Wayne County faces serious cash flow problem; is emergency manager next?

Conversion of health agency into authority means less state money for already cash-strapped Wayne County

Author: Rod Meloni, Local 4 Business Editor, @RodMeloni
Published On: Apr 25 2013 03:02:41 PM EDT   Updated On: Apr 23 2013 07:03:23 PM EDT
Wayne County seal
DETROIT -

Then Wayne County Mental Health Agency will soon become an independent authority, meaning the county will miss out on its cash inflow.

The pending conversion has Wayne County leaders very concerned. Here's why:

The state of Michigan sends $650 million in Medicaid each year to the Mental Health Agency. The county uses about $80 million of that money each year to deal with its cash flow issues before sending the rest along to the agencies that do its work.

The agencies don't get shorted but the county benefits. However, as of Oct. 1 the state of Michigan says the money will go straight to the new Mental Health Authority, skipping the county.

The county's fragile financial status is putting everyone on alert.

See more: Headlines from Wayne County, Mich.

"It's going to give us more struggles in order to balance our books," said County Commissioner Tim Killeen.

Killeen is tasked with coming up with the plan that would deal with the authority conversion.

"Our budget discussions this summer have just gotten an awful lot more difficult as a result of this amount of money moving out of the county," Killeen said.

Is Wayne County on track to emergency manager appointment?

The Auditor General's report in January warned "the loss of the agency's cash inflow for the county's cash pool system could cause the county to have serious cash flow challenges when it is formally separated and becomes an authority."

Wayne County already has triggered four of the tripwires that could lead to a state-appointed emergency manager. Its three stabs at a deficit reduction plan have not been approved by the state.

Killeen doesn't even want to use the words emergency manager.

"Not only do I want the authority up and running to protect the people that we're serving, but I also have to look at the damage to the county," he said.

The county's chief financial officer, Carla Sledge, doesn't want to hear about an emergency manager, either. She hopes the county leaders can pull together to fix this.

"If it's the will of all involved, meaning all elected officials, the Commission, the county executive, I think that it can be turned around. But it's going to take us all," she said.

Any strained cash flow could put Wayne County closer to an emergency manager appointment. There is no doubt more cuts in county employment are on the way for both blue and white collar workers.

Related: Wayne County Commissioner calls for hiring fairness