Ann Arbor Employee Car Allowances

In our effort to help the city identify some areas where cost reduction could occur without cutting citizens services I asked my Council member if he could supply a list of the city employees that receive a monthly car allowance. The following table is the information that we received.

Detail Earnings by Employee
City of Ann Arbor Master Company
Select: Company is CAA - City of Ann Arbor and Earnings Code is CAR
Sort Order: Service Area(Asc), Service Unit(Asc)
Pay Period Range: 201104010 - 201104309

SERVICE AREA	SERVICE UNIT	EMPLOYEE	MONTHLY AMOUNT
City Attorney	City Attorney	Postema, Stephen K.	$330.00
City Administrator	City Administrator	Fraser, Roger W.	$400.00
Community Services&nbsp	Parks & Recreation	Straw, Jeffrey D.	$200.00
Community Services	Parks & Recreation	Smith, Colin	$200.00
Community Services	Planning & Develop	Bahl, Sumedh	$300.00
Community Services	Planning & Develop	Welton Jr., Ralph R.	$150.00
DD Agen	DDA	Pollay, Susan	$315.63
Finance & Admin	City Assessor	Courtney, Michael S.	$180.00
Finance & Admin	City Assessor	Weber, Annette M.	$180.00
Finance & Admin	City Assessor	Forner, Patricia R.	$180.00
Finance & Admin	City Assessor	Balogh, Amy	$180.00
Finance & Admin	City Assessor	Petrak, David R.	$180.00
Finance & Admin	City Assessor	Doletzky, Ryan E.	$180.00
Finance & Admin	Finance Administration	Crawford, Thomas E.	$350.00
Public Services	Field Operations	Konwinski, Julian M.	$ 50.00
Public Services	Fleet Services	Crum, Dennis L.	$300.00
Public Services	Public Services Admin	Kulhanek, Matthew J.	$300.00
Public Services	Public Services Admin	Cariano, Robert L.	$300.00
Public Services	Public Services Admin	McCormick, Susan F.	$300.00
Public Services	System Planning	Hupy, Craig	$300.00
Public Services	Wastewater Treatment	Kenzie, Earl J.	$300.00
Safety Services	Fire	Dziubinski, Edwin J.	$375.00
Safety Services	Fire	Hubbard, Ollice	$375.00
Safety Services	Police	Seto, John Y.	$375.00
Safety Services	Police	Bazick, Gregory D.	$375.00
Safety Services	Police	Jones, W B.	$400.00
TOTAL

$7,075.63



Why are we giving so many employees such large car allowances? Why are we encouraging city employees to live outside the city by subsidizing their commuting costs? It seems that the city's policy of encouraging alternate transportation does not apply to the employees. Is it only the taxpayers that should walk or take the bus so that there would be less congestion for the city administrators?

The parking for city employees is also provided. That is one of the reason the downtown parking rates are so high. If some spaces do not contribute to the cost of the parking structure the remaining spaces must make up the difference.

Eliminating these two perks would save about enough to avoid one of the proposed police or fire fighter layoffs.

Karen Sidney

KAREN'S* FY2012 BUDGET NEWSLETTER - Issue 1

THE FY 2012 BUDGET

The FY2012 budget is on the May 16, 2011 Council agenda. Under our city charter, the city administrator proposes a budget which goes into effect unless 7 council members vote to change it. The proposed budget continues the trend of cutting basic services, especially police and fire, which will see 10 layoffs plus elimination of vacant positions. Mayor Hieftje and his supporters on Council insist that Ann Arbor is better off than other cities and the cuts are unavoidable result of the recession.

The truth is that Ann Arbor is better off than other cities because we pay higher per capita taxes than other cities, even with all that U of M and city park land off the tax rolls. There are other solutions to the current fiscal mess the Mayor and his supporters have created besides continuing to slash basic services. Below are my suggested changes to the budget.


Eliminate pork projects

1. A $639,422 contingency is included in the general fund budget. This contingency is in the same line item that was used in the 2011 budget to cover the Justice Center overruns. If the city administrator can't explain what the money is for, it shouldn't be in the budget. The budget should be amended to eliminate this contingency and restore police and fire positions.

2. $2.2 million for more new garbage trucks is included in the fleet fund budget. The fleet fund is an internal service fund. According to the last audit the city has an all time high of 28 garbage trucks, up from 18 the year before. Most of the $2.2 million is for new residential collection trucks even though Sue McCormick says she plans to outsource residential collection. Apparently the garbage company that gets the residential collection monopoly also gets a big taxpayer subsidy in the form of new trucks. Residents get higher fees and fewer services. Cancel the new trucks and restore services to residents.

3. $1 million for new parks vehicles is also included in the fleet fund budget. Parks needs a lot of things but $1 million in new vehicles is not high on the list. Cancel the new vehicles and transfer the $1 million to the parks millage fund, overseen by the Parks Advisory Commission.


Eliminate overcharging for internal services

Internal service funds are supposed to be break even but the latest audit shows the city's internal service funds have built up a cash hoard of about $20 million. That means these funds have overcharged other city departments $20 million. Internal service funds are used to divert money that should be used for basic services to more ego projects. $3.3 million in overcharges by the insurance fund were used to help pay for the new Justice Center.

When the IT internal service fund was established in 2006, the charges for IT services doubled. In 2006, the charges for fleet services also doubled while City Hall touted efficiencies from the $35 million new maintenance facility. The Increased charges have allowed the city's top management to pursue more ego projects at the expense of basic services. Your street may not get plowed, but when the plow finally comes, it's state of the art.

Establish a new city policy to refund the overcharges.


More doers and fewer managers

In 2002, the city had 958 employees. The city administrator's 2013 budget proposes 688 employees, a 28% drop. But the pain from staff cuts has not been shared equally. By 2013 police and fire will have lost 35% of their staff compared to 2002 levels while the city attorney and district court have lost about 12% of their staff and the city administrator service area has lost 16%.

Winners include the DDA, whose staff has doubled, and public services area management. Sue McCormick oversees the Public Services area. Compared to 2002, the proposed 2013 budget has about 25% more people planning and overseeing capital projects, 33% more people in public services administration but 33% fewer people assigned to field operations, which is responsible for performing services like plowing, tree maintenance and road repair.

One example of the shift from doers to managers is forestry. Before the Roger Fraser reorganization, the city had a city forester who was responsible for taking care of our trees. When our last city forester, Paul Bairley, left, the city forester position was eliminated and replaced by an Urban Forester & Natural Resources manager (Kerry Gray) and a Field operations Supervisor III (Kay Sicheneder). The result has been big spending on a tree inventory and an urban forestry management plan while our trees continue to deteriorate.

Restore safety services positions and eliminate management positions.


Fewer Consultants

The city has become addicted to consultants. The city has even posted a RFP for a consultant to help the police chief decide who to promote. Recently, Sue McCormick told Council that there was no one on city staff capable of conducting a public meeting.

City staff needs to stop hiding behind consultants. We don't need to pay consultants to justify decisions that have already been made. We also don't need to pay consultants to conduct public meetings in order to manipulate us to make the “right” decision. City employees should be the ones talking to the public. The city staff member conducting the meeting should be the individual with decision making authority, not some junior staff member sent to absorb public anger about an unpopular decision.

Maybe if Roger Fraser, Mayor Hieftje and the council members who pushed the new justice center had had to face the public in a give and take public meeting, we might not have a new $50 million building next to city hall, which has been nominated for the dubious distinction of being the ugliest building in America.

Just say no to consultant contracts.

*Karen Sidney is an attorney and CPA. She has an expertise in forensic accounting, which is the art of finding out where the money is going when people can't or won't tell you.

Ann Arbor Park Funding

Background

The Ann Arbor Parks are funded from two sources. One is the city general fund which obtains money from the general city property taxes. The other is from special additional taxes that the citizens have agreed to pay, the Parks Millage.

In 2006 the Ann Arbor City Council proposed a new Parks Millage of 1.1 mills. This millage replaced two smaller millages that expired that year. The new tax was expected to generate slightly less than $5 million annually. This was approximately $1 million more than the millages it replaced. The increased tax was approved by the voters in November of 2006.

There was substantial popular concern that approving the additional millage would result in a shift in the Parks funding from the general fund to the millage rather than increasing the actual amount available for maintenance and improvement of the parks. To reduce this concern and encourage the voters to pass the increased tax, Council passed two resolutions, promising that if the 2006 park millage was approved the funding for parks from the general fund would increase or decrease by the same proportion as the general fund increased or decreased.

The first resolution passed in August 2006 stated that the funds for Police and Fire (Safety Services) were to be excluded from the calculation of the increase or decrease of the general fund.  This was amended in October to remove the exclusion of Safety Services from the calculation.

Both resolutions included a statement that the parks millage money would not pay municipal service fees. This was to avoid the transfer of fees from the millage to the general fund by  a "back door" service charge.

The purpose of this report is to test if the city is following Council's 2006 promise to the citizens.


Data

The data used in this analysis are from the cities and the city's proposed budgets. The data for the years 2007 through 2010 are from the audited financial reports . The data for the years 2011 and 2012 are from the proposed budgets.

GENERAL FUND

First let's look at the general fund

The red line is a linear regression line fitted to the data. This is a common method to predict trends and is often called a trend line. The trend is clearly flat.

The large increase in 2009 was the cost of the police early retirement. If the data from 2009 did not include the early retirement, the result would still be the same, or at most any trend would be very minor.

It should be noted that when Council member Taylor and others refer to the multimillion dollar “short fall” of the current budget this is not so much a short fall from past budgets as it is a short fall from the additional amount they wish to spend or have already spent.

PARKS

Now consider the contribution from the General Fund to the Parks.

Here is that chart

The additional taxes were first collected in FY 2008. The council resolution promised that Parks funding from the general found would not decrease if the voters approved the additional millage. Yet in every year since 2007 the funding has been reduced. The average decrease has been 14%. The trend is that decrease is increasing each subsequent year. The rate of decline is $290,000/year.

The parks appropriation have not followed the council resolution, as ammended in October 2008.

At the April meeting of the Parks Advisory Commission meeting Colin Smith stated that Parks staff relied on a document, “The Policies for Administration of the November 7, 2006 Charter Amendment” as their guide for following the Council resolution.

Council member Mike Anglin requested a copy of this document. The pdf file he received is here.

It is note worthy that the policy park staff believe they should follow is not the final amended resolution passes by Council. Their policy is based on the August resolution. Even so it is interesting to test if the park allocations agree with their policy statement.



SAFETY SERVICES

Lets look at the safety Service Funds next. Here is the chart of just the police and fire budget; that is the safety services.


The trend in the Safety Service fund dollars, including the budgeted 2011 and 2012 is flat. That is, there isn't any apparent increase or decrease. Again the bulge in 2009 is cause by the additional cost for the early retirement. Without this transfer the trend line would probably have a very slight positive slope.


GENERAL FUND minus SAFETY SERVICES

Since the trend of the general fund is flat, and the trend of the Safety Services is also flat we would expect the trend of the difference to also be flat. Here is a chart of those calculated data.

As expected, the trend line is flat. It is interesting to note that if the budgeted dollars for 2011 and 2012 are excluded, the slope of trend line for the years 2007 through 2010 is positive. The slope is nearly $1 million/year. The confidence in this value would be low because it is based on a small number of data points. Still it is strong indicator that Safety Services funding was cut more in that period than the remaining General Fund.

Again, here is the chart of the allocation of park funds from the general fund.

It is quite clear that the trend in the park allocation from the general fund does not follow either the Council resolution or the inaccurate Park Policy Statement.

MUNICIPAL SERVICE CHARGE

There is also another part of the story. As stated in the second paragraph, the Council resolution at the time the millage was proposed included a statement that the parks millage money would not be used to pay municipal service fees but could include IT and fleet service charges.

The city has not imposed a “municipal service charge” but it has greatly increased the allowable internal charges paid by the millage.  It is reasonable that the millage should pay some of these charges.  But is unreasonable that they should be increasing at such a rapid rate when services and personnel are decreasing. 

Initially in 2006 the charges were about $300,000; they are now budgeted to be over $1.3 million in FY 2012. The administration is doing exactly what Council attempted to prevent in the 2006 resolution. Internal service charges are being used to transfer money from the parks millage to the general fund. Obviously this reduces the millage resources that the citizens agreed to pay for parks improvement and maintenance.


Assertions by Others

The assertion that the city has not kept its promise made to the citizens  when the millage was proposed is not new. This allegation was made in 2007 by Council member Robert Johnson, Sierra Club Chairman; Doug Cowherd, and former Parks Advisory Commission chairperson Linda Berauer. Here is a link to the a video of the Council discussion.



Conclusions

The city has not kept it promise to the citizens that “if the 2006 park millage is approved by the voters the future funding for parks from the general fund would increase or decrease by the same proportion as the General Fund. It does not matter whether the total general fund is used in the calculation or the General fund excluding Safety Services.

The city has followed the words of the Council resolution prohibiting applying a muncipal service charge to the parks millage funds. It has not kept the spirit of that promise since the allowable charges have been greatly increased. This further reduces the amount of funds available for park operation and maintenance.

The transfer of funds opposed by  Robert Johnson, Doug Cowherd, and Linda Berauer; expressed in the videos from May 2007 have consistently and systematically occurred after the voters approved the millage increase.

Karen Sidney
Glenn Thompson

Karen Sidney is a CPA and attorney and a shareholder in the local CPA firm, Conlan & Sidney PC. Her practice focuses on providing tax advice to small businesses and individuals and litigation support services. For the past several years she has used her investigative accounting skills to dig into city finances.

Glenn Thompson is a licensed professional engineer with a background in matematical statistics and data analysis.