Rod Meloni: Wayne County and emergency management

Wayne County's money problems make stake takeover almost inevitable

DETROIT - Wading into the inner workings of Wayne County is like Chinese water torture. It's a slow steady drip, drip, drip of financial trouble.

With every drop of water the point is also driven painfully home that unless something major changes soon an emergency manager will be in the Guardian Building.

Wayne County, much like its next door neighbor the City of Detroit, is incapable of staying within its budget, and is uninterested in doing the requisite cutting that would stave off emergency management.

That was the conclusion that came out of today's audit committee meeting inside the Guardian towers. The committee spent quite a bit of time lamenting the fact County Executive Bob Ficano and Sheriff Benny Napoleon essentially ignore the newly rebuilt and approved County Benefit Enrolled Ordinance. That requires "the County of Wayne shall not provide a benefit to an elected official, employee or contractor without prior approval, by a majority vote, of the Wayne County Commission."

Auditor General Willie Mayo wrote in his audit report discussed at the meeting today: "Our office finds it difficult to understand how the County Benefit Enrolled Ordinance can be passed by a majority of the commissioners and the administration can elect not to follow Ordinance 2012-096."

The commissioners and Mayo made it abundantly clear in their discussions today the County Executive and the Sheriff have decided they can hire and fire at will and don't need anyone's approval. They apparently also do not feel it necessary to work especially hard on cutting budgets, costs or employees. Mayo started a discussion on something in municipal finance called a "fringe factor."

That is what is paid to an employee beyond regular pay.

Mayo reported in his audit: "We determined from budgeted information for Fiscal Year 2014, the percentage of benefits provided to county employees were as follows: hospitalization (44%); retirement (40%); (9%) payroll taxes and others. These calculations represent the 93% fringe factors being paid for each dollar in wages paid by Wayne County."

Translation: for every dollar paid a Wayne County employee, the county also pays 93 cents more in legacy costs. To put that into a proper perspective, municipal finance experts I have spoken with say a good number would be 30 cents. Bankrupt Detroit is somewhere between 60 and 70 cents. Mayo pleaded with the audit committee to consider pressing the Sheriff and the Executive for cost cutting alternatives like changing the pension to a defined contribution plan [like a 401k], privatizing the jail and others. He calls this kind of benefits load unsustainable and will surely bring in an emergency manager without dramatic and swift change.

Now one might say, and the County Executive usually does when you ask him about such things, that this is only one audit report that is overstating the problem. Well let's do some math here. In just the past few months we have chronicled here on this blog the following: Sheriff's Department car and transport vehicles have had their BP gasoline credit cards turned off twice this year for lack of payment. They remain that way tonight. The vehicles have to drive a half hour from downtown out near the airport to a Wayne County maintenance yard to gas up and drive back. It's coming from the maintenance budget. It's not bad enough the sheriff's office can't pay its bills; the fix is more expensive than the original problem.

We showed you how the auditor general wants the Sheriff to do everything he can to reduce the million and a half dollar a month overtime budget at the jail including cancelling a contract with the Wayne County Community College larded down with appointees doing "community outreach" for the Sheriff's Office along with several deputies who do campus patrols. Mayo said they are better used in the jail. Napoleon convinced the Wayne County Commission to approve that contract instead.

The auditor general is looking into the Sheriff Department's tether program. Tethers are what inmates released inmates from the overcrowded jail wear so the county can keep track of them by GPS technology. We showed you the Lieutenant in charge of deciding which vendor to use for that program getting flown to Denver for a golf outing on county time by the very vendor he had already chosen on a million dollar contract. [That vendor wanted in on another contract]. The tether program has four vendors on the contract, and each has a capped limit of how much it can be paid. The Sheriff is openly continuing to use Michigan Tether equipment, to the exclusion of the others in open violation of the contract. Willie Mayo is looking into all of this.

We showed you the Wayne County Jail Commissary program. It's a small store inside all three of Wayne's Jails that sell sundries and snacks to inmates. The store and its pay phones bring in two million dollars a year. That money is supposed to be funneled to inmates to help them get GED's and fund other programs. A Mayo audit there showed there are no financial or inventory controls of any kind, Sheriff's deputies are buying things with cash when it uses only an electronic payment system, there is no accounting of that cash, and no one knows how much money is coming in, going out or whether anything is being stolen.

Mayo also noted the Sheriff and Bob Ficano put appointees on the oversight committee watching the commissary; the jail director and his chief financial officer. Mayo declared it was a conflict of interest considering they were the ones who set up a store that could easily be pilfered from and were the ones voting on whether to keep the operation going that way. Mayo also pointed out the Sheriff was buying non inmate related items like computers for the tether program, floor washing machinery and paying employees out of that commissary money when the law states it could not be.

Of course Bob Ficano is no shrinking violet. The albatross around his neck this week is the failed new Wayne County jail project that went roughly $100 million over its budget. That was discovered after $120 million went into the ground and the half built jail project will have to be torn down and moved out to a vacant state prison on Detroit's east side. We still do not know who is criminally liable for that disaster and prosecutor Kym Worthy is withholding an audit report that would tell us who to blame for that boondoggle. And by the way Wayne County's pension fund is 50% underfunded. You get the idea.

Now we in Metro Detroit are well aware of the emergency management process. It's driven by the Treasurer and the Governor in Lansing so politics play an important part. There are trip wires that have to be tripped before a financial emergency is declared. Included on that list is missed pay days or bond payments. Must I mention that Detroit did neither of those and wound up in bankruptcy? Wayne County has been working with the Treasurer's office on a deficit reduction plan that would buy some time and keep an emergency manager away for at least a little while. The county continues to struggle with finding a plan the Treasurer can live with. Do not think for a minute they are not aware of these numbers in Lansing.

They are watching closely and are probably not at all anxious to pull the EM trigger anytime soon. But it is clear with each passing day the possibility grows larger.

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