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Sources of Funding -- Detailed

There are five primary sources of funds for the programs recommended in this paper: 1) the American Rescue Plan Act (ARPA), 2) the County Mental Health & Public Safety Millage [henceforth “Millage”], 3) savings from the armed police budget, 4) external grants, and 5) General Fund other than the Ann Arbor Police Department (AAPD). 


    1.    American Rescue Plan Act (ARPA):  City Administrators recommended in last October that “at least $2 million” of ARP funds be

used to support the unarmed response program.  The City Council accepted this report in late October and called for the City Administrator to provide a final report on a spending plan for the ARP funds not later than March 1, 2022.  In his interim report on December 12, 2021, on unarmed response the City Administrator specifically mentioned the need to “Develop a more detailed cost analysis for the $2 million ARP fund proposal …”.


    2.   County Mental Health & Public Safety Millage:  The Annual Comprehensive Financial Report (ACFR) for FY 2021 shows an ending

(June 30, 2021) fund balance of $1.44 million (pp. 6 - 7).  This is considerably higher than the estimate of $0.61 million in the Adopted Budget for FY 2022 (p. 109).  City staff project the fund balance will decline by $0.23 million in FY 2022 (p. 109).  The actual decline is likely to be less.  The estimate of City staff of tax revenue from the Millage of $2.50 million in FY 2022 is smaller by about $2,000 than actual tax revenue in FY 2021.  An increase is more likely.  To be conservative, we do not adjust upward the City’s revenue estimate.  Adding the unadjusted decline in the FY 2022 fund balance to the actual FY 2021 fund balance, we estimate the ending fund balance in FY 2022 will be $1.21 million.


City staff estimate the Millage will yield revenue of $2.66 million in FY 2023 (FY 2022 Adopted Budget, p. 126).  Adding this to the ending fund balance from FY 2022, total available funds in FY 2023 are estimated to be almost $4 million.  We feel comfortable in estimating the Millage could supply about $3 million in FY 2023 and slightly more in each succeeding year until the Millage expires after FY 2026.


As shown by an objective public opinion survey, this use of Millage funds would be consistent with the voting public’s expectations when they voted for the Millage and, furthermore, with what they wanted the Millage revenue to be used for.


   3.     Savings From the Armed Police Budget:  The need for armed AAPD officers will lessen as unarmed responders assume duties

previously performed by the former.  These savings are likely to accrue slowly.  Public safety is so important that a conservative approach to the pace of transformation is probably wise and, in any case, is almost undoubtedly politically advisable.  In addition, shrinking the number of armed police officers through attrition is easier for bureaucratic and political reasons than firings.  We use the FY 2022 Adopted Budget as a guide to what is feasible and likely.  In FY 2022 there is an overall reduction of 7.0 FTEs in the Police Department and an approximately $700,000 drop in the FY 2022 Budget for personnel services from the budgeted amount for FY 2021 (FY 2022 Adopted Budget, pp. 399-400).  We assume a decline in the Armed Police Force, including support staff, of 5 FTEs per year and assume this yields savings of $0.5 million per year; these savings accumulate over time, that is, the total savings relative to today’s status quo would be $0.5 million in FY 2023, $1.0 million in FY 2024, $1.5 million in FY 2025, and so on.  Total FTEs in the Police Department in FY 2022 are 149 so a decline of 5 per year translates to a modest 3.4 percent per year.


   4.     External Grants:  Both Michigan and Federal governments have grant programs to a) encourage the development, implementation,

and evaluation of programs to expand the scope of unarmed response and b) provide improved services to those living with a mental health condition so they do not become patients waiting in a long due in a Psychology Emergency Room or, worse yet, in a law enforcement process.  Foundations and nonprofits are also supporting innovative programs in these areas.  If local public officials design i) a thoughtful program that integrates 988 into a network of contact numbers for problem-solving and crisis response, ii) an objective evaluation methodology of the crisis response system, and c) a collaborative Youth Assessment Center and Youth and Family Resource Center, then funding of these programs and the evaluation should be available from governmental or other funders.  This outcome is especially likely if the City Council approves the City Administrator’s request for a grant writer (slide 22 in link).


   5.    General Fund In Addition To Savings from the Armed Police Budget:  Improved public safety and better services for those living with

a mental health condition are  important and should be a high priority.  City officials should scour the entire budget, as necessary, as a prelude to shifting funds from lower priority uses to adequately fund the unarmed response program and mental health services.


Summary:  There is not a good reason to inadequately fund the unarmed response program and recommended human services.  Both are high priority.  Both warrant support relative to lower priority services in the City’s budget.  This would be true in any period.  Having recognized this, allocating the needed funds in the FY 2023 Budget will be easier than in many years.  The Millage was supported by voters because they desired improved mental health and public safety services.  The ARPA was passed to enable local governments to maintain and even improve services despite the pandemic.  State and Federal governments recognize the importance of improved public safety and better housing and human services, and they are allocating grant funds for this purpose.  City officials, both elected and administrative, should cease this moment, focus on making good programmatic decisions, and then appropriate the funds needed for implementation.

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