'A Pandora's box of problems': Grand Traverse County struggles with stability
To an outsider, Grand Traverse County is a picture of success. New homes and businesses are popping up all over Michigan’s third-fastest growing county, and property values are on the rise.
But insiders describe a county government in chaos.
They say decades of mismanagement have led to the worst-funded pension debt in Michigan and a rash of resignations from the county’s top jobs, including the administrator.
Last May, Chris Radu was making the media rounds. He spoke to the Traverse City Record-Eagle, the Traverse Ticker, Interlochen Public Radio and the Ron Jolly Show. Radu is a soft-spoken financial advisor. He’s not really a well-known public figure, and he’s not exactly a media hound. In fact, this was the first time he’d ever done anything like this.
“The hope was that ... it would make a big enough statement that it would cause an uproar through the rest of the community,” says Radu.
"It's a product of poor management and really unqualified people making decisions about things they don't understand"
To make that statement, Radu and two others resigned from Grand Traverse County’s Pension Advisory Board. They did it to protest, in a very public way, what they saw as a serious problem.
Radu says the county had, for decades, made promises it couldn’t keep. It offered generous pensions to its employees as a way to attract and keep good people.
“It’s well known throughout Michigan that Grand Traverse County has the Cadillac pension plan,” says Radu.
Some people who got in on that plan are averaging $70,000 a year in retirement without having paid anything into it.
Meanwhile, Radu says the county basically ignored its pension fund – the pot of money set aside to pay the retirees. By 2016, Grand Traverse County had fallen behind by almost $50 million, and the county’s pension debt was the lowest-funded in Michigan.
The county commission formed the Pension Advisory Board to try to get a handle on the problem, but Chris Radu says commissioners ignored the board’s advice. In fact, he says the only time the board paid any attention to the pension fund was when they would sometimes dip into it to make up for budget shortfalls.
“It’s a product of poor management and really unqualified people making decisions about things they don’t understand,” says Radu.
The county might have continued paying little attention to the pension problem – Radu and others call it “kicking the can down the road” – but in 2015, a federal law changed. It required the county to include the pension debt in its annual budget, and that meant they had no choice but to pay attention to it.
'Menzel mends it'
That rude awakening, in part, cost Administrator Dave Benda his job, according to one county commissioner.
And in came Tom Menzel, a businessman and former mayor of Rolling Meadows, Ill. Menzel had returned to his hometown of Traverse City to lead the National Cherry Festival out of dark financial times, and then he did the same thing for the Bay Area Transportation Authority.
Menzel had a reputation as a turnaround artist – a leader who could get a financially troubled organization back on its feet.
In Traverse City business circles, they had a saying: “Menzel mends it.” And that’s exactly what Grand Traverse County commissioners hoped he would do with the county’s pension problem.
What Menzel saw when he arrived at the county would sour him on government service and hasten his retirement.
“I was really disappointed in my hometown,” he says. “I expected so much better from it than what I found. I was very disappointed.”
Menzel and his leadership team – most of whom have since resigned or been fired – describe a county government in chaos:
- Department audits hadn’t been done in decades.
- Department heads hired their friends and relatives to county jobs.
- No one was keeping track of keys and swipe cards to government buildings.
- The county’s computers ran the old DOS system from the 1980s.
“We had to fight all the time with the existing culture, which was trying to keep itself in place,” says Menzel.
"Mr. Menzel kind of reminded me of William Tecumseh Sherman – burn everything in my march to the sea. He didn't care who he stepped on. He was going to get what he wants."
Menzel got to work on what he calls “a Pandora’s box of problems.” By his count, he made over 60 major changes in his year and a half on the job. Many of those changes were aimed at the county’s pension debt.
He doubled the amount the county was paying toward the debt. Employees had to pay 20 percent toward their health care instead of six percent, and he made some union employees start paying into their pensions for the first time.
Pushback and a new direction
“Mr. Menzel kind of reminded me of William Tecumseh Sherman – burn everything in my march to the sea,” says Bob Donick, who represents many Grand Traverse County employees through the Teamsters Local 214. “He didn’t care who he stepped on. He was going to get what he wants.”
When Menzel set his sights on renegotiating union contracts, Donick was the one at the table. Only Menzel wasn’t there, says Donick. He sent lawyers instead.
“The county didn’t negotiate,” he says. “They just came in and said, ‘This is the way it is. If you don’t like it, oh well.’”
Donick says the county was using the pension debt as an excuse to squeeze more concessions out of the unions.
“Is it a concern, the pension? Yes. Is it as big a concern as the county portrays it? We disagree with that,” says Donick.
It wasn’t just the unions and county employees who disagreed with Menzel’s approach. County commissioners – like Carol Crawford – were starting to push back, too.
Crawford says it was the 2008 recession that caused much of the county’s pension debt problem. The money the county put aside for pensions went to MERS – the state agency that manages and invests retirement funds. During the recession, MERS lost a lot of money – upwards of 20 percent of Grand Traverse County’s pension fund.
“There seemed to be the opinion with that administration that the employees should bear all the burden for paying back that debt, when really a lot of that debt happened when the 2008 housing bubble burst and the recession that followed,” says Crawford.
When Menzel was first hired to come in as the fixer, Crawford supported him. But once he and his team started making moves – moves she saw as unfairly targeting county employees – her opinion changed.
“I think that the methods used by that particular administration were a little heavy-handed,” she says.
Crawford says Menzel brought a top-down, private sector style to his job.
She says he did a poor job of getting buy-in from county employees on the pension problem.
And Crawford says he didn’t communicate well with his board. To illustrate that point, she says Menzel never told the board about a controversial plan to eliminate the county’s animal control department. Board members found out about it by reading the Record-Eagle.
“It often shows up in the newspaper that the Board of Commissioners eliminated animal control,” says Crawford. “I never voted for that one time. That never came to us in that manner.”
Former Deputy County Administrator Jennifer DeHaan says the administration communicated regularly.
“No matter what we tried, they didn’t like the message,” says DeHaan. “They didn’t like what was happening.”
DeHaan says the culture bristled at every move Tom Menzel’s team tried to make.
“When you have people who are worried about their jobs, or they’re worried about sharing information because, ‘If someone else knows what I do, then they can do my job,’ that becomes a problem for the organization when they act in that way,” she says.
While Menzel’s administration tried to clean up county government, the pension problem actually grew worse. That’s because more and more county employees were retiring and collecting the old “Cadillac” pension benefits.
Then the 2016 election happened, and the politics of the county commission shifted. Instead of a 4-to-3 commission that favored Menzel’s plan, it was a 4-to-3 against him.
Menzel announced plans to retire.
Uppal comes ... and goes
In September, the board hired a new administrator, Vicki Uppal. Uppal scaled back or eliminated many of Menzel’s changes. She fired Jennifer DeHaan, and many other Menzel acolytes resigned.
And then, in January – just four months into the job – Uppal resigned, saying she had to leave the job for family reasons. She left the county the day after announcing her resignation.
Uppal did not respond to a request for comment.
And so now, for the third time in three years, Grand Traverse County is looking for a new administrator.
Kent Wood, director of government relations for the Traverse City Area Chamber of Commerce, says all this upheaval makes the county look bad.
“We’re concerned that if this were to continue, that people, talent [and] businesses would eventually say, ‘It seems like a really cool place to be, Grand Traverse County, but not a great environment to be doing my craft right now,” says Wood.
The county is expecting some new numbers in June that commissioners hope will show improvement in pension funding.
Some commissioners say the pension problem is under control now, and thanks to all that growth going on, Grand Traverse County is bringing in more money.
This story was edited Feb.26, 2018 to clarify that Tom Menzel said department audits hadn't been done in decades, not broader audits of the entire county.
Bob Campbell with Bridge Magazine contributed to this story.