Shrinking City Government

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But if the staff is down 30 percent, why has the budget gone up at all? "The cost for employees has gone up while the number of employees has gone down," says Crawford. "That's a key driver. Having three hundred fewer employees means a citywide saving of about $30 million a year, but we've also had increased costs. In 2001, the city paid $43.6 million in payroll. In 2012, it's $48.5 million. In 2001, the city was paying zero dollars toward pensions. Today we're paying $10 million," due to rising numbers of retirees and shrinking investment returns. "In 2001, health care and retiree health care was $6 million," Crawford adds. "Now we're contributing $15 million." And if the city hadn't cut its workforce, those numbers would be that much greater.

The ultimate compliment for the city's reorganization came when two of its architects moved on to bigger jobs last year.Roger Fraser was hired to run the state's emergency manager program, and former public services administrator Sue McCormick now heads the Detroit Water and Sewerage Department (see box, below).

"Ann Arbor has done a remarkable job of reducing expenses to meet revenues, and it's had a minimal impact on services," says Fraser's successor, Steve Powers. "We're just about right now, not too skinny, not too big. The last ten years have made the city better conditioned and more muscular."

But now, Powers says, "it's time to take a break from reduction. I don't see the number of employees changing in the next five years unless council, supported by the public, decides to change things."