1986 Private Delivery of Public Services by JCCI

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PRIVATE DELIVERYOF PUBLICSERVICES

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A Report to the Citizens of Jacksonville. Summer 1986

SCOPE OF THE STUDY The private delivery of public services is not a new idea. In Jacksonville, in other municipalities, and at the state and federal levels, many government services have been privatized, via contracting out, vouchers, franchises and other means. During the 1980's the idea of reducing the size of government and getting government "off the backs of the people" has gained great popularity. Consistent with this has been an increasing trend toward privatization, the private delivery of public services. A key issue is seldom addressed. Under what circumstances is the private delivery of services preferable to government delivery? This study seeks to determine the most appropriate and cost effective means of delivering local government services to its citizens, whether this be via public delivery or by a variety of alternative methods of private delivery. This study includes a review and analysis of: The literature in public administration regarding pros and cons of alternative service delivery methods Delivery methods used currently by local government and an assessment of existing policies in Jacksonville Guidelines for determining cost effectiveness and quality of service delivery Criteria to be used in awarding contracts to ensure a high level of service, accountability and efficiency while guarding against disruption of services Load shedding, the complete removal of a service from the government sector, has been excluded from this study. Nor does the study attempt to recommend the most appropriate form of delivery for specific local government services. Rather, it identifies the underlying principles which should govern decisions on whether to privatize a service.

HIGHLIGHTS MAJOR ISSUES

RECOMMENDED SOLUTIONS

Lack of data for valid cost comparisons of public versus private delivery of services

Development and use of cost accounting procedures by city to enable accurate cost comparisons

Need for managerial training in contract design, negotiation, and administration

Managerial training programs and emphasis of contract management skills in hiring, performance evaluation and promotion practices by city

Failure to evaluate all services as potential candidates for privatization

Appointment of special committee by mayor to review requests by private firms to provide public services

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: FIND]N'GS ~ .'

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findings~rep'resent the d~ta~base of the committee. Th.ey ar~ derivedfr?m the publ~tlea materials ~ste",din the references, facts rE=1port~d

by r~sgl;!rcepersQns or~fr£>m'aconsens~s of comrtlltte~,understa'ldmg as ~epo(ted,py!e~ourc~ l;1ersQns. .. g:;

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DEFINITIO~Of' GOVERNMENT SERVICE '"

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GOVERNMENT ~OR PUBLIC SERVICES ARE THOSE WHICti.. ARE DEMANDED ORFJEEDED BY THE. PUBLIC, WHICti , ,' ~ . .. .. .. -' '-"'" .

CAN FEASIBLY BE PROVIDED AND WHICH"ARE AGREED UPON~'BYOFEICfAL POLICYMAKERS. "Ii~

. Legalservices,both criffiinaland

Froll) the PQ!itical science perspective there ~-iS' no service tha!,.belongs e'5<clusivelywith government. In different times and places ~there have been different philosophies as tQ,what government should provide. Some examples of public services which have not tra8itionally been supplied by local government but are now common, include:

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civil

Poverty. programs~

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. Air P4'ltutio~prograrqs;t

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businesses (i.e. the project with th~o,pse yompany to~build ret~L space). There mayi'

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servi§~s. Government eQgages fp enterprise~ctivities, fin§l1ces projectsal1deven awaras grants to pQvate individuals and

new services are desired by the "citizens and whether E1xisting services are'. ade-" quate. Through this process government has evolved to cover a wide~assortment of

.~ Emergency ',>~ ~ fpedicine """.,f' . BeacJ;\;rest;Qratio,1l

. '"Wa~\er"m~nagement

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. Tran,sit for the elderly and~ -,,!liP" ,-~:;

ti' ~s-"part of their policy~~making respon. ~ Iii!si5;ilities, elected officials determine what

be~no limit to what~government will supply.

T,HE';PONCEPT OF INDIVIDUAL AND COLLE~TIVE GOODS AND SERVICES

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~OME SERVICES BY JHEIR NATURE, SUCH AS eOLicEPRqT~CTION, MUST BE FUNDED PUBLIClY, WHILEOTHERS CAN OPERATE IN A PRIVATE SECTOR M-\I;IKETPLACE WITH THE INDIVIDUAL BUYER SELECTING THE"VENDOR AND THE' AMOUNT OF SERVICE NEEDED.

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ly, some indiViduals wouid prefer more police protection while others would prefer less than is produced. If police' protection were produced and sold in a private market, consumers who w~redissatisfied with the.level might refuse.;;to pay the price resulting'in under- produ~tion. Once again, society"imust make a collective decision re-

If services such.as police protection were produced and sold in a private market, an ~

inagequaie amount would be produced. This would

occur

because

SERVICES PROVIDED IN JACKS01NILLE JACKSONVILLE'S M'ANY LOCAI::r PUBLIC SERVICES.AR'EDELIVERED BY BoTH PUB'bcAND PRIVATE SeCTOR EMPLOYEES, USING SEVERAL FINANCINGMECHANrSMSRANGINGcFROM PAYMENT FUNDED BY TAXES TO DIRECT PAYMENT TO A PRIVATE PROV(DER.~ a

quiring individuals to p~y fpr theqe¥,el of police protection providgd.

all citizens

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would enjoy the same benefits and protec;;!

Fire protection and emiironmentalprotection are.other examples of sE1rvices which require public funding to insure adeqLlate Rt°duction. This does not mean that the public sector must produce these services. They may be prodi.Jc~d privately or publicly, but the funding must be publicly mandated. It should be noted that the

tion, whether they paid for it or not. The

!;;. non- buyers could not be excluded from the benefits and would become "free riders." The more who elect to be free riders, the less mone; allocated to the production of

police~protection. To avoid this problem,

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society must make a collective decision, usually through government, regarding the method ana amount of financing for such a service.

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may think that all publicly fjpanced good and services are es.,s,ential, many publip services, such as parks or sports yo_m-

in under-productign if left entirely up to th~ private market. bllce-police protection is produced~all i'1.divlduals are beneficiaries !II

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plexes~re notes~entialwhile manX'priv~te go!?js.,and services, such as medical tare, are-essential. i10 ~ " E'i

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LOCAL GOVERNMENT MAY CHOOSE FROM A VARIETY OF METHODS FOR ~

THE DELIVERY OF THE SERVICES IT

PROVIDESFORITS CITIZENS. o!acksonville uses many alternative arrangements. and contractstd supply governmental services with or througMhe prjvate sector for ~arious classifications of cdhsumers; Depending on the type of service, the consumer may be an individual, S Qousehold... everyone in a geographic"'al

are?, or it may be a groupof p~ople.With~ '" com~0l'\ch9racteristics such as studE1nts~ the~ handicaPl?ed, or the poor. """ '" '" !!!

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local public

METHOD OF SERVICE DELIVERY ~

essential serviQes. Although some people Services such as police protection possess another characteristic which would result

A list of service~ provided by local governmentjn Jacks()nville with an indication of how fhe~service is provided, is in the apPendix. The list indicates that a great if! nUmber of privatized or partially privatized

characteristics of police protection discussed above do not refer to essential".or non-

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of the same level of services. Undoubted-

The institutional arrangements commonly used to deliver a service or product, with examples from Jacksonville, are outlined in the table below. The two extremes shown are "direct government delivery"-

paid for wholly by tax dollars and delivered by public employees and "private market" - paid for by the individual and delivered through the private sector. Each of the alternative methods of service

delivery involves negotiating and contracting with government or regulation by government.

JACKSONVILLE EXAMPLES OF ALTERNATIVE METHODS OF SERVICE DELIVERY Method of Delivery

Financing

Taxes Paid to Government

User Fee to Government

Direct User

Direct government delivery

police, fire, generation

electric

Government

toll collection

contract

Payment to Private Sector

with other government Government

contract

garbage collection

with private deliverer (purchase Of service) Government grant to private deliverer Government

Arts Assembly,

tax incentive

Festival Market-

to private deliverer

Rouse project

Government leasing or lease/purchase from private deliverer

School board

Government designation regulation of monopoly to private deliverer (Franchising) Government provision of voucher to private consumer

zoo

building

Cable T.V. franchise

housing (Section 8) emergency food

Voluntary provision of service to public (e.g. fire department volunteers) Joint Public/Private Competitive deliverers

Coal Plant

private

Coal Plant private market grocery store

Direct government delivery occurs when a service is provided by a government agency using its own employees. The majority of public services in Jacksonville are provided using this method.

Government

purchase

of service

is a contract between local

government and a private firm. Under such an agreement the government funds the service through taxes, user fees or special assessments, and the private firm delivers the service. This is the most common alternative form of delivering a public service and numerous examples such as garbage collection, park mowing and bridge maintenance, are present in Jacksonville.

One government contracting with another government via an intergovernmental agreement is a service delivery method commonly used nationwide, especially where small municipalities contract for services with larger neighboring municipalities or with the countjl. Jacksonville, because it is the largest city in the region and because of the consolidation of city and county, has little opportunity for this type of contract. The Jacksonville Transportation Authority (JTA) does contract with the State of Florida to operate highway toll booths and collect these fees for the JTA.

Government grants to private deliverers fund or partially fund services by granting money to the private provider. In Jacksonville, this is especially apparent in the "MiscellaneousAppropriations" budget items used to grant funds to services such as museums, the zoo, and community service organizations.

JC C I STUDY~

THE

PRIVATE

DELIVERY

OF PUBLIC

SERVICES

CORRIGENDUM The

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JACKSONVILLE EXAMPLES OF ALTERNATIVE METHODS OF SERVICE DELIVERY Method of Delivery

Financing Taxes Paid to Government

Direct government delivery Government

User Fee to Government

Direct User Payment to Private Sector

electric generation

police. fire

contract

toll collection

with other government Government contract with private deliverer (purchase of service)

garbage collection

Government grant to private deliverer

Arts Assembly,

Government

Festival Market-

tax incentive

to private deliverer

Rouse project

Government leasing or lease/purchase from private deliverer

School board

Government designation regulation of monopoly to private deliverer (Franchising) Government provision of voucher to private consumer

zoo

building

Cable T.V. franchise

housing (Section 8) emergency food

Voluntary provision of service to public (e.g. fire department volunteers) Joint Public/Private Competitive deliverers

private

Coal Plant

Coal Plant private market grocery store

Government tax incentives may be granted to private companies to encourage projects which the government wishes to provide. Tax incentives and tax dollars have been used to revitalize the downtown area through the creation of the Festival Market Place. Some municipalities, but not Jacksonville, have reduced or forgiven taxes to encourage private enterprise in specific geographical areas. In Jacksonville, tax increment financing has been used to encourage business development within certain designated districts by committing the increased taxes generated by such development to municipal projects within the district. :~

Government provision of vouchers to individual consumers is a way of providing a service or good to specific individuals or groups of individuals through the private sector. The city Welfare Division provides some emergency food vouchers to individuals who have a short term emergency need. Section 8 housing assistance is furnished through a voucher-like system in which the city, using funds through a federal program, provides rent subsidies to families who find housing in the private sector. The housing must meet certain standards to qualify for the funds.

Voluntary provision of services to the public occurs in some recreational services where volunteers maintain and work in parks and in fire department functions where volunteers assist the professionals in fire fighting. Volunteer provision of service may help to expand service delivery without expending funds.

Government leasing or lease/purchase from a private deliverer can be used to provide a service with private sector assistance. Capital equipment and even personnel can be leased when a project is short term or capital is limited. Lease/purchase agreements may provide a legal way to circumvent some statutory limitations, debt ceilings and public referendarequirements. Lease/purchase is a mechanism in which the public agency leases a building, office, floor or piece of property from a private firm with a long-term lease. This avojds public debt for the building, which may require a referendum, and avoids the problem of pledging or lending of credit. Some facilities at University Hospital and the Duval County School Board Building are local examples of this type of private delivery. Government also may lease out public facilities to private deliverers to encourage an activity. Jacksonville has leased public facilities, such as warehouses associated with the port and University Hospital.

Competitive private delivery refers to the provision of private goods by the free market system. Load shedding refers to the shifting of a service which was once provided by the public or with public funds to private delivery and control as exemplified by the sale of WJAX, the public radio station, to a private sector deliverer. Government may enter into a joint public /private ownership arrangement with a private firm. By means of a constitutional amendment and enabling statutes, the Jacksonville Electric Authority (J.E.A.) and Florida Power and Light entered into a joint venture to build a coal-fired generating plant. This plant will be operated and managed using primarily private sector employees.

In franchising, government designates and regulates a monopoly by awarding an exclusive franchise to a private deliverer to supply a particular service. Unlike contract services in which government pays for the service, the consumer pays directly for the service in a franchise. In Jacksonville, cable television companies have been granted franchises to provide a service. The government regulates the terms of the franchise and receives a fee.

LEGAL IMPEDIMENTS STATE AND FEDERAL LAWS GOVERNING THE STRUCTURE OF GOVERNMENT IN JACKSONVILLE IMPOSE RESTRICTIONS IMPEDING, BUT NOT PROHIBITING, THE WAY SOME GOVERNMENTAL SERVICES ARE PROVIDED. B

A local government is granted its authority to operate by the state and thus must abide by the restrictions placed on it by the state. The Florida constitution and the city charter both require Jacksonville to maintain specific functional offices and place restrictions on how these can be changed. With the passage of the Municipal Home Rule Powers Act in 1973 the city, rather than having its privileges individually listed, was given the right to provide -all local governmental functions. Some restrictions still exist, however, on which services can be privatized.

Constitutional

Constraints

The primary constitutional restriction to the private delivery of some governmental functions is Article VII, Section 10 of the Florida constitution, which prohibits a public body from pledging or lending its credit in aid of a private person, firm or corporation. Taxes may not be pledged to private corporations. Thus, Jacksonville may not contract with a private firm to provide a governmentservice, such as fire protection, and agree to make up any budget deficits of the private firm. Industrial development bonds are an exception to this constitutional prohibition. Other categories of service which cannot be privatized are those provided by the

constitutional officers with specific duties in the counties and municipalities. These constitutional officers include:

. Sheriff

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Property Appraiser Supervisor of Elections

Tax Collector

Clerk of the Circuit Court

If, for example, all law enforcement activities were contracted out, the.sheriff still would be required to maintain the duties called for in the constitution. However, a portion of law enforcement activities could be contracted out. Any of these constitutional officers could set up a small support staff to monitor all services and then contract out the tasks necessaryto provide the services.

" City Charter Provisions The cJ!ycharter prohibits Jhe city council' Jrom changing the form of government. An interpretation of this provision would have to be m;ide with regard to any proposal for extensive privatization. For example, it would probably not bcelegal to abolish several departrtJents all at once, such as public works, parks and recreation and central services. This 'might be interprtJ!,ed as a change in Jhe form of government. = §

Legal functions are established for cities in Chapter 166 and for counties in Chapter 125 of th~ Florida Statutes. The city council may not adopt an amendment which would aqversely affect thp rights ,.,of municipal empJoyeesfis granted to them

under !he~ charter, nor alter the fortlJ. of government as~stablished by the charter. J;;;lowever, the Florida Legislature may

?tate Stat~tes

Some problems could occur if the city sought to abolish or contract to the private sectol"some functions established in the state statutes. For example, certain state/county or municipal/county health ""carefunctions"such a~ those of the county health"officer are set by statutes and some positions are required to be filled by ,employees of the Florida Department of Health and Rehabilitative Services. The statutes might haveto be amended in order to conJract out thes'l:!functions complete,Jy. Currently, they are contracted out only in part with ~policymaking retained in a

EMPLOYEE AGREEMENTS In Jacksonville, no provisions in the present union agreements prohibit the contracting~ out of services. The city has the opportunity to cony-act out any functions which are otherwise legal. However, the city council cannot enact laws that adversely affect the rights afforded municipal employees by the charter.

The school code, in the Florida Statutes, contains some large barriers to contracting out major parts of the education system. Smaller segments could be contracted out without legal impediments.

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public office.

changetneseprohibitions. In addition, ci~tycouncil maYffimake~uc~h changes qy ordinance, provided that the ordinance is approved by referendum of the people.

APPROACH '"CRITERIA FOR SERVICE DELIVERY %

EFFICIENCY, EFFECc,11VENE$S, AND EQUITY ARE THE PRIMAR} CONSIDERATIONS LOCAL OFFICIALS USE WHEN DETERMINING HOW A SERVICE SHOULD i;JEPROVIDED. IN ADDITION, THE:£ MAY CONSIDER THE FOLLOWING: . IMPACT ON OTHER SEfWICES, ~

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POTENTIALFORSERVICEDISRUPTION,

J"he literature on privatization, as well as -discussions with local Qfficials and private ~providers of public services, irwicate that the following criteria should be considered when making.,decisions on the private delivery of public services. ~fficiency, or procuring,the service at .the lowest cost, is usually the main objective in any change in the method of service gelivery. All otber things being equal, a service should logically be supplied at the lowest cost possible. Consideration should ~e made of all costs including those of:

determining the feasibility, the contract, . payingJh.e,pervice provider, . administering the contract and maintaining- recprds, . monitoring !he s~rvice, . paying for any part of the'service still supplied by the government, . preparing a fall-back plan should'the contractorfail to perform as stipulated, . pla.c~ment and retrainirl'g of employees displaced by~thecontract and the expense of early retirement.

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RESPONSIVENESS TO CITIZEN' NEEDS AND EXPECTATLON"S,AND POLITICAL STRENGTH OF ANY OPPO§ITION TO A CHANGE.~

The effectiven~ss of a service is a consideration of whether the level of service

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"" .. . is as de,sired for the ci~ens apd the quality of the service is adequate for the cost. Gover!1ment officials are responsible to the

to pay and still need the service. A consideration in changing the service delivery method should include an evaluation of the impact on other services. For example, city garbage collection employees may now be used to clean up after major civic events such as River Day or to help street maintenance crews clean up after a storm. If the garbage service were all contracted out, this clean-up function also would be affected.

taxpayers for th~ effegtiveness of the ser""vice, whether it is provideg by public employees or priVate employees~and must determine if the level of servi£e and quality are appropriate for the community. The public will noMolerate inferior performance from the private sector with any more patience than it accepts inferior performance

from government.

Government officials must have a.back-up plan to reduce the potential for interruption of essential services. A contractor may declare bankruptcy or provide ineffective service, employees may strike, or volunteers may no longer be available.

In selecting thep1ethod of service delivery, ~governrhent officials must determine equity-that'is, whether a method of delivery and payment will proyide the service fa.irly to citizens.\The equity issue is not a major concern of the private sector and may be lost when public officials become concerned only with costs. However, government has the responsibility of considering equity-. If a service is going to be provided by user fees, publR: officials must set a poligy~for those unable to pay for the service. For example, the city sometimes expands sewer lin~s into areas 'where septic tanks are ineffective and cause pollution problems. A\lthough the city requires land owners top'ay to connect to the s!!wer lines, some people-are unable

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Because citizens ultimately look to elected officials for satisfactory delivery of public servic~, the

c~Jizens'needs and expecta-

lions must be considered when choosing a service delivery method. Government may give up some of its authority and its ~ccountability when moving government {unctions into the private sector. In theory, government has not given up its powers; '"

it hassimplylent the powersand retain~d control and responsibility through its

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=ยงI~guidelines. In reality, government may lose 'i';r

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\isome authority when the servic\ is con-

the ciniens~ needs ?nd expectations",and retain control.

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'vALID COMPARISONS OF THE~OSTS OF~PUBtIC'VERSUS

PRIVATE DELIVERY

OF SERVICES~EI~FS~ENTIAl:-f(jFi ",SOlJND.DE:CISION~MAKING ON THEJSSUE ;OF VYHETHERTO~ PRIVATIZE, ~ .PARTICULAR. SERVICE. BECAUSE ACCbUNT!NG PROCEDURES FOR GOV~ERNMENTARE DIFFERENTFROM '" Tt;iOSEUSEDINTHEPRIVATESECTOR, It IS DIFFICULT TO MAKE VALID' COMPARISC)NSOF SERVICE COSTS:

t;(icted oat but it stilr-must be able to meet

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The political strength of '"opposition~may determine if some services can be COO" sidered for alternative delivery metn6ds. Som~ services may have strong support from elected officials who previously served in the city department. 1.;heirresisfance may reduce the feasibility ot such a change.

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parison of R!ivate versus J?~61i.c: delivery, in most cases a cgns!gerp.bje""ambunt or-Work is involved. As an illustration ,a method of cost accounting of those services delivered .. through the DepartmelJJ" of Central Services has been developed. This method factors in retirement benefits and other personnel costs. In some cases, however, fur-

The City of Jacksonville conforms to municipal accoul1ting~standardsas approved ~rth~'pavernmental Finance Officers Association..However, those standards d.o pgtilequire"'comparativecost accounting. Jacksonville has no requirement for cost comparisons for internal purposes similar to that of the federal requirement describ-

ed ab9..v~.cTh~refo~e, alttlOugh it is treorot\fally pos~ible to ma~~ accounting adtustm~LJtsto enable a v~id cost corp-

Th~ iijfed~r.!'!rgovern[J1~nt, via 9i~cular No.A"i7.6of the Office of Management and BudgetlLequires tgat agencies sof the lederalc90vernment compa,Ie the cost oj p~rforfTIing a function using federal Etmployeesto the cost of p~rforming the "work using a private contractor. The most "ecohomical"means of obtaig,ing support ~services can then be determined.

ther adjustments would need to be made to include all costs associated with the service. For example, the Office of the General Counsel and the Computer Systems Division are not charged for rent in the current method of cost accounting.

ARGUMENTS FAVORING PRIVATE DELIVERY s; '" ;

PROPONENTS OF THE eRIVATE DELlVi;RYOFP"UBI,.ICSERVICESSTATE THATTHE PRIVATESECTOR CANDELIVERSERVICESOF EQUALOR BErTER Q.UALITYATTHE;SAME OR lOWER COST THANCANTHE PUBLICSECTOR, FORA NUMBER OF REASONS. THIS SERVICE IS CLEARLY TRUE IN SOME INSTANCES BUT IS QUESIii" .. COST SAViNG FOR"".COMPARABLE" ,., . .. TIONABl~

IN OTHERS.

private delivery of sEfiViceand it is tile main

area in which the private sector claims to be able to produq~ signiflcant results. Comparing the costs of government and contract service is not as easy as it may appear. T#pically,

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the cost of government

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bt.RJget. Government budgets usually are= dbt designed to be used for cost accoun~~ ~ ting purposes, however, and may fail to include significant expenses such as fringe'" benefits and capital expenditures.

In Jacksonville, no detailed cost stUdies have been conducted tor city services. Some departments,.however, in specific instances, have judged that the private delivery of specific services is less costly. S~me examples are listed .below~

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-ec;;ity"" HUD also decided, based on lower costs, to u!:!.ethe private sector'

for tile paintingof rentalunits. In thi~

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case, the city's cost using public &ployees was calculated on the basis of salaries, fringe benefits, an amortized equipment cost, plus an in-

The and Public" Affairs. ~ s Recreation . Departmentca!ยฃ:ulated that mowing and c.1ean-uP.2servicesfcost the city

'?,Ji;. frifm W-18~an acre,"'using. city staff? ~ Thisfigure includes salaries, benefits, d,~prE~pi1fed equipment costs, and operating and main!enance costs of II!!

still significant.

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Until 1981 , the Florida Department of 'Transportation handled roadway maintenance and repair servfce for the JTA, charging between $700,0Q.0 to $800,000 anr'lually,,_The~TA"- audited the service and foun-d it could'be done by the. private sector at a saviggs. The project was put out to bid in 1982 and now costs from $360~(j00 to $380,000 "per year. ..

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direct cost figure of approximately 20%

. For 20 of its .,;;;! Ruplic ~ho~ing Gom"".. plexes, !he.Jacksonville Depa~tment ~ of Housrng and~Urban.Development

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equipment. It does not include "indirect" administrative costs. The city sought bids from the private pector and contracted for the ยงervice at $13 an acre. The contract was later sQ,lit" among several private contractors". with some bids as low as $9 an acre. The additional cost of city employees used to monitor the mowing and clean-up activity has not been included in the privatesector cost figures but it is believed that the cost savings are

vice is taken to be the cost stated in the

'" (HUD) bids out the garbage collection to the private sector. HUD obtains a lower private sector bid for garbage collectfbn three times a week.than the city government's charge to HUD for service two times a week.

Cost is a primary reasop for turning to the

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THE REASONS GIVEN FOR HIGHER PUBLIC SECTOR COSTS INCLUDE:

. BENEFIT COSTS . CIVIL SERVICE SYSTEM

PAY DIFFERENTIALS

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PLANNED DELAYS TO KEEP STAFF GOVERNMENT RED TAPE LACK OF COMPETITION

Some of the above reasons for higher public sector costs are not applicable to all situations. However, in some cases personnel costs and requirements cause the services to cost more when provided by public employees.

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Benefit Costs

For Jacksonville public employees, fringe benefits add approximately 27% to the salary cost. This cost includes money set aside for accrued but not previously funded retirement benefits. These benefits costs are generally higher than those of the private sector. Civil Service System In order to insulate public employees from improper political pressures, the civil service system provides a complex process for the removal of employees who, according to management, are not productive. A civil service employee may not be suspended without pay, demoted nor dismissed except for cause and after a hearing has been held. Because of the paper work, documentation and hearings, some employees may be retained even though they are not as productive as expected. In the private sector, in a non-union setting, regulations and requirements surrounding dismissal are fewer. This can be an advantage for the private sector deliverer in providing an efficient operation but it can also be a disadvantage for the employees. Pay Differentials Municipal employees in the lower skill levels of employment are often paid more than privatesector counterparts. The benefitsfor these levels,especially with seniority, make the jobs very well paid. Planned Delays to Keep Staff When the need for a service changes and employees are no longer required, the public sector may retain the employees. In the private sector the profit motive would require a reduction in staff. To justify retaining unnecessaryemployees a city department may slow up the work or "plan delays" and make it appear that a limited amount of work is taking a long time. One very vivid example of this in Jacksonville occurred when the

previous engineering department admitted to "planned delays." In the late 1970's there was very little building in city government, so there were fewer jobs for the engineering personnel. The department purposely slowed work to ensure work for all personnel, all year. This waste was subsequently removed by reducing the department size and contracting out additional services.

renegotiate the bid to follow purchasing procedures. Every change order must go through a lengthy approval process to protect the public. In contrast, private sector builders can negotiate and respond immediately to changes in the work.

Government Red Tape Government delivery of services requires additional layers of employees to ensure accountability. These multiple layers lTIay be required by the method of funding where a federal program may require review and management at the state, region and local levels. Each level requires a time consuming review of each phase of a project.

Government delivery of services creates additional expensesdue to the requirements to operate "in the sunshine" and be accountable to the public. Public managers must be ready and willing to respond to the press and the public. The time required to address questions is time that is not used to actively produce the public service. In addition, negotiations with employees or contractors when all recordsare open to the public can leave government negotiators at a cost disadvantage. To ensure that public dollars are fairly spent, government must follow rigid and time-consuming bidding procedures when making purchases from the private sector. These procedures often must be approved by several levels of bureaucracy before any change can be made. For example, a contractor may have bid to use a specified type of steel in construction of a building (i.e. a steel door for a jail). The contractor's supplier may not have that specification but may be willing to substitute a higher grade at the same cost. A private sector builder could make an instant decision to purchase the substitute and proceed with construction. On the other hand, a public sector builder might be required to rewrite the specifications and

Federal law imposes certain restrictions which often increase the cost of providing services with federal funds. The Davis-Bacon Act requires contractors of projects funded with federal dollars to pay prevailing union wages and requires vacation time, sick days and holidays in excess of normal private sector fringe benefits for employees working on construction. The prevailing union wage must be determined and approved by the regional office of the U.S. Department of Housing and Urban Development, causing costly delays before the funds will be released. Contractors using these funds may have to keep two sets of books for two groups of employees. In addition, federal, state and local laws require affirmative action reports and may require the use of minority contractors, which in some cases are difficult and more expensive to obtain. Lack of Competition Competition encourages cost efficiency. A monopoly can be and remain inefficient, because it does not have any competition. Many people think that government is inefficient because it is a monopoly and the private sector is more efficient because it is competitive. This is not necessarily true. Shifting a service from public to private sector does not necessarily shift it from monopoly to competition nor shift it from ineffective to effective.

Changing from public provision to private provision does not necessarily change some services from a monopoly to a competitive market. A privately operated fire department would have an exclusive contract and operate much like a monopoly.

6 --I

The public sector provides many services which compete with other services (mass transit with taxis and autos; parks and recreation with state and federal parks or any entertainment). However, public sector provision is not necessarily competitive since tax dollars are usually guaranteed to subsidize the service and the public service does not have to compete with the private sector for funds.

PROPONENTS AND OPPONENTS OF PRIVATIZATION HAVE AGREED THAT THE PRIVATE SECTOR PROVIDES THE LEAST COSTLY METHOD OF PROVIDING A SERVICE IN SOME CASES, BUT NOT ALWAYS. When government needs a service which is not an on-going but a time limited need, the flexibility of the private sector makes its use more efficient. For a short term need the city cannot justify the expense of hiring city employees to supply the service. Some examples of this in Jacksonville are:

. . .

seasonal needs of the Jacksonville Electric Authority for tree pruning around wires, specialized maintenance on city equipment such as retracking a bulldozer, professional services (architects, engineers, bonding attorneys)

FOR SOME SERVICES, PUBLIC ADMINISTRA TORS ADMIT THAT THE PRIVATE SECTOR COULD REDUCE COSTS BUT CONTEND THAT THE SERVICE SHOULD REMAIN PUBLIC FOR REASONS OF PUBLIC HEALTH, SAFETY OR OTHER SOCIAL GOALS. City officials contend that for health and public safety reasons, some services should remain at least partially in the public sector. Solid waste collection and disposal is the most obvious of these services. The city wants to maintain some control of collection to reduce possible health hazards from uncollected garbage. The need to keep tight control over garbage disposal is manifested by problems with the disposal of hazardous material in improperly maintained landfills, posing a danger to the ground water supply. The method used in Jacksonville to maintain some control while still providing some of this service through the private sector is described below.

chose. Neighbors on the same street might receive service from different companies on different days. Consequently, garbage was on the street every day.

SERVICES WHICH MAYBE APPROr PRIATE FOR PRIVATIZATION

After consolidation, the city established five, and later six, garbage service areas in the previously unincorporated parts of the county. Each area was assigned to one of six contractors while the Sanitation Division continued public pickup in the core city. Residents 9f the core city receive a higher level of service than the outlying areas.

WHEN LOOKING TO THE FUTURE, LOC~L GOVERNMENT MANAGERS TEND TO JUDGE THE PERIPHERAL SMALL SERVICES AS MORE SUITABLE FOR POTENTIAL PRIVATIZATION, WHILE THE PRIVATESECTORSERVICE PROVIDERS INDICATE THAT THE GREATEST PUBLIC BENEFITSCAN ACCRUE FROM THE PRIVATIZATION OF MAJOR BLOCKS OF SERVICE.

The public employees in the core city, by working overtime, may be used to back up the private contractors in emergency situations, such as are presented by equipment failure or labor problems. However, most contraotors have their own back-up plan for any labor problems, and may arrange for back-up by other private contractors when equipment problems occur. There are no unions in the garbage collection business in Jacksonville and work stoppages are almost non-existent.

Government sector managers, when asked to suggest services to consider for privatization, usually submitted minor, peripheral services that would not greatly affect the number of staff. In addition, they suggested services which are difficult to provide and generate many complaints from the public, makiog them problems from the manager'spoint of view. Some examples cited by public sector managers include:

. A single rate is set for all contractors based on the actual cost of delivery bid by each contractor. Between the contract years (every 3 years) the rate is adjusted annually by 70% of the consumer price index change. The contract price is controlled by the price for which the city can deliver the service. Presently the city provides the service for $76.68 per customer per year and the contractors are paid $74.18 per customer. The city cost of $76.68 may not include all costs such as overhead, fringe benefits and equipment. Some national studies have shown that this type of joint provision of solid waste pickup can be the most cost efficient. The private sector price helps to keep the public sector aware of costs and thus more efficient, while the presence of a public sector provider can keep the private sector from holding the city hostage and increasing charges.

The school administration suggested site maintenance including grass cutting.

. .

programs,

The JTA suggested bus service to Mayport Naval Station and toll collection. The sheriff's office suggested public building security.

If forced to choose, the Public Safety Department would suggest services such as parking and animal control.

The Department of Health, Welfare and Bio-Environmental

Services

suggested mosquito control, nuisance abatement and physical exams for all city employees. On the other hand, private sector providers suggested schools, hospitals, civic centers and jails as most feasible for privatization. They maintained that any service or operation that must purchase, process and deliver large quantities of goods and services has a potential for greater efficiency with a private manager. Basically, the greater the number of activities in a given service or operation, the greater the possibility for improvements in efficiency.

Private service providers complain that public administrators have experience in writing contracts for construction but not in writing contracts for services. The same principles do not apply to these arenas. Service contracts are often divided into so many segments that a private sector deliverer is not able to reduce costs by im-

Before consolidation, the county had a number of independent garbage companies doing business wherever they

7 ~

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" proving efficiency. Tile private contr~ctor can provide more efficient and less costly it.service if contrapted for a broader range ~of services. For example, in road maintenance, if mowing, sign maintenance, drain cleaning and road Jepairs are separated into different contracts the costs will be greatE1rthan giving a contract for all road maintenance. With a single contract one crew can do all the services in one trip. However,with separate

contracts several different work crews must travel and work on the same roadway. According to some private sector providers, there is almost no service that should not be subject to consideration. They believe that government should perform the functions,pf determining and defining the public need, "while relegating the managing;.,of

peopleto the privatesector.

MOST~EXPEBTS AGREE THAT -SERVICES-WHICfI ARE UNDEijGOING"MAJOR CHANGES AND NEW SERVICES "" NOT PREVIOUSLY SUPPLIED BY THE ~GOVERNMENT ARE OFTEN THE BEST CANDIDATES

FOR f!RIVATIZATION.

New services do not present the problems of existing personnel or turf associated with an establish~ agency of government. I;

Based on these criteria alone, any new ventures or major changes such as the proposed new jail and the proposed "new resource recovery plant would be good candidates for consideration.

I ~

Several private companies build and operate corrections facilities. However, the sheriff and most other law enforcement officials in the state of Florida oppose any privatization of jail operations.Very few prelrial detention""facilities (as opposed to a prison for sentenced offenders) are operated privately. The rights, requirements and privileges of peoPle in a pre-trial detention facility differ from those

of peoplein prison.

The construction and financing of a new jail merits separate consideration. The city council is exploring the option of havjng a private 'firm build and lease back the building with the sheriff retainfng control of operations.

presently run ip the public sector. The Corrections Corporation of America has..been in business two and one half years and presently has seven contracts with a total of 1400 beds in operation, including the Panama City jail. It does not claim to be able to improve on all jails and prisons since many are well run. However, allover the country government is having problems with overcrowding, inadequate facilities, und~rstaffing, budget crunches and the inabilfty to pass revenue bQndreferenda. At "the same time the public sector has placed increased emphasis on stiffer sentences, crime control and getting tough with criminals. The inadequate facilities and Jack of funding do not mesh with increasing the number of incarcerated people.

In contracting for building, leasing and operating a jail the gove!nment can guarantee accountability by making provisions: "" '" . to revie~cthe contract at regular intervals, . to have the option to payoff the remaining cost of the facility and take it over, . to guarantee that at the end of the contracHusually 20 years) the facility is owned by the government and accredited, . to guarantee the rate of increase of operating costs Private management of a jail, according to CCA, allows elected law enforcement officials t6 direct more energy and resources to crime prevention and enforcement. Jails present difficult administrative tasks because of the number and scope of activities that are constantly in motion. Demonstrated cost savings effectively reduce revenue needs or, more likely, allow those revenues to be used for other public programs (schools, welfare, roads, etc.). Jacksonville is currently making plans for a facility to ge~rate electricity by burning garbage. Whether the public o~private sector will build and operate the facility is still undetermined. Nationwide, 70% of similar facilities are privately owned and operated. In Florida, all are publicly owned and privately operated. ,..

Iii

According to the Corrections torporation of America, opposition to contracting out the operation of jails and prisons is a turf issue. They maintain that jails and prisons can be run by CCA at least as well or better and more cost effectively than they are

THE, CONCEPT OF GREATEST COST EFFICIENCYBY THE REQUIREDUSE OF CENTRAL SERVICES IS SOMETIMES QUESTIONED BY OTHER GOVERNMENT ENTITIES. SOMESUGGESTTHAT THESI: SERVICES MIGHT BE BETTER PROVmED AT THE DEPARTMENTAL OR AGENCY LEVEL OR BY THE PRIVATE SECTOR. The charter requires all city departments, agencies, the school board and authorities, with two exceptions, to use services supplied p'y the Department of Central Services. cThe Jacksonville Port Authority has the option not to use central services and the new coal-fired generating component of the Jacksonville Electric Authority is excluded.

Central services is a major department within the city with over 600employeesand a budget in excess of 46 million dollars. Legal services from the Office of the General Counsel and personnel services are also centri:lIized services which must be used by parts of local government but are not located within the Department of Central Services. The Department of CentralServices contains the following functions:

Fleet management (motor pool) Printing Storerbom (supplies) Public buildings (custodial care, maintenance, minor construction, operation) Computer systems Communications (telephone and radio) Purchasing professional services Information services

Some agencies required to use these services complained of slowness and high cost. Some representatives of the independent authorities believe their agencies are considered low priority for service delivery. The Department of Central Services, however, said it had not heard such complaints from~ the authorities.

Central services has certain priorities for filling requests. The sheriff and the Department of Public 'Safety have priority for equipment such as cars and also for computer time. Central services bills city agencies and authorities for most of its services. The department is paid by the authorities in "real dollars~ and by the city agencies in paper transactions. Central services says

8 .,

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tor or in-house at a lower cost thanfs ;ow provided .t>y'central services: ""

'that if;'Tecords]ndicate most of its'services Sire pr,£>vide,pat 80 9q,percent of what it woul(j"'cost in the private sector. At fhe ~ s!ilJ1e~time,the department con'siders itself mOLeresponsive, giving the same quality

ofs:rVicErtn a reduced time frame.

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LegalCounsel ,., Motor Poo~

Purch;sing.

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. f'~'

School Bus;!Radio Rej)afr ... . ~

1he school;board thinks it could provide th~ fotlqwing selvices through the privaTe sec~

overallcost of city'legal servicesand the

proportion provided~for,ctheschoolboard.

~ "

the rate charged for its legal need::;. iii

PRIYATE DELIVERY

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ARGUMENTS.AGAINST

~ ,:Tl;)e sch<;!olboard now has no contr..?1over

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The school board would prefer t6 contract ~ith the private sector for legal counsel. ..Charges currently amounting to ~about $250,000 -are now determined by the

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~ Data proces~ng

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OPPONE~TS OF!!!PRIVATIZATIONIIEX,PRESSED CONCERN THAT IT "'WILL ~'-. .,,'.' "..,

Corruption ,

and,QIJest!b'l1a"hle ,'..

/.:cti\Qties~ ~

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need fqr t~chnical e1SP~,rtiSe by government employees Increas~(j. The spoils system' brought on many ,ablj$es and~he in"

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competenc;y.of the resulti~gbureaucracy led to further deteriQrafloJl:,of1he sOlystem~ T"he~Tweed Ring iQNeWYork City most notorioLJslyepitomi;zedthe (;orruption and graft of this era with flagrantly overpriced city contrac~ to rewarp political cronies,

Contractor§ ii1ay look for ways to cut co;§t~ and i]'1axii"pize profits at the expense ot s~rvice quality by hiripgJnexperi,enced, tn~nsfentpersonnel atlgw wages, by inadequ.~te~J'pervision and byeyadingcontract n~quirements. The contractor has the clear right tor~fuse to do anything'-that isn't in the contract, and it is difficurt to foresee all the spe;ific requfPements' 6f. d'eliv~ring a

..service>vyhen writing1t contract. For'exani-

;!f of service requir~a. Th~"'cost s~avingsmade by the~private contractor were primarily~a Fesult of understaffing and less effective {'ervice. Gainesville eventually'\vas fQrced to return to public delivery of the service.

proceedin~s. In a 1977' article (Hanrahan), Gerald vy. McEhtee, sPleJident of th.e American Federation of State, CountY and MunicIpal Emproyees, sums up the arguments against contracting out ,by concluding:

Citizens who "'are paying for a service may fiodthe contractor less accountable than the public employee. When"citizens complain aBout a >3'contracted service the ~go~eg1l1Jent must in turn complain to the "contra.ctor and may have to enter into costly contract negotiations or termination

With competent pablic management, there would be no need even to consraer contracting-outin many instances in which it is n°1:Yused. Contracting-outis frequent111.'"Iyused to mask the inadequacies of public officials~hocant manage theirown depart-

and the use~q.Jkickbacks":'

pie, wh§n Gainesville contracted its motqr pool to a privafe sector operator, the contract was not ~dequate to maintain the level

Public employees, having chosen to work for the public"~. may be more oriented to

Lack of Public Control

Before civilservicethe nationwas ruraland the governmenfwas small, relativelylimpie, with a nontechnical bureaucracy." Governm~nt jobs were awarded. py the spoils system, based on po!iticalactivism and backing a winning candidate. As th~ country urbanized and industrialized, "demands on the gover.nmentto supply!;!r~ ban public services ~xpandecf ~;'d ..

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~ic:es and bring on another round of abuses apd scandals~

lyconnected firmcan meel;;pecifications.

Because priv~te'foJ"panies exist to make a profit, th.e n~~s§ity of profit will drive up costs eventuallY? If opt immediately. Compan1es"l1lay buy in by offering.'8. contract at a low rate only to increase cnarges when the cifyfinds itself dependent on th~f'particutar contractor. In addition, the hidden costs of contract preparation, administrao' tion an.d monitoring may make it more expensive tnal1 doing ~the work with public staff.

. ~

will lessen the direct public control ofser-

C'ontracts;JTlay not be"'aw~rded on a truly "a~§~L.:p'3N HIGf:lER COSTS, POOaER SERVICES, gQ~RUBTION ANa LACK competi~ive ]~asi; and matbeias;og,ated OF ACCOUNTABILITY TO.THE PUBL1C. . ~,,~ ,,'", ",. '''', '. "'- with brib~ry, ki.ckb.acks, collusive' bIffdiQg '" <f!Ifi ;j) ~ i!nd po!iti,fi:iIcronyism. A corilract can,be ;Higher,Costs wriften ,,' ""-'.'" so that only dne"favored s",''''", oq;>olitical:;

Poqre!Ser¥ice

pri~ate sector to a mistru~t of the puplic sector. The (,!nions.fear that privatization

helping people 'than priqate sector III'" empfoyees..Public sector people, in some '" cases, have sacrificed fin"!.ncial opportunities from workiQgin)he private sector in oreierto'serve in tile public sectoF.'Thus, they may provide better 's~rvice than private sector employees,.

Civil service reform occurred"in resp8nse to th~se problems and to'tilecJl'eed for a mbre sophisti$;"ated govetoment to supply urban servites-police, fire, water, sewer, mass transit, paved streets and street lighting-to the growing cities. Reform gov~rnments tr~d to, profession,§lH:z~.the.. "delivery of hi9h(W~ify public services and brought most of these~ser;vices, previ9us'Iy supplied in many commu!1ities by private contracts, unc;le~r direct government control. Civil service began to I.Is§ther;nerit sy'Stem for employee selection 'and aqvancement in government jobs, offl\'!:lng !J;!ore job security for public employees. Procedures for hearing employ~e complaints and appeals to disciplinarY.?2tibns plotection toemp!oY~E!s. Ii!

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"ga¥e further ..

~ments properly. Any state or local government agency with skilled managers should b~ able to effect the same kinds of economies and efficiencies tha~.' gCtpd private managers achieve-and witfiout the added problems that contracting-out brings... Responsiblegovernment requires impr6vingthe quality of public management and public services, not the selling off of government. Some pr~poner1ts of privatiz~tion, however, maintain that the1/!.most inefficient .

."~

managers, because they are notlable to deliver theserylce with existing staff, are often the very ones who get additional staff and more status in th~ir position.

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Public empioyee union!fsee"tl;Je p~ndulum of history swinging from a mistrus1 of the

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MANAGEMENT

I I I

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THE SKILLS OF CONTRACT DESIGN, NEGOTIATION AND MONITORING ARE CRUCIAL FOR PUBLIC MANAGEMENT OF PRIVATE DELIVERY. To insure proper control over the use of public monies, the city must maintain enough expertise 9-mongcity employees to oversee the work of the private sector providers. In most cases in which a municipality failed in the privatizationof some service, part of the cause for that failure was the lack of adequate controls and understanding of the service by the city staff. This lack of understanding often results in the "development of contracts which are written to the advantageof the private provider and do not ensure the quality of service desired by public officials. Besides leading to an inadequate provision of services,

loose contracts can lead to legal problems with the unsuc'Cessful bidders. The city often faces court cases when the low bidder does not get a contract or when the selection process is called into question. Now, most city service contracts are judged on how the proposal measures up to the specifications. The cost is important but not the sole criterion for selection of a service provider. Companies bid low for a number of reasons. Sometimes they are incompetent, or just need to keep all employees engaged between other jobs. Sometimes they may spot errors or omissions in the specifications, and count on change orders to insure a profit. Firms often allow no funds for contingencies and may thus run into problems. The city needs to be assured that a bidder will perform the job well and fully, at a reasonable cost.

PUBLIC MANAGERS HAVE MANY OF THE SAME OPPORTUNITIES AS PRIVATE MANAGERS TO IMPROVE SERVICE DELIVERY AND REDUCE COSTS. Many services provided by public employeesdo not appear to cost more than those provided in the private sector. Some services are operated as businesses and are able to use the same economies as private businesses. If these economies are used, then the public sector can have an advantage over the private sector by not having to make a profit. However, some city department heads indicate that it is difficult to hire and keep good managers in the public sector because of better wages in the private sector. Also, supervisor promotion is locked into the "rule of one," making it difficult to select the best candidates. Without good, well trained and knowledgeable supervisors, it is difficult to operate efficiently.

STEPS TO CONSIDER WHEN CONTRACTING THERE IS NO UNIVERSAL SYSTEM BEST FOR ALL CONTRACTS, BUT THE MOST SUCCESSFUL SYSTEM OF CONTRACjlNG OUT A SERVICE WILL INCLUDE COMPLETE AND ACCURATE SPECIFICATIONS, REPORTINGDATES, INCENTIVES FOR TIMELY COMPLETION, PROVISIONSFORSEVERINGTHE CONTRACT,PERFORMANCEBONDING, COST ESCALATORS, MECHANISMS FOR RELOCATING DISPLACED EMPLOYEES AND A REVIEW AND MONITORING PROCEDURE.

. .

Most contracts should include at least:

Tight specifications A pre-bid conference should be used to guarantee that the specifications are understood by both the government and the private sector. Easily measurable services Services such as grass mowing which can be easily measured are more readily contracted out than complicated projects.

Built-in reporting dates with specific performance standards Incentives Traditional contracts usually contain a financial penalty if the project is not completed within a certain period of time. Bonuses for early completion might be more effective in providing a positive incentive. Provisions for breaking the contract Requirements for performance bonding if the project is high risk Performance bonding is expensive, a cost paid by the taxpayer, and some projects may not need performance bonding. The need must be determined by analyzing what would happen if the project were to fail. Cost escalators providing for when and how much the service cost can increase A contract should not leave the option of "low balling" the bid with the possibility of later increasing charges.

Provisions for dealing with existing employees if the service will take over a present governmental service Politically, it is extremely difficult to dismiss government employees. Some mechanism must be found for relocatingemployees or having them employed by the new private firm.

Government can also set up procedures to ensure the fulfilling of the contract on an ongoing basis:

daily enforcement of the contract

. regular review of the financial

status of the company regular review of contract implementation requiring Jnsurance to cover any liability

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APPENDIX TABLE OF LOCAL SERVICES IN JACKSONVILLE The table below lists the public services provided by the City of Jacksonville and shows which services or portion of services are delivered by the private sector. The following codes are used in this table:

C-virtually complete provision excluding inconsequential peripheral services. P-partial provision by public sector and part by private sector.

-this

sector

SERVICE

provides

Publicly Delivered

the majority

of the service.

Privately Delivered

SERVICE

Public works/transportation/utilities

... ....

Publicly Delivered

Privately Delivered I

Education

Street/parking lot cleaning Inspection/code enforcement Parking lot/garage operation (city owned) Airport operation Electric service Street light operation Commercial solid waste collection

C C C C C C

Residential solid waste collection Solid waste disposal Port operation/marine and trade development Economic development Water service Waste-water service

P P P P P P

Traffic signal installation/maintenance Meter maintenance/collection Bus system operation/maintenance Transit system for the elderly and handicapped Utility meter reading Utility billing

'P 'P 'P 'P 'P 'P

P P P P P P

Street repair Street construction Tree trimming/planting Cemetery administration/maintenance

P p P

'P 'p 'p

Instruction Food service Adult education, job skills Agriculture/home economics Transportation

C C C C

Payroll Tax bill processing Tax assessing Delinquent tax collection Secretarial services Personnel services Labor relations Insurance Microfilming Purchasing Communications (telephone and radio) Planning Staff training Data processing

P P P

Building design Building construction Food service in public buildings

Recreation Operation of convention centers/auditoriums Operation of sports complex Operation of libraries Cable television franchising

C C C

Recreation services (city facilities) Operation/maintenance of recreation facilities Parks landscaping/maintenance

'P 'P 'P

Engineering Building/grounds maintenance Building security Legal services Public relations/information Printing Debt service and bond administration Audits Fleet managemenVvehicle maintenance Heavy equipment Emergency vehicles All other vehicles

Health and human services

Public safety Crime prevention/patrol Circuit and county court operation Public defenders Police/fire communication Emergency medical service Traffic control/parking enforcement Vehicle inspection Emergency management Hazardous material containment & clean up Vehicle towing and storage Fire prevention/suppression Ambulance service

.,..-.-----

C C C C C C C C C C P 'P

'p P

Animal shelter operation Day care facility operation Operation/management of public/elderly housing Operation/management of hospital Drug/alcohol treatment programs Operation of mental health/retardation iprograms/facilities Child wellare programs Programs for elderly

Publicly Delivered

Privately Delivered

Support functions

Sanitary Inspection InsecVrodent control Animal control Public health programs Mosquito control Nuisance abatement Water and air pollution programs Victim assistance services Consumer affairs

SERVICE

C C C C C C C C C C C C C C

'p 'P

C P P

C C C C C C C C C C C C C C C C C P 'P 'P 'P 'P 'P 'p 'p

'P P P P P P P P

'p C C

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Cor1'clusions express the value judgments of the "con'fiTIittee,obased on the findiilg%.

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1.~~overnmenti1as social goals whiCpmu~ be~eClsured against economic consider~tions in any decision to privatize a ser\(ice. AsocostefficieQcy and"'effective delivery of a.serviEe'ar~ifJot necesยงarily synonymod~', government should shift to private deliy~ry

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"~onrywhen effitiency;"effectiveness and~equity areยฃ,carefully"coQsidered. ~

2. WhilEja'sigpiDcanJ number of public seryices'in Jacksom7i11!:! are already successfully prov~ed by the.private sector, there are

other sel;iiceswhichcouldb~ cQnsideredfor privatization." '~ " . ';f@

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3. Services which most readilY' I~nd them~elves~o privatization include: Seasonal, highly specializeCi and non-recurring needs New or greatly altered services ."

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'4. Contract awards~should be based on objective'selection criteria free of politicalconsid.erations.

ii! 5. Successful privatization requires strong contract managefnehtsskills on the part of.government officials. In some cases local governmentis no(providing adequate cpntract preparation and supervision of private contracts. Contract requirements must be detailed

and the services must .be closely monitqretf.;"

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6. Objectivecomparative cost analysis should-be conducted before determining the most appropriate method of delivering a service. I!O " ;; 7. There are state and local laws which liw.!J..fle"ibiILty ilJthe local delivery of services (e.g. city charter requirements for central servicesJ: H()wever,these laws can be cha"ngedand should not eliminate any service from consideration for privatization. 8. Some public services, such as police and environmental regulation,arenot appropriate for privatizationbecause they are an exercise of the inherent coercive powers of the state, and are perceive.d by the public as a strictly public trust. ~ ~

ii>

9. The concepJ '" of central services as operated-if! Jacksonville inhibits privatization. 10. The advantages of competition should be explicitlyconsidered indelivery of public services. The existence of a potential for com-

~~tition withthe privatesector maystimulate"publicagencies to performbetter. '" ;II"

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11. P'ublic unions, as strong opponents of priv~liza1ibn, negessarily must be cQnsidered and involved early in any .attempt to privatize

a serVice.

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12. When considering possibilities for privatization, local government tends to limit itself to only minor services rather than considering

all services which do not have legal restridions,

"!II.

RECOMI\lIENDA TIONS

Recomm~nc!atiQns"are the committe~'s specific suggestions for change, based on the findings and conclusions. ~

1. The mayor should plan for periodic evaluation of public services as to suitability for privatization. In particular, new services, seasonal services, or sE!rvices undergoing ra'dical change should i;>ecarefully re~iewed for possible privatization. '2.

The mayor should appoint a special"'cQmQ'1itte~composed-of equarreRJesentation from the private and RUblicsectors to review requests by private firms to provid~~p"u6IiQise~ic~s. If the comglittee redommends that the service in question may be better pro-

vided oya private deliverer, the m1iyor"should re'Ll,lire~tj:1orough cost comparison bet\ll/eeppublic and priv~t~meansof~~liverj''f ~

3. ~Ibe City Fillance DepartlTlent and the city c,~unCilaudifor should develoR and maintain an accounting procedure whereby the cost of Rroviding public services using gov~rnment employees can be ~ompiired to the cost of performing the work using a private ~

contractor. ,;,:

4. In'oeder to I~ssen political considerationยง in a";~rairl"9;"M!jjor contracts for services, the m:yor or indepe1,deQt!'igencies should I!l''\ .~"'" appoint to each selegtion committee a,private~Qr(jn?eerrepJ~s~ntativE!.Jrom the affEtctedfield (whowould n!?t~beeligiblefor selecI tion), to assist in developing the scope of services and reYiew~esPQnses tOJequest~"forproposals. The.mayor or board of the involved independent ageric)(!should explain in writingafty{ejection of the cOl'T1mitte~'$,;aecision. . . . ~ c III ""'= "" " ~ '" ,ยง .. .. 51 g; ~'2 .. ~

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~... .' ~ = . "'-.. working with]-the Iqcal edi.u:::ation and Q,usine§s~cQr:nIJl~lliti~s"sb2uld develop training programs to,?ssistpublic managers to effectively prepare, negotiate, and adriifniSter'<pontraCts with the' private g'ector. -

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6. Strong contract management skills should be emphasi.?edin city hirin'g, perform'lnce evaluation and promotion practices for posi~ tions involved in contracting with private sector service pro~iders. ~ .~

7. The mayor should carefully examine thlconcept

of centr'~1 services to determine those services that would benefit from competi-.

tion and should authorize efforts to privatize those serylc~s,deJEHmined to be appropriate !;

8. When a service seems appropri~tefor

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or charter provisions,

and seek .

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i:!

for privatization.

privatization, Jheq,ity should review impedingle~isl~ion

necessary changes to allow privatization tQ occur.

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REFEBENOES".

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~a:r~s,ES. ment.

Privatizing

Chatham,

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the Public

New Jersey:

Sector:

Chatham

(1982):' ,

f-iow to Shrink

ii!

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Govern-

HousePubli'Siiers,

IJJc1'

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Arming~n, R.Q. and i;lIis,. Willia'!li"D~ ThisWay"Up:TheLocal Officialis Handbook Jqr PrNatization and Contracting °Ldl.. Cbicagoi" lliinois~ Regnery Gateway, Inc. (1~84). ~=~ R ~

. '.

International City Managemeflt Assoaation. Iss!1~sin Contractingf9~ Public Seryig~s frqrn the Private Sector. Management In'" 'Ii;formationService~Repprt, Volume 14, Number5. Washington D.C.: Management Information Service (May 1982).

Hanraban,

'!i

II!

New Patronage.Washington,D.q.:;.Americanliederationof

Butler, Stuart. What is Privatization': Sharing; Project Shiue, Rbckville, Maryland: Volume 9, Number, 1 (December, 1985).

~ """

Vale.nte,Carl F. and Manchester, Lydia D.RethipkingLoc?I§~r~ ~ vices: Exami'ling Alternative Delivery Approaches. Managerfient' '" Information Service Special Report No. 12. Washingtgn D~@.":" JrI-ternationalCity Management Associatiop (1984). 'Iii ~

Applied Research Council, Inc. Contracting for Services. St. "Augustine, Floljda: The Public Services Group, Inc. (1985).

~ ?

John D. Government fOFSale: Contractjng=Out ttJ..f'i

State,,,County and Municipal Employees (1977).

"'i::!

John and The Naisbitt 1986: .."!f' Group. The Year ~head ... . ~ Ten Powerful Trends Shapirlg Your Future. New York,New Y9£k~

WarnerBooks,Inc.(1985).

Inte'rnational pjty Management Association. Alternative Appro<fqhes f&Delivering Public Services. Baseline Data Report, Volume 1.4,Number 1q.washington D.C.: Urban Data Service

,~ (06totThr ~1982)."

__~aisbitt, "''..

;!;'"

<!!

I1i

'Ii'

Mor9}n,DavidR'.

S~rvice Delivery Alternf!;xives. State Administration. Dekker ~O985)~

Municipal

"ar1'd ~ocal Government

Hendersoo; Harold. Can Business Do It Better? Planning:'''Chicago, Illinois: American Planning Association, Vol. 51 ,No. 11 (No~ember, 1985). ~-

Ii::;§

..6hi, Keon S. Privatization: A Public Option? State Goyernment News, ~ashington D.C.; pune .:198§). '" .

ill Office~f Management and Budg~t, Executive Officepf the President. Circular No. A-75 (Revised). P~rformance of Cpmmercial Activities. Washington D.C. (August 4, 1983).

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RESOURCE PEOPLE The JCCI study process relies upon information supplied I;>yknowledgeable resource people in addition to published reference materials. We wish to thank the following speakers for their contributions to this study.

Harvey Baker, Jr., Division Chief - Communications Division, Department of Central Services, City of Jacksonville Bill Basford, President, Jacksonville City Council Thomas W. Beasley, President, Corrections Corporation of America Dale Beerbower, Director, Public Safety Department, City of Jacksonville J. Henry Boggs, Maintenance Coordinator and Acting Chief- Public Buildings Division, Central Services Department, City of Jacksonville Bichard Bowers, Director, Housing and Urban Development Department, City of Jacksonville Miles Bowers, Fire Chief and Deputy Director, Public Safety Department, City of Jacksonville Steve Canfield, Financial Officer, Housing and Urban Development Department, City of Jacksonville Dr. Joan Carver, Jacksonville University Patricia Cowdrey, M.D., Director, Health, Welfare and Bio-Environmental Services Department, City of Jacksonville Andy Crawford, President, Southland Services of Jacksonville, Southland Waste Systems, and Seaboard Sanitation Dr. Ed Crawford, Deputy Director for Administration and Regulatory Services, Public Safety Department, City of Jacksonville Rudolph Daniels, Director, Human Services Department, City of Jacksonville Dale Eldridge, Division Chief - Information Servo & Motion Picture & TV Dev. Division, Central Services Department, City of Jacksonville Matt Frankel, Senior Public Safety Analyst, Public Safety Department, City of Jacksonville Eddie Gibbs, Division Chief, Printing & Storeroom Division, Central Services Department, City of Jacksonville John Gregg, President, University Hospital Daniel Haskell, Deputy Director - Purchasing Division, Central Services Department, City of Jacksonville Lester A. Hester, Chief Administrative Officer, Orlando Florida Gary Higgins, Chief, Planning & Research Division, Office of the Sheriff, City of Jacksonville Claude Hunter, Regional Director, American Federation of State, County and Municipal Employees Douglas Hutchins, Deputy Director - Fleet Management Divisions, Central Services Department, City of Jacksonville Dewayne Igou, Deputy Director, Public Works Department, City of Jacksonville Pat Karney, Managing Engineer, Wastewater Branch, Public Works Department, City of Jacksonville Victoria Lewis, Chairman, Jacksonville Civil Service Board Royce Lyles, Managing Director, Jacksonville Electric Authority Donald McClure, Chief Administrative Officer, City of Jacksonville Katharine Medlock, Associate with Housing Management Division, Housing and Urban Development Department, City of Jacksonville John Meyer, Executive Director, Jacksonville Transportation Authority Harold E. (Hank) Moore, Director, Central Services Department, City of Jacksonville Jack Nooney, Chairman, Duval County School Board Mary Nogas, Chief of Solid Waste Disposal Division, Public Works Department, City of Jacksonville Robert Nord, Vice President & Chief Engineer of Mandarin Utilities Jim Proctor, Executive Director, Downtown Development Authority Clement Purnell, Division Chief - Computer Systems Division, Central Services Department, City of Jacksonville Milton Reid, Fleet Manager, City of Gainesville William N. Rose, President, The Public Services Group, Inc. and the William N. Rose Company Herbert Sang, Superintendent of Schools, Duval County School Board Gerald A. Schneider, General Counsel, City of Jacksonville Doug Smith, City Highway Engineer, Public Works Department, City of Jacksonville Dr. David Swain, Edward Waters College Dr. Earle Traynham, University of North Florida Ron Watson, Acting Director, Recreation and Public Affairs Department, City of Jacksonville Thomas R. Welch, First Assistant Counsel, Office of General Counsel, City of Jacksonville Charles Williams, Director of Support Services, Gainesville Regional Utilities Earl Wilson, Manager of Sanitation, Public Works Department, City of Jacksonville Dr. Bill Young, Consultant, The Applied Research Council, Inc.

COMMITTEE MEMBERSHIP AND WORK Committee members met together on 27 Wednesday mornings from pctober through May. In addition, the Management Team met numerous times to provide guidance and direction for the study. The committee received information from 47 knowledgeable resource persons and additional written materials researched by JCCI staff. Chairman: George Fisher

Management Team James Burke Betty Davis Bob Johnson Teala Milton Roderick M.Nicol* David Swain

Earle Traynham Elizabeth

Gail Beveridge Deborah Bishop Lillian Cannon Joan Carver

Head

Doug Howard John Lammerding Hardie Lord Paddi Napier David Rader

William Copley Patricia Cowdery Robin Engle Delores Gahan

Shirley Taylor Ann Thompson Darlene Tye David Williams Don Winstead

Lucy Hadi Dan Hadwin Charles Hayes

* Duringthe course of the study, the services of Roderick M. Nicol were lost because of his untimelydeath. JCCIis deeply appreciative of the many contributions Rod made to the community through previous involvement in JCCI and numerous other organizations.

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11 r ..

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JCCI ST~FF" ~

"'"

Marian Chambers, Executive Director ~

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PROFESSIONAL:

SUPPORT:

Jghn Hamilton* Carole Varney Cheryl Nichols

Martha McShea Mary Honeyman *

Responsible for this study Iii!

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PREVIOUS STUDIES CHAIRMAN

STUDIES *Local Government Finance *Housing *Public Education (K-12) *Public Authorities *Strengthening the Family *Capital Improvements for Recreation Citizen Participation in the Schools Youth Unemployment Theatre Jacksonville Civil Service Planning in Local Government But Not In My Neighborhood TQe Energy Efficient City Coordination of Human Services Higher Education Disaster Preparedness Teenage Pregnancy Downtown Derelicts Mass Transit Indigent Health Care Jacksonville's Jail Growth Management Visual Pollution Minority Business

I , I

I I

i I

I II

I .

Robert D. Davis Thomas Carpenter Robert W. Schellenberg Howard Greenstein Jacquelyn Bates Ted Pappas Susan Black Roy G. Green Richard Bizot Max K. Morris I. M. Sulzbacher Pamela Y. Paul Roderick M. Nicol Pat Hannan R. P. T. Young Walter Williams, Jr. Mari Terbrueggen Earle Traynham David Hastings Linda McClintock Eleanor Gay Dr. Curtis L. McCray Doug Milne Jack Gaillard

I I

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THE JACKSONVILLE COMMUNITY COUNCIL, INC. The Jacksonville Community Council, Inc. (JCCI) was formed to anticipate, identify and address the complex issues of urban life. JCCI is a community-based nonpartisan, nonprofit organization providing the vehicle for in-depth, objective, citizen analysis of community problems and issues. It seeks broader community awareness and understanding of the issues and provides Jacksonville a diverse citizen forum reaching across the traditional dividing lines of a complex and diverse urban community.

The primary goal of JCCI is a better quality of life in Jacksonville through positive change. It has an impressive record for the quality , objectivity, clarity, and practicality of its studies of community problems, and its advocacy for the solutions it develops. Jacksonville has experienced the benefits of numerous improvements growing from these citizen studies. Through its support of the Human Services Coalition, and work for the United Way, JCCI promotes the planning and coordination of human services. JCCI is founded on a deep faith in the ability of citizens to set aside their differences and join together to learn and reason about problems of mutual concern. Its growth and success offer renewed hope for this basis democratic concept as a means of addressing the complex issues of modern urban communities.

JCCI receives funding from the United Way of Northeast Florida, the City of Jacksonville, corporations, and individual members.

BOARD OF MANAGERS Kenneth Eilermann,

Ray Bullard, Secretary Julie Woodruff, Treasurer

President

J. Shepard Bryan, Jr., President-Elect James Rinaman

Andrew Robinson

Jacob F. Bryan, IV James Citrano

Sylvia Simmons Leanie Payne Curtis McCray Eleanor Gay Pat Hannan

Lucy Hadi Ted Johnson Hy Kliman

Carolyn Gentry Douglas Milne Bill Hodges Walter Williams, Jr. Terrence Kelly

r'.

17 l

---' ~"-"~-~"-'Non-PrufitOrg.

III"~ Jacksonville Community

t~~

U. S. POSTAGE

P A (D

Council Inc.

PermitNo. 1999 Jacksonville.,FL

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1001 Kings Ave., Suite 201 Jacksonville, Florida 32207 Telephone (904) 396-3052

A UnitedWay Agency

A JCCI STUDY:

THE PRIVATE DELIVERY

OF PUBLIC

SERVICES