Progress 10/01/98 to 09/30/03
Outputs
National data on local government service delivery (collected by the International City County Management Association) shows privatization has not increased dramatically since 1982. This research has sought to understand why there has been so little growth in privatization. We have explored two theoretical possibilities with our analyses: government failure or market failure. We found government failure (bureaucratic concerns over loss of control by local officials and employee resistance) does not explain the failure to privatize more, but failure in contract markets themselves does.Using longitudinal data from 1982 to 1997, we have shown that the local decision to provide public services is complex and dynamic. Local governments use a range of service restructuring alternatives including privatization, mixed public/private provision and cooperation between governments. Service delivery is a dynamic process reflecting changing citizen demand for services and new
privatization. The data also show significant instability in contracts, including contracting in - the reverting back to public provision of previously privatized services. This 'reverse privatization' may reflect problems with the contracting process itself, limited efficiency gains, erosion in service quality or concern over the loss of broader community values associated with public service delivery. Privatization does not imply a retreat of government but rather a more active engagement with the market. Whether as regulator, contractor or direct service provider, local governments manage markets to create competition and ensure service quality and stability. This pragmatic market structuring role is critical to ensure that both efficiency and the broader public benefits of service delivery are achieved.Under this grant we developed publications on the overall trends data and several more quantitative analyzes of the data looking at differential effects across the rural to urban
spectrum, and the impacts of citizen voice, equity and efficiency resulting from contracted public services. We compared contracting out to contracting back in and discovered that contracting back in is not competitive bidding but rather is primarily due to problems with monitoring. We worked with ICMA to redesign their 2002 survey of Alternative Service Delivery to add questions which test directly for the stability of contracts and the reasons why local governments contract back in previously privatized work. We also explored some of the public values at stake in the privatization process, especially the implications for local government contracting authority under free trade. This work was presented at the American Collegiate Society of Planners Conference, November 2002.
Impacts
Our quantitative analysis of trends over time has brought some clarity to the privatization debate which has been characterized by case studies. We have show the uneven distribution of privatization by wealth and metro status of local governments. As a result of our research, ICMA has redesigned their survey of alternative service delivery to measure the dynamics of the contracting process.
Publications
- Warner, M.E. and Hefetz,A. 2002. Applying Market Solutions to Public Services: An Assessment of Efficiency, Equity and Voice. Urban Affairs Review, 38(1):70-89.
- Warner, M.E. and Hefetz,A. 2002. The Uneven Distribution of Market Solutions for Public Goods. Journal of Urban Affairs, 24(4): 445-459.
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Progress 01/01/01 to 12/31/01
Outputs
National data on local government service delivery (collected by the International City County Management Association) shows privatization has not increased dramatically since 1982. This research seeks to understand why there has been so little growth in privatization. Theory offers two possible answers: government failure or market failure. While government failure (bureaucratic concerns over loss of control by local officials and employee resistance) may explain the failure to privatize more, the data provide limited support for this view. Failure in contract markets themselves may explain the continued primacy of publicly provided public services. Using longitudinal data from 1982 to 1997, we show that the local decision to provide public services is complex and dynamic. Local governments use a range of service restructuring alternatives including privatization, mixed public/private provision and cooperation between governments. Service delivery is a dynamic
process reflecting changing citizen demand for services and new privatization. The data also show significant instability in contracts, including contracting in - the reverting back to public provision of previously privatized services. This 'reverse privatization' may reflect problems with the contracting process itself, limited efficiency gains, erosion in service quality or concern over the loss of broader community values associated with public service delivery. Privatization does not imply a retreat of government but rather a more active engagement with the market. Whether as regulator, contractor or direct service provider, local governments manage markets to create competition and ensure service quality and stability. This pragmatic market structuring role is critical to ensure that both efficiency and the broader public benefits of service delivery are achieved.We were invited to present the overall trends data at a national conference sponsored by the Economic Policy
Institute in Washington, DC on January 11, 2001. This paper has been published by EPI as a briefing paper. We have also conducted several more quantitative analyzes of the data looking at differential effects across the rural to urban spectrum, and the impacts of citizen voice, equity and efficiency resulting from contracted public services. This work was presented at the research pre conference to U.N. Habitat II in New York, NY June 4-6, 2001. We also have completed a paper comparing contracting out to contracting back in and discovered that contracting back in is not competitive bidding but rather is primarily due to problems with monitoring. This paper was presented at the American Collegiate Society of Planners Conference in Cleveland, OH in November 2001.Future work is addressing the complexity and dynamics of trends over time. We are working with ICMA to redesign the 2002 survey to add questions which test directly for the stability of contracts. We are also exploring some of
the public values at stake in the privatization process, especially the implications for local government contracting authority under free trade.
Impacts
Most work on privatization is based on case studies. Our quantitative analysis of trends over time is of high interest to local governments, public sector unions and federal government agencies. Most significantly, ICMA has asked us to help them redesign their next survey scheduled for 2002.
Publications
- Warner, M.E. and Hefetz, A. 2001. Public Services, Public Choice and Local Government Privitization. CRP Working Paper no.93; submitted to Department of Rural Sociology.
- Hefetz, A. and Warner, M.E. 2001. Contracting out and back-in: the role of monitoring. CRP Working Paper no.201. Dept. of City and Regional Planning. Presented to the American Collegiate Society of Planners Conference, November.
- Warner, M.E. and Hefetz,A. 2001. Uneven markets: privatization and public service delivery in U.S. cities. Proceedings of the International Forum for Research and Development, pre conference to U.N. Habitat II New York, N.Y. June 4-6. Conference proceedings Vol.1.no.6:Privatization of service delivery in mega cities. CRP Working Paper no.6.
- Warner, M.E. and Hefetz,A. 2001. Privatization and the market structuring role of local government. Dept. of City and Regional Planning WP no.197. Pdf version of paper available at www.epinet.org.
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Progress 01/01/00 to 12/31/00
Outputs
Despite an ideological shift in favor of market-oriented solutions to problems of government service delivery, provision of services by public employees remains the dominant mode of service provision in the United States. Proponents of the privatization of local government services attribute the persistent dominance of in-house service provision to such factors as bureaucratic concerns over the loss of control by local officials and employee resistance. We present a more complex explanation for the continued primacy of publicly provided public services. Using longitudinal data from 1982 to 1997, we show that the local decision to provide public services is far more complex and dynamic than a simple dichotomy between public and private provision. Local governments use a range of service restructuring alternatives including privatization, mixed public/private provision, cooperation between governments, and internal management improvements which increase the
effectiveness of the public sector. Our data also show significant incidence of contracting in - reverting back to public provision of previously privatized services. This reverse privatization may reflect problems with the contracting process itself, limited efficiency gains, erosion in service quality or concern over the loss of broader community values associated with public service delivery. In arriving at an appropriate mix of public and private delivery of public services, local politicians are far more innovative and pragmatic than ideological in balancing efficiency concerns with the need to enhance community well being. Privatization does not imply a retreat of government but rather a more active engagement with the market. Whether as regulator, contractor or direct service provider local governments manage markets to create competition and ensure service quality and stability. Based on findings from the New York State survey and analysis which are being published by the
Journal of Policy Analysis and Management in spring 2001, we have expanded our focus to the national data provided by the US Census of Government and the International City County Management Association survey of Alternative Service Delivery administered to local governments every five years. We have compiled the ICMA data into a longitudinal data set (1982-1997) and the Census of Government Organization Files from 1987 and 1992 (1997 data are not yet available). We have conducted a specific analysis looking at the impacts on rural governments (article under review at the Journal of Rural Sociology) and on metro and suburban governments (article under review at the Journal of the American Planning Association).We were able to complement the quantitative work with case study data. The New York State case study data were published as a book chapter in Fall 2000 and the national case studies, supported by the American Federation of State, County and Municipal Employees and the
International City County Management Association were distributed by AFSCME in fall 2000.
Impacts
Our work on national privatization trends provides an important context for other research in this field which is based on case studies. The ICMA data have proven to be of high interest to local government associations, public sector unions and privatization vendors. Our discovery of the importance of contracting in, has resulted in ICMA asking us to help them redesign their next survey scheduled for 2002.
Publications
- Warner, M.E. 2000. Structuring the Market for Service Delivery: A New Role for Local Government. pp 85-104 in Contracting, Managed Competition and City Services, Robin Johnson and Norman Walzer eds. Westport, CT: Quorum Books. (Earlier version CRP Working Paper #188).
- Warner, M.E. and A. Hefetz. 2000. Cities and Service Delivery: Regions or Markets? Submitted to Journal of the American Planners Association, November. CRP Working Paper #196.
- Warner, M.E. and A. Hefetz, 2000. Patterns of Alternative Service Delivery: Is There a Rural Dimension? Submitted to Rural Sociology June. (Earlier version CRP Working Paper #193).
- Ballard, Michael J. and M.E. Warner 2000. Taking the High Road: Local Government Restructuring and the Quest for Quality. Working Papers in Planning #194. Department of City and Regional Planning, Ithaca, NY: Cornell University. Pdf version at www.epinet.org.
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Progress 01/01/99 to 12/31/99
Outputs
We successfully built a longitudinal data set of local government service delivery restructuring by linking responses from each survey year for the International City/County Management Association surveys of Alternative Service Delivery (sample size 1500 cases, roughly 40% common over any two survey periods). This provides us with a longitudinal view of restructuring, and the stability of restructuring choices for the period 1982 -1997. This work shows that the reverse privatization phenomena found in our New York survey is equally common in a national sample. To check the representativeness of the ICMA sample (which is biased toward governments more likely to restructure services and which under represents rural governments), we used a similar methodology of pairing responses for the US Census of Governments Organization files. The Census only asks about contracting for 13 services and only began doing so with any level of detail in 1987. It has the advantage of
covering all governments, especially the thousands of very small rural ones. Descriptive statistics of both data sets have been analyzed extensively and early modeling efforts begun. Results show contracting is favored by more suburban and wealthy governments. Rural governments are at a disadvantage. See publications below. We also worked closely with ICMA and the American Federation of State, Municipal and County Employees this summer to do follow up interviews with governments which had brought substantial amounts of previously contracted work back in house. We wanted to understand the nature of this "contracting back in" and the reasons for it. Results of these surveys have been used to design a follow up survey instrument which is being tested with the National Association of Counties in its Operations Survey on a stratified sample of 500 counties this spring. Work was presented to ICMA, NACO, AFSCME, the Economic Policy Institute this past spring. The Economic Policy Institute
has offered to publish the work.
Impacts
This research has identified an important phenomena, contracting back in previously privatized services, which shows important limitations to privatization, especially for small rural governments. This work is redefining the way in which researchers look at privatization. Previous research has focused only on work that goes out, we now have important data showing the need to focus on why previously privatized work is brought back in to the public sector.
Publications
- Warner, M.E. and Robert Hebdon. 1999. "Local Government Restructuring: Privatization and Its Alternatives," Department of City and Regional Planning Working Paper #179. Cornell University, Ithaca NY. Currently under review at Journal of Policy and Management.
- Warner, M.E. 1999 "Structuring the Market for Service Delivery: A New Role for Local Government." forthcoming chapter in Contracting, Managed Competition and City Services, Robin Johnson and Norman Walzer eds. Quorum - Greenwood Publishing Group.(forthcoming).
- Hefeitz, Amir and Warner, M.E. 1999. "Patterns of Alternative Service Delivery: Is There a Rural Dimension?" Working Papers in Planning No 189. Department of City and Regional Planning, Ithaca, NY: Cornell University.
- Warner, M.E. and Amir Hefeitz, 1999. "Trends and Factors in Local Government Restructuring 1982- 1997," Report presented to the American Federation of State, County and Municipal Employees and the Economic Policy Institute, April 1999., Washington, DC.
- Warner, M.E. and Amir Hefeitz, 1999. "Local Government Restructuring: The Importance of Looking At Change Over Time," Report presented to the International City/ County Management Association, February 1999., Washington, DC.
- Warner, M.E. and Amir Hefeitz, 1999. "Trends in Local Government Restructuring: Implications for Unions," Report presented to the American Federation of State, County and Municipal Employees, February 1999., Washington, DC.
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