Reason Foundation

Recent Research and Commentary

Annual Privatization Report 2009

Reason Foundation's 23rd annual report on privatization and outsourcing

August 6, 2009

Leonard Gilroy

With governments at all levels facing severe budget deficits and prolonged fiscal crises amid the national economic recession, privatization and public-private partnerships have become increasingly prominent in fiscal policy debates, according to Reason Foundation's Annual Privatization Report 2009.

Trends In Public and Contracted Government Services From 2002 to 2007

Privatization and outsourcing by local governments
Policy Brief 80

August 4, 2009

Amir Hefetz, Mildred Warner

Local governments in the U.S. use a variety of mechanisms to deliver public services. The International City County Management Association (ICMA) conducts a survey of alternate service delivery by local governments every five years. For those interested in understanding the role of privatization in local government service delivery, the ICMA surveys are the best barometer of local government practice across the United States. The 2007 survey (supported by the Searle Freedom Trust) shows that public delivery is still the most common form of service delivery at 52% of all service delivery across all local governments on average. Intergovernmental contracting at 16% and for-profit privatization at 17% are the most common alternatives to public delivery. Non-profit delivery at 5% is next, and franchises, subsidies and volunteers collectively account for less than 2% of service delivery.

In this article we look at trends from 2002-2007 with a special focus on differences in service delivery patterns by metro status. The 2007 survey received 1,474 useable responses from counties and cities across the country. The majority were suburbs (784 cities, 53%), and the rest were metro core municipalities (262 cities, 18%) and rural areas (428 municipalities, 29%). Local governments experiment in various types of service delivery. The levels of contracting go up and down over time and vary across metro status. The “reinventing government” reforms of the 1990s saw a rise in for-profit contracting among all governments from 1992 to 1997. In fact, in 1997 for-profit contracting peaked nationwide at 19%. Over the last decade suburbs have consistently had the highest rates of contracting. Metro core governments, which had lagged behind suburbs in their level of contracting, appeared to be catching up.

(Un)Happy New Fiscal Year: Tax Hikes, Missed Budget Deadlines, State Shutdowns and Ongoing Fiscal Woes

July 1, 2009, 1:31pm

Leonard Gilroy

On the first day of Fiscal Year 2010, the only thing standing between a "Year of Fiscal Responsibility" and a "Year of Budget Insanity" is the political will to take the necessary steps to reduce the cost of government.

"Perfect Storm" Could Accelerate Privatization Trends

MuniNet Guide Interview with Reason's Leonard Gilroy

October 24, 2008

Leonard Gilroy

Is privatization looming as large in other parts of the country? Could the increasing trend to form public-private partnerships gain momentum in light of this country’s economic downturn? Reason's Leonard Gilroy says the answer to both of those questions is "yes." In the interview that follows, he shares his many insights on privatization, and why we’re likely to see more of it.

Privatization Can Transform the Delivery of State Psychiatric Services

Innovative policymakers increasingly turning to privatization to dramatically improve the quality of mental health services while holding down costs

December 29, 2008

Leonard Gilroy

At a time when it's more critical than ever to do more with less, Virginia policymakers need to ask a critical question: does the obligation to deliver high-quality psychiatric services necessarily require the Commonwealth to be in the business of running hospitals, or could it achieve better outcomes at a lower cost through contracting for performance with experienced private sector operators? The experience in Florida and elsewhere strongly suggests the latter approach may be the best answer in Virginia.

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