MANKATO — Mankato City Manager Susan Arntz has eliminated the city’s 10-person engineering department, prompting the immediate or pending dismissal of seven workers amid plans to outsource most of the work to private engineering firms.
The decision comes after multiple mistakes and controversies related to city construction projects, payments, cost estimates and fee collections by the engineering division, but Arntz said her decision was not prompted by the staff’s performance.
“We have a lot of talent here at the city …,” she said. “We’re at a spot where we haven’t been able to recruit replacement talent. This is 100% about that.”
Two supervisory positions in the department have been vacant for more than a year since Jon Nelson, an associate civil engineer, took a job in Lakeville and Assistant City Engineer Michael McCarty was hired as the Watonwan County engineer and public works director. That left two graduate engineers on Mankato’s staff who were without certified professional engineers to provide the expected supervision and mentoring, Arntz said. Those two engineers-in-training were laid off Oct. 3.
The jobs of the five engineering technicians on the staff will end on Dec. 5. A project coordinator will be retained on the municipal payroll, working in a new Construction Services Department supervised by Administrative Services Director Parker Skophammer.
Major changes
Arntz authorized the layoffs and the organizational restructuring without the permission of the City Council. Under the council-manager form of government established in Mankato’s City Charter, the council sets overall policy and hires the manager to handle day-to-day operations. Somewhat similar to a CEO overseen by a Board of Directors, the city manager has complete authority to hire and fire employees.
“I do,” she said. “My role is to operate and provide for the staffing.”
The hiring part of the job has proven difficult when it comes to attracting experienced engineers, even after contracting with a recruiting service.
“I can’t compete with the private sector in what they’re paying engineers,” Arntz said.
Even if she ramped up salaries for engineers, state pay-equity laws would force other upward adjustments for comparable positions in city hall, which would require increases for those workers’ supervisors — bringing budgetary repercussions all the way up the chain of command.
Revisions to Mankato’s proposed 2026 budget, presented to the council at its most recent work session, show the effect of the layoffs. Salaries and benefits for “construction services” are reduced by $676,000. Additional revisions show nearly $80,000 in reductions in “vehicle operations” and “capital outlay.”
Offsetting that is a big jump in charges for “other services,” which are rising by more than $812,000. Some of that reflects expected increased in unrelated contracted services, but the vast majority is the anticipated payments to private engineering firms to do the work previously accomplished by the municipal engineering staff.
The bottom line is that the change will bring a slight decrease in costs, Arntz said.
The changes will also bring some efficiencies while providing more consistency in who is overseeing major civil engineering projects on city streets and in city buildings, she said.
Local engineering firms Bolton & Menk and ISG are likely recipients of much of the $700,000-plus slated for engineering services in 2026.
Already, Bolton & Menk is providing some of that work via its employee Karl Keel, who has been serving as Mankato’s interim public works director for more than a year after Public Works Director Jeff Johnson went on a leave of absence believed to be related to a deployment by the U.S. Army Reserve. The city also has project-specific consulting contracts with ISG, SEH and TKDA.
A difficult year
Arntz recognizes that the timing of the decision to eliminate the engineering department will lead to assumptions that it’s connected to the negative publicity the city has received about the handling of downtown construction projects.
In January, the council learned that unidentified city staff had provided six-figure discounts in municipal fees charged to developers when construction projects cause obstructions to city sidewalks. Rather than charging the amounts set by the City Council, staff had for years been slashing the fees — by $140,000 in one documented case and possibly by much higher amounts in other instances. While the discounted charges were calculated by engineering staff, Arntz said they set the amounts as they had been trained by someone in a higher level of city government — a person who has never been publicly identified.
In February, Arntz asked the council to authorize $742,000 in streetscape improvements on a just-completed reconstruction of Riverfront Drive — mostly to remove new highway-style light poles that had been installed months earlier and replace them with the vintage-style lights that had been intended for the historic Old Town business district. The cost of the fix ultimately rose to $816,000 when bids came in higher than anticipated.
In April, Arntz advised the council that nearly $1 million of expenses were omitted from cost estimates provided to the elected officials when they were deciding whether to go ahead with the original Riverfront Drive reconstruction project. Multiple mistakes were made by the engineering division in reporting costs and estimating assessment charges, but the largest misstep was a decision to place a purchase order for $940,000 in traffic signal systems and street lights without the knowledge or the required authorization of the council or city manager. The Riverfront Drive reconstruction, which carried a $9.1 million cost estimate when the council approved the project, ultimately cost $10.7 million.
An even bigger whiff on a project cost estimate came to light in September when bids were opened for the reassembly and placement of the historic Kern Bridge over the Blue Earth River between Sibley and Land of Memories parks. The apparent low bid was $1.1 million above estimates, pushing the entire project cost to $10.5 million.
Although the most recent construction estimate was made by the consulting engineering firm SEH, which is being paid $1.7 million to design and oversee the project, an even larger error was made by the city engineering division when originally projecting the cost of reusing the 152-year-old structure as a pedestrian bridge connecting the two parks. In August, 2020 the municipal engineers estimated the project would cost $2.53 million — less than a quarter of what the city is now facing to complete the job.
Even as the city engineering staff is being laid off, Arntz isn’t blaming them or their relative lack of experience for the problems: “I don’t believe that to be the case.”
Instead, the elimination of the department is about the ongoing challenge of finding qualified engineers.
A small-city approach
A widespread shortage of civil engineers is impacting private firms, too, so it’s possible the cost of contracting for engineering services will ratchet upward as the private sector is forced to boost salaries in an effort to recruit and retain staff.
“That’s always the fear,” Arntz said, adding that the presence of large local engineering firms eases that concern. “We have a lot of local talent in the firms here in Mankato, so we’re very fortunate that way.”
It’s not the first time Mankato has contracted with private firms for work that had previously been done by city staff. The most obvious example is the elimination of the city attorney’s office under former City Manager Pat Hentges. That happened upon the retirement of a longtime city attorney Eileen Wells in 2016 when Hentges worked out an agreement with the Blue Earth County Attorney’s Office to hire Mankato’s assistant city attorneys and contract with the city to handle the bulk of municipal legal matters.
Five years later, Arntz suggested looking at alternatives and a private law firm based in Stillwater was hired to provide legal services for the city.
Smaller cities routinely contract with the private sector to supply both a city attorney and a city engineer as needed, but it’s far from common for a major regional center such as Mankato to be without an engineering department.
“I’m not aware of a lot of cities our size that contract 100% of their engineering services,” Arntz said.