The Detroit People Mover's financial management is susceptible to inaccuracies, misappropriations and even theft, according to an audit of the transit system's operator.

The Detroit Transportation Corp. had ineffective or deficient policies and procedures in various areas, including accounting and human resources, Detroit’s Office of the Auditor General concluded last year.

The corporation showed “deficiencies in accounting, human resources, and information systems controls due to management not maintaining, revising, and monitoring the internal control environment," concluded the January 2023 report, which analyzed a six-year operational history, spanning from July 2015 through June 2021.

“The internal control deficiencies contributed to informal practices and irregularities in the performance of operations, the lack of defined accountability and performance measurement for critical operations, and the potential for DTC operations to become misaligned with business objectives,” the report said.

The auditor found that the corporation, a component unit of the city created in 1985, lacked "defined credibility for critical accounting operations." It also lacked effective methods of tracking vendor accounts and vacation accruals.

Four general managers led the Detroit Transportation Corp. during the period audited.

The city of Detroit gave subsidies to the corporation in several years: $6.5 million in fiscal year 2018, another $7 million in 2019, and $6 million in 2020.

The Detroit Transportation Corp. manages the People Mover, a 2.9-mile-long transit system in Detroit. The system has faced criticism since its inception, with the head of the Federal Urban Mass Transportation Administration calling the People Mover a “pork-barrel project gone wild” in 1985. More recent reviews have found further problems with the corporation’s management.

“My gut reaction is that the severity of the findings and the lack of available staff (several unfilled positions), mean many of the recommendations proffered by the audit will go unresolved,” Robert Daddow, a former deputy Oakland County executive, told CapCon.

Daddow said the problems may be even worse, pointing to infrequent audits, a small staff, limited controls over financial checks and balances, and failure to follow basic accounting principles.

The audit should have been done earlier, Daddow said, given the Detroit Transportation Corp.'s history of problems. A triennial review by the Federal Transit Administration found deficiencies in eight of the 20 areas examined, including financial management and procurement. The administration had reported these same problems in previous reviews, Daddow said, noting that correcting cited deficiencies would normally be a high priority for management.

Daddow also pointed out problems with bank reconciliations, which are designed to detect errors and inappropriate transactions. The auditor requested 21 bank reconciliations from July 2019 to March 2021 but received only eight.

The People Mover's management also neglects to document transactions properly. Half of the payments did not have completed purchase order documentation, Daddow said, and there were 20 “doubled-up payments to vendors” that totaled $53,000.

Daddow pointed to duplicate tracking numbers and a failure to obtain board approval for a half-million-dollar contract. The operator is required to have board approval for expenditures over $25,000.

A paraprofessional in northern Michigan who left the Michigan Education Association successfully led an effort to decertify the MEA and replace it with a local association.

Mike Williams, who works for Northwest Education Services in Traverse City as an auto repair paraprofessional, left an MEA union for support personnel in December 2022, as CapCon previously reported. His frustration with the MEA led him to spearhead an effort to establish a new union, which the state of Michigan recognized April 30.

Williams had long been dissatisfied with the MEA, which helped secure an hourly raise of only 70 cents per hour between 2007 and 2017. He left the union, rejoined at the request of colleagues, and then was part of the team that negotiated the 2021-24 contract for education support professionals in the intermediate school district. That team negotiated the contract without the help of the state MEA, he said.

The new association, representing roughly 140 employees, will be the new bargaining agent for paraprofessionals and other occupations assisting teachers. The current contract expires June 30.

Williams says he received help from several quarters, including the Mackinac Center for Public Policy, which he approached after leaving the MEA for a second time in December. Believing that the MEA did not properly represent him and his colleagues, he asked about laws and policies governing decertification.

Williams began asking state MEA officials in early December about forthcoming contract negotiations and was dissatisfied with the response. The MEA regional representative told him in one message that some members were unhappy with the emails he had sent out to them.

The lack of information, Williams told CapCon, left him wondering about the fate of workers in the bargaining unit. Would the MEA still represent them if they needed to file a grievance, he wondered. Union membership was not strong, he said, with approximately 20 employees having signed up to be members.

Williams said setting up a new union was not easy, adding that he and his colleague made a few mistakes as they navigated the intricacies of labor law. Officials at the Michigan Employment Relations Commission were helpful in answering questions, he said. Tracking down the 140 employees across multiple buildings and doing so outside of work hours was a challenge, he said. Other employees helped out by making trips to the various buildings to contact prospective members of the new association.

In a mail-in election that occurred over several weeks, 25 employees voted to leave the MEA, and 12 voted to stay.

Williams says the association he and his team created requires no union dues.