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Shared Services Agreements: Overcome Challenges, Improve Services

Government Educator Webinar Series: May 3, 2011

Shared Service Agreements Overcome Challenges, Improve Services



Speaker Introductions

Benjamin H. Syden, A.I.C.P., E.D.P - Director of

Planning and Community Development



Presentation Outline

I. Shared Services Defined

II. Overview of Shared Services Study/Process

III. The Ten Step Process Ten Step Process for Shared Services

Arrangements

IV. Keys to Success

V. Questions and Answers



Shared Services Defined



Shared Services Defined

An approach or arrangement by which two or more municipalities

address municipal service delivery. Shared services approaches

vary in complexity and intensity. Shared services can be formal or

informal, involving inter-municipal agreements or “handshake”

agreements without exchange of dollars for services provided.

Approaches to Shared Services

Cooperation: communicating and sharing information

Coordination/Collaboration: sharing equipment, facilities,

staff, and revenue

Consolidation: transferring functions and sharing

services among jurisdictions

Dissolution or Merger



Shared Service Options

Cooperation: Informal and short-term

Exchanging information is all that each of the partnering municipalities

expect

Residents and the community as a whole perceives a duplication of

services

Cooperation rewards all participating municipalities equally

Municipalities that create cooperation directly benefit




Coordination/Collaboration: Longer term requiring a deeper

working relationship, but is still not a formalized operation

Achieving economies of scale for a one-time event or short-term project

Potential partners share common short-term outcomes or plans

Shared resources will help potential partners accomplish short-term

objectives

Potential partners need to maintain their individual identities within the

context of the event or short-term project

The overall service system of which you are a part of requires significant

changes

To achieve economies of scale, the issue must be addressed at a much

larger scale and with more resources than any one municipality has

The challenge is complex and requires long-term, multiparty commitment




Shared Services and Consolidation of Services: A highly integrated

approach to restructuring government services. Presents both major

opportunities and challenges

Enhanced capacity to deliver needed services

Expansion of geographic reach of services

Less competition for funding resources to support municipal services

Integrating municipal cultures into productive and efficient partnerships

Correctly estimating the time, effort, and financial resources required to

reach operational stability

Shared service can be accomplished through intermunicipal agreements

(IMAs)

Consolidation of services may include the elimination of employees and

potential “loss of identity” and is considered much harder to achieve




Municipal Dissolution or Merging units of government: The most

dramatic form of restructuring.

Warranted if the unit or service deliverer can no longer function, i.e.,

“Going out of Business”

If it is more efficient or otherwise advantageous to have the service

provided by some other entity



Why Shared Services?

Duplication of Services

10,521 overlapping government units exist in New York State

Growth in Service Demands & Cost

Stagnant & Declining Tax Bases

High Unemployment Rates

Declining State Aid & Funding



The Primary Objectives of Shared Services

To increase efficiency and effectiveness of local governments

To achieve cost reductions based on economies of scale and better

leverage

To eliminate or minimize duplication of services

To share resources and specialized skills

To improve service through timeliness, quality and

cost management of common services

To develop a cost effective model that is based on

best practices, yet remains consistent and

accountable to the people

To focus on services that can be better provided through sharing or

consolidating than they could by individual agencies

Eff

icie

ncy

Cost



Types of shared services that residents support

Public transportation

Road and highway maintenance

Park and recreation programs

Prisons

Public libraries

Garbage, recycling and yard waste collection

Public water and wastewater

Back office functions, i.e., assessment, accounting, code

enforcement, economic development and planning

Most Contentious Areas

Police

Fire

School Districts



Reasons for Supporting Shared Services

Quality of local government services improves

Businesses are more interested in locating to an area

Property taxes decrease

Cost of local government services decreases

If not saving money, it makes things more efficient

Duplication and overlap of services is reduced

The government receives grant money or other incentive



Reasons for Opposing Shared Services

Property-owners would have less say in what happens in local

government

Change increases the cost to your community, but lowers the

cost for another

Your community loses its own identity

People lose their jobs

Your government cannot make its own decisions, but has to

compromise with neighboring towns or cities

There are no cost savings for you



Key Forces for Change

In the current economic climate, spending of any kind is under the

microscope and the pressure to cut back is intense

Government organizations must strive to meet the implications of

massive debt and loss of revenue sources

Current service delivery is often redundant, inefficient and non-

standardized

Regionalized service delivery is sometimes considered

unresponsive, detached and inflexible

Municipal responsibilities are becoming increasingly complex

and demanding

What changes would you make on a government “do-over” day?



Appraising Your Shared Service Options

Key Questions:

What are the driving forces for collaboration?

Who will the partners be now, and in the future?

What are the ambitions of the partnership?

What services and processes are within your scope?

What collaboration model is preferred? (i.e., shared services

agreements, functional consolidation, full consolidation,)

What are the potential barriers and roadblocks?

Where will the shared service be housed?



... Appraising Your Shared Service Options

Key Actions:

Assess the feasibility of shared service options and their

attractiveness over other alternatives

Determine what organizational changes will need to take place

Benchmarking: Understand where you are now and where,

individually and collectively you could be if a shared service

agreement were introduced

Where are policies and processes unclear or poorly designed?

Where is quality assurance absent?

Where are lines of communication and responsibility unclear?

Do the partners diligently track labor hours by function in a standard

format?



Questions to Consider

The following are examples of questions that a municipality

should consider when conducting a shared services study:

What organizational changes will take place? What is the impact on

existing personnel? What positions would be eliminated or

replaced?

What will the impacts be on personnel terminations, retention, pay

policy benefits, etc.?

What are the benefits & the degree of efficiency that will result?

What are the negative consequences?

Is there a measurable cost saving to residents from sharing

services?

How is the taxing structure for residents going to be allocated?



Does it make “sense” or “cents”?

Economy: Will the proposed cooperative

arrangement reduce the current program’s

costs now or in the future?

Efficiency: Will the proposed cooperative

arrangement improve the current delivery

of program services?

Effectiveness: Will the proposed

cooperative arrangement allow local

governments to deliver needed services

that are qualitatively improved or that each

would find difficult to provide individually?

Source: NYS Office of the State Comptroller, Local Government Management Guide, 2009

Efficiency Economy

Effectiveness



Overview of Shared Services Study Process



Overview of Shared Services Study Process

Inventory & Analyze Existing Conditions

Identify Opportunities & Alternative Models of Service Delivery

Involve Stakeholder & Public

Fiscal Analysis of Alternatives

Implementation Plan

Benchmarking



Data Collection

Review Existing Plans and Studies

Review Capital Projects, Plans and Budgets

Review Organizational Staffing Plans and

Union Contracts

Review Existing IMAs

Inventory of Equipment, Facilities, Personnel

and Other Resources

Inventory & Analysis

Data Collection Methodology

Municipal and Departmental Questionnaires and Interviews with Elected

Officials, Department Heads, Financial Representatives, Legal

Representatives

Roundtable Discussions



Examine the Fiscal Health of the Community:

Total Expenditures and Revenues by function and by department

Assets (capital, equipment, facilities)

Outstanding Debt

Tax base (taxable assessed and full value of real property, special district

taxes)

Fiscal Review



Development of Shared Services Opportunities & Fiscal Impacts

Identify the potential opportunities for shared services

Review the advantages and disadvantages of each

Identify Alternative models of service delivery

Evaluate fiscal implications and prepare cost/benefit analysis

Potential opportunities may include:

Possible reductions in total costs

Savings in equipment and maintenance costs

Improvements to service delivery

Changes in organizational structure

Shared Services Opportunities and Alternatives



Community Education and Outreach

Community Survey

Community-wide Workshops

Educational Seminars

Public Hearings

Public Outreach



The municipal partnership must consider:

The potential to achieve cost savings and/or efficiencies and the

tax impacts of the alternatives

The potential for savings from sharing costs and avoiding costs

Each entity's assets, including but not limited to real and

personal property, and the fair value

Each entity's liabilities and indebtedness, bonded and otherwise

The hidden costs or secondary impacts of sharing/consolidating

services, i.e., union contracts, impact on revenues, future costs

of personnel (benefits, advancement within new organizational

structure)

Fiscal Considerations of Shared Services Options



Fear of loss of control or community identity by one or more of the

involved municipalities

Fear of job loss, pay scale change, responsibility, change in

organizational structure, policies and/or place of employment

Fear of degradation of service provision

Fear of the unknown – change is unsettling

The “perception of what is “lost” and what is “gained”. Cost

tradeoffs – one party may realize savings while another may see

costs increase

Understand the Perceived Barriers/Obstacles



Common Challenges in Shared Service Studies

Lack of public education and involvement in key decisions

Why change? Hand shake agreements seem to be working?

Unions - consolidation of staffing entails bargaining and

consideration of pay equity

Lack of comparable record keeping and detailed cost accounting

practices

Lack of labor force utilization tracking, making it difficult to identify

the labor hours necessary to perform a specific function

Lack of committed leadership



Consider the Size and Scope of the Approach

Toe in the water: Begin

with two partners

sharing a service

manager

Focused: Enlarge the

number of partners

sharing a service

manager and one or two

services

Joining Up: Two or three

bodies consolidate one

or two services

Evolve: Two or three

bodies expand the range

of shared services and

include other partners

Narrow Broad

Size of Partnership

Shallow

Deep

Sco

pe o

f S

erv

ice

Toe in

the

water

Focused

Joining

Up Evolve



Ten Step Process for Shared Services Arrangements



1. Define the problem: Make sure that there is a problem to be solved

and never assume that sharing municipal services will always be more

cost effective

2. Identify potential partners: Identify and include all affected parties

and find a common ground. Shared services arrangements will only

work if you have a common ground and agree upon a common goal

3. List and Allocate Financial Impacts: Determine the cost of current

service provision and tax and debt limitations. Next, identify methods

for financing, including potential federal/state aid. Then, assess the

impact on the tax rate.

Ten Step Program for Shared Services Arrangements

*The Ten Step Program was developed by NYSDOS



4. Confirm legal authority: Consult state statutes, for example, NYS

General Municipal Law articles 5-G and 14-G, as well as Town, Village,

County and other related laws

5. Plan the Project: Document the need for services, determine costs

and financing, prepare impact statements for constituents and on other

services, and develop a plan for implementation and assessment

6. Collaborate with affected parties: Discuss plan with constituents,

non-profits, businesses and local organizations

7. Negotiate the agreement: Identify the necessary items to be included,

identify a facilitator to assist negotiations, and finalize terms





8. Prepare the agreement: Terms should be memorialized in some

manner regarding involved parties, nature of agreement, level of

service, limits on service, charges/financing arrangements,

organizational control and responsibilities, reporting, personnel,

duration, termination, amendment, evaluation and continuation

9. Implement the agreement: Initiate programmatic elements,

communicate with town constituents and document all aspects of the

project

10. Evaluate the project: Examine the implementation to ensure proper

function, convene regular meetings to assess and share information,

prepare formal evaluation reports





Steps to Developing Intermunicipal Agreements

Identify services to be shared

Identify parties to agreement

Determine whether to draft a single agreement or separate

agreements with each municipality

Determine duration of agreement

Determine a method or formula for equitably allocating revenues

and costs

Determine the manner of employing and compensating personnel

Determine the acquisition, ownership, operation, maintenance, and

lease and sale of property



…Steps to Developing Intermunicipal Agreements

Determine the manner of handling any liabilities that might be

incurred in the operation of the joint service and obtain adequate

insurance coverage

Determine custody by the fiscal officer of one of the participants of

any or all moneys made available for expenditure for the joint

service

Determine periodic review of the agreement, including terms

relating to its duration, extension or termination

Determine adjudication of disputes or disagreements

Determine collective bargaining issues, if any

Determine town taxation issues, if any

Draft agreement



Keys to Success



Balance community values versus cost savings opportunities

Build consensus

Build partnerships

Must have committed leaders

Remember the 4 “C”s

Communication

Coordination

Collaboration

Cooperation

Keys to Success



Balancing Community Values vs. Cost Savings

Cost Services

Cost

Services

Cost

Services

Cost

Services

Cost

Services



Cost to Deliver

Services

Community Values &

Service Demands

…Balancing Community Values vs. Cost Savings

Decisions are based on balancing:

Results of the Fiscal Analysis

Political and Community Will

Success is dependent on managing

the public perception that small

governments are more accountable

The perceived negative impact on

service quality may outweigh the

cost savings

Sharing/consolidating municipal services does not always

amount to significant cost savings

There is no one-size fits all approach



Stakeholder Involvement:

Key Actions:

Engage staff early in the process to identify shared values and

interests

Identify areas of common ground and benefit

Build consensus on partnership working and shared services

Emphasize the contribution sharing can make to community goals

Explain the various mechanisms that can be used (i.e. contracts,

governance arrangements, service level agreements)

Manage Uncertainty & Fears: Build Consensus

Stakeholder Interviews• Roundtable Discussions• Department Head & Staff Surveys



Managing Change

Many issues identified are symptomatic of the prevailing culture

Shared service arrangements demand skills and resources in

moving from one way of working to another

Key Issues to be Dealt with:

Identify and correct shortcomings in current systems and processes

Introduce new systems and procedures that will ensure continuity of

service

Develop systems needed to ensure that costs are managed and

benefits realized (i.e., cost tracking and standardization )

Anticipate risks created by the transition and develop policies,

procedures and mitigation plans to deal with them

...Building Consensus



Craft a Common Vision and Stress Open Communication

Work with partners to develop a clear vision and plan

Communicate the vision to all relevant stakeholders

Allow all relevant stakeholders to be involved in ‘fleshing out’ the

vision

Ensure that the goals and values of the partnership are clearly

articulated

Deal with concerns and misconceptions

Ensure the rationale shows the contribution of each partner

Explain to individuals and groups the benefits they can expect

Build Strong Partnerships for Implementation



Understand areas of weakness and contention

Political support and resources are keys to success

Be aware of the effects change will have on employees and public

opinion

Pick the “low hanging fruit”

Initiate early dialogue with all stakeholders union officials

Build commitment among staff to a new way of working

Put the interests of customers above narrower political concerns

Be willing to “fight the fight”

Strong Committed Leadership = Success

Effective collaborative working is first and foremost a human resources and political challenge.



Questions and Answers... For further information contact:

Laberge Group

Benjamin H. Syden, AICP

Director of Planning & Community Development

email: [email protected]

website: www.labergegroup.com

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