, which resulted in only $27,617,099 in actual revenues compared with the $29,418,995 that was budgeted. Those reasons included: $120,842 less in passenger revenue; $269,095 less in local transit tax revenue; $529,214 less in purchase-of-service revenue; and $927,149 less in federal funding. That was balanced somewhat by reduced expenses in some categories, including: about $500,000 less in compensation; $600,000 less in purchased services (including consulting); and $550,000 in savings due to the delayed launch of the service between downtown Ann Arbor and Detroit Metro Airport.

Based on board discussion at the meeting, the AATA currently has just about exactly the three month operating reserves on hand that it’s required to maintain by board policy.

This brief was filed from the downtown location of the Ann Arbor District Library, where the AATA board holds its meetings. A more detailed report will follow: [link]

AATA's CEO Michael Ford presents an overview of the transit master plan to members of a financial group that will be making recommendations on funding options for countywide transportation. (Photos by the writer.)

The AATA fiscal year runs from Oct. 1 through Sept. 30. The budget approved by the board calls for expenses of $30,410,616 against only $29,418,995 in revenues, for a deficit in the coming year of $991,621. At the meeting, members stressed that the nearly $1 million deficit was due to one-time expenses associated with the planned transition to a countywide service. They also stressed that even by using unrestricted reserves over the next year to cover the planned deficit, the AATA would still be left with more than three months’ worth of operating expenses in its reserve.

Incurring a deficit this year was characterized as a way to “catapult” the organization forward, allowing it to pursue an aggressive work plan for the coming year, which was also approved at the meeting. Highlights of that work plan include reconstruction of the Blake Transit Center in downtown Ann Arbor. Design for the station is expected to be complete by the end of the year, with construction to start in spring 2012.

In terms of increased service, next year’s work plan includes a focus on: establishing the AATA as a vanpool service provider; establishing service to the Detroit Metro Airport; improving work-transportation connections between Ann Arbor and Ypsilanti; and continuing work on commuter rail. Also related to enhanced services, the AATA is also holding rider forums in October to get feedback on proposed increased service on Route #4, between Ann Arbor and Ypsilanti.

Related specifically to commuter rail, the board received an update at the meeting on the Washtenaw Livingston Line (WALLY) project, a proposed north-south commuter rail connection between Howell and Ann Arbor. The board expressed some caution about the project by passing a resolution that requires the board’s explicit approval for the expenditure of the $50,000 in next year’s budget allocated for station designs.

In other business, the board approved the selection of Plante & Moran as its new auditor. A new auditor rotation policy put in place by the board earlier this year made the previous auditor, Rehmann Robson, ineligible for the contract. The AATA board also approved a contract with an outside vendor to begin offering vanpool service.

In business that could be described as housekeeping, the board opted to keep its same slate of officers for the coming year and to keep the same meeting schedule – the third Thursday of the month. Jesse Bernstein was elected chair last year, and will continue in that role.

Also at the meeting, other members of the financial review group were announced. That group will be analyzing funding options for an expansion to countywide service. Previously, it had been announced that McKinley CEO Albert Berriz and former Washtenaw County administrator Bob Guenzel would co-chair the group. Their first meeting was Friday, Sept. 16, the day after the AATA board met. Berriz stated at that first meeting that the group will meet three more times, and will produce a white paper by the end of this year.

Related to that countywide effort, the initial board for an unincorporated transit authority – a precursor to an eventual formal authority – could be seated by Oct. 20, the date of the AATA board’s next meeting. It would include representatives from Ann Arbor, Ypsilanti, and other districts throughout the county.

AATA Work Plan

Highlights of the 10-page work plan for fiscal 2012 include reconstruction of the Blake Transit Center (BTC) in downtown Ann Arbor. During his report to board members, CEO Michael Ford said the acquisition of a six-foot-wide piece of land on the southwest border of AATA’s BTC parcel would be on the city council’s agenda for Sept. 19. (At that meeting, the council approved the AATA’s purchase of the land for $90,000, which will facilitate reconstruction of the BTC starting in the spring of 2012.)

In terms of increased service, the work plan includes a focus on: establishing the AATA as a vanpool service provider; establishing service to the Detroit Metro Airport; improving work-transportation connections between Ann Arbor and Ypsilanti; and continuing work on commuter rail.

Related to Detroit Metro service, Ford told the board that work on getting airport service in place had continued and that in the last three weeks he’d worked with Wayne County Economic Development Growth Engine (EDGE) on the issue. He said follow-up work was being done on the definition of public transportation as it relates to airport service. [Detroit Metro Airport charges access fees to private transportation operators.] Ford said the AATA would try to select a private-public partnership soon – in November.

Related to improvement of work-transportation service between Ypsilanti and Ann Arbor, on Dec. 1, 2010, the Ann Arbor Downtown Development Authority offered a challenge grant of $14,417 to support that kind of service improvement. A description of the grant from The Chronicle’s meeting report:

Before the DDA board was a resolution that would offer a $14,417 challenge grant to fund service improvements for the Ann Arbor Transportation Authority Route #4 bus, which runs between Ypsilanti and Ann Arbor. The dollar figure for the grant is based on a total estimated price tag for the improvements of $180,000 and a Washtenaw Area Transportation Study (WATS) computer model, which estimates about 8% of riders on the #4 bus have destinations west of State Street in the DDA district.

Before the Sept. 15 board meeting, the AATA held a rider forum on the proposed service enhancements to the Route #4 bus service. It was attended by around a dozen people. Additional drop-in sessions with AATA staff on Route #4 service improvements include:

• Thursday, Oct. 6, 5-7 p.m. at Glencoe Hills Apartments clubhouse, 2201 Glencoe Hills Drive, Pittsfield Township.
• Tuesday, Oct. 11, 9-11 a.m. at University Hospital, 1500 East Medical Center Drive, Ann Arbor. Classroom #2C108, across from the gift shop and cashier’s office.
• Tuesday, Oct. 11, 1-3 p.m. at Michigan Union, 530 S. State St., Wolverine Room AB, Ann Arbor.
• Wednesday, Oct. 12, 9:30-11:30 a.m. at Dom Bakeries, 1305 Washtenaw Ave., Ypsilanti.
• Tuesday, Oct. 18, 5-7 p.m. at Ann Arbor District Library, 343 S. Fifth Ave., Ann Arbor.

More information about the proposed changes is available online, along with details about how to give input.

The 2012 work plan also calls for continued work on AATA’s information technology, including its website as a communication tool, and improved point-of-sale systems to allow people to pay for their fares. [.pdf of work AATA 2012 work plan]

2012 Work Plan: Board Deliberations

As part of his report from the planning and development committee, Rich Robben reviewed next year’s work plan, calling it “very aggressive.” He described how it includes development of countywide networks and improvements to current service.

Service improvements highlighted by Robben included: adding service between Ann Arbor and the Detroit Metro airport; adding vanpool services; improving service between Ann Arbor and Ypsilanti; upgrading the AATA website; expanding the bus storage facility at the South Industrial headquarters; expanding night ride service to Ypsilanti; and reconstruction of the Blake Transit Center.

During deliberations, Anya Dale characterized the work plan as challenging, but said she thought the AATA can accomplish it. Roger Kerson gave credit to AATA staff for being able to accomplish the goals in this year’s work plan.

Board chair Jessie Bernstein called it an active, committed, dedicated past year on the part of the AATA, saying that there’s another active plan for next year.

Outcome: The board voted unanimously to approve its FY 2012 work plan.

AATA 2012 Budget

The board considered a resolution to approve its operating budget for the 2012 fiscal year, which runs from Oct. 1 through Sept. 30.

The budget calls for expenses of $30,410,616 against only $29,418,995 in revenues, for a deficit in the coming year of $991,621. That shortfall will be made up by drawing on the fund balance. According to the budget resolution, the AATA’s fund balance policy requires it to maintain reserves equal to at least three months’ worth of operating expenses. And the AATA expects to have $1.2 million more in its fund reserve to start the year than the minimum fund balance policy requires.

So the projected deficit – which the budget resolution attributes partly to one-time expenses associated with the transit master plan – is within the $1.2 million excess beyond the minimum three-month reserve, which the AATA holds in its fund balance. [.pdf of AATA 2012 operating budget]

In the most significant categories, the AATA’s revenues break down percentage-wise as follows: 31.4% local transit tax; 29.4% state operating assistance; 18.6% passenger fares; 12.8% federal operating assistance. The AATA also receives some revenue from surrounding municipalities that get transit service through purchase of service (POS) agreements. [2012 AATA revenue pie chart]

In the most significant expense categories, the AATA’s expenses break down percentage-wise as follows: 54.7% employee compensation; 18.2% purchased transportation from other providers; 9.3% other purchased services; 5.7% diesel fuel and gasoline. [2012 AATA expenses pie chart]

2012 Operating Budget: Board Deliberations

Reporting out from the planning and development committee earlier in the meeting, Rich Robben ticked through the figures from the 2012 operating budget. He said the budget will maintain and improve service, and will support the work plan and the transit master plan (TMP).

He acknowledged the roughly $1 million deficit, and described it as stemming from some one-time costs with development of the TMP, such as an improvement program for each district of the county, plus the governance structure. The deficit would be funded from unrestricted net assets, he explained. Even though unrestricted assets will be used, the AATA will still have 3.1 months of operating expenses in reserve after those assets are used in the course of the year, he said. By board policy, the AATA must maintain a reserve of at least 3 months of operating reserves.

Robben led off deliberations by saying it’s not a sustainable budget. But he said it would catapult the AATA towards a transition to countywide service. It’s aggressive, he said, but not taken lightly that the AATA would operate at a deficit. It’s also not AATA’s responsibility to build bank accounts, he said, so it’s appropriate to use the funds for this type of purpose.

CEO Michael Ford (right) talks with AATA board members Rich Robben and Anya Dale after the Sept. 15 meeting.

Anya Dale noted that many of the expenses that are causing the deficit are one-time costs. Now is the time, she said.

Roger Kerson said the budget reveals AATA’s next challenges. Planning was for this past year, he said, and next year is the financing challenge. It’s the right thing to do, he said, and he was looking forward to feedback from the financial review group that will be making funding option recommendations.

Board chair Jesse Bernstein said he was seriously concerned that the deficit year be a one-time commitment. He picked up on Kerson’s mention of the financial group, and noted that McKinley CEO Albert Berriz and former Washtenaw County administrator Bob Guenzel were co-chairing that group. It’s composed of people who understand financing and the politics of funding public activities, he said.

Bernstein called the AATA’s efforts at a transition to countywide service not an empty transition, but a real transition. The budget deficit, he said, should be recognized as unusual and unique, for one year only.

Outcome: The board unanimously approved AATA’s fiscal 2012 budget.

WALLY Commuter Rail

On the agenda was a resolution that expressed general support for continuing to work with surrounding communities on the Washtenaw and Livingston Line (WALLY) project. WALLY would provide commuter rail service on a 26-mile route between Ann Arbor and Howell. Relevant entities identified in the resolution include the state of Michigan, Livingston County, the city of Howell and the Ann Arbor Railroad.

However, the one “resolved” clause requires that funds allocated for WALLY in the 2012 budget – $50,000 – cannot be spent, except with the explicit consent of the AATA board.

WALLY: Background

At the Sept. 15 meeting, the board received a status report on the WALLY project from Michael Benham, a special assistant for strategic planning at AATA. Benham was hired in 2009 to handle the WALLY project. Since then, he’s become responsible for directing the development of the countywide transit master plan (TMP), which the AATA has developed over the last year.

Highlights from Benham’s report included the fact that starting in 2008, AATA has spent a total of $102,853 on the WALLY project, while other partners have spent a total of $225,000. That money has been spent primarily on a study and public education efforts. As part of the AATA FY 2012 budget, the AATA has included another $50,000 for the project. That money would be put towards station design.

Benham’s report identifies $16 million already invested by the Michigan Dept. of Transportation in track improvements, with $19 million worth of work still needed. Another $6 million in optional capital improvements is also identified.

Benham’s report projects that after the necessary capital improvements are completed to operate the commuter service, annual operating costs would amount to $5.4 million. Fares would be expected to cover $2.1 million of that, with another $1.4 million coming from the state’s Comprehensive Transportation Fund. That would leave another $1.9 million of local funding still to be identified.

Benham pointed board members to an appendix in the report with comparative data on WALLY. He characterized WALLY as “right in the ballpark” with other similar projects – at the low end of the range for capital costs. For similar commuter rail connections already in place, he said, the average time from idea to actual service was 10.5 years. So if people ask why WALLY is taking so long, it’s not actually taking so long, he concluded.

[.pdf of WALLY status report (to reduce file size, does not include scans of letters of support)]

WALLY: Board Deliberations

Rich Robben said he wanted to make the observation that the board had some concerns about the viability of the WALLY project. That’s why the presentation had been requested from Michael Benham – to make a reassessment of financial issues and to look at the prospects of closing remaining gaps in funding.

Roger Kerson also noted that board member David Nacht (who did not attend the board meeting) had raised some concerns at a committee meeting. Kerson characterized WALLY as a challenging project, but said, “We’re up to the challenge.” Kerson said the AATA was changing the eco-system by making transit a priority. Traffic is real, and congestion is real, he said. Having an alternative to US-23 will be welcome. He said he was glad to be going ahead in a measured way. Board chair Jesse Bernstein said he couldn’t imagine a clearer statement of moving forward in a careful way.

Outcome: The board voted unanimously to approve the resolution requiring board approval for any expenditures associated with WALLY.

Auditor Rotation

The board considered a resolution authorizing a one-year contract with Plante & Moran for auditing services.

A policy adopted by the AATA board on June 16, 2011 limits contracting with any one auditing firm to a total of eight years. That meant that the auditing firm the AATA had previously used, Rehmann Robson, was not eligible to provide auditing services.

The request for proposals (RFP) was sent to 19 public accounting firms. Plante & Moran’s proposal was judged to be the best of the three proposals received by the AATA.

Auditor Rotation: Board Deliberations

Roger Kerson reported from the performance monitoring and external relations committee that the AATA had received three bids from the 19 solicitations they’d sent out. The AATA evaluation team had ranked Plante & Moran as the best of the three bids, and the committee supported that recommendation.

When the board deliberated on the issue, AATA controller Phil Webb described how the RFP was sent to 19 CPA firms. The 19 were picked from a list of firms in southeast Michigan that did similar work. Technical abilities were 60% of the evaluation score, he said. The cost part of the bids were opened later and counted for 40% of the evaluation. The evaluators were Webb, board treasurer Sue McCormick, CEO Michael Ford.

Outcome: The board voted unanimously to approve selection of Plante & Moran as the AATA auditor.

Vanpools

A resolution on the agenda called for authorizing a contract with VPSI Inc. for vanpool services that is not to exceed $6,600 per year for each AATA owned/managed van. Vanpools are arrangements in which a vehicle is provided through the service, but is driven by one of the members of the pool. Riders pay for operational costs. Currently, the MichiVan program, operated by VPSI, provides such a service in the Ann Arbor area.

However, through fiscal year 2012 MichiVan will only continue to provide vanpool service for existing vanpools in the Ann Arbor area. It’s AATA’s intention to provide service for any additional vanpools that people might wish to create.

Vanpools: Board Deliberations

Reporting out from the planning and development committee, Rich Robben described how in a vanpool, the monthly cost is paid by riders. The capital cost will be paid by a federal grant.

Chris White, AATA manager of service development, told the board that AATA had been working on the project for a while now. [It was one of the service initiatives discussed at an Aug. 10, 2010 board retreat.] MichiVan will continue to operate (with about 100 vanpools) but there’s no ability to expand that number of vanpools. So AATA is looking to be a provider for expansion pools. It allows AATA a chance to get some experience before taking on a larger volume. The eventual goal, White said, is to assume operation of all of the vanpools in the county. This is an opportunity to do that gradually, he said.

Outcome: The board voted unanimously to authorize a contract with VSPI Inc. for vanpool service.

AATA Housekeeping

The board handled a number of housekeeping items.

Housekeeping: Board Officers

The board elects new officers every year. This year, board chair Jesse Bernstein said at the Sept. 15 meeting that the current officers have agreed to continue. As the organization contemplates a transition to a countywide focus, it was felt that it would be good to have some continuity, he said.

AATA board officers are: Jesse Bernstein (chair); Charles Griffith (secretary); and Sue McCormick (treasurer).

The committee chairs are: Rich Robben (planning and development committee), and Charles Griffith (performance monitoring and external relations).

Outcome: The board voted unanimously to maintain the same slate of board officers.

Housekeeping: Board Meeting Schedule

Also on the agenda was the approval of the full board’s meeting schedule, as well as the schedule for its committee meetings. Board meetings fall on the third Thursday of the month. [.pdf of board and committee meeting dates] AATA board meeting information packets are generally available before the meetings on the AATA website.

During deliberations, Anya Dale asked if there was an opportunity to talk about holding meetings earlier in the day. CEO Michael Ford told Dale that there had not been a discussion about that, and he said that staff can be open to changes or modifications. Board chair Jesse Bernstein said he’d be very open to discussing times, once dates are firmed up.

Outcome: The board voted unanimously to approve its meeting schedule.

Housekeeping: Local Advisory Council Appointments

Reporting out from the AATA’s local advisory council (LAC), a co-chair of that group, Jody Slowins, reported that terms were coming to an end, and that members would need to be reappointed. The LAC is a body that provides advocacy for seniors and disabled people.

Gloria Kolb had submitted an application, Slowins said, and the LAC welcomed her graciously.

Slowins said she’d been involved with the LAC for the last 12 years, and she’d never seen such a good group. The AATA’s paratransit coordinator, Brian Clouse, is strongly supportive of the LAC, she said.

Recommended for appointment to the LAC were: Gloria Kolb, Cheryl Weber, Clark Charnetski, Mary Wells, John Kuchinski, Lena Ricks, Eleanor Chang, and Stephen McNutt.

Outcome: The board unanimously approved the appointments to the LAC.

Countywide Transit Finance Group

At the board’s August 2011 meeting, Ford had announced that McKinley Inc. CEO Albert Berriz and Bob Guenzel, retired Washtenaw County administrator, will be co-chairing a panel of financial and funding experts. They are tasked with reviewing a report on funding options and making recommendations that will form the basis of a governance proposal for countywide transit.

That governance proposal is expected to come from an as-yet-unincorporated board of an Act 196 transit authority (U196) to establish a countywide transit authority under that state statute. [Michigan's Act 196 of 1986 provides a mechanism for establishing a transit authority that includes a larger range of entities than just cities. In contrast, the AATA is formed under Act 55 of 1963]

The funding report to be reviewed and analyzed by the group is the third volume of the transit master plan (TMP). [.pdf of Part 1 of Vol. 3 Transit Master Plan Funding Options] [.pdf of Part 2 of Vol. 3 Transit Master Plan Funding Options].

CEO Michael Ford’s written report to the AATA board for its Sept. 15 meeting included a partial list of members in the group tapped to review the funding options report for the countywide transit master plan. At the meeting, an updated list was circulated.

Besides Berriz and Guenzel, members of the group include the following: Patrick Doyle (CEO, Domino’s Pizza); Ric DeVore (regional president, PNC Financial Services Group Inc.); Mary Jo Callan (director, office of community development, Washtenaw County); Mark Perry (director of real estate services, Masco Corp.); Andy LaBarre (vice president of government affairs, A2YChamber); Tim Marshall (president and CEO, Bank of Ann Arbor); Norm Herbert (retired treasurer, University of Michigan); Adiele Nwankwo (senior vice president, PB Americas Inc.); Mike Cicchella (financial planner, Cicchella and Associates, and former Northfield Township supervisor); Leigh Greden (executive director of governmental and community relations, Eastern Michigan University); Conan Smith (executive director, Suburbs Alliance and chair, Washtenaw County board of commissioners); Jonathan Levine (professor, University of Michigan college of architecture and urban planning); Jason Lindauer (wealth management advisor, Merrill Lynch, and mayor of Chelsea); Mark Ouimet (state representative, District 52); John Thorhauer (president and CEO, United Methodist Retirement Communities); Jon Newpol (executive vice president, Thomson Reuters); Dennis Schornack (special advisor on transportation, Governor’s Office); Jim Kosteva, (director of government relations, University of Michigan); Paul Dimond (attorney, Miller Canfield).

The first meeting of the group was Friday, Sept. 16 – the day after the AATA board met. Most of the members were able to attend. The group received a presentation of some of the material they’d already been given in written form. They also asked for specific additional information and analysis, including: the specific economic impact of transit investments in communities of comparable size to Ann Arbor; and a measure of the costs that could be avoided through increased investment in transit.

While the amount and timing of a possible countywide transit millage received scant mention, a robust theme of the initial conversation was the potential for creative private-public partnerships in funding improved transit. Berriz called his and Guenzel’s selection as co-chairs of the group symbolic of the potential for private-public partnerships.

Berriz told members of the group at the Sept. 16 meeting that they will meet three more times, and will produce a white paper by the end of the year.

In his public commentary at the AATA board’s meeting the day before, on Sept. 15, Larry Krieg, with Wake Up, Washtenaw!, congratulated the AATA for the people it had assembled for the financial review. It’s an impressive list, he said. He asked that “out-of-the-box thinking” be tried.

Krieg hoped that among the funding mechanisms the group could identify would be original, significant public-private participation.

Communications, Committees, CEO, Commentary

At its Sept. 15 meeting, the AATA board entertained various communications, including its usual reports from the performance monitoring and external relations committee, the planning and development committee, as well as from CEO Michael Ford. The board also heard commentary from the public. Here are some highlights.

Comm/Comm: Governance, U196 Board

During his report to board members, CEO Michael Ford gave a brief update on progress with future governance issues connected with the entity that would eventually administer countywide transportation.

WEMU's Andrew Cluley interviews AATA board chair Jesse Bernstein after the Sept. 15 meeting.

By way of background, the basic approach the AATA is taking to expanding countywide transit is to transition to an authority formed under Act 196 of 1986. The AATA has been working towards encouraging townships in the county to strike inter-governmental agreements [under Act 7 of 1967] to have joint representation to the board of any Act 196 organization. It’s conceived as a 15-member board, with seven seats from Ann Arbor, two seats from the southeast sector (Ypsilanti Township and Augusta Township), and one seat each for the city of Ypsilanti, Pittsfield Township, and multi-jurisdictional districts in the northeast, north middle, west and south middle parts of the county.

As a precursor to the Act 196 authority, the AATA hopes to seat an unincorporated authority (U196) by Oct. 20, the date of the board’s next meeting.

Ford reported at the Sept. 15 board meeting that he’d met with AATA board chair Jesse Bernstein and Ann Arbor mayor John Hieftje about an inter-local agreement between Ann Arbor, Ypsilanti, Washtenaw County and the AATA.

Comm/Comm: Chelsea Express

Roger Kerson reported out from the performance monitoring and external relations committee that the Chelsea Express – a commuter service between Ann Arbor and Chelsea – is now near capacity. The AATA is now at the point of deciding what to do if the route meets capacity.

Comm/Comm: Website Development

Mary Stasiak, AATA director of community relations, said that one concern the staff is focusing on is to make sure the AATA “owns” everything that’s being developed for the site, given that some of it is being custom developed. The AATA has sent the initial designs back to the contractor for revision, because “we want to make it the best that we can,” she said.

Comm/Comm: Complaints

Thomas Partridge introduced himself as an Ann Arbor and Washtenaw County Democrat, an advocate for seniors and the disabled, and those needing and deserving of public services during this trying time in American history. He called for the election of a new chair of the board of the AATA to champion service that is friendly and caring in safe and ride-worthy vehicles. He questioned whether that’s been the case under current board leadership.

SelectRide should not receive the bid for the AATA’s A-Ride paratransit service, Partridge said. He called the vehicles that SelectRide puts on the road “jalopies” that have accumulated more than 200,000 miles before they are purchased by SelectRide.

Partridge also spoke at the second public commentary slot at the end of the meeting. He called himself an advocate for those who can’t attend the meeting. He said he had led the effort to get the board to meet in an accessible place. [Last year, the AATA moved its meetings to the boardroom of the Ann Arbor District Library from its headquarters on South Industrial Highway.] Despite those efforts, Partridge said, the board went ahead with their vote on the budget with three of its seven members absent. The budget items should have been deferred until the entire board could attend, he said.

He complained that AATA staff members got people to come to board meetings to salute their incompetence. The public is being cheated by publicly funding vehicles that should never be on the road, he said. SelectRide, the company that holds the para-transit contract with AATA, perpetuates discrimination against everyone, Partridge said, even their own employees.

His complaints have been whitewashed, Partridge contended, and he called on the board to elect new leadership.

Comm/Comm: Compliments

Carolyn Grawi spoke on behalf of the Ann Arbor Center for Independent Living. She said she came to support the new local advisory council appointments. She also congratulated AATA for its work associated with the non-motorized Washtenaw Avenue walkway and the accessible crosswalk – AATA was among the many players on that project, she said. She also congratulated Mary Stasiak’s department for receiving an APTA AdWheel award, recognizing its billboard ads.

Present: Jesse Bernstein, Rich Robben, Roger Kerson, Anya Dale

Absent: Charles Griffith, David Nacht, Sue McCormick

Next regular meeting: Thursday, Oct. 20, 2011 at 6:30 p.m. at the Ann Arbor District Library, 343 S. Fifth Ave., Ann Arbor [confirm date]

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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.

Purely a plug: The Chronicle relies in part on regular voluntary subscriptions to support our coverage of public bodies like the Washtenaw County board of commissioners. 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!

Robert Allen, interim superintendent of the Ann Arbor Public Schools, addresses the board of education at their April 20, 2011 meeting.

The proposed cuts would eliminate 70 teaching positions, and would likely lead to changes in the district that include larger class sizes, fewer elective options and new roles for teachers. Other proposals include eliminating busing for high school students, cutting salaries and benefits, and creating “shared” principal positions at four elementary schools. On the revenue side, the budget plan calls for expanding the district’s Schools of Choice program and increasing parking fees at Pioneer High School for University of Michigan football and basketball games.

Interim superintendent Robert Allen delivered the presentation, saying that this year’s budget preparations were the most difficult he’s had in his five years working with the district’s finances.

“Although we have made similar cuts, it is even more difficult to make them on the heels of the $18 million we reduced last year,” he said. “We tried to keep the cuts away from the classroom, but at some point that becomes impossible.”

Allen said the district’s structural deficit, which creates an annual hole of $6-7 million dollars, will not go away until it’s dealt with directly. ”We’ve been facing the structural deficit for about 10 years and we can’t address it by cutting,” he said. “We have to fix the structure.”

The deficit could grow even larger – by nearly $6 million – if voters don’t pass a special education millage renewal that’s on the May 3 ballot. At several points throughout the meeting, board members and AAPS staff urged the public to support the millage renewal.

Allen closed his introduction by saying that the district tried to make the cuts in an equitable manner, adding that everyone should maintain efforts to lobby state representatives to come up with a permanent fix for budget woes.

The budget update was an informational item at Wednesday’s meeting and will come back before the board as a briefing item next month before it can be approved.

Budget: Cuts to District Staff

The first area of reductions Allen touched on was district staff, including teachers, administrators and central office staff. These cuts total about $7.1 million:

• Eliminate 70 teaching positions within the district.
• Reduce or combine administrative positions through the reduction of an assistant principal position at each comprehensive high school (not including Skyline) and the sharing of principals at four elementary schools.
• Use Individuals with Disabilities Education Act (IDEA) grant funds to cover the salary costs of one central office full-time employee.
• Reduce support staff and general support services.

Allen said these reductions will lead to a number of changes in the AAPS landscape, including larger class sizes, fewer elective options and new roles for teachers.

On the issue of class sizes, Allen estimated there would be an increase of about two to three students per classroom because of the reductions in teaching staff. Elimination of teaching positions accounts for the biggest cuts to the budget, totaling about $6.3 million.

These class size increases did not sit well with trustee Glenn Nelson, who said it would result in an increase in children with behavioral issues and teachers with less time for programming and other work.

“The truth is that Michigan is not a good place to be a kid these days,” Nelson said.

Elective classes with low enrollment were also examined, with Allen and his budget team looking for ways to combine classes for a more efficient use of teachers. Allen said these combinations could limit student options for scheduling these classes.

More reliance on split classrooms – when classes from two grades share one room – may also be necessary, according to Allen. The district had been moving away from split classrooms in recent years.

The proposal of shared principals drew concern from trustees on issues such as school leadership. Allen explained that the two pairs of elementary schools that will share principals will be Wines and Abbot, and Angell and Pittsfield. Of those schools, Pittsfield principal Carol Shakarian and Abbot principal Pam Sica will be reassigned within the district, leaving David DeYoung of Wines and Gary Court of Angell to split their time.

Trustee Susan Baskett asked what the criteria were for selecting principals. Interim deputy superintendent Lee Anne Dickinson-Kelley spoke on that, saying that while all four were valued members of the district, Court and DeYoung had experience managing larger buildings. She added that the district will still benefit from the leadership of Shakarian and Sica.

Baskett was also curious as to how schools would operate under the new system.

“What does a potential day look like?” she asked. “Will there be two offices? Are there models to adopt?”

Dickinson-Kelley said there were no models because each school is unique, but it would likely not be a 50-50 split, and would depend on each school’s situation. She added that the district will use its talents to support each school.

She also said that the district envisioned giving the title of Lead Teacher to “strong and well-matched” teachers who can take on additional responsibility when a principal is not present.

Allen also touched on why the district chose to recommend sharing principals over other possible solutions, such as closing schools.

“Some elementary schools have low enrollments, but there’s not a lot of excess capacity in other schools,” he said. “We’d have to move students from the closed schools and our buildings can’t accommodate the additional kids.”

Allen added that the Snyder administration has not finalized their budget for K-12 education, creating the possibility that the district will have more funds than anticipated. The shared principal system would be more easily reversed if additional funds are available, whereas the decision to close a school would be difficult to change.

The last area of staff reductions Allen discussed related to central office staff. Allen said the cost of one full-time employee will be transferred to funds provided by an IDEA grant, saving the district about $90,000.

Budget: Cuts to Operational Services

Allen then discussed reductions in the district’s operational budget, focusing on transportation and ways to make other aspects of the district’s operational services more efficient, saving more than $2 million:

• Eliminate all high school busing, seventh hour busing and middle school shuttles.
• Reduce legal fees and one human resources support position.
• Renegotiate the district’s gas contract.
• Reduce three operations and information technology positions, two of which will be reduced through attrition.

The elimination of all high school busing services was another issue that trustees viewed as possibly problematic.

Allen said the district has been looking at a number of alternatives, as well as some of the implications of these reductions. One focus of the district has been on conversations with the Ann Arbor Transportation Authority (AATA). Allen said that while there have been no talks about entering into a contract with AATA, they have discussed how bus schedules could be adjusted to align with high school bell schedules. Allen also said the district would be encouraging other methods of transportation, such as carpooling.

According to Allen, 4,700 students in the district are eligible for busing, and about one third of those students use the service.

Allen also said they have discussed the plan with the Washtenaw Intermediate School District (WISD). [In June 2010, the AAPS board voted to contract with the WISD to provide the district’s busing services, which resulted in the district laying off its entire transportation staff. See Chronicle coverage of the decision at the board's June 23, 2010 meeting.]

Allen said he and other administrators will be bringing this plan to the community to gain more information.

“We know the numbers but don’t know who those students are,” he said. “We’re always open to good suggestions and we have the expertise to make adjustments.”

The two positions that will be eliminated due to attrition consist of one retiring employee who will not be replaced and one vacant position that will not be filled.

Budget: Cuts in Wages and Benefits

Allen briefly mentioned the $2.6 million in savings the district will see from the proposed cuts to employees salaries and benefits:

• ¾ of the year pay step freeze.
• Renegotiate health care benefits and perform dependent care audit.
• Reduce supplemental pay.

Budget: Cuts in District-Wide Budgets

Allen also outlined remaining reductions to other budgets in the district, totaling $1.275 million:

• Reduce department budgets by 7%.
• Reduce noon-hour supervision at elementary and middle schools.
• Reduce transfers to building budgets, trusts and agency accounts.
• Reduce transfers to athletic departments.

These areas of cuts all held the theme of the district needing to tighten its belt, according to Allen. The reductions in noon-hour supervisors was something he felt could be made up for by solid building leadership. Trustee Irene Patalan also felt this was an opportunity for schools to brainstorm cost-effective methods of noon-hour supervising.

The reductions in transfers to building budgets, trusts and agency accounts would lessen the amount and frequency of  transfers for purchases that require funds to be moved from one account to another, such as a music department needing money to purchase band uniforms.

Allen said the final cuts to the athletic departments will be in the form of reducing services such as transportation to events, opting to look for outside funding to fill those needs.

Budget: Revenue Options

The last methods Allen mentioned for combating the deficit were options for raising revenue, which would total about $1.3 million:

• Enact a targeted Schools of Choice (SOC) program.
• Increase parking fees during University of Michigan football and basketball games.

The board had discussed an SOC program at previous meetings, deciding to open up 190 spots in a number of grades for students outside of the district wishing to enroll in the AAPS. [See Chronicle coverage of this decision at the board's March 30, 2011 meeting.] The window for application opened on April 15 and runs until May 15. The district hopes it raises about $1.2 million.

The increases for parking fees would see the price to park a car in the Pioneer High School parking lot jump $5 – from $35 to $40. Allen maintained that, despite the increase, they were not pricing themselves out of consideration.

Trustee Susan Baskett felt the $1.3 million that the district was projected to earn in revenue was on the low side. She asked if there were any other options to raise more funds.

Allen said that money raised from grants was not included in these figures, so it was possible that grants could provide more funds. He added that thanks to the establishment of a designated grant coordinator, the coming years should see more solid projections of income from grants.

The more than $14 million in savings will still leave a gap of about $683,000, something that Allen recommended covering from the district’s fund equity, leaving about $18.5 million in the FE account.

Trustee Simone Lightfoot expressed concern over using fund equity in this situation, a sentiment that Allen agreed with, saying that the district usually tries to protect it.

After Allen’s presentation, trustees expressed their appreciation for the work done by Allen and his administrative cabinet. They recognized that it was a difficult process and commended the effort to keep cuts away from students, as much as possible.

Allen closed his presentation by reminding the board that this budget proposal did not account for the additional $6 million the district would have to cut if voters fail to pass the special education renewal millage on May 3. He encouraged the public to vote for the millage, saying that these cuts have already gone deep.

Trustee Glenn Nelson took the opportunity to express disappointment at the state of K-12 education funding, framing the issue in terms of how Michigan families have fared over the last 10 years.

“From 2002 to 2012, per capita income in the state rose 25% – these are official state projections,” he said. “Our foundation allowance in 2012 will be the same as in 2002.”

Nelson said this showed what the priorities of Michigan’s leaders were, and he hoped that others who did value the children would continue to fight for their fair share.

Public Commentary

Every board meeting includes an opportunity for members of the public to address the board.

Public comment: Future of the District

The meeting started with performances by the Tappan Middle School girls flute quartet, the Tappan boys clarinet quartet and the Slauson Middle School boys choir ensemble.

Tappan Middle School boys clarinet quartet.

The Slauson ensemble was led by Cherry Westerman, who stayed after the performances to open the meeting’s public commentary session.

Westerman expressed concern over the cuts the district has had to make over the last seven years. She said she hoped parents who may not see how the cuts directly affect a school and its students will know that there is an impact.

“Those who are in the building, we feel it (the cuts) everyday,” she said.

She thanked the board for their responsible financial management, helping to make the impact of the cuts less severe.

She closed her comments by encouraging the public to educate and involve themselves in what is going on, to help the AAPS continue its service.

Public Comment: Northside Elementary Teacher Let Go

The public commentary session was highlighted by parents speaking in defense of Diane Baker, a first-year fourth grade teacher at Northside Elementary School who is being let go at the end of the year.

Jack Edelstein spoke to the board during time set aside for public commentary.

Carlene Colvin-Garcia and Jack Edelstein, parents of students in Baker’s class, both spoke in her defense. They felt that, while she may have gotten off to a slow start earlier in the year, she recovered and had been doing an exemplary job in a difficult classroom.

Both parents had heard that Baker, who the board later identified as being on probation, was going to be let go before the end of the school year, making for what they felt would be a very turbulent end to the school year. They both implored the board to reconsider the firing, and to at least let her finish the school year.

The board addressed this issue while voting on their action items at the end of the meeting, voting unanimously to not renew Baker’s contract after this school year.

Trustee Susan Baskett addressed the parent’s concerns by saying that, despite what they had heard, Baker would be finishing out the school year. She added that a school administrator has taken care of all the documents substantiating that Baker had not performed to expectations.

Public Comment: Rising Scholars

Stephanie Abalos, a parent with children in the district, also spoke during the public commentary session, touching on a proposal that would make cuts to the district’s Rising Scholars program. She claimed that the students enrolled in the program, including one of her children, had made significant commitments – to deprive them of this would be unfair. She also felt this program would help to close the achievement gap, questioning the board’s commitment to that initiative. [The board had recently discussed the achievement gap at their April 13, 2011 study session.]

Board president Deb Mexicotte addressed this issue later during the items from the board section of the meeting, saying that the information presented on the Rising Scholars proposal was premature and would likely undergo significant vetting before a final version is made public.

Public Comment: Haisley Elementary School Parking Lot

Tam Perry and Christie Schichtel addressed the board on the issue of a planned alteration and expansion of the parking lot at Haisley Elementary School. Perry is a parent of a Haisley student and organizes a “walking school bus” to the school. She’s also teaching a course at the University of Michigan’s School of Social Work, cross-listed in the College of Architecture & Urban Planning, on community organizing [S.W. 651/UP651— Planning for Organizational and Community Change]. Schichtel is a student in the class, which has considered the Haisley parking lot as a case study.

Perry thanked the district for holding a third public meeting on the topic of the parking lot expansion. She noted several aspects of the meeting that could have been improved.

[That meeting, which The Chronicle attended, was held at the school on April 12. At the meeting, Randy Trent, AAPS executive director of physical properties, presented two variants of revisions to the lot – one would expand the surface area of the lot, and the other would not. Neither of those alternatives would appreciably increase the number of parking spaces available from the current number of 70. The district had begun its engagement with the public by citing a state requirement that the number of parking spaces be increased and had presented plans at previous meetings with up to 120 spaces; however, the information about the state requirement proved to be inaccurate. Staff of the school who were present at the April 12 meeting, and some parents, indicated a strong preference for additional parking. Some nearby residents and other parents questioned the need or desirability of additional parking spaces, especially if it meant trading parking spaces for green open space.]

Perry noted that two of the alternatives had been projected on a screen, while a third alternative, developed by a parent at the school – Norm Cox, of the Greenway Collaborative – was presented only on an easel. There’d been no opportunity to get up close to the on-screen alternatives and mark on them, she said. She said it’s important to make clear whether the purpose of a meeting is just to provide information to the public or to get input.

Perry suggested that when dealing with controversial issues like the Haisley parking lot expansion, the district should balance the need for leadership against the usefulness of getting input. A school newsletter was sent out, she said, that included the statement that the state required an increase in the number of parking spaces, but that proved to be inaccurate. A balanced fact sheet about the parking lot should have been made available, she said.

The district should have also displayed more balance, Perry said, with respect to allowing access to the school property to gather information on traffic patterns. On the one hand, they’d allowed a member of the PTO access to the roof, she said, to document vehicle movements. But when a parent of a Haisley student [Norm Cox] had attempted to document the traffic patterns photographically, the school administration had called the police, even though he was not standing on school property.

For more information on the topic – including a time-lapse video of the Haisley parking lot showing activity in the course of one full day – Perry encouraged the board to visit the Greenway Collaborative’s website.

Christie Schichtel shows the board an illustration of the evolution of humans into bicyclists.

Schichtel told the board she had attended the April 12 meeting. She suggested that promoting behavioral change to reduce demand on the parking lot at Haisley could benefit from some community-organizing tools from the UM course. [One parent at the April 12 meeting had flatly stated that she would simply not get up early to walk her child to school or park on a side street and walk that distance – she let everyone know she'd be parking in the parking lot and taking her kid into the building from there.]

Schichtel suggested aligning those efforts with the Safe Routes to School program, which includes “walking school buses” – groups of children walking to school led by an adult. Parents should be invited to “choose safety,” she said.

Schichtel suggested that this choice for safety be supported by asking parents to make a year-long pledge to commit to choosing safety. She showed members an illustration of a human evolving into a bicyclist as an example of the kind of messages that could be used to help normalize behavior. She also suggested that some strategy of reminding parents of the desired drop-off zone behavior would be useful – people forget, she said.

Public Comment: Vote to Recall Gov.  Snyder

Ann Arbor resident Thomas Partridge spoke last during the public commentary portion of the meeting. Partridge asked for the board’s support in an effort he was leading to recall Gov. Rick Snyder. He also encouraged the public to support the May 3 special education millage renewal.

Association Reports

At each meeting, the board invites reports from six associations: the Youth Senate, the Ann Arbor Parent Advisory Committee on Special Education (AAPAC), the Parent-Teacher-Organization Council (PTOC), the Black Parents Student Support Group (BPSSG), the Ann Arbor Administrators Association (AAAA), and the Ann Arbor Education Association (AAEA). At the April 21 meeting, the board heard reports from the PTO Council and AAPAC.

PTO Council

Amy Pachera briefly addressed the board on behalf of the PTO Council, updating the trustees on the May 16 officer training they’ll be holding for PTO officers. The session costs $25 plus $10 to take the materials home. She also expressed the PTOC’s support for the special education renewal millage.

AAPAC

Linda Rouse spoke for the Ann Arbor Parent Advisory Council, reporting on AAPAC’s desire to keep students with their peers during transitions from elementary to middle school. She also thanked Sandra Bromley, the AAPS Student Intervention and Support Services assistant director, and Elaine Brown, SISS assistant superintendent, for their contributions to AAPAC and SISS.

Rouse closed by giving AAPAC’s full support for the special education renewal millage, saying that the millage is needed to keep up with a growing demand for services.

“State and federal funding has not kept pace, so this millage is needed,” she said.

Board Committee Reports

The board has two standing committees. The planning committee consists of: Christine Stead (chair), Susan Baskett, and Irene Patalan; the performance committee consists of: Glenn Nelson (chair), Simone Lightfoot, and Andy Thomas. Board president Deb Mexicotte sits on neither committee.

Performance Committee

Glenn Nelson updated trustees on the April 19 meeting of the performance committee, discussing purchase of Northwest Education Association software for student and teacher assessment. Nelson said that the performance committee recognizes the value that this software would provide, laying out three options for purchase:

• Purchase the software for all AAPS students in grades K-2 and for students in grades 3-8 at Mitchell elementary and Scarlett middle schools, costing $61,100.
• Purchase the software for all AAPS students in grades K-5 and for students in grades 6-8 at Mitchell elementary and Scarlett middle schools, costing $109,000.
• Purchase the software for all AAPS students in grades K-8, and new computers for all elementary and middle schools other than Mitchell and Scarlett, costing about $3.7 million.

The necessary cost of updating computers was an issue for Nelson.

“We can’t afford decent technical equipment – never gonna make it (the lost opportunity for progress) up,” he said. Nelson gave the committee’s endorsement for a second-tier purchase, with the understanding that budget issues could keep them from moving to the third tier.

Nelson also shared the committee’s disappointment that the enactment of a balanced calendar was pushed back a year, contending that the district needs to be proactive instead of reactive. [A balanced calendar features a shorter summer break, and includes optional intersessions – one or two-week long academic or enrichment activities held during breaks in regular instruction. It was discussed in detail at the board's Dec. 8, 2010 meeting.]

He closed his remarks by expressing the committee’s support for the special education millage renewal, urging the public to vote yes on May 3.

Planning Committee

Trustee Christine Stead delivered a report on the April 14 planning committee meeting, discussing reports they heard from Liz Margolis, AAPS director of communications, Chris Barry, AAPS grant coordinator, and Annette Ferguson, the district’s director of business partnerships. Stead said they were happy to hear about structures being put in place to allow anyone to contribute to writing grants. Stead added that Barry had told them about $3 million of grants she will be pursuing.

According to Stead, some of these grants require the receiving group to be a 501(c)3 organization. Stead encouraged the board to look into earning this distinction. The topic was added to the board’s next executive committee meeting.

Stead had comments similar to Nelson on the topics of the NWEA software and the balanced calendar, expressing regret that the former was out of the district’s price range and that the latter was being pushed back.

Superintendent’s Report

Interim superintendent Robert Allen’s report was highlighted by the announcement that the Pioneer High School music department had been named the national Grammy signature school, honoring the best school in the country for commitment to music education. This is the second time Pioneer has won the award, with the last time coming in 2006.

[Allen will continue to serve as interim until the arrival of Patricia Green, who's been hired as the district's next superintendent – she'll start her tenure at AAPS in July. Green's contract with the district was finalized on March 30.]

SISS Technology Purchases

Elaine Brown, Student Intervention and Support Services assistant superintendent, was on hand to give the first briefing on proposed purchases for special education in the district. SISS administrators had presented on these purchases during the March 2 regular meeting of the AAPS board of education, and Brown was looking to answer some of the questions trustees had. [See Chronicle coverage: "AAPS Preps to Push for Special Ed Tax"]

“We made every effort to address the curriculum and instructional needs of students,” Brown said. “This is the appropriate technology needed for all students to grasp the curriculum.”

One of the board’s biggest questions was how much the technology would cost to maintain over the years. The initial funding for the purchases would come from funds distributed by the federal American Recovery and Reinvestment Act (ARRA), funds that had to be used by June 30 or they would be lost.

Brown provided the board with information detailing each item they were looking to purchase, discussing the three biggest items: The Kurzweil 3000 software and components, the Promethean Interactive Touch Boards, and the Tap It Mobility touch screen computers. These three items total $179,000 and would be covered by ARRA funds.

As far as yearly costs for the items, Brown said the upkeep would total $10,000, which could come from an IDEA grant.

“This is the perfect time to do this,” she said. “We’ll never see these funds again.”

Brown added that SISS would host open houses for teachers, administrators and the community to foster familiarity with the new technology.

Outcome: This was a first briefing item and will come back before the board for approval at their next meeting.

Grant Awards

Linda Doernte, director of the district’s purchasing and business support services department, announced $4.6 million in grants received by the district. These grants came from ARRA funds, Title I, II and III initiatives, Head Start initiatives and the Ann Arbor Educational Foundation, which gave $283,000.

Pioneer High School Performing Arts Upgrade

Randy Trent, AAPS executive director of physical properties, reported on the bids they awarded for upgrades to Pioneer High School’s performing arts facilities. Improvements include a new orchestra shell, lighting and sound system equipment, and flooring on the stage.

Trent reported that all the bids came in just under the predetermined budget of $695,000.

The discussion about bid awards led trustee Simone Lightfoot to express disappointment due to the lack of bids for Historically Underutilized Business program members (HUB). Trent said that while they have worked extensively with HUB businesses in the past, there were just no HUB bidders for this project. Lightfoot requested a document detailing the work they’ve done with HUB members, as well as how others can get involved.

Easement Request

Trent closed the meeting’s presentations by reiterating the easement request from Mark and Elizabeth Perry for access to property at Forsythe Middle School – the request was previously brought up during the board’s March 30 meeting. The granting of an easement to install a drain line was added to the consent agenda. [.pdf file of easement contract]

Outcome: The board unanimously passed the consent agenda, which included the easement request, upgrades to Pioneer’s performing arts facilities and previous meeting minutes.

Items for Agenda Planning

Trustees Christine Stead and Susan Baskett both had items for the board to address. Stead promoted the scheduling of a legislative roundtable to help educate representatives on how to promote K-12 funding.

Baskett also asked for a summary on the progress of the Haisley parking lot situation, an issue that was going to be dealt with at the next meeting of the planning committee, according to Stead.

Items from the Board

The biggest issue that members of the board promoted was the May 3 election – the special education millage is on the ballot for renewal. Trustees encouraged the public to support the initiative at the ballot box.

Present: President Deb Mexicotte, vice president Susan Baskett, secretary Andy Thomas, treasurer Irene Patalan, and trustees Glenn Nelson, Simone Lightfoot, and Christine Stead. Also present were Robert Allen, interim superintendent of AAPS; Liz Margolis, AAPS director of communications, and Randy Trent, AAPS executive director of physical properties.

Next regular meeting: Wednesday, May 11, 2011 at 7 p.m. in the fourth floor conference room of the Ann Arbor District Library, 343 S. Fifth Ave. [confirm date]

About the writer: Eric Anderson is an intern for The Ann Arbor Chronicle. Jennifer Coffman, who usually covers AAPS board meetings for The Chronicle, is taking a maternity break. Chronicle editor Dave Askins contributed to this report.

Allen told board members that the district faces a $15 million shortfall in the next fiscal year, which begins July 1. That figure assumes the special education millage, on the ballot for May 3, will be renewed. If voters don’t approve the millage renewal, the deficit could grow to nearly $21 million.

During the meeting, board members criticized Gov. Rick Snyder’s proposed state budget, which calls for cuts to K-12 education. They cautioned that his focus on business tax cuts would undermine the quality of public education in the state. “I don’t think most people want education ravaged in order to fund a huge business tax cut,” trustee Glenn Nelson said. “We need to shout this story from the rooftops.”

Allen will be giving an expanded report on the budget situation to the public from 6:30-8 p.m. on Monday, March 21 at the Pioneer High School cafeteria annex. The board also discussed setting up a time to meet with state legislators, to discuss their concerns about the state budget proposals.

Also during Wednesday’s meeting, board president Deb Mexicotte reported that the district is close to wrapping up contract negotiations with Patricia Green, the board’s choice to become the district’s next superintendent. She hoped to provide additional details soon, including a potential start date.

Budget Presentation

Interim superintendent Robert Allen started his budget presentation by describing how public school districts in Michigan are funded. The state controls revenues for local school districts in two ways. First, it collects taxes directly from residential and non-residential property owners – 6 mills each, annually – and pools that money into the state’s School Aid Fund (SAF), which also includes revenues from sales and income taxes, state lottery revenue and other sources. Out of this fund, the state pays local school districts a per-pupil allotment – a variable amount set by the state legislature that can increase or decrease each year.

In addition, state law controls the amount of taxes that school districts can levy directly – those that are not pooled into the SAF. Beyond the 6 mills that go into the SAF, for example, there’s an additional tax on non-residential property owners, but the state caps that tax at 18 mills. Both the funding from non-SAF local property taxes and from the total School Aid Fund are factored into an amount called the per-pupil “foundation allowance,” which varies by district. For Ann Arbor, the current per-pupil foundation allowance is $9,336, with roughly 16,440 students in the district.

These revenue sources, along with grants and private donations from groups like the Ann Arbor Public Schools Educational Foundation, are what the district relies on for everything from employee salaries to mandated special education programs. However, since 1995 the district’s per-pupil funding allocation has only risen once. And if Gov. Rick Snyder’s budget proposal is adopted, per-pupil funding would decrease by about $700.

Allen described in more detail how the many budget changes proposed by Snyder will have an impact on public education funding. For example, the state’s School Aid Fund, which has been dedicated solely to funding K-12 districts, would be combined with the state fund for community colleges and other public institutions for higher education. Allen said this was unfair – it would create a deficit in the School Aid Fund, which had a surplus before higher education was included.

“I don’t think those two are on the same playing field,” Allen said. “[Higher education institutions] have options to raise tuition, whereas school districts have very few options.”

These funding changes drew some questions from the board about the legality of changes to the School Aid Fund. “If these sources of revenue were specifically legislated to fund K-12 education, what authority does the state have to redirect that to higher education?” trustee Andy Thomas asked.

Allen was as uncertain as Thomas was, but trustee Christine Stead had some insight. Stead said that there have been mixed reactions in Lansing to the notion that the state can use these tactics – in light of the fact that communities and school districts are in dire economic straits. ”There may be a constitutional challenge to what has been proposed,” she said.

Another challenge Allen touched on in his presentation is the growing cost of the district’s pension plan. Local districts are being required to make higher contributions to the Michigan Public School Employees Retirement System (MPSERS), which is managed by the state but covers local district employees. Those contributions have grown to the point where the district is paying for at least 20% of an employee’s pension. ”This is the fastest-growing and largest burden for the district,” Allen said.

He characterized the pension issue as contributing to a structural deficit. The current pension system is a defined benefit plan. Having a defined benefit plan is troublesome, Allen said. With growing health insurance costs and fewer employees to support the plan, the district’s mandated contributions to the system are increasing.

Allen contrasted the defined benefit approach to a defined contribution plan, a system used by most for-profit organizations and which has more controllable costs. [In defined benefit plans, retirees receive a set amount per month during their retirement. In defined contribution plans, employers pay a set amount into the retirement plan while a person is employed. The most common of these defined contribution plans is the 401(k).]

All of these issues contribute to a budget shortfall that Allen estimates at about $15 million for the upcoming fiscal year, beginning July 1, 2011. This figure assumes that the upcoming special education millage renewal will pass. [See Chronicle coverage: "AAPS Preps for Special Ed Tax"] It did not take into account new information received by trustees who attended a legislative meeting in Lansing earlier that day, where they learned that estimated education cuts proposed by the Snyder administration may be conservative. About the $15 million shortfall, Allen said: ”This is a best-case scenario.”

Allen will be giving an expanded report on the budget situation to the public from 6:30-8 p.m. on Monday, March 21 at the Pioneer High School cafeteria annex.

Budget: Strategies

After detailing the hurdles the district will have to overcome, Allen laid out some of the ways they can combat the projected deficit.

He said one of the biggest priorities for AAPS is to lobby the state for more local control of funding, and for changes in the distribution of state funding for public education. These structural and fundamental changes are necessary because, as Allen said, currently the district is addressing the yearly shortfalls with “band-aid solutions.”

“We identify a shortfall and come up with ways to meet that,” he said. “That is not a long-term solution.”

Allen also suggested increasing student enrollment, consolidation or collaboration with other organizations, and private donations as other possible solutions to close the deficit. [For additional background on possible AAPS revenue strategies, see Chronicle coverage: "AAPS Mulls Options to Increase Revenues"]

Budget: Strategies – Private Donations

Trustee Christine Stead took the opportunity to discuss private donations, a solution she felt could be lucrative. “I believe there is an opportunity for significant donations to AAPS,” she said. “I’d like to really think about this private giving in a paradigm-shift kind of way.”

Stead pointed out that many businesses in the community want to see the district succeed because that would make them successful as well. If a significant partnership was sought, she said, a donation in the millions was possible.

Even with a significant donation, trustee Andy Thomas reminded the board that private giving alone would not be enough to close the budget gap.

“If we were to get a large donation of $1 million, that would roughly cover one-tenth of the increase in just pension contributions for just one year,” he said. “This is a very difficult problem.”

Budget: Strategies – School of Choice

Increasing student enrollment by opening a school of choice program was another idea that the board felt could have a significant impact on revenue. The program opens up additional spaces for students from outside the district to fill. The application process includes listing a student’s top four school choices, which the district uses to fill available slots. A lottery system is used for schools with more applicants than spaces, and those who are not initially selected are put on a waiting list.

The district used this strategy last year, hoping to enroll an additional 150 students. However, they were only able to attract 76 79 more. According to interim deputy superintendent Lee Ann Dickinson-Kelly, this was due to the district’s inability to bring in siblings of children who applied for the school of choice program. A number of students were lost because their family had other siblings looking to enter different grades, but there were no available openings.

To deal with this, the district is allowing for more flexibility in the amount of school of choice students it can enroll. The district will be opening 60 spaces in kindergarten and first grades for a total of 120. Twenty spaces will also be evenly distributed for second- through fifth-grade classrooms in the district, with each grade getting five openings.

While the district will be opening 140 spaces, they will allow up to 190 students to take advantage of the program. These extra 50 slots are included for increased flexibility, allowing families the opportunity to move all their children into the district without the limits they faced last year.

Liz Margolis, the district’s director of communications, said there will also be an increased effort on marketing the program, with advertisements running in area newspapers, flyers and other forms of publicity.

Dickinson-Kelly concluded the recommendation by proposing a window of April 15 to May 15 for families to sign up. The board will revisit the issue at its next meeting, on March 30.

Budget: Board Commentary on Snyder

The budget discussion led to criticism by some trustees of Gov. Rick Snyder’s view’s on public education funding.

Glenn Nelson opened the commentary, saying that the board can’t let the new budget proposals from the Snyder administration be framed as foregone conclusions. “Education in this budget has been put at the bottom of the priority list,” he said. “I don’t think most people want education ravaged in order to fund a huge business tax cut – we need to shout this story from the rooftops.”

Christine Stead followed Nelson’s point, and touched on the assumptions being made that Snyder’s commitment to tax cuts would create jobs. “The notion that job creation is the solution and that businesses will create jobs in Michigan is an assumption. If you look at Snyder, he didn’t do that,” Stead said, referencing Snyder’s tenure at the helm of the computer firm Gateway.

Stead continued by discussing the assumption that the jobs created would have well-paying salaries that can support a family, saying that this was unlikely to be true. She bemoaned the view that giving tax breaks to businesses would benefit Michigan, saying that business values and the mission of CEOs do not necessarily translate to a better community.

Board president Deb Mexicotte agreed with Stead and Nelson regarding Snyder’s budget priorities, as well as the poor state of public education funding over the past few decades.

“It is obvious to anyone who has been listening to the way this [budget] has been put together, and has been watching the drumbeat against public education for the last 30 years by the Republican party,” she said. “This isn’t new.”

Mexicotte added that, without opposition, the current trend against funding public education would continue.

Susan Baskett made the final argument for action, urging those who have supported education to show more than passive support, and saying that those who do not support education need to be identified and educated about the importance of public schools in the community.

“We have to stop being nice,” she said. “We know people will pay for what they value and we need to remind (legislators) of this. Who doesn’t value education? A business tax reduction over our children?”

Allen used the discussion on possible methods of closing the budget shortfall to segue into his presentation on the upcoming special education millage renewal. He re-emphasized a number of the points made during a presentation at the board’s regular meeting on March 2, given by representatives from AAPS Student Intervention and Support Services (SISS). From Chronicle coverage of that meeting:

By way of background, at its December 2010 board meeting, the Washtenaw Intermediate School District (WISD) voted to place before voters a renewal of an existing tax that supports special education in all school districts in Washtenaw County. It will appear on the ballot on May 3, 2011.

The funds collected through the millage support special ed services for students with physical, mental or emotional disabilities up to age 26.

First approved in 2004 at the rate of 1 mill, the six-year millage expired after the 2010 tax season. The proposed renewal of the special ed tax, at a rate of 0.985 mill, would extend another seven years – through 2017. A tax rate of 1 mill is equivalent to $1 for every $1,000 of a property’s taxable value. The millage appears on tax bills under the label WISD SPEC ED.

Allen expanded on the importance of this special education funding by detailing the district’s entire special education budget, totaling nearly $40 million. Much of this is covered through reimbursements from the state and federal government, though the district spent about $4 million in general fund dollars last year for special education. The special education millage provides about $6 million to cover remaining costs. Without the millage, that $6 million would need to come from the district’s general fund – adding to the projected deficit.

“This truly impacts the entire district,” Allen said.

Special Presentations

The meeting was opened with two presentations from students.

The Skyline Horn Trio, directed by Skyline High School’s band director, Jason Smith, opened the student presentations by performing for the board. Smith said he was very proud of the trio, as well as his entire music program, adding that the three musicians are “great individuals – they’re really very talented.”

After the performance, Larry Dishman, coordinator for the Hikone-Ann Arbor cultural exchange program, talked to the board about the program and introduced a group of middle school students who were at the meeting to report on their experiences.

The program gave students the opportunity to travel to Ann Arbor’s sister city of Hikone, Japan for about two weeks in late October and early November 2010, learning about Japanese culture and living with a host family. AAPS students and their families also hosted students from Japan for eight days, introducing them to an American way of life.

Dishman reported that he had been in contact with program representatives from Japan and he was happy to announce that they were not directly affected by the recent earthquake. “They are safe and sound,” he said. “Their only regret is that they aren’t getting as much information as we are.”

Students from the program then talked about different aspects of their experience. Topics included the classes they took prior to their trip to learn about the language and culture, as well as fundraising they did.

Trustee Glenn Nelson asked the group if there was anything they encountered that they did not expect. Students answered that they were surprised by some of the food they tried and by the affectionate style of interaction they saw – they had expected much more formality.

After the presentation, board president Deb Mexicotte expressed appreciation that the students had an enjoyable time, hoping that other students would be encouraged to sign up for the program.

Association Reports

At each meeting, the board invites reports from six associations: the Youth Senate, the Ann Arbor Parent Advisory Committee on Special Education (AAPAC), the Parent-Teacher-Organization Council (PTOC), the Black Parents Student Support Group (BPSSG), the Ann Arbor Administrators Association (AAAA), and the Ann Arbor Education Association (AAEA). At this meeting, the board heard from the Youth Senate, AAPAC, and the PTOC.

Association Reports: Youth Senate

Aoxue Tang, a junior from Pioneer High School, represented the Youth Senate by delivering the first report. Tang updated the board on the Youth Senate’s philanthropic projects focused on raising awareness about poverty through a series of presentations.

“Students have participated in varied service events and have decided to donate proceeds raised from the presentations to the Washtenaw Intermediate School District’s Education Project for Homeless Youth,” Tang said.

Tang also touched on the role of standardized testing, discussing recent developments that have made the Youth Senate question a test’s usefulness. The Michigan Merit Exam was the focus of this portion of the address, with Tang pointing out that, while the test does provide an opportunity to practice for the ACT, the revocation of the Michigan Promise scholarship makes the MME unnecessary.

Association Reports: AAPAC

Lauren Roland addressed the board on behalf of the Ann Arbor Parent Advisory Committee on Special Education. Roland began by reporting that her son, a fourth-grade student in AAPS with autism spectrum disorder, was doing very well, thanks to the structures and support in place from the district. This included her son’s participation in a field trip to see the Ann Arbor Symphony Orchestra, an event that required preparation due to the increase in sensory activity that would accompany the performance. Her son had a successful trip, she said, and according to one teacher, enjoyed the performance.

She also thanked board president Deb Mexicotte for attending an AAPAC meeting recently to discuss the upcoming special education millage renewal.

Roland closed her presentation by echoing the call for an Ann Arbor-based Young Adult Program (YAP), helping those with special needs transition into society. [The board heard a presentation about a possible YAP for Ann Arbor at their March 2, 2011 meeting.] AAPAC has been emphasizing this cause for months, and Roland reiterated that there is enough parent and community support to justify the creation of a program.

Association Reports: Parent-Teacher Organization Council

Martine Perreault delivered the final association report, on behalf of the Parent-Teacher Organization Council. Perreault opened by welcoming Patricia Green, the district’s next superintendent, before discussing the PTOC’s upcoming meetings.

Perreault highlighted the PTOC’s March 21 meeting, where effective fundraising strategies will be discussed. The meeting will start at 7 p.m. at the Balas Administration Building, 2555 S. State St. She added that the PTOC will be surveying district treasurers on their retail banking habits, hoping to glean the best practices.

Board Committee Reports

The board has two standing committees. The planning committee consists of Christine Stead (chair), Susan Baskett, and Irene Patalan. The performance committee consists of Glenn Nelson (chair), Simone Lightfoot, and Andy Thomas. Board president Deb Mexicotte sits on neither committee.

Committee Reports: Performance Committee

Nelson updated the board on the most recent meeting of the performance committee. He discussed the policy reviews they covered, as well as some of the strategies they discussed for increasing enrollment. He did not provide much detail about the numerous policy changes the committee was presented with at its March 14 meeting, saying generally that they discussed greater transparency and ease of use of district buildings.

Nelson added that he was impressed with how much impact the strategic plan was having with regards to providing a road map for the district and the board. The committee plans on continuing to review the policy changes.

Nelson also touched on the committee’s discussion about enrollment strategies, mentioning a number that were fleshed out during Robert Allen’s budget presentation [see above]. According to Nelson, administrators have suggested several good ideas, something he attributes to their familiarity with the subject matter.

“Administration people are the ones who live with these numbers,” he said. “They’re the experts.”

Committee Reports: Planning Committee

Stead reported on the planning committee’s meeting, touching on policy reviews, the upcoming special education millage renewal and the board’s continuing efforts to advocate for public education.

Stead, like Nelson, did not go into specifics about the policies that the committee reviewed. She said she was pleased to report that the committee would be following a suggestion from Baskett to require a hard copy of any documentation referenced during their review, which would result in a more efficient process.

With regards to special education, Stead had positive reports on some of the meetings she had been a part of to raise awareness about the upcoming millage, emphasizing its importance. “We want the community to be aware that this is an incredibly important millage for us,” she said. “It is one of the few things we can control at crucial at a time of massive cuts.”

Finally, Stead said there needs to be a commitment to educating legislators about the budget proposed by Gov. Rick Snyder’s administration, and its impact on school districts. “The budget proposal is packaged together so tight that it’s tough to break it apart into pieces,” she said, encouraging arming legislators with information on how to respond.

A strategy for response was also brought up later in the meeting, during the trustees’ closing remarks. Stead proposed inviting local representatives to a study session-type meeting to discuss funding issues.

The board decided to move forward with the idea by collecting information to present to the representatives and members of the public who attend, with the goal of educating the public on the issue and on where the legislators stand. Baskett added that taping or recording the session would help to increase awareness. A date for the session has not yet been set.

Interim Superintendent’s Report

Interim superintendent Robert Allen reported on several notable accomplishments in the district. Among those, he highlighted a partnership between the district and the Main Street Area Association that’s featuring local students’ artwork hung in the windows of downtown businesses. As part of that effort, a downtown art walk was held on March 13 – Allen said there was a large turnout of families for the event, which also included performances by the Pioneer High School choir. He added that the artwork will be on display until the end of March, and encouraged people to check it out.

Update on Superintendent Search

Board president Deb Mexicotte gave a brief update on the superintendent search. Mexicotte said the district has entered into negotiations with Patricia Green, the candidate selected by the board at their March 5 meeting. [See Chronicle coverage: "AAPS Superintendent Choice: Hard Decision"] According to Mexicotte, they were close to being able to bring a contract to the board for final review. At that point, she said, she would have more information about the contract and potential start dates.

Board Action

The only voting action the board took was to unanimously approve its consent agenda, which included the second-quarter financial report, delivered by Nancy Hoover – AAPS director of finance and interim chief financial officer – at the March 2 board meeting; board minutes from the March 2 and 5 meetings; and a gift of Shakespeare plays given by Saint Andrew’s Episcopal Church.

A number of policy reviews came up later in the meeting for the board’s first briefing.

The board discussed the district’s policy on homeless students, elementary reclassification-retention, and local wellness. No changes were made, although the local wellness policy may have to be changed in the future due to legislation currently being proposed. This was the first hearing for the policies; no action will be taken by the board until the second briefing for these items at a future meeting.

Board Notes

The board concluded the meeting with general communications from trustees. The remarks were highlighted by trustee Andy Thomas discussing the district’s funding situation and announcing that the Ann Arbor Public Schools Educational Foundation has kicked off its 2011 fundraising campaign with the goal of raising $1 million.

Continuing on this topic, Thomas discussed a piece of legislation introduced by state Sen. Jack Brandenburg that would cap the amount of fund equity a district could accumulate. [The proposal is to cap a district's "rainy day" fund at 15% of its annual operating expenses.]

“This has to rank as the single dumbest idea I have heard anywhere,” Thomas said. “The districts that were responsible would get money taken away to be driven back down. The only explanation is that Brandenburg doesn’t understand the concept of fund equity. It’s not a rainy day fund. This is another opportunity to write to a senator to let them know what a bad idea this is.”

Present: President Deb Mexicotte, vice president Susan Baskett, secretary Andy Thomas, treasurer Irene Patalan, and trustees Glenn Nelson, Simone Lightfoot and Christine Stead.

Next regular meeting: Wednesday, March 30, 2011, at 7 p.m. in the fourth-floor conference room of the downtown Ann Arbor District Library, 343 S. Fifth Ave.

About the writer: Eric Anderson is an intern for The Ann Arbor Chronicle. Jennifer Coffman, who usually covers AAPS board meetings for The Chronicle, is taking a maternity break.

Leading up to the city administrator’s proposed budget in April, the city council is also holding a series of work sessions on the budget. Their typical scheduling pattern is for the weeks between council meetings. That was the case on Jan. 31, 2011 when the council held its budget work session on the community services area, which includes human services, parks and planning. Another session was held on Feb. 7, prior to the council’s regular meeting, regarding the 15th District Court. A report on the Feb. 14, 2011 session, which focused on police and fire, will follow.

At the podium is community services area administrator Sumedh Bahl. Partially obscured by the podium is councilmember Marcia Higgins (Ward 4). Leafing through the budget impact sheets that the council had been given just prior to the meeting is Stephen Rapundalo (Ward 2). (Photo by the writer.)

The Ann Arbor city council’s budget work session on Jan. 31, 2011 covered a broad range of topics – from the city’s affordable housing stock, to planning and development, to parks and recreation (including golf courses), to human services funding. All these issues fall under the city’s community services area, which is led by Sumedh Bahl.

In a budget year where maintaining the same level of activity in every department is projected to result in a $2.4 million shortfall, city departments have been given reduction targets between 2.5% and 4%. Targets vary across departments depending on health care costs for employees in those departments.

So at their work session, councilmembers heard from heads of individual departments about the specific ways those targets might be met.

For example, Mary Jo Callan, who’s head of the city/county office of community development, told councilmembers that an unrealized $98,000 federal grant would pose an additional challenge. All other things being equal, Callan would meet the reduction target by reducing the city’s allocation to nonprofit human services agencies by $116,714 – from $1,275,744 to $1,159,030. The budget is planned in two-year cycles, even though it’s adopted just one year at a time, so Callan’s reduction strategy for next year’s FY 2013 budget would be to reduce the nonprofit allocation by an additional $48,700.

The planning department plans to meet its reduction target in part by charging the construction fund for 10% of the historic district coordinator’s time, factoring in projected revenue increases due to increased development activity, and leaving a rental housing inspector position vacant. The rental housing inspection activity would be maintained at appropriate levels by using construction inspectors for rental housing inspections as needed.

The city’s housing commission – which maintains more than 350 units of public housing throughout the city – is not proposing to meet reduction targets, but rather to hire what officials say are two crucially needed positions: a financial analyst and a facilities maintenance manager, which together are expected to cost an additional $154,000 per year.

Parks and recreation would meet their targets in part through savings derived from energy improvements that have been made to various recreational facilities over the past few years.

The council focused some of its session on the city’s golf courses, with a council consensus seeming to emerging that for the next two years, the council will be content to stick with the status quo – operating the Leslie Park and Huron Hills facilities as golf courses, and not changing them to other uses.

But the council was also asked to consider a question on which it could be harder to achieve consensus: Should the city continue to help fund park operations, as it has for the last four years, by tapping the city’s general fund reserve for $287,000 annually? The history of the issue dates back to the parks capital improvements and maintenance millage, which was approved in 2006, and which was followed by the council’s approval of its FY 2008 budget the next spring.

That history is rooted partly in a question that the city’s CFO, Tom Crawford, addressed in a straightforward fashion at the work session: What exactly does it mean for a department to have a budget reduction target of 2.5%? 

In this report, we take a look at: (1) how the city’s financial staff define budget reduction targets; (2) how and why those targets vary across departments; (3) how reduction targets relate to the parks budget controversy of FY 2008 and the current $287,000 question; and (4) the range of work session topics discussed by the council.

What Is a Budget Reduction Target?

The city is currently in the middle of its 2011 fiscal year – which ends on June 30, 2011 – and is developing its FY 2012 budget. If the city’s chief financial officer has established a 2.5% budget reduction target, how does he check to see that the target has been met?

Percents are all about comparing numbers, so a natural inclination would be to compare this year with next year – that is, the FY 2011 budget expenses with the FY 2012 projected revenue. In more detail, you might think to calculate 2.5% of the FY 2011 expenses, subtract that number from the FY 2011 expenses and ask: Is that number equal to my FY 2012 budgeted revenue? Arithmetically:

[FY 2011 expense] — [FY 2011 expense]*.025 ?=? [FY 2012]

If that checks out, then from this year to next year, we’ve cut the budget by 2.5%, right?

But that’s not what a 2.5% budget reduction target means for the city. When the city’s financial staff calculate a reduction target of 2.5%, they’re not comparing this year’s expenses with next year’s projected revenue. They’re comparing next year’s projected expenses, with next year’s projected revenue.

At the Jan. 31, 2011 city council work session, the city’s CFO, Tom Crawford, explained this concept to council members as a stepwise process:

1. Assume the same activities will be maintained next year at the same level they exist this year [staffing levels will remain the same; the same services will be provided; etc.].
2. Project to next year how much it will cost to maintain that same level of activity. [If the cost of electricity is expected to increase by 10%, that's calculated in; if union contracts stipulate that there's a 1.5% salary increase, that's calculated in.]
3. Compare next year’s projected cost with next year’s projected revenue. If cost exceeds revenue, that defines the percentage reduction the organization needs to achieve as a whole.

Arithmetically, the equation looks like this:

[FY 2012 expense] — [FY 2012 expense]*.025 ?=? [FY 2012 revenue]

By way of a made-up example, consider a perfectly balanced FY 2011 budget where expenses and revenues are $100,000. Let’s say that due to contractually obligated salary increases, overall inflation, and a rise in oil prices, it’s possible to project that the same activities/services the city obtained for $100,000 in FY 2011 will instead cost $101,000 in FY 2012. Let’s say that revenues are expected to drop in FY 2012 to $98,475. So the crucial question for the city is how to reduce $101,000 down to $98,475. On this scenario, measured in dollars, the city is looking for some way to trim $2,525. What’s that dollar target in terms of percent?

2,525/101,000 = .025

Let’s say on that scenario, the city does achieve its reduction target of 2.5%. That is, let’s say the city finds a way to cut expenses for FY 2012 down to $98,475. That would mean a reduction target of 2.5% has been met for FY 2012, even though comparing FY 2012 to FY 2011 would indicate only a 1.525% cut.

Different Reduction Targets for Different Departments

Part of the city’s specific labor strategy is to try to convince its unions to adopt a health care and pension plan that would cost the city less – by requiring greater contributions from employees. The public relations component of that strategy was reflected at the Feb. 7, 2011 city council meeting, when Stephen Rapundalo (Ward 2), chair of the city council’s budget committee, addressed his colleagues. He contrasted the level of health care benefits received by city union workers with benefits received by city non-union workers and by employees at institutions like the University of Michigan.

In addition to the public relations piece, the city’s labor strategy has a budgetary component. As early as the first budget retreat in December 2010, city administrator Roger Fraser and CFO Tom Crawford explained to councilmembers that this year they will align the city’s labor and budget strategies. What that means in terms of budget reduction targets is that different departments will be given different reduction targets, depending on how many employees in the department have adopted the city’s new benefits plan.

All departments have a baseline 2.5% target, with additional reductions assigned to departments depending on the extent to which employees in each department are still on the city’s old benefits plan.

In a hypothetical department where all employees were on the new heath and pension plan, the reduction target would be 2.5%. In a department with a large number of union employees who have not yet adopted the new health plan, the reduction target this year can be as high as 4%. The numbers extracted from budget impact sheets submitted by each department for the Jan. 31 work session illustrate how the percentage reduction targets vary across departments. The targets all fall between 2.5% and 4.0%:

                   Community     Plan/Dev     Planning        Parks
Projected FY 012   2,008,008    1,497,874      829,796    3,612,367
Reduction Dollars     55,521       55,182       29,613       92,083
Reduction Percent       2.76         3.68         3.57         2.55

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Reduction Targets and the 2006 Parks Millage: $287,000

The city’s method for computing reduction targets based on next year’s projected expenses and next year’s projected revenues is not new this year – this is simply the way it’s been done. But that method of computing budget targets is inconsistent with the last-year-vs.-this-year comparison that many people are drawn to when they think about percentages. That inconsistency led to considerable controversy in early 2007 when the city council adopted its FY 2008 budget.

The controversy involved the combined parks maintenance and capital improvements millage that was approved by voters in November 2006. Before passage of the combined millage, the city levied two separate millages at 0.5 mill each – one for parks maintenance and the other for capital improvements. Now, within the combined millage, taxes are collected at a rate of 1.0 mill, but money is allocated to maintenance or capital improvements on a more flexible basis than the previous legally enforced 50-50 split that was expressed by the specialized purpose of each millage.

However, there’s not complete flexibility to allocate money to maintenance or capital improvements within the unified millage. Percentage allocation is guided by a city council resolution passed in October 2006. The resolution specifies a range of 60% to 80% for maintenance, with the remainder going to capital improvements.

Another part of that resolution was intended to address a fear expressed by some in the community at the time: Even though more money for parks might be generated through the new millage, the amount of money actually spent on parks could be reduced – if the city reduced funding for parks from its general fund. So the intent of the resolution was to allay that fear. In relevant part, the October 2006 resolution reads:

4. If future reductions are necessary in the City’s general fund budget, during any of the six years of this millage, beginning with Fiscal Year 2007-2008, the general fund budget supporting the parks and recreation system for that year will be reduced by a percentage no greater than the average percentage reduction of the total City general fund budget;

5. If future increases occur in the City’s general fund budget during any of the six years of this millage, beginning with Fiscal Year 2007-2008, the general fund budget supporting the parks and recreation system for that year will be increased at the same rate as the average percentage increase of the total City general fund budget;

By spring the following year – as the council was prepared to adopt the FY 2008 budget – objections were raised when general fund support for parks in the proposed FY 2008 budget was less than in FY 2007. Those who objected, including prominent leaders of two environmental groups, pointed to the increase in the overall general fund budget from the previous year, and contended that parks should enjoy the same increase, not a decrease. From a May 19, 2007 Ann Arbor News account, written by Tom Gantert:

Mike Garfield, director of the Ecology Center, and Doug Cowherd, chairman of the Sierra Club-Huron Valley Group, said the city should do what it said it would do in an October 2006 resolution. That resolution stated that if the city’s general fund budget increased, the parks system budget will be increased at the same rate as the average percentage of the total general fund budget.

According to the city, the general fund budget rose from $78.5 million to $80.3 million, an increase of 2 percent. Yet, the parks system budget dropped from $6.7 million to $6.0 million, a decrease of about 11 percent. To get to that 2 percent increase as the resolution states, the city would have to add about $763,000.

On the night the council adopted the FY 2008 budget, an attempted budget amendment – proposed by then-councilmember Bob Johnson – would have added $638,900 to the parks budget from the general fund reserve. But the amendment failed, receiving support only from councilmembers Johnson, Ron Suarez and Stephen Kunselman.

For that vote, the majority of councilmembers seemed persuaded that the intent and purpose of the October 2006 resolution was served by treating the parks budget targets – as they’ve been laid out in the first section of this article – the same as all other departments. At the time, an Ann Arbor News account from May 16, 2007 had Crawford explaining the apparent discrepancy this way:

But now chief financial officer Tom Crawford says the [October 2006] resolution was too simplistic and just looked at overall budget figures and didn’t follow the city budget methodology in place for several years.

For example, because the parks system doesn’t have as many employees as other departments, its budget doesn’t increase as much for rising expenses such as employee health care.

Because of problems in the ordinance language like that, Crawford said the parks would be getting more money than other larger departments that are paying for such benefits.

Crawford said the parks department was treated the same as the other departments in the city.

But later, in October 2007, Johnson brought the issue back to the council with a smaller number to be added to the parks budget from the general fund reserve – $287,000. And that resolution was passed by the council.

Originally the general fund supplement to the parks budget was supposed to be a non-recurring item from the general fund reserve in FY 2008 and FY 2009. But it recurred in the FY 2010 and FY 2011 budgets, as well.

So at the Jan. 31, 2011 council work session, community services area administrator Sumedh Bahl asked the council for guidance: Should the city simply set the parks budget at $287,000 higher, continue to tap the general fund reserve, or discontinue the supplement? Mayor John Hieftje wanted to know if the city’s park advisory commission had become more versed in how the budget targets work. Crawford told the mayor he thinks PAC understands it.

Stephen Rapundalo said this is not the first time over the years when the council has talked about tapping the reserve fund balance for recurring operational needs – it needs to stop, he said, because the council was just “kicking the can down the road.”

But Crawford was keen to stress that in general the council has been disciplined about not tapping the general fund reserve for operational expenses. The parks supplement was an old decision, he said, and now it’s time to check and see where the council’s consensus is on the question.

Marcia Higgins (Ward 4) indicated that it is a decision the council would make during the budget process. Stephen Kunselman (Ward 3) wondered how that would be achieved: Do they do that by resolution? The answer was unclear.

Christopher Taylor (Ward 3) noted that out of a $7.8 million community services budget, $287,000 is a relatively small order of magnitude. Rapundalo cautioned that the right number to compare the $287,000 against is just the parks portion – around $3.6 million.

Kunselman inquired when the parks maintenance and capital improvements millage is up for renewal, and Colin Smith, the city’s manager of parks and recreation, clarified that it would be on the November 2012 ballot.

Concerning the differing viewpoints on the intent of the October 2006 resolution, city administrator Roger Fraser seemed conciliatory. It was a matter of interpretation, he said, and both groups had made good arguments about whether the budget complied with the intent of voters.

Budget Impact Sheets

The Jan. 31, 2011 budget work session was oriented around budget impact sheets for each department. The city of Ann Arbor is maintaining a separate page in its online budget guide as a repository for the impact sheets. [.pdf of combined budget impact sheets from Jan. 31, 2011] The impact sheets include in detail all the items identified for savings or additional revenue, as well as any items that would increase costs.

Budget Impact Sheets: Planning and Development

Among the ways that the city’s planning and development services departments are meeting their reduction targets, Sumedh Bahl highlighted the following: making sure that staff time is being billed appropriately to other departments; and an additional $3,000 in revenue from already-implemented fee increases in the city’s historic preservation program.

Tony Derezinski (Ward 2) said he liked the additional $10,00o in revenue from increased development activity. He wanted to know if there were more development proposals in the pipeline? Yes, answered Bahl.

In the course of questioning, Bahl went on to explain that part of their plan to meet reduction targets is to leave an inspector position vacant and to use construction inspectors for rental housing inspections. Increased efficiency in rental housing inspections is expected to yield an additional $50,000 in revenue.

In response to councilmember questions, Bahl said that regionalization of inspections – using inspectors from surrounding municipalities – is a future possibility. The city is also looking into the establishment of an administrative hearing bureau (AHB), which would help expedite dealing with nuisance properties, Bahl said. That might take around a year to establish, he said.

[Stephen Kunselman (Ward 3) has, over the last several months, pointed out specific properties in his ward that he says have become nuisances, and are contributing to blight. At the budget retreats, he has also urged that the council and staff  think about ways to address the problem – money for demolition can be clawed back through a lien, for example. Establishment of an AHB is one mechanism that the state's Home Rule Cities Act makes available for dealing with such properties. The city of Ypsilanti established an AHB last year.]

Stephen Rapundalo (Ward 2) noted that he’d made a request at one of the budget retreats for a cost/benefit analysis of doing mandatory home inspections upon sale of a property. It’s something that would generate some amount of additional revenue. Is that on the list? he asked. Bahl confirmed that looking at the issue was at the top of his list.

Budget Impact Sheets: Housing Commission

The Ann Arbor Housing Commission oversees around 350 affordable housing units across the city. The housing commission’s impact sheet did not propose to meet the reduction target. Instead, it called for hiring two new positions: a facility maintenance manager and a financial analyst.

Bahl explained that the facility maintenance position  is vacant. The job includes overseeing the maintenance of buildings, plus the mechanicals like boilers and furnaces. Bahl stressed the need to maintain equipment as a way to extend its life, which delays capital expenses.

Bahl recalled his recent experience as head of the city’s drinking water facilities. [Bahl assumed the leadership of the community services area last year when Jayne Miller left the city for another position. Before that, Bahl was head of the drinking water facilities.] His focus was always on maintenance, he said. By way of example, he described for the council how they had gas engines from 1965 and pumps from 1949 that were still in service. That’s how you prolong the life of equipment – by having a good maintenance program.

[The request for two positions for the housing commission comes in the context of a wholesale replacement of the housing commission's board last year. Additional Chronicle coverage: "Housing Commission Reorganizes," and "Investments: Housing, Bridges, Transit." Last year, the council agreed to a $138,000 allocation to the housing commission to help transition it into an operation that is less dependent on the federal HUD program. The transition included making full-time positions of the executive director and deputy director of the housing commission.]

Mayor John Hieftje asked Tony Derezinski (Ward 2) – the city council’s liaison to the housing commission – if funding would be available to perform the maintenance, if the maintenance manager position were funded.

Derezinski explained that maintenance was part of needs assessment that had been done [by Schumaker & Company]. The commission is currently “backhoeing” a lot of the deferred maintenance, he said. It’s things like changing filters. [There is also currently an open request for proposals (RFP), with a Feb. 25 deadline, to bid on replacing furnaces at many of the housing commission properties.] They need the management position to organize the staff to do it the regular maintenance.

City administrator Roger Fraser said that $330,000 had been spent on furnaces and boilers in the last year. There are two resident managers who work with people in facilities to do some maintenance, he said, but they don’t have time to look at the capital side.

Fraser reminded the council that in last year’s budget, they’d approved additional money for the housing commission – over $130,000 – but this current request is “not a repeat of that money.” For some of the capital investments necessary, Fraser said, the commission had received grants. [To match those grants, the housing commission has recently asked the Ann Arbor Downtown Development Authority for support, but the DDA has not yet acted on the request.]

About the maintenance issues, Derezinski compared it to opening a drawer and finding more snakes. He said the maintenance issues in the housing units are reflected in the complaints you hear at the housing commission’s board meetings. Two years ago, he said, there were a dozen people at every meeting, but that’s decreasing. The staff is now “on top of it.”

Stephen Rapundalo (Ward 2) inquired whether maintenance could be done by third party. If you have a schedule for changing filters, could they call up someone in the phone book and have them perform that task? he wondered. Bahl allowed that some tasks could be outsourced to a third party – they take a combined approach. Some maintenance is done by staff, and some is done by contracted sources – for example, for chillers that require a worker with specialized training. But Bahl said that someone has to monitor and manage everything.

Kunselman noted that as part of the reorganization last year, the commission had eliminated two union positions for maintenance. Kunselman wanted to know how that was consistent with needing a maintenance manager. The part of the maintenance that has been outsourced, instead of using union positions, Bahl said, is done when the units turn over to a new occupant. The commission still needs someone to make sure that all the regular maintenance work is getting done.

Earlier in the work session, Sandi Smith (Ward 1) drew out the fact that there is currently $118,000 in the Ann Arbor housing trust fund. Kunselman wanted to know if that included the Burton Commons project. Mary Jo Callan, head of the combined city/county office of community development, explained that four years ago the commission had committed funds the  Burton Commons housing project. Two years ago, she said, the city told “wanted-to-be developers” it could not continue the commitment. So, where’s the money? Kunselman wanted to know. Fraser explained that it was put in back in the trust fund, and it’s been used. Smith inquired about future payments that are due to the fund by developments – specifically, the one at Plymouth Green. Wendy Rampson, head of planning for the city, explained that based on the Plymouth Green development agreement, two payments of $15,000 had been made and there would be two more, at $15,000 each for next two years.

Smith noted that Avalon Housing is a nonprofit organization in town similar to the housing commission, and Avalon Housing has divested itself of smaller, single-unit housing. Did the needs assessment for the housing commission include consideration of the type of housing stock? She pointed out that it could be a question of replacing 100 furnaces versus one.

Derezinski said that the furnaces that had been replaced were in smaller units. He also said that the question of an appropriate mix of housing stock was receiving attention from the commission. They’d looked at the mix in the Grand Rapids housing commission’s collection of housing, for example.

Fraser wrapped up the discussion of the housing commission by noting that he’d been in public service long enough to see the federal government essentially get out of the business of domestic spending on housing. A lot of the housing we’re dealing with now, he said, dates to the late ’60s and ’70s. The units had 30-year mortgages to guarantee affordability. Fraser noted that the council had previously discussed multi-family units going to market rate. The pressure has rolled downhill to the smallest units of government closest to the people, he said, and the dilemma is only going to get worse.

Fraser pointed to President Obama’s remarks during his state of the union speech, and the new leadership in the U.S. Senate and House, as well as Michigan’s own legislature – all of them have been targeting domestic spending for cuts, he said, and we’ll have to live with it.

Budget Impact Sheets: Community Development

Mary Jo Callan, the director of the combined city/county office of community development, delivered a grim picture for human services allocations to nonprofits. She would meet the budget reduction target in FY 2012 by reducing allocation to nonprofits that provide human services by $116,714 – from $1,275,744 to $1,159,030. Callan’s strategy to meet the target for next year’s FY 2013 budget would be to reduce the nonprofit allocation by an additional $48,700.

Councilmembers appeared slow to grasp the full significance of the numbers on the budget impact sheets. Margie Teall (Ward 4) asked: How did you come up with that number? Where will it hit?

Callan explained that she did not yet know which specific nonprofits would be affected. She said that her department is in the process of gearing up for the new coordinated funding process, beginning July 1, 2011.

Carsten Hohnke (Ward 5) remarked that it was a significant percentage cut, with Teall chiming in that it was greater than 2.5%.

Callan explained that her department had anticipated receiving a $98,000 federal grant from HUD the previous year, to cover administrative costs incurred from city finance and administrative staff. The grant had not materialized – HUD requires documentation that is fairly specific, she said. In a followup email in response to a Chronicle query, Callan described the documentation issue in more detail:

The documentation requires not only the amount of time spent on a specific grant (e.g. CDBG, HOME, CDBG-R, NSP), but also the specific project worked on (e.g. single family demolition, 701 Miller rehab, human services). Community Development has our whole finance and time tracking system set-up to accommodate this documentation threshold, since the vast majority of our funding comes from these sources. City finance and administrative staff however, do not track their time in this detailed way, since the vast majority of their work relates to the general fund.

Stephen Rapundalo (Ward 2) mistakenly concluded from Callan’s remarks that the $116,000 reduction did not mean reduction in nonprofit allocations after all – the reduction would be $116,000 minus the $98,000, he ventured. That would make it more palatable in terms of actual service agency cuts, he concluded.

But Callan clarified that they would not be subtracting $98,000 from anything. Rapundalo sought to clarify why support to nonprofits would be reduced if the $98,000 was originally intended to support administrative staff.

City administrator Roger Fraser sought to bring some clarity to the situation by saying that if administrative staff is reduced, the city loses capacity to administer the program. The office of community development had tried to keep the allocations to nonprofit agencies stable, he said. The city’s recommendation is consider the trade-off: What does it take to run the operation, and how much direct support to nonprofits can be provided? The city is trying to figure out how to pay for staff to run the program at the same level, while continuing to provide direct support to programs.

Rapundalo ventured that the budget impact sheet was not a specific proposal for allocating the cut between administrative staff and direct support to programs. Fraser replied that the city was suggesting a balancing act: “These are the adjustments we think are necessary.” Marcia Higgins (Ward 4) zeroed in on the significance of the numbers the council had been given: “So it really is a direct reduction?” Yes, said Callan. She continued by saying her department is a lean organization: “We don’t bring this to you lightly.”

Hohnke summarized the situation by saying that one way the city had been working to maintain funding was to identify federal funding opportunities – the proposed cut reflects the fact that federal funding didn’t materialize.

Christopher Taylor (Ward 3) characterized the situation as Callan believing the department is as lean as it can go and it has gotten what revenue is gettable – the only way to meet it is to reduce funding to human services agencies.

Fraser stressed that there was no effort yet to balance the choices in human services funding against other choices in the city’s organization. The office of community development was asked to meet the reduction targets just like every other department, and it was presented in “raw form.” In the proposed budget in April, he said, they might propose a different scenario, but the impact sheet simply recognizes that $98,000 is gone.

Budget Impact Sheets: Parks and Recreation – Basics

Among the dollars identified at the work session by Sumedh Bahl for savings in parks and recreation was $65,083 in energy savings due to improvements done at facilities. He also pointed to $10,000 saved in materials and supplies used for upkeep in facilities. Upgrades in facilities means that for a certain time, there’ll be a reduction in maintenance costs, he said. Additional budget savings would result from adjusting water charges to reflect what actual usage is. And they’re eliminating some software licenses. Some of the software, Bahl said, isn’t used by the staff that much, “so we’re taking it away from them.”

Bahl also pointed to an additional $52,000 in anticipated revenue, starting in FY 2013, from new kayaking and tubing, resulting from the planned construction of the Argo Dam bypass, which was recommended by the city’s park advisory commission and approved by the city council last year.

Mayor John Hieftje wondered about a proposed increase in fees at the city’s outdoor pools for FY 2013 – $4 to $5 for adults and $3.50 to $4 for youth and seniors – which the budget impact sheet showed would generate an additional $40,000 in revenue in FY 2013.  He noted that historically, fee increases had caused revenue to drop. Bahl said he felt the prices would still be pretty competitive.

Colin Smith, manager of the city’s parks and recreation program, allowed that fee increases leading to less patronage and lower revenues had happened – but that was a number of years ago, he said. At that time, he said, the increase had been for season passes and it was extraordinary. During the last fee adjustment cycle, the prices on season passes were raised by 10% and the city didn’t get any “hard feedback” on that, he said.

Marcia Higgins (Ward 4) wanted to know: What’s “hard feedback”? Smith explained that this meant negative public input about the increase.

But Higgins noted that this is the first year that the city would see the impact of the 10% fee increase – this spring. She clarified that these are additional fee increases planned for the following year. Smith confirmed that’s the case – he didn’t want to implement two kinds of fee increases at once.

Budget Impact Sheets: Parks and Recreation – Huron Hills

Included in the materials provided to city councilmembers was a memo that outlined various options for Huron Hills golf course. [The city also owns the Leslie Park golf course.]

[Last year the city issued an RFP to privatize of some the operations at the course, but ultimately decided not to accept either of the proposals that were made – one from Miles of Golf and the other from a citizen group that envisioned turning the course operations over to a nonprofit.]

Bahl summarized the result of the implementation of recommendations made by a consultant – Golf Convergence, hired by the city in 2007 – to improve patronage at the city’s two golf courses. All of the recommendations have now been implemented:

Rounds Played
Season  Huron    Leslie
2007    13,913   21,857
2008    15,558   27,078
2009    21,150   30,973
2010    22,500   32,000

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Bahl noted that there’d been a dramatic improvement in the number of rounds played, but there are signs that it’s flattening out.

A memo provided to the council outlines the financial impact of various options for use of the Huron Hills land, including continuing to operate the golf course. In summary strokes, the options for Huron Hills and their costs over the next four years would be:

• Golf course: $162,000-187,000 annually
• Walking trails: $68,000-$309,000 annually
• Naturalization: at least $500,000 annually, falling to around $100,000 after seven years
• Soccer fields: no cost estimate
• Disc golf: no cost estimate
• Farming: no cost estimate

There’s a wide range of cost estimates for the walking trails option. By way of explanation, Bahl noted that for non-golf scenarios at Huron Hills, it’s necessary to include the “legacy costs” for two people currently employed at Huron Hills, both in union positions – one AFSCME and one Teamster. By union contract, he said, those employees cannot be laid off if the city has any temporary, seasonal, or contract worker employed at the city. And the city relies heavily on these types of workers, so laying off the two union workers at Huron Hills is not a realistic option. The net cost to the city of replacing seasonal workers with the Huron Hill’s workers would be around $175,000, Bahl said. Also in the mix is $42,000 in municipal service charges and $24,000 in IT charges that the golf enterprise fund accounting currently pays from the enterprise fund into the general fund.

The lower range of cost reflects a scenario in which the two Huron Hill’s union workers can be placed elsewhere in the city, while the higher cost in the range is a scenario where neither worker can be placed elsewhere.

Colin Smith, manager of the city’s parks and recreation program, stressed that under the walking trails option, the result would not be a natural area, but rather an “unkept golf course.” Converting it to a natural area would require considerably more investment – listed out as a separate option. Stephen Kunselman (Ward 3) confirmed with Smith that under the walking trails option, there was money factored in for mowing of the 8th and 9th hole areas that are used for sledding in the winter. Sabra Briere (Ward 1) drew out the fact that there is not money in that option for mowing areas where people might cross-country ski.

Marcia Higgins (Ward 4) wondered why the parks capital improvements and maintenance millage could not be used for non-golf options. Smith’s answer was that because maintenance would be mowing, which must be paid out of the city’s general fund.

Commenting on the legacy costs, mayor John Hieftje noted that if positions elsewhere in the city opened up, they could be held open for the Huron Hills workers. City administrator Roger Fraser allowed that this would be the city’s strategy, but could not guarantee that positions would open up.

Christopher Taylor (Ward 3) noted that the walking trails options outlined a range of possibility, but he wanted to know what the range of likelihood is. Bahl told Taylor that chances of finding an opening for the AFSCME employee are better, because of the relatively large pool of such workers. On the Teamster side, the pool is smaller. Summarizing the city’s best realistic estimate for the legacy costs for non-golf options, Colin Smith said it’d be $150,000 and above in the first couple of years.

Higgins stated that the city had committed to five years before evaluating the success of the Golf Convergence recommendations – when does that end? she wondered. Colin Smith clarified that the five-year evaluation period ends in 2013 – there are two years left.

City administrator Roger Fraser weighed in, saying the staff was not suggesting the council had to implement changes before two more years is up. It’s a matter of considering what a sustainable approach to city services is. When the city talks about community engagement to solve problems for the city’s future, the different scenarios for Huron Hills should be a part of the discussion, he concluded.

There seemed to be little enthusiasm from councilmembers at the work session for contemplating anything but a golf course at Huron Hills for the next two years.

Bill Reynolds, Washtenaw County's deputy administrator, with a framed copy of the county's "guiding principles."

The discussion was another step toward developing a framework that county administrator Verna McDaniel and her staff can use in their budget planning for 2012 and 2013, when the county faces a projected $20.9 million deficit. The session followed a five-hour Jan. 29 retreat. The board also plans to continue their budget talks on Feb. 23, after their regular administrative briefing.

Conan Smith, chair of the board, told the group he hoped they could form an outline of their priorities – not in terms of programs, but at a policy level. He said that focusing on specific programs at this point would limit the administration’s flexibility for future restructuring.

During the two-hour session, commissioners talked about the importance of providing a safety net of services for residents who are most in need – perhaps through a combination of the county’s own services, and partnerships with outside agencies. Though some commissioners expressed concerns about privatizing, there seemed to be consensus about exploring ways to market the county’s infrastructure services – like payroll processing and human resources – to other local municipalities.

They discussed the need for more self-reliance on local resources, as opposed to state and federal funding – while acknowledging the dependence that many county programs have on state and federal grants. The board also talked about the importance of balancing short-term budget needs with long-term investments that could bring more significant structural savings in future years.

Also during Wednesday’s retreat, some commissioners noted the importance of keeping all budget discussions in public view. The retreats – unlike the board’s regular meetings and working sessions – are not televised, though they are open to the public. In addition to county commissioners, the retreats are attended by other elected officials and county staff.

The bulk of Wednesday’s session focused on trying to craft a framework to prioritize “county business.” Of the five topics sketched out as possible parts of that prioritization framework, the group tackled three on Wednesday night, which can be recast as grouped questions: (1) Is a service mandated by state law? (2) Is a service part of the basic reason county government exists? Does a service address longer-term root causes of problems? Does a service address crisis situations? and (3) Does the county itself currently operate a program? Does the county invest in some outside agency to provide a program?

Because of time constraints, commissioners decided to continue discussion on the remaining two topics at their next session. Those topics are: (1) Is it better to provide world-class services, but fewer of them? Is it better to provide a broader range of services, but at lower levels? and (2) Should commissioners prefer solutions that have a sustainable, long-term budget impact or those that address immediate needs?

Before tackling these questions, commissioner Ronnie Peterson asked whether they should revisit the county’s “guiding principles,” which were adopted several years ago. Will their decisions be consistent with those? They should either abide by the principles, he said, or change them. Bill Reynolds, deputy county administrator, fetched a framed copy of the guiding principles that was hanging in the boardroom. The principles are:

1. Ensure long term fiscal stability for the county.

2. Reduce the cost of conducting the county’s business.

3. Enhance customer service.

4. Provide the necessary knowledge, skills and resources to county employees to carry out these principles.

5. Ensure adequate provision of mandated services.

6. Focus on the root causes of problems that affect the quality of life of county citizens by aggressively pursuing prevention strategies

7. Provide leadership on intragovernmental, intergovernmental and intersectoral cooperation and collaboration aimed at improving services to county citizens.

Smith suggested that Peterson’s question should be the topic for a future Wednesday retreat discussion. Kristin Judge said she also wanted to make sure they sought constituent input as the budget process moves forward. It’s important to get feedback about what priorities residents have regarding county services, she said.

This report summarizes the key points of the board’s two-hour discussion.

Mandated vs. Non-Mandated Services

In introducing the topic of mandated vs. non-mandated services, Conan Smith (D-District 10) noted that the priorities in Lansing – where the state legislature sets mandates for services that local governments must provide – might not be the county’s priorities. How does the board answer the question of serviceability, or guide the administration to determine what levels of mandated services they should provide?

Leah Gunn (D-District 9) characterized this as a crucial issue. “World-class service may not be attainable,” she said. Many of the non-mandated services that the county provides affect people who are most in need, Gunn noted. When asked by Smith to identify some principles that the administration can use to determine levels of serviceability, Gunn suggested getting guidance from the county’s department heads and other elected officials who lead departments, like the treasurer and clerk. She said she knows that Brian Mackie, the county’s prosecuting attorney, disliked the exercise they did during the last budget cycle when departments were asked to identify impacts if their budgets were cut 5%, 10%, 15% or 20%. But that was helpful, she said, because department heads know their operations much better than commissioners do.

While department heads are the best to determine the impact on their operations, Gunn added, it’s up to the board to decide which of those impacts are acceptable. Barbara Bergman (D-District 8) noted that some savings might not be worth it, if the consequence of cuts is too great.

From left: Washtenaw County commissioners Ronnie Peterson and Yousef Rabhi.

Ronnie Peterson (D-District 6) said they need to keep in mind three different categories: (1) mandated services for departments led by elected officials; (2) mandated services for departments led by staff; and (3) non-mandated services.

Dan Smith (R-District 2) agreed, saying the state had determined that certain services are important enough to mandate, and that most of those mandated services are in departments led by elected officials. Those services are deemed to be core, he said, citing several examples: a place to put people who break the law; a place to file deeds; a way to ensure that flooding is under control. The board needs to keep that distinction in mind during these discussions, he said.

Wes Prater (D-District 4) said that in general, he wanted to see a focus on performance measures and outcomes, to help determine serviceability levels.

Dan Smith pointed out that they can’t ignore the impact of decisions in Lansing. It’s probably too late for this budget cycle, he noted, but they need to lobby for relief from some of the state’s unfunded mandates – they need to lobby for additional state funding for those services. For non-mandated services, he observed that sometimes the county gets a huge return on its investments, by leveraging county dollars to get state or federal funding for programs. When that’s the case, “we should keep doing it,” he said.

Gunn added that lobbying the federal government on these issues is also important.

Regardless of lobbying efforts, Prater said it’s clear the county will need to do more on its own in the future. If they depend on Lansing, “I think you’re only wishful thinking.” The same is true at the federal level, he said. Despite the success of Rep. John Dingell in getting earmarks for his district, which covers much of Washtenaw County, that funding will might evaporate soon, Prater said.

Yousef Rabhi (D-District 11) expanded on Prater’s point, saying the county should try to relocalize what it does, and become self-sufficient as much as possible. That’s what local government is all about, he said.

But Peterson cautioned against taking that approach to the extreme, saying that state and federal funding is a plus for the county. One of the reasons the county has world-class departments is that they’ve been aggressive – and successful – in getting state and federal dollars, he said. Do you walk away from those population groups that are served by these programs? Most of those programs support families and children, he noted. The programs get federal funds, but they aren’t mandated. He urged the board not to abandon these people on principle. “It’s about the babies,” he said.

Bergman said they should at least question how much real benefit they’re getting from programs supported by the county’s general fund, even if they leverage federal dollars.

Prater clarified that he wasn’t advocating to abandon what they already have. If the county can hang on to the funding it’s got, that would be a success, he said. But commissioners need to anticipate that state and federal funding might be eliminated – that’s likely the case with state revenue-sharing dollars, he noted – and they should figure out how to deal with a decrease in outside funding.

Rabhi, too, said he wasn’t advocating to let go of all state and federal funding. But it’s important to look for ways that county government can be more independent.

Washtenaw County commissioners Leah Gunn and Dan Smith.

Rob Turner (R-District 1) brought the conversation back to the underlying issue: The county is facing a $20.9 million deficit. The state and federal government has evolved to make local governments dependent on them, he said, by taking local taxpayer dollars, then returning only a portion to local entities by funding certain programs. Local municipalities rely on the state and federal government to “give us our money back,” he said, but it’s just not happening.

The only way to address the situation is to ask every department to look for excesses in their programs and services, whether they be mandated or non-mandated, Turner said. They’re going to have to survive on less, and it will be difficult. He said he understood that cuts have already been made, but they need to do more, to squeeze out as much efficiency as they can. It should be a bottom-up process, he added, not a top-down decision.

Turner noted that he’d been on a tour that afternoon of several county facilities, and had come away more depressed than happy. [The tour included all four newly elected commissioners – Turner, Alicia Ping, Yousef Rabhi and Dan Smith – as part of their orientation to the county's operations.] Turner observed that the county provides so many great, essential services – and they won’t be able to do it all in the future.

Ping (R-District 3) agreed with Turner, saying it’s clear they can’t be all things to all people. She said their tour of the county children’s services department especially touched her heart. There are employees whose job entails both cooking and janitorial work, she noted, and counselors on the third shift do laundry as well. In many places they’ve already cut to the bone, she said, but they’ll need to do even more.

Gunn thanked Turner for pointing to the bottom line, and reminded her colleagues that in county administrator Verna McDaniel’s state of the county presentation last month, McDaniel had targeted making $8.5 million in cuts to employee compensation and benefits, and another $8.5 million in organizational changes and baseline reductions in the 2012-2013 budget. Gunn indicated that those are daunting cuts.

Conan Smith wrapped up the discussion on the topic by noting that so far, they hadn’t yet identified which non-mandated services they consider sacrosanct – which ones they’ll choose to do, regardless of state or federal support. That’s something they’ll need to address, he said.

Core Business, Root Causes or Crisis Management?

In starting the conversation on this topic, Conan Smith noted that the county exists for some purpose that’s distinct from why a city, state or federal government exists. The county supports services like the county jail, among other things. Rob Turner had previously characterized these as core businesses. How should they prioritize those services, Smith asked, compared to services that address “root causes” – one of the county’s guiding principles. [The principle states: "Focus on the root causes of problems that affect the quality of life of county citizens by aggressively pursuing prevention strategies."]

Smith said they know that when they attack root causes, there’s a long-term gain – but that gain is sometimes hard to quantify. How should they prioritize core services that don’t address root causes? Does a core service automatically take priority? And finally, how should they prioritize services that fall into the category of crisis management?

Washtenaw County commissioner Kristin Judge.

Yousef Rabhi described the role of government as providing services for those who’ve walked the length of the road, and there’s no more road for them to walk. Government is the safety net, when there’s nowhere else to turn. Of course, he added, it’s prudent to provide services aimed at preventing people from reaching the end of the road. But the county’s focus should be to support people when they most need it.

The most critical services provide food and health care, Barbara Bergman said. Leah Gunn agreed that the county’s role should be to cover holes in the safety net. But how do they do that, given the resources they have?

Ronnie Peterson said he considers core services to be those that are overseen by elected officials like the sheriff, water resources commission and clerk. But he also considers public health and mental health services to be core as well. People move to Washtenaw County for a reason, he said. And people who move here to work for the county are proud to be associated with it. The county’s reputation carries a great deal of respect, he said.

Dan Smith agreed with Peterson about prioritizing those core services for which county elected officials are responsible. Regarding root causes, he said the four new commissioners had just spent the afternoon learning about county programs focused on addressing those areas, which try to “nip problems in the bud” before they become major expenses later. Every dollar they spend on a child saves hundreds of dollars later on, he said, by keeping people out of jail, or making them healthier.

Conan Smith said this is a question he’s struggled with: How do they balance an investment in root causes today, given their declining resources? Such an investment would be important to yield a longer-term payoff, but won’t have an effect on the current budget. How do they balance their short-term goal of balancing the budget, with long-term strategic goals?

That’s the crucial question, Turner said. This is not just a two-year problem – the economic recovery likely won’t occur until at least 2015, he said. So commissioners need to factor in those long-term gains. Decisions about things like employee health care and pensions might not have a significant impact for 10 years, but they need to make those decisions now “or we’ll be revisiting this year after year,” he said.

Turner also noted that the four new commissioners had visited the county’s veterans affairs office earlier in the day. The office leverages less than $200,000 to get millions of dollars in federal funding, he noted, while providing help for local veterans. That’s what it means to do business well, he said, and the county needs to find similar areas of its operation that provide those kinds of returns for a relatively small investment.

Alicia Ping said it might take 18 years to see a payoff from investing in kids. When you visit the juvenile detention center or family court, you wonder how kids ended up there, she said.

Conan Smith summarized the point, saying the county needs to prioritize both financial and social ROI (return on investment).

Looking back at the previous 2010-2011 budget cycle, Gunn said they didn’t tackle real structural reform at the time. It’s time to address structural change, including departmental restructuring and labor costs, she said.

Wes Prater asked whether they were being realistic, in terms of their ability to address root causes. Shouldn’t much of that, for children, be the responsibility of parents? He questioned how the county should deal with that.

Conan Smith, chair of the Washtenaw County board of commissioners.

Kristin Judge (D-District 7) observed that the county’s Head Start program serves about 580 families, and parents participate, too – she’s sure they’re making a long-term difference. One of the program’s new employees had been part of Head Start as a child, she said.

Some of it comes down to the question of whether it’s the county government’s job to provide these services, Dan Smith said. Is it something that taxpayer dollars should support? Some people in the county would say that the services are important, he said, but that it’s not the county’s role to provide them, even if it’s a worthy cause or a good investment. It would be easy to tell the county administration to just provide the basics, he said, but the board needs to find a balance.

Judge said she was an advocate of zero-based budgeting – looking at what it costs to provide the county’s core services, then seeing how much was left over before deciding where to spend it.

Turner cautioned that the departments led by other elected officials shouldn’t simply get carte blanche on their budgets, even if they are core.

Running a County “Business” vs. Investing Elsewhere

Conan Smith set up discussion of this topic by asking commissioners what areas the county should itself take responsibility for.  Are there areas where the county should be aggressive about partnering with other organizations? For example, the county made a decision to invest in literacy – it helped develop the blueprint to end illiteracy, and is part of the Literacy Coalition of Washtenaw County. But the effort is being handled by others, Smith noted – that is, the county is a partner, rather than a driver. So what are the areas in which the county needs to be the primary leader, Smith asked, versus taking a secondary or tertiary role.

Dan Smith started by saying that perhaps they should look at the “transparent” services the county provides, those that taxpayers don’t see but that support the county’s operations – things like human resources and payroll. Perhaps they should explore transferring those services to a third-party provider. How much of its infrastructure does the county need to run? he asked.

Barbara Bergman said a better characterization might be “invisible” – there are many services provided that the public doesn’t see.

Conan Smith flipped that question, asking whether the county could provide those kinds of services to other local governments. He cited the example of the county taking on human resources for the Washtenaw County Road Commission, which previously had its own HR staff.

Yousef Rabhi said he didn’t like the idea of outsourcing infrastructure services, but he did favor being a place where other governments could come to for those services. The question is: How does the county market those services?

Rabhi described the veterans affairs office as a place where veterans could come and get help. If the county doesn’t offer the specific services a veteran needs, the staff would direct them to the right source. Maybe the county should take that approach on a broader level, he suggested. Sometimes they should just serve as a help desk, pointing people toward other resources in the community. But when there’s nowhere else to go, that’s when the county should provide a service. He said the county’s mission should be to make sure residents are provided for – it doesn’t matter who’s providing the services.

Wes Prater pointed out that the Washtenaw United Way’s 211 system is the kind of help desk that Rabhi described. Conan Smith said the county’s role could be to ensure that people are aware of that service. A possible framework, he said, is for the county to identify the services that its residents need, and to ensure that those services are provided – either by the county government, or some other agency. In that case, Prater responded, they need to do an inventory of services.

Rolland Sizemore Jr. (D-District 5) expressed concern that there’s a disconnect between the county board and other local governments, and between the county board and state leaders. Commissioners need to do more networking, he said. Sizemore also cautioned that they shouldn’t overburden the staff to the point that work isn’t getting done that needs to get done, but he liked the idea of providing services to other local governments. They’ve done that to some extent with training programs, he noted, but the word’s not out in the community about it.

Conan Smith said it’s a theme that comes up repeatedly – the county needs to do a better job at communicating what it does. In a sense, he added, that might be one of the “businesses” they should be in.

Going back to the topic of outsourcing services, Bergman said that the idea of privatizing scared her. She urged her colleagues to think about the possible long-term implications. As a metaphor, she posed a theoretical situation: What if they provided garbage pickup but decided to privatize that service, selling off their garbage trucks. What would happen if they later decided they didn’t like the services that a private company was providing? What would it cost to buy back those garbage trucks? [The county does not provide garbage pickup services.]

On the other hand, Bergman said, if more people know about the “invisible” services of the county, they might be able to sell those services.

Janis Bobrin, Washtenaw County water resources commissioner.

Janis Bobrin – the county’s water resources commissioner, an elected position – said they should also think about the standards and expectations they’d have for an outside service provider. What standards would they want to set so that the services remain as efficient as the county’s currently are?

County treasurer Catherine McClary, also an elected official, agreed with Bergman on the importance of looking at long-term implications. Her department handles payroll for county employees – would an outside firm be able to provide the same level of service? Whatever they decided, it would have consequences, she said.

Dan Smith clarified that his earlier remarks were just meant to talk through some of these issues – clearly there are different ways of looking at it. He noted that in his district – District 2, covering much of the county’s northeast region – there are six township boards that each have to deal with pension issues, for example. They might be happy to use the county’s resources for that, he said. Obviously the townships retain control over that decision, he added, but the county might not be doing enough to reach out to other local governments.

Prater suggested that as Smith traveled through his district, he might ask those local officials what they thought of the idea. That way, he could get a feel for how receptive they’d be. Prater noted that his own district, District 4, covers four jurisdictions in southeast Washtenaw: the city of Milan and the townships of Ypsilanti, York and Augusta. One of them might be interested in sharing services, he said, but for the other three, “it’s a turf war.”

Ronnie Peterson weighed in, saying he hoped they’d give departments a chance to streamline their operations first, before they considered privatizing.

Rob Turner said he’s not a big fan of privatizing, but there are times when it wouldn’t hurt to compare the county’s services with outside vendors. Turner, a former trustee for the Chelsea School District board of education, said it was amazing how when the school board started talking about outside services, the district’s employees found ways to streamline and save money. When the district was exploring the possibility of consolidating its bus services with the Washtenaw Intermediate School District, he said, the transportation department came up with a lot of ways to cut costs.

Alicia Ping, a former Saline city councilmember, said the city’s union contracts stipulate that if the city issues a request for proposals (RFP), the unions are offered the chance to come in at a lower cost on the project. She also cautioned commissioners not to assume that private businesses would deliver lower levels of service. There are many companies out there that are willing to go the extra mile, she said.

Kristin Judge echoed that sentiment, saying that privatization isn’t necessarily a bad word. They need to look at ways to support local businesses as well.

Prater said they need to keep in mind that the private sector needs a profit margin – but government doesn’t.

Verna McDaniel explained that most of the union contracts prevent the county from displacing workers by contracting out for services. However, she noted that when the county stops offering a service – for example, as they did when they discontinued the Library for the Blind and Physically Disabled – then there’s some flexibility. In the case of the library, those services were taken over by the Ann Arbor District Library – an entity McDaniel noted could provide the service well.

Next Steps

Near the end of almost two hours of discussion, Conan Smith asked county administrator Verna McDaniel about the budget timeline – at what point did she and her staff need the board to provide some kind of definitive guidance? Having it by early April would be fine, she replied – giving the board several more weeks to continue their budget discussions.

Smith proposed holding the next retreat on Feb. 23, from 6-8 p.m., following the board’s administrative briefing. He said he hoped they could ultimately provide McDaniel with a statement that would indicate the board’s agreed-upon outcomes and principles for investment, which could guide the staff’s budget planning.

Janis Bobrin, the water resources commissioner, hoped that the details of the evening’s discussion wouldn’t be lost. Details are almost as important as a final official statement, she said.

When Smith said that Rolland Sizemore Jr., as chair of the board’s Ways & Means Committee, would meet with McDaniel to get budget planning updates and feedback, Ronnie Peterson objected.

All of their budget-related talks should be held in the public eye, he said, adding that he even had concerns about the retreats they were holding. [Unlike the board's regular meetings and working sessions, the retreats aren't recorded for Community Television Network.] He said he certainly didn’t want any backroom meetings out of public view.

Smith said that wasn’t his intent. So he asked McDaniel if instead of meeting with Sizemore, she could give reports to the board at their regular meetings. She agreed, saying that her plan is to be very public about this process.

Wes Prater noted that Peterson has raised these same concerns at previous meetings. Commissioners need to keep everything on the table, he said, adding “we don’t have as much time as we think we do.”

Kristin Judge pointed out that this same situation had arisen during the last budget cycle, when Smith had served as chair of Ways & Means. She recalled that she and Prater had asked whether the board rules designate that the Ways & Means chair serves as a budget liaison between the board and administration – they don’t, she said. She agreed with Peterson that the board hasn’t authorized anyone to work on their behalf. They are each one of 11 commissioners, she said, and if there are budget discussions, they should all be involved. During the last budget cycle there were some “trust issues” that shouldn’t be repeated, she said.

Smith reiterated that it was not his intent to keep discussions out of public view – he said he had just wanted to give McDaniel an avenue for giving feedback.

Present: Commissioners Barbara Levin Bergman, Leah Gunn, Kristin Judge, Ronnie Peterson, Alicia Ping, Wes Prater, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, Dan Smith, Rob Turner. Other elected officials who attended the meeting: treasurer Catherine McClary, water resources commissioner Janis Bobrin. Several county staff members were also present, including county administrator Verna McDaniel; deputy administrator Bill Reynolds; Bob Tetens, director of Washtenaw County Parks and Recreation; and finance director Kelly Belknap.

Next retreat: These budget-related discussions, which are open to the public, will continue on Wednesday, Feb. 23 at a special meeting following the board’s administrative briefing, which is held to preview the March 2 board meeting. The briefing begins at 5:30 p.m. at the county administration building, 220 N. Main St. The special meeting focused on the budget is scheduled from 6-9 p.m. [confirm date]