Shared Services: Shared Risks, Shared Opportunities, Shared Expenses

There is a definite trend in local and county government towards the exploration and implementation of shared services.  Shared services as idealized are composed of two or more parties, where one party acts as the hub providing a service for the other parties.   These parties are typically taxpayer funded but can also include private entities.  As the title implies, these shared services distribute the risks, opportunities, and expenses across the parties.  The increased scale of the sum of services provided also allows for increased leverage in negotiating with contractors and vendors.  These arrangements can also allow partners to acquire goods and services that might normally have been unavailable on their own.  The implementation of shared services can result in reduced costs, increased service levels, reduced redundancy and ‘red tape’, convenience, and compliance with laws, regulations, and statutes.

Typical shared services include Animal Control, Residential and Commercial Code Enforcement & Inspections, Cooperative Purchasing, Information & Technology Service, Library Services, Municipal Courts, Personnel and Staff Sharing, Public Health, Public Safety, Public Works, Recreation Services, and  Trash and Solid Waste Collection,

The concept of shared services as formalized by the State of New Jersey Legislature as enacted into law in 2007 is described in UNIFORM SHARED SERVICES AND CONSOLIDATION ACT c. 63, P.L. 2007 (As amended by c. 55, P.L. 2011) [from this PDF reference guide]:

AN ACT to encourage the financial accountability of local units of government throughempowering citizens, reducing waste and duplicative services, clearing legal hurdles to shared services and consolidation, and supplementing, amending, and repealing sections of statutory law.

 

WHEREAS, The problem of high property taxes paid by New Jersey’s residents is not easily solved, but can be ameliorated through changes to the laws designed to ecourage government efficiency through shared services, regionalization, and consolidation; and

 

WHEREAS, The problem of political resistance remains a potent barrier to consolidation,especially since initial additional short-term costs may mask the long-term benefits of consolidation; and

 

WHEREAS, The Legislature should attempt to facilitate, by an improved and streamlinedprocess that is tailored to local needs, that avoids the current thicket of overlapping and antiquated laws inhibiting interlocal cooperation, and that deals with Civil Service issues rationally; and

 

WHEREAS, The State largely has employed a “carrot” approach to incentivizing consolidation and service sharing for over 30 years, and for real progress to occur in reducing the rate of property tax increase, the “stick” approach is appropriate; and

 

WHEREAS, Providing citizens with the tools to gauge the efficiency of their local governments will help promote accountability and cost savings; now, therefore,

 BE IT ENACTED by the Senate and General Assembly of the State of New Jersey

Despite the potential upside, there are challenges, as explained in this NJ PowerPoint [PDF], summarized below:

  • Know your institutions objectives and the political and managerial requirements.
  • Know the objectives of your partners.  Work with those you already know or build relationships with your partners, being sure to learn the culture of their organizations.
  • Make informed decisions before committing with a partner.  Be sure to perform due diligence, financial analysis, and be managerially committed.  Be focused on delivery outcomes.
  • Go through and identify all the variables and agree to principles in advance.  Have an exit policy to dissolve the partnership and a dispute resolution process in place should one of the partners be dissatisfied.
  • Manage opposition to shared services implementation.  Identify and manage obstacles and actively work to mitigate risk.
  • Be prepared to actively manage the partnership.  The work will continue after the agreement has been signed.  The partnership will require regular meetings and discussions and is dependent on capacity, resources, and positive attitudes.  The partnership should result in a cooperative culture that drives innovation and improvement.

If you are interested in this subject, the State of New Jersey has many resources here.