Police, Fire, Parks, Millage Funds & Pools Dinged By City’s IT Fund For Millions In Assessments While IT Projects Remained Uncompleted

MAYOR HIEFTJE HAS repeatedly told the public that the cost of police and fire service is a strain on the city’s budget. In a 2012 interview he said this about the city’s safety services budget, “…All the water has been wrung out of the towels. There just aren’t any more rabbits to pull out of the hat.”

However, the police and fire departments face what officials within those departments point out are inflated assessments by the city’s IT Fund.

In the case of the AAPD, in 2012 the department was assessed more by the IT Fund than was budgeted for retiree pensions. Meanwhile, the AAFD was assessed more by the IT Fund than was budgeted to maintain the city’s fire trucks.

Former IT Director Dan Rainey (left) isn’t talking. He did not respond to repeated requests to comment on why contingency funds allocated year-after-year went unspent and projects went uncompleted.

Ward 2 Council member Sally Hart Petersen earned her MBA from Harvard. When asked about the IT Fund charges, she forwarded the question to the city’s CFO, Tom Crawford.

“I’ve asked Tom Crawford about the formula for assessments,” said Hart Petersen. “I can provide a comment once I receive more information from him.”

The city’s CFO did not respond to Hart Petersen’s request.

Ward 4 Council member elect, Jack Eaton, has been concerned about such internal administrative fees for some time.

“A few years ago, I became concerned about the method the City uses for calculating its administrative service charges to departments.

I am particularly concerned about the high administrative fees charged to functions that are funded through restricted funds, such as the parks millage. I hope to work with others on Council to review the method used to calculate administrative costs.

I believe that administrative service charges should reflect the amount of services provided, not the size of the department’s budget,” he said.

Stephen Lange Ranzini, is the President & Chairman of University Bank. After studying the city’s financial documents, including audits, Ranzini said he believes the “amounts being charged to specific city fund accounts appear excessive.”

Ranzini also points out that  Ann Arbor “appears to have an excessively expensive IT department, which should be of no surprise to anyone when considering the fact that the city just built an approximately 7,000 square foot city/county IT center at a cost of $458.25 per square foot, or $3.2 million dollars.

Ranzini argues no private sector firm would build a data center “in a metropolitan downtown core at a cost of $458.25 per square foot.”

The 330,000 square foot building that housed the Borders headquarters was reportedly sold for $6.8 million dollars.

Money Amassed, Projects Uncompleted 

Dan Rainey, the City of Ann Arbor’s IT Director for 8 years, earned a six-figure salary as one of the highest paid employees. In May 2013, he resigned his position to work  at the Detroit Water and Sewerage Department for Sue McCormick, former Ann Arbor Director of Public Services,

Shortly after April 2011, when long-time City Administrator Roger Fraser took his Ann Arbor pension and decamped for a six-figure job with the State of Michigan, McCormick decamped with her Ann Arbor pension for a six-figure job with the City of Detroit.

In February 2012, Ann Arbor Police Chief Barnett Jones retired with his estimated $20,000 Ann Arbor pension to a six-figure job as the Police Chief of Flint as well as a six-figure job with Sue McCormick at the Detroit Water and Sewerage Department leading the office of Integrity and Security.

That bit of double-dipping resulted in front page headlines in the Detroit newspapers. Under that group of four former city managers, the IT Fund assessments rose virtually unchecked, critical IT projects remained uncompleted and police and fire staffing was slashed.

Ann Arbor’s most recent audit  revealed that while the IT Department had $150,000 dollars allocated to projects such creating and implementing a disaster recovery plan in the event that the city’s computer data were lost, no such plan had ever been created or implemented.

Rainey, the city’s former  IT Director, sat on the allocated $150,000 for over two years, according to the city’s March 2013 Revenue Budget Performance report. In fact, several special projects were funded, including money for contracted services, but never completed under Rainey’s tenure:

Jury Management System ($5,000 allocated)

Disk Array/Disaster Recovery ($150,000 allocated)

Project Management Business Improvements ($17,000 allocated)

Barton Canoe Livery Asset Management System ($25,000 allocated)

Kiosks ($55,000 allocated)

Tax Assessing Software Upgrade ($20,000 allocated)

Contingency Funds

Under Rainey, the IT Department sat on hundreds of thousands of dollars in unused contingency funds. This money includes a $65,000 contingency fund for software purchases, a $60,000 contingency fund for “business intelligence,” $75,000 in contingency funds for a Water Data Mart project and a $50,000 contingency fund for “intrusion prevention.”

However, the city’s 2012 audit dinged Dan Rainey and his department for not requiring city computer passwords to be changed regularly, and for neglecting to set up computers so that screens locked when employees left their work stations.

IT Fund Assessments

Certain city departments and even millage funds are being assessed proportionally higher IT Fund charges, specifically the city’s Park Maintenance & Capital Improvement Millage Fund, the Parks & Rec Department, the AAPD and the AAFD.

In 2012 Argo Canoe Livery paid $10,320 to temporary workers—employees who rent canoes, sell concessions, teach summer camp classes, and tend to the equipment. That same year, Argo livery was charged $12,041 by the IT Fund.

Gallup Canoe Livery was charged the same amount by the IT Fund.

The Ann Arbor Senior Center, threatened with closure for the want of operating funds, was assessed $18,825 for the IT Fund, or 10 percent of the Senior Center’s $188,000 annual expenses.

According to comprehensive  budget documents posted to the city’s website, in 2012 taxpayers spent $12,129 for chemicals and $14,716 for water for Fuller Pool. Fuller Pool pool was also assessed $11,700 by the IT Fund. Mack Pool paid $18,814 for electricity and was assessed $17,391 for the IT Fund.

The Leslie Golf Course spent $12,639 on water, $26,502 on retiree medical insurance and was charged $36,824 by the IT Fund. Huron Hills Golf Course was assessed a whopping $60,000 for the IT Fund in 2012.

The Park Maintenance & Capital Improvement Millage Fund, which raises about $5 million dollars per year from taxpayers, is paying high IT Fund assessments, as well.

In 2012, the Park Maintenance & Capital Improvement Millage Fund was assessed over $167,000 for the IT Fund. The Open Space & Parks Acquisition Millage was assessed $10,412 for the IT Fund, but the Natural Area Preservation program was charged $67,959 for the IT Fund, 25 percent of NAP’s $268,069 expenditures.

Neither the Street Repair Millage Fund nor the Art in Public Places Millage Fund paid anything into the IT Fund in 2012.

Like the park’s millage, the Parks Department is expected to pay a relatively high IT Fund assessment in 2013, $179,000. Conversely, the City Attorney’s Office is budgeted to pay $152,800 to the IT Fund and the Solid Waste Department is budgeted to pay $143,000 to the IT Fund, respectively, in 2013.

The Downtown Development Authority, on the other hand, is budgeted to pay no IT Fund assessment in 2013 and paid none in 2012.

Safety Services Pay High IT Fund Assessments

Like the city’s parks, preservation and open space programs, safety services are assessed significantly higher IT Fund charges than other departments.

Ann Arbor employs 124 police officers. The AAPD paid $1.32 million dollars to the IT Fund in 2012, $100,000 more than the AAPD is projected to pay to fund retiree medical insurance in 2013 and $300,000 more than the AAPD is projected to spend in 2013 on medical insurance for its active patrol officers.

The Ann Arbor Fire Department, with 94 officers, was assessed $338,000 for the IT Fund, or triple what is budgeted for maintaining and repairing the city’s firetrucks in 2013.

In response to a request for comment, one City Council member suggested that it’s time to “go after fund balances” such as the “contingent” money that sits in the IT Department’s budget and other city funds.

Stephen Ranzini points out:  “Some (city) funds are overstuffed with cash (for example the Percent For Art Fund), overall the city has over $100 million of cash trapped in various buckets not restricted by millage or the source of the funds but ‘restricted’ only by vote of city council, while the mayor and city manager assert that the general fund only has $15 million in cash and therefore doesn’t have enough funds to properly staff the fire fighters….

Overall, the city’s many funding buckets earned over $30 million last year, but we have ‘no money’ to find basic priorities like fire, police and roads! Drain the buckets!”