people mover
A new audit of the organization responsible for managing the Detroit People Mover found flawed accounting practices, unchecked employee vacations and improper pay raises. (BridgeDetroit file photo)

An audit of the organization responsible for managing the Detroit People Mover found serious accounting flaws that resulted in unauthorized and duplicate payments, excessive vacation time and improper pay raises.

The new report on the Detroit Transportation Corporation from the independent Office of the Auditor General found $3.3 million worth of check requests were missing proper authorization and $53,194 in duplicated payments were made dating back to at least 2015. The 77-page audit also flagged other troubling financial issues – like an employee’s 61% pay hike – that increased the DTC’s risk of fraud and abuse. 

Council Member Fred Durhal called the audit “concerning” during a Wednesday committee meeting, noting the findings suggested major flaws in the DTC’s workplace culture. Council Member Coleman Young, whose late father presided over the People Mover’s construction while mayor, called the details “almost to the point of outrageous.” 

“It’s a reflection of the city,” Young said during the committee’s review of the audit findings. “It not only hurts us in terms of doing business with vendors, but the reputation of the city as a whole is harmed by that.” 

DTC General Manager Robert Cramer attributed many of the issues to unfilled positions, frequent staff turnover and poor training that predates the organization’s current leadership. Cramer said the DTC underwent a major overhaul of key positions and its human resources department in the last year. He said new policies, procedures and training programs are being implemented as recommended in the audit.

“We’re all personally and seriously invested in (the People Mover), it’s a unique and important system,” Cramer said Wednesday. “We’re eager to strengthen it and grow the value to the city and its residents. This is something that can really be beneficial.” 

The audit, which covers July 2015 through June 2021, found that DTC did not have formal procedures for some of its accounting operations. For the procedures it did have, the audit found, some were “outdated and inadequate” and others weren’t followed. 

The DTC failed to follow policies relating to vacations, performance evaluations and salaries. Three employees took far more vacation time than they should have been allowed – 1,179 excessive vacation hours worth $40,332 in 2021 alone, according to the audit.

The audit also found 13 non-union employees were given raises in 2018 without documented evaluations and approvals. One employee’s salary increased by $35,984, another was paid nearly $8,000 more than their recommended salary range. 

Most of the issues identified were attributed to staffing shortages combined with a lack of adequate policies, Vivian Slaughter, a staffer from the auditor’s office told council members Wednesday.

DTC relied on temporary staff, she said, who were either unaware of its policies or did not follow them. The DTC accounting department had only one employee. Four other positions were vacant, including a staff accountant position that hadn’t been filled since 2010. 

DTC has endured four different managers since 2005, including two since last May. Cramer was hired last July after serving as general manager of the Suburban Mobility Authority for Regional Transportation, a regional bus service. 

In the last year, DTC brought on a new controller, human resources manager and manager for purchasing and procurement, among other positions. Cramer said the DTC will continue to update the auditor general and the council on its progress toward recommended reforms. 

The DTC was created in 1985 by the City of Detroit to operate the People Mover, which began running two years later on an elevated 2.9-mile, single-track loop in the city’s central business district. DTC is a legally separate entity from the city and is governed by a Board of Directors composed of six unpaid members appointed by Mayor Mike Duggan. City Council President Mary Sheffield also sits on the board.

Duggan and Sheffield declined to comment on the auditor’s findings. 

DTC has operated at a net loss since at least 2019, according to the audit. It recorded a $21 million loss in 2019, with administrative costs taking up $19.5 million in operating expenses. Annual losses slowly decreased to a $13.8 million loss by 2022. DTC is largely funded by city grants and was given $19.5 million in operating subsidies from 2018 to 2020. The city did not provide a subsidy for DTC in 2021 or 2022. 

Revenues were severely impacted due to the COVID pandemic, which closed the service in 2021 and part of 2022. The People Mover reopened last May after a two-year pandemic-related hiatus, with eight stations and an abbreviated service schedule. 

Other findings from the audit included nearly $542,000 in payments over several years to an advertising company despite the company not having an approved contract. 

An unnamed financial controller quoted in the audit noted that purchase orders were often “meaningless and incomplete,” with most being “made on the fly, long after an item was bought and received.” 

The audit revealed financial records were often not approved on time and that they contained inaccuracies. Paper checks and electronic payments involving various vendors were often misidentified, the audit states, and some checks were recorded with numbers that belonged to other checks. 

Fare revenues were entered into financial records months later, according to the audit, and practices to prevent tampering with the revenue collection process weren’t followed. 

The audit notes that DTC did not provide all of the documents requested by the auditor’s office, others weren’t provided in a timely manner. 

Young said he hopes the People Mover will eventually connect to a larger rail system or regional mass transit network, but said Detroit needs a functional transportation corporation to make that happen. 

“We have to have a transportation corporation that’s on point if we’re trying to get to the next level, because it’s going to harm the economic development that the city could be experiencing if it’s not,” Young said. “If they’re not going to trust you with the little stuff, they’re not going to trust you with that kind of stuff.”

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  1. Yikes! Not a great sign for the people mover. Sadly, Michigan government gave them millions for the next ten years.

    Should we really be tying ourselves and our tax resources to a loop in downtown? How much better would our bus system be if we had invested millions into it? How much does it really cost to increase driver pay baseline to a decent middle class income?

  2. So what was the total dollar amount of financial & other errors. The city has accounting rules, why couldn’t the DTC use them if they didn’t have any or any adequate ones. This sounds like somehow they found and used a way to steal City funds from the floor up.

  3. I think someone needs to audit the ppp funds that Dtc also received. It doesn’t hurt to ensure that tax payer dollars were properly spent.

  4. Wow it’s about time that someone is looking into this because I want to know how a department head gets 3 raises and a new position in the middle of a pandemic or how over half of the employees owed unemployment because Detroit transportation company did nothing to fix the problem they created now we owe the state how did they get covid money but we only worked one day a week? But department heads and management got raises but we lost houses cars and our families I would love to talk to the city council about the treatment we got shoved down our throats

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