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Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Shared Service Agreements Overcome Challenges, Improve Services
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Speaker Introductions
Benjamin H. Syden, A.I.C.P., E.D.P - Director of
Planning and Community Development
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Presentation Outline
I. Shared Services Defined
II. Overview of Shared Services Study/Process
III. The Ten Step Process Ten Step Process for Shared Services
Arrangements
IV. Keys to Success
V. Questions and Answers
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Shared Services Defined
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Shared Services Defined
An approach or arrangement by which two or more municipalities
address municipal service delivery. Shared services approaches
vary in complexity and intensity. Shared services can be formal or
informal, involving inter-municipal agreements or “handshake”
agreements without exchange of dollars for services provided.
Approaches to Shared Services
Cooperation: communicating and sharing information
Coordination/Collaboration: sharing equipment, facilities,
staff, and revenue
Consolidation: transferring functions and sharing
services among jurisdictions
Dissolution or Merger
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Shared Service Options
Cooperation: Informal and short-term
Exchanging information is all that each of the partnering municipalities
expect
Residents and the community as a whole perceives a duplication of
services
Cooperation rewards all participating municipalities equally
Municipalities that create cooperation directly benefit
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Shared Service Options
Coordination/Collaboration: Longer term requiring a deeper
working relationship, but is still not a formalized operation
Achieving economies of scale for a one-time event or short-term project
Potential partners share common short-term outcomes or plans
Shared resources will help potential partners accomplish short-term
objectives
Potential partners need to maintain their individual identities within the
context of the event or short-term project
The overall service system of which you are a part of requires significant
changes
To achieve economies of scale, the issue must be addressed at a much
larger scale and with more resources than any one municipality has
The challenge is complex and requires long-term, multiparty commitment
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Shared Service Options
Shared Services and Consolidation of Services: A highly integrated
approach to restructuring government services. Presents both major
opportunities and challenges
Enhanced capacity to deliver needed services
Expansion of geographic reach of services
Less competition for funding resources to support municipal services
Integrating municipal cultures into productive and efficient partnerships
Correctly estimating the time, effort, and financial resources required to
reach operational stability
Shared service can be accomplished through intermunicipal agreements
(IMAs)
Consolidation of services may include the elimination of employees and
potential “loss of identity” and is considered much harder to achieve
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Shared Service Options
Municipal Dissolution or Merging units of government: The most
dramatic form of restructuring.
Warranted if the unit or service deliverer can no longer function, i.e.,
“Going out of Business”
If it is more efficient or otherwise advantageous to have the service
provided by some other entity
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Why Shared Services?
Duplication of Services
10,521 overlapping government units exist in New York State
Growth in Service Demands & Cost
Stagnant & Declining Tax Bases
High Unemployment Rates
Declining State Aid & Funding
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
The Primary Objectives of Shared Services
To increase efficiency and effectiveness of local governments
To achieve cost reductions based on economies of scale and better
leverage
To eliminate or minimize duplication of services
To share resources and specialized skills
To improve service through timeliness, quality and
cost management of common services
To develop a cost effective model that is based on
best practices, yet remains consistent and
accountable to the people
To focus on services that can be better provided through sharing or
consolidating than they could by individual agencies
Eff
icie
ncy
Cost
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Types of shared services that residents support
Public transportation
Road and highway maintenance
Park and recreation programs
Prisons
Public libraries
Garbage, recycling and yard waste collection
Public water and wastewater
Back office functions, i.e., assessment, accounting, code
enforcement, economic development and planning
Most Contentious Areas
Police
Fire
School Districts
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Reasons for Supporting Shared Services
Quality of local government services improves
Businesses are more interested in locating to an area
Property taxes decrease
Cost of local government services decreases
If not saving money, it makes things more efficient
Duplication and overlap of services is reduced
The government receives grant money or other incentive
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Reasons for Opposing Shared Services
Property-owners would have less say in what happens in local
government
Change increases the cost to your community, but lowers the
cost for another
Your community loses its own identity
People lose their jobs
Your government cannot make its own decisions, but has to
compromise with neighboring towns or cities
There are no cost savings for you
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Key Forces for Change
In the current economic climate, spending of any kind is under the
microscope and the pressure to cut back is intense
Government organizations must strive to meet the implications of
massive debt and loss of revenue sources
Current service delivery is often redundant, inefficient and non-
standardized
Regionalized service delivery is sometimes considered
unresponsive, detached and inflexible
Municipal responsibilities are becoming increasingly complex
and demanding
What changes would you make on a government “do-over” day?
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Appraising Your Shared Service Options
Key Questions:
What are the driving forces for collaboration?
Who will the partners be now, and in the future?
What are the ambitions of the partnership?
What services and processes are within your scope?
What collaboration model is preferred? (i.e., shared services
agreements, functional consolidation, full consolidation,)
What are the potential barriers and roadblocks?
Where will the shared service be housed?
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
... Appraising Your Shared Service Options
Key Actions:
Assess the feasibility of shared service options and their
attractiveness over other alternatives
Determine what organizational changes will need to take place
Benchmarking: Understand where you are now and where,
individually and collectively you could be if a shared service
agreement were introduced
Where are policies and processes unclear or poorly designed?
Where is quality assurance absent?
Where are lines of communication and responsibility unclear?
Do the partners diligently track labor hours by function in a standard
format?
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Questions to Consider
The following are examples of questions that a municipality
should consider when conducting a shared services study:
What organizational changes will take place? What is the impact on
existing personnel? What positions would be eliminated or
replaced?
What will the impacts be on personnel terminations, retention, pay
policy benefits, etc.?
What are the benefits & the degree of efficiency that will result?
What are the negative consequences?
Is there a measurable cost saving to residents from sharing
services?
How is the taxing structure for residents going to be allocated?
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Does it make “sense” or “cents”?
Economy: Will the proposed cooperative
arrangement reduce the current program’s
costs now or in the future?
Efficiency: Will the proposed cooperative
arrangement improve the current delivery
of program services?
Effectiveness: Will the proposed
cooperative arrangement allow local
governments to deliver needed services
that are qualitatively improved or that each
would find difficult to provide individually?
Source: NYS Office of the State Comptroller, Local Government Management Guide, 2009
Efficiency Economy
Effectiveness
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Overview of Shared Services Study Process
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Overview of Shared Services Study Process
Inventory & Analyze Existing Conditions
Identify Opportunities & Alternative Models of Service Delivery
Involve Stakeholder & Public
Fiscal Analysis of Alternatives
Implementation Plan
Benchmarking
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Data Collection
Review Existing Plans and Studies
Review Capital Projects, Plans and Budgets
Review Organizational Staffing Plans and
Union Contracts
Review Existing IMAs
Inventory of Equipment, Facilities, Personnel
and Other Resources
Inventory & Analysis
Data Collection Methodology
Municipal and Departmental Questionnaires and Interviews with Elected
Officials, Department Heads, Financial Representatives, Legal
Representatives
Roundtable Discussions
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Examine the Fiscal Health of the Community:
Total Expenditures and Revenues by function and by department
Assets (capital, equipment, facilities)
Outstanding Debt
Tax base (taxable assessed and full value of real property, special district
taxes)
Fiscal Review
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Development of Shared Services Opportunities & Fiscal Impacts
Identify the potential opportunities for shared services
Review the advantages and disadvantages of each
Identify Alternative models of service delivery
Evaluate fiscal implications and prepare cost/benefit analysis
Potential opportunities may include:
Possible reductions in total costs
Savings in equipment and maintenance costs
Improvements to service delivery
Changes in organizational structure
Shared Services Opportunities and Alternatives
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Community Education and Outreach
Community Survey
Community-wide Workshops
Educational Seminars
Public Hearings
Public Outreach
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
The municipal partnership must consider:
The potential to achieve cost savings and/or efficiencies and the
tax impacts of the alternatives
The potential for savings from sharing costs and avoiding costs
Each entity's assets, including but not limited to real and
personal property, and the fair value
Each entity's liabilities and indebtedness, bonded and otherwise
The hidden costs or secondary impacts of sharing/consolidating
services, i.e., union contracts, impact on revenues, future costs
of personnel (benefits, advancement within new organizational
structure)
Fiscal Considerations of Shared Services Options
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Fear of loss of control or community identity by one or more of the
involved municipalities
Fear of job loss, pay scale change, responsibility, change in
organizational structure, policies and/or place of employment
Fear of degradation of service provision
Fear of the unknown – change is unsettling
The “perception of what is “lost” and what is “gained”. Cost
tradeoffs – one party may realize savings while another may see
costs increase
Understand the Perceived Barriers/Obstacles
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Common Challenges in Shared Service Studies
Lack of public education and involvement in key decisions
Why change? Hand shake agreements seem to be working?
Unions - consolidation of staffing entails bargaining and
consideration of pay equity
Lack of comparable record keeping and detailed cost accounting
practices
Lack of labor force utilization tracking, making it difficult to identify
the labor hours necessary to perform a specific function
Lack of committed leadership
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Consider the Size and Scope of the Approach
Toe in the water: Begin
with two partners
sharing a service
manager
Focused: Enlarge the
number of partners
sharing a service
manager and one or two
services
Joining Up: Two or three
bodies consolidate one
or two services
Evolve: Two or three
bodies expand the range
of shared services and
include other partners
Narrow Broad
Size of Partnership
Shallow
Deep
Sco
pe o
f S
erv
ice
Toe in
the
water
Focused
Joining
Up Evolve
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Ten Step Process for Shared Services Arrangements
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
1. Define the problem: Make sure that there is a problem to be solved
and never assume that sharing municipal services will always be more
cost effective
2. Identify potential partners: Identify and include all affected parties
and find a common ground. Shared services arrangements will only
work if you have a common ground and agree upon a common goal
3. List and Allocate Financial Impacts: Determine the cost of current
service provision and tax and debt limitations. Next, identify methods
for financing, including potential federal/state aid. Then, assess the
impact on the tax rate.
Ten Step Program for Shared Services Arrangements
*The Ten Step Program was developed by NYSDOS
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
4. Confirm legal authority: Consult state statutes, for example, NYS
General Municipal Law articles 5-G and 14-G, as well as Town, Village,
County and other related laws
5. Plan the Project: Document the need for services, determine costs
and financing, prepare impact statements for constituents and on other
services, and develop a plan for implementation and assessment
6. Collaborate with affected parties: Discuss plan with constituents,
non-profits, businesses and local organizations
7. Negotiate the agreement: Identify the necessary items to be included,
identify a facilitator to assist negotiations, and finalize terms
Ten Step Program for Shared Services Arrangements
*The Ten Step Program was developed by NYSDOS
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
8. Prepare the agreement: Terms should be memorialized in some
manner regarding involved parties, nature of agreement, level of
service, limits on service, charges/financing arrangements,
organizational control and responsibilities, reporting, personnel,
duration, termination, amendment, evaluation and continuation
9. Implement the agreement: Initiate programmatic elements,
communicate with town constituents and document all aspects of the
project
10. Evaluate the project: Examine the implementation to ensure proper
function, convene regular meetings to assess and share information,
prepare formal evaluation reports
Ten Step Program for Shared Services Arrangements
*The Ten Step Program was developed by NYSDOS
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Steps to Developing Intermunicipal Agreements
Identify services to be shared
Identify parties to agreement
Determine whether to draft a single agreement or separate
agreements with each municipality
Determine duration of agreement
Determine a method or formula for equitably allocating revenues
and costs
Determine the manner of employing and compensating personnel
Determine the acquisition, ownership, operation, maintenance, and
lease and sale of property
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
…Steps to Developing Intermunicipal Agreements
Determine the manner of handling any liabilities that might be
incurred in the operation of the joint service and obtain adequate
insurance coverage
Determine custody by the fiscal officer of one of the participants of
any or all moneys made available for expenditure for the joint
service
Determine periodic review of the agreement, including terms
relating to its duration, extension or termination
Determine adjudication of disputes or disagreements
Determine collective bargaining issues, if any
Determine town taxation issues, if any
Draft agreement
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Keys to Success
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Balance community values versus cost savings opportunities
Build consensus
Build partnerships
Must have committed leaders
Remember the 4 “C”s
Communication
Coordination
Collaboration
Cooperation
Keys to Success
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Balancing Community Values vs. Cost Savings
Cost Services
Cost
Services
Cost
Services
Cost
Services
Cost
Services
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Cost to Deliver
Services
Community Values &
Service Demands
…Balancing Community Values vs. Cost Savings
Decisions are based on balancing:
Results of the Fiscal Analysis
Political and Community Will
Success is dependent on managing
the public perception that small
governments are more accountable
The perceived negative impact on
service quality may outweigh the
cost savings
Sharing/consolidating municipal services does not always
amount to significant cost savings
There is no one-size fits all approach
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Stakeholder Involvement:
Key Actions:
Engage staff early in the process to identify shared values and
interests
Identify areas of common ground and benefit
Build consensus on partnership working and shared services
Emphasize the contribution sharing can make to community goals
Explain the various mechanisms that can be used (i.e. contracts,
governance arrangements, service level agreements)
Manage Uncertainty & Fears: Build Consensus
Stakeholder Interviews• Roundtable Discussions• Department Head & Staff Surveys
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Managing Change
Many issues identified are symptomatic of the prevailing culture
Shared service arrangements demand skills and resources in
moving from one way of working to another
Key Issues to be Dealt with:
Identify and correct shortcomings in current systems and processes
Introduce new systems and procedures that will ensure continuity of
service
Develop systems needed to ensure that costs are managed and
benefits realized (i.e., cost tracking and standardization )
Anticipate risks created by the transition and develop policies,
procedures and mitigation plans to deal with them
...Building Consensus
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Craft a Common Vision and Stress Open Communication
Work with partners to develop a clear vision and plan
Communicate the vision to all relevant stakeholders
Allow all relevant stakeholders to be involved in ‘fleshing out’ the
vision
Ensure that the goals and values of the partnership are clearly
articulated
Deal with concerns and misconceptions
Ensure the rationale shows the contribution of each partner
Explain to individuals and groups the benefits they can expect
Build Strong Partnerships for Implementation
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Understand areas of weakness and contention
Political support and resources are keys to success
Be aware of the effects change will have on employees and public
opinion
Pick the “low hanging fruit”
Initiate early dialogue with all stakeholders union officials
Build commitment among staff to a new way of working
Put the interests of customers above narrower political concerns
Be willing to “fight the fight”
Strong Committed Leadership = Success
Effective collaborative working is first and foremost a human resources and political challenge.
Shared Services Agreements: Overcome Challenges, Improve Services
Government Educator Webinar Series: May 3, 2011
Questions and Answers... For further information contact:
Laberge Group
Benjamin H. Syden, AICP
Director of Planning & Community Development
email: [email protected]
website: www.labergegroup.com