SPECIAL REPORT: Center Township trustee taps taxpayers for millions

At an aging building at 863 Massachusetts Ave., they pass through a metal detector and wait in line to show a clerk their identification and copies of overdue bills. Center Township Trustee Carl Drummer sometimes helps.

The Trustee’s Office received an average of $6.9 million each of the last seven years, mostly from taxes, to provide poor relief—now known as township assistance. But only about $2 million reached the penniless each year, with much of the difference covering administrative overhead.

Drummer has hoarded the rest as a shield against unspecified future needs.

Parked in a series of money market accounts, the surplus at the end of 2007 stood at $7.1 million—more than the office brings in annually to handle poor relief. Since 2001, the reserve has ranged from $4 million to $10.4 million, depending on expenses.

That’s an enormous cash cushion, and one the trustee’s office isn’t eager to publicize. IBJ discovered it by poring over public records dating back to 1994. An analysis of the financial records showed that Drummer and his predecessor, the late Julia Carson, built the reserve over the last decade and a half by collecting far more than they spent in a handful of years and banking the remainder.

Since property taxes are the primary type of income the trustee can control, that means Center Township homeowners and businesses now clamoring for lower bills paid millions more than they had to over the years.

Trustees operate without much direct oversight. Separate state agencies review annual budgets and spending reports, but they don’t often interfere with policy decisions as long as the township’s tax levy remains lower than the legally authorized maximum.

Drummer also answers to an elected seven-member township board, composed almost entirely of well-meaning residents with few professional credentials who essentially rubber-stamp the budget, one former director said. (See related story.)

In addition to the hefty surplus, Center Township has amassed a $10 million portfolio of underused properties for future redevelopment. (See related story.)

But it’s the multimillion-dollar savings account that gives critics ammunition in their argument that township government is so wasteful it should be dismantled. The General Assembly is considering caps on homeowners’ property tax bills, which would choke off local government’s largest source of revenue and force long-simmering questions about inefficiency to boil over next year.

Republican Gov. Mitch Daniels already has required state agencies to trim fat to the bone. Under his administration, officials target reserves of 10 percent of their annual expenses. By that measure, Drummer’s surplus shouldn’t top high six figures.

He argues it’s necessary nonetheless. Without the savings, Drummer said, his office might have to go begging like the people it serves.

"It would be very easy for me to say, ‘You know guys, I’m tired of getting beat up on for saving money.’" said Drummer, a Democrat. "If we were borrowing money, they’d be beating up on me, too."

Still, Statehouse critics aren’t exactly happy about the surplus. When he learned about Drummer’s reserve from IBJ, State Rep. Phil Hinkle of Indianapolis repeatedly called it "absurd" and "unbelievable."

"You cannot justify in my mind the validity of overcharging the taxpayer consistently," said Hinkle, ranking Republican member of the House Local Government Committee. "One or two years in a row? OK, I can see it happening. You make adjustments. But you don’t consistently over-bill the taxpayer."

Drummer has defenders nevertheless, including State Rep. Bill Crawford, who chairs the powerful House Ways and Means Committee.

The Indianapolis Democrat praised Drummer’s decision to maintain a surplus, especially in light of the looming potential of a national recession.

And, Crawford noted, Drummer’s management choices have been repeatedly approved by the ultimate authority: voters

"It’s the people of the township who have the right to say yea or nay about the administration of that office," Crawford said. "There’s nothing to stop them from turning the trustee out."

Plight of the poor

Statewide, township trustees have a variety of duties, including overseeing fire departments and maintaining cemeteries. But in urban areas like Center Township, their chief responsibility is to offer short-term aid to needy people suffering emergencies, such as layoffs or medical crises.

Drummer, 43, knows the plight of the poor well. Born in Chicago, he was one of five children raised in various housing projects by a single mother. The family moved here when Drummer was in second grade.

He remembers his mother’s endless, exhausting trips to relief offices-each located in a different part of town-to pick up food stamps, clothes or housing stipends.

That’s why he gathered numerous types of aid under one roof. It’s also why he insists that poor-relief applicants be treated with respect. In his office, they’re called "clients." Drummer also won’t allow his 85 employees to wear suits or ties, which he says intimidate desperate people and create an air of supplication.

"I enjoy helping people. I enjoy seeing the satisfaction on a kid’s face that didn’t have food yesterday that’s going to walk out of here and eat today," Drummer said. "That’s my roller-coaster ride. That’s important to me."

Applicants who approach the trustee on a cold winter’s day with a final notice from the gas company find a friendly face in applications clerk Kendra Surrett. She has worked in the Trustee’s Office 7-1/2 years, meticulously obtaining case information from the destitute.

Like Drummer, she’s felt their troubles personally. As a young single mother a decade ago, she received poor relief herself.

"You never know when you’re going to be in need. Just because you’re not in their shoes is no reason to condescend to them," she said. "Some people work every day of their life. Then they get sick, and they come here."

"I tell people ‘I am you,’" she added. "I have sat there. And don’t think I can’t be where you are, just because I’m sitting on this side now."

There’s nothing lavish about the Trustee’s Office on Massachusetts Avenue—think decades-old furniture, fluorescent lights, bare walls and cubicles filled with extremely polite employees.

To make the office a "one-stop shop," Drummer leases space to other agencies that serve the needy, so clients can also get help with their food stamps, Medicaid or child support payments-assistance that doesn’t show up on the township’s books with the pauper’s funerals, emergency shelter or utility assistance.

There’s no question that an unyielding tide of poor people regularly brings sharp, intractable problems to Drummer’s doorstep. Dealing with them takes time, which means resources.

Rather than require applicants to fill out complicated forms, for example, clerks conduct interviews verbally. That’s because many applicants are illiterate.

Surrett said she keeps a box of crackers in her desk drawer for the children who accompany some of her clients. One of the key indicators that a family needs poor relief, she said, is how desperately kids react when offered food.

Drummer wants to help his clients help themselves.

Consider Nelson Alexander, 50, a strong bull of a man with a wide smile whom Drummer hired to do temporary janitorial work in the Trustee’s Office. A trained forklift driver, Alexander said he was laid off from his last job after three years at a local manufacturing plant. He came to the trustee for help with gas, electric and water bills. He’s now searching for another forklift job.

"It’s more like a hand up this way," Alexander said. "I just feel better about myself as a man than I would with a handout."

Obscure finances

Every fall, Drummer and his chief financial officer, Alan Mizen, prepare a poor-relief budget, setting the tax levy after evaluating expected income and expenses. By law, they must publish notices in local newspapers, then present the budget to the township board, which approves it at a sparsely attended public meeting.

In February, the Trustee’s Office files a final report known as Form 15 with the state Board of Accounts, showing actual receipts and disbursements for the year before.

IBJ‘s analysis revealed Drummer’s budget has little correlation to reality.

Last year, for example, Center Township’s poor-relief budget would have allowed up to $14.8 million in expenses; the township actually spent $7.6 million. That’s not an aberration. This decade, Drummer’s budgets averaged $6.9 million more in planned spending than he actually disbursed.

Drummer’s property tax levy is based on this inflated budget, a practice the state Department of Local Government Finance allows as long as it remains below the legal limit. In Indiana, government offices are allowed to spend less than they’ve budgeted, but not more.

Any extra is carried over into the next year, when it typically is budgeted to be spent. If it’s no—as in Drummer’s case—the surplus can be held indefinitely, provided it isn’t invested in anything that takes longer than two years to mature.

"The traditional government approach is to ‘use it or lose it,’" Mizen said. "And one of the things this township management understands is, if you don’t spend the money, put it back into the next budget so that you’ve got the money available for your next year’s needs, should they occur."

Drummer’s office draws more than three-quarters of its annual revenue from taxes, mostly property taxes. Other income sources include the county option income tax and a share of the excise taxes on automobiles, airplanes and financial institutions. And Center Township’s property portfolio and surplus fund each generate six-figure contributions in the form of bank interest and rent.

In 2003, the Trustee’s Office brought in $10.5 million for poor relief, the most this decade. That year, 69 percent came from property taxes. The $7.2 million levy was far more than the average $2.7 million Drummer raised the other six years.

The extra money was earmarked for development of a community center—still on the drawing board—next door to the trustee’s headquarters and for other improvements; less than $240,000 was spent.

All told, Drummer budgeted $17.5 million in spending for 2003. That seems impossible, given his $10.5 million income. And it would be, if Drummer didn’t have a reserve.

In the 2003 year-end report, Drummer listed actual disbursements of $7.1 million from the poor-relief accounts. That meant he banked $3.4 million, building the accumulated surplus to a peak of $10.4 million.

Drummer said he never targeted a specific sum for the reserve. Instead, he considers it an extension of his frugal philosophy.

"If we had a million or 10 million, the goal was to make sure that we had enough," Drummer said. "The key … was to make sure that we would never have to borrow again."

Drummer has been dipping into the reserve since 2003, spending about $3.3 million over the last four years as expenses have exceeded income.

The process of accumulating reserves began in the early 1990s under Carson, Drummer’s predecessor. State Board of Accounts audit records show the office had big jumps in cash and investments under management four times between 1993 and 2000. The records don’t include details about the source of the gains.

Drummer isn’t the only township trustee with a surplus, to be sure. Public records show Marion County’s Washington Township, for example, has formally established a $3.5 million rainy day fund. Urban Calumet Township in Gary has one that totaled $1.4 million at the end of 2006.

Still, Indiana Township Association President Mary Hart said surpluses are the exception, not the rule.

"You really shouldn’t be building up a major surplus," Hart said. "You look at your figures, and if you didn’t use all the resources, you cut back what you ask for next year. And you do that line item by line item."

"Most of your township trustees are a little more responsible with your tax dollars than that," she added.

History, history, history

Few remember it now, but when Carson became Center Township trustee in 1991, the office was in crisis—more than $24 million in debt and on the brink of state intervention.

Worse, Drummer said, its standards were a shambles. Handouts were awarded with little investigation to anyone who asked, leading to fraud: poor-relief money going to people who had full-time jobs, fur coats and big-screen television sets.

As trustee, Carson implemented strict standards and demanded every claim be double-checked and investigated in person, Drummer said. She also began accumulating a substantial reserve so debt would never again be a problem.

"We were able to come in and do a service and turn this thing around," Drummer said. "We’ve run this like a business."

Drummer began working as a security guard for Carson in 1990 after she received death threats. When he was elected to replace her in 1997, he continued Carson’s policies, including the decision to build reserves.

A substantial surplus is necessary, Drummer said, in case of emergency, such as mass layoffs or a severe turn of Indiana’s economy.

"History, history, history. You can’t tell when a need will crop up," Drummer said. "If you don’t have reserves available, you’ll be in violation of the law or putting people on the streets."

Direct assistance provided by Drummer’s office has remained steady this decade, ranging from a low of $1.8 million in 2003 to a high of $2.4 million last year. Property tax revenue in the same period has been more volatile, peaking at $7.2 million in 2003 and bottoming out at $2.1 million last year.

Hinkle, a former city-county councilor, remembers Carson’s predecessor. At the end of every year, Hinkle said, the trustee would approach the council, hat in hand, because he’d overspent his budget. Marion County had to make up the annual difference, between $1 million and $2 million.

"A tip of the hat goes to Julia because she quit that process," Hinkle said.

Like Carson before him, Drummer has developed a leadership role among the urban poor that many outsiders acknowledge, but few understand. Indianapolis Recorder columnist and radio personality Amos Brown said Drummer is seen as a responsible public official, one of the few who is responsive to the needy. And the people who ask for his help understand that it’s a last resort.

"I don’t think people perceive it’s an open door and you can get anything you want out of there," Brown said.

It’s impossible to say whether poor relief could be organized more efficiently, Brown said, because the question has never been studied with the same kind of diligence as other local issues, such as consolidation of the area fire departments.

"As a community, we need to answer the question: If somebody is out on their luck and they still have bills, how do they survive?" Brown said. "We’re putting the cart before the horse. I don’t think any business would decide to radically change without studying what that change would involve and mean."

A critical debate

In 2006, Drummer received 9,391 requests for assistance, about 181 a week. His office helped 6,855 people. Given the millions of dollars in the bank, the question is whether the trustee could be doing more.

About 43,000 people in Center Township live below the poverty line, according to U.S. Census Bureau research. But Drummer said it’s not the trustee’s job to assist them all—at least not permanently. His role is to quickly respond to the handful that occasionally slip into crisis, then refer them to other agencies for long-term relief, he said.

Many who apply are rejected because investigators determine they’re not poor enough to qualify for help—or they’re trying to "game" the system, Drummer said. Those investigations use resources, no matter the outcome. The Indiana Department of Local Government Finance, which reviews trustees’ budgets, expects costs for poor-relief administration to be higher than relief distributions.

Even so, critics argue Drummer’s overhead is exceptionally top-heavy. On average, 72 percent of his spending this decade underwrote administrative costs such as salaries, legal consulting and maintenance of buildings owned by the township. Just 28 percent supported direct relief.

Drummer objects to any analysis that concentrates on his ratio of overhead to relief, but it raises questions for others.

"We have to ask ourselves if it makes sense to have such high administrative costs or a $10 million reserve," said Indiana Chamber of Commerce Senior Vice President Mark Lawrance. "Is it necessary for this unit of local government to have that kind of surplus when they have an annual appropriation?"

"They’re not the township’s dollars," he added. "They’re the people’s tax dollars."

The critical debate is likely to escalate. Hoosier homeowners are demanding property tax relief, and the officials charged with delivering it have township government straight in their sights.

"We think there are plenty of places where people are running a tight ship, and others where they aren’t," said Indiana Supreme Court Chief Justice Randall Shepard, who spent the last half of 2007 investigating local government consolidation with the help of former Gov. Joe Kernan. "Township decisions are not particularly visible to voters. … That’s part of the reason why we [recommend] transferring these assignments to the county level, where people are wont to pay greater attention."

Even so, the campaign to dismantle township government likely won’t escalate beyond skirmishes this year. Hinkle said the Legislature has enough on its plate for the 2008 short session establishing property tax caps for homeowners.

But expect bloody battles in 2009, when questions about the efficiency of township government will move front and center.

"Government is not in the business of generating profit and creating surpluses. Government is in the business of providing a service," Hinkle said. "And when you charge more than the cost of that service, you do not only a grave injustice to the taxpayer, you’re not fulfilling your public role."

Seldom scrutinized

Drummer grumbles that outsiders never attempt to understand his challenges, visit his office, or spend any time with the poor, instead making assumptions and issuing pronouncements of inefficiency from on high.

He cited Republican Mayor Greg Ballard as an example. Like his predecessor, Democratic Mayor Bart Peterson, Ballard wants to consolidate units of local government to reduce expenses. One difference: Peterson’s "Indy Works" plan would have left Drummer’s office intact.

"We need to find ways to reduce the cost of government. What seems like low-hanging fruit are the multiple layers of government that aren’t necessary anymore," said Ballard’s spokesman, Marcus Barlow. "We view the township trustee as … a level of government that should no longer exist."

Those public officials who do visit often walk away impressed with Drummer’s operation. After a recent tour, Republican state Sen. Jim Merritt of Indianapolis removed township trustees from legislation he introduced to merge local government offices in Marion County.

He called the Center Township Trustee’s Office highly organized, and said he had the impression Drummer is attempting to lower costs.

But Merritt admitted he hasn’t attempted to scrutinize Drummer’s finances.

"I frankly think with the property tax issue the way it is, and how we’re struggling down here to put a system together so that we’re taking as little as possible from property taxes, $10 million seems like a lot of money," said Merritt, the majority caucus chairman. "I’d have to sit and think about that. … I think an explanation is due as to why so much money is in his account."

It’s not yet apparent whether property tax ire will finally force the question of township government consolidation. What is clear is that the needs of the urban poor won’t change, no matter what office serves them.

Drummer generally has a friendly demeanor. But he becomes irate at the suggestion that reorganizing trustees’ offices would offer more help to the needy.

"We’ve given shirts off of our backs. Literally," Drummer said. "Coats out of our closets. Literally."

Hard-pressed for their next meal or bed, desperate people don’t pay much attention to government structure. But they understand when one of the few places offering a foothold is in danger.

Poor-relief applicant Amy Cedarwall, 40, explained their perspective.

Living in a homeless shelter, Cedarwall visited the trustee last month to get help finding a job. She’s on felony probation for a theft she committed against her last employer. With few skills, she said, it was tough to get work before her conviction. Now, it’s nearly impossible.

The trustee is the last resort, Cedarwall said, for both herself and her 5-year-old son.

"I hope they keep on running this place," she said. "There’s a lot of homeless people out there that don’t have anywhere to go."

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