The rule of 566
The drumbeat for shared services keeps getting louder. Teaneck Township Council candidates campaigned on it, the County Executive promoted it at a March conference at the Marriott at Glenpointe, and the New Jersey School Boards Association endorsed the concept for its members in a recent newsletter.
A large chorus of voices agrees that local governments and school districts need to learn the lesson that the corporate world learned long ago. Efficiency is improved when redundancies are eliminated. Consolidation improves the longer term prospects for survival. There is no sense in having each local government operate its own Department of Public Works or having each local school district keep a full complement of special education coordinators on staff. Cities, towns, and boroughs can band together so that each one does not have to build up the costly infrastructure and bureaucracy needed to sustain self-contained units.
Recent developments have increased the urgency with which municipalities and school districts ought to be pursuing shared services. If it wasn't already obvious, it is now abundantly clear that state aid can no longer be relied upon to cover local funding shortfalls. For several years now, the onus has been on local officials to find ways to rein in spending or find additional sources of revenue to maintain programs and services. Now we know that there is little chance of a return to the days when Mother New Jersey could be counted on to kick a few extra bucks to make things work.
If such initiatives are so attractive and so widely supported, what is standing in the way of implementing them? Cynics will point to the glacial pace of change in government and the fact that politicians' actions rarely keep up with their rhetoric. Others might explain that shuttering local departments in favor of larger regional ones threatens jobs. There is more to it than that, though.
The real obstacle to meaningful consolidation and cost cutting through shared services is the concept of home rule. New Jersey has 566 self-governing municipalities and 593 school districts, most of whom zealously preserve the autonomy granted to them in the State Constitution at great cost to their taxpaying residents. The tug of war for power and influence between local and county governments or municipal governments and school districts stands in the way of progress and consumes valuable resources.
Whether or not they realized it at the time, new Council members who campaigned on a platform of shared services have committed themselves to put aside the petty jealousies of home rule and to aggressively search for ways to achieve cost savings through shared services. This is one campaign promise that will not be forgotten. I anxiously await the first proposal.
Postscript- An interesting piece by Mitchell Blumenthal titled "Tough Talk on Home Rule, But Is It Just Talk?" discusses this hot button issue in Sunday, May 28, 2006's New Jersey section of The New York Times.
posted by Teaneck Blog @ 11:04 AM
4 Comments:
Let’s put this through a basic cost/benefits analysis:
Fundamentally, shared services is the centralized management of resources (school supplies, salt spreaders, fire departments, sewage treatment, etc)
Let’s consider the ‘management': Who are they? How do they perform their duties? Who will monitor their progress? How will corruption be prevented? (Corruption – gives contracts to friends and family, steal goods and services, etc.)
What are the benefits? Cost Savings -primarily because the replication of functions is avoided and resources are used more efficiently. Quantity discounts, etc.
In corporations, it is argued that shared service centers allow organizations to become better at their 'core business' through being able to specialize. Municipalities would be able to focus on more important things, such as development planning and not worry about the minor details of securing the best price for reams of paper.
Also, the shared service unit itself can become a 'center of excellence' through focusing on its specific role and so become more effective. Expertise can be pooled and benchmarking can be implemented. What this means is that the management team in charge of purchasing can focus on negotiating the best deals and tracking inventory and develop best practices for doing so.
Potential disadvantages include:
• High implementation and transition costs; development of infrastructure (i.e. computer system to track resources) - who pays?
• reduced control of resources for participating municipalities; a loss of autonomy (this right here is the big magilla)
• municipalities may need to compromise on specialized needs; and
• resources may be less accessible to or appropriate for certain municipalities
Conclusion: Shared services is very easy to talk about and very difficult to implement. No one is willing to bite the bullet and pay the necessary costs for setting something like this up and implementation will span years before we can realize the cost benefits. Politically – that’s a tough sell.
Excellent post, corporate cog.
The only place I would really differ from you is in the implicit assumption you make that the shared services proposition has to be implemented whole hog right away. I could see getting the ball rolling through a few select joint projects among a small number of neighboring municipalities that would build experience and know how while setting a precedent for future cooperation.
I also wonder whether a great deal of political capital really needs to be expended given the broad consensus that this is the wave of the future and one of the few remaining avenues for squeezing out some savings without seriously reducing services.
Another risk, I think, is that we will have shared services without any reductions in headcount, giving us the worst of both worlds. I remember when Teaneck tried to put trash collection out for bid for the town as a whole (and in so doing allow us to pay for it via our tax bill, giving us an increased deduction) and there was a hue and cry that we were destroying our friendly, local sanitation companies. I can only imagine what will happen if we actually have to let go some people from DPW, police, etc. And what about the rationalization of pay & benefit scales, what if, for example, Bogota paid less than Teaneck for position X and we wanted to share that position -- would we not bring the Bogota person up to Teaneck's pay scales (I can't imangine that we would bring Teaneck's down).
The only place I would really differ from you is in the implicit assumption you make that the shared services proposition has to be implemented whole hog right away. I could see getting the ball rolling through a few select joint projects among a small number of neighboring municipalities that would build experience and know how while setting a precedent for future cooperation.
I didn't mean to imply that everything had to be implemented at once. Even a phased roll-out would raise the same issues (i.e. who gets to be in charge?)
As you can see from my 'name' I work in a corporation, and we recently, via a phased roll-out, implemented shared services concept in all our back office operations. There were turf wars, grumbling, lay-offs, and resignations - but at the end of the day, getting with the program was a condition of employment and most people learned to deal with it.
Now, a couple of years later, no one can imagine having 5 different a/p departments, 20 different IT departments, etc.
My major point is that in the political arena, it's a whole other story.
Losing autonomy is political death. It’s ceding power and no one voluntarily gives up power.
If it comes to a vote, most voters will not be presented with anything other than a sound bite in order to help them make their decision as to what they think will be best for their community.
Another fear is that if the shared services concept is ultimately realized, NJ may end with just another governing body, fraught with the same weaknesses and inefficiencies as any governmental bureaucracy. It should be noted, Teaneck came into being as a township in part because Englewood wasn’t servicing our community’s needs regarding sewer, fire, and infrastructure.
We need to counter these fears with a detailed plan as to how this would work, including the initial sacrifices and the ultimate rewards. We need an architect and a leader. I can’t see anyone in the current political arena that has the necessary qualifications to make this a reality.
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