City of Detroit
Public & Government
In June 2012, Eric Foster of LB3 Management, through his predecessor firm, Foster McCollum White & Associates, published an independent 17 point formal fiscal and operational restructuring plan for the city of Detroit and Regional Government Shared Services in Southeastern Michigan. The comprehensive plan included an executive summary, presentation summary and a separate four year fiscal/budget implementation blueprint to support restructuring reinvestment strategies. Commencing in July 2011, Eric and his strategic organizational development staff spent countless hours analyzing and reviewing numerous fiscal and operational documents from the City of Detroit dating back to the Louis Miriani Administration and various commission reports, process improvement reports and transition plan reports that have been developed by stakeholder organizations (fiscal ratings agencies, restructuring plans, commission reports, etc.) of the past 60 years. For example, from a 48 year period, the 1964-65 fiscal year to the 2011-2012 fiscal year, the City of Detroit operated in a continual state of deficit spending across general fund, enterprise fund and component agencies departments. Detroit’s debt and long term obligation burden (principal and interest) equaled $22.7 billion dollars, which was equal to $32,193.96 per person (per 2011 census population estimates). Some of the original plan and updated addendum in March of 2013 included the following policy approaches:
Foundational Objective – Debt & Finance
• Realistic Budget Planning per actual revenue and expenditure data.
• Implementation of quarterly budget estimating conference with independent agency/citizen input model.
• Reduce the number fiduciary responsible operating departments.
• Improve funding stream to departments that impact “buying decisions” of residents and businesses in choosing Detroit or a competitor city to live or operate.
• Push for legislative changes for operational/debt restructuring (PPP’s for public sector authorities)
• Enhanced Public Sector Authority model for bond & loan debt leveraged agencies
• VEBA programs for retiree pension & health care benefits
Value Building Objective – Brand & Governance
– Reduce city of Detroit governmental operations to essential agencies that impact quality of life or the buying decision of existing (residents and businesses)
– Create a model for regional approaches to managing large scale governmental infrastructure organizations
– Create a model for shared service solutions to maintain and improve the quality of parks management, tax collection and information technology innovations for the southeastern Michigan region
– Create a model for shared service solutions to maintain and improve the quality of public safety operations
FMW Fiscal and Operational Restructuring model benefits:
– Detroit’s governmental function alignment (QOL & Buying Decisions).
– Decrease annual debt service burden from 49.03% of total projected revenues (TPR) to 39.97% of TPR during first year of plan implementation and to 32% of TPR by year three of plan implementation, freeing revenues for current service delivery.
– Increase deployment of public safety field assets to reduce response time and increase presence.
– Generate budget surpluses for reinvestment in public safety, economic development, and recreation and infrastructure management and reconstruction departments.
– Could be implemented and managed by existing municipal government structure or emergency manager operational model.
– Will create resident/business goodwill by demonstrating value for tax payments and that Detroit’s government values its customers (current residents, existing businesses and visitors to city attractions)
– Will demonstrate the Detroit’s governmental operations can function in an attractive manner to new potential customers (residents from neighboring communities and non-Detroit based businesses