Monday, August 19, 2013

Shared Services: Achieving Local Government Efficiency or Loss of Civic Identity?

In a recent National Public Radio Morning Edition radio piece Communities Debate Whether Sharing Services Saves Money, NPR focused on how the economic downturn has hurt the places where we live – cities, counties, towns – and the ways that communities and citizens are attempting to address their fiscal challenges.

NPR states, “Money-strapped municipalities are increasingly sharing services with neighboring governments. Advocates say consolidating police, fire and other departments protect them from budget cuts. Critics worry about emergency response capabilities and wonder if the savings are really there. Residents complain taxes are too high, then wince when services are cut. Increasingly, leaders are turning to a third option: consolidation of services, or even a merging of neighboring communities. While this can save millions of dollars, some critics say it's still more important to preserve a community's autonomy.”

Service consolidation is undoubtedly on the rise. Local governments primarily share services to improve service quality and save money. Even before the recent recession, Census Bureau data showed intergovernmental spending rose 234 percent from 1992 to 2009. Now, all states have service-sharing laws due to this unsustainable expense growth.
Expenditures rose steadily from $436 billion in 1977 to $1.5 trillion in 2009

When we talk about “shared services” we’re describing a local government’s ability to partner with another entity, public or private, in order to accomplish the same result of the service, while splitting the costs to deliver the service.  Same results, less cost, and less resources required from a community to pay for those results – these are the outcomes of shared services. 

But besides better outcomes, lower costs, and greater efficiency, NPR cites another outcome worth discussing, and that’s “civic identity.” The argument follows that service providers with a vested interest in the outcomes they’re working to deliver have a greater probability of achieving those outcomes. A patrol officer, for example, patrolling the streets of their own neighborhood, might approach the duty with greater care for the safety of their own streets, than somebody from outside the community would. Furthermore, when a local government is in control of how a service is provided, they have more control – control over changes in the service, control over costs, etc.

It’s an interesting argument, but many communities are finding that it’s not an “either / or” discussion; that there is a huge opportunity to achieve ALL outcomes: better results, lower costs, and just as much control (if not improved and increased service delivery). And if these are the outcomes we’re hoping to achieve through shared services (including the outcomes of “civic identity”), then how do we go about finding services worthy of consideration?

In the City of Cincinnati, Ohio, they used their Priority Based Budgeting process to draw attention to shared services opportunities by focusing on programs where the City has identified that there is another service provider (either public or private), and/or the program isn't recovering all of its costs – this was a great place to start!

The question on the table here is: we know there are other service providers out there providing this service, and we know we are using general government resources to provide these programs (because they aren't 100% self-sufficient). If through PBB, it was demonstrated that a program was very much a high priority, the City still wanted to, at minimum, investigate whether or not they could partner with another organization (public or private) to find efficiency in providing the program. If, on the other hand, PBB demonstrated that the program was less of a priority to the City, then they should seek a shared service provider and turn over the provision of this service to the public or private sector.

At the end of their first year, they’d identified 17 distinct programs that met these criteria, including: Regional Crime Lab, joint procurement, joint use of public safety training facilities , provide human resources services to other jurisdictions (training, civil service testing, etc.) and centralizing printing and stores.

In our story from the City of Fort Collins, CO, about the Rocky Mountain Innosphere (RMI), the
City’s share of funding to support RMI scored well in the PBB process – it was a high priority. However, using the filters of the PBB Model, it was clear that this was a program that others could offer and were offering in the form of business support (in other words, the City need not be the only player in providing this service), that the City wasn’t mandated to do, and was unlikely to pay for itself. Through the lens of PBB, this points precisely in the direction of a partnership. The role of government, even in a high-priority program, is not always to be the direct service provider; it can be a key partner!

And for all of our discussion lately of the Decade of Local Government, the Metro Revolution, and the Power Inversion, aren’t we talking about shared services, consolidation and (from the local government’s perspective, perhaps) “in-sourcing” as well? As the Federal and State government fiscal woes and political paralysis continue, it is up to local government (as a shared service alternative) to take on responsibility for the achievement of outcomes in a community.

Whether it comes through partnerships between multiple public agencies (public-public partnerships), partnerships with the private sector (public-private), consolidation, or even (in the right situation) letting one partner take over a service entirely while ensuring that the right outcome is achieved (alternative service delivery, or in/out-sourcing), there are immense opportunities to tap.

In our work in Priority Based Budgeting, one of the greatest outcomes of the work is the
ability to shed light on where to find opportunities for shared services. What if a program was of the highest priority for your citizens, and you found out you were one of several providers of this service in your community? Perhaps a partnership would be an incredible opportunity to produce efficiency in the provision of that program. On the other hand, what if you found a lower priority program for which there were other service providers? Maybe the best approach there would be to consolidate services or even allow the other service provider to take on the program entirely.

Central to PBB is the idea that all local government organizations can determine the role they're suited to serve best within a community, and amongst all potential service providers within a region - identifying the overlap, the potential for partnerships, consolidated services, and spinning off of services between city, county, school district, non-profit and private sector organizations. The end goal is nothing short of the most efficient use of a community's resources as a whole, to achieve the results of a region – it’s "bang for the buck" for the provision of public services.

Keep an eye on the CPBB blog for further updates. Sign-up for our social media pages so you stay connected with TEAM CPBB!

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If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

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