Saturday, July 21, 2012

At Least Some Local Governments Use Common Sense ... Shared Services

Most of the time, it's very hard to find something nice to say about government leadership with respect to providing quality services at the lowest possible cost to taxpayers. It's actually real hard, in fact.

But many small towns and counties across America now seem to be coming to grips with the simple fact that no free lunches exist, especially in government, and that to continue to ignore our all too real fiscal problems won't make them disappear.

These well intentioned and productive public servants are also finding that solving our local financial problems doesn't have to be that difficult, assuming two conditions are met: (1) there's a recognition of the problem and (2) a willingness to find and implement a common sense MOM based solution.

Towns Cut Costs by Sending Work Next Door is subtitled 'Oregon Counties Join a National Trend, Handle Local 911 Calls, Tax Collection.' It's a refreshing read which says in part:

"MOLALLA, Ore.—This town of 8,000 residents has found a way to trim its troubled budget: outsource city-hall jobs to a nearby county government.

In 2008, Molalla spent $507,973 on employee salaries and other expenses to handle its building permits, inspections and other construction red tape. In the fiscal year ended June 2012, it spent less than $150,000 for that work.

Molalla did it by finding a subcontractor, much as some corporations contract out to specialists the task of making their products. The town is paying Clackamas County to take care of the construction-related work. So far, town residents aren't complaining.

Molalla, 30 miles south of Portland, is part of a trend spreading across Oregon among towns and cities facing fiscal crises and seeking to cut spending. . . .

Oregon towns are turning to bureaucracy-outsourcing as the toll from the sluggish economy is compounded by the end of decades long federal timber payments that until this spring pumped as much as $200 million annually into 18 of the state's 33 counties.

Oregon's public sector is catching up to a trend that has already taken off in some other states as cities and towns consolidate operations. Often called "service contracting," or "service sharing," this type of outsourcing lets cities keep the work local and maintain a connection with voters, instead of privatizing operations to a commercial venture that might be located far away. . . .

Driving the outsourcing are sharp drops in tax revenue and the tapering off of federal stimulus funds, which have hit government workers hard. . . .

As some towns look to spin off their bureaucracies, other local governments are more methodically bidding to do those tasks, said Robert Bland, professor of public administration at the University of North Texas. "Local governments now are looking at doing each other's purchasing, human-resources work or having their municipal courts handle each other's small misdemeanor claims," he said.

Oregon's Lane County, for example, is marketing itself as a one-stop shop for bureaucratic outsourcing, bidding aggressively for contracts to take over work from Oregon cities and towns. In 2010, the county assumed information-technology duties for Oregon's Crook, Lake, Gilliam and Wheeler counties, four smaller jurisdictions that can't afford IT teams.

Under the arrangement, Lane County handles property-valuation and tax-collection duties for the four counties, which feed their property data to Lane's computers. Officials for the four counties confirm the arrangement.

"We're absolutely thrilled with the technology stuff," said Donald R. Cossitt, Wheeler County's assessor. "We couldn't do it in-house." . . .

Molalla's case illustrates the appeal and downside of outsourcing. Its building department had a $300,000 deficit the last year city employees ran the operation, said Ellen Barnes, Molalla's city manager. She said outsourcing the work this year to Clackamas County would cost around $100,000; she added that Molalla faced a one-time charge of $37,500 for the staff it laid off.

Peter Blythe, principal broker for Molalla Realty, considers the 30-mile round trip to Clackamas County offices in Oregon City something of an inconvenience, but he prefers the new arrangement overall. "Most of us were agitating for it," the Molalla resident said. "It's better than having people with nothing to do in a recession and paying them $40,000 or $50,000 a year."

Clackamas County is now marketing those services to other towns. "The county makes a little money, and the cities save some," said Clackamas chief planner Clay Glasgow. "It's such a good idea it's hard to believe two governments actually made it happen."

My Take

Small towns are accepting responsibility to make solid MOM based economic decisions involving tradeoffs between doing everything themselves and contracting with surrounding communities who are able to provide those services better and at a lower cost.

To me it's a no-brainer and involves only a simple common sense based "make versus buy" comparison as to what it would cost if local government did it "in-house" or oursourced the activity and received the same or better service by paying someone else to do it for a lesser cost.

Companies outsource or contract out routine administrative work all the time. It's an excellent way to introduce economies of scale and outside expertise to areas where the resultant benefits make the decision to outsource "shared services" an easy one.

Here's at least one way to look at this shared services approach: Better quality of government services at a lower cost = enhanced productivity = more responsible government = happier citizens and taxpayers.

There is no need for government officials to relinquish control as the "external" contractor or service provider still has to "satisfy the government customer" or he'll lose his job. As in the private sector, that's sufficient incentive to deliver quality service at a low price. Productivity in action. And it's an incentive that is often missing in action when the work is done in-house.

Summing Up

Now let's ask ourselves a related question: Why won't the feds try this common sense outsourcing approach for postal deliveries, managing drivers' licensing bureaus or countless other administrative matters currently done in-house by government but better done by outside contractors? Could it be that they are obligated to the public sector union leaders? It's either that or a fear of change.

In any event, MOM thinking doesn't have to be AWOL when different governments work together to control costs and deliver quality services to their citizens. It's a simple matter of using common sense.

But since we don't often see evidence of this common sense approach to cost sharing and control in any one governmental body, let alone more than one, I wanted to share with you the good news from small town Oregon and elsewhere.

If OPM left town and MOM started running the government "show," our politicians would become quality service providers at the lowest possible cost to taxpayers.

And that's not only what We the People deserve but what we must begin demanding.

We can't afford to keep wasting money we don't have just because we've always done it that way.

Thanks. Bob.

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