Practical Resources for Consolidating Services

In the current economic climate, all of us are looking for ways to do things better and with less expense.  At MRSC, we are getting lots of requests for information about consolidation as a way to reduce costs and provide a comparable, or better, level of service.  No matter which model of cooperative service provision you’re considering, here are some tips and resources to think about along the way.

The Trust Factor  Even the simplest partnerships depend on mutual trust.  If you’ve already got a cooperative relationship with your potential partners, you’ll find an easier path to new forms of cooperation.  If past relationships have been uneasy, then you’ll likely spend time building trust by cooperatively working through the issues that have been obstacles in the past.  Make sure you have staff leading the consolidation effort who are perceived to be honest brokers.  An outside facilitator may help everyone focus on common goals in the initial stages.

Resource:

√  Southwest Washington’s GEM (short for Grounds, Equipment, and Maintenance) has built trust among 27 diverse agencies, including cities and counties and school, water, and fire districts.  Here is a short video and presentation on the group, which has as its motto: “Providing a cost efficient result to the community by sharing services and facilities.”

Statement of Shared Values  If you’re embarking on a major effort to consolidate services, it’s smart to begin by developing and adopting a shared statement that articulates your goals in terms of levels of service, functionality, and cooperation. The benefits of this initial work will pay off down the road.  If the sledding gets a little rough, it’s good to have a reminder of the common goals of the enterprise.

Resource:

Statement of 10 Public Values, LOTT Clean Water Alliance. LOTT’s four government partners (Lacey, Olympia, Tumwater, and Thurston County) jointly manage wastewater resources for a 14,000 acre area, serving a population of about 78,000 people.

Costs Versus Control  First, take a hard look at the numbers.  If you are consolidating a service to achieve cost savings, make sure you understand how those savings will be realized.  While economies of scale are real, there is a point at which it may no longer be efficient to get bigger.  If the consolidation does result in a significant cost savings, it will likely come at the expense of your control over the level of service provided.  If you are moving from an owner of a service to a customer or subscriber, weigh whether the savings are worth it.

If your best option is to contract out for services that you currently provide in-house, look for ways to smooth the transition.  Do you have leverage in shaping the level of service that will be provided?  Will your partner agency provide a financial credit or incentive to cover the costs of the changeover and to assist with the transition of your employees?  If the transition involves a high profile service, such as police protection, communication with your citizens about why the change is being made and how it will impact the community will be paramount.

Resources:

City of Burien’s Provision of Police Service Assessment - a comprehensive study comparing costs of city’s current contract to cost of a city-police department.

City of Woodinville summary of the terms of their contract for police services with the King County Sheriff’s Office.

Issues Checklist (adapted from AWC’s “Forming Successful Partnerships“):

  • Can the provider jurisdiction deliver service at the level desired?
  • Will community members be impacted by the change in service delivery?  If so, will the changes in service delivery be acceptable to them?
  • Will the partnership require personnel transfers or layoffs? If so, are there labor agreement requirements? Are there feasible means to satisfy these requirements?
  • What is the preliminary estimate of the cost of service the provider would have to recover? Is this amount significantly less than the recipient’s current cost of service?
  • Are there sufficient resources available to develop and sustain the relationship?
  • What are the risks to each organization?  Is there a large initial investment required?  If so, what risks are associated with it?
  • What are the potential benefits to each organization?

Governance: Whether you are entering into a simple interlocal agreement to share an animal control officer with a neighboring jurisdiction or creating a new county-wide system of animal shelters, it’s important to set out in writing how costs are allocated and how decisions are made.  Try to anticipate issues that may arise and build them into your interlocal or governance agreement.  It may be tempting to simply adopt a successful model from somewhere else, but you’ve likely got a different mix of cities, special districts, and counties on board.  Think about the specific characteristics of the partners that need to be taken into account.  Provisions related to voting, partners versus subscribers, cost allocation, ownership of assets, dissolution of the agreement, and/or other relevant details should be tailored to your specific needs.

Resources (from relatively simple to more complex agreements):

Agreement between the cities of Lake Forest Park and Kenmore for public works services

Agreement between the city of Vancouver and Clark County for the delivery of IT Services

Cascade Water Alliance Code  Cascade is a municipal corporation comprised of eight municipalities (five cities and three water and sewer districts) in the Puget Sound region that joined together to provide a safe, clean, reliable water supply to its almost 400,000 residences and more than 22,000 businesses.

About Tracy Burrows

As MRSC’s Executive Director, Tracy seeks out innovations in local government, tracking trends in management and technology that impact your work. She has over 20 years of local government and non-profit experience, specializing in growth management, transportation, and general city management issues.
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