The county has determined that it is authorized to collect up to 1/10th of a mill without seeking voter approval. That’s because the state legislation that enables the county to levy this type of tax –  the Veterans Relief Fund Act, Public Act 214 of 1899  – predates the state’s Headlee Amendment. The county first began levying this millage in 2008, and collects the tax in December. Services are administered through the county’s department of  veterans affairs.

Since 2008, the county board has slightly increased the rate that it levies each year. In 2012, the rate was 0.0286 mills – or 1/35th of a mill. It was raised to a rate of 1/30th of a mill in December 2013, to fund services in 2014.

The current proposal is to levy 1/27th of a mill in December 2014, which is expected to raise about $540,887 in revenues for use in 2015.

There was no discussion of this item at the board’s Aug. 6 meeting.

This brief was filed from the boardroom at the county administration building, 220 N. Main St. in Ann Arbor. A more detailed report will follow.

From left: Commissioner Kent Martinez-Kratz (D-District 1); Bob Tetens, director of parks & recreation; county prosecuting attorney Brian Mackie; and county treasurer Catherine McClary. (Photos by the writer.)

The board, comprised of elected officials representing nine districts, is responsible for budget decisions. The five positions that are elected by voters countywide – the sheriff, prosecuting attorney, treasurer, clerk/register of deeds and water resources commissioner – head up county departments but must have their budgets approved by the board.

The board is developing a process that will guide budget decisions regarding how to manage budget surpluses or shortfalls, including $3.9 million surplus from 2013 and about $600,000 in higher-than-budgeted property tax revenues in 2014. The county administrator, Verna McDaniel, is recommending that the $3.9 million be kept as general fund reserves. Some county commissioners would rather spend at least a portion of the surplus.

The recommendation from the electeds is to allocate a to-be-determined percentage of any surplus to these five areas: (1) unfunded liabilities for the pension fund; (2) unfunded liabilities for the retiree health care fund; (3) the county’s housing fund, which was eliminated in 2012; (4) the delinquent tax fund reserves, specifically for internal advances on county projects to save bonding costs; and (5) the capital reserve fund or unearmarked reserve fund.

Commissioners made no decision on these recommendations, other than to thank the electeds for their input.

In other budget-related action, the board gave final approval to put a 10-year parks & recreation millage renewal on the Nov. 4, 2014 ballot. Commissioners also set public hearings for two millages that are levied annually in December without voter approval – for support of indigent veterans and their families; and to fund economic development and agricultural activities. Those hearings, to solicit public input, will be held at the board’s July 9 meeting.

The board also gave final approval to set the county’s general operating millage rate at 4.5493 mills – unchanged from the current rate. This is an annual process that includes a public hearing, which was also held on June 4. One person spoke.

A final vote was also taken to create a new committee that will explore funding options for road repair. This follows the board’s rejection – at its meeting on May 21, 2014 – of a proposal to levy a countywide tax for this purpose. No committee members have been appointed yet.

The board was also briefed on work by the community corrections unit, which is part of the sheriff’s department. It provides services that include jail diversion and alternative sentencing options to the Washtenaw County Trial Court, pre-trial services, drug testing, and electronic monitoring. The use of electronic monitoring has increased dramatically, from an average number of cases between 25-30 at any given time in FY 2012-2013, to between 85-115 cases in FY 2013-14.

During public commentary, commissioners heard from David Schonberger, an Ann Arbor resident who thanked the board for passing a resolution last month to oppose oil exploration and drilling in the county. He urged them to use it as a starting point for more action. Specifically, he advocated that the board fund a robust public education campaign and establish an advisory committee to work with Scio Township and the city of Ann Arbor on this issue.

Budget Process

At its Nov. 20, 2013 meeting, the Washtenaw County board of commissioners approved a four-year general fund budget for 2014-2017. As part of that process, the board adopted a set of budget policies, which were revised at that meeting to address a process for allocating any revenue surpluses – beyond the amounts that are contributed to the county’s fund balance.

Here are the relevant policy sections:

11. The Board of Commissioners commits to long-term budget flexibility and sustainability, and an adequate level of cash flow with its attention to fund balance. A healthy fund balance is an essential ingredient and the following was considered to determine an appropriate level as a target: an appropriate level to fund at least 60 days of operations, to help offset negative cash flow (primarily from the seven month delay in property tax collections after incurred expenses), and to assist buffering any unexpected downturns. Therefore, the Board shall plan future budgets to meet the goal of a Reserve for Subsequent Years representing at least 20.0% of General Fund expenditures, net of indirect costs.

12. Any annual surplus or deficit will have options for use recommended by the County Administrator in alignment with the community outcomes and processes as outlined by the adopted Community Impact Resolution 13-TBD, presented to the Board of Commissioner for consideration and confirmed by Board action and authorization in July of each calendar year.

Felicia Brabec (D-District 4) has been leading the budget process for the board, as chair of its ways & means committee. On May 21, 2014, she presented a timeline for budget work in 2014. [.pdf of budget calendar resolution] Highlights are:

• July 24, 2013: Board approved budget priorities. (That document was subsequently amended on Aug. 7, 2013.)
• May 7, 2014: Board authorized county administrator to seek consultant for work on budget priorities. The review and selection process for that consultant is underway.
• June 5, 2014: Budget discussion on the board’s working session agenda, to discuss the status of any general fund surplus or shortfall.
• July 9, 2014: County administrator presents recommendation for using surplus or addressing shortfall, based on board priorities. Board to take initial vote on recommendation.
• Aug. 6, 2014: Final vote set for surplus/shortfall recommendation.

The county had a 2013 general fund surplus of $3.9 million. County administrator Verna McDaniel has recommended to keep that amount in the general fund’s unearmarked reserves, to meet the county’s goal of having reserves that total 20% of the general fund budget.

On May 21, Conan Smith (D-District 9) had expressed frustration at the approach, because the county administrator has already recommended to keep that amount in the general fund’s unearmarked reserves. He thought the process was “turning out to be little more than a rubber stamp of a decision that’s already been proposed by the administration.” Brabec stressed that commissioners will be discussing and making the final decision – which might differ from the administration’s recommendation.

Budget Process: Advice from “The Electeds”

On June 4, board vice chair Alicia Ping (R-District 3) was leading the board meeting in the absence of chair Yousef Rabhi (D-District 8). She noted that there were “special guests” at the meeting who would be making a presentation to the board – three of the five countywide elected officials: Sheriff Jerry Clayton, treasurer Catherine McClary, and prosecuting attorney Brian Mackie. Clerk/register of deeds Larry Kestenbaum and water resources commissioner Evan Pratt did not attend, but supported the written recommendation that was presented to the board. [.pdf of recommendation] These five positions are informally known as “the electeds.”

Alicia Ping (R-District 3) is vice chair of the county board.

Clayton referred to Ping’s introduction, joking that if they are viewed as guests then they should come to more meetings. He said the recommendation speaks for itself, but they wanted to frame it for the board. They understood that the board has the final authority and decision-making for the county budget, and for how revenues are spent. “We respect that,” Clayton said. But the five countywide-elected officials are part of the county leadership too, he added, and are responsible to all 340,000 residents that elected them into office. So they thought it was important to lend their perspective as the board undertakes its new budget process.

The countywide electeds are asking the board to factor in some set-asides for items that will continue to be a challenge, Clayton said. There are no recommendations regarding amounts or percentages, he noted – that determination is up to the board. “We plan on staying available and engaged in the process as you think about the budget,” he said. “We want to be seen as partners, as part of an overall collaborative effort – not as obstacles or as a group that’s trying to get in the way of the process, but quite frankly trying to enhance the process.”

McClary stressed that the recommendation is supported by all five countywide elected officials, and is presented in the spirit of partnership. She noted that several years ago, she had served on the county board, and for part of that time she served with Ronnie Peterson (D-District 6). One of the most important things for the board to assert was its ability to set policy through its budget. “That is your primary responsibility and authority as a board of commissioners,” she said.

The board had taken a momentous step last year when they adopted a four-year budget, McClary continued, “and we want to commend you for that.” But a four-year budget requires being very conservative about revenue estimates. For example, the budget had projected a 1% increase in revenues this year, but the actually increase is about 2% – or about $600,000 more in property tax revenues than budgeted.

In addition, the county recently refinanced some bonds, saving more than $2 million, McClary noted. That amount had previously been budgeted for debt service. [.pdf of press release about bond re-funding] [.pdf of May 28, 2014 bond prospectus]

So knowing that there will likely be unanticipated increases in tax revenues over the next four years, the five electeds are asking that the board consider developing and adopting a formula by which to allocate that money. For example, McClary said the county has “severe” unfunded liabilities for its pension fund – a defined benefit plan called the Washtenaw County Employees’ Retirement System (WCERS) – and for its Voluntary Employees Beneficiary Association (VEBA) retiree health care fund. The county is working on a 27-year amortization to achieve 100% funding, but any money that’s put into the funds today will be compounded over that 27-year period, she noted.

In addition to allocating a percentage of any surplus to unfunded WCERS and VEBA liabilities, other recommendations for allocating surplus revenues are:

• Adding to the county’s delinquent tax fund reserves, specifically for internal advances on county projects to save bonding costs.
• Restoring the county’s housing fund. (The fund had received about $110,000 annually, but was eliminated in 2012 as the county made cuts to prevent a budget deficit.)
• Increasing the budgeted amount for the capital reserve fund or unearmarked reserve fund.

By having a plan and assigning percentages to different priorities, McClary noted, the board can strategically allocate surplus funds. She pointed out that the Ann Arbor city council had done something similar at its June 2 meeting – by voting to set aside 50% of the net proceeds from the possible sale of development rights on the Library Lane lot, and put those proceeds into the city’s affordable housing trust fund.

McClary said she’d also been surprised by Ping’s description of the electeds as “guests,” calling it exceedingly polite. She again stressed that the five electeds hoped to be partners with the board, giving “on-the-ground information about what it’s like to run a department and to provide services to citizens in this county.”

Budget Process: Board Discussion

Conan Smith (D-District 9) responded to the presentation by quipping, “Thanks, roommates!” He asked McClary to explain the recommendation about adding to the delinquent tax fund reserves for internal advances.

Conan Smith (D-District 9).

McClary replied that it’s a topic somewhat separate from any decision to allocate surplus revenues to it. She said the issue can be explored in more detail at a July 10 working session, when she and Evan Pratt – the county’s water resources commissioner – will be making a presentation.

McClary then described the proposal, which she had also mentioned in a presentation to the board at its March 19, 2014 meeting. The idea is for the county to internally fund some of its projects – for drains, roads, public works, parks – instead of bonding. The amount for internal advances would be small – in the $400,000 range or less. She noted that when the county issues bonds, it has to pay a bond attorney and financial advisor, in addition to other costs associated with a bond issue. About half of the money goes toward fees and interest payments, not for the project itself. “We believe we can save the taxpayers quite a bit of money,” she said, by taking care of these financing needs internally, which she called “self-funding.”

When she first became treasurer, McClary noted, there was about $20 million in the delinquent tax revolving fund, and delinquent taxes were about $15 million. So it would have been possible to self-fund some projects then, but the county administration at that time didn’t take that approach. Rather, any excess money above $4 million was moved to the capital projects fund – that’s how the county has been paying debt service for various projects over the last 20 years, she said.

In the past, the county board had authorized keeping up to $4 million in the delinquent tax revolving fund as reserves. Now, McClary is recommending to increase that amount incrementally so that there will be more money for self-funding. She said she already self-funds a small amount of projects, including drain projects from the office of the water resources commissioner.

As another example, McClary said she has discussed using the fund to help the road commission purchase trucks – as the commission typically need about $1 million for five trucks each year. Right now, the road commission is financing those purchases at an interest rate over 3%. McClary said her investment portfolio is earning half a percent. If the road commission agreed to a 2% interest rate in a self-funding arrangement, they’d save money and the general fund would earn more. “That’s the type of thing we want to talk with you about,” she said.

McClary noted that the four-year budget included very conservative estimates on property tax revenues, so there will likely be excess revenues. She told the board that this particular group of commissioners has been very policy-oriented, and meticulous about planning. “We’re thinking this would be a great partnership,” she said.

County administrator Verna McDaniel.

Conan Smith agreed, saying the anticipated excess revenues provide a great opportunity to make strategic, systemic investments. It’s an opportunity that the county hasn’t had in many years, he said, and the advice from electeds is appreciated.

Other commissioners also thanked the group for these recommendations. Andy LaBarre (D-District 7) asked about the recommendation to put a percentage of excess revenues toward unfunded liabilities in the WCERS pension fund. The recommendation includes a statement that WCERS is “now less than 60% funded, a level defined as below acceptable norms.” He asked McClary to elaborate, saying that it drew a bit of a red flag for him.

McClary said she thought the recent bond rating prospectus had mentioned that the pension funding was low. But it had also mentioned the management of the county and the strategic role that the board of commissioners is playing, she said. Board chair Yousef Rabhi (D-District 8) had gone with the administration to meet with the Standard & Poor’s staff prior to the bond issue, McClary said. She noted that she had participated in that meeting via conference call, and reported that Rabhi had conveyed in a very emphatic way the strategic approach that the board is taking. She pointed out that the county was successful in securing a triple-A rating.

The Government Finance Officers Association is the premier organization for assessing standards, McClary noted. LaBarre’s question would be a good one to ask of the county’s actuaries when they present to the board in July, she added. “They have indicated that anything under 60% is getting into territory that becomes problematic,” she said.

LaBarre clarified with McClary that the term “below acceptable norms” didn’t come from an audit or official statement from the actuaries.

Budget Process: Working Session

Felicia Brabec (D-District 4) gave an update on the hiring of a consultant for helping the board on budget-related work. By way of background, at the board’s March 19, 2014 meeting, commissioners authorized county administrator Verna McDaniel to hire a contract employee who will support budget-related work this year for the county board and administration. As county administrator, McDaniel has discretion to spend up to $50,000 on professional services contracts.

Two candidates were selected for interviews, but one of them subsequently withdrew, Brabec said. The remaining candidate will be interviewed on June 5, she added.

Also on June 5, the board would be holding a budget discussion at its working session, including how to use the 2013 budget surplus. Responding to a query from Ronnie Peterson (D-District 6), Brabec said that no decisions would be made at the working session, “but we wanted to start to have that conversation.” At some point, the board will develop a document with guidelines that will direct their decisions about allocating any surplus.

Outcome: This was not a voting item.

Public Hearings for Millages

The board was asked to set public hearings for its July 9 meeting to get input on two millages that Washtenaw county levies without voter approval: (1) for support of indigent veterans and their families; and (2) to fund economic development and agricultural activities.

From left: Commissioners Rolland Sizemore Jr. (D-District 5) and Andy LaBarre (D-District 7), standing, talk with Greg Dill, the county’s director of infrastructure management.

No increase is proposed for the economic development millage, levied under Act 88. The proposal is to levy 0.07 mills in December 2014, raising an estimated $1,022,276 in property tax revenues. In previous years, the resolution setting this millage has outlined how the revenues would be allocated. The largest allocations have gone to the county’s office of community & economic development, and to the nonprofit Ann Arbor SPARK.

However, at its Nov. 6, 2013 meeting, the board adopted a new policy for allocating Act 88 revenues, drafted by Conan Smith (D-District 9). [.pdf of Act 88 policy] The policy included creating an Act 88 advisory committee to make recommendations to the board and prepare an annual report that assesses how Act 88 expenditures have contributed toward progress of goals adopted by the board. The policy allows the committee to distribute up to 10% of annual Act 88 revenues without seeking board approval. The policy also allocates up to 30% of revenues to the county office of community & economic development, which administers Act 88 funding.

For support of indigent veterans, the county is authorized to collect up to 1/10th of a mill without seeking voter approval. That’s because the state legislation that enables the county to levy this type of tax – the Veterans Relief Fund Act, Public Act 214 of 1899 – predates the state’s Headlee Amendment. The county first began levying this millage in 2008, and collects the tax in December. Services are administered through the county’s department of veterans affairs.

Since 2008, the county board has slightly increased the rate that it levies each year. In 2012, the rate was 0.0286 mills – or 1/35th of a mill. It was raised to a rate of 1/30th of a mill in December 2013, to fund services in 2014.

The current proposal is to levy 1/27th of a mill in December 2014, which is expected to raise about $540,887 in revenues for use in 2015.

In previous years, the board has taken action in the fall to levy these millages. When queried by The Chronicle about the earlier timeline this year, finance director Kelly Belknap said the required documentation for these millages must be submitted by Sept. 30. “Prior to submitting the required documentation the Commissioners must first approve the levy. So it is just about timing and getting the documents submitted within the required timeframe,” she said.

Outcome: Without discussion, the public hearings for these millages were set for July 9.

Parks & Recreation Millage

The agenda included a resolution giving final approval to put a 10-year parks & recreation operations millage renewal on the Nov. 4, 2014 ballot.

From left: Ronnie Peterson (D-District 6) and Rolland Sizemore Jr. (D-District 5). Sizemore also serves on the county parks & recreation commission.

The parks & recreation operations millage was first authorized by voters in November 1976 at 0.25 mills for a 10-year period and has been renewed three times. Because of the state’s Headlee amendment, the rate that’s actually levied has been rolled back and is now 0.2353 mills. The current millage expires in December 2016.

If renewed again, it would generate an estimated $3.2 million annually. That’s about half of the parks & recreation annual operating expenses of $6.7 million. Other revenue sources are admission/gate/membership fees charged seasonally at facilities including the Meri Lou Murray recreation center, the water/spray parks, and the Pierce Lake golf course. Funding is also received from state and federal grants as well as private donations. [.pdf of staff memo]

The county parks system receives most of its funding from two countywide millages. In addition to the operations millage, another millage pays for capital improvements and park development. It was also originally levied at 0.25 mills, but has been rolled back to 0.2367 mills.

In addition, a third millage – levied at 0.25 mills but rolled back to 0.2409 mills – funds natural areas preservation, bringing in about $3 million annually. It was first approved by voters in 2000, and renewed for another 10 years in 2010.

The county’s parks & recreation department is overseen by a separate entity – the parks & recreation commission – whose members are appointed by the county board. The county board has the authority to put a parks millage proposal on the ballot, but does not authorize expenditure of the funds. That responsibility rests with the parks & recreation commission. The group meets monthly at the parks & recreation office at County Farm Park, and its meetings are open to the public.

Outcome: Without discussion, the board gave final approval to put the parks & recreation operations millage renewal on the Nov. 4, 2014 ballot.

General Operating Millage

The June 4 meeting included a final vote to set the county’s 2014 general operating millage rate at 4.5493 mills – unchanged from the current rate. This is an annual process that includes a public hearing, which was also held on June 4. One person – Thomas Partridge – spoke, advocating for more resources to provide services for the county’s most vulnerable residents.

Several other county millages are levied separately: emergency communications (0.2000 mills), the Huron Clinton Metroparks Authority (0.2146 mills), two for county parks and recreation (for operations at 0.2353 mills and capital improvements at 0.2367 mills) and for the natural areas preservation program (0.2409 mills). That brings the total county millage rate levied in July to 5.6768 mills, a rate that’s also unchanged from 2013. [.pdf of staff memo]

This is a mandatory procedural action, not a vote to levy new taxes. With a few minor exceptions, the county board does not have authority to levy taxes independently. Millage increases, new millages or an action to reset a millage at its original rate (known as a Headlee override) would require voter approval.

The rates will be included on the July tax bills for property owners in Washtenaw County.

Outcome: The millage rate was set by a unanimous vote, without discussion.

Community Corrections

A request to approve the application for a $421,900 state community corrections grant appeared on the June 4 agenda.

Sheriff Jerry Clayton talks with Judy Foy, left, and Renee Wilson, director of community corrections. Foy serves on the community corrections advisory board.

The grant from the Michigan Dept. of Corrections is for the period from Oct. 1, 2014 through Sept. 30, 2015. This is part of a regular, annual grant process to fund services that include diversion and alternative sentencing options to the Washtenaw County Trial Court, pre-trial services, drug testing, electronic monitoring and “social education,” according to a staff memo. The total program of $1.18 million also includes $240,983 in county matching funds, $280,584 in estimated program revenue, and $239,554 in the use of fund balance. The community corrections program is part of the county sheriff’s office. [.pdf of staff memo] [.pdf of grant application]

This year’s program includes a new position – with a salary range between $31,912 and $43,674 – to help supervise a substantial increase in use of electronic monitoring by all Washtenaw County courts, for pretrial and sentenced offenders as an alternative to jail. According to the staff memo, the use of electronic monitoring increased 256% over the previous fiscal year. Average electronic monitoring cases for FY 2012-13 were between 25-30 at any given time, and increased to between 85-115 cases in FY 2013-14. Increased revenue from the electronic monitoring program and use of fund balance will be used to fund the increase in staffing.

The grant was submitted to the state in May.

Community Corrections: Board Discussion

Felicia Brabec (D-District 4) described community corrections as a “gem” that most residents aren’t aware of. She asked for more information about the increase in the number of people who are served through this program.

Renee Wilson, community corrections director, replied that there’s been a constant increase over the past two or three years, for a variety of reasons. Community corrections has established itself as a service for the courts and county prosecutor’s office that they have confidence in, she said, in terms of pre-trial supervision. Systemically, she added, the county is approaching the management of jail overcrowding better than in the past, diverting people who don’t need to be in jail during the pre-trial period by using community corrections.

Sheriff Jerry Clayton and commissioner Felicia Brabec (D-District 4).

There’s also been an increase in drug testing. “We’ve pretty much become the sole provider of drug-testing services to all of Washtenaw County,” Wilson said. In past years, there were some private entities that provided those services, but the courts have moved to looking at community corrections for that service, she said.

The case load for electronic monitoring is another area that’s increased, Wilson noted. One factor is the increase in specialty courts throughout the county, which each have different requirements for services, including electronic monitoring. Also, the 14-A District Court no longer runs its own tether program, she noted, so that’s coming to community corrections as well.

Courts are doing risk assessment for pre-trial offenders, Wilson explained. Court magistrates, prior to every arraignment, identify people who would be appropriate to release on bond, and determine what type of supervision would be appropriate for them. Some of those people are being referred to the electronic monitoring program, she said.

Brabec asked Wilson to talk about the number of jail beds saved by this approach. According to Wilson, from 2010 to 2013, the diversion efforts resulted in 91,375 jail bed days that weren’t used, saving the county $11,513,250. Wilson noted that these figures only included “successful completions” for all pre-trial and sentenced supervision programs. That is, the figures don’t include savings from people who were initially part of a program but who were then sent back to jail for whatever reason, she said.

Between 2012 and 2013 there was an increase in the estimated per-day cost of a jail bed per inmate. Prior to 2012, the cost was estimated at $85 per day, based on a study that the county had done in 2003. That figure was updated for 2013, based on internal cost studies done by the sheriff’s office. The current estimated per-day cost of a jail bed is $126.

Outcome: Commissioners unanimously approved the grant application.

Road Funding

Commissioners were asked to give final approval to create a new committee that will explore funding options for countywide road repair.

Lew Kidder of Scio Township has been active in road funding issues.

Commissioners had given initial approval to the idea at their May 21, 2014 meeting, after rejecting a proposal to levy a 0.4-mill countywide road tax in December. The tax would have been levied under Act 283 of 1909, which does not require voter approval.

In arguing against levying the tax at this time, some commissioners cited the need to study funding options – including a possible Act 283 levy – before making a decision. The committee will consist of seven members: (1) a road commissioner or designee; (2) the road commission managing director or designee; (3) the county board’s road commission liaison; (4) one additional county commissioner; (5) a position representing townships; (6) a position representing incorporated municipalities; and (7) a member of the general public. Members will be appointed at a later date.

The county administrator will help provide administrative support to the committee. The resolution also states that the county road commission could present a road funding plan at the board’s annual meeting in the fall “as Act 283 of 1909 provides.”

For additional Chronicle coverage on road-related issues, see: “County Board Continues Weighing Road Tax,” “County Board Debates Expanded Road Commission,” “County Board Sets Hearing on Road Tax,” “County Considers Road Funding Options,” “No Major Change Likely for Road Commission” and “Group Explores Road Commission’s Future.”

On June 4, there was no discussion on this item.

Outcome: The resolution passed on a 6-1 vote, over dissent from Conan Smith (D-District 9). Commissioners Yousef Rabhi (D-District 8) and Dan Smith (R-District 2) were absent.

Board of Health

The June 4 board agenda included a resolution to create a board of health, an entity that would prove advice on public health issues for the county. Commissioners had given initial approval to the item at their May 21, 2014 meeting.

A description of the board’s duties is outlined in a staff memo that accompanied the resolution:

The purpose and role of a Washtenaw County Board of Health will be to identify public health problems and concerns in the community, establish health priorities, and advise the Board of Commissioners and the Health Department on issues and possible solutions. The Board of Health will serve as advocates and educators for public health services and policies. The Board of Health will provide oversight and guidance to the Health Department, and will recommend a program of basic health services to the Board of Commissioners.

The new Board of Health will have the authority to hear appeals and requests for variances from the local public health and environmental regulations established under the Public Health Code. The Board of Health will have the authority to hear appeals regarding the suspension or revocation of food service licenses.

The resolution creating the health board also dissolves an existing environmental health code appeals board and the hearing board for the Health Department Food Service Regulation. The duties of those boards would be absorbed by the new health board. [.pdf of staff memo]

The recommended size is 10 members, including one ex-officio representative from the county board of commissioners. According to the staff memo, appointments could represent “health service delivery (physicians, dentists, mental health practitioners, administrators); environmental health and conservation, land use planning, food service and nutrition, academia, K-12 education, philanthropy, social service delivery, legal services, and consumers of public health services.”

Members would be compensated for attending each meeting. The total cost for the health board, including in-kind staff support, is estimated at $19,000 annually. The board of health would be expected to convene for the first time in October 2014.

Ellen Rabinowitz, the county’s public health officer, attended the June 4 meeting but left when she was told that the item would be postponed.

There was no discussion on this item, but Conan Smith (D-District 9) moved to postpone it until the board’s July 9 meeting. He did not give an explanation for the postponement.

Outcome: The item was postponed until the July 9 meeting.

Bonding for Malletts Creek Drain Project

The board was asked to authorize bonding for up to $650,000 to fund the Malletts Creek Springwater sub-drain project in Ann Arbor. Bond payments would be made through special assessments against the city of Ann Arbor. The project will include stormwater management improvements in the city’s Springwater subdivision. According to a staff memo, the financing will be made through the state revolving loan fund at 2.5% over 20 years. [.pdf of staff memo]

There was no discussion on this item.

Outcome: Commissioners granted initial approval for the bonding. A final vote is expected on July 9.

Proclamations

There were two resolutions of appreciation on the June 4 agenda.

Gloria Brooks, CEO of the nonprofit Arbor Hospice.

Alicia Ping (R-District 3) presented a resolution honoring Arbor Hospice on its 30th anniversary. It was founded in 1984 by Mary Lindquist, a registered nurse, to provide care for the terminally ill and their families.

The nonprofit’s CEO, Gloria Brooks, was on hand to accept a framed copy of the resolution. She thanked commissioners, saying it was “amazing to have a 30-year journey as we help families experience their end-of-life journey.” Arbor Hospice helps 50% of the residents of Washtenaw County, she said – it’s the largest provider in this county. She invited commissioners to a celebration on June 11.

Brooks received a round of applause from the board and staff.

Another resolution of appreciation honored Roy Wilbanks for his service to Washtenaw County and Eastern Michigan University. Wilbanks, a former EMU regent, did not attend the June 4 meeting.

Communications & Commentary

During the June 4 meeting there were multiple opportunities for communications from the administration and commissioners, as well as public commentary. In addition to issues reported earlier in this article, here are some other highlights.

Communications & Commentary: Oil Drilling

David Schonberger spoke during public commentary, introducing himself as a resident of Ann Arbor from the district represented by Andy LaBarre (D-District 7). He provided a handout to commissioners, in addition to his commentary. [.pdf of handout]

He thanked commissioners for passing a resolution at their May 21, 2014 meeting to oppose gas and oil drilling. He urged them to use it as a starting point for more action. Specifically, he advocated that the board fund a robust public education campaign and establish an advisory committee to work with Scio Township and the city of Ann Arbor on this issue. Schonberger noted that his research shows a gray area in relevant state laws, opening the door to “numerous creative ways to intervene and discourage that particular type of local economic development.”

From left: Corporation counsel Curtis Hedger and commissioners Conan Smith (D-District 9) and Felicia Brabec (D-District 4).

Schonberger cited a 1990 summary judgment upheld by the U.S. Federal Court of Appeals, 6th Circuit Court in the case of West Bay Exploration Co. v AIG et. al. [West Bay is seeking a permit for oil exploration in Scio Township.] “This citizen action is a statement about documented violations of state law, reckless irresponsibility, intentional corporate misconduct, and gross negligence at facilities located in Michigan,” he said. He added that NIMBY is particularly justified in this matter, and that the risks of such proposed activities in Washtenaw County vastly exceed any potential benefits.

Responding to his commentary, Conan Smith (D-District 9) agreed that the county could be doing more to help people restrain gas and oil exploration here. Educating residents is one of the key ways to do that, within the structure of the current state law, he added. The county “may or may not have regulatory authority that we can leverage, but we can certainly help people to organize, and to use their own property rights to protect their interests and the interests in the environment,” Smith said.

As an example, Smith stated that it takes a majority of property owners to agree to lease their land in order for the exploration to happen. There are also clauses regarding environmental protection that can be incorporated into lease agreements. He reported that the environmental health code board of appeals has been discussing these issues, “and I’ll make sure we continue the conversation at that level.”

Communications & Commentary: VEBA, WCERS Special Meeting

County administrator Verna McDaniel reported that there will be a special joint meeting of the boards of the Washtenaw County Employees’ Retirement System (WCERS) and the Voluntary Employees Beneficiary Association (VEBA) retiree health care fund. It will take place on Thursday, June 12 at 1 p.m. in the county administration building’s boardroom, 220 N. Main St. The actuarial reports will be presented for those two plans.

Communications & Commentary: Misc. Public Commentary

Thomas Partridge spoke during both opportunities for public commentary. He urged the board to keep focused on the priorities of ending homelessness, increasing affordable housing, expanding public transportation, and providing better access to health care and education. He also supported Democrat Mark Schauer for governor, so that these priorities can be addressed on a statewide level.

Present: Felicia Brabec, Andy LaBarre, Kent Martinez-Kratz, Ronnie Peterson, Alicia Ping, Rolland Sizemore Jr., Conan Smith.

Absent: Dan Smith, Yousef Rabhi.

Next regular board meeting: Wednesday, July 9, 2014 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to 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 commentary is held at the beginning of each meeting, and no advance sign-up is required.

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Several other county millages are levied separately: emergency communications (0.2000 mills), the Huron Clinton Metroparks Authority (0.2146 mills), two for county parks and recreation (for operations at 0.2353 mills and capital improvements at 0.2367 mills) and for the natural areas preservation program (0.2409 mills). That brings the total county millage rate levied in July to 5.6768 mills, a rate that’s also unchanged from 2013. [.pdf of staff memo]

This is an annual procedural action, not a vote to levy new taxes. With a few minor exceptions, the county board does not have authority to levy taxes independently. Millage increases, new millages or an action to reset a millage at its original rate (known as a Headlee override) would require voter approval.

The rates will be included on the July tax bills for property owners in Washtenaw County.

A public hearing on the millage rates is set for June 4.

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

The millage rate that was listed in the FY 2014 budget resolution – approved by the council at its May 20, 2013 meeting – was 1.0969 mills. The park maintenance and capital improvements millage should have been listed as 1.10 mills. The corresponding correction from the total millage rate was from 16.4470 to 16.4501 mills. Measured in dollars, the correction is estimated to bring in an additional $14,460 in revenue.

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

Several other county millages were authorized and are levied separately: emergency communications (0.2000 mills), the Huron Clinton Metroparks Authority (0.2146 mills), two for county parks and recreation (0.2353 mills and 0.2367 mills) and for the natural areas preservation program (0.2409 mills). That brings the total county millage rate to 5.6768 mills, a rate that’s also unchanged from 2012.

This is an annual procedural action, not a vote to levy new taxes. With a few minor exceptions, the county board does not have authority to levy taxes independently. Millage increases, new millages or an action to reset a millage at its original rate (known as a Headlee override) would require voter approval.

The rates will be included on the July tax bills for property owners in Washtenaw County.

On June 5, the board also held a public hearing on the millage rates. The only speaker was Thomas Partridge.

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

From left: Princess Logan and Monique Franklin, students at Ypsilanti High School, are part of the Young Women Making Washtenaw Better program. Seated behind them is Natalia Harris, community outreach coordinator for the Washtenaw County sheriff’s office, which sponsors YWMWB. (Photos by the writer.)

In her state-of-the-county address, county administrator Verna McDaniel set a goal of identifying $6.99 million in structural reductions for the 2014 budget. The approach to addressing this $6.99 million target depends on whether the county moves ahead with a major bond proposal, which would cover the county’s pension and retiree healthcare obligations. [See Chronicle coverage: "County Board Debates $345M Bond Proposal."]

If the board decides not to bond for those obligations, 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. Finding the $6.99 million in cuts would be very challenging, she added, given the amount of reductions that have already occurred in the past few years. Serviceability levels and major programs would be affected.

Action related to the bonding proposal – for up to $345 million, the largest ever issued by the county – was originally on the May 15 agenda. But early in the meeting, board chair Yousef Rabhi announced a decision to push back the process until the board’s July 10 meeting. He cited the need for more time for public input and additional information – including updated actuarial reports that are due in late June. Public hearings on the proposal are set for June 5 and July 10, with a board working session on the issue scheduled for June 6.

The board also voted to hold a special meeting on July 24, to allow for additional bond-related votes and public commentary, if needed. Rabhi also announced a series of informal meetings at coffee shops in Ann Arbor to discuss the bond proposal with residents. The first “Bonding Over Coffee” will be held on Tuesday, May 28 from 4-6 p.m. in the basement of Elixir Vitae (formerly Café Ambrosia) at 326 Maynard St. in Ann Arbor.

Among the several items that the board is expected to vote on at its July 10 meeting is a “notice of intent” to issue the bonds. This is a standard initial step in the bonding process, letting residents know that they have 45 days during which they can circulate petitions to require a vote of the people before any bonds are issued. Ronnie Peterson reminded commissioners that just a few years ago, a citizens group had gathered enough signatures to force another bond proposal – for expansion of the county jail – onto the ballot, where it was defeated by voters. For the current bond proposal, about 15,000 signatures would be required to force a voter referendum.

In another budget-related item on the May 15 agenda, the board received a first-quarter 2013 briefing. The county’s financial staff is now projecting a $818,999 shortfall for the year – the difference between $102,364,815 in projected general fund revenues and $103,183,814 in projected expenditures. That shortfall is lower than the $3.03 million shortfall that was originally projected for 2013.

The board continued its budget discussion at a retreat on May 16, where they worked to hone priorities for the next four years. This Chronicle report includes a summary of that two-hour session.

In other May 15 action, the board gave initial approval to set the 2013 county general operating millage rate at 4.5493 mills – unchanged from the current rate. Several other county millages are levied separately: emergency communications (0.2000 mills), the Huron Clinton Metroparks Authority (0.2146 mills), two for county parks and recreation (0.2353 mills and 0.2367 mills) and for the natural areas preservation program (0.2409 mills). That brings the total county millage rate to 5.6768 mills, a rate that’s also unchanged from 2012. A final vote and public hearing is expected on June 5.

The board also passed a resolution expressing support for the state of Michigan to expand the federal Medicaid program, as part of the Affordable Care Act – a measure currently being debated in the state legislature. During deliberations, Dan Smith (R-District 2) voiced his objection to the county weighing in on state issues, but he left the room prior to the vote.

A range of other issues were raised as items of communication by commissioners or during public commentary. Topics included: (1) a corridor improvement authority planned by Pittsfield Township for a section of State Street; and (2) the possibility of renewing the county’s membership in the Michigan Association of Counties.

Bonding Proposal

A resolution authorizing the publication of a “notice of intent” for a major bond issue was originally on the May 15 agenda of the board’s ways & means committee for initial approval. [.pdf of bond resolution on May 15 agenda] The proposed bond issue of up to $345 million, the largest in the county’s history, is intended to cover unfunded pension and retiree healthcare obligations from the Washtenaw County Employees’ Retirement System (WCERS) and Voluntary Employees Beneficiary Association (VEBA) – the defined benefit pension and retiree healthcare plans.

The proposal had first been mentioned publicly in mid-April, though the administration has been working on it since November of 2012, and commissioners had discussed it in closed session earlier this year as part of the county’s negotiations for new labor contracts.

In addition to the notice of intent to issue the bonds, the resolution on the May 15 agenda also would have officially retained Axe & Ecklund as bond counsel for this issue, and Municipal Financial Consultants Inc. (MFCI) as the financial consultant. Axe & Ecklund provides a 15% discount on its fees if the county hires MFCI as the financial consultant. MFCI president Meredith Shanle is Axe’s daughter.

Washtenaw County commissioner Yousef Rabhi (D-District 8) serves as board chair.

The notice of intent is a standard initial step in the bonding process. It must be published in a “newspaper of general circulation within the county,” letting residents know that they have 45 days during which they can circulate petitions to require a vote of the people before any bonds are issued. The notice must include a maximum amount of the bond issue, a maximum interest rate, and a maximum term for the bonds. Although the proposal previously presented to the board had indicated a 25-year bond term, the resolution regarding a notice of intent specified a maximum term of 30 years.

The amount of the bond issue is an estimate at this point and will not likely be as high as $345 million, according to the county’s bond counsel, John Axe of Axe & Ecklund. To set the specific amount of the bond issue, the county needs updated actuarial information – but those reports won’t be ready until late June.

The board has been briefed on this proposal most recently at a May 2 working session. [See Chronicle coverage: "County Board Debates $345M Bond Proposal."] At that time, Axe had indicated a timeline that included giving initial approval to two other bond-related resolutions on May 15, in addition to the notice of intent.

Those other resolutions were: (1) a resolution setting the bond’s maximum amount; and (2) a continuing disclosure resolution that’s standard for all bond issues over $1 million, indicating that the county will provide updated financial information annually during the term of the bond. However, neither of those two other resolutions were on the May 15 agenda when it was made available to the public prior to the meeting.

The bonding is made possible by Michigan’s Public Act 329 of 2012, which the state legislature passed in October of 2012. [.pdf of Public Act 329] The law enables municipalities to issue bonds to cover unfunded accrued pension and retiree healthcare liabilities, but has a sunset of Dec. 31, 2014. The county faces a $30 million contribution toward these obligations in 2014, and is looking for ways to manage that obligation.

The most recent estimates put the county’s maximum retirement obligations at $340.8 million. The board was presented with calculations for borrowing $344 million at an assumed average interest rate of 4%. The county would pay $239 million in interest over the life of the bond, for a total of $583 million in combined interest and principal.

County administrator Verna McDaniel is advocating for this move, in part to make long-term budgeting easier by having predictable bond payments. The bonding is also linked to new 10-year labor deals approved earlier this year, which closed the defined benefit plan to employees hired after Jan. 1, 2014. Unless the defined benefit plans were closed, the county would not have been allowed by law to proceed with this type of bonding. However, closing the plans also triggered the dramatic increase in contributions to those plans, which has prompted the bond proposal.

Bonding Proposal: Public Commentary

During the two times for public commentary on May 15, former county commissioner Wes Prater expressed concern about the proposed bonding. He pointed out that the total debt service is estimated at $583 million over 25 years, and that the first 18 months of payment is $25 million for interest only and no principal. Total interest is about $239 million – an average of $9.5 million annually that could be supporting county programs and services, Prater noted. It amounts to about 14% of the county’s tax revenue, just to make interest payments, he said.

Prater also noted that the bond proceeds wouldn’t immediately pay off the pension and retiree healthcare obligations, but would go into an intermediate trust that would make investments using the bond proceeds.

From left: Former county commissioner Wes Prater and current commissioner Kent Martinez-Kratz (D-District 1).

There’s another approach that the county could take, Prater said – a deficit recovery plan. It would require changing some policies and “you’d have to live within your means,” he said, which means the county couldn’t spend more revenue than it takes in. “That’s what this county has been doing for a long, long time.” [Prater had raised the suggestion of a deficit recovery plan at a May 2, 2013 working session of the county board, focused on the bond proposal. At that meeting, Kelly Belknap – the county’s finance director – stated that such a plan is only required for local governments that have fund deficits. She said none of the Washtenaw County funds have a deficit, so there’s no requirement to submit a deficit elimination plan to the state.]

Later in the evening, Prater again addressed the board. He suggested that commissioners put the proposal on the ballot for voters to decide, saying “it would certainly stop the controversy and it would certainly satisfy most everybody that I know of, including myself.” He hoped commissioners would at least talk about the pros and cons of doing that. Whenever the bond proposal is discussed, supporters of it talk about all the positive things, Prater said. No one talks about what would happen if “the market dunks – what happens then? Who’s holding the bag?” It’s a global economy, he noted, with a lot of uncertainty.

Bonding Proposal: Board Discussion – Postponing Notice of Intent

Near the start of the May 15 ways & means committee meeting, board chair Yousef Rabhi announced his decision to pull the bond-related resolution from that night’s agenda. He said the schedule for moving ahead with the bonding process had been “aggressive.” Because he believes the public should have a full voice and full access to information, he added, the board had also set an aggressive public engagement schedule. It included a May 13 press conference, as well as a to-be-scheduled public presentation on the issue, and future public hearings, he said.

Despite that, Rabhi noted that there were concerns about the timeline being too aggressive, and the public not having time to consider the information. So in consultation with other commissioners, Rabhi said, he decided it was appropriate to postpone action on the bond’s notice of intent until after the county receives the actuarial report at the end of June.

The resolution will be brought back for consideration at the ways & means committee meeting on July 10. Rabhi stressed that it was not a decision that he made alone. The overwhelming sentiment among commissioners was that the public needs more time to evaluate the information, discuss it, and fully understand its implications. “This is one of the most important issues that we will be dealing with as a board, and perhaps that this board has dealt with for many boards past.” It deserves full consideration by both the board and the community, he said.

Rabhi also stressed that issues underlying the motivation for this bond proposal are real, and must be dealt with. It’s an issue that many other governments face nationwide, he noted. “We must address this issue – it is a critical issue.”

He thanked residents who have contacted the county and given their input already, and he urged people to continue to share their concerns and to not jump to conclusions. “I don’t think that anything is a done deal here,” Rabhi said. “We are discussing this in an honest and open way, and we want your feedback. We want your participation and we want your questions. We want you to understand what we’re looking at and the information we have and the context of the decisions that we have to make.” He urged people to approach the issue with an open mind.

Rabhi, one of the commissioners representing Ann Arbor, also announced a series of coffee hours that he’ll be holding for constituents. Called “Bonding Over Coffee,” the series will start on Tuesday, May 28 from 4-6 p.m. in the basement of Elixir Vitae (formerly Café Ambrosia) at 326 Maynard St. in Ann Arbor. [.pdf of "Bonding Over Coffee" press release]

County commissioners Alicia Ping (R-District 3) and Ronnie Peterson (D-District 6).

Later in the meeting, Ronnie Peterson asked about the voter referendum process. If the board issues a notice of intent in early July, and residents are successful in collecting the 15,000 signatures needed to place a bond proposal on the ballot, what’s the earliest election at which that proposal might be put before voters?

Hedger replied that he thought it might be possible to put it on the Nov. 5 ballot, assuming that the notice of intent expires in August. It certainly couldn’t be on the August primary ballot, he said.

Peterson noted that people might think “that this is Ronnie instigating something, but this has happened before.” When the county proposed issuing a bond to fund the expansion of the county jail a few years ago, residents were able to gather the required number of signatures to put the proposal on the ballot in 2005. Voters subsequently defeated the bond proposal at the polls.

It doesn’t take much to get that many signatures, Peterson said. He also noted that commissioners hadn’t received the kind of negative feedback about the jail expansion as they have about the current bond proposal.

Bonding Proposal: Board Discussion – Special Meeting

Rabhi also announced a resolution to set a special meeting on July 24. Typically during the summer months of June, July and August, the board holds only one meeting – on the first Wednesday of those months. The July 24 meeting would give commissioners more opportunity to discuss the bonding proposal and vote on it, he said.

Specifically, the resolution stated that the meeting ”shall be convened to only discuss and vote on the following items: (1) resolution to issue retiree health care and pension bonds; (2) resolution of continuing disclosure related to that bond; and (3) resolution to consider the comprehensive financial plan related to the bond.” [.pdf of resolution setting special meeting on July 24]

Responding to a question from Peterson, Rabhi clarified that at the first meeting in July – on July 10 – commissioners would likely be asked to take an initial vote on these items, with a final vote on July 24. Also on the July 10 agenda would be the notice-of-intent resolution that had been pulled from the May 15 meeting.

Peterson said he appreciated how Rabhi was handling this issue, and noted that he had previously voiced concerns about the process. Peterson stressed that he was committed to honoring the county’s obligations to its retirees. “How do we get there is open for discussion,” he added.

Peterson wondered when the board would receive the documents that they’d be voting on in July. County administrator Verna McDaniel replied that documents – including the actuarial reports – would be provided “well in advance” of the July 10 meeting.

Peterson said he didn’t want to “throw a brick through a window,” but he wanted to know when the board would see a copy of the debt retirement schedule. After consulting with Curtis Hedger, the county’s corporation counsel, McDaniel said the debt schedule would be among the materials provided to commissioners prior to July 10.

Dan Smith also thanked Rabhi for postponing the timetable, and thanked the administration and staff for adjusting their budget development to fit the new timeline. If the board decided to take both initial and final votes on these bond-related issues on July 10, he wondered what the process would be if the board then decided to cancel the July 24 meeting.

Hedger clarified that the board could cancel the July 24 meeting at its July 10 meeting – if a majority of commissioners wanted to do that. Hedger noted that it only takes three commissioners to call a special meeting, according to state law.

Felicia Brabec (D-District 4) is chair of the county board’s ways & means committee and part of the county’s budget task force.

Peterson wanted to make sure that the public has plenty of opportunity to weigh in prior to a board vote. He hoped there would be at least two formal opportunities for the public to give input to the board.

Hedger replied that it would be possible to do two public hearings – one on June 5, before the actuarial information is received, and another one on July 10. Rabhi indicated that he would like to do that.

Andy LaBarre reported that the board’s June 6 working session will focus on the bonding proposal, and will provide another opportunity for public input and commissioner discussion. [LaBarre chairs the working sessions and sets those agendas.] Rabhi requested that the administration put a list of dates, times and locations on the county’s website, to let the public know when the board would be focusing specifically on the proposal, and what opportunities there would be for public commentary.

Peterson asked if any worst-case scenarios had been developed, to show what the county’s obligations would be if the stock market tanked. The financial consultants hired by the county should show the board “the good, the bad and the ugly,” he said. With only $16 million in general fund reserves, the county doesn’t have a lot of flexibility if things go bad, he added. If he had known the full range of possibilities for his own investments a few years ago, Peterson joked, he would have taken all his money and put it in a mattress. “I’m not instigating tonight,” he added. “I’m advocating.”

Rabhi assured Peterson that those discussions are happening now. He said LaBarre has been asking for that kind of information too, and administration is working on putting that together. Noting that Wes Prater had raised concerns about the county making just interest-only payments in the first years of the bond, Rabhi said the administration is also looking at options for paying down principal in the beginning years, too.

Outcome: The board unanimously approved setting a special meeting on July 24 to handle the bond resolutions. Also set are public hearings related to the bond proposal on June 5 and July 10.

First-Quarter Budget Update

County financial analyst Tina Gavalier gave the first-quarter budget report, for the period from Jan. 1 through March 30, 2013. She began by noting that with just three months of information, it’s still early to tell how finances are trending this year. [.pdf of Gavalier's presentation]

On the revenue side, she reviewed the news – delivered at the board’s April 17, 2013 meeting – that property tax revenues will be higher than expected this year, with a surplus of about $2.3 million compared to the original 2013 budget projections. The clerk/register of deeds office is also projecting a surplus of about $254,000 from higher-than-expected real estate transfer taxes and fee revenues. However, the 14A district court is projecting a revenue shortfall of about $297,000, with lower-than-anticipated court fines and fees. New case filings have declined for five consecutive years, she reported.

From left: County finance director Kelly Belknap and finance analyst Tina Gavalier.

Projected expenses are $438,739 more than budgeted, with the largest over-expenditure – of $482,031 – coming from the sheriff’s office for inmate food and medical services, as well as law enforcement operating supplies. The district court is also reporting over-expenditures of $259,000 for overtime and contracts related to magistrate and mediation services. Those over-expenditures are offset by lower expenses from the trial court and support services.

Gavalier also highlighted a projected surplus of about $483,000 from tax appeals and refunds. So far this year, the county has spent about $42,000 for tax appeals and refunds based on board of review and tax tribunal decisions. The budgeted amount for this category is about $1.5 million for 2013.

Overall for 2013, the county’s financial staff is now projecting a $818,999 shortfall for the year – the difference between $102,364,815 in projected general fund revenues and $103,183,814 in projected expenditures. That shortfall 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. [.pdf chart of 2013 budget as of March 30, 2013]

Gavalier told commissioners that the finance staff will be monitoring several items, including the impact of federal sequestration cuts, fringe benefit trends, personal property tax reform, actuarial valuations, and the county’s annual cost allocation plan. The board will get a second-quarter budget update in August.

First-Quarter Budget Update: Board Discussion

Dan Smith thanked the staff and department heads for keeping the budget “not only on track but above track.” Noting that there are three more quarters to go, Smith said the initial trends look good. He highlighted the projected $16 million fund balance by year’s end. Having that kind of fund balance allows the organization to be pro-active in managing its future, he said, rather than reactive.

Ronnie Peterson asked a question about the court budgets, joking that he wasn’t trying to get in trouble with the judges. “Whatever they want, give it to them,” he said. But he wondered how to address the budget fluctuations, especially if the county moves to a four-year budget process. Budgets for the jail, law enforcement and general criminal justice services are “almost uncontrollable,” he said, because those areas are responding to crisis needs. Sometimes the estimates are far off, he noted, and those shortfalls must be made up somehow. He’d rather see a more conservative projection when the budgets are developed.

Peterson contended that $16 million wasn’t a lot for a county the size of Washtenaw to have in reserves. “Any major crisis could make us spend a great portion of that,” he said.

Andy LaBarre asked Gavalier if she saw anything in the first quarter that would be a red flag – something that she hadn’t mentioned in the report, and that commissioners should be aware of. No, Gavalier replied. It’s important to “keep pressure on the organization,” she added, and to continue to monitor and collaborate with each department as the year progresses.

In response to a question from Felicia Brabec regarding the sheriff’s budget, Gavalier said the finance staff looks at expenditures and revenues separately, in reporting shortfalls or surpluses. The variance that she’s reporting is between the budgeted amounts and the first-quarter actual revenues and expenditures, Gavalier explained. When preparing the budget, the staff looks at the previous five years of expenditures to help project future expenses. It’s more difficult to project revenues for each unit, she noted, because that amount depends in large part on the overall county general fund revenue – the largest portion from property taxes. Gavalier added that more detailed budget figures are monitored at the departmental level, compared to what’s presented to the board.

State of the County

The board received a second budget-related update from county administrator Verna McDaniel, as part of developing a four-year budget from 2013 through 2017. [.pdf of McDaniel's presentation] At its May 1, 2013 meeting, the board had approved development of a four-year budget.

Washtenaw County administrator Verna McDaniel.

McDaniel reviewed the county’s current financial foundation, noting that the main guiding principal is fiscal stability. She cited the county’s AA+ rating from credit agencies, the building of its general fund reserves above the board’s policy of 8%, and the organization’s low debt ratio of 0.83% compared to the allowable level of 10%. She highlighted reductions that have been made since 2002, reflecting declines in property tax revenues as well as state shared-revenue funding. Most county departments have been reduced by at least 20% in the past five years, she said.

Unions have made concessions in their contracts, McDaniel added, and non-union employees have seen reductions as well. Personnel accounts for about 67% of the county’s general fund budget, or $65 million. Fringe benefits now equal about 66% of salaries, on average.

She pointed out that the county made $17.5 million in reductions for the 2012 and 2013 budgets, but not all of those were structural.

McDaniel noted that some general fund revenue sources – like property taxes and state revenue-sharing, which is now tied to performance measures – appear to be stabilizing. However, there are other areas of uncertainty, particularly with state and federal funding that support non-general fund programs. Also uncertain is the future of personal property tax replacement revenues. The tax will be phased out starting in 2014 through 2022. As part of that change, a statewide voter referendum is slated for August 2014 to ask voters to authorize replacement funds from other state revenue sources. It’s unclear what will happen if voters reject that proposal.

On the expenditure side, 72% of general fund dollars support public safety and justice operations. Those areas include the sheriff’s office, trial court, 14A district court, prosecuting attorney’s office, and public defender. About 70% of the county’s services are mandated, she noted, but the county has discretion over how those mandates are fulfilled.

McDaniel outlined key revenue assumptions that the administration is making in developing its budget projections. [.pdf of budget major assumptions] That includes an estimated 1% annual increase in tax revenues, state revenue-sharing reinstated at 75% of its previous levels, and police services contracts increasing by 1% in 2014 and 2015, but showing not increasing in the following two years.

Assumptions on the expenditure side include wage increases of 2% in 2014, 1% in 2015, and 2% in both 2016 and 2017. Fringe benefit packages will be changed for employees hired after Jan. 1, 2014, with defined contribution plans replacing defined benefit plans.

Looking at the period from 2014-2017, McDaniel told the board that she hopes to identify $6.99 million in structural cuts in the first year of that four-year period. [In 2014, the general fund budget is projected to be $107.429 million, according to McDaniel's preliminary report. That does not include the hoped-for $6.99 million in structural cuts.] That $6.99 million represents 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 otherwise 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 the bond proposal, which would 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 healthcare.

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. Finding the $6.99 million in cuts would be very challenging, she said, given the amount of reductions that have already occurred in the past few years. Serviceability levels and major programs would be affected.

Both scenarios assume an additional $2.4 million in revenue for 2014. It’s expected that will be achieved primarily 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, and structural changes are still needed.

The strategy to approach these changes includes a continued focus on internal collaboration, looking for alternative ways to deliver services that might generate revenue, and maximizing outside funding whenever possible, McDaniel said. The county needs to talk with community partners to see if there are services provided by the county that can be shifted to others, and to look for services that can be eliminated because the county can’t afford to provide them.

McDaniel also noted that 327 county FTEs now have healthcare benefits that the federal government defines as a “Cadillac plan.” If that remains in place, in 2018 the county will face a 40% federal excise tax on those benefits.

In closing her remarks, McDaniel said the administration will continue meeting with departments to review business plans and define budget targets for 2014-2017, with the goal of providing a budget proposal to the board in September. The coming months will also include town hall meetings with employees.

In seeking direction from the board, McDaniel asked that commissioners consider three questions:

• Do current budget allocations have the impact that commissioners desire?
• Should the general fund respond when there are federal/state revenue reductions in non-general fund programs?
• What community areas (internal and external) should have the greatest impact?

McDaniel told the board that the administration’s approach is to be very conservative. “It is very dangerous to not be conservative,” she said. “If you underestimate the magnitude of the problem, you will have an even bigger problem.”

She also cited the importance of finding structural solutions. If that doesn’t happen, then the board and administration will be facing these same problems year after year, she said. “It’s time for us to face our problems and deal with them effectively.”

State of the County: Board Discussion

Felicia Brabec described the situation as daunting. Andy LaBarre, characterizing the presentation as sobering, asked when the county had been at its peak, in terms of employees. Verna McDaniel replied that the county employment levels were highest “just before the economy went bad” in 2008. She noted that 650 current employees – about half of the county’s total workforce of 1,350 – are supported with general fund dollars. Other employees rely on federal and state funding, she said.

From left: County commissioners Dan Smith (R-District 2), Kent Martinez-Kratz (D-District 1), and Rolland Sizemore Jr. (D-District 5).

LaBarre noted that the county isn’t alone – saying cuts have been made statewide. “It just scares the heck out of me to think about more cutting,” he said, adding that employees are there for a reason – to provide services to taxpayers.

Alicia Ping referred to the data point that 72% of the county’s general fund budget is spent on public safety. Ping said it would be helpful to see the history of funding for the trial court and district court, which receive lump sum amounts from the county’s general fund. She was curious about whether the courts had cut in the same way that other county units had cut. “I’d like to know that we’re all in the game together,” Ping said. [The county's finance staff subsequently provided that data: .pdf of historical funding for public safety & justice operations]

Dan Smith asked for elaboration on the fact that fringe benefits equal 66% of salaries, on average. Kelly Belknap, the county’s finance director, replied that the percentage includes healthcare costs (medical and dental), pension contributions, workers compensation, Social Security and taxes. If someone’s salary is higher, then the percentage for benefits would be lower, she said. For employees with lower salaries, that percentage is higher.

D. Smith also noted that health care costs are estimated to increase 8% annually. Has the county been able to take into account the changes in federal and state law that aim to put downward pressure on healthcare costs? Belknap said that the county is self-insured, though it uses Blue Cross/Blue Shield as a provider. Some changes that the county has made in its healthcare benefits have kept costs down, but she said it’s still too soon to know the impact of federal and state legislation.

McDaniel added that nationally, healthcare costs have been increasing at about 12% annually. The county has been trending at 8% annual increases. “We’ve done some work, and it’s paid off,” she said. At the state level, McDaniel noted, Public Act 152 of 2011 put a cap on the amount that local governments can pay for healthcare benefits. On the federal level, the Affordable Care Act will institute an excise tax on “Cadillac” plans in 2018, she continued, so the county will need to deal with that.

D. Smith highlighted the board’s decision – as part of the negotiated 10-year labor contracts that were approved on March 20, 2013 – to close the county’s defined benefit pension and retiree healthcare plans for employees hired after Jan. 1, 2014. The decision to close those plans will result in dramatic increases to the county’s required contributions to those plans in the next few years, which is driving some of the healthcare cost increases, Smith noted. But that had been a board policy decision, he said.

Kent Martinez-Kratz asked whether the line item of “personal services” for the next four years included the upcoming contributions to the pension and retiree healthcare funds. [The line item represents salaries and benefits, and is projected to be $71.68 million in 2014, growing to $77.64 million by 2017.] [.pdf of chart showing budget projections] Finance analyst Tina Gavalier replied that those contributions are factored in, but only for general fund employees. Martinez-Kratz expressed some surprise that the increase per year wouldn’t be higher.

Brabec asked a question related to bonding for pension and retiree healthcare obligations, saying she was trying to understand the implications of that decision. She noted that McDaniel’s presentation had indicated that in the past, there were some county units that hadn’t seen reductions. Brabec asked for more details. McDaniel replied that the prosecuting attorney’s office and equalization department were two areas that haven’t been cut, as examples. “We have to be realistic about where we can cut without just really crippling a department or a service,” she said.

Brabec also asked about another assumption on the expenditure side – an estimated $1.5 million for information technology, with a projected 10% increase. Was that increase annual or over the four-year period? When McDaniel indicated that it was an annual increase, Brabec said it seemed “awfully high.” Gavalier reported that industry standard increases are closer to 20%. The county has IT maintenance contracts on huge systems, McDaniel added, which costs a lot to maintain and operate.

Outcome: This was not a voting item.

Budget Process Update

During the May 15 meeting, Felicia Brabec – chair of the board’s ways & means committee and a member of the budget task force – gave an update on the budget development process. The county’s finance staff is meeting with departmental staff – those will continue through early July, she said.

Regarding the bonding proposal, a press conference was held on Monday, May 13, she noted. Three members of the media asked questions of bond counsel John Axe and county administrator Verna McDaniel. Brabec reported that she and four other commissioners also attended: Alicia Ping, Yousef Rabhi, Rolland Sizemore Jr. and Andy LaBarre. She said she found it to be very educational.

Brabec noted that the resolution about the notice of intent had been pulled from the May 15 agenda, and the county awaits more information from its actuaries, which is expected to be ready by late June. At the board’s July 10 meeting, there will be several resolutions related to the bond that will be considered for initial approval, including the bond proposal itself and the creation of an intermediate trust. If passed, those resolutions could be considered for a final vote at the board’s special meeting on July 24, or the board could decide to take a final vote at the July 10 meeting, she noted.

May 16, 2013 Board Budget Retreat

During his report as board chair on May 15, Yousef Rabhi reviewed the plan for a second budget retreat the following day. The board had held its first budget retreat on March 7, 2013, where commissioners talked about big picture issues and engaged with other elected officials and department heads, he said. “Now, it’s time to drill down a little bit, to go into detail about what our weighted priorities are.”

Commissioners convened on May 16 at the county’s Learning Resource Center at 4135 Washtenaw Ave., near the county jail complex. The meeting, which was open to the public and videotaped for broadcast on Community Television Network, was attended by seven of the nine county commissioners and about a dozen staff members, including nearly all of the senior administrative staff. Also attending as observers were two of the five countywide elected officials: sheriff Jerry Clayton and prosecuting attorney Brian Mackie.

County administrator Verna McDaniel did not attend, due to a conflict with her daughter’s graduation from George Washington University. The two commissioners who did not attend represent districts in the Ypsilanti and Ypsilanti Township area: Rolland Sizemore Jr. (D-District 5) and Ronnie Peterson (D-District 6).

The retreat was facilitated by Lisa Brush, executive director of the nonprofit Stewardship Network. She is also the sister of Andy Brush, who leads the county’s IT unit and was on hand to help with technical support at the retreat. Also attending to help provide support was Mary O’Hare, who facilitated the March 7 retreat. [.pdf of O'Hare's summary from March 7, 2013 retreat]

At the March 7 retreat, commissioners had engaged in a broad discussion of possible areas of investment. O’Hare had provided summaries of five key areas that emerged from that retreat, framed as “success statements”:

• Ensure that Washtenaw County government has a sustainable & effective labor force. What success could look like: (1) Washtenaw County government attracts and retains talented and committed employees; (2) Washtenaw County makes ongoing investments in the professional development and education of its workforce; (3) Washtenaw County develops deep leadership “bench strength” to effectively lead the organization into the future.
• Mobility in Washtenaw County. What success could look like: (1) Washtenaw County has excellent roads, bridges, and related infrastructure to facilitate efficient movement of county residents and local goods and services, and/or; (2) Residents in Washtenaw County can travel easily and affordably throughout the county, using motorized or non-motorized routes and connections.
• Robust economic & workforce development. What success could look like: (1) Washtenaw County has the highest state employment rate, including communities on the eastside, and/or; (2) Entrepreneurs and local businesses have access to capital, talent, and supports needed to grow and thrive, and/or; (3) Housing and transportation costs will be affordable to residents earning less than 80% of the area’s median income, and/or; (4) Washtenaw County has safe and stable neighborhoods, with high rates of homeownership, and/or; (5) Washtenaw County, local communities, and private and corporate partners work together to strengthen the local economy, and/or; (6) All Washtenaw County residents have access to broadband internet connection.
• Ensure a community safety net (health & human services). What success could look like: (1) Washtenaw County residents have ready and affordable access to primary care for mental, oral, and physical health, and/or; (2) Children in Washtenaw County will have access to the care, support, and developmental tools they need to be ready for kindergarten, and/or; (3) Youth in Washtenaw County will graduate from high school, ready for college or career, and/or; (4) Residents of Washtenaw County will be food secure, and/or; (5) Poverty rates throughout Washtenaw County, including on the eastside, will be the lowest in the state, and/or; (6) Low-income residents have access to affordable transportation options.
• Reduce environmental impact. Success could look like: (1) Residents in Washtenaw County can easily travel throughout the county, using motorized or non-motorized routes and connections, preserves, parks and open spaces; and/or, (2) Residents in Washtenaw County can easily access parks, natural areas, and open spaces; and/or, (3) Washtenaw County government will be carbon neutral.

The main exercise at the May 16 retreat entailed commissioners allocating their spending priorities in these five areas. They were given two packets of fake money – one bundle representing the finite amount of revenues in the county’s general fund budget, and another bundle representing revenue from outside sources, such as federal grants or additional taxes. Commissioners were instructed to allocate their dollars into the five priority areas, to indicate how much they’d like to spend on each area. The intent, Lisa Brush explained, is to begin developing a “collective vision” that will help inform budget decisions.

Alicia Ping (R-District 3) allocates fake money to indicate her spending priorities, as part of an exercise at the county board’s May 16, 2013 budget retreat.

Some commissioners raised concerns with this approach. Alicia Ping noted that in the category of mobility, there was no way to distinguish her specific priority – widening US-23, for example – with the priority of someone like commissioner Conan Smith, who might want that money to be spent on rail transit.

Ping also wanted to talk about where funding could be cut. She felt the exercise was focused on spending and on non-mandated services, but in fact the board needs to look at mandated services too. The mandated public safety & justice services – including lump sum payments to fund the courts – account for 72% of the general fund budget. Ping said the board needs to look at areas that in the past they’ve funded without question. They need to look at the entire budget, she said.

Dan Smith observed that about 70% of services in the county’s general fund budget are mandated. So the discretionary amount is relatively small. He said some of the things that are important to him – some mandated services that he’d be inclined to spend more money on – aren’t included in the five key areas identified from the previous retreat.

Andy LaBarre suggested that instead of looking at the fake money as funding, the paper could be viewed as “value tokens” that simply indicate how much weight each commissioner gives the five key areas that emerged from the first retreat. Ping replied that for her, those five areas didn’t match up with where she wanted to put her money: “My value bucket is missing from this picture.”

Yousef Rabhi, who as board chair led the planning for the retreat, responded by saying that this session was just another step to help narrow and weight the board’s priorities. It could lead to another retreat, working session, or discussions at a regular board meeting. He suggested that for this exercise, commissioners could write on their extra packet of fake money to indicate that it represented cuts from mandated services, or funding that could be shifted to from mandated to non-mandated priorities.

Commissioners spent the next portion of the retreat making their priority decisions by portioning out their fake money into boxes that represented each of the five key areas from the first retreat. Staff then compiled the results.

Overall, the safety net/human services funding and workforce/economic development categories each received about 30% of the fake money/value tokens. The remaining three categories received the following percentages: maximizing mobility (18%), environmental impact (15%) and effective labor force (8%).

Lisa Brush reported that the extra packets – representing grants, taxes or other revenue sources – were divided roughly in the same way, although about a third of the fake money in that category had been designated by commissioners as “don’t spend.”

Dan Smith reported that his decision was easy, since he didn’t favor funding any new activities. Instead, he put large chunks of his fake money into two categories: (1) workforce/economic development, where he designated it for making the county’s neighborhoods safe; and (2) mobility, where he designated the money for roads.

Conan Smith made an argument for looking at possible new millages, especially for safety net services, where federal funding is in decline, and for roads. The board and administration need to start talking to the community about how much citizens want to invest, he said.

Felicia Brabec wanted to look at how this exercise could translate into the real budgeting process. What would the 30% priority for safety net services look like, as part of the budget? Ping suggested looking at how the existing budget lines up with these key areas. Is the county currently allocating money in the areas that commissioners believe are priorities? It would be interesting to see where the budget is “out of whack” with those priorities, she said. Ping wanted to see numbers attached to the discussion.

From left, standing: Lisa Brush of the Stewardship Network, who facilitated the May 16 retreat, and Mary Jo Callan, director of the county’s office of community & economic development. Seated are Andy Brush, the county’s IT manager, and Mary O’Hare, who facilitated the board’s March 7 retreat. They were compiling results from the board’s priority-setting exercise.

Andy LaBarre continued that thought, saying he’d like to see numbers and scenarios that show him how much “pain” will result from these decisions.

Dan Smith noted that the board is facing $6.99 million in structural reductions for 2014, and there are huge decisions to be made that don’t relate to the priorities they’ve been discussing so far at the retreat. Those structural changes “need to be at the top of our list,” he said.

Brush indicated that the next step would be to identify the outcomes that commissioners would like to see, based on their priorities.

LaBarre stressed the need to get input from the two commissioners who didn’t attend the retreat – Sizemore and Peterson.

Conan Smith advocated for organizing into small committees, structured around the service areas that were formerly known as “communities of interest.” [Those are civic infrastructure, economic development, emergency preparedness and response, health and human services, land use and environment, public safety and justice, and support services.] The committees would consist of a few commissioners and staff, and could develop recommendations to bring to the full board, he said.

Others talked about having an additional retreat or working session discussions. Ping suggested meeting in different parts of the county, to make it easier for citizens to participate. But Conan Smith said he wasn’t interested in another session like this. “We’re not getting down to brass tacks,” he said, adding that it’s not possible for the group of nine commissioners to talk about the entire budget and get anything done.

Conan Smith also recommended that the board review the strategic plans, investment priorities and outcomes that other units of the county – like the sheriff’s office and office of community & economic development – have already developed. He noted that legally, it’s the responsibility of the county administrator to prepare and deliver a budget for the board to consider and approve. He’s heard some commissioners indicate they want a stronger hand in the budget process, but they’re going down a path where soon it will be hard to have a major influence.

Ping agreed with C. Smith. It seems like the budget is developed and brought to the commissioners, then they have only two meetings to make changes and adopt it, she said. Approving the budget is really the only responsibility of the board, she noted. Ping wants a hand in the budget process because otherwise, she said, the only way she can voice her opinion is to vote no on the budget after it’s presented.

C. Smith noted that the other option is to spend those two meeting at the end of the process arguing over $100,000 in a $200 million budget. [He was referring to both the general fund budget of roughly $100 million, as well as the non-general fund portion of the budget.]

Both LaBarre and Kent Martinez-Kratz highlighted the bonding proposal as the other big piece of this year’s budget process that needs to be settled. LaBarre also expressed support for the small committee approach, but said he worried that not all commissioners would participate – or perhaps they all wouldn’t have the chance to participate – and as a result those commissioners might not support the outcome of the process.

LaBarre also said that ultimately he didn’t care what process they used. He just wanted to “get something here that we can really chew on.” It’s helpful to talk about priorities, he added, but now it’s time to see some hard numbers.

In wrapping up the retreat, Rabhi noted that in the past, the chair of the board’s ways & means committee – currently Brabec – has typically been the board’s voice in budget planning. But he’s hearing that commissioners want more involvement, so he’d work with the Brabec and other board leadership to figure out an appropriate way to proceed.

Millage Rate

At their meeting on May 15, commissioners were asked to give initial approval to the 2013 county general operating millage rate at 4.5493 mills – unchanged from the current rate.

Several other county millages were authorized and are levied separately: emergency communications (0.2000 mills), the Huron Clinton Metroparks Authority (0.2146 mills), two for county parks and recreation (0.2353 mills and 0.2367 mills) and for the natural areas preservation program (0.2409 mills). That brings the total county millage rate to 5.6768 mills, a rate that’s also unchanged from 2012.

From left: Pete Simms of the county clerk’s office talks with corporation counsel Curtis Hedger.

This is an annual procedural action, not a vote to levy new taxes. With a few minor exceptions, the county board does not have authority to levy taxes independently. Millage increases, new millages or an action to reset a millage at its original rate (known as a Headlee override) would require voter approval.

The rates would be included on the July tax bills for property owners in Washtenaw County.

A related resolution set a public hearing for the millage rate at the board’s June 5 meeting. Curtis Hedger, the county’s corporation counsel, noted that this is commonly known as the “truth in taxation” hearing. The notice regarding the public hearing includes the county millage rates as well as rates for other taxes that the county receives revenue from via the state – specifically, the alcohol and cigarette tax.

When the state changed the timing of the levy from December to July, the county has been running into issues related to getting information from the state about alcohol and cigarette tax rates. This year, the state hasn’t yet provided those numbers, Hedger said. The board can still pass this resolution to set the county millage rates, Hedger said, but the county clerk will be directed not to publish the notice of a public hearing until the information on alcohol and cigarette tax rates is received.

Legally, he said, the notice of the public hearing – including the proposed millage rates – doesn’t have to be published until six days before the actual hearing. The hearing has to be held on June 5 because that’s the only time that the board meets, he noted, unless commissioners want to call a special meeting.

Outcome: The board unanimously gave initial approval to set the millage rate, with a final vote expected on June 5, when a public hearing is scheduled.

Medicaid Expansion

Commissioners were asked to consider a resolution expressing support for the state of Michigan to expand the federal Medicaid program, as part of the Affordable Care Act – informally known as Obamacare. The resolution of support was brought forward by commissioner Andy LaBarre (D-District 7).

Expansion of the Medicaid program would cover individuals and families earning up to 133% of the federal poverty level, and provide coverage for over 10,000 Washtenaw County residents who are not currently eligible. The resolution cites additional reasons to support the action:

Without the expansion, approximately 5,000 Washtenaw Health Plan (WHP) members will have no coverage options at all because their income is below 100% of poverty, thus by law, these individuals cannot buy subsidized coverage through the insurance exchange; and

WHP funding will be significantly cut on January 1, 2014, and ultimately eliminated completely, regardless of whether or not the state expands Medicaid, thus Washtenaw County’s ability to provide services to this population will be severely limited and these residents will be left to seek care in hospital emergency rooms, adding additional economic burdens to Washtenaw County residents who must indirectly pay those costs;

Republican Gov. Rick Snyder supports the expansion, but it’s not clear whether the Republican-controlled Michigan legislature will approve it.

Medicaid Expansion: Board Discussion

Dan Smith asked that the resolution be pulled out from the consent agenda and voted on separately. He thanked LaBarre for making this resolution very specific to Washtenaw County, with information about impacts to local residents.

Commissioners Alicia Ping (R-District 3) and Andy LaBarre (D-District 7).

He added that he gets emails from people urging him to contact state legislators to oppose the expansion, while the governor supports it. Clearly it’s a complex issue that Lansing is dealing with, he said, “and I have my hands very full dealing with things that are in front of this board.”

Smith said it’s been his position all along that weighing in on something like this as a body isn’t appropriate. He felt it would be more effective to work with legislators individually, “rather than interfering in Lansing’s business in a resolution of this form.”

[By way of background, at its Jan. 2, 2013 meeting, on a 5-4 vote the board voted to remove the ability of a commissioner to abstain from a vote. The question of abstaining from votes has related primarily to resolutions on state or federal issues, over which the county board has no direct control. In early 2012, Dan Smith had successfully convinced a majority of commissioners to add to the board rules the ability to abstain. That action was reversed by the majority of the newly elected board on Jan. 2 of this year.]

During the discussion on Medicaid expansion, LaBarre noted that he was following up on an issue that he had mentioned at the board’s previous meeting. LaBarre reminded commissioners that he serves as the county’s liaison to the Area Agency on Aging 1-B board board, which recently passed a similar resolution.

He said that if it would put Smith’s mind at ease, Macomb County also passed a similar resolution, and one of their commissioners (Toni Moceri) helped LaBarre with the resolution. Washtenaw County “wouldn’t be breaking new ground,” he noted, adding that he understood Smith’s position.

Felicia Brabec thanked LaBarre, noting that Medicaid expansion is important to the community with dire impacts on people who really need it. She serves on the board of the Washtenaw Community Health Organization (WCHO), which sees the need “in a very real way,” Brabec added. Without the expansion, a lot of residents will go without care.

Outcome: The resolution was approved on a 6-0 vote. Dan Smith (R-District 2) left the room prior to the vote. Conan Smith (D-District 9) and Rolland Sizemore Jr. (D-District 5) were also not in the room during the vote.

Grants for Workforce Development

Two items were on the agenda for initial approval for grants administered by the county’s office of community & economic development (OCED).

An additional $55,000 in funds was available for the Food Assistance Employment and Training (FAE&T) program, bringing the program’s fiscal year 2013 budget to $139,783. According to a staff memo, the program was established through the federal Food Stamp Act of 1977 to help people who are receiving food stamps get training that will lead to regular employment. Locally, this program is administered by OCED through the Michigan Works office in Ypsilanti. These extra funds are available because other entities did not use their allocation of funds, and the money is being redistributed.

The second item was an additional $73,300 for the Dislocated Worker program, bringing that budget to $586,398. That program, which is operated out of the Michigan Works Career Transition Center in Ypsilanti, provides training and services to help workers who have been displaced from their jobs.

Grants for Workforce Development – Board Discussion

Dan Smith commented that grants or other items from the OCED are on the agenda for almost every meeting, and address specific needs of the community. He thanked OCED director Mary Jo Callan and her staff for their work, including dealing with “fairly onerous” federal regulations associated with these grants.

In response to a question from Felicia Brabec about the dislocated worker grant, Callan explained that the state – which receives the federal funds and passes those on to local governments – provides supplemental allocations near the end of the fiscal year, using money that’s unspent at the state level or by other communities that receive these grants. It’s possible to carry over these funds into the next budget year, she said. For the purposes of the dislocated worker grant, the fiscal year starts July 1. The county intends to carry over the funds into the next fiscal year, to help offset federal sequestration cuts. For workforce development programs in Michigan, cuts will range from 16-25%, Callan said. In Washtenaw County, cuts will average 17-18%.

Outcome: Acceptance of both grants received initial approval by the board. A final vote is expected on June 5.

Urban County Plan

Washtenaw Urban County’s five-year strategic plan through 2018 and its 2013-14 annual plan was on the May 15 agenda for final approval. The board gave initial approval on May 1, 2013. [.pdf of draft strategic and annual plans]

The Urban County is a consortium of Washtenaw County and 18 local municipalities that receive federal funding for low-income neighborhoods. Members include the cities of Ann Arbor, Ypsilanti and Saline, and 15 townships. “Urban County” is a designation of the U.S. Dept. of Housing and Urban Development (HUD), identifying a county with more than 200,000 people. With that designation, individual governments within the Urban County can become members, entitling them to an allotment of funding through a variety of HUD programs. The Urban County is supported by the staff of Washtenaw County’s office of community & economic development (OCED).

Two HUD programs – the Community Development Block Grant and HOME Investment Partnership – are the primary funding sources for Urban County projects.

The plans indicate that the Urban County area is expected to receive about $2.7 million annually in federal funding, which will be used for these broad goals:

1. Increasing quality, affordable homeownership opportunities

2. Increasing quality, affordable rental housing

3. Improving public facilities and infrastructure

4. Supporting homeless prevention and rapid re‐housing services

5. Promoting access to public services and resources

6. Enhancing economic development activities

A public hearing had been held at the board’s April 17, 2013 meeting.

Outcome: The board gave final approval to the Urban County plans.

Appointments

Board chair Yousef Rabhi made two nominations at the May 15 meeting. He nominated Ed Toth to serve on the police services steering committee, filling the position of police chief for a non-contracting jurisdiction. Toth is chief of policy for the city of Chelsea.

To the county’s food policy council, Rabhi nominated nutritionist and pharmacist Gail Solway for the healthcare position and Lauren Atkins Budde – who publishes the Have Fork, Will Eat blog – for the citizens position.

Outcome: Without discussion, all appointments were approved.

Communications & Commentary

During the evening there were multiple opportunities for communications from the administration and commissioners, as well as public commentary. In addition to issues reported earlier in this article, here are some other highlights.

Communications & Commentary: Michigan Association of Counties

Two representatives from the Michigan Association of Counties (MAC) – executive director Tim McGuire and Ben Bodkin, director of legislative affairs – were on hand to urge commissioners to renew the county’s membership in MAC. In 2011, the board voted to cut membership to the organization, as part of a broad effort to eliminate a budget deficit in 2012 and 2013.

From left: Tim McGuire, executive director of the Michigan Association of Counties, and Ben Bodkin, MAC’s director of legislative affairs, provided handouts and swag for commissioners. County administrator Verna McDaniel takes a look.

McGuire told commissioners that he’d had individual conversations with several of them, but he also wanted to make an appeal to the full board to consider rejoining MAC. Bodkin highlighted some of the issues that MAC has addressed on behalf of the 83 counties in Michigan, including state revenue-sharing and personal property tax legislation. He hoped Washtenaw would consider rejoining MAC to strengthen the county’s voice, protect taxpayer dollars, and get tools that can help make its work more effective.

McGuire spoke again, citing issues like transportation funding, Medicaid and indigent defense as other areas that MAC is working on. The organization has five standing committees that commissioners can participate in. All counties need to work together to make improvements, he said.

Ronnie Peterson said he’d been very active in MAC in the past, and had served on the search committee that had recommended hiring McGuire. He suggested scheduling a formal presentation from MAC, and he wanted to discuss the possibility of rejoining the organization, which he said was highly respected. The county needs to be a player at the state level, he said. The lobbyist that the county pays – Lansing-based Governmental Consultant Services Inc. – does a good job, Peterson added, but he felt that GCSI’s work is focused on specific projects.

Yousef Rabhi said he’d like to continue the discussion. He wondered how the voting worked for MAC – was it one county, one vote? McGuire replied that MAC’s board has 16 members representing different counties, and each member has an individual vote. At the organization’s conventions, it’s one vote per person with regard to electing those board members. There are also five standing committees at MAC: judiciary, taxation, transportation, human services and economic development. County commissioners from across the state serve on those, he said, and make recommendations on legislative stances. Those recommendations are considered by the board of directors, who develop a formal platform each year that’s used as a guide for lobbying.

Rabhi said he didn’t doubt MAC’s leadership capability or value. He noted that two years ago when the 2012 and 2013 budgets were developed, he was the one who proposed eliminating dues to MAC. The money was used instead to fund the county’s homeless shelter, he said, for which funding had been cut dramatically. One of Rabhi’s concerns with MAC is that some counties have higher populations – including Washtenaw – yet are at the table with the same vote as much smaller counties. “When you’re advocating for policy, that might not be representative of the wills of the people in the state and of the people that those county commissioners represent,” he said. It would be valuable to give weight to populations when MAC’s policy decisions are being made, Rabhi added. That’s how SEMCOG operates, he noted. That said, Rabhi indicated interest in further discussing the issue.

McGuire responded, saying that in his experience if something is good for Washtenaw County, it’s probably good for a county with a smaller population – and vice versa. It’s rare not to have consensus on issues that affect all counties, he said. McGuire felt it’s important to have Washtenaw County represented in MAC’s discussions, and he hoped commissioners would re-engage.

In response to a question from Dan Smith, McGuire said the dues for Washtenaw County would be $26,230 annually, based on population and state equalized value. Dues were frozen in 2003, he added, and have only been increased one time since then – by 3% in 2007. MAC recognized the economic situation, McGuire said, and has tried to make membership affordable for all counties by doing more with less.

Communications & Commentary: Corridor Improvement Authority

Dan Smith highlighted a communication that the board had received regarding the intent of Pittsfield Township to establish a corridor improvement authority (CIA) along State Street. [.pdf of Pittsfield communication] The letter indicates that the township would use tax increment financing as a funding mechanism, he noted. A portion of the proceeds from millages levied by the county and county parks & recreation would be captured by such a TIF.

Smith said he has no objections to what Pittsfield Township is doing regarding its CIA, but he noted that the county board needs to have a discussion about TIF. “Trying to deal with [such projects] as just single items makes it very difficult to really look at what we want to do with TIF financing throughout the county,” he said. If commissioners say yes to one and no to another, it looks like they’re playing favorites rather than following a policy. He’d like to discuss a policy so that when items like this come up, the board has a framework in which to act.

Yousef Rabhi offered to work with Smith to develop such a framework, which could then be brought to a working session for the full board to discuss.

The Pittsfield Township CIA would extend along State Street from Airport (just south of Ellsworth) to Campus Parkway (just north of Michigan Avenue). In April of 2013, the Pittsfield Township board approved the intent to establish this CIA. A public hearing is set for May 22 at 6:30 p.m. at the township hall, 6201 W. Michigan Ave.

Communications & Commentary: County Parks & Recreation

Rolland Sizemore Jr. and Dan Smith – who both also serve on the county parks & recreation commission – highlighted work that’s being done by that group, and noted that Rolling Hills and Independence Lake parks will be opening on Memorial Day weekend. Both of those facilities have water parks. The Independence Lake water park, located in Webster Township, is new. The water park at Rolling Hills in Ypsilanti Township has a new 30-foot water slide.

Communications & Commentary: Roads, Transportation

Rolland Sizemore Jr. asked when the county road commission would be coming to brief the board at a working session – he thought that was happening in October. Andy LaBarre, who chairs the working sessions, reported that one of the October working sessions is scheduled for the southeast Michigan regional transit authority, not the road commission. Sizemore replied that whenever the road commission is scheduled, he’d like for representatives from the Southeast Michigan Council of Governments (SEMCOG) to attend as well, since SEMCOG also had managed transportation projects. He noted that as the county board’s liaison to the road commission, he’s participating in a committee that’s evaluating the condition of roads countywide.

Yousef Rabhi reported that SEMCOG’s executive meeting would be held on May 16, when they would be taking up the 2040 long-range regional transportation plan. SEMCOG planners are recommending the expansion of I-94 in Detroit and I-75 in Oakland County. Rabhi characterized the expansion as unwise, and said he’ll be opposing it. Looking toward the future with more sustainable transit and fewer cars, he said, it doesn’t seem wise to expand the highway system and take property by imminent domain. “It’s painful for me to see that this is the direction that our region is choosing to go,” he said, even though he understands that the project would be funded with dollars allocated for roads. It seems like a poor use of taxpayer money, he said, but he asked for feedback from other commissioners and the public.

Communications & Commentary: Young Women Making Washtenaw Better

Several teens from Young Women Making Washtenaw Better, a program of the Washtenaw County sheriff’s office, introduced themselves to the board and spoke about the program, which celebrated its one-year anniversary in May. The program emphasizes leadership, community service and making a positive impact on the community. Also addressing the board was Natalia Harris, community outreach coordinator for the Washtenaw County sheriff’s office, who serves as facilitator for YWMWB. As part of the program’s advocacy focus, she said, members are going to different government groups and introducing themselves. The county board is the first group that YWMWB has attended, Harris said. “So I thank you for being our guinea pigs.”

Harris also invited commissioners to attend an ice cream social celebrating YWMWB’s one-year anniversary. The event is on Tuesday, May 21 at 4:30 p.m. at the sheriff’s office community engagement center, 4101 Washtenaw Ave. – in the community corrections building. She also noted that YWMWB can be a resource for the county, with volunteers working on a variety of community projects. Harris encouraged commissioners to contact her if they needed volunteers in their districts.

Several commissioners thanked the teens for attending the meeting. The county’s two female commissioners – Alicia Ping (R-District 3) and Felicia Brabec (D-District 4) – both offered to meet with the girls to talk about leadership issues.

Communications & Commentary: Thomas Partridge

Thomas Partridge spoke during both opportunities for public commentary. He objected to the fact that the budget retreat was not being held at the county boardroom, saying it was a retreat from the public. He urged commissioners to put forward an agenda that would address serious needs in the county. If they can’t do that, he added, they should step aside so that someone else can.

Attendance at the May 15, 2013 Washtenaw County board meeting was as follows:

Present: Alicia Ping, Felicia Brabec, Andy LaBarre, Kent Martinez-Kratz, Ronnie Peterson, Yousef Rabhi, Rolland Sizemore Jr., Dan Smith.

Absent: Conan Smith was at the meeting when attendance was taken, but did not take his seat for the rest of the meeting and did not participate in any votes.

Next regular board meeting: Wednesday, June 5, 2013 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to 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 commentary is held at the beginning of each meeting, and no advance sign-up is required.

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Several other county millages were authorized and are levied separately: emergency communications (0.2000 mills), the Huron Clinton Metroparks Authority (0.2146 mills), two for county parks and recreation (0.2353 mills and 0.2367 mills) and for the natural areas preservation program (0.2409 mills). That brings the total county millage rate to 5.6768 mills, a rate that’s also unchanged from 2012.

This is an annual procedural action, not a vote to levy new taxes. With a few minor exceptions, the county board does not have authority to levy taxes independently. Millage increases, new millages or an action to reset a millage at its original rate (known as a Headlee override) would require voter approval.

The board also voted to set a public hearing for the millage rate at its June 5 meeting. The rates would be included on the July tax bills for property owners in Washtenaw County.

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]

One of two video cameras used to record the May 6, 2013 AADL board meeting. (Photos by the writer.)

Nancy Kaplan, chair of the board’s budget & finance committee, said the committee met after the April 15, 2013 board meeting and discussed concerns that had been raised about the proposal to levy a slightly higher millage rate of 1.575 mills. She noted that administration had proposed cuts to allow the rate to remain unchanged.

The main reduction in expenses came from the materials line item, with nearly $100,000 saved by switching from RFID to bar code technology for handling circulation. AADL director Josie Parker stressed that the library is able to secure those savings without impacting the purchase of materials for its collection.

In addition to the budget, the board also approved a one-year extension on the space-use agreement with the nonprofit Friends of the Ann Arbor District Library, which operates a used bookstore in the lower level of AADL’s downtown branch at 343 S. Fifth Ave. Proceeds of the store are given to the library.

The board was briefed on a proposal that they’ll be voting on next month to upgrade the fiber-optic infrastructure for the Pittsfield branch. Eli Neiburger, AADL’s associate director of IT and production, described that location at 2359 Oak Valley Drive as a “bandwidth backwater,” with about 2% of the Internet connectivity speed compared to other AADL locations. The recommendation is to hire the nonprofit Merit Network to build and maintain a connection from the branch to Merit’s existing high-speed network. The contract includes a one-time cost of $112,150 and ongoing annual costs of $2,625.

The May 6 session also included two statements from board president Prue Rosenthal, which she read aloud during the meeting. One was a letter from the board to Parker, following her annual evaluation. The board praised Parker’s work over the past year, including the recognition and leadership of Parker and her staff at the state, national and international levels. At Parker’s request, her salary was unchanged for the fourth consecutive year.

Rosenthal’s second statement, read early in the meeting, was in response to issues raised at previous meetings during public commentary about the board’s compliance with Michigan’s Open Meetings Act. The board is scrupulous about adhering to the letter and spirit of the law, Rosenthal stated.

At the end of the meeting, resident David Diephuis responded to Rosenthal’s statement, urging the board to videotape its meetings and to allow the public to attend the board’s committee meetings. He noted that the board does meet the requirements of the OMA. “My question to you is what is allowed under the act,” he said. “I believe this community wants more than what’s required.”

The suggestion to videotape the monthly board meetings had been proposed two years ago by trustee Nancy Kaplan but had been supported by only one other board member, Barbara Murphy.

A videotaping of the meeting did occur for the first time on May 6, however. Skyline High junior David Kloiber set up two stationary cameras to record the proceedings. He had been hired by the Protect Our Libraries political action committee, which posted the video on YouTube.

FY 2013-14 Budget

The main items on the board’s agenda related to AADL’s fiscal 2013-14 budget. The board was asked to act on three resolutions: (1) set a millage rate of 1.55 mills – unchanged from the current rate; (2) approve the budget for the fiscal year starting July 1, 2013; and (3) designate the budget as a line-item budget with a policy for disbursements. [.pdf of budget summary from AADL board meeting packet]

The $12.328 million budget assumes a 2.1% increase in tax revenues, based on an increase in property values. The approved budget and millage rate are slightly lower than the draft proposal presented at the AADL board’s April 15, 2013 meeting. At that time, trustee Ed Surovell argued strongly against even the slightest increase in the millage rate, which had been proposed at 1.575 mills. The library is authorized to levy up to 1.92 mills, but in recent years the board has set the millage rate at lower levels.

The budget reflects a 3% increase in the merit raise pool for full-time employees and an increase in hourly base rates for part-time workers. The base rate for part-time workers – known as “casual” employees – hadn’t been raised since 2008, and the administration wanted to make sure that the library’s lower-paying jobs started at more than $9 per hour.

Expenses related to employee salaries, benefits and taxes are by far the biggest part of the budget, totaling $7.995 million – up 3.5% compared to the current fiscal year. Of the non-personnel expenses, the largest line item is for materials, at $1.75 million – down 5.4% ($98,931) compared to the current year’s expenditure of $1.848 million.

FY 2013-14 Budget: Public Hearing

Two people spoke during the public hearing on the budget. Lyn Davidge told the board that it was a little daunting to comment on any budget proposal, because she’s fully aware that there’s a lot she doesn’t know about the budget, and that there’s a lot that the board does know about it. Her concern was the proposed cut to the materials budget – about $99,000 less for the purchase of books, DVDs, and other materials. She hoped the board would address the rationale for this cut, and to let her know if she has misunderstood what this line item actually means.

Don Salberg asked about the proposed 3% increase in the merit pool. No doubt employees deserved it, he said, but he wanted to know if the criteria could be provided to the general public.

FY 2013-14 Budget: Board Discussion

Nancy Kaplan, chair of the board’s budget & finance committee, reported that the committee had met on April 26. At the board’s April 15, 2013 meeting, she noted, some concerns had been raised about increasing the millage. [The committee had originally recommended increasing the millage by 0.025 mills. Ed Surovell had argued strongly against any increase, saying that many taxpayers continue to struggle because of the economic downturn.]

The committee had followed up on those concerns with Ken Nieman – AADL’s associate director of finance, HR and operations – as well as AADL director Josie Parker. They discussed ways to find additional efficiencies while still providing the community with the services it expects, Kaplan said. So now the committee was able to recommend leaving the millage at the current rate.

Margaret Leary said she was glad about the committee’s recommendation, because it’s consistent with how the library has operated in the past, and consistent with what the staff can do – providing a good collection and great services, despite limited resources.

Leary noted that there had been interest expressed during public commentary about the changes that had been made. In reviewing the April draft budget with the current proposed budget, Leary identified three line items that had changed: (1) purchased services had been decreased by $10,000 to $133,000; (2) materials had been cut by about $99,000 to $1.75 million; and (3) library programming had diminished by $37,000 to $235,000.

Seated from left: AADL board members Nancy Kaplan, Jan Barney Newman and  Prue Rosenthal.

AADL director Josie Parker elaborated on those items. The $1.75 million line item for materials that’s proposed in the FY 2013-14 budget reflects about $99,000 in savings from the original draft budget. That line item includes not only the items in the collection, but also includes the materials needed to package and circulate the collection, such as labels and bar codes. The savings is being taken from the latter category.

Specifically, the library is dropping the RFID technology it has used to help manage circulation. That technology is expensive and is no longer being supported by the company that developed it for libraries, Parker said, so the library will be using bar code labeling instead. By changing back to bar code circulation only, the library is able to secure those savings without impacting the purchase of materials for the collection.

Leary paraphrased, noting that the cut has come not from the content, but from the physical processing of the collection. Another example in the past was the elimination of “theft strips,” Leary said, which had been extremely expensive. Leary applauded the administration’s ability to make cuts without impacting the funds available for the collection itself.

Barbara Murphy, who also serves on the board’s budget & finance committee, pointed out that the changes Leary had highlighted were a comparison between the draft budget and the final proposed budget. Some of the changes are smaller if you compare the current fiscal 2012-13 budget with the proposed fiscal 2013-14 budget, she said.

For example, the April draft FY 2013-14 budget had called for an increase of the library programming line item to $272,000, compared to the current fiscal year’s $250,601 for that item. The revised draft budget cuts programming to $235,000.

Jan Barney Newman, another member of the budget & finance committee, said the budget doesn’t show a significant increase in the line item for repairs and maintenance, with the hope that it won’t be needed. In fact, she said, some expenses in that category are unforeseen. [The FY 2013-14 line item for repairs and maintenance is $302,000, a 5.5% increase from $286,338 in FY 2012-13.]

Parker added that any unanticipated costs for repairs and maintenance would be paid for out of the library’s fund balance. As of March 31, the AADL’s fund balance was $8.214 million.

Leary described the budget as conservative. Prue Rosenthal added that the library has a very conservative CFO. Kaplan pointed out that copies of the budget are available at all the branches and online as part of the board’s meeting packet.

Outcome: The budget, millage rate and designation of the budget as a line-item budget – with a policy for disbursements – were approved in three separate unanimous votes. Ed Surovell left after the vote on the millage rate, and did not vote on the budget or line-item resolutions. Rebecca Head was absent.

FY 2013-14 Budget: Additional Public Commentary

During the public commentary at the end of the meeting, Lyn Davidge thanked the board for their discussion and explanation of the line item for materials. She said it would have been nice to have similar explanations for all of the line items that had been changed since the draft budget was proposed. “It was a useful discussion, and I hope to hear more of those in the future,” she said.

Friends of the AADL Space-Use Agreement

A resolution to extend the Ann Arbor District Library’s space-use agreement with the nonprofit Friends of the Ann Arbor District Library for one year was on the  board’s May 6 agenda. Friends of AADL operates a used bookstore in the lower level of AADL’s downtown branch at 343 S. Fifth Ave. Proceeds of the store – about $90,000 annually – are given to the library. [.pdf of current FAADL space-use agreement]

Prue Rosenthal noted that she’d had a brief conversation with FAADL board president Pat McDonald, who had told Rosenthal that she didn’t have any concerns about the agreement. There was no other comment on this item.

Outcome: The board unanimously approved the one-year extension for FAADL’s space-use agreement.

After the vote, Nancy Kaplan reported that she had attended a recent Friends luncheon. She described them as a “wonderful, dedicated group,” and encouraged others to join the organization.

Director’s Evaluation

During the meeting, board president Prue Rosenthal read a letter that had been given to AADL director Josie Parker, following Parker’s annual evaluation by the board. [.pdf of board's letter to Parker] The evaluation had been conducted by a board committee, and discussed with Parker and the full board in closed session, at Parker’s request.

The letter praised Parker’s work over the past year, including the recognition and leadership of Parker and her staff at the state, national and international levels. However, “Since your salary is equitable with those in comparable positions, and at your request, we have agreed that, for the fourth year in a row, your salary will remain the same.” [Parker's salary is $143,114.]

The letter only indirectly alluded to a major effort that took place over the past year – a proposal to rebuild the downtown library, which ended when voters rejected a $65 million bond ballot proposal in November of 2012:

The Board is pleased that the Library continues to operate with a balanced budget year after year while developing and providing new services and seeing increased use of the Library’s services. It is particularly proud of the fact that this can be accomplished while meeting the need of additional maintenance to the aging Downtown facility.
…
Each year presents new choices and new demands. Ann Arbor is a special community, founded and built on learning and information. The Ann Arbor District Library has increasingly been central to our community and its growth and prosperity. It is therefore incumbent upon us to pay special attention to the strategic goal of maximizing the efficiency and utilization of the meeting rooms in all facilities to provide what the community deserves.

When Rosenthal finished reading the letter, the board gave Parker a round of applause. Parker thanked the board, but did not make any additional remarks.

Outcome: This was not a voting item.

Director’s Report

Josie Parker highlighted three achievements of AADL staff members during her monthly director’s report.

From left: AADL director Josie Parker and Prue Rosenthal, president of the AADL board.

The library won “best of show” from the American Library Association for AADL’s online annual report. Parker credited Tim Grimes, AADL’s community relations and marketing manager, as well as other staff for this effort. It’s the first time that the library has won for its online annual report. [The video annual report for the library’s 2011-12 fiscal year runs six minutes and features clips from programs and speakers hosted by AADL, as well as describing new online services and content that’s available for circulation.]

Other ALA awards included “best of show” for the 2012 summer game print material for children, and honorable mention for Jump!, a calendar of events for kids. Parker noted that AADL competes with hundreds of other submissions in these categories, and she congratulated everyone who was involved in working on these projects.

Parker also reported that in the fall of 2012, AADL was asked to do a webinar on its “21st century take on reference services.” Reference resources have changed, but instead of forsaking reference, Parker said, AADL decided to recharge it and change it. Celeste Choate – AADL associate director of services, collections and access – was asked along with others from across the country to participate in a webinar. Choate was subsequently asked to do a similar presentation at a Public Library Association conference, and more recently gave it at a meeting of the Massachusetts Library Association.

Finally, Parker noted that Eli Neiburger, AADL’s associate director of IT and production, would be featured on the May 7 edition of On Point, a news analysis show distributed by National Public Radio. Neiburger was on a panel with Tony Marx, the CEO of the New York Public Library, and others talking about the role of libraries in the digital age. Parker said she was very proud that Neiburger is part of that discussion.

Ed Surovell remarked that “any time we share a library podium with NYPL, we have something here to be proud of.”

The board gave the staff a round of applause.

Pittsfield Fiber-Optic Project

The board is considering a proposal to upgrade the fiber-optic infrastructure for the AADL’s Pittsfield branch. A staff recommendation calls for Merit Network to build and maintain a connection from the branch to Merit’s existing high-speed network. [.pdf of fiber-optic proposal]

Merit, a nonprofit based in Ann Arbor, currently provides AADL’s main connection to the Internet. The Pittsfield branch – located at 2359 Oak Valley Drive – is outside of the city of Ann Arbor’s I-Net (Institutional Fiber Network) and currently uses much slower T1 and cable TV connections.

This robot will not be installing fiber-optic cable at the AADL’s Pittsfield branch. It’s a collage by Ava Lowen, a third-grader at Ann Arbor Open. The piece is part of an exhibit of student work that’s on display on the third floor of the Ann Arbor District Library’s downtown building.

Eli Neiburger, AADL’s associate director of IT and production, gave a brief presentation about the project, describing it as an issue of the library’s ability to meet the public’s demand for bandwidth and connections to the Internet. Pittsfield is the only branch that doesn’t have a high-speed connection, he said. A high-speed connection would provide over 100 megabits of bandwidth. As a comparison, a home cable-modem might be about 4 or 6 megabits.

When Comcast and the city of Ann Arbor were building out a fiber network about a decade ago, the Pittsfield branch wasn’t eligible for a fiber run because of its location outside of the city. Fiber runs allow for nearly unlimited bandwidth, Neiburger explained, because you can always upgrade equipment at either end of the fiber.

The speed of the Pittsfield branch’s connectivity to the downtown library and to the rest of the Internet is about 2% of the speed at the other library locations, he said. “In some ways, it’s a bandwidth backwater, because we’re unable to deliver the data as requested out there.” It reaches “up to capacity and beyond” every day, he added.

After exploring different options, the staff arrived at three alternatives, including the option of keeping the current system. The recommended option is to contract with Merit, an organization that since the 1960s has focused on serving the state’s educational market. Neiburger said that Merit proposed building a new fiber run from the Washtenaw Intermediate School District (WISD) on Wagner Road over to Pittsfield. It would be much more expensive to build a fiber run – “literally cables hanging from poles,” he said – from the downtown library to the Pittsfield branch.

Merit has a robust fiber network, he said. It includes providing the downtown library’s Internet connection – originating from city hall at Fifth and Huron, then linking to the nearby Ann Arbor Hands On Museum, where Merit has equipment, then connecting to the AADL building at 343 S. Fifth. Merit also has equipment at the WISD, and is able to offer the library a gigabit of bandwidth – 1,000 megabits. The connection would run from downtown to Pittsfield, via the “wire closet” at the WISD and new fiber between the WISD and Pittsfield, which the library would pay for. In this option, the library would pay $112,150 plus an ongoing yearly cost of $2,625. It gives the library a 1,000 megabit connection, compared to the current 1.5 megabit connection – a 600- to 800-fold increase in performance, he said.

Another option would be to contract with TDS, the library’s current phone vendor, to build a new T-3 connection of up to 45 megabits. It would be faster than the current connection, but still only about 5% of the connectivity at other locations. This option has a very low one-time cost, Neiburger noted, but the annual cost for the service would be $27,000.

Given the cost structure and the established location of the WISD infrastructure, Neiburger recommended proceeding with Merit to build a fiber connection from the WISD to the Pittsfield branch. The initial cost of the build would be paid from the library’s fund balance in the next fiscal year, with ongoing annual costs paid out of the communications line item in the budget.

Pittsfield Fiber-Optic Project: Board Discussion

Margaret Leary addressed the process, saying it’s the perfect example of how the board handles these kinds of recommendations. The matter had been initially reviewed by the facilities committee. Leary, who chairs that committee, had reported on the proposal at the April 15, 2013 meeting. Next, the staff is making a presentation this month, and the board will vote on a formal resolution next month.

Jan Barney Newman told Neiburger that people have asked her why the library needs more bandwidth, “because everybody does everything on their cell phone these days.” But the library does need it, she added, so what’s the best way to respond to these questions?

Neiburger replied that the library is about the only institution in town that offers high-speed wireless connections to the public at no charge. People can bring their laptops to the library and get a connection that’s faster than a coffee shop or any other location, he said, and you don’t need any credentials to use it. A lot of people use it to download large files that would take a long time to download at their home. “In many cases we’re providing connectivity that’s faster than what’s available in their own homes,” he said.

From left: AADL trustees Ed Surovell, Barbara Murphy and Margaret Leary.

People work at libraries, he noted – that’s been true for centuries. Now, working involves “consuming bandwidth.” People also use it for Skype to make calls overseas. The library is providing a critical public service, he said, “and we take that responsibility very seriously.” Every year, the library experiences more and more demand for data service.

Referring to Newman’s comment about cell phones, Barbara Murphy clarified with Neiburger that to have any kind of wireless connection, you also need some kind of wired infrastructure. That’s right, Neiburger said – saying that everything that every device connects to is ultimately connected to a wire. Also, he said, a fast mobile connection on a phone might be 400k, or 4 megabits for a really fast connection. For the fiber network, “we’re talking 250 or 300 times that, so it’s on a different scale.”

Prue Rosenthal wondered whether it would have been cheaper to make the connection from the beginning, when the Pittsfield branch was built. Neiburger replied that it wasn’t an option at the time, although the building was constructed with conduit because staff was “hoping that this would happen someday.”

Nancy Kaplan wondered how technology has changed since the branch was built. Would it have been the same speed then as the current proposal? Neiburger explained that after a fiber run is built, “the technology can advance without building new infrastructure.” New equipment can be upgraded at either end of the fiber, he said, “to get more speed out of the same pipe.” Using a highway analogy, Neiburger said fiber provides an infinite number of lanes that you can add, by upgrading equipment at either end.

The fiber run will bring the Pittsfield branch up to the same standard as the other locations, he said, which is state-of-the-art for public libraries. There are organizations that have 10 gigabit connections, but that’s on a scale for institutions like the University of Michigan, he said. If the equipment to run a 10 gigabit connection comes down in price, it’s possible for the library’s fiber to support that.

Outcome: This was not a voting item. A resolution for the contract will likely be presented at the board’s June 17 meeting.

Response to Open Meetings Act Questions

During the May 6 meeting, board president Prue Rosenthal read a statement that responded to issues raised at previous meetings during public commentary about the board’s compliance with Michigan’s Open Meetings Act. Specifically, complaints have been made that the board’s committee meetings aren’t open to the public.

The board is scrupulous about adhering to the letter and spirit of the law, Rosenthal stated. The board’s bylaws state that all committees are advisory in nature, and don’t have the authority to take final action or set policy on behalf of the full board.

“We do not hold secret meetings,” Rosenthal said. “We do not discuss the library’s business if there are more than three of us in the same place.” All board decisions are made during public meetings, she said, and the committees simply make recommendations to the full board. [Because the committees consist of only three members – that is, less than a quorum of the board – they are not required to be open to the public. There is also no requirement for the meetings to be closed.]

Rosenthal highlighted excerpts from the OMA, which she said she took from the online Michigan Open Meetings Act Handbook. [.pdf of OMA handbook] The OMA requires a public body to give notice of when it meets. “We do this,” Rosenthal said. All decisions must be made at a public meeting that’s open to the public.

She read from the handbook:

All decisions must be made at a meeting open to the public – the OMA defines “decision” to mean “a determination, action, vote, or disposition upon a motion, proposal, recommendation, resolution, order, ordinance, bill, or measure on which a vote by members of a public body is required and by which a public body effectuates or formulates public policy.” The OMA provides that “[a]ll decisions of a public body shall be made at a meeting open to the public,” and that, with limited exceptions, “[a]ll deliberations of a public body constituting a quorum of its members shall take place at a meeting open to the public.”

“We do this,” Rosenthal stated. She then read a section related to advisory committees:

The OMA does not apply to committees and subcommittees composed of less than a quorum of the full public body if they “are merely advisory or only capable of making ‘recommendations concerning the exercise of governmental authority.’”40 Where, on the other hand, a committee or subcommittee is empowered to act on matters in such a fashion as to deprive the full public body of the opportunity to consider a matter, a decision of the committee or subcommittee “is an exercise of governmental authority which effectuates public policy” and the committee or subcommittee proceedings are, therefore, subject to the OMA.

“I believe we do this to the fullest extent of our ability and to comply completely with the law,” Rosenthal said. The board has consulted with lawyers in the past, she added, and will do that again if the need arises. “I hope that will put to rest people’s concern about the Open Meetings Act.”

Response to OMA Questions: Public Commentary

At the end of the meeting, David Diephuis addressed the board, saying he appreciated Rosenthal’s strong statement regarding the state’s Open Meetings Act. He agreed that sometimes people nitpick. But he noted that Rosenthal had addressed the requirements of the act, which the board certainly is following, he said. “My question to you is what is allowed under the act. I believe this community wants more than what’s required.” The OMA doesn’t limit the board, he said. It would allow the AADL board meetings to be filmed, for example, and it would allow the public to attend committee meetings. “That, I think, is the true spirit of the Open Meetings Act.” Allowing the public to attend committee meetings and posting videos of board meetings online would be great ways to increase communication with the community, Diephuis said.

Diephuis pointed out that the AADL’s own philosophy statement states that the library “accepts the responsibility of serving the entire district by providing free and open access to its facilities and services for all members of the community.” Free and open access is a wonderful, worthy value, he said. “I hope that you will embrace that value, and look to open up some of your committee meetings and provide video of this board meeting.”

Public Commentary

Three people spoke during public commentary at the start of the May 6 meeting.

Don Salberg said he wanted to revisit the library’s failed bond referendum. He said he had posed questions during public commentary at AADL’s March 18, 2013 meeting and subsequently received answers. Now he wanted to respond to those answers. He had examined the 2007 report by Providence Associates, which had highlighted needs of the library. One of the premises, he said, was an expectation that there would be a 16% growth in Ann Arbor’s population by 2020. Last year, the Southeast Michigan Council of Governments (SEMCOG) published a forecast of only 6.1% growth in Ann Arbor by 2040, he said. “There’s quite a difference here, and the incremental years have changed the prospects of population growth – this should be considered.” There’s a much less urgent need, he said.

David Kloiber, a junior at Skyline High, was hired by the Protect Our Libraries PAC to videotape the May 6 AADL board meeting.

At the time of the Providence report, there was also a question about how the Internet would impact library services, Salberg said. Since then, when Luckenbach|Ziegelman Architects was hired by the library to develop schematics for a new downtown building, Salberg said the architects stated that very few people were coming to the library to do research because they were using the Internet to do that work.

Salberg said he had attended informational meetings that the library had held last year about the need for a new downtown building, and at those meetings at least three major deficiencies in the existing building had been cited.

One deficiency was that it didn’t have a large enough meeting facility, and that the current basement multi-purpose room only holds about 100 people. When there are large events with overflow capacity, people are directed to another room to watch the event on closed video. But he said he was told there were only 13 instances of this happening last year. “That doesn’t seem like a great demand for additional space by itself,” he said. Although it would be nice to have an auditorium with comfortable seating, there doesn’t seem to be urgency for that. Other issues that were cited about the downtown building included the elevators and outdated electrical facilities, but Salberg felt those issues didn’t present major problems and could be addressed without a new building.

Salberg noted that 55% of the voters had rejected the bond proposal for a new downtown library in November of 2012. One way to look at that is to say that 55% of the voters like the library as it is, he said. There has been some suggestion that the referendum was defeated because voters weren’t property informed, he noted. “I disagree. I think we have an intelligent population and I think they understood what was going on.”

Bob Rorke addressed the board, saying he’d been hired in January by the Protect Our Libraries political action committee to review AADL’s operations and to suggest alternatives for the system’s future direction. From his review, he has concluded that the AADL is well-funded and well-managed. He praised the library staff and management, noting that services have been maintained despite a “substantial” loss in revenues because of the economy.

Rorke said he’s confident of these findings, but less clear about the future direction of AADL. The administration has been proactive in offering new direction and services as the basic functions of lending material and providing reference resources become outmoded, he said. Those new services include podcasts, gaming, ESL programs, and lending of specialized materials like musical instruments and telescopes.

“My question, though, is: Are these initiatives viable in the long term?” Rorke said there seems to be no tactical plan or document that describes why these particular services are being offered, and what their impact has been. Lots of questions remain unanswered, he said, including what the future potential demand for these services will be, what resources are needed to provide these services, and whether there is competition from either new technology or other community organizations.

In November of 2012, voters “resoundingly” defeated a bond issue for a new downtown library, Rorke noted. “Some have suggested that the voters didn’t appreciate the library, and some have questioned whether the communication to the public was adequate. I don’t believe either of these arguments are valid.” Rather, the initiative failed because “the public couldn’t understand how we got from today’s library to the library of the future,” he said. “And after four months of study, I don’t see it either.”

Onna Solomon, left, talks with AADL trustee Barbara Murphy following the library board’s May 6 meeting. Solomon had addressed the board during public commentary.

There is speculation that the library’s future role might be in local media production, local archiving or a public meeting space, but there’s no detailed plan or evidence to support that vision, he said. Rorke said he’s sure the board and administration will challenge this conclusion. Although a vision has been articulated, he concluded, “this is the challenge for the Ann Arbor District Library – to present a factual, realistic plan to support the vision.”

Onna Solomon introduced herself as a new mom with a five-month-old son. She had voted in favor of a new downtown library, and believes that parts of what it represents are very important to the future of Ann Arbor. One of the reasons she settled here is because of the library system. It’s an amazing resource for young families – she uses the library all the time. She also praised AADL’s storytime events, saying it was a wonderful way to meet people that you wouldn’t necessarily meet in your neighborhood. The point of having a larger meeting space is to have a community center that could promote new opportunities. As she raises the next generation of Ann Arborites, Solomon said, “I really see the value in expanding and in changing [the building] in order to meet new needs.”

Present: Nancy Kaplan, Margaret Leary, Barbara Murphy, Jan Barney Newman, Prue Rosenthal, Ed Surovell (left early). Also AADL director Josie Parker.

Absent: Rebecca Head.

Next meeting: Monday, June 17, 2013 at 7 p.m. in the fourth-floor conference room of the downtown library, 343 S. Fifth Ave. Traverwood branch, 3333 Traverwood Drive (at the intersection with Huron Parkway). [Check Chronicle event listing to confirm date]

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The $12.328 million budget assumes a 2.1% increase in tax revenues, based on an increase in property values. The approved budget and millage rate are slightly lower than the draft proposal presented at the AADL board’s April 15, 2013 meeting. At that time, trustee Ed Surovell argued strongly against even the slightest increase in the millage rate, which had been proposed at 1.575 mills. The library is authorized to levy up to 1.92 mills, but in recent years the board has set the millage rate at lower levels.

The budget reflects a 3% increase in the merit raise pool for full-time employees and an increase in hourly base rates for part-time workers. The base rate for part-time workers – known as “casual” employees – hadn’t been raised since 2008, and the administration wanted to make sure that the library’s lower-paying jobs started at more than $9 per hour.

The budget and millage rate were approved in separate votes. A third vote designated the budget as a line-item budget with a policy for disbursements. All votes were unanimous.

This brief was filed from the fourth-floor conference room of the downtown library at 343 S. Fifth. A more detailed report will follow: [link]

Several other county millages are levied separately: emergency communications (0.2000 mills), the Huron Clinton Metroparks Authority (0.2146 mills), two for county parks and recreation (0.2353 mills and 0.236 mills) and for the natural areas preservation program (0.2409 mills). That brings the total county millage rate to 5.6768 mills, a rate that’s also unchanged from 2011.

This is an annual procedural action, and not a vote to levy new taxes. With a few minor exceptions, the county board does not have authority to levy taxes independently. Millage increases, new millages or an action to reset a millage at its original rate (known as a Headlee override) would require voter approval.

Initial approval had been given at the county board’s May 16, 2012 meeting. At that meeting, commissioner Wes Prater expressed concern that the county parks & recreation department was building up a fund balance that is higher than necessary, and suggested that perhaps the entire millage for parks & rec did not need to be levied. Several commissioners defended the use of millage proceeds, noting that several large capital projects are on the horizon, including a possible recreation center in downtown Ypsilanti.

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]