Shared Services – A Way of Reducing the Cost of Government
Monday, October 22, 2012 • 11:30pm
Ben Wolkowitz and Astri Baillie, candidates for Borough Council, have been investigating how economic pressures felt throughout our state are forcing municipalities to consider different ways of providing services. In a prepared press release, they stated, “Some municipalities have instituted or are considering complete town-wide consolidation of municipal services. Princeton has been a high visibility case where the Township and the Borough, previously independent municipalities, merged into a single entity.”
Wolkowitz and Baillie are not in favor of such a wholesale move for Madison; however they view service sharing and purchasing as potentially viable alternatives to providing everything for itself.
The candidates went on to state: “These are not new concepts for the borough, which has successfully instituted sharing of its building application and inspection processes, and its wastewater treatment. It also purchases animal control services, and provides fee-based access to its municipal court to other municipalities. Importantly in all these cases there is no apparent reduction in the quality of services provided for Madison residents. “
Wolkowitz and Baillie caution that “before considering such arrangements we must be confident that besides maintaining service levels they will also save money and that no borough employee will be treated adversely because of the transition to a different services acquisition method.
“Why these arrangements can be successful is straightforward. Many of the services provided by municipalities require a certain number of employees and a particular size facility to provide the service; however, that minimum size may still result in excess capacity that is being paid for but not used. Therefore, users can be added at little or no additional cost resulting in a reduced cost for all users.
A slight variation is when a facility can be expanded and additional users can be serviced at a lower incremental charge than if they provided it for themselves. For example if you could double the number of users without doubling the total cost of providing the service you have a potentially good candidate for sharing.
Madison becoming more involved in these arrangements puts us in a league with most of New Jersey. Economic and budget pressures have prompted financial belt tightening throughout the state forcing the majority of municipalities to become aggressive in their pursuit of cost savings. These pressures will only grow as the economy improves and inflation increases. These are trends for which we need to prepare, as have many of our neighboring towns.
A note of caution merits repeating. Every possible arrangement needs to be carefully evaluated to ensure it satisfies our criteria of reducing costs, ensuring no reduction in the quality of service and the unchanged treatment of our own municipal employees. We also wish to make clear that such arrangements require regular and routine monitoring to determine if some adjustments are required to ensure continued positive results.
For example, in an increasingly competitive environment for health services and for health officers Madison ironically finds itself with a Health Department that is becoming too expensive. In the past by selling some of our capacity our Health Department had been able to provide Madison residents with a high level of service at a reduced cost.
But within the current year we have had three different health officers and have lost three out of five of our long-term municipal clients or approximately $200,000 in annual revenue. This loss, effective on January 1, 2013, could take our cost per resident from approximately $15.00 to in excess of $28.00, an unacceptably high cost. Since the deterioration in the Health Department’s finances coincides with the tenure of its current board president, John Hoover, that position bears review.”
Wolkowitz and Baillie conclude their statement by noting that “there is no universal model that fits every situation nor is it guaranteed that a given arrangement will work well in perpetuity. It will take careful decision-making and monitoring to ensure any change in the way services are provided is in the best interests of our residents”.
For further information on their views regarding shared services access, the white paper the candidates prepared on the subject is available at www.madison-dems.org.