Competitive Governance Strategies
For Baltimore
City:
Lessons from
Other Cities
Douglas R. Sahmel
Prepared for the Baltimore Efficiency and Economy Foundation
September 2000
Conclusions or opinions
expressed in this publication are those of the authors and do not reflect the
views of staff or others affiliated with the Institute of Policy Studies, The
Johns Hopkins University, or the Baltimore Efficiency and Economy Foundation.
Table of Contents
CHAPTER 1 – EXECUTIVE SUMMARY 4
CHAPTER 2 – INTRODUCTION............. 7
CHAPTER 3 – CASE STUDIES.. 19
Charlotte... 19
Indianapolis 25
Philadelphia 30
Phoenix................. 35
San Diego........ 38
CHAPTER 4 – SUMMARIES OF OTHER STUDIES.. 45
From Privatization to Innovation:
A Study of 16 U.S. Cities. 45
Performance Measurement of
Municipal Services:
How are America’s Cities Measuring Up?................. 46
Perspectives on Privatization by Municipal Governments 47
Privatization of Municipal Services in America’s Largest Cities................. 49
San Diego County’s Innovation
Program: Using Competition and a
Whole Lot More to Improve Public Services..... 50
CHAPTER
5 – LESSONS LEARNED AND RECOMMENDATIONS
FOR BALTIMORE CITY........ 52
REFERENCES............... 65
GLOSSARY................. 72
APPENDICES
Case Study Appendex
Overview Matrix of Performance-Based
Government Initiatives
1. EXECUTIVE SUMMARY
During the 1990s, many
American cities have sought to reinvent themselves through performance-based
government. In this market- and
customer-centered approach, competition and innovation -- rather than monopoly
and bureaucracy -- drive the provision of public services.
Privatization, while perhaps
the most obvious route, is only one of several strategies used to foster more
cost-effective and competitive government.
These include:
·
Managed
(or "public-private") competition: the process in which both public
and private vendors vie to provide a public service opened to competition.
·
Outsourcing
(or "contracting out"): a technique in which the city government
allows private vendors to compete to provide a public service.
·
Restructuring
(or "reengineering"): an approach in which public functions are
inventoried, direct and indirect costs enumerated, decisions made about which
are core functions of government, and efficiency and effectiveness measured. Collaborative management/worker efforts are
then focused on developing and implementing structural, management, and work
organization innovations that improve efficiency and service quality of core
functions.
·
Employee
innovation: a strategy in which the city offers employees greater flexibility
and/or incentives in return for service enhancement ideas.
This report examines
performance-based government initiatives in five U.S. cities: Charlotte, North
Carolina; Indianapolis, Indiana; Philadelphia, Pennsylvania; Phoenix, Arizona;
and San Diego, California.
Charlotte. The City of Charlotte has
long used contracting out and began its first five-year managed competition
program in 1992. Charlotte’s rightsizing strategy began with dramatic
restructuring and reeingineering of the city’s delivery of services and then
turned to managed competition. With an emphasis on obtaining the best service
at the lowest cost regardless of the service provider, the city's competitive
re-engineering initiative encourages constant improvement and high levels of
citizen and employee involvement. The results of Charlotte's strategy include
decreased costs, a stable tax rate, greater employee competitiveness, and
ongoing savings of $12 million per year since 1999.
Indianapolis. Indianapolis's experience with
competition began in 1992 and has become a model for those aiming to reinvent
government. Under its comprehensive
program, the city injected competition into 85 city functions and employs
managed competition, outsourcing, management contracts, internal markets, and
volunteers. Among the many results of
Indianapolis's successful competition strategy are reduced costs, enhanced
service, and cumulative savings of over $450 million.
Philadelphia. The City of Philadelphia
introduced competition in 1992 as part of a sweeping financial recovery
program. Emphasizing service
improvement over who would provide a service and its cost, the city kept five
services in-house and contracted out 47 functions. Competitive government strategies helped Philadelphia get back on
a firmer fiscal footing, improved citizen satisfaction, and generated over $150
million in savings by fiscal year 1998.
Phoenix. Phoenix's longstanding pursuit
of service enhancement has won it national and international praise as an
innovative and skillfully governed city.
The city has contracted out for decades and is widely regarded as the
trailblazer in its use of managed competition, which it introduced in 1979. Since then, Phoenix's application of this
technique to numerous service areas generated savings of over $34 million as of
1999 and has boosted service quality, employee morale, and citizen satisfaction
levels.
San Diego. San Diego employs both
outsourcing and managed competition in its competitive re-engineering program,
which was begun in 1994. Among the many
benefits of the city's shift to more entrepreneurial government are improved
labor relations; greater employee productivity, pride, and empowerment; and $117
million in anticipated cumulative cost savings through fiscal year 2002.
The cities profiled in this
report and elsewhere hold valuable lessons for cities like Baltimore that are
interested in enhancing government performance. The cities recommended that Baltimore’s efforts include:
Clarity of goals and objectives. Clear
goals are essential for: 1) decisions
about what services the city should continue to offer its citizens (provided by
either public or private parties); 2) evaluating alternative approaches to
delivery; and 3) mobilizing the city workforce and the public to become
partners in the performance enhancement effort. A focus on customers, whether internal to government in the case
of support agencies, or the public for most others, pervades the work of
successful cities.
Political champion. Every city surveyed and all
studies examined identified leadership as an essential ingredient for success.
Finely tuned measurement capabilities. The ability to make accurate measurements of costs and benefits
is critical in every stage of a competition program, from the decision about
whether to introduce competition to the setting of performance targets and
monitoring of contracts and outcomes. Moreover, reliable, defensible economic analysis
is essential for demonstrating that the competitive process is fair. A number of the cities have highly developed
systems for calculating the cost of delivering services (activity-based
costing). These are useful not only for
making sure that public and private bids are made on comparable bases, but also
for helping managers and workers see where internal efficiencies can be
effected, even if competitive contracting is not part of the picture.
Careful program design. Once the
goals are set, the leaders are leading, and measurement capacity is in place,
strategic choices must be made about what approaches to take and how to tailor
them to different places and situations.
Choices include managed competition, outsourcing, reengineering, and
employee innovation. Most cities have used a combination of tactics.
Implementation structure. The
importance of central management in the process of performance enhancement is
often cited in the literature on competition. Many cities have formed
government-wide commissions, often with private as well as public members, to
set policy, and a centralized staff entity to work with line departments to
monitor day-to-day program operations.
Inclusive process and extensive communication. The most frequently mentioned element said to be critical to the
success of a performance enhancement program is outreach and continuous
communication with all affected parties.
Beyond communication, genuine collaboration, both with employees and
citizens, has characterized the most effective city initiatives.
Management, legislative, and resource challenges. Program designs must reflect and address a variety of contextual
variables or risk foundering on procedural grounds. A city looking to execute competition-based policies can
encounter federal, state, and local rules and regulations as well as union
contracts and various management structures and procedures.
Support for workforce transition. The impact on the existing workforce is high
on every city chief elected official’s list of concerns about
performance-enhancing initiatives. A
number of strategies have been devised to soften competition's impact on city
workers. Many cities, for example,
offer career planning and training and require private contractors that win public-private
competitions to give first preference to displaced city workers.
Continuous monitoring and oversight.
Governance cannot be contracted out.
No matter what approach is adopted, government’s responsibility is to
make sure that service delivery is effective.
The process begins with developing a strong work statement; without it,
evaluation of performance is impossible.
Cities have used a combination of methods to ensure contract compliance.
Persistence and flexibility. Openness
and willingness to change are essential in a process that by definition is
continually reexamining the way in which government does business.
2.
INTRODUCTION
“I’d
like to see the government get out of war altogether,” wrote Joseph Heller in Catch-22 (1961), “and leave the whole
feud to private industry.” Though few
take so extreme a position today, governments at all levels are rethinking the
ways they provide services and conduct business. Stereotyped as stagnant and wasteful, many administrations have
been prompted to question whether a public monopoly is the best vehicle for
serving the public interest.
Increasingly in their search, elected officials and public
administrators are looking to competition as a beacon in an uncertain political
landscape. Though shifting from a
bureaucratic to a more entrepreneurial model is no panacea, governments from
Boston to Bahrain have found that introducing competition can generate greater
efficiency, responsiveness, and innovation in the provision of services.
Prodded
by an increasingly demanding public, governments in the 1960s began to rethink
the ways they performed, and since then the public sector has arguably been at
its most introspective and innovative on the municipal level. In the 1970s and particularly the 1980s,
when the federal government withdrew from urban aid, taxpayers revolted,
recession-plagued states reduced local assistance, and cities began to
experience severe fiscal stress, market-oriented strategies won many adherents. In the 1990s Age of Accountability, both
public and private sectors became obsessed with measuring inputs, outputs, and
impact in their pursuit of the “better, faster, cheaper” grail. The old management adage, “what gets
measured gets done” has been elevated to a mantra. Stimulated by the adoption of ISO 9000 quality standards as one
of the requirements of European buyers, U.S. companies have been forced to
assess the ways in which all systems and processes in their operations affect
the quality of their products. When
they began to see the bottom line operating efficiency impacts effected by
their new quality-driven focus on measurement, businesses became true
believers. The U.S. Department of Commerce, ever mindful of the nation’s
companies’ global competitiveness, gives its most eagerly sought honor, the
Malcolm Baldrige Award, to organizations in business and government that meet
the highest quality standards. Service
sector industries, including government, have been slower to see productivity
gains than have manufacturers, but techniques are improving and notable
successes, such as Federal Express (the first service company to receive the
Baldrige award), Nordstrom, and Ritz Carlton Hotels, have inspired imitation.
Performance-based
government
The movement that spawned
Total Quality Management and all its progeny has taken flight in the public
sector as “performance-based government.”
The basic premise is that
“if you want better management, untie the managers’ hands and let them
manage. Hold them accountable for
results – not for following silly rules” (Osborne 1998). The new governance approach encourages
managers and workers to innovate in order to achieve higher efficiency, in many
cases by removing their monopoly on providing services. But while competition may be one of its
underlying tenets, the “reinventing government” guru David Osborne includes
many tactics in the toolkit:
“contracting out, public vs. private competition, performance bonuses,
group bonuses, total quality management, customer surveys, business process
reengineering, internal markets, ‘one-stop shopping’ and more” (Osborne 1998).
Privatization is not the
goal of these efforts. “The issue is
not public or private,” according to former Indianapolis Mayor Stephen
Goldsmith in an interview for the New
York Times, “the problem is monopolies.
If you bring in a private contractor with a monopoly, you’re not going
to be any better off – maybe worse” (Johnson 1995). As Chicago Mayor Richard Daley said at a 1994 big city mayors
conference focused on revolutionary urban governance:
One recent development signals a real victory in the effort to make government more competitive. This year, we deprivatized one particular program we first bid out three years ago: maintenance of street sweepers and garbage trucks. Today we can do it cheaper in-house. This sends an important message to city employees who harbor suspicions about privatization. I have not embraced privatization so wholeheartedly that I have forgotten the bottom line – which is better service at lower cost. If city departments can do a job more efficiently than outside firms, they should do it. They’re encouraged to compete for the contract. In and of itself, privatization is not a goal. And it is by no means the only tool to make government more efficient (speech by Mayor Richard Daley, included in proceedings by Reason Public Policy Institute 1994).
Calibrating
and recalibrating the public and private sector roles in provision of services
to the American citizenry has been underway since the country began. Thomas Jefferson said, “It is better for the
public to procure at the common market whatever the market can supply, because
there it is by competition kept up in its quality and reduced to its minimum
price”[1]
Osborne
(1996) identifies five basic strategies for moving organizations from the
bureaucratic to an entrepreneurial model:
·
Core
strategy – 1) Strip away functions and missions that do not contribute to the
primary purpose of a public organization, by abandoning, devolving, selling, or
leasing them;
2) Separate regulatory
functions of government from service functions; 3) Create new steering
mechanisms, such as the Oregon Progress Board, a representative body that sets
long term goals (the Oregon Benchmarks), measures progress, and reports to
elected officials and the public on results.
·
Consequences
strategy – Create consequences for performance, by 1) putting a public
enterprise into the market, dependent on its customers (internal within
government or external) for revenue; 2) creating managed competition through
competitive contracting; or 3) undertaking performance management, in which
results are measured (often through performance contracts) and incentives such
as performance awards, performance pay, performance-based budgets, and
gainsharing are used to reward high performance.
·
Customer
strategy – Make the organization accountable to its customers, by 1) creating
customer choice and allowing funding to follow customers’ choices of preferred
service providers; or 2) setting customer service standards and requiring
organizations to meet them or provide compensation to the customer.
·
Control
strategy – Push significant decision-making downward through the hierarchy and
outwards to the community, which can in some cases take responsibility and
solve its own problems.
·
Culture
strategy – Change the workforce’s habits, hearts, and minds, by changing what
people do, “celebrating successes and honoring failures,” building teams,
investing in people and their work spaces, and working to ensure that employees
are involved in creating mission statements and the systems to achieve them.
Governments around the world
are pursuing these new approaches to improving their operating efficiency. A
1999 Economist Intelligence Unit/Andersen Consulting survey of almost 700
officials and civil servants in 12 countries found that nearly 80 percent
expect a “significant change” in the ways their organizations are structured to
provide services by the year 2010. In the United States, the study found that
69 percent of elected officials and senior civil servants in state and federal
governments expected new ways of doing business. The strongest forces
propelling change in the United States in 2010 are projected to be: information technology (rated very important
or vital by 94 percent of respondents), electronic commerce (86 percent),
changing organizational culture (73 percent), productivity pressures (68
percent), increasing citizen expectations and budget constraints (both 66
percent). In 2010, 38 percent of those
surveyed in the U.S. expect privatization to play a very important or vital
role in delivering services; outsourcing was cited by 47 percent and other partnerships
with the private sector by 60 percent.
Private sector delivery was judged to be likely or highly likely in
health (62 percent) and education (49 percent) functions. The leading motivations for outsourcing
included: keeping up with advances in
information technology (cited as very important or vital reasons by 58
percent), the difficulty of hiring and retaining in-house personnel with
necessary skills (51 percent), increasing service levels (44 percent), reducing
head count (41 percent), increasing flexibility (40 percent), reducing costs
(38 percent), and increasing productivity (38 percent).
A 1993 study by the Council
of State Governments found that state use of contracting out, by far the most
prevalent form of privatization, was most frequently used in corrections (92
percent of respondents), administration/general services (92 percent),
transportation (84 percent), education (81 percent), social services (71
percent), health (70 percent); 65 percent said they used it in mental
health/retardation (cited in GAO 1998).
A
survey of towns and counties in New York State completed in 1996 and 1997 by
researchers from Cornell University found that half of the responding
governments[2] had
implemented some form of local government restructuring during the 1990s. Intermunicipal cooperation was the most
common form of innovation (54 percent of the total), followed by privatization
(28 percent), reverse privatization[3]
(7 percent) and public sector entrepreneurship[4]
(6 percent). Restructuring was most
prevalent in public works, public safety, and general government support
functions (Warner and Hebdon 1998).
A
1998 study by the Illinois Center for Competitive Government of 516
municipalities in the state found that 52.7 percent of the cities contracted
for 10 or more services. Commercial solid
waste collection (92.6 percent of the respondents), residential solid waste
collection (87.7 percent), solid waste disposal (84.5 percent), vehicle towing
and storage (76.2 percent) and day care facility operations (53.4 percent) led
the list of core functions most frequently outsourced. Support functions most often outsourced were
legal services (67.6 percent), food services (45.1 percent) and janitorial
services (27.1 percent). The larger the
city, the more likely it was to be increasing its use of outside
contractors. Nearly three quarters of
the cities reported some degree of cost savings (Johnson, Walzer and York
1997).
A
1995 survey of 66 of the largest cities in the U.S. by researchers at West
Virginia University updated information collected by the International
City/County Management Association (ICMA) in 1982, 1988, and 1992 about
privatization activities specifically.
The most frequently privatized functions in the cities surveyed were
vehicle towing (80 percent of the cities), solid waste collection (50 percent),
building security (48 percent), street repair (40 percent) and ambulance
services (36 percent). The motivations
for privatization were primarily cost reduction and service improvement (Dilger,
Moffett, and Struyk 1997, see summary in Chapter 4).
John
O’Looney of the University of Georgia’s Human Services and Civil Education
Division has found that 80 percent of major U.S. cities outsource vehicle
towing, followed by solid waste collection (50 percent), building security (49
percent), street repair (40 percent), ambulance services (36 percent), printing
services (35 percent), street lighting/signals (26 percent), drug/alcohol
treatment centers (24 percent), employment and training (24 percent); 24
percent outsourced legal services (OutsourcingGovernment.com 1999).
The
1996 annual fiscal survey by the National League of Cities found that 14
percent of the responding cities had pursued privatization by selling assets
(Stone, Bell and Poole 1997). The
potential for significant privatization through asset sales or leases is
huge. The U.S. Senate’s Joint Economic
Committee has identified over $227 billion in state and local government assets
that could be privatized, including highways, airports, water companies, and
electric facilities (U.S. Senate Joint Economic Committee 1996).
Functions most
frequently subjected to competition
The
experiences of cities that have used private contractors to help deliver public
services, either through privatization, managed public-private competition, or
contracting, hold lessons for Baltimore City government as it considers ways of
enhancing its operating efficiency. The
following sections describe studies and individual city programs in several key
areas. The focus is on those functions that
today are performed by Baltimore City government and funded by the General
Fund.
Paramedic services. A
1995 survey of the 200 largest U.S. cities by the Journal of Emergency Medical Services found that in 25 percent of
the cities, paramedic services were wholly contracted to the private sector. In
16 percent the city government (usually the fire department) and the private
sector were both involved. Often the
city is first-responder and private contractors are responsible for
transports. Service in the remainder of
the cities was provided solely by the city government. (Privatization.org
n.d.). About two dozen cities,
including Las Vegas and Fort Wayne, Indiana, have transferred emergency medical
services wholly to the private sector, where they are 100 percent user funded
(Independence Institute 1999). The City
of Fort Worth has also privatized its ambulance services (Civic Federation
1996).
Fleet management and maintenance. Between 1982 and 1992, the use of private
contractors for fleet management and vehicle maintenance increased 27 percent
(Privatization.org n.d.). Over 50
cities and counties outsource the management and maintenance of vehicle
fleets. Average cost savings for
contracting out fleet management is 30 to 40 percent (Allegheny Institute
1997).
Information technology. In
1995, 32 percent of all cities outsourced information technology services, an
increase of 15 percent since 1987. Cost
savings from outsourcing information technology functions typically range from
10 to 20 percent (Privatization.org n.d.).
Other benefits include increased flexibility, access to up-to-date
technology without major capital outlays, and availability of technical
specialists hard to hire and retain in the public sector.
A growing percentage of information
technology outsourcing is related to the movement toward e-government, which
uses the technology to enhance access to and delivery of a government’s
services to its constituent “customers.” Thanks to the Internet, there is a
growing expectation that information and services, including those provided by
government, are available to suit the convenience of the customer, 24 hours a
day, seven days a week. E-government is an important new performance-enhancing
tactic, and like others before it, has corollary operating benefits. Andersen Consulting estimates that every
interchange currently conducted in person or by telephone that is replaced by
an online transaction saves government between $40 and $400 (cited by Goldsmith
2000) and shortens processing times.
Other benefits include stimulating resident companies that do business
with the city to become e-businesses and thereby increase their
competitiveness, helping to bridge the digital divide among the population, and
make the city more attractive to potential residents by improving the quality
of the relationship of citizens to their government.
KPMG International’s 2000
survey of national, regional and city governments worldwide found that 80
percent were providing information electronically through websites and 59
percent of government sites were capable of “basic interactivity” but only 39
percent currently processed even simple transactions online. The National Association of Counties’ survey
of American counties in April 2000 found that 61 percent of the counties had
websites, 48 percent used the sites for information dissemination only, and 8
percent for both transaction processing and information dissemination. Transactions most frequently supported were
access to county records (11 percent), procurement (8 percent); seven percent
supported on-line bids and proposals (National Association of Counties 2000).
Contracts can be structured
in a variety of ways, many of which involve little cash outlay by the public
sector: the contractor either receives
a standard licensing fee, transaction fees, or a percentage of the savings the
client government realizes (self-funding contracts). Contractors see a huge opportunity in taking governments digital,
since only one percent of the $1 trillion of federal, state, and local
transactions each year are now conducted on line (Birnbaum 2000). The GartnerGroup, a leading information
technology consulting and market information firm, estimates that spending on
e-government hardware, software, internal labor, and external services will
grow from $1.5 billion in 2000 to more than $6.2 billion by 2005 (cited in Washington Technology June 2000).
Recreation and
parks. Between 1987 and 1995, 10
percent more cities contracted out park maintenance; by 1995, 33 percent of
cities, including New York City (Civic Federation 1996) outsourced the
function, sometimes to nonprofit organizations. Cost savings ranged from 10 to 28 percent. Cost savings from outsourcing recreation
facilities operation and management ranged from 19 to 52 percent
(Privatization.org n.d.)
Solid waste. More
than 50 percent of U.S. cities of all sizes, including Ft. Worth and Norfolk
(Civic Federation 1996), contract with the private sector for all or part of
their solid waste collection services (Scarlett and Sloan 1994). The Wall
Street Journal estimates that outsourcing grew from 30 percent of cities in
1987 to 50 percent in 1995. A study for the Allegheny Institute by Kengor and
Haulk found that among the 50 percent of municipal governments in the U.S. that
contracted for trash collection, savings averaged 30 to 60 percent (1996). In 1995, Cleveland’s managed competition of
downtown waste collection resulted in an award to city employees who were able
to save $700,000 by improving labor/management communication and reorganization
(Civic Federation 1996).
Private sector involvement
in trash collection can take at least six different forms:
·
Single
district, winner take all competitive contracting
·
Multi-district
competitive contracting
·
Noncompetitive
negotiated contracting
·
“Free
for all” competition
·
Nonexclusive
franchising
·
Competitive
exclusive franchising
Two thirds of materials
recovery facilities were privately owned in 1997, an increase from 50 percent
four years earlier. The National Solid
Wastes Management Association (now the Environmental Industries Association)
has estimated that more than half of waste disposal capacity is privately owned
and operated. A l984 study of 20
California cities found privatization cost savings of 28 to 42 percent
(Scarlett and Sloan 1994).
General services and support services. In Chicago,
$3.6 million was saved between 1990 and 1994 by privatizing custodial services
and $886,000 between 1992 and 1995 on police photocopying and facilities
management. Savings of $6.2 million
between 1989 and 1995 on abandoned vehicle towing were realized through a
public-private partnership that also shared scrap sales revenues with the city. A private vendor-designed parking
enforcement computer system has increased parking ticket revenues from $25
million in 1990 to $65 million in 1994 and enhanced compliance. Norfolk, Virginia contracts out janitorial
services, grounds maintenance, security guards and electrical repairs. New York City contracts out facility maintenance
at schools and firehouses, laboratory services, and print shop services (Civic
Federation 1996). The first Cleveland
Competes initiative, which contracted out payroll and time and attendance
services, saved the city $603,000 in 1994 in deferral of computer costs and
annual savings estimated at $195,000 (Clark 1995).
Other
performance-enhancing initiatives
The
Civic Federation, a 100-year old citizens’ good-government organization, looked
at big city efforts to improve productivity and innovation in 1996 and grouped
them into four categories. In addition
to competitive contracting and outsourcing, they included restructuring and
employee innovation. Restructuring is
defined as “a complete top-to-bottom overhaul of city government. Instead of asking the question, ‘Are we
doing things right?’ restructurers ask, ‘Are we doing the right thing?’” (p.
vi) The efforts, often referred to as
reengineering, are typically long-term, bold, and are aimed at improvements in
quality and flexibility rather than short-term cost savings. Employee innovation encourages and empowers
employees to innovate, reinventing their work processes to improve efficiency
and customer satisfaction.
Some of the restructuring
and employee innovation examples the Federation cites include:
Restructuring. The City of Chicago saved $3.6 million in
1995 by shifting responsibility for laboratory services to the Illinois
Department of Public Health. Many other
cities have had success convincing the counties within which they are located
to assume functions, but this is clearly not an option for Baltimore City. Fort Worth reduced staff requirements by 25
by consolidating engineering divisions within several departments.
In
New York City’s Agency Partnership Program, corporate partners donate time and
expertise to help departments tackle productivity challenges. For example, Chemical Bank worked with the
Department of Buildings to improve customer service. The agency established a one-stop shop that reduced the
construction permitting approval process, which formerly required six months
and visits to at least four different agencies, to three or four weeks. Xerox’s partnership with the Department of
Health produced a drop in the length of time required to obtain a birth or death
certificate from 14 weeks to one week, and further improvements are expected to
reduce the period to 24 hours. The
United Parcel Service helped the inventory divisions of several bureaus to
reduce delivery time from over eight weeks to under two days for small items
and from 16 weeks to two for larger ones.
Beginning
in 1995, the City of Austin, Texas has been evaluating every city program every
five years to ask whether the city should be delivering the service and whether
it is doing so in the most efficient way.
Employee innovation. Louisville’s CityWork program calls on teams
of employees (sometimes expanded into town meetings) to work with a facilitator
to brainstorm ideas for improving efficiency and quality. In response to ideas generated at the first
CityWork session at the Fleet Management Garage, employees were assigned the
same vehicles whenever they came in for repair. A total of $410,000 was saved and work orders were reduced by 60
percent. Similarly the Law Department
saved $97,440 annually by changing its assignment process. In FY94-95, innovations in Scottsdale
suggested by individuals in its 1600-member workforce saved $1.4 million and
generated $1.3 million in revenue.
Innovations included: a new
boring tool to enable traffic signal cable-laying without tearing up the
street, creation of a new print and design shop, purchasing prescription drugs
directly from manufacturers, renegotiating the city’s contract with its health
insurer, and phone-in registration for recreation programs.
Ideas surfaced through the
Seattle Works program have resulted in:
1) greater citizen participation in decisionmaking, including those
about competitive contracting and outsourcing; 2) saving $6,000-$7,000 monthly by
taking advantage of vendor discounts for paying bills early, and 3) saving
$100,000 annually in travel expenses by consolidating travel bookings and
taking advantage of bulk discounts.
Previous
Baltimore studies and experience
In
Baltimore, during the previous administration, the recent mayoral campaign and
since, a variety of suggestions have been made and initiatives undertaken aimed
at enhancing the operating efficiency of city government, most of them in
response to the city’s projected budget deficits.
Millennium Group. The Baltimore City
Government Millennium Group was established by Mayor Kurt Schmoke in July, 1998
to “coordinate and accelerate current [better government] initiatives, and to
find new ways to deliver more efficient, more cost effective, and higher-quality
services (Report of the Baltimore City Government Millenium Group 1999). Five areas were examined using a competitive
reengineering approach: personnel
operations, workers’ compensation, building maintenance, fleet management, and
solid waste collection. The group
recommended a number of measures that fall into Osborne’s five strategies:
·
Consequences
– Increase city managers’ accountability for risk management costs associated
with workers’ compensation claims; on a pilot basis, contract for maintenance
and custodial services at one building to provide a benchmark for judging the
competitiveness of city operations
·
Customer
orientation – Increase use by the Personnel Department of management discretion
allowed by the City Charter to support its client agencies’ objectives;
develop performance-based service
agreements with tenants of city-managed buildings
·
Control
–Give fleet management full responsibility for life cycle management of the
city’s vehicles, not just maintenance
·
Core
– Create a new entity to oversee a competitive reengineering program in city
government
Privatization, state assumption (restructuring), performance
measurement. Over the last decade,
Baltimore City has privatized or outsourced a number of its enterprise-type
functions, including golf courses, arena management, and public market
management. No significant city
agencies have been eliminated, but over 30 years, the city has supported the
the State of Maryland’s assumption of responsibility for formerly local
criminal justice and income-redistributive functions such as district courts
(1971), public defenders (1972), local probation (1973), Medicaid local
contribution (1975), public assistance and social services local contribution
(1975), local circuit breaker property tax credits (1976), food stamp
administration (1980) and pre-trial release (1986). More recently, the state has assumed functions for Baltimore City
alone: Baltimore City Community College (1991), Baltimore City Jail (1992), and
central booking (1995).
Within the last five years,
the city has instituted a Program Performance Measurement Project, designed to
assist agencies in re-engineering work for improved performance. Plans are underway for linking the
performance measurement program with budgeting. An experiment in contracting out education to a private entity
ended in failure. When the Department
of Public Works was directed by the Mayor to issue a request for proposals
(RFP) for collecting solid waste from 10,000 households in three sections of
the city on a pilot basis, only one extraordinarily high bid was received and
the pilot was abandoned. The process of
developing the RFP, however, focused attention on operating characteristics of
the current trash collection and disposal program, many of which had not been
modified for decades.
Mayor Martin O’Malley has
also initiated programs to regularly measure and display geographically the
delivery of a wide variety of public services, beginning with public safety
(ComStat) and later expanded
throughout city government (CityStat).
These techniques are expected to improve managers’ understanding of the
problem they are being asked to solve, whether it is drug corners or alley
litter or lead paint poisoning, and thereby sharpen tactics to improve service
delivery, and at the same time enhance accountability.
GBC/Presidents’ Roundtable report. More r