Privatization of Municipal Services in America's Largest Cities

Abstract

Thanks in large part to three nationwide surveys sponsored by the International City/ County Management Association in 1982, 1988, and 1992, we know a great deal about the extent of municipal privatization in the United States. These surveys, however, were not designed to explore the various nuances of municipal privatization, such as the extent of their satisfaction with privatization, why cities choose to privatize services, the extent to which privatization reduces service costs and improves service delivery, how privatization affects employee's compensation packages, how cities monitor the quality and effectiveness of privatized services, and what lessons city officials have learned from their privatization experiences. The authors fill this void in the literature by asking these questions and more of city officials in America's largest cities. Among their many findings, they discovered that while privatization is now an accepted, alternative means of delivering municipal services throughout the United States, it is by no means viewed as a panacea. Faced with increased demands for public services and strong resistance to further tax increases, city officials across the country have been forced to reexamine the way they provide city services in an attempt to save money and find ways to more with less. Echoing the themes raised in Osborne and Gaebler's now famous book, Reinventing Government (1993), city officials are shifting away from a focus on what government should do toward a focus on how government can get things done more efficiently and effectively. This new focus has contributed to the increased use of strategic planning initiatives that use citizen surveys, public hearings, and town meetings to help city officials define their cities' long-term objectives and develop a strategy to achieve those objectives (Below, Morrisey, and Acomb, 1987; Streib, 1990; Wheeland, 1993). This focus has also contributed to the privatization of city services and, in a recent development, the increased use of competitive bidding practices that pit the private sector against existing city agencies (Uchitelle, 1988). In this article, we enhance the knowledge of the privatization movement in the United States by reporting the results of a survey of the privatization experiences of America's largest cities. We compare and contrast this surveys results with the results of surveys on municipal privatization experiences conducted by the International City/County Management Association (ICMA) in 1982, 1988, and 1992. The ICMA's surveys asked respondents to indicate the extent of privatization within their cities, and they remain the most comprehensive sources of information on municipal privatization activities. They did not, however, attempt, as this survey does, to determine the cities, level of satisfaction with their privatization experiences, nor did they attempt to explore some of the nuances of the cities' privatization experiences, such as why they chose to privatize specific services and what privatizations impact has been on service delivery costs and the quality of services. Also, the ICMA surveys did not focus on the privatization activities of America's largest cities. Instead, they included cities of various population sizes as well as county governments. The Survey A three-page survey was mailed during the summer of 1995 to the office of the mayor, or to the city manager when appropriate, of the 100 American cities with the largest populations. The survey was designed to determine the extent of privatization within these cities, the level of satisfaction with their privatization experiences, the reasons they privatized services, the extent to which privatization reduced service costs and improved service delivery, the effect of privatization on employees' compensation packages, the way cities monitored the quality and effectiveness of privatized services, and the lessons they had learned from their privatization experiences. …