Thoughts on Outsourcing--Part III

I've given a little of the history of why cities have employees and what the core mission of a city should be, to protect the commons. I've also given some of the background as to how we got to the situation we find ourselves in today. So now let's take a look at what's happening in our city and some suggestions on how we might move forward.

Moving Forward?

So, today we have a "Great Recession" with lowering wages in the private sector, an unwillingness of those who have to pay their share (cut taxes) of the costs of preserving and protecting the commons (although they are the biggest users of the commons) and spiraling costs in healthcare and a reduction of income from investment for government pension plans. Basically, we don't have the money to make good on the promises that we've made to our city employees. So how shall be deal with it?

The answer today seems to be, fire the bunch of 'em and bring in cheaper workers. But, because of the "commitments" to the unions, we can't do that. So, the alternative, is to eliminate their job and outsource it to cheaper labor. And this is different, how?

One of the earliest examples of this in Pomona was (and I recognize that the reasons were not econmic in this case, but the example still holds) the outsourcing of the Fire Department. We got rid of our firefighters, equipment, and said we'll hire an outside department to come in and take over this job function, (again, in history fire fighting was one of the first functions considered to be a "common" need for all citizens, or a core function of a city). So today, we have an entrenched vendor, who raises prices every year and who does not have the same responsiveness to the needs of our community. Yes, they are good at firefighting. Yes, they are a good department. But they are also a department that has a large geographic area that it is responsible for, and Pomona is only one very small part of that.

Let's compare the costs of our city Police Department with our outsourced Fire Department.

In the past several years, as money has become tight, the Police Department has taken a large number of cuts to staffing and funding. During that same period, the Fire contract has maintained the exact same staffing and has had year-over-year increases in the price it charges the city. Why? With the Police, our city creates the police budget, looks at all items and trims where they feel they can. With the Fire Department, the county negotiates these items, not our city, and "supposedly" passes on the savings or increases in the amount that is charged Pomona.

With the Police Department, our city negotiates the salaries of our police officers and staff directly, working with the unions to get concessions on pay and benefits. And, they are dealing with a union that is local to Pomona, that understands Pomona. With the Fire Department, their contracts are negotiated by the county, and with unions that are spread over the entire greater Los Angeles area with thousands more members than our local unions. And, we're not at the table. We have to take whatever the county agrees to and have those costs (or savings) passed down the line. The proof is in the putting, our bill from the county has increased each year of the contract while our police (and I recognize that police is still the largest part of our budget) has gone down.
Of course, there are those who are still advocating for outsourcing our police department as well.

Another long-term outsourced service has been our city attorney. Unfortunately, we don't have anything to compare it to (not like police and fire) but there have been questions about whether or not there have been any cost savings in this area.

As I mentioned in a previous post, when we as homeowners have a reduction of income, we tend to bring outsourced services back in-house. With cities it appears to be the opposite. So now we in Pomona have outsourced our fire, city attorney, building and safety, much of our park maintenance, street sweeping, and some other functions, all in an effort to reduce cost and get rid of those damned expensive city employees. Sounds a little like union busting to me, but since most of our city council people are democrats who were supported by unions, that certainly can't be the case (a note of sarcasm, in case you didn't get it).

So we've given away the ability to deal directly with those who work for us and have abrogated that responsibility to some outside vendor. Let them deal with the hiring, firing, wages, equipment, etc. And the trade off? We, the citizens of Pomona don't have a say in any of it. We can now either fire the outsourced company and hire a different one, or live with whatever service we get. We've sold out the commons to the highest bidder.

I know that I promised to look at where we go from here. But it's not an easy thing to do. Our city's infrastructure is falling apart. We need more services, not fewer. Unfortunately, Pomona has a very low economic demographic. We don't have the kind of money that we need to do the work that has to be done. We've decided to go from an city where we control our destiny to one where we let those who think they can make a profit off of us do the important work of protecting us. I think that there must be a better solution out there, but it will take some thoughtful work to accomplish it. It will also mean that we've got to decide if we're willing to pay the price that it will take to make the improvements we need.

Right now, as I've said, no one wants to pay their share. We all want to not have to pay for the services we get. Increases taxes so we can have more police protection? Not if it means I have to get rid of my smart phone. Increase fire protection? Not if it means I have to limit myself to over-the-air TV. Fix our parks and streets? Not if I have to brown-bag my lunch.

One of the things that I've always admired about the American spirit is the way that we've always been able to come together for a common cause. The ideal of America is NOT a place where no one pays taxes. It's not a place where you can become wealthy on the back of someone else. It's a place where people recognize a problem, and solve it. We need to get that American spirit back!!

Thoughts on Outsourcing

As the city of Pomona moves forward with a "policy" of outsourcing city services to save money, it's time to look at the history of civic services, how we got into the situations we're in today, what are the perceived benefits of outsourcing, and my perception as to why we're taking the current actions.

Today, A History Lesson

When cities were originally formed, the main purpose for creating a city government was to manage the "commons," that is those things that are common interest to all the citizens. Things such as police protection, fire fighting, the management of "common" property (this probably included public pastures for grazing, town squares, and parks), etc. As cities grew, other common interest items were taken on such as maintenance of the roadways, public lands management, ensuring cohesive development, etc.

To do the work of the city, under our form of government, citizens formed community councils (sometimes they included the entire city in town-hall meeting type situations, today it's city councils) which went about determining needs, setting taxes to pay for those needs so that everyone contributed to the "shared" costs, and hiring either companies or individuals to do the work necessary to carry out the needs of the community.

Hiring police, firefighters, maintenance people, etc. in a political situation such as a city is fraught with dangers. Early on, much of this work was done through political appointment which became what is today called a "spoils" system whereby the winner of an election can distribute the spoils to his/her supporters. Soon the electorate determined that this type of system resulted in corruption and in many areas a "civil service" system was instituted so that these important jobs were given to "qualified" people rather than through the problematic spoils system.

Individuals who were hired for civic service were often hired at salaries that were well below what was common in the private sector. So cities began to offer other incentives to attract and retain good employees. Retirement plans, healthcare plans, assured job security plans (such as tenure), were all ways that cities attracted people out of the private sector and into civic service.

Enter collective bargaining: As unions became strong, city employees formed unions so that they could collectively bargain for their wages and benefits. City council's bargained with the employees and, in good faith, employees agreed to terms of employment. Unions only got what cities were willing to give them. Any city, at any time, could have held out for different conditions. The idea that unions somehow coerce their way to benefits is as ludicrous as the idea that cities coerce employees to take cuts. It is a negotiated process. Each side tries to get the best deal that they can, and in the end both sides make a promise to act in accordance with the final contract.

Over the years, during good times, unions were able to negotiate contracts which included some very good benefits. The cities were willing to give them these benefits because they felt that this was the way that they could compete with private industry for workers, many of whom were getting the exact same benefits but higher pay.

Subsequently, private industry started to cut benefits and pay. As the economy started to falter, the gap between benefits and pay for public employees was catching up with the private sector and for some jobs surpassing it. Where in the past cities could work "on the cheap" by hiring their own workers, now that benefit has dissolved and cost savings can be made by "hiring out" or outsourcing the work.

Next time: Why Outsourcing