Shared Services: Myth, Mirage or Magic?

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Minch Lewis
May 22, 2015

The economy that fuels public and private organizations shows signs of new life. During the years when its survival was more doubtful, government had to consider the unthinkable: shrinking itself with good government consolidation. In spite of this new life, government consolidation is still breathing. But is consolidation really an answer to government’s stress?  

The myth says yes. The mirage says consolidation may be a matter of hot air. The magic promises an answer to stress with a careful application of consolidation strategies. It is up to public administration to guide that application to secure the potential benefits of government modernization.

The Myth:  Consolidate and Save

Efforts to reduce government structures date back to the beginning of our federal system. The persistence, however, was not based on success. Even with promises of substantial tax savings, voters balked. In case after case, they rejected the mergers, dissolutions and shared services.

Even harder to understand, some revenue-sharing options have turned out to be myths. Local officials have pushed back against state standards for revenue sharing.

The Mirage: We see value, but it’s really about the services

Good government enthusiasts still see consolidation down the road. Public value rises from the pavement in waves, but in fact the road is burning in the blistering heat of social, political and financial turmoil. Services cannot be sustained at the current level. Metrics of quantity, quality, timeliness and cost present unacceptable choices: fewer services, with fewer benefits, delivered slowly at greater cost.

The Magic: Improve value by modernizing

Under the circumstances, consolidation strategies might present better choices.

State Collaboration: The state has a collaborative role.

• Scale:  The state can take a larger regional view.
• Substance:  The state is not limited to a single functional area.
• Sophistication:  The state’s analysis can be more comprehensive.
• Technical:  The state has access to state-of-the-art data mining.
• Perspective:  The state’s view of regional relationships can be broader.
• Leverage: The state can overcome resistance with constitutional authority and financial incentives. 

Local Collaboration: Local government must be on the other side of co-laboring. Lessons  can be learned from a case study of a consolidation that did not go well. A plan to consolidate police services in Broome County, New York produced several lessons for local proponents:

• Determine the starting point based on local needs.
• Build the trust of the organizations with functional alignment.
• Analyze the impact: accuracy counts and unrealistic projections hurt.
• Keep it simple to minimize potential problems.
• Create new value with better services at acceptable costs.
• Update the plan based on performance measurements.
• Manage the feedback by  providing information to all stakeholders.

Practical examples of state and local collaboration:

New York State                               

The NYS Office of Local Government has set an ambitious goal. It is operating in the environment created by Governor Cuomo who is totally committed to regionalizing local governments. The New York State Comptroller’s Office has published a management guide, “Shared Services in Local Government.” It is a resource with topics from project planning through implementation to project reporting.

New Jersey

Other states also see magic in collaborating with local government. New Jersey has set high goals for its SHARE program (Sharing Available Resources Efficiently).

California

Change can mean better service, more of it, sooner and at lower or the same cost. California has seen the savings.

The Health Care Industry

State collaboration can take other forms as well. The health industry has seen the most cases of direct state / local collaboration, as documented by the Association of State and Territorial Health Officials (ASTHO).

The Future:

The demands on local government are not going to shrink. And the resources for local government are not going to grow. Local government needs the magic of modernization.

It is clear that the magic won’t work without the magician and his “secrets.” Public administrators can work the magic. The New Jersey League of Municipalities promotes five keys developed by the Department of Community Affairs (DCA) to pull successful shared services out of the hat. They are not so much magic as solid administrative practice:

• Leadership: “Success depends on … support from local elected officials. But you have to push—“
• Communication: “Both within your boundaries (schools, fire districts, libraries) and globally         outside your community.”
• Imagination: “Be open to new ideas.”
• Common sense: “Start with relatively simple, small and even obvious opportunities and build    on success.”
• Flexibility: “Be willing to compromise.” 

The keys work. New Jersey DCA has summed up the challenge and the opportunity:

“Traffic doesn’t stop at a town’s border. Neither do things like weather, crime, public safety or emergency services. When problems cross local boundaries, so too should the solutions. Partnerships work. Sharing services reduces costs and duplication without affecting the quality of the work and, thereby, increases government efficiency.” 

So sharing services is not a myth, not a mirage and not magic. It has the potential for public benefit in trying times. Sharing services should be on the public administration agenda.

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Author: Minch Lewis is a part-time instructor at Syracuse University’s Maxwell School. He served as the elected city auditor in Syracuse, New York, for nine years. He has extensive experience nationally in developing and installing financial management systems for the affordable housing industry. He earned his master’s degree in public administration at the Maxwell School. He holds a certificate from the Association of Government Accountants as a Certified Government Financial Manager. He can be reached at [email protected].

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