Frederick County struggles over whether to privatize local services

If Frederick increasingly is known for its trendy restaurants and shops, its historical roots remain a part of its fabric, from a City Hall built on the site of an early protest against British rule to a mall and minor league baseball team named after hometown hero Francis Scott Key.

Now, another revolution could be fomenting as Frederick County considers a radical change to the way it does government business: It is debating whether to outsource many of its public services to private business, road maintenance and parks and recreation programs, budgeting in the finance department and Central Booking at the jail. Should that happen, the county of 233,000 residents would become the largest U.S. jurisdiction to privatize what have traditionally been services provided by public employees.

The proposal, launched by an all-Republican Board of County Commissioners that after last year's elections took on a more conservative, smaller-government cast, has created an uproar. More than 500 county residents and employees descended on Winchester Hall in Frederick, the seat of the county government, for a public hearing on the proposal last week — the first of several scheduled for this month — with most opposing it, and vocally so.

"I think a lot of people wanted to make a point," Mike Ramsburg, a county employee for 26 of his 47 years, said after speaking at the often raucous hearing. "[County Commission Chairman] Blaine Young often says that since he received so many votes, he had a mandate. But we didn't vote for them to dismantle Frederick County government."

Supporters of the proposal characterize opponents as a small but vocal group, one that has gone both online with Facebook pages and recall petitions and to the streets with signs and rallies to defeat the privatization plan.

The controversy has created tensions in this county of small towns and rural areas, where many know someone whose job could be eliminated. There are also those who believe that although voters signaled in November that they wanted a change, the board is moving too fast in upending the way things have been done in Frederick County.

Much of their ire has focused on Young, who as host of a local radio talk show is no stranger to heated debate. He continually stresses that the commission is only studying privatization and has made no decision yet on whether to move toward it, even as he has been outspoken about its benefits.

Opponents point to the fact that to study the issue, the commission hired the consultant who developed and implemented the plan under which Sandy Springs, Ga., considered a model of privatization, outsourced much of its operations to a contractor.

There was no surprise, then, when the consultant, Oliver Porter, released his report last month: Yes, he concluded, privatizing what he called "core services" in the county could cut 13 percent to 21 percent of its budget, which currently stands at $438 million. If Frederick County followed his recommendations, he said, it could save as much as $109 million from its budget over five years.

While opponents cast suspicion on the eye-popping figures, there are many in Frederick County and beyond who support cuts to government spending and say that private companies are more efficient than public employees.

"The concept, I think, is fantastic," said Farrell Keough, a resident of Urbana and a frequent writer on The Tentacle, a Frederick County-based news and opinion website that also publishes commentary by Young. "If you want to do any program, government is going to be your least efficient mechanism."

Keough, who works in information technology for the National Institutes of Health, said his own field is one in which outsourcing is a common practice. He said privatizing some county operations could allow the government to be more flexible, citing as an example building inspectors who could be brought in only to meet demand.

"We as citizens have to pay to have inspectors on all the time, but we haven't had much building lately," he said.

Should Frederick County follow Porter's plan, it would apparently become the largest jurisdiction to outsource so much of its operations to a private contractor. The cities that have generated the most attention for what Porter calls "public-private partnerships" are smaller — Sandy Springs has a population of 94,000.

Sandy Springs is located in Fulton County, which surrounds Atlanta, and some residents had long felt that too many of their tax dollars were being spent on social services in the city. The largely affluent town, which is home to multiple Fortune 500 companies such UPS and Walgreens, incorporated as a city in December 2005 and turned over much of its new municipal government to a Colorado firm.

The move motivated other Georgia towns to similarly carve themselves out of the county and outsource operations — with public safety usually being the major function kept in-house.

But in recent years, some of those towns have ended their contracts and gone toward a more traditional form of municipal government. The cities, according to news reports, had to cut their budgets because of the economic downturn and believed they could provide services themselves for less than the private companies. Even Sandy Springs has moved partially toward a more traditional municipal government, deciding to outsource it is work to several companies rather than a single contractor and put more services under the control of City Hall.

But Porter said he stands by his concept of PPPs, or public-private partnerships, and that cities choosing to go back to more traditional municipal governing are making a mistake. The biggest savings are found when a city commits to a PPP, rather than the more common approach of outsourcing a few functions here and there.

"That's how you get increased efficiency," Porter said. "You bring innovation and state-of-the-art equipment and cost-saving efficiencies."

Porter said a big part of the savings comes from unloading the cost of health insurance and pensions for the employees whose jobs are taken over by a contractor. "That's what's sinking so many governments, they're saddled with long-term benefits," he said.

But Mildred E. Warner, a Cornell University professor who has researched government privatization, said she and two colleagues analyzed every published econometric study of water distribution and solid waste collection — the two most commonly privatized local services — and found no cost savings.

Warner, a professor of city and regional planning, said local jurisdictions are continually experimenting with outsourcing, letting out new contracts even as they decided to pull other work back in. "Sometimes, you need that guy down the hall," she said.

Warner said surveys by the International City County Management Association show that the amount of work that is outsourced is continually in flux, with local governments trying out a company and either shifting the work to another contractor or returning the task to in-house staff. Cities and counties most often cite problems with the quality of service and unrealized cost savings as their reasons for deciding to end the outside contract, she said.

"There was this notion that private providers could do it for less," Warner said. "What [government officials] discovered was there weren't the savings expected."

Additionally, she said, officials have found that you can't outsource responsibility. "When there's a problem, the citizen still calls the local government," she said. "When there's a problem, the elected official is the one who is unelected."

Last week, Frederick County commissioners sat through a long hearing at which public employees and residents mostly argued against the proposal. It is the latest controversy for the commission, after earlier this year cutting all county funds to Head Start — and added to the uproar when two members took the opportunity to say women should stay home rather than send their children to day care — and beginning a practice of starting their meetings with a prayer.

Many in the crowd had little use for Porter's report, summaries of which were available but were often turned into makeshift fans by many of the estimated 225 people who got seats in a hearing room that quickly became overheated.

More than 100 people crowded into other rooms and halls of the county building, watching the proceedings on TV, while another 100 protested outside.

"I'm against the privatization. If we do it, we should start with the five commissioner seats," said Gordon Jenkins, a retired carpenter. "I'm all for cutting waste first of all and unnecessary spending. But the county's got a lot of good employees, and I trust them to do the job."

It is a common phenomenon these days, as government on all levels try to cut their overburdened budgets: People say they support cutting spending, but they like the services they are currently getting.

"It's the same thing the federal government is going through," said Karen Snoots, 53, a real estate agent who joined a protest. "I'm very concerned about the level of services if this goes through. I don't think [the commission] has any idea of all the little things county employees do."

County employees described workplaces that would be familiar to many in both the public and private sector during the past several years as budgets and staff have been cut, even as the amount of work that has to be done remains the same.

"If it needs to be done, you just do it," Susan Mose, a parks and recreation manager, said. "There's always someone out there willing to do the work for less, but can they do it with the same loyalty?"

Frederick County privatization proposal

Number of Frederick County employees: 2,199

Number of employees in the "core services" that plan says should consider outsourcing: 528

Savings to the county, according to PPP: $45 million to $70 million over five years.

Savings in county's contribution to post-retirement health insurance: $10 million.

Savings in the county's contribution to pensions: $29 million.

Source: Frederick County Government; "Services Assessment Study," Oliver Porter, PPP Associates

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