Local Government Restructuring
Resources for Restructuring Local Government
When revenues are plunging, efficiencies alone cannot provide enough savings to balance budgets. In this situation, more drastic actions by local governments may be needed. Before "knee-jerk" reactions such as wholesale layoffs and service cuts are pursued, the following process is recommended, ensuring that the proper right-sizing actions are identified and implemented carefully, minimizing the impact on citizens and government staff.
View a narrated presentation in which Dave Boerger, SEMCOG Consultant, discusses several aspects of right-sizing local government.
Restructuring Process and Resources
- Budget Best Practices — Southeast Michigan's local governments are in the throes of either preparing or attempting to meet tough budgets under a very challenging economic environment. This is a list of best practices that have been used with success throughout the region. In addition, click here for a narrated presentation from Plante & Moran providing ideas to balance your budget.
- Financial Forecast — Property values fluctuate causing varying state equalized values and taxable values from year-to-year. This is a forecasting tool from the State of Michigan Treasury.
- Engage Stakeholders — Solicit input from citizens, businesses, elected officials and staff. Use surveys, the media, task forces and dialogue to inform and connect those likely to be impacted by restructuring actions. Simplify the language so all can understand. This is an example that was used to engage elected officials and staff from Macomb County, Michigan.
- Prioritize Services — Develop a means to assess the relative importance of the various services being provided to and by the stakeholders. Rank the services into four priority levels, high to low. This is an example from Jefferson County, Colorado.
- Prioritization Matrix — Quantify the annualized cost and personnel levels required to provide each service. Include fully accounted and allocated costs, such as overhead and administrative expenses. Plot the prioritized importance and costs/personnel levels for each service on a scatter diagram. This is an example of a prioritization matrix.
- Restructuring Plan — Beginning with the high cost/low importance services, consider elimination, reduction or privatization of each. Then for the low cost/low importance services, pursue reduction or elimination as appropriate. For the high cost/high importance services, aggressive efficiency efforts are called for. And finally, for the low cost/high importance services, improve the processes to speed delivery of the already efficient service.
- Benchmark Comparisons — A critical right-sizing tool is to provide an in-depth analysis on how your city or township compares to the best on a cost per resident basis. Also, click here for an excerpt of the City of Sterling Heights' annual budget for how operational benchmarks can be used to drive improvements. Both the SEMCOG Web site and the City of Sterling Heights' Web site contain extensive benchmarking data for 17 different service areas.
- Quantify the shortfalls — Any area not measuring up to the best is a prime target for restructuring.
- Privatization — Outsourcing of non-core services to outside third party providers can reduce costs by about 30 percent; however, typically, contractual issues surface that can be addressed via an approach called Managed Competition.
- Dealing with Fiscal Challenges — Review this article from ICMA magazine for lessons learned in coping with the economic crisis facing local governments.
- Avoiding Receivership — Restructuring effectively and in a timely manner using the above actions and this detail checklist will assure the local government steers clear of the public sector equivalent of bankruptcy.
For more information and assistance, contact:
Improving Local Government Effectiveness