A recent study revealed the vast majority of local officials in Michigan are satisfied with their outsourcing or privatization initiatives. The survey’s results suggest a growing number of opportunities to outsource municipal activities nationwide.
The University of Michigan’s Ford School of Public Policy surveyed local officials throughout Michigan that opted to outsource or privatize some of the local municipal services. The study revealed nearly 75 percent of all officials polled are satisfied with the outcomes of these contracts with private providers.
Throughout Michigan, about 65 percent of local governments outsource some of their municipal services in an effort to reduce costs or improve services to residents. Satisfaction with these outsource contracts was high among Democratic, Republican and Independent officials alike. Yet, just 10 percent of Michigan jurisdictions have plans to create new, or expand upon existing, outsourcing strategies in the near future.
According to the survey data:
- 83 percent of respondents privatize attorney or legal services
- 51 percent privatize engineering
- 45 percent privatize waste/recycling
- Only 25 percent of municipalities evaluate their outsourcing contracts
In addition, the study revealed certain counties within the state are less likely to outsource services than others. For some of these municipalities, it is more common to arrange shared services agreements with nearby governments than seek partnerships with private providers. Some local leaders expressed uncertainty in the payout of privatizing services, citing limited proof of success.
University of Michigan researchers plan to conduct the survey annually in hopes of equipping local decision makers with empirical data to support further exploration of outsourcing opportunities as well as evaluations of current privatization contracts.
Current Outsourcing Projects
One Michigan city is looking to expand its privatization of services in light of successful cost reductions. Grant Traverse County commissioners are discussing further privatization of maintenance duties as well as eliminating four county jobs in an effort to make up for a projected $700,000 shortfall. Rather than pay off the deficit with a reserve fund, the commissioners plan to use new revenue and cut costs to erase the shortfall.
The commissioners are calling for bids from parks maintenance and snow shoveling providers, which they will compare to the current in-house costs associated with the services. Grand Traverse County commissioners are confident in privatizing these tasks after reporting an estimated $195,000 in annual savings after replacing 11 employees with a private janitorial service in 2011, Traverse City Record-Eagle reported.
Similarly, in Olmsted Falls, Ohio, city officials have decided to outsource building department operations with the goal of generating $105,000 annually in savings. Because Olmsted Falls has a small population, it has become less cost-effective to staff a buildings department with fully certified professionals.
When the city’s building administrator announced his retirement, Olmsted Falls officials evaluated the costs of maintaining the department compared to privatizing with a contractor. Officials looked at other Ohio cities that partnered with the same contractor such as Bay Village, which reported $271,000 in savings during its first year alone, Cleveland.com reported.