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July 26, 2004
Small Town Sends Library to the Private Sector
Privatization of governmental programs has provided more effective and lower cost alternatives in services such as garbage collection, health care and prisons. The latest government program to turn to the private sector for better service at a lower cost is public libraries. Here in Tennessee, Germantown has followed such a strategy as reported in the Germantown News Online.
"The County, faced with severe money problems dating back several years, has decided to phase out its annual $5.6 million contribution to the Public Library and Information Center. In response, Germantown hired Library Systems and Services (LSSI), a Maryland-based firm, to run the branch at Farmington and Exeter....Germantown officials determined that hiring LSSI - which will cost about $1.1 million annually ($1.3 million for overall library operations as a City department) - would be cheaper than paying $1.5 million per year to stay in the county system. Also, services will be increased - including new Sunday hours, an expanded collection and a closer relationship with local schools. In contrast, the County was planning to reduce services."
Having been part of the wave of privatization in public health care in a past venture, I can say that some of these initiatives only take things half way or do not pursue these strategies with pure intentions.
In some cases, they keep large bureaucracies in place to "oversee" the private firms they contact with. This tends to minimize the cost reduction that could be created and constrain innovation. I have seen some privatization efforts clearly be set up to fail by disgruntled governmental employees who set up a system of oppressive micro-management.
Some privatization initiatives merely take the inefficient and ineffective systems already in place and make them a private entity. In addition to the obvious "feathering of nests" by contracting with former governmental employees, no real innovative changes will likely take place to save money or improve service.
The initiative in Germantown appears to be one that is not falling into these traps. While they do have oversight (which any contract should have), it looks to be of a reasonable scale. They are also letting the private firm improve services and use their existing systems.
Thanks to Ben Cunningham for passing this article along.
Posted July 26, 2004 06:58 AM
Comments
My company is involved in the federal re-privatization of screening check-points at all US Airports which represents an excellent entrepreneurial venture realizing that the date is rapidly approaching when airport executives will have the right to choose between TSA operated security checkpoints/baggage screening areas or choose to go with private-sector companies to perform these duties. We will still contract and received oversight through the TSA, but will keep all the operations under our tutelage. The private sector can offer distinct advantages through better service provided to airline passengers and greater operational efficiency and flexibility for the airport.
I initially had major concerns that the TSA would not allow the “opt-out” program to progress because it would dramatically reduce the number of employees and the overall bureaucracy that so many government managers pride themselves on. If they give up the bureaucracy they may lose their power in the government, or so they think. However, after reading this blog article, I can definitely see that if the TSA permits this program progress by letting the airports make a choice they may only initially take a hit to the number of government employees working for the TSA. Over time it is likely that the “oversight” responsibilities will allow them to increase TSA payroll for all sorts of people that are not really needed and eventually balloon back to their former size minus the actual front-line workers who do the grunt work. Pure Intentions????, we’ll see what happens.
Posted by: TJ at July 29, 2004 08:43 AM
at Belmont University in Nashville, Tennessee. He consults with a variety of businesses on start-up and growth related issues, and with larger corporations on re-establishing entrepreneurial cultures within their organizations. Dr. Cornwall's current research interests include entrepreneurial finance and entrepreneurial ethics. He has authored or co-authored four books.
