City is Expanding Staff Again

As part of the FY-16 city budget, the city staff is planning on moving the operation of the water treatment and waste treatment from contract to in-house city employees, without objection from the council.  The city projects this move will save $5,000,000 over the next 5 years.  So far as the public is concerned, this savings is an "assertion".  No analysis has been presented to justify the savings or change in operation.

The city needs to do a rigorous cost-benefit analysis and share the results with its citizens before making the change.  A rigorous cost-benefit study would include the following as a minimum:

· The study comprehensively measures direct costs.

· The study comprehensively measures indirect costs.

· Tangible benefits are monetized to the extent possible.

· Intangible benefits are monetized to the extent possible.

· Costs and benefits are measured against alternatives or a baseline.

· Future costs and benefits are discounted to current year values (net present value).

· Key assumptions used in calculations are disclosed.

· Sensitivity analysis is conducted to test how the results would vary if key assumptions were changed.

In addition to calculating the pension and health care benefit costs over the expected life of the employees, an attempt should be made to value the loss in flexibility for the city to adjust staffing levels if there is a reduction in revenue caused by external economic forces.

Also, what is the value to the citizens of maximizing private industry's participation in providing city services in a competitive environment as opposed to using city employees?

Engage your city council and request a rigorous and comprehensive cost-benefit analysis be performed and shared with the citizens before deciding to transition the operation of these plants to city staff.