Annual Privatization Report

Tulsa, Jacksonville Mayors Pursuing Public-Private Partnerships

Two first-term mayors hit the ground running in 2011

Two first-term mayors hit the ground running in 2011 by pursuing transformative government reform initiatives: Tulsa, Oklahoma Mayor Dewey Bartlett and Jacksonville, Florida Mayor Alvin Brown.

A. Tulsa, Oklahoma

Mayor Dewey Bartlett didn’t have time to ask questions or get adjusted on his first day in office on December 7, 2009. Even though the previous administration had cut $10 million dollars in spending and had used almost $11 million of the reserve fund, he 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.

First, Bartlett ordered a review of city services as a part of his vision for comprehensive managed competition, specifically identifying departments delivering services often handled by the private sector like vehicle fleet maintenance and street maintenance. The city partnered with KPMG for a review of Tulsa’s government, paid for by the Tulsa Community Foundation, which was published on July 1, 2010 including 1,134 recommendations.[1]

KPMG calculated the city’s workforce as composed (at the time) of 3,900 full-time equivalent employees providing 1,512 services across every department costing $420.4 million and generating $408.5 million in revenue. KPMG included a concise summary of strategic opportunities in the report (see table below). KPMG identified 700 opportunities for cost savings, 84 opportunities for enhanced revenue collection and 350 opportunities for efficiency gains.

Summary of Strategic Opportunities for Tulsa

Summary of Strategic Opportunities for Tulsa

Source: Managing Change: Opportunities for Municipal Efficiency and Effectiveness, City of Tulsa Management Guide (Tulsa: KPMG, July 1, 2010).

KPMG split city functions into two broad categories based on the primary customer base served: internal departments (e.g. communications, finance, internal auditing, etc.) and external departments (e.g. parks and recreation, municipal courts, public works, etc.). The KPMG review was performed under the purview of Bartlett’s newly created Management Review Office (MRO). MRO is dedicated to designing, evaluating and implementing reform, then delegating long-term operational responsibilities to existing city departments. Additionally, the review led to the creation of the Office and Strategic Review Steering Committee, which is composed of private sector business leaders and provides guidance for the MRO.

Bartlett ordered the first Citizens Survey to determine feedback on his reform agenda and public service delivery priorities. Over 100 questions were asked to over 1,800 households and more than 65% of respondents indicated they support Bartlett’s efficiency initiative. Other notable findings include:

  • 73.8% support coordinating and sharing services with Tulsa County to reduce costs;
  • 70.3% support more public/private partnerships for parks and recreation;
  • 68.2% support more public/private partnerships for the performing arts; and
  • 59.8% support more public/private partnerships for utility services.[2]

One of Bartlett’s first tangible wins was successfully transitioning the Tulsa Zoo to a public-private partnership (PPP). The Tulsa Zoo is the fifth such PPP in Tulsa; other examples include: the BOK Center, Gilcrease Museum, the Performing Arts Center and Tulsa golf courses.[3] According to an analysis conducted by Schultz & Williams, the 78-acre complex houses 2,500 animals and attracts over 525,000 visitors annually and has operated within Mohawk Park since 1927. Lawmakers partnered with the newly created nonprofit Tulsa Zoo Management, Inc. (TZMI).

TZMI assumed a significant fundraising challenge since the facility renewal and reinvestment plan included $60–100 million for deferred maintenance and infrastructure investment. The zoo also faced a pressing need to meet compliance standards for accreditation with the Association of Zoos and Aquariums (AZA) after the death of two giraffes under public operation.

One year later the Tulsa World reports, “(the) Tulsa Zoo is prospering due to privatization.”[4] The zoo was able to retain its AZA accreditation meeting standards for governance, operations and quality animal care. Privatization allowed the zoo to increase its reliance on private funding for its $8.3 million operating budget—specifically raising over $1 million for capital investment and deferred maintenance projects—with only $3.6 million coming from the city in the form of a management fee. TZMI is planning on hiring 26 employees, replacing 12 vacant positions the city eliminated in January 2010 during budget cuts.

City officials also identified the Tulsa Animal Welfare on the reform agenda. They sent out 58 Request for Information (RFI) packets to local and national nonprofit animal organizations, veterinarians and animal clinics, academic institutions, and to other cities that have implemented privatization and pet stores like Petsmart, according to a June 19, 2011 article in the Tulsa World. Officials agreed to partner with the Humane Society of Tulsa to provide animal adoption services for the city with established goals to: Increase the number of adoptions, decrease the number of animals being euthanized, and redirect cost savings into education and enforcement. The move is expected to save Tulsa taxpayers $300,000 annually.

Bartlett’s aforementioned Citizens Survey found that at the time, only 50% of respondents were satisfied with the city’s Fix Our Streets program. KPMG’s review of Tulsa’s Management Review Office confirmed citizens’ dissatisfaction. Approximately 36% of activities within the maintenance budget were spent on maintenance activities: 20% toward street maintenance, 13% toward snow removal, and 1% toward graffiti. Bartlett elected to focus on optimizing this service delivery duty by eliminating six vacant FTE positions, saving $571,000 annually and creating three new departments: Streets & Stormwater, Water & Sewer, and Engineering Services.

MRO partnered with a fleet management consultant to identify over 550 excess vehicles that will be sold. These vehicle reductions allow the city to close two maintenance garages and add second shifts to remaining garages to increase use of those facilities. Combined with lower capital purchases, savings from vehicle fleet maintenance reform is expected to exceed $6 million over five years.

Bartlett’s administration elected to retain the Emergency Medical Services Authority (EMSA) for emergency transport services, rather than transfer duties to the Tulsa Fire Department, on the condition that EMSA implement cost savings of at least $1 million annually. The city is also negotiating a permanent revenue-sharing agreement with EMSA—transfers have ranged from $600,000–$1,600,000 over the last few years.

The Tulsa Metropolitan Utility Authority selected Infrastructure Management Group (IMG) to conduct a comprehensive audit of the city’s water and wastewater system. The $2.9 million audit is expected to take 18 months and includes three engineering firms (Black & Veatch; Tetra Tech; and Holloway, Updike & Bellen) and two legal firms (Pannone Lopes Devereaux & West LLC and Public Finance Law Group).[5]

Finally, perhaps the most symbolic reform came from building maintenance reform. City employees bid against private contractors to continue to provide mechanical, electrical, plumbing and carpentry services at City Hall. The city employees won the managed competition process, saving the city over $900,000 over five years and enabling these innovative and competitive employees to retain their positions. The contract includes the city’s first application of gainsharing, whereby employees will receive 50% of any additional savings realized.

Bartlett is leaving few stones unturned. Tulsa policymakers will explore reforming parking meters, law enforcement, 911 call centers, workers compensation and more in 2012.

B. Jacksonville, Florida

Mayor Alvin Brown was sworn into office on July 1, 2011, succeeding former Mayor John Peyton. Previously Brown served in former President Bill Clinton’s administration. In Brown’s first 100 days he took several symbolic steps that served as a preview of what’s to come. First, he took a 20% pay cut and declined to take a city pension. He also worked with his administration to identify and eliminate 50 mayoral appointee positions and proposed a balanced budget that didn’t raise taxes (or fees) or dip into the city’s cash reserve fund.

On November 8, 2011, Brown introduced a comprehensive slate of reform legislation that is the first of two phases. Phase one focuses on demonstrating the architecture of reform by enhancing the city’s ability to be effective and efficient, positioning the city for economic realities of the future, increasing the city’s competitiveness, and giving the best opportunity to streamline and innovate. Discussing public-private partnerships, Mayor Brown stated:

My philosophy is simple: if the private sector can do something better than city government, and in a way that saves money for taxpayers, then we should work together.[6]

Phase two focuses on streamlining city operations to ensure that services are delivered in the most efficient, effective manner possible. Specifically, Brown’s administration and department heads seek to save 10% to 15% of the city’s roughly $270 million annual budget. Brown identified three opportunities for streamlining:

  1. Reforming employee leave time to reduce overall compensation for overtime hours.
  2. Examining the city’s vehicle fleet maintenance to save on fuel costs and reduce vehicle asset depreciation.
  3. Identifying opportunities for PPPs to leverage taxpayer dollars.

In order to execute this vision, Brown tapped Renee Finley to head the Mayor’s Office of Public-Private Partnerships. The city council voted in August against funding the proposed two-person department for $227,000 annually,[7] however Finley will instead be paid $1 annually as an executive-on-loan from Blue Cross Blue Shield of Florida, where she worked as the vice president for Corporate and Market Strategy. Brown outlined some examples of cost savings he expects to be realized:

  • Public Employee Health Benefits: Providing an opt-out option, seeking bids and active employee health management, passing on more of cost to employees, and performing a dependent eligibility audit.
  • Vehicle Fleet Maintenance
    • Automated Vehicle Locator (AVL) System: 5% of public vehicles account for 80% of waste and inefficiency; implementing AVL technology is intended to identify and eliminate the waste.
    • Compressed Natural Gas (CNG) for Heavy City Vehicles: Transitioning to CNG is expected to reduce costs by 25% plus fuel savings.
  • Emergency Services
    • Rescue Transports: Increasing collection rates of certain recurring city revenue streams, such as rescue transports.
    • Jacksonville Fire and Rescue Department: Investing in a specialty apparatus that combines fire engine and ladder capabilities.
    • Fire Inspection: Exploring procurement to privatize fire inspection services.
  • City Engineering Services: Providing specialized and peak-demand engineering services.
  • Real Property Asset Management: Right-sizing city facilities by exploring sale, leaseback, etc.

RFIs and Requests for Proposals (RFPs) are expected for vehicle fleet maintenance, fire inspections, medical insurance management and information technology in 2012.

Harris Kenny is a policy analyst at Reason Foundation. A modified version of this article was published in Reason Foundation's Annual Privatization Report 2011: Local Government report.


Notes

[1] Managing Change: Opportunities for Municipal Efficiency and Effectiveness, City of Tulsa Management Guide (Tulsa: KPMG, July 1, 2010).

[2] City of Tulsa: Citizen Survey (Oklahoma City: Shaphard Research, February 23, 2011.)

[3] Tulsa Zoo and Living Museum: Tulsa Zoo Organizational Analysis and Governance Study. (Philadelphia: Schultz & Williams, March 15, 2011).

[4] Sara Plummer, “Tulsa Zoo is prospering due to privatization,” Tulsa World, September 9, 2011.

[5] P.J. Lassek, “Team selected to assess Tulsa’s water and sewer system,” Tulsa World, June 2, 2011.

[6] Alvin Brown, “Introduction of Reform Legislation,” November 8, 2011.

[7] Steve Patterson, “Council panel cuts Mayor Alvin Brown’s public-private partnership office from 2012 budget,” The Florida Times-Union, August 25, 2011.

Harris Kenny is Policy Analyst





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