Budget Hearings - DWSD, Office of Auditor General
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This assignment is for two budget hearings:
2:00 p.m. - Detroit Water & Sewerage Dept. (DWSD)
3:00 p.m. - Office of the Auditor General
Check the source website for additional information
Reporting
Edited and summarized by the Detroit - MI Documenters Team
DWSD needs $100M from state to fund Lifeline Plan for 4 yrs, $12M for Basement Backup; OAG outsourcing ARPA audits.
Here’s the Detroit City Council website with a link to join today’s virtual meeting, agendas, meeting archives, and a link to watch on Channel 10.
https://detroitmi.gov/government/city-council
Here’s the agenda for today’s budget hearing which started at 10am today and includes what I’m covering at 2pm.
https://pub-detroitmi.escribemeetings.com/Meeting.aspx?Id=e16c9595-87c5-4e79-b560-626fe568c12c&Agenda=Agenda&lang=English&Item=12&Tab=attachments https://t.co/qKJ8cxjTH9
Here’s coverage from @PolarBarrett and @BridgeDet313 on the proposed budget:
https://www.bridgedetroit.com/duggans-2-6b-budget-proposal-includes-residential-property-tax-cuts/
It’s 2:03pm, looks like the Neighborhood and Community Services Standing Committee that started at 1pm is still finishing. here’s that agenda: https://pub-detroitmi.escribemeetings.com/Meeting.aspx?Id=e5efbef9-e1fa-47bc-9ada-12cec600c6fc&Agenda=Agenda&lang=English
The parliamentarian pointed out that council member Young needed to recess to the call of the Chair, President Sheffield. Young recessed and they called the roll for the 2pm budget hearing. Then Sheffield recessed back to member Young.
Now member Young has to call the roll for the Neighborhood and Community Services Standing Committee so they can finish the agenda.
Council member Young and the Neighborhood and Community Services Standing Committee have a few items left including member reports. https://t.co/grk0KxYEOQ
Pres. Sheffield has called back the 2pm budget hearing and the clerk is calling the roll.
First up on the 2pm hearing is the Water & Sewer Department. This attachment is a document from David Whitaker, from the Legislative Policy Division(LPD), and includes LPD’s Analysis of the proposed budget. https://pub-detroitmi.escribemeetings.com/filestream.ashx?DocumentId=85425 https://t.co/A6mdyI4Zco
We are starting with a presentation from Gary Brown, the Water and Sewage Director. Joined by Tiffany Jones, the Diversity and Inclusion Director, and Brown’s financial team.
The DWSD Executive Team considered these factors in developing the Budget:
Affordability, Compassionate and responsive Customer Service, and Operations that support public health, employee and asset safety, water and sewer upgrades, and employee focus. https://t.co/Yds4b3pJrZ
Revenue Requirements: all the revenues they need to sustain and operate the system:
Broken down between water and sewer funds. https://t.co/e2Dgb52QdN
This summarizes the projected share of each of the 3 components of the revenue requirements. The chart here is to show what DWSD controls. https://t.co/nuUeQRXEa0
Non-Departmental or Indirect Expenses Systemwide. There’s a decrease of $10.2 million, primarily due to a decrease in Legacy Pension offset by an increase in wholesale charges. The decrease in legacy pension costs is due to the expiration of the pension agreement end of FY23. https://t.co/dLwvdlQNxc
FTEs: Water and Sewer Funds
Gary Brown-two years of the pandemic had a devasting effect on the department. Now that they are out of covid, they have finances in order, his concern is the bad debt. https://t.co/8aVQusJKlc
I’m having trouble keeping up, apologies. They are talking now about the recovery funds for basement recovery from floods in 2021 in Jefferson Chalmers.
Council pro-tem Tate is asking about billing disputes being moved locations back and forth. It was Brown’s idea, he’s going to need to get back to them with answers. Sounds like they were trying to use an independent magistrate, and now billing disputes are back at DWSD.
Brown’s general counsel is saying the most common dispute is “unusually high usage”. They’re saying usually they can tell there’s some kind of leak. Often it’s a leaky toilet. If they can show there’s a leak and it’s repaired, they can get a discount.
If there was a leak on the outside, they will get an even greater discount on their bill.
They also enacted a meter dispute policy if residents think there was something wrong with the meter. DWSD would install a new meter in that case.
These are all the reasons they moved billing disputes back to the front end at DWSD. Member Tate responded and said he’s concerned with transparency, and that it makes sense to have a third party review these billing disputes.
Q: Council member Waters is inquiring about Federal Grants for water infrastructure.
A: Brown said DWSD has received $100 million for lead service line replacement. They are aggressively reaching out to improve the system. They have a team that works on that “day and night.”
Q: Council member Durhal is asking about stormwater fees, residents don’t understand why they are getting charged. What are we doing to better educate residents on why drainage fees are high?
How can we help mitigate high fees?
A: Brown: There was a rate study. They are doing everything to keep rates down for residents.
Q: Durhal asking about re-routing to the Rouge River.
A: Brown said they are ahead of schedule. He can send an update on the progress.
Member Durhal said he has more questions as this is a department that residents call about all the time. Sheffield said they can take more questions and/or move it to an executive session for more time with Director Brown.
Q: member Johnson is asking about the $60 million in bad debt.
A: The CFO is saying 80 percent of the bad debt is from non-payment from residential customers.
Q: Johnson had requested and is still waiting to receive a plan that addresses everything that DWSD and the Great Lakes Water Authority are doing in District Four, where Jefferson Chalmers is located.
A: Brown found out today, they’ve been awarded a contract with the US Army Corps, $2.5 million on a study to come up with a plan to mitigate flooding in Jefferson Chalmers. This was one of 5 awards and 2 in Michigan.
Brown continued: They’re going to start near Jefferson Chalmers up close to Connors.
There’s also a $350 million state program where they’re going to take storm water off of I-94.
Member Santiago-Romero is concerned about what she’s hearing from small landlords who are being charged at a higher rate if they go over a certain usage rate and they have to charge tenants more.
Q: Is this part of the proposed rate structure?
Santiago-Romero said the costs of this are going to end up on the tenants.
A: Brown said that the landlords should be checking their infrastructure and why they feel they need to charge more.
Debra Pospiech, Chief Administrative Officer and General Counsel said they’ve revised the policy so that households with occupants higher than four have a higher level of usage that’s allowed at the base tier rate. If it’s a leak, they can work with them to repair it.
Q: Santiago-Romero is asking about water main breaks.
A: There was one recent break at Wabash and Michigan, where there’s a pub. It happened on St. Patricks Day. They fixed it the next day. It takes time to figure out who is impacted when there’s a water main break.
Santiago-Romero is making a motion to move the whole budget to an executive session to discuss customer service.
That action has been taken.
The second motion was made to urge DWSD to work with our alert systems for better communication with the public.
Q: Member Young is asking about plans to address preparing for 100 year or 300 year flood?
A: Brown is willing to meet with them to discuss 5 and 10 year plans.
Q: Member Young is asking about what the Lifeline Plan is doing in terms of reducing water shutoffs.
A: Brown is saying there are no water shutoffs happening. They are reaching people. They’re focus now is not shutoffs…
Brown feels like they are reaching people, it costs money to shut people off. He’s not saying they won’t shut off people in the future.
They are asking for $100 million in the state’s budget.
Brown: we are not shutting off residential water customers for non-payment. They are going door to door so they can get the money out of the funds that are available. They have to reach out to each customer to let them know help is available.
Mr. Corely pointed out that the operating budget has been approved by the water commissioners.
This budget has been moved to executive session and they can submit more questions.
Now moving on to the next budget.
The 3:00pm hearing for the Office of the Auditor General. https://t.co/qKBD2j5x9w
There will be a presentation by Laura Goodspeed, deputy Auditor General.
I found the link to the presentation by googling just now. https://detroitmi.gov/sites/detroitmi.localhost/files/2023-03/Office%20of%20the%20Auditor%20General%20FY2024%20Budget%20Hearing%20Presentation.pdf
The Auditor General makes audits of the full financial transactions, performance, and operations of City agencies based on an annual risk-based audit plan prepared by the Auditor General. They also give a full report to the Detroit City Council. https://t.co/6j8hf3U5Hp
Each agency, department, or entity is assigned a score based on seven metrics: Revenues, Expenditures, number of staff, fund type (general or special), source of the audit request, date of last audit, and emerging issues. They are always auditing. https://t.co/Y8UN4OiGE9
These are audits in progress:
Crio Compliance Fees
Property Tax Assessments Forensic Audit
ARPA Renew Detroit Program https://t.co/Lxtnm0rCPG
A note about the ARPA audits. Audits are typically historic in nature. ARPA audits are being done while these programs are being executed. It may take more time. They plan to audit more ARPA programs.
They expect to have their first report on the Board of Police Commissioners requested by a former council member in Oct. of this year. The scope of that report is July 1st, 2020-June 30th, 2022. https://t.co/c2e9uNkbrR
Upcoming Audits 2023-2024:
–DPD Drug Law Enforcement Fund Scope: July 1, 2020 to June 30, 2023.
–DPD Special Operations (known as the Secret Service Fund) Scope: July 1, 2020-June 30, 2023
–Payroll Audit https://t.co/0t1r6xizVJ
They cannot hire temporary employees. They plan to outsource high-risk ARPA-related performance audit projects. They plan to use ARPA funds previously resolved and set aside for City Council. These funds will be used to audit ARPA funds. https://t.co/wvIDK0ZUNl
The Office of the Auditor General (OAG) is getting ready for its first-ever Peer Review.
It will be an external independent peer review. https://t.co/9vH5kYGz0I
The external, independent peer review will look at all of their work and activity in addition to their audits. https://t.co/GFobWdwZiQ
Here are other OAG activities:
Revenue Estimating Conference
City Council Budget Hearings
Auditor General is the Chairperson of the Towning Rate Commission.
OAG Mandatory Training and Staff Development. https://t.co/rdCdq59X8L
What the OAG does is related to effective governance.
Here are their related goals and Strategic Priorities Related to City Outcomes. https://t.co/pILC1oxbmN
They are submitting a funding request through the City Council related to supervisory duties and management. This will allow them to have the capacity to handle additional outsource RFPs for the APRA programs. An RFP is a request for proposals. This will also restore overtime. https://t.co/YhbKSJsfxG
The funding request from OAG has been sent to the executive session.
Q: Member Johnson is asking about risk management.
A: Goodspeed is saying they have upgraded their software. All of the agencies in the city are required to fit into 5 categories…
A: They want to look at all the agencies that go into effective governance citywide, not just one department or agency at a time.
Q: Durhal is asking how does the OAG prioritize its audits & investigations?
A: Goodspeed-they come up with a 2-year plan based on the risk score.
OAG provided a packet to City Council with answers to questions from LPD.
Now to public comment. There are 6 callers online.
Cindy Dara is here in person.
Comment #1. Mr. Crowley started off criticizing Pres. Sheffield. She stopped him and asked for respect.
He’s talking about administrative functions, something about publishing notices to the public for funding. He’s pretty upset, Sheffield is ending his comment.
#2: Mr. Davis. On DWSD, the city needs to aggressively pursue the split between water and sewage. He’s saying right now Detroit doesn’t control anything and try to get the split to 50/50. The Great Lakes Water Authority could end up flooding our basements at will…
…They have no control–there needs to be more checks and balances on the water department. Retirees shouldn’t be paying too much for their bills.
#3: Miss Warrick. Residents are upset with Sheffield for not meeting with residents or responding to phone calls and emails. Would like to know if the Inspector General’s office is overseeing the use of ARPA funds…
…thinks the planning process of projects like North End Landing are secretive deals made through handshake agreements.
#4. Miss Vernor: Concerned about residents with disabilities and seniors needing their homes to be accessible. She appreciates what they have now, but they need more help. There is a large population of seniors and residents with disabilities.
#5 Miss Winston. DWSD–Brown is hiring more people, and she’s wondering if anyone is checking stormwater management. Vacant lots cause a rush of water, we need to make sure they are draining properly. She is also asking about contractors and if there are enough trained workers…
#6 We need the auditor general to audit the home repair revitalization funds, and illegal foreclosures, and find the people who lost their homes, “we want you to find those residents and make them whole”…
…we need property tax abatements for residents like those given to the Illich Family. We want Detroit to have more input on the hearings. They need to hear our concerns. We need more time than one minute. Also asked about the Mayor’s secret fund.
#7. Cindy Dara is asking about a 2007 audit in regard to Joe Louis Area and the parking authority. The City used to get a percentage of ticket sales, concessions, and parking, there apparently was an audit in regards to that which was never completed…
…also she doesn’t think the city has the time to audit all of these developments getting tax abatements. Thinks abatements should go to neighborhoods.
The next budget hearing is tomorrow at 10am. This meeting is now adjourned at 4:27pm.
This concludes my coverage of the Detroit City Council Budget Hearings for the Detroit Water and Sewage Department (DWSD) and Office of Auditor General (OAG).
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Agency Information
Detroit City Council
The Detroit City Council is the legislative body of Detroit, Michigan, United States. The Council is responsible for the creation of local laws—called ordinances. Additionally they pass resolutions, motions, and the proposed city budget. The full-time council is required to meet every business day for at least 10 months of the year, with at least eight of these meetings occurring at a location besides city hall. The council may convene for special meetings at the call of the mayor or at least four members of council. Areas of responsibility for the Budget, Finance and Audit Committee include, Budget, Finance and the Auditor General.
City Council members are elected on the same cycle as the Mayor and will be elected in 2021. Seven members represent the seven council districts, while two members are elected at-large.