Politics & Government

Professor: Privatization Works When Done Right

Governor's privatization task force hears testimony in Summit.

An expert on outsourcing told Gov. Chris Christie's panel on privatization Wednesday that when done right, letting private firms handle government work can save money.

Steve Savas, a professor in the school of public affairs at Baruch College, City University of New York, testified before the Governor's Privatization Task Force that when used correctly, outsourcing government goods and services has been proven to lower costs.

But others who addressed the panel and an overflow crowd Wednesday evening at the Summit High School library questioned Savas' conclusions.

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The most common areas for government privatization are janitorial services, solid waste management, building maintenance, and security, according to Savas, who has written several books on privatization.

In a study of Los Angeles done from 1979 to 1989, Savas reports that the city saved 28 percent from privatization. While Savas says there is not much recent data on the subject, he said he maintains that when done correctly, privatization works.

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"It enables governments to focus on core functions," he said.

But some of the state workers and other interested parties in the audience had other views.

Several representatives from Communications Workers Association Local 1033, comprised of workers in the executive branch of government, spoke about the effects of previous privatization attempts in New Jersey and about the cost at which they provide services to the state.

Kevin Ryan, principal chemist and quality assurance manager at the state distribution center said it has been proven that the DSS can provide distribution services at a much lower cost than companies that were previously awarded outsourcing contracts, such as Aramark and Cisco.

Ryan urged the task force, chaired by former Congressman Dick Zimmer (R-Hunterdon County), to compare apples to apples when accepting bids, be wary of "low-ball bidding," and make sure to investigate the cost of service on the ground.

"Pipe dream savings usually turn out to be just that: pipe dream savings," he said.

Howard Jacobs, the assistant crew chief for the state's central motorpool said in addition to servicing the state's fleet of vehicles with only 96 employees, the motorpool does it for significantly less than a private company could because it does not have to markup the prices on parts, because they exclusively repair state vehicles and because of the dedication of the staff.

Jacobs said in addition to after-work training courses to stay up-to-date on new technologies, all of the workers spend between $50,000-$150,000 for their tools.

"Our only concern is that the vehicle is safe and repaired correctly," he said.

Other groups also testified both before and against privatization before the task force, which is comprised of former Summit Common Council President Kelly Hatfield, former Bergen County Freeholder and GOP gubernatorial candidate Todd Caliguire, Kathleen Davis and John Galandak. Other suggestions included:

  • Allowing school boards to retain the right to outsource services such as custodial, food service, and buildings and grounds. Barbara Horl, a lobbyist for the New Jersey School Boards Association, testified in support of privatization, pleading with the task force to protect school boards from legislation that would prohibit them from outsourcing. "All school boards need to retain this possibility," she said.
  • Bring New Jersey Department of Transportation jobs back in house. A representative from the New Jersey Department of Transportation testified that if the state brought back in house all of the DOT jobs, it could save the state $90 million. Hatfield asked whether or not the increase in consultants working in DOT is a result of the state's hiring freeze. The representative confirmed that Hatfield's suspicion was correct.
  • Privatizing the state lottery. A representative of a gaming company in Jersey City said that privatization efforts in other states have proven to be very successful and claimed New Jersey is not reaching its lottery sales potential.
  • Retain funding for New Views Treatment Program Inc. in Morris Plains, currently funded through the Division of Mental Health Services. Marcia Brands, executive director, said Christie has suggested eliminating funding for the program. But Brands says New Views, which is a non-profit agency established to provide a variety of services for the population who suffer from an overlay of alcohol and drug abuse, as well as severe chronic mental illness, can provide these services better and at a lower cost than state hospitals. "We can do it better, we can do it cheaper and we've proved it over the last 25 years," she said. Brands, when asked by task force member Caliguire for her opinion, said she felt the treatment of drug and alcohol abuse and mental illness was better handled by agencies such as New Views, not state hospitals. "I'm not sure that it's the best thing for the state to be doing," she said.
  • Provide incentives for state colleges to cut costs. Phil Connolly, vice president of operations at Kean University, said the state's public colleges, such as Kean, would consider privatizing auxiliary services if the state provided a "corresponding benefit" to the schools.
  • Stop privatization in the Division of Revenue and Taxation. Steven Dovidio  detailed his experiences working within the Division and several attempts to privatize tax collection. Dovidio reported he and his staff spend significant portions of time fielding complaints from taxpayers over faults of the outsourced company. "Privatization and outsourcing in the Division of Revenue and Taxation, I find, has not been effective at all but it's made our work harder," he said.

The next meeting of the Governor's Privatization Task Force is scheduled for April 21 from 7 to 9:30 p.m. at Camden County College, Cherry Hill Campus, Executive Conference Room 110, 1889 Route 70 East, Cherry Hill. But Zimmer said the location on campus is likely to change due to the high attendance at Wednesday's meeting.

The task force has until May 31 to deliver its report to Christie. Several district representatives from around the state were present at the meeting.

Editor's Note: This is a guest article written by Summit Patch editor Heather Collura.


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