John Gallagher| Detroit Free Press

Until 13 months ago, the City of Detroit’s workforce development office — the agency that uses federal funds to train city residents for private-sector jobs — represented another failure of city government.

The workforce office was so inefficient that payments to vendors were months late. Contracts that should have taken a month or two to sign would get lost for up to a year. Performance in placing candidates was so poor the state, the conduit for federal funds, threatened in a blistering February 2012 letter to cut off funding to the agency.

PDF: Letter to Chairman of Detroit’s Workforce Development Board David Baker Lewis

But since being spun off a year ago into the nonprofit Detroit Employment Solutions Corp., workforce development in Detroit has flourished. The office supplied the majority of candidates for the new Meijer store at 8 Mile and Woodward and all 661 line workers at the new Detroit Manufacturing Systems plant in northwest Detroit, which assembles instrument panels for the Ford F-150 pickups and other vehicles.

“I would just stress that on every level — operations, program performance, partnership — we see significant improvements,” said Janet Howard, deputy director of the State of Michigan’s workforce development agency.

Like Eastern Market, Cobo Center, and other municipal operations spun off in recent years into independent nonprofit authorities and conservancies, the workforce development story shows that swift improvement in city operations is possible once a radical restructuring takes place.

Pamela Moore, a former aide to Mayor Dave Bing who took over the workforce agency and moved it into its new nonprofit structure, echoed that.

“You cannot do this work inside of a broken system,” Moore, president and CEO of Detroit Employment Solutions, said. In the new nonprofit mode, she added, “We’re agile, we’re nimble, we can process things quickly and we can respond to the environment.”

Detroit emergency manager Kevyn Orr has said he’ll explore the option as he works to reorganize city government.

Swift turnaround

Proof of the success can be found at Detroit Manufacturing Systems, a new auto supplier operating in northwest Detroit near Southfield Road and I-96. Rosemary Brewer, director of human resources, said the new Detroit Employment Solutions Corp. has succeeded in matching qualified workers with open jobs.

The independent workforce agency screens thousands of potential candidates to find those with eighth grade math and reading ability and the manual dexterity needed for line work, pre-qualifying them before they arrive for the final company interview.

When the auto supplier found that some of the candidates were failing a drug screen, the workforce agency found a grant to conduct the drug screening in advance, so that only pre-screened candidates made it to the final interview with the company.

“Without them, I don’t know that I would have made my employment requirements,” Brewer said of the newly independent agency. “They’ve been very responsive to whatever our needs have been.”

LaRusso Rippie, 19, of Southfield, a line worker at the plant, appreciates the help he got from the new Detroit Employment Solutions office. “They helped me with my résumé, everything,” he said. “They helped me for the interview. I got the job, so they helped me right.”

Darryl Rambus, 49, of Harper Woods, a data analyst with the plant, echoed that. Having been laid off from a previous automotive job, he approached Detroit Employment Solutions.

“They take you in, give you the initial interview, just see what are you looking for, where your head is at, are you looking for a job or just looking?”

There is, of course, opposition to such spinning off of city operations. Debates at City Council have raged for years over the propriety of shedding operations, either over concerns about “selling the city’s jewels” or over the impact it might have on unionized city workers.

But the success of Eastern Market, Cobo Center, and other former city operations now run by nonprofit boards has raised hopes that other potential spin-offs might be equally successful, whether dealing with public lighting, blight removal, or other city operations.

“We do see major turnaround on every level,” state official Howard said of the Detroit Employment Solutions operation. “We’re excited about the turnaround and hoping that the word gets out more and more to the community so they understand that it’s not business as usual and that citizens really are being served as well as business.”

Nonprofit success

There are 25 local workforce development agencies in Michigan, all receiving U.S. Department of Labor job training funds that flow through the state’s workforce agency. Detroit’s operation is the largest.

For years, that city operation was in trouble. Moore said there had been seven directors in eight years when she took over. Performance measures — how many workers were placed in jobs and other metrics — were so poor that in the February 2012 letter the state threatened to cut off the flow of federal funds to the city. In response to the warnings and internal efforts, the agency spun off a few months later.

“Many of the problems were directly identified as being connecting to being a part of city government structure,” Howard said. “The actual department didn’t have control over the flow of funds. Payments out to contractors were months behind and sometimes as much as a year late. Contracts that needed to be executed to administer programs were often six to 12 months being processed.”

Leaders involved in this and other spun-off city operations, including Eastern Market and the Historical Museum,, both spun off in 2006, and Cobo Center, put into a regional authority in 2009, agree there are common reasons the change-overs to independent nonprofit status has worked so well.

Shedding government bureaucracy: Multiple levels of redundant approval are eliminated. The city’s structure requires that contracts with outsiders go through multiple levels of approval — within the department involved, the mayor’s office, the law department and City Council. As a result, nothing moves quickly.

“It was just an archaic structure,” Howard of the state agency said. “It was not made to be nimble. It was not made to be flexible in any way, and it certainly did not serve workforce development at all.”

Some say those checks and approvals are important safeguards against waste and fraud. But supporters counter that the positive results are so overwhelming in some cases that it’s worth the risk. They also point out that the nonprofits have board members, that any group using taxpayer funds or grants is occasionally audited and that there are often performance benchmarks that must be met to keep receiving public money or grants.

Saving money: Spinning off a function also allows operations like Cobo Center and workforce development to cut overhead. Moore estimates she has saved dramatically on those expenses, thanks to streamlined labor operations and elimination of city legacy costs.

New partners and funding: A new nonprofit structure can also attract new partners and funding opportunities from outsiders who were unwilling to get bogged down in the city bureaucracy. The Detroit Employment Solutions Corp. recently received a $1-million grant from DTE Energy to run workforce training programs in local schools — a grant that probably wouldn’t have happened under the old city structure.

“Our excuse was always the city,” Moore said of the old dysfunctional workforce agency. “We could always blame the city. And now we’re a nonprofit, totally not relying on the city, so we don’t have an excuse anymore. We’ve really got to be efficient and prove we’re as great as we can be.”

The new nonprofit agency has become a demand-driven organization, training Detroiters for actual openings with real companies, such as the new Meijer store and the Detroit Manufacturing Systems plant.

“We can respond to the environment,” Moore said. “When you’re in the city you can’t respond to much because there’s something that’s going to stop you, hold you up, the process, somebody’s not going to return your phone call. The city is pretty broken right now.”

For Moore, the resurrection of her workforce agency is part of the broader struggle to reimagine what Detroit can be.

“Detroit is reinventing itself every day,” she said. “Detroit is going to be something different than we’ve all known it to be. We need to be able to respond to that.”

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