Technical Articles

Service Consolidation in Michigan

Jay Kilpatrick, AICP, PCP - Williams & Works
Scott Dienes, JD -DeFrancesco, O’Dowd and Dienes
Craig Frankland - Plante & Moran

Presented during the 2010 Michigan Association of Planning Annual Conference
October 2010
[Printable version]

Introduction

In the midst of the deepest downturn since the Great Depression, Michigan municipalities are seriously considering options that even a few years ago would have been out of the question. Recently a Mayor of a mid-sized Michigan city told one of the authors off the record that their community is not only considering merging its Police and Fire services to form a Public Safety Department, they are also in early discussions with a neighboring city about consolidating all public safety service for both communities. When asked if this was driven by the current revenue squeeze, the surprising answer was, "only in part, actually we think we can each provide better service with combined forces."

This statement was given off the record, because the Mayor admitted the discussions are delicate and could easily be derailed by any number of forces. This admission is striking because it expresses the fundamental tension in any discussion on local government service consolidation. On the surface, the economies of scale are readily apparent and the opportunities for service improvements – in terms of quality and efficiency – with larger combined operations are many. However, vested interests, institutional inertia, legal obstacles, complex financial negotiations and a natural bureaucratic resistance to change make reaching a consensus difficult at best, and in many instances virtually impossible.

Nevertheless, elected and appointed officials are put in office to deliver reliable and efficient services to their constituents and they have a fiduciary responsibility to examine any and all options for fulfilling that responsibility. This article is intended to briefly outline some of the advantages and disadvantages of local government service consolidation, to outline a few effective examples and to outline a methodical set of techniques to advance a discussion of the topic.

Many Possibilities

The discussion of local government service consolidation frequently includes concern about loss of local autonomy and uncertainty about what might result from taking some irretrievable action to change how services are managed and delivered. However, there is a range of possibilities that offer some or all of the benefits while mitigating some of the related disadvantages, as illustrated below:

  • Cooperation: The association of persons or organizations for common benefit.
  • Collaboration: Working together, especially in a joint effort that is mutually beneficial to all parties.
  • Consolidation: A combination, merger, or unification of two or more organizations, departments, or entities.

Potential Benefits

So what are some of the benefits that can accrue through municipal service consolidation?

  • Cost savings. This is certainly the centerpiece of most discussions on service consolidation. Cost savings may result from combining overhead operations, sharing staff, joint purchasing of larger items, joint use of major capital assets, among others.
  • Improving Services. Combined operations can bring a greater number of individuals and talents to the workforce which offers the potential of better service than available in smaller organizations.
  • Expanding Services. In some cases, a larger combined organization is able to acquire more specialized personnel or equipment, which enable an expanded level of service than would otherwise be available.
  • Dealing with Larger-than-Local Challenges. In every community there are challenges that extend across municipal boundaries – such as traffic, utility demand, land uses, etc. Effective solutions to these challenges require a comprehensive perspective and potentially consolidated responses.
  • Achieving Cost/Benefit Equity. This issue frequently comes up in discussions about community facilities or services; such as large regional parks, libraries and museums. Frequently the cost of supporting such facilities falls more heavily on one unit of government even though residents from other jurisdictions make use of them. Consolidation or cooperation can enable a more equitable sharing of costs and benefits.
  • Enhancing a Regional Identity. Communities seeking to market themselves to the world must recognize that businesses seeking a new location in the area are less interested in jurisdictional boundaries and more interested in the services, amenities and workforce available in the general region. Economic development is enhanced by a unified identity.

The ‘Downside’

With so many advantages, why is local government service consolidation so rare? It is actually not so rare, at least in its most basic form (as outlined below), but there are both factual and illusory obstacles that need to be overcome:

  • Loss of Autonomy. This is at the top of the list, because it is the objection that is either stated openly, or it lies just below the surface of most discussions. And it is a real concern. For better or worse, Michigan has a long tradition of fragmented local government with 83 Counties, over 500 Cities and Villages, 1,242 Townships and 549 local school districts. There is, therefore, a strong bias to keeping decision-making and the provision of services as close to the constituents as possible. Any combination or consolidation of services necessitates a sharing of decision-making responsibility with others and this goes against tradition in Michigan.
  • Structural Obstacles. These include labor agreements, Charter-mandated services and offices, and incompatible systems for managing information and files. Some such obstacles can be addressed with sufficient time and resources, but others can be intractable.
  • Old Grudges. One aspect of Michigan’s fragmented system of local government is the rivalries that often develop between neighboring policy-makers and opinion leaders. Often these must be overcome if honest and meaningful discussions on consolidation can occur.
  • Finding the Equitable Balance. This refers to the varied perspectives in any discussion relative to the
    costs and benefits that could be achieved in consolidating services. For example, two cities that seek to combine utility systems bring their own capital requirements to the discussion and if one system is in need of a new large piece of equipment, the other community may not have a similar need and would see little benefit in participating in the capital cost of that equipment.
    Sorting out these often high-stakes issues can be extremely challenging.
  • Lack of Will to Make it Work. As outlined above, an effort to consolidate services is difficult and without a predictable outcome. In such an environment, many local policy leaders do not have the will to see it through. Couple this with the fact that many local elected officials serve part-time and may not have the expertise to fully assimilate such a complex process, policy support can be thin, at best.

Some Examples

It is helpful to look at successful efforts in other communities to get a general sense of what may be possible. However, it is also important to understand that every situation is unique and there are few "off the shelf" approaches.

A Joint Land Use Plan
Officials in the City of Hastings, Rutland Charter Township and Hastings Charter Township recognize that residents of the area typically do not pay much attention to which community in which they shop, work or play. For day-to-day activities, the entire region functions as a unified community. But, land use decisions are being made by the City and Rutland Township locally and by Barry County on behalf of Hastings Charter Township. While officials of all three communities confer with each other, the fragmented decision-making can result in inefficient and potentially uncoordinated "leap frog" development that undermines rural character and creates traffic problems.
Leaders of the three communities began discussions several years ago about a better future for the greater Hastings area. They commissioned a report prepared by Public Sector Consultants, Inc. to consider not only the effects of uncoordinated growth, but alternatives the three communities might consider.

Accordingly, the City, together with Rutland Township, Hastings Township and Barry County adopted an Inter-Local Agreement under Acts 7 and 8 of 1967 to form the Hastings Area Joint Planning Committee. The Committee woked to develop a Joint Land Use Plan as more detailed supplements to the master plans of the participating jurisdictions. All three jurisdictions have now adopted this plan, setting the stage for implementation, including coordinated zoning overlay language for all three zoning ordinances.

A Utility Example
Borne out of both economic necessity and a true desire to develop a "regional" approach to public water service, the City of St. Joseph and several surrounding communities cemented their relationship with a new agreement last year. This region has a long history of not being able to reach simple consensus on this subject and had been trapped in "negotiation limbo" for several years.

Elected officials from each community took over and jointly selected a trusted and knowledgeable third party to help them walk through each issue until a foundation for a long term relationship was established. The balance of theagreement came easily after that task was completed. This new agreement laid the groundwork for much needed infrastructure projects including substantial work to the water treatment plant and several new water towers. All of this was possible because the parties were able to forge a real, cooperative and fair relationship that will now last decades.

A Public Safety Example
The concept of a regional dispatch agency is common throughout northern and western parts of the State of Michigan, but historically regional dispatch centers have not been widely implemented in southeast Michigan. However, three communities in Macomb County - Roseville, St. Clair Shores, and Eastpointe - are currently working to establish the first independent dispatch authority in the region.
Officials from the three cities have been working for the past four years to consolidate their separate emergency dispatch centers into a single entity. Three years ago, Plante & Moran conducted a regional dispatch feasibility assessment for approximately eight agencies in the County.

While this large scale dispatch center did not initially become a reality, Roseville, St. Clair Shores, and Eastpointe determined that the increased efficiency and cost effectiveness of regional dispatch was a strategic initiative for their communities. Working in conjunction with Plante & Moran, the cities are being proactive by setting up their regional authority with room to expand service to neighboring communities. They were even awarded a $1 million grant to implement this progressive concept.

To date, the communities have created the South East Regional Emergency Services Authority (SERESA), formed under the Emergency Services Act (PA 57 of 1988), have recently hired an Executive Director and are on schedule to begin joint dispatching operations by the end of December 2010.

After establishment of the legal structure of the authority in July 2010, the consortium has already been approached by six communities to potentially join the endeavor. Plante & Moran has always said, "if you build it, they will come," which is proving to be the case so far as these three communities are setting the standard for other communities to follow in Southeast Michigan.

How to Get Started

Accept that each situation is unique and local considerations and needs will dictate the parameters of any approach to cooperation or consolidation in services. However, a few key elements are likely to be present in almost all situations, so the following paragraphs may provide a useful guide, even though they must be tailored to local requirements.

  1. Begin with informal discussion. Make a list of objectives and concerns your community may have and ask your counterpart(s) in other jurisdictions to do the same. Ideally, these discussions should be candid and honest and in the early going, probably are best handled by professional staff.
  2. Consider an independent facilitator. A professional in the field can aid the conversation and help to move discussions forward. This role is most important where there is some disparity among the parties in terms of political or financial strength or sophistication. While there will be some expense in using a facilitator, it should not be excessive and could be shared equally among the parties.
  3. Measure the Costs and Benefits. There are several steps in this very important task. The first is to make sure there is a clear understanding of the actual costs of the facilities or services today. Having an accurate understanding of current costs will be key to negotiating any sharing arrangement. Secondly, estimate the prospective cost of the shared service or facility. This should be founded on the current cost model, but adjusted for the consolidated operation. To properly prepare this analysis, many assumptions are required regarding personnel and maintenance activities and these need to be carefully evaluated and quantified as much as possible to allow the analysis to be adjusted and refined as the process proceeds. Thirdly, it is important to develop cost and savings sharing formulae that are rational, reliable and easily understood.
  4. Determine How to Proceed. Once the costs and benefits have been identified, if the participants decide to proceed, a strategic plan for implementation is needed. This will entail outlining the various agreements that will be required, any current agreements that may need to be amended, drafting ordinances or other instruments for implementation, potentially appraising existing capital equipment or facilities and projecting operating costs.
  5. Gaining Public Buy-In. At this step, the costs and benefits are fairly well established and the path to implementation has been laid out, but it is still necessary to decide whether to proceed. This step may include a series of public meetings for large-scale efforts or merely a few work sessions to make sure all decision-makers understand the proposal. At this stage, professionals can play an important role in facilitating an objective discussion of the proposal. This can help decision-makers focus on the factual decision before them and help to deflect uninformed commentary that may undermine a rational decision.

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Jay Kilpatrick, AICP, PCP, is Principal-in-Charge of Planning at Williams & Works. His career has focused on planning, zoning, community development and municipal management for local units of government in Michigan.

Scott Dienes, JD is a partner in the St. Joseph office of DeFrancesco, O’Dowd and Dienes. His practice is focused in the area of Municipal Law and he represents numerous municipalities and public bodies in West Michigan as general counsel. He and his wife live in Stevensville with their son.

Craig Frankland is a Senior Consultant with Plante & Moran, PLLC. He specializes in working with governmental clients to resolve organizational and operational problems related to staffing, finances, technology, and shared service arrangements.


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