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July 15, 2011

Privatization: Programs that are working Part 2

Blaine R. Young

In yesterday’s column I began listing a series of public private partnerships already in use across America and the world. Here are further examples of the success of such arrangements.


Human resources administration, the state of Victoria, Australia, formed a public private partnership and had a private company take over control and operations of their human resources functions, including payroll, HR information systems and reporting, and savings totaled 30%.


Library services, Chicago Mayor Richard Daley claimed that the city saved $3.7 million by contracting out management of the Harold Washington Library. And in 2009, the Brooklyn, NY Public Library became one of first libraries in the country to use UPS, rather than a local or internal courier system, to reduce costs and move materials more efficiently throughout its 60 branches. The library's former internal delivery system was frequently backed up, with turnaround times reaching between 7 to 14 days. Under the UPS contract, turnaround time has reduced to 24 hours, taking advantage of the company's overnight service focus, and former library staffers and truck drivers now work as full-time sorters.


Mental health services and facilities, Florida has outsourced the management of the South Florida State Hospital and has found that it is between 39% and 48% less costly per person even though sister facilities run by the state are significantly larger.


Park operations and maintenance, currently nearly 40 percent of cities in America, contract out for various recreation services (as do national and state parks systems). Cost savings from public private partnerships with recreation facilities operation and management typically range from 20 to 50 percent, and cost savings from partnerships for park landscaping and maintenance generally range from 10 to 30 percent.  In fact, turning over partial ownership or management of city parks to non-profit groups and neighborhood associations often is the best way to ensure they remain a public asset. New York City's Neighborhood Open Space Coalition has assumed control from the city of hundreds of abandoned lots and parks in this way, turning many dangerous eyesores into gardens. Nearly one-fourth of the city's nearly 1,500 public parks are now cared for by community associations.


Parking lots and parking meters, in April of 2008, the City of Atlanta successfully transferred parking ticketing and meter collections to a private agency and saved $1.3 million annually.


Rail and mass transit, the Hudson-Bergen Light Rail project in New Jersey, a $1.1 billion light rail startup system went into service in April of 2000, five years ahead of schedule at a cost of $730 million, almost a $300 million savings, and was a federal partnership project.


Road maintenance and construction, in Virginia, the completion of the loop around Richmond, Route 288, was estimated by state engineers to cost $283 million, but under the Virginia Public-Private Transportation Act of 1995, the efficiencies through partnerships of design-build, and a long-term warranty, the State realized a savings of $47 million.


Street cleaning and snow removal, like many other jurisdictions, Frederick County already has some public private partnerships for snow removal.


Swimming pools, the Village of Canal Winchester in Ohio, currently is seeking to hand over daily operations of the municipal pool to a private vendor saving the taxpayers $112,780 a year.


Toll roads, the Denver E-470 Toll Road, Segments II, III and IV, projects generated significant cost savings. Under the traditional government financing approach, the project would have cost the taxpayers $597 million. However under a public-private partnership, the project was completed at a cost of $408 million. A $189 million savings.


Water system, In Franklin Township, NJ, it would cost the taxpayers $38.2 million to directly operate the utility over the next 20 years. However, a local business, United Water, has bid to operate the utility for the next 20 years at a cost of $32.3 million, for a savings of $5.8 million.


Zoo operations, the Los Angeles City Council is currently relinquishing operations of its zoo to a private company to be completed by July 2012 with a taxpayer savings of $26 million.


I could list more examples literally A to Z!


It also does not mean that if listed here that Frederick County will absolutely implement it.


If done correctly, you can get the result you request. Sure a list of examples of public-private partnerships that have failed can be developed, but it comes down to oversight and the contents of the contract.


While there can be substantial misperceptions about the value of partnerships, a look at who endorses them should clarify the picture.


Federal agencies like the Environmental Protection Agency, the Department of Defense, and the Veterans Administration all use partnerships. And the number of state and local governments using this tool is even greater.


For example, the U.S. Conference of Mayors is enthusiastically working with private-sector providers to discuss ways to make partnerships more effective. Numerous surveys indicate why governments traditionally realize cost savings of 20 to 50 percent when the private-sector is involved in providing services.


President Andrew Jackson stated, “Democracy shows not only its power in reforming governments, but in regenerating a race of men and this is the greatest blessing of free governments.”


The easy days are gone my friends. We have the highest challenges facing us today. The time to act is now.


Real problems require real solutions, and those solutions have to be found today. We don’t have the luxury or misfortune, depending on how one looks at the federal government, of simply borrowing or printing more money to pay our bills today and increase our children’s debt. We cannot just ride out the storm and hope for better weather.


It is time to stop thinking about the next election and to start thinking about the next generation.


As President Jackson stated so eloquently, democracy gives us the power, and the mandate to reform our governments and our spending! It is our solemn duty and responsibility to provide the best and most efficient government operation for our citizens.


So, why are so many people afraid of the “phone book test” or “on-line test?” Is it what we may find out? If done correctly there is another more efficient way to provide and meet the needs of the citizens.


Public private partnerships can enhance county services while building relationships with private stakeholders – all while enabling a positive impact on your budget’s bottom line. These are serious times which demand serious answers and new strategies to the financial challenges we face today.


Public private partnerships can put us on a path to transformation. Government addiction must come to an end.


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