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Innovators in Action: Osceola County, Florida Commissioner Frank Attkisson

Posted on April 13, 2012, 9:00am | Harris Kenny

In the latest installment of Reason Foundation's Innovators in Action series, I interview Osceola County, Florida Commissioner Frank Attkisson.

Osceola County policymakers faced few choices when, admist ongoing county-wide budget woes, the library system alone faced a $3 million budget deficit. In response, the Commission voted to approve the first-ever public-private partnership for libraries in Florida. They ultimately signed a five year contract that netted $6 million in savings with Maryland-based Library Systems & Services Incorporated (LSSI).

While the public-private partnership model is proven in states like California and Texas, this is a major move for Florida and one that is likely to be replicated by other local governments across the state. Here's an excerpt from the interview:

Kenny: The first concern that many people have when it comes to libraries is access. How did the commission address this concern and how might other policymakers address it?

Attkisson: If another commission wants to do this, the boogey man is going to come out and people will try to scare them. Elected officials control these contracts and the public trusts us to deliver value for their money. We (the commission) control the hours and set the standards. We know what it costs and want the private sector to help us realize our vision for our libraries.

The vendor has an option to set up ancillary businesses to provide additional services to users, like a coffee shop. Think about how much has changed in ten years. We didn’t have computers or Internet. Now it’s a given that you’ll have those resources. That’s totally different from the libraries of ten years ago. We were able to leverage procurement to achieve substantive goals.

You have to have the backbone to say it will take 3-6 months to transition. But I’m comfortable that once we do, nobody will want to go back because we’ll have more capability than ever before.

Read the full interview available online here. For more, see Reason Foundation's Innovators in Action 2012 series available online here.

Innovators in Action: Carrollton, Texas City Manager Leonard Martin and Director of Competition Tom Guilfoy

Posted on April 5, 2012, 7:00am | Leonard Gilroy

In the latest installment of Reason Foundation's Innovators in Action series, I interview the Dynamic Duo of Carrollton, Texas: city manager Leonard Martin and director of competition Tom Guilfoy. Trust me—you don't want to miss this. There's a reason I call them the Dynamic Duo.

Ten years ago, Carrollton's city leaders charted a new direction for how the city would operate, directing administrators to transform the bureaucracy from a government culture to a competitive, business-like culture. Officials hired Martin to lead this change, and he created a new Director of Competition—the first both for the city and nation—whose sole purpose was to drive the city's culture to become competitive, either using in-house or external service providers to provide services to residents "cheaper, faster, better, and friendlier."

Martin and Guilfoy developed a robust managed competition program where all government service costs are fully burdened with overhead costs just like private businesses, and government compares their fully loaded cost of service delivery against private sector costs to seek the best provider. In some cases, this has led to re-engineering of city services, and in others, like solid waste collection and vehicle fleet maintenance, the city has turned to private service providers.

Overall, Martin and Guilfoy estimate that managed competition has saved the city $30 million over the last decade (and they add that it's a conservative estimate). Moreover, despite an increase of over 40,000 residents, the city still operates with about the same number of employees on the payroll in 1990, a testament to both the results of competition and the city's fiscal stewardship.

In the interview—available here—Martin and Guilfoy discuss the first decade of managed competition in Carrollton, the process used, and what it takes to create a culture of competition in city government. Here's a small excerpt:

Martin: [...] Government has been taught that there are only two options: raise taxes or cut services. You hear it in Washington. You hear it in the states and cities. No, there's another option: run it like a business and make it efficient. We don’t try to be everything to all people.

[...] Our exercise wasn’t really fancy. We took legal pads, put a line down the middle, and on the left side put essential services and on the right, non-essential. We listed out every service we did. The things we learned that we were doing were things we didn’t previously have a clue on, like the movies. We don’t need to go out and undercut businesses, so we just stopped doing some things. Another example is karate, where you can’t drive down the street and not see a school on every other corner. Yet city government was offering karate classes. And you’re out there with your black belt, paying your lease, paying taxes on your business that I get to keep to undercut you at the rec center.

I had an employee that defended it to me once, saying that there were people that couldn’t afford to go take karate. So I told him that was an excellent point that I hadn’t thought of. At the time George Bush was president, and I said, “I’m quite sure that President Bush had to know karate under the Constitution in order to run for president.” Because obviously if you’re going to be President then you have to know karate. I wanted to be an astronaut, and my town didn’t provide me astronaut training. It’s amazing I was able to become a city manager since my town let me down on astronaut training.

So that guy quit. I respect that person because they lived up to their principles. And I assure you that there were lots of places in government he could go that had that same philosophy: that anyone who wants something gets it. Not here. The council has stayed firm to our policies. We’ve known other places where the staff want to do managed competition, but the council doesn’t want to push on employees because the employees are viewed as a strong voting base. You see that especially at the state levels, where politicians cater to that state bureaucracy.

Our councils have not gotten into that, and they’ve stayed on firm ground and done what’s right for the taxpayer. You got people on the council that have been there for years and understand the culture and are proud of it. All of that takes some courage.

Read the rest of the article here. All I can say is that it's a must-read for anyone interested in what cutting edge city management looks like. One of the more interesting takeaways from the interview is that implementing tools like managed competition is necessary but not sufficient. To really streamline government and keep it lean, you need to change the culture of the bureaucracy. Martin and Guilfoy's insights on that subject alone are fascinating and, frankly, should be internalized by every public administrator (and politician) in the country.

With policymakers at all levels of government seeking ways to reduce spending and improve services delivered to taxpayers, Reason Foundation's Innovators in Action series highlights good government efforts that are delivering real results and value for taxpayers. It is our hope that that the examples and experiences offered by innovators like Martin and Guilfoy will inspire reform-minded mayors and administrators elsewhere to provide better, leaner and cheaper government to taxpayers.

[Note to readers: In previous years, we have published Innovators in Action in an annual report format, the last edition having been released in early 2010. The publication has been on a temporary hiatus since then, but we have resumed publication in a slightly different format. In order to deliver timely content to our readers on a more frequent schedule, we're publishing one Innovators article per month on reason.org. Other articles featured in the Innovators in Action 2012 series are available here.]

Innovators in ActionReforming Local Government in Colorado Springs

Posted on February 14, 2012, 5:00pm | Harris Kenny

As is often documented here on Reason Foundation's Out of Control Policy blog, the Great Recession gut checked federal, state and local government budgets across the United States. Overspending finally caught up to state capitols and many policymakers realized how vulnerable their budgets were (and still are) to economic uncertainty. However, policymakers weren’t the only ones who noticed. In Colorado Springs, concerned citizen and president of The Broadmoor Hotel, Steve Bartolin, wrote a letter to then Mayor Lionel Rivera criticizing the city’s unsustainable fiscal policy and lack of transparency.

At the time, Colorado Springs faced two major long-term issues: First, unsustainable fiscal policy exacerbated by a lack of transparency; and second, burgeoning civil employee pension liabilities that are outside the control of local government [civil servants are part of the state’s Public Employee Retirement Association (PERA)]. These concerns, combined with citizen dissatisfaction, created a distrustful environment blocking meaningful government reform.

Letter writing was a respectable start, but that's not where Bartolin's efforts ended. Bartolin’s letter ultimately rallied community, business, and political leaders (like former City Councilman Sean Paige), who partnered to create The City Committee in 2010. The City Committee is a nonprofit, nonpartisan civic organization focused on applying best business practices to improve the operators of Colorado Springs' city government and its enterprises.

I recently sat down with Chuck Fowler, CEO and Chairman of The City Committee, where he discusses the formation of the organization, the changing structure of city government in Colorado Springs, and future government reform efforts in store for The City Committee. Here's an excerpt:

Kenny: Do you have any recommendations for concerned citizens who might be interested in starting something like The City Committee in their community?

Fowler: First, the common thread is the recognition there's a problem. Second, that it's time to do business differently. Every community is different and the variables that have shaped communities over time are what make them different. Recognition of the problem and willingness to find the courage to make changes is what will bind communities together. Communities need to find their collective courage, tear down their silos, to look at the issues they’re confronting in a realistic way, which I think if one trusts the current economic forecasts its going to be a while before governments have the type of revenue that they enjoyed the past few decades—something’s got to give. 

Growing the revenue to government enterprises is less likely of an outcome than a reduction of public services by the government. The only way to pay for a level of service that some have come to expect from government is to question: is this something government should do? And if it is, maybe their role is to oversee procurement to give the private sector the privilege to provide these services competitively. This practice is widely known as managed competition.

Economic cycles come and go. Financial tides rise and fall. At this moment in our country’s unique economic and political history, all citizens—whether individuals, businesses or public servants—can and should participate in redefining appropriate solutions for more effective and efficient government. American ingenuity has always led to innovative solutions. That’s foundational to the mission of the City Committee. 

Read the full interview available online here. For more, see Reason Foundation's full Innovators in Action 2012 series available online here.

Innovators in Action (Jan 2012 edition): Tulsa, Oklahoma Mayor Dewey Bartlett, Jr.

Posted on January 13, 2012, 12:02pm | Leonard Gilroy

In the latest installment of Reason Foundation's Innovators in Action series, Tulsa, Oklahoma Mayor Dewey Bartlett, Jr. offers his reflections on tackling the city's fiscal challenges by embracing innovation, competition and market-based policies. In the article—available here—Mayor Bartlett details the bleak fiscal situation his administration walked into two years ago, his proactive approach to developing solutions and a number of the administration's implementation successes to date. In short, Mayor Bartlett is applying the tools of competition—such as competitive sourcing and public-private partnerships—to deliver better value to taxpayers and right the city's fiscal course.

An excerpt from Mayor Bartlett's article:

My first day in office was December 7, 2009. My finance director greeted me with the sober news that, after ten consecutive months of declining sales tax revenues, all previous measures to balance the city budget had failed to stop the real threat of deficit spending. Even though the previous administration had cut $10 million dollars in spending and had used almost $11 million of the reserve fund, my management team and I had 45 days to cut an additional $10 million from the operating budget. In total, this amounted to between 10% and 15% or $24 million of the operating budget.

Reductions by the previous mayor had included discontinuing public safety academies, turning off highway lights, grounding the police helicopters, and suspending the removal of graffiti and the mowing of public property. Even with city employees being furloughed eight days and the previous administration having spent 80% of the city's reserve fund after just five months of the fiscal year, more and bigger pain was on the immediate horizon. Defaulting on obligations was more real than at any time in Tulsa’s history.

We quickly discerned that the city government had not prepared for times such as these. City government had grown too big, it cost too much, it was doing too much, and it had made commitments and promises to our government employee unions that could not be kept.

[…]

With the help and guidance of my chief of staff and management team we have accomplished major changes after only two years. Over that time Tulsa has resumed both police and fire academies, the police helicopters are flying again, the highway lights are back on and the efforts toward mowing public property and removing graffiti have doubled. All of the employee furlough days have been eliminated, and for the first time in several years, the employees received a stipend increase in June. The reserve fund balance has been restored to almost $13 million and we continue to control our overhead cost by maintaining a 3% vacancy rate across all city departments. And, for the first time in memory, the city has reached collective bargaining agreements with all five of its bargaining units at the beginning of the fiscal year.

The secret of our success really is no secret. It takes applying conservative business and financial principles to government, the courage and political will to tackle the toughest of challenges, willingness to embrace innovation, competition and private market ideas.

Read the rest of the article here for Mayor Bartlett's detailed description of how his administration has gotten from there to here. He describes over a dozen different administration initiatives that span a broad range—from competitive service delivery to public-private partnerships to asset divestiture to implementation of internal efficiency initiatives. It's an impressive and ambitious agenda illustrative of the kind of thinking that will be critical to future public sector management. If you're not familiar with Mayor Bartlett or his reform agenda, you definitely should be.

With policymakers at all levels of government seeking ways to reduce spending and improve services delivered to taxpayers, Reason Foundation's Innovators in Action series highlights good government efforts that are delivering real results and value for taxpayers. It is our hope that that the examples and experiences offered by innovators like Mayor Bartlett will inspire reform-minded mayors and administrators elsewhere to provide better, leaner and cheaper government to taxpayers.

[Note to readers: In previous years, we have published Innovators in Action in an annual report format, the last edition having been released in early 2010. The publication has been on a temporary hiatus since then, but we are resuming publication in a slightly different format. In order to deliver timely content to our readers on a more frequent schedule, henceforth we plan to publish one Innovators article per month on reason.org, which will subsequently be compiled into a report format later in the calendar year.

Mayor Bartlett's article is the second in the 2012 Innovators in Action series. The first—my interview with Puerto Rico Public-Private Partnerships Authority executive director David Alvarez last fall—is available here.]

Building Puerto Rico's Successful Infrastructure PPP Program

Posted on September 9, 2011, 2:23pm | Leonard Gilroy

Puerto Rico Governor Luis Fortuño's administration has taken bold actions to address the territory's chronic deficits and unsustainable debt, including dramatic spending cuts, optimizing government operations and passing a broad-ranging new law in 2009 inviting private investors to modernize or develop new public infrastructure across a variety of sectors. (see the Governor discuss Puerto Rico's fiscal situation and his reform efforts in this Reason.tv video.)

Puerto Rico enacted Act No. 29 in 2009, authorizing government agencies to enter into public-private partnerships (PPPs) with private firms for the design, construction, financing, maintenance and/or operation of public facilities, with a set of priority projects that include toll roads, transit, energy, water/wastewater facilities, solid waste management and ports. The law also established a new Public Private Partnership Authority (PPPA), a new center of excellence within the Government Development Bank responsible for identifying, evaluating and selecting PPP projects and for monitoring and enforcing the terms of PPP contracts.

Getting a program enacted is one thing, but implementation is where the hard work really happens. And in two short years, the PPPA has built a world-class PPP program and has already seen some major successes that other states can learn from. For example:

• To help modernize aging K-12 school facilities and improve academic performance, the PPPA developed the "Schools for the 21st Century" program as their first PPP endeavor, where the Commonwealth is contracting with with private operators to design, build and maintain approximately 100 schools across Puerto Rico; over 60 of these contracts were already in place by July 2011.
• In June 2011, the PPPA selected a winning bidder for a 40-year, $1.08 billion concession to operate the PR-22 and PR-5 toll roads.
• PPPA officials have more recently launched a procurement for a long-term lease of San Juan’s international airport, and a dozen potential bidders recently submitted statements of qualification.

For some must-read, innovator insights on what it takes to build a successful PPP program, check out my new interview with PPPA executive director David Alvarez, where he discusses the development of Puerto Rico's PPP program, the benefits of having a centralized PPP program with a broad scope across infrastructure sectors, and the central role of the PPP program in Puerto Rico's economic development strategy. Here's an excerpt:

Gilroy: Up to this point, most states have taken piecemeal approaches to PPPs, with a heavy focus on transportation projects. However, Puerto Rico's PPP program goes much further than most states, extending beyond transportation to other types of infrastructure. Can you describe the scope of the Commonwealth's PPP program?

Alvarez: The scope of the program is very broad. We decided to include in the legislation—not the projects themselves, but the areas that we can pursue, the different infrastructure types. We actually have nine areas listed in the PPP legislation in Puerto Rico. We can go from transportation to energy to water. We can do schools, social infrastructure, corrections, information technology—so it's a very broad scope.

We decided to start the program with the projects that were most ready to go into the pipeline and out to the market. For example, we focused first on "brownfield" projects [Editor's note: "brownfield" PPPs cover the operation and/or capital investment in existing public assets]. The schools project [Schools for the 21st Century] was one where the need was high for investment in school infrastructure, so we knew that this was a priority project. A lot of these are renovations of existing schools, so this is not like a "greenfield" project where you need a lot of permitting, etc. [Editor's note: "greenfield" PPPs cover the private sector construction, operation and/or financing of new public assets.] All of the greenfield PPP opportunities that Puerto Rico has need a lot of permits and environmental work to be completed.

So we started with something that we could manage well. Then we moved into the toll roads project with another brownfield transaction. And that's how we started to move across different asset classes.

We can do a variety of different projects, which is fascinating and gives the opportunity to talk to the public about the PPP concept without attaching it to a project—a toll road or an airport. So you can do a lot of education about the PPP concept itself, which is very useful. Then when you get to a particular project, you can relate to your concept again and how it applies to a toll road or a school or a correctional facility. So that gives us a lot of room for action.

To continue reading, click here.

La Jolla to Secede from City of San Diego?

Posted on April 29, 2010, 9:32pm | Adam Summers

Aggrieved by deteriorating services and infrastructure provided by the City of San Diego, whose financial outlook seems increasingly bleak and destined to insolvency, the community of La Jolla is seriously considering seceding from the city. The upscale community, home to over 40,000 residents, beautiful beaches and ocean bluffs, the cute and pesky seals that frequent La Jolla Cove, Mount Soledad, the Torrey Pines Golf Course, Birch Aquarium, and the University of California, San Diego, is more than capable of providing for its own services, and has been frustrated as resources have been siphoned away to line the pockets of San Diego employee labor union members while local services decline and the San Diego administration and city council appear unwilling or unable to tackle mounting debts and implement needed reforms.

According to a San Diego Union-Tribune article, "La Jolla is fed up with how San Diego can't deliver key services like it used to. . . . The secession movement, a perennial, is once again becoming a hot topic in La Jolla. Proponents even have a logo. This time, momentum may be growing because of how the community is suffering from widespread decay."

"People are fed up," said Melinda Merryweather, vice president of Independent La Jolla, a citizens group advocating for secession.

Some parents have talked of splitting La Jolla schools off from the San Diego Unified School District as well.

A dispute over shoreline fire pits is a microcosm of the larger debate. The City of San Diego is removing its 186 fire pits across the city because it can't afford the maintenance costs to clean them. La Jolla residents want to maintain the 7 pits in the community, and the La Jolla Community Foundation even wants to donate the money needed to do so, but the city has refused because it is taking an all-or-nothing approach to the maintenance and claims that it can't service a select few.

Such a secession would not be unprecedented. In 2005 and 2006, the new cities of Sandy Springs, John's Creek, and Milton split off from Fulton County, Georgia (which includes the City of Atlanta). Chattahoochee Hill Country and Dunwoody followed suit in 2007 and 2008, respectively. The communities were upset with high taxes and poor service delivery, and so became the first new cities in Georgia in 50 years. Instead of establishing municipal bureaucracies that would mirror that of Fulton County on a smaller level, the new cities adopted a "contract city" model, in which a city contracts out most of its services to private-sector providers. In an article for Reason's Innovators in Action 2009 publication, Oliver Porter, who was instrumental in the Georgia incorporation movement, describes how Sandy Springs was formed in a very short period of time to effectively serve a population of 90,000 with only two city employees. In the article, he notes the benefits of incorporation and the public-private partnership (PPP) model:

While surrounding traditional cities have experienced severe budget problems during the current recession, Sandy Springs has enjoyed a $14 million surplus, in addition to funding a $21 million reserve.

During the three and a half years of operations, Sandy Springs has paved more roads in the community than the county had in the past 20 years, created new parks, established a 125­-person police force, and 89 firemen with all new equipment. The new city has vastly improved EMS capability, and has established a state-of­-the-art, joint electronic 911 service with another of the new cities. Cost sharing in many areas between the PPP cities has aided in keeping costs down. A much needed modern traffic control system has been installed. Local control over zoning, planning, permitting and code enforcement has been gained. The list of improvements is very extensive, and all of these changes have been introduced without tax increases. In fact, the city's taxes are lower than the taxes on the unincorporated areas of the county.

The PPP that looked so risky at first has been an outstanding success.

Should La Jolla succeed in overcoming the hurdles to secession (San Diego will not easily let go of its valuable tax base, especially as it struggles to make ends meet), it would be wise to adopt the contract city/PPP model and avoid the mistakes of San Diego, which has yet to even implement the managed competition/outsourcing program approved by voters three and a half years ago (check out the San Diego Managed Competition Clock, which notes the amount of time that has passed since the measure was approved and an estimate of how much money the city could have saved in the meantime by implementing the program).

Louisiana Announces Privatization of Insurance Program

Posted on March 16, 2010, 6:59pm | Leonard Gilroy

In what's shaped up as a "Privatization Day" of sorts at Reason—with our new Reason.tv "Privatize It!" video and two new privatization policy briefs here and here—it seems fitting to report some good news from Louisiana on the privatization front.

The Louisiana Division of Administration has announced the privatization of their state self-insurance operation, primarily the management of all property and casualty claims and loss prevention services. Details from the press release:

Commissioner of Administration Angele Davis today announced the privatization of claims management and loss prevention services within the Division of Administration's office of risk management, a move that will result in estimated savings of at least $20 million over five years, instant access to technology improvements, and greater program flexibility.

Last year, Commissioner Davis embarked upon a department-wide efficiency initiative, conducting a sweeping review of activities for potential privatization and outsourcing opportunities.

"The point is not to privatize just for the sake of privatization, but where it makes sense, and only after a thorough evaluation demonstrates an ability to provide a high level of service at a better cost to taxpayers," said Davis. "During a period of fiscal challenges, today's announcement points to just one of the ways that the Division is leading the effort to streamline state government, in this case actually improving the effectiveness of services while also improving the cost-effectiveness of government operations."

After issuing a request for proposals last November, the Office of Risk Management (ORM) conducted a careful review of the proposals received, then evaluated the highest-scoring proposal in comparison with its internal operations. This process resulted in the decision to outsource the adjusting/management of all property and casualty claims and loss prevention services to FARA (F.A. Richard & Associates, Inc.), a Louisiana-owned company headquartered in Mandeville, Louisiana.

ORM director Bud Thompson said, "I commend my staff for their yeoman's work in the research, preparation and execution of this RFP, especially their commitment to evaluate the proposals objectively and analyze the advantages, disadvantages and projected cost-savings to our in-house program in the long-term best interest of the State."

Among the advantages to ORM's operations identified in this privatization effort:

• Provides instant access to state-of-the-art technology improvements that cannot be achieved in-house;
• Offers high probability for reduced claims costs and reduction in overall program cost;
• Provides for additional flexibility in managing the program, as changes can be made more quickly;
• Allows ORM to focus on enterprise risk management, as opposed to the day-to-day business of running a large claims and loss prevention organization.

The privatization will result in a reduction of approximately 85 ORM employees. However, due the specialized nature of ORM's work evaluating risk to government, the RFP included a requirement that the company awarded the service offer employment to all ORM employees displaced by the privatization, at a salary based on the company's pay scales for their existing employees, and providing immediate eligibility for enrollment in benefit plans and the establishment of local offices to service the state.

While states routinely operate their own self-insurance programs—which are essentially responsible for handling the state's property and casualty risks, as well as tort claims made against the state or its agencies—there's nothing inherently governmental about the tasks that operational staff perform. In fact, these same functions are performed at privately insurance companies as a matter of routine, and thus they are commercial in nature. So essentially, Louisiana has decided that the private sector can perform that same function for the state at a lower cost, in addition to the longer-term benefits of reducing the state workforce (and associated pension liabilities, etc.). And it should be noted that the private company is expected to save millions for the state while taking on 100% of the current state employees currently performing that function.

More from The Advocate here. And don't miss my interview with Commissioner Davis in Reason Foundation's Innovators in Action 2009, in which she discussed privatization and the numerous other "right-sizing" strategies Gov. Jindal's administration is advancing in Louisiana to proactively address their fiscal challenges. Other states should be following suit.

» Reason Saves Cleveland With Drew Carey Episode 3: Privatize It
» Reason Foundation's Annual Privatization Report 2009
» Reason Foundation's Privatization Research and Commentary

Louisiana Budget Chief Angele Davis on Streamlining State Government

Posted on February 18, 2010, 4:05pm | Leonard Gilroy

Reason Foundation's Innovators in Action 2009 features an interview with Louisiana Commissioner of Administration Angele Davis (PDF version here, who is playing a central implementation role in Gov. Bobby Jindal's wide-ranging efforts to streamline the state bureaucracy. Here's an excerpt:

Leonard Gilroy, Reason Foundation: Nearly every state, and many local governments, are facing a protracted fiscal crisis. What is Louisiana facing on the fiscal front? What's driving the push toward streamlining government in the state?

Angele Davis, Louisiana Commissioner of Administration: Like most other states, we're facing budget deficits projected over the next several years, including a $948.7 million shortfall for FY 2010–11 alone. Given these challenges, we're aggressively putting fiscal reforms in place. Primarily we're focused on reducing the cost and size of government by evaluating program effectiveness and getting rid of those that don't measure up through elimination, consolidation, privatization or the strategic use of technology. We're expanding our use of performance measurement to drive accountability and to see what works and what needs improvement. We don't have enough money to get the outcomes we want for citizens if we spend it in the same ways we spent it last year and the year before.

Read the whole thing for a detailed review of the variety of internal cost-cutting and efficiency strategies underway in Louisiana. This interview gives a excellent example of the type of broad, wide-ranging thinking and action it takes to tackle a fiscal crisis of the scale that many states are facing these days. In short, there's no silver bullet, and reform involves many moving parts, as we're seeing in Louisiana.

For other examples of innovative policy and management approaches in government, don't miss the rest of Innovators in Action 2009.

Innovators in Action 2009

Posted on January 29, 2010, 4:22pm | Leonard Gilroy

Now more than ever, governments at all levels are looking for ways to reduce spending and improve the services delivered to taxpayers. As such, I'm pleased to announce the release of Reason Foundation's Innovators in Action 2009, which profiles nine innovators who have demonstrated leadership through action on privatization, competition, government re-invention and other market-based reforms designed to reduce the costs of government and deliver more value to taxpayers:

• Georgia Governor Sonny Perdue created the Commission on a New Georgia, an advisory group of corporate executives partnering with the state to re-engineer its bureaucratic machinery.
• Former New South Wales, Australia Premier Bob Carr embraced privately financed toll roads as a means of delivering infrastructure better, faster and cheaper than traditional government approaches.
• Louisiana Commissioner of Administration Angele Davis is playing a central implementation role in Gov. Bobby Jindal's wide-ranging efforts to streamline the state bureaucracy.
• Under the leadership of State Superintendent of Education Paul Pastorek, Louisiana's burgeoning school choice movement is using transparency, standards and accountability to improve student achievement and turn around low-performing schools.
• Indianapolis Mayor Gregory Ballard has advanced an array of competition and government reform initiatives designed to control costs, improve government performance, and bring best business practices to government.
• Former Florida Council on Efficient Government Executive Director Henry Garrigo helped to create a national model for a state center of excellence in privatization to ensure sound decisionmaking on outsourcing proposals.
• Chicago's Chief Financial Officer Gene Saffold oversaw the Windy City's $1.15 billion lease of the city's downtown parking meter system in 2009.
• Former AT&T executive Oliver Porter led a citizen task force that created the template for the largely privatized government in Sandy Springs, Georgia.
• Chief Information Officer Eric Gillespie and his colleagues at Onvia saw major gaps in the federal government's commitment and ability to deliver on stimulus spending transparency— and they stepped in to fill it by creating Recovery.org at a fraction of the cost it took the feds to create their own Recovery.gov.

Amidst today's massive deficits and red ink, we need government leaders who are willing to ditch the failed status quo and seek out better ways of doing things. We hope the examples and experiences offered by these innovators will inspire reform-minded officials at all levels of government to provide better, leaner and cheaper government to taxpayers.

• Innovators in Action 2009 homepage
• Full report (PDF, 950kB)
• Press release

Laissez Les Bon Reforms Roulez

Posted on December 16, 2009, 6:47pm | Leonard Gilroy

My new column tells Virginia policymakers that it's time to serious about reducing the size and scope of government and that they should look to Louisiana's aggressive government reform efforts as a model. Here's an excerpt:

As the state taking perhaps the most aggressive approach to solving its own fiscal crisis, Louisiana offers a reform model Virginia officials should consider replicating. [...]

In the spring they created a Commission on Streamlining Government that presented the governor and legislature 238 recommendations this week to save over $1 billion through privatization, streamlining, consolidation, and elimination of government activities. Recommendations include a number of large-scale government overhauls, including adopting a statewide spending limit, shifting all of the state's retirement funds to 401-k style defined contribution plans for all new hires, and revamping state education finance to promote a student-based budgeting approach where education dollars directly follow children into the classroom. Similarly, policymakers created a parallel commission to review the state's postsecondary education system to find potential savings, cuts and service improvements.

Louisiana policymakers are also embracing privatization. The Streamlining Commission recommended over a dozen privatization initiatives estimated to save the state at least $88 million, including recommendations to create a statewide competitive sourcing program, privatize state inpatient psychiatric services and outsource the administration of state employee group medical benefits, correctional food and pharmaceutical services, road maintenance and most highway design engineering.

The state has also recently issued requests for proposals from private bidders for the potential privatization of state risk management functions (claims management and loss prevention), the maintenance of dozens of state buildings and a variety of IT support services. In addition, the state has already adjusted its rental car contract to facilitate more downsizing in its vehicle fleet, and it is undertaking an inventory and analysis of all state-owned buildings and lands to find underused property to return to private commerce.

This is just a start—read the whole thing for more on Louisiana's budget and spending reform initiatives, and see my testimony on privatization to the Streamlining Commission here.

I'll be writing separate posts in the coming days on the new Streamlining Commission report, as well as some of the privatization initiatives that are starting to advance in Louisiana.

» Reason Foundation's Government Reform Research and Commentary
» Reason Foundation's Privatization Research and Commentary
» Reason Foundation's Annual Privatization Report 2009

Chicago CFO Gene Saffold Addresses Critics, Discusses Benefits of Parking Meter Privatization

Posted on December 11, 2009, 4:48pm | Leonard Gilroy

One of the ongoing themes in Chicago's controversial parking meter privatization is the question of whether or not the city received the best and highest value in the $1.156 billion transaction. I haven't seen any evidence to support that contention myself—in fact, this sort of claim is usually either (1) based on a flawed analysis of costs, risks and discount rates, or (2) pulled from the grab bag of tired, old anti-privatization rhetoric (i.e., "the city could run it more efficiently and keep the savings," which of course never really pans out much in real life).

In a new Reason.org interview, I asked Chicago's Chief Financial Officer Gene Saffold to share his take on the issue of valuing Chicago's parking meters, after a recent New York Times article suggested that the concessionaire is "piling up profits" and that the city could have gotten a better deal. Suffice to say, Saffold sees it differently—here's an excerpt:

The City of Chicago competitively bid the metered parking system, and the high bid was $1.156 billion. That amount was on the high side of our projections. As such, it was more than just a good bid; it was an economic boon to the City.

There have been a few contrarian valuations offered to date, but they've generally failed to fully factor annual operating expenses and recurring costs, like capital expenditures, or failed to allocate the appropriate level of risk. Risk discounts future cash flow. Let's be honest, there are some very real risks associated with the metered parking system, like labor costs, fuel costs, expanded use of public transportation, and changes in driver behavior. The City has shifted those risks, however, from the taxpayers to the concessionaire. [...]

I don't think the whole story is told unless one notes the benefits that flowed from the metered parking concession. For example, prior to this year, hourly rates had not been increased in nearly 20 years at 75% of Chicago's parking meters. Under-priced meters lead to congestion, increased travel times, and pollution. Today, however, Chicago's hourly parking meter rates are comparable, even less, than a number of cities throughout the Unites States. They create turnover and availability, making businesses and institutions served by meters more attractive.

The technology side has improved as well. The concessionaire has installed more than 4,200 pay boxes, replacing about 32,000 single space parking meters. The pay boxes take credit cards and notify the concessionaire when they are broken or need collection. As a result, there are now fewer broken meters. Those meters that are broken are repaired in a couple of hours. It used to take the City days.

Read the whole interview here. And for more on Chicago's parking meter privatization, see here.

» Reason Foundation's Annual Privatization Report 2009
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