Annual Privatization Report 2013

Local Government Privatization News and Notes

Subsection of Annual Privatization Report 2013: Local Government Privatization

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Local Government Privatization News and Notes

Below is a series of case studies and highlights in privatization and public-private partnerships for 2012–13.

Libraries

Osceola County, Florida: The Osceola County Commissioners implemented a contract with Maryland-based Library Systems & Services Incorporated (LSSI) for the county’s six-branch library system. After issuing a Request for Letters of Interest (RFLOI), LSSI offered to operate the system and identify $12–13 million in cost savings over five years. However, this offer was derailed when one commissioner required that all 80 employees receive an offer to work with LSSI. seventy six ultimately elected to stay on with LSSI and, as a result, LSSI redesigned its bid while still identifying approximately $6 million in savings over the course of the five-year contract.1

Frank Attkisson, an Osceola County Commissioner, explained the partnership in an April 2012 Innovators in Action interview with Reason Foundation saying:

At the end of the day, what do you want as an elected official paying for a library? Smiling faces focused on serving constituents getting whatever resources they want as quickly as possible. The name badge and building say Osceola County. Just because the name on the paycheck is different doesn’t mean the quality will change. For example, (challenges) came in the form of threatening state grants. We spoke directly with our secretary of state to clarify that it indeed remains a public library, we’re just delivering services more cost effectively, and state officials dismissed (these challenges) by sending the library a letter ensuring they’re still eligible for state grants. State policymakers are actually considering rewarding innovative local leaders with more state money—not less—for thinking outside the box.2

Osceola County Commission Chairman John Quiñones authored an April 2012 op-ed in Around Osceola highlighting additional benefits of the partnership with LSSI. Quiñones explains that after 100 days, more than 4,200 new items arrived and more than 8,500 books had been ordered for the county’s library system. A new “Hot off the Press” program focuses on expanding availability of new books and bestsellers while maintaining the “hold system” for items. He importantly notes that the partnership does not disqualify Osceola County from various grant programs available for libraries in Florida. Finally, Quiñones highlights breaking ground on a new West Osceola Library Branch in Celebration.3

Health Care Services

Frederick County, Maryland: In January 2012 LW Consulting Inc. assumed operations and management of Citizens Care and Rehabilitation Center and Montevue Assisted Living after signing a contract with the Frederick County Board of County Commissioners. The county will pay LW Consulting Inc. $439,008 the first year, with a six-month renewal option of $219,504. While cost savings motivates the partnership, improved service delivery is also expected.4 As noted by Sonja Sperlich, chairwoman of the nursing homes’ board of trustees, “This gives us access to a depth of information and expertise we have not previously had and we can do it in a cost effective manner.”5

Essex County, New York: The Essex County Board of Supervisors is expected to finalize the sale of the 100-bed Horace Nye Nursing Home to the Centers for Specialty Care of the Bronx for $4.05 million. In addition to formally singing the contract, the State Department of Health would need to transfer the operating license, which could take nine months to a year according to County Attorney Daniel Manning III. The sale was facilitated through a contract with Chicago-based sale advisor Marcus & Millichap.6 The facility had been losing more than $2 million each year under county control.7

Herkimer County, New York: Policymakers privatized the county’s Certified Home Health Agency in March 2011 after signing a contract with Bassett At Home Care for $200,000. Privatization led to $320,000 in 2011 savings and $480,000 in 2012 savings for Herkimer County. The move was necessary in part because of funding cuts by county legislators, who are motivated by the increased cost of long-term care service delivery, which set in after changes to Medicare billing in the late 1990s.8

Building Maintenance and Administration

Pontiac, Michigan: The Pontiac Board of Education approved a three-year, $2 million contract with GCA Services Group, Inc. for the district’s custodial and maintenance services. According to Superintendent Brian Dougherty, the move will save the district $700,000 in 2012–13 and $1.2 million in 2013–14. Dougherty cited the district’s successful effort to privatize bus service several years ago, a contract which expired in December 2012. The district’s new $3.9 million contract with FIRST Transportation is expected to save the district a total of $548,000.9

Deerpark, New York: In January 2012 the town of Deerpark transferred three of its four building department employees to work for Fusco Engineering & Land Surveying, a private firm providing building department services for the town. The fourth part-time code enforcement employee will be released. The move was bundled with a two-year contract renewal with Al Fusco, who has been serving as the town’s engineer since 2008. Councilman Dave Hoovler explained, "I think it's a win-win for us. Some savings now, bigger savings for the future.”10 He explained further that future savings would result from divesting post-employment contributions.

Infrastructure

Monmouth County, New Jersey: The Monmouth County Board of Chosen Freeholders voted to transfer operations of four county-owned drawbridges to the private sector, choosing to partner with Florida-based Drawbridge Services Inc. in a move expected to save $572,270 annually. According to Bill Heine, director of the Monmouth County Department of Public Information:

The county, like every other agency, is facing tough budgets. We have been for a number of years. The county actually has very proactively looked for ways to consolidate things in government and looked for efficiencies, and we’ve determined that this is an area that we can make a change and save a considerable amount of money.11

It cost the county $2,057,778 annually to operate and maintain the four bridges. Moving forward the winning bidder will charge the county $1,485,508 annually. While the trend of looking to the private sector for streamlining is increasing, these are the first drawbridges to be privatized in the state of New Jersey.

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Endnotes

1 Harris Kenny, “Reinventing libararies in Osceola County, Florida: Partnering with the private sector to create standards of excellence,” Innovators in Action, (Los Angeles, CA: Reason Foundation), April 12, 2012. http://reason.org/news/show/reinventing-libraries-in-osceola-co

2 Ibid.

3 John Quiñones, “Public-private partnership is paying dividends,” Around Osceola, April 25, 2012. http://www.aroundosceola.com/index.php?option=com_content&view=article&id=11403:public-private-partnership-is-paying-dividends-&catid=45&Itemid=58

4 Sherry Greenfield, “Frederick County outsources management of nursing, assisted-living homes,” The Gazette, December 9, 2011. http://www.gazette.net/article/20111209/NEWS/712099467/1016/frederick-county-outsources-management-of-nursing-assisted-living&template=gazette

5 Ibid.

6 Lohr McKinstry, “Horace Nye sale nears completion,” Press Republican, January 12, 2013. http://pressrepublican.com/0100_news/x1525004272/Horace-Nye-sale-nears-completion

7 Lohr McKinstry, “Horace Nye sale issues almost resolved,” Press Republican, January 23, 2013. http://pressrepublican.com/0801_seniors/x1746081027/Horace-Nye-sale-issues-almost-resolved

8 Byron Ackerman, “Herkimer County saves money with privatization of at-home services,” Observer-Dispatch, December 5, 2011. http://www.uticaod.com/news/x1595263211/Herkimer-County-saves-money-with-privatization-of-at-home-services?zc_p=1

9 Diana Dillaber Murray, “Pontiac schools privatize custodians; move will save district $1.2M in 2013-14,” The Oakland Press, December 6, 2012. http://www.theoaklandpress.com/articles/2012/12/06/news/local_news/doc50c1499ba3c20340999858.txt?viewmode=fullstory

10 James Nani, “Deerpark privatizing its building department,” Times Herald-Record, December 21, 2011. http://www.recordonline.com/apps/pbcs.dll/article?AID=/20111221/NEWS/112210342/-1/news

11 Kristen Dalton, “County drawbridges privatized to save $572K,” Independent, December 1, 2011. http://ind.gmnews.com/news/2011-12-01/Front_Page/County_drawbridges_privatized_to_save_572K.html

Harris Kenny is Policy Analyst





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