RESOURCES:
U-M Center for Local, State and Urban Policy (CLOSUP)
The Fiscal Health of Michigan Local Governments 2024
TRANSCRIPTION:
Caroline MacGregor: You're listening to 89.1 WEMU. I'm Caroline MacGregor. And my guest today is the Director of the Center for Local, State and Urban Policy, Stephanie Leiser. And we are going to be discussing a survey that talks about, or literally has implications for Michigan's local government leaders from well over a thousand counties, cities, villages and townships, and what this means for Washtenaw County. First of all, Stephanie, welcome! Thank you so much for joining us!
Dr. Stephanie Leiser: Of course! I'm happy to be with you!
Caroline MacGregor: Now, the school is celebrating its 25th anniversary. Is that correct?
Dr. Stephanie Leiser: Yeah. Our research center CLOSUP was created in 2001, so this year is our 25th anniversary of working on behalf of the University of Michigan to engage with the state of Michigan and local governments on all of the policy issues that are affecting locals. So right now, we're looking a lot at data centers, but for the past 25 years, we've been working with our local partners on all kinds of different issues.
Caroline MacGregor: Well, let's delve into this survey. First of all, what is important for us to know, given the uncertainty in the political realm at all levels of government? Maybe you can just distill it down, so that we can understand what's important to us.
Dr. Stephanie Leiser: Sure. Let me start by telling you a little bit about the survey itself. So, we started doing the survey in 2009. Since CLOSUP was created, we worked really closely with our partners in state and local government, in particular, Michigan Municipal League, Michigan Association of Counties, and the Michigan Townships Association, which kind of collectively represent local governments in the state on just what's on their mind, what are different communities struggling with. And of course, 2009 was kind of coming out of or still really in the Great Recession. And so, there was just a lot of particularly financial worries. And so, since then, we are actually currently in the field. Our survey is live. We're the 30th wave. We actually did some analysis here: 161 jurisdictions in the state that we've heard from every single time, and there's only three that we've never heard from. There's 1,856 cities, villages, townships, and counties in the state. We really work very hard to get a high response rate. We get 70%-plus every year, so that means we're hearing from about 1,300 or more of those 1,800 jurisdictions. We don't just want to hear from the larger, more populous places. We really want to reach into all areas of the state. How are communities feeling about this? What are the different pain points? And how does it look different, say, in Washtenaw County, where we've got a few data centers in various stages of progress versus in rural Michigan in different parts of the state.
Caroline MacGregor: Gosh, yes! And those data centers have huge implications for the townships. The points that you've mentioned in the survey, which affects all levels of government. Tell me how we're faring here in Washtenaw County. What are the main things that you discovered in the survey, the cities and township here, as far as the fiscal health of these areas?
Dr. Stephanie Leiser: Yeah. So, what we're hoping is that by looking at that statewide perspective, local officials here in Washtenaw County can kind of get a sense of where they fit in the bigger picture. And one of the nice things we like to do with the survey, too, is it's a chance to collect best practices. So, last year, we did a big portion of our survey on resident engagement. This is something a lot of communities have reported that they've struggled with, especially post-pandemic, in just reaching people to engage residents, to inform residents, to maybe get residents to volunteer, to serve on boards and things like that. So, this is something we've really heard from a lot of communities that has been a struggle. So, one of the things we did in this survey was to collect ideas like, do you have something that's really worked? And then, we can kind of amass all of those great ideas and those best practices and then distribute it back out. So, in Ann Arbor, right, this is a relatively well-resourced place. They've got a lot of different engagement mechanisms and what can we learn from Ann Arbor that then we could apply somewhere else in the state? Or if folks in Grand Rapids have developed a really great mechanism, how then can we inform what's going on here in Washtenaw County. So, we try to make it like a way to aggregate a lot of intelligence about what's going with various best practices and then also gaging where you fit. You mentioned the fiscal health, so we do actually a lot on fiscal health, even just beyond the survey itself. So, within the survey, we ask our respondents, local leaders, how was your fund balance? How was your cash level and kind of various aspects of their fiscal health and just gaging how they're doing. We can track that over time to see which way the trends are going and what they're really worried about. And then, we also do a bunch of analysis of financial data that we get from the state, just to kind of compare, like, you say you're really worried about your fiscal health. What do your numbers say? And just to try to give us more insight on what is actually driving the worries, and how can we kind of break that down and look at like, okay, there's small townships in Washtenaw County. How do their issues compare to larger cities?
Caroline MacGregor: So, in Washtenaw County, are you seeing generally strong short-term financial health or what are we seeing here in some of the results of the survey?
Dr. Stephanie Leiser: So, in Washtenaw County, there's about five cities, a bunch of townships. We have one village, Barton Hills, and we can look at various aspects of their financial condition. So, one of the most important things we look at is fund balance, which is like your savings account as a community. And across the board, those look pretty good. That's a result of a few things. I think all the communities in Washtenaw County got revenue from the American Rescue Plan Act or for the pandemic, so that really kind of boosted things. And we've seen pretty good economic conditions for the past few years, so that's really allowed those fund balances to kind of stay healthy and, even in some cases, grow a little bit. So, there are a handful of townships where the fund balance has gotten pretty low, but I wouldn't say anything quite in the concerning territory. So, we look at those savings accounts. Those are looking pretty good. We look at things like how much debt communities have. There's really no standouts here. Obviously, cities generally tend to have more debt. They have more infrastructure that they fund. And in this case, cities like Saline kind of stand out in that they seem to be using debt to do new investment. And we kind of already know that Saline has been growing.
Caroline MacGregor: That's good news! Go ahead with what you were saying that.
Dr. Stephanie Leiser: Right. So, we also look at spending per capita. How much are different types of governments spending per resident that they have? And generally, that's lower in townships, because there are fewer services and it's higher in cities. But I mentioned Saline. Saline has one of the highest spending per capita. That's kind of a consistent story of Saline growing, and its fiscal health is quite good. And then, of course, on the lower end of spending per capita in Ypsilanti, which we know is a little bit lower income, and also Ann Arbor, just, I think, that's sort of related to its size. But again, nothing in the concerning territory there. And Barton Hills always kind of stands out because it's a village. It's very small, but there's a lot of wealth there, so it also kind of stands out on the very high end. One thing that we've seen when it comes to fiscal health and really even on some other measures, we also do a lot of measurement of health of democracy, which we can talk about more if you want to. These smaller and more rural places seem to be kind of falling behind the larger cities. This is sort of a reversal of what the trend was before pandemic, where the smaller places were often telling us we're in pretty good shape, we're feeling pretty good about the state of things, pandemic happens. Now, it seems that cities more urban and larger places have, for the most part, found the path to recovery and are doing all right. And the smaller places, the more rural places, are falling further and further behind. So, that's something that we've kind of uncovered and really want to dig into more.
Caroline MacGregor: Right. Now, what are your thoughts on why they are falling behind, given the information from this survey?
Dr. Stephanie Leiser: Yeah, I think that's still a little bit of an open question. And like I said, we're seeing it along multiple dimensions. So, it's financial. Not that they're in terrible financial shape, they just haven't recovered in the same way that other places have. So, maybe that's driven by migration, maybe that is driven by just kind of economic factors. But we are also seeing it in a lot of those measures of health of democracy, resident engagement, tone of discourse, the other things that we look at. And this is surprising. And this is where we don't think it's really economic factors that's driving those things, but maybe something else or it's related to economic factors. But I'm not really sure. Something about resident engagement has really kind of fallen behind in smaller and rural communities.
Caroline MacGregor: That actually somewhat surprises me because during the pandemic, a lot of people were migrating out of the cities into the more rural areas to escape the cities. It seems like they're struggling more. Are they showing declining cash revenues overall?
Dr. Stephanie Leiser: Not necessarily declining revenues, but the revenues are just not growing quite as strongly as they are in larger places.
Caroline MacGregor: Okay.
Dr. Stephanie Leiser: It's not so much that things are getting worse, financially speaking, in smaller places. It's just that they're not in the same trajectory as the larger places.
Caroline MacGregor: So, does this fall into disparities, due to jurisdiction size or the smallest jurisdictions facing the highest long-term liability burden? Is this all part of that then?
Dr. Stephanie Leiser: That's part of it. So, with the long-term liability burden, in the very smallest jurisdictions, this is less of an issue. But once you kind of get up into the medium size and the larger, these are things like unfunded pension liabilities, unfunding retiree health care, where these plans were not paid into or they fell behind over the years, and now they have to catch up. And so, when you're a very large place, there's perhaps more capacity to kind of keep up and absorb some of that, or at least some financial expertise to develop strategies. But in the mid and smaller-sized places, it really kind of becomes an anchor kind of that you drag around. And so, that may be part of the story too.
Caroline MacGregor: I've been speaking with the Director of the Center for Local, State, and Urban Policy, Stephanie Leiser, and we've been discussing their Michigan Public Policy Survey. Thank you so much for joining me today!
Dr. Stephanie Leiser: It's a pleasure! Thank you!
Caroline MacGregor: This is 89.1 WEMU-FM Ypsilanti.
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