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Civic Bulletin
No. 31 March 2003


This Works: Managing City Finances

William D. Eggers and Stephen Goldsmith

William D. Eggers is a Senior Fellow at the Manhattan Institute. Stephen Goldsmith, the former Mayor of Indianapolis, is Chairman of the Center for Civic Innovation and Senior Vice-President for e-Government and Strategic Development at Affiliated Computer Services State and Local Solutions.

A revolution in municipal management was at the heart of the urban renaissance of the 1990’s. Across the nation, mayors of all ideologies and parties found more efficient ways to run city governments, and they used the savings to cut tax rates, rebuild decaying infrastructure, and modernize antiquated government information systems.

However, despite the successes to date, cities cannot afford to rest on their laurels. Many continue to face losses of population, jobs and wealth as the information economy gives workers and businesses more freedom to choose where to live and work. Cities are also facing a crisis of rising expectations. As taxpayers become more and more accustomed to obtaining 24/7, personalized attention from companies like Amazon.com, they expect the same from City Hall. This means city governments will have be faster, smarter and more flexible.

In order to continue to flourish, urban America will require additional reforms in the way it is governed. These reforms are embedded within the following six strategies:

  • Injecting competition into city services;
  • Making government performance-based;
  • Modernizing government through information technology;
  • Improving asset and financial management;
  • Enhancing human capital by transforming the nature of public work and public personnel; and
  • Creating institutions to drive continuous improvement.

By implementing reforms based on these six basic concepts, all reinforcing one another, America’s cities can make the successes experienced in the 1990s the norm, rather than the exception, of urban governance.

Injecting Competition into City Services

Bureaucratic monopolies are bad for taxpayers and bad for public employees. When government insists that competition is off limits, it communicates to public workers that they are inferior. Competition creates the conditions for increased productivity and new partnerships in which the private sector provides some functions while public employees concentrate on what they do best—and where they are most needed. By opening up public services to competition from private providers, mayors can realize extraordinary savings and improve service quality. Private vendors are often able to produce savings through innovation, advanced technology and a commitment to customer service while public employees, once exposed to competition, typically find ways to reduce their own costs.

Launch a Competitive Contracting Program

From Charlotte, North Carolina to Fresno, California, dozens of cities have launched comprehensive competitive sourcing programs over the past decade. The goal has been to institutionalize competition and continuous improvement in city services and operations. In most cases, such programs have achieved significant cost savings and service efficiencies. The City of New York, for example, implemented over 60 competition initiatives during the 1990s, ranging from contracting out fleet management in the city’s parks department to franchising private ferries.[1]

One key to ensuring a successful competition program is a commitment from city hall to place as many displaced workers as possible in other vacant public jobs.

This requires both union and management leadership to rethink seniority rules, job classifications, pay scales and other issues, for they all affect employee mobility. As part of its competitive contracting program, for example, Philadelphia contracted out 46 city services, saving $38 million per year, and avoided the need to create 500 new city jobs, but not one of the almost 1,000 city workers displaced by competitive contracting was involuntarily separated from city service without first being offered alternative employment by the new service provider or the city.

Empower Unions to Compete

Competitive bidding programs should provide incentives for city agencies to trim bureaucratic bloat, eliminate waste, increase productivity, and focus on outcomes. When union workers are given the freedom to put their own ideas into action, they can be as innovative, effective, and cost-conscious as their private-sector counterparts. The problem is that union workers traditionally have been trapped in a system that punishes initiative, ignores efficiency, and rewards big spenders. When introducing competition into city government, mayors should allow union employees to compete for contracts to provide city services.

Union workers in Indianapolis won more than half the contracts for which they competed, including in such activities as street repair, fleet maintenance, solid waste pickup, and sewer maintenance, saving an average of 20 percent each time. Indianapolis city workers often outperformed their own bids, sharing in the savings they generated through substantial bonus checks.[2]

For example, union workers at Indianapolis Fleet Services, the city agency responsible for maintaining and repairing the city’s fleet of some 2,500 vehicles, cut their overhead by two-thirds, reduced the number of managers by 75 percent, doubled the productivity of their mechanics, established bonus-pay plans based on performance, and for the first time created customer-evaluation procedures.

Annual Cost Savings Achieved from Competitive Government Programs

Indianapolis

$46M

Los Angeles County

$50M

New York City

$42M

Philadelphia

$38M

San Diego County

$17M

State of Virginia

$32M

Sources: Individual city and state governments and various Reason Foundation publications

Give Citizens More Choice in Service Providers

For many public services, the best way to realize the benefits of competition is to allow service recipients to choose their own providers. In addition to providing greater freedom of choice, choice-based programs bring consumer pressure to bear, creating incentives for consumers to shop around for services and for service providers to supply high-quality, low-cost services. Vouchers have been used by cities for services such as day care, paratransit, recreation, cultural activities, drug treatment programs, housing, developmental disabilities and job training.

Creating an Outcome-Based Government

A robust system for performance measurement, budgeting and management is essential for increasing the efficiency of city services and delivering improved results to city residents. Performance management systems hold city managers accountable for not only how much money they spend, but also how well they spend it. Performance reviews assist managers in evaluating their efforts and accomplishments; help explain the value of public programs; establish standards for performance; and improve the ability of government to make responsible, well-informed decisions about service priorities, staffing levels, and budgets. Performance measures challenge departments to set ambitious goals and enable legislators and members of the executive branch to determine more accurately what resources are necessary to support desired levels of service.

Well-run cities like San Diego and Phoenix have utilized a variety of performance management tools—strategic planning, performance-based budgeting, citywide surveys, zero-based management reviews, plain language citizens’ budgets, performance pay—to create a unified performance management and measurement system where broad objectives cascade all the way down to agency goals, employee goals and individual appraisals.

Establish a Strategic Planning and Performance Measurement System

Strategic planning and performance measurement go hand in hand, forming a continuous cycle of planning and measurement.[3] Strategic planning helps to determine the mission of the organization and define what results should be measured. It’s crucial for setting priorities, allocating scarce resources and giving managers cues into the chief executive’s long-term desired outcomes, which in turn frees them up to try innovative approaches to realize these goals. Performance measurement, on the other hand, looks backward to examine whether the results were actually achieved. By putting an emphasis on realizing key performance targets, it provides a powerful way of getting government organizations to focus on achieving results and to distinguish between what works and what doesn’t. The best systems continually refine their measurement and strategic planning systems, making sure they’re producing real results.

Fund Outcomes, Not Processes

Governments typically focus on inputs—measuring the quality of a service by the amount of money spent providing it. If crime goes up, police departments receive more money; if student test scores go down, the schools are given more cash. Poor outcomes lead to more inputs, rather than an improved process, and as a result provide incentives for failure instead of success. To accomplish their goals with a minimum of waste, cities must shift their focus to the result, not the resources applied. Rather than buying asphalt, trucks, and employee hours (inputs) or even buying a certain number of repaired potholes (outputs), mayors ought to purchase smooth streets (outcomes) from departments and contractors.

Performance standards also can be used to evaluate and reward city employees, enabling managers to tell at a glance whether a certain division is over or under budget, whether its productivity is adequate, and what areas need improvement.

Make Contracts Performance-Based

Essential to making government results-based is instituting performance-based contracts that clearly spell out the desired end result expected of the contractor, while the manner in which the work is performed is left to the contractor’s discretion. Properly structured performance-based contracting can reduce contracting costs while increasing service quality. In Compton, California, the school district contracts with Sylvan Learning Systems, a provider of educational services, to provide supplemental math and reading instruction to 1,200 students. The school district pays only for results. If Sylvan fails to meet the contract requirements—including an improvement in students’ reading scores of at least 3 points on a scale of 100—the company receives nothing.

Use a Balanced Scorecard Approach

One of the biggest mistakes cities sometimes make when they establish performance measurement systems is they try to measure too much and end up with measurement overload. A “Balanced Scorecard” approach is useful to avoid this pitfall. A “Balanced Scorecard,” is a management tool that focuses an organization’s strategies on four important perspectives: customers, finances, internal business processes and employee learning and growth. The City of Charlotte found that adapting the Balanced Scorecard to their particular needs allowed them to create meaningful performance measures and discard less useful ones.

Using Performance Data to Improve Outcomes

The New York City Police Department’s widely acclaimed Compstat management-for-results model focuses on when, where, and how crimes occur and then concentrates police resources in those areas, helping the police send cops where they’re needed most. Individual precincts, senior officers, and precinct captains are held accountable for results on a daily basis. The result: crime in New York City has fallen to its lowest levels since the 1960s.

Baltimore’s Citistat, a variation of Compstat, has had similar success. At Mayor Martin O’Malley’s CitiStat meetings, Baltimore officials pore over rat-trap stats, pothole stats, and drug treatment stats. CitiStat makes everything public on the city’s website, thus both preventing territorial bureaucrats from hiding embarrassing data and giving equally deserved attention to innovative supervisors. In 2001, thanks in part to Citistat, Baltimore’s homicide rate fell to a 10-year low, and the city saved $13 million by slashing leave and overtime abuses.

Make Performance Data Transparent and Understandable

Government performance should be easily accessible and understandable to the public. Transparency increases citizen involvement, which generates accountability, which in turn generates pressure for improved performance, and more extensive and accurate feedback on the state of city services from the people receiving them. One notable approach to increasing transparency and accessibility is that adopted by San Jose. The city publishes a “community budget,” specially designed for citizens, that clearly spells out goals and results for the six major operational areas of the budget.[4] The goal: to provide a citizen-centered, as opposed to agency-centered, view of the budget. Such “community” and “popular” budgets help to spur debate over both the city’s goals and whether each department’s proposed activities advance the city towards these goals, as well as helping city council members and citizens to make informed choices about budgetary tradeoffs.

Survey Citizen Satisfaction

Another important way to increase citizen involvement and feedback is through surveys of citizens’ perceptions of government services. Citizen surveys gauge public sentiment on the main issues facing a community, and provide community input into what should be the main priorities of city hall. They also help identify which services are operating well and which ones need to be improved, making them a key component of a performance measurement and management system. To gather additional information on how the city’s customers evaluate the services they receive, Philadelphia, for example, includes citizen surveys in its annual Mayor’s Report on City Services, a summary of the government’s performance for the year.

Connect Employee Pay to Performance

Most public employees are smart, hardworking people who work in ways that are consistent with the incentives and rewards in their workplaces. Unfortunately, traditional compensation systems simply divide employees into wage levels and award pay raises at uniform rates to all employees based on seniority. This approach provides workers no incentive to increase efficiency and may actually reward inefficiency. Performance management cannot succeed without linking performance outcomes to employee pay. Connecting pay to performance causes the bureaucracy to focus on results and allows managers to create either individual or team-based incentives that enhance productivity.

Under performance-based pay plans, employees and their supervisors mutually define and agree on measurable job performance objectives that are linked to the organization’s broader goals and mission. Employees then are evaluated on how effectively they accomplish their objectives, and rewarded accordingly. There are a variety of ways to link pay to performance, including performance contracts, performance bonuses, shared savings, gainsharing, productivity awards and ending automatic pay raises.

One of the best ways to begin the transition to pay for performance is by providing financial rewards for employees, teams and divisions for saving money. Public Works department employees in Portland, Maine receive between $100 and $250 each for reducing construction costs by 10 percent or more,[5] while in Charlotte, all city employees get a bonus if the budget comes in at a certain savings target.

Modernizing Government through Information Technology

As we continue to transition to the Information Age, few strategies are as important to transforming government as optimizing the use of information technology. By leveraging the power of electronic government and other technological tools, governments can save money, enhance customer service, improve information sharing, become more citizen-centered, increase transparency and better manage their relationships with contractors and other levels of government.

Use Public-Private Partnerships to Obtain Access to Cutting-Edge Technology

Most of the state-of-the art technology and experience in e-commerce strategies lie in the private sector. This means that to create a 21st century digital government cities will have to rely on far-reaching public-private partnerships and outsourcing agreements. San Diego County, California outsourced all of its computers and telecommunication operations to a consortium of private companies, resulting in one of the largest local government technology outsourcing projects ever. One reason for the move was to upgrade the county’s technology systems. As part of the agreement, the city’s private partners installed new, state-of-the-art desktop computers, phones, phone switches, routers, computer networks, and fiber-optic cable.

Private-sector technology partners can also be used to improve a long-existing municipal problem: collecting delinquencies. Rather than resorting to traditional collection processes—ie, turning off services (e.g. water) or calling in the lawyers—cities can work with private-sector partners to set up sophisticated information systems for managing receivables whose main aim is to keep citizens current, and thereby avoid the cost and inconvenience of collection altogether.

Move Procurement Online

Cities spend billions of dollars purchasing goods and services, using notoriously inefficient paper-based procurement systems. According to a state of Texas study, governments spend 5.5 percent of procurement budgets simply on processing costs.[6] If done correctly, moving procurement online can increase competition, speed up transactions, reduce administrative costs and staff time, consolidate purchasing, and drive down prices. To speed the transition from paper-based to digital purchasing, city hall should mandate that city agencies replace their archaic paper-based purchasing systems with enterprise-wide e-procurement platforms.

Digitize the Procurement and Management of Contract Services

Most cities spend more money procuring services than they do on commodities, yet even the most technologically sophisticated ones still use inefficient, paper-based processes to procure and manage contract services. The result is lumbering service procurement cycles, an inability to quickly compare contract prices across agencies and inefficient contract management. By installing software systems that capture the entire contracting life cycle—from negotiation to obligation to renewal—online, city officials can quickly determine the exact number of contracts, who they are with, what types of services are contracted, and a myriad of other valuable pieces of information. This, in turn, allows them to leverage their buying power across the entire city government. Digitizing contract management typically results in anywhere from 3%–25% percent lower input costs. The Texas Education Agency, for example, is saving 2% of all their spending on services from Web-enabling their contract management system.

Provide Self-Service Government

Letting customers help themselves via self-service transactions on government portals allows cities to reduce costs and improve customer service. Leading private companies are experiencing huge cost savings from shifting millions of customer calls to self-service Web transactions. By moving 35 million customer service calls to a Web-based self-service environment, IBM saved $750 million in 2000. Every service call handled through ibm.com instead of a customer representative saves between 70% and 90%.

The best near-term opportunity for governments to achieve hard cost savings from self-service Web transactions is by digitizing internal functions such as human resources (HR) management. The State of Florida will save $24 million a year by Web-enabling and outsourcing its HR, payroll, and benefit administration functions now serving 135,000 employees across 30 agencies. Florida’s HR outsourcing and technology enhancement initiative will also allow it to reduce the number of employees delivering HR services by 1,000 FTEs.

Use Technology to Cut Fraud, Waste, and Abuse

Billions of government dollars each year are wasted because of overpayments, false claims, and outright fraud. Neural networks, data mining, and other computer technologies can make it much easier for governments to detect and reduce fraud and erroneous payments. Another promising fraud reduction model is recovery audit programs. A division in the U.S. Department of Defense that makes commodity purchases of about $4.9 billion a year has recovered $111 million over the past seven years, and $24 million last year alone, by using recovery audit techniques.

Saving Money by Web-Enablement

Organization

Process Web-Enabled

Estimated Cost Savings

Cisco Systems

Supply-chain management

$412.5M

Cisco Systems

Financial Reporting

$86M [7]

DoD Financial & Accounting Service

Reverse Auctions

$2.1M

DuPont

E-procurement

$200M [8]

Honeywell

Travel booking

$4M [9]

IBM

Training

$395M [10]

IBM

Customer Service

$750M [11]

IBM

E-procurement

$270M

Oracle

Customer Service

$550M [12]

Shell Oil

Knowledge Management

$200M [13]

State of Pennsylvania

Reverse Auctions

$13M [14]

Improving Asset and Financial Management Systems

How city governments account for their costs and liabilities and report such information tells managers, employees, elected officials, and taxpayers a great deal about what the city is doing and what they’re getting for their money. Unfortunately, most municipal accounting and financial management systems fail to provide decision-makers with all the cost information needed to make important management decisions, such as whether to keep a service in-house or to outsource it to the private sector (if you’re going to outsource a service, you need to know how much the job costs in the first place). Moreover, while maintaining city buildings, warehousing supplies, running vehicle fleets, and managing land holdings aren’t particularly exciting topics, they’re essential and costly functions of city governments. And most cities can do a much better job managing these assets than they’re doing today.

“Corporatize” City Agencies such as Utilities, Airports, and Ports

Corporatization is the process of converting an agency to a corporate legal status with the government as the sole shareholder. Once corporatized, the department must use private-sector accounting standards, obey corporate law, and operate under greater accountability. This can bring about more efficient management and prepare the department for potential competition or privatization. New Zealand did this with many agencies, including forestry and transportation, and here in the United States corporatization is being considered for some municipal utilities. Many times this is combined with contracting out certain functions to reduce costs and increase quality by obtaining world class technology or management know-how.

Sell Selected Government-owned Assets and Enterprises

Many municipal governments have unused, underused, and sometimes unwanted facilities, land, tax liens, and equipment that can be sold. Since 1994, New York City realized more than $1.5 billion in revenues from divesting a host of assets and enterprises, ranging from city-owned apartment buildings to tax liens on delinquent properties.[15]

Unfortunately, many mayors aren’t aware of what or where their assets are, and city departments have little incentive to keep track. One way cities can uncover unused assets is by letting the agency keep a share of the money earned from the sale, rather than having all proceeds revert to the general fund.

Institute Activity-Based Costing

Most city governments have no idea how much it really costs to fill a pothole, plant a tree, or clean out the sewers. Without this data, it’s impossible to know whether city services are being delivered efficiently, or to accurately compare the costs of public-sector delivery with that in the private sector. Standard government accounting principles prevent managers from stealing money, but do little to stop them from wasting it. The result: city employees often neither know nor care about their costs of doing business.

The solution to this problem is a process called activity-based costing (ABC). ABC is a simple, but powerful, mechanism that measures the real costs of providing a service—filling a pothole, for example, or plowing a mile of snow. For every identifiable activity of government, ABC determines the cost of everything that goes into conducting that activity. It uses private-sector definitions of depreciation and includes all the costs of idle equipment, building space, and other fixed costs. Accurate information about costs provides a foundation for managers to identify inefficiencies, compete-out services, and establish performance measures.

ABC can also help identify underused assets. For example, if the water utility owns significant unused land, the cost of maintaining that land should be included in the department’s cost of providing water services. At the same time, the value of the land ought to be reflected in the agency’s books as an asset—either for future use or for conversion to cash.

Adopt a Capital Charge System

Most city agencies have little incentive to extract the greatest value from the use of their assets because the capitol cost of land and buildings and other assets aren’t reflected in their budgets. This can be rectified by assessing a “cost of capital” charge on all assets. A capital charge essentially applies an interest rate to all capital, creating an actual cost for using capital. The charge creates an incentive to balance a capital expenditure against its usefulness in achieving the agency’s goals because, suddenly, the once-invisible costs of land and buildings become very real to agencies that find themselves charged for their use. New Zealand adopted a capital charge in the 1990s and studies have shown that most chief financial officers of departments believe it’s caused them to pay greater attention to asset utilization, as well as providing an incentive to return unneeded or inefficient capital to the government.16

Require City Agencies to Purchase Services from One Another

City budgets often contain hidden or unreported costs that skew the true efficiency of a department. A common unreported item, for example, is the cost to provide services to sister departments. This cost should be made explicit in agency budgets. City departments are already used to paying enterprise fund agencies for services delivered. The same practice can be extended to all departments, which helps make it clear which are the more important and interrelated services. With such a system in place, departments can make better choices about where to get services—from another department, a private firm or a nonprofit body—and mayors can make better decisions about which services should be subject to outside competition.

Enhancing Human Capital by Transforming the Nature of Public Work and Public Personnel

Outdated hierarchical, command and control government personnel systems, with their layers of unnecessary middle management and their lack of authority given to line workers, prevent employees from being efficient and effective. They create waste and inefficiency by utilizing multiple layers of managers to pass information that can better be accomplished through technology. Furthermore, narrow job descriptions reduce both job satisfaction and productivity.

Reducing Risk Liability in Philadelphia

The City of Philadelphia created the Division of Risk Management in 1993 in order to reform the city’s employee disability and workplace safety programs and reduce the impact of lawsuits and third-party claims filed against the city. In both areas, the division was able to make substantial progress. Injury leave across major city departments was slashed by 77 percent; reducing the average number of employees not able to work because of job-related injuries from 263 to 65; and employee disability medical costs was reduced from $18.3 million annually to $6.6 million—a decrease of 64%.

Achieving 21st Century government depends on a motivated work force that is allowed to make its workplace decisions. Both union and management leadership need to rethink seniority rules, job classifications, pay scales and other issues, for they all affect employee mobility. As employees earn the right to exercise more discretion they can increase their own productivity inside the government and learn the new skills of activating networks and managing contracts to produce results.

Rethink Work Rules

Work rules sustain inefficient work processes and severely constrain the ability of managers to manage creatively and flexibly. In the rapidly changing marketplace within which city governments now operate, public-sector jobs and employees need to be constantly evolving. Work rules must be restructured and rethought to allow for—and reward—productivity.

Transform Public Work

Today’s public problems often require the integration of various public resources, tailored to meet a complex or unique problem. Government often can put together a consortium to solve a problem: for instance, workforce boards in many states contract through public organizations with large non-profits or for-profit companies that in turn subcontract with local grass roots and faith based organizations. In these cases, which are more the norm than the exception, well-exercised discretion by public employees is vital. These “networked” solutions require public officials to weave together public, private and not for profit service providers. They also require a new set of public employee skills. These skills involve acting as smart buyers, with both increased discretion and fewer layers of supervision.

Create Broadband Job Descriptions

Myriad, narrowly defined job descriptions don’t recognize the reality of the modern workplace—the changing technological environment and the need for constant employee growth. By broad-banding job descriptions and reducing the number of classifications, mayors can create a more flexible workforce that is able to respond to changing needs. Workers should be assigned to a project or geographical area rather than to a specific function, so that the same employees who plow snow in the winter can fill potholes in the spring, mow street medians in the summer, and pick up leaves in the fall. In addition to improving customer service and cutting costs, this flexibility better prepares employees for future challenges.

Creating Institutions to Drive Continuous Improvement

Too many city governments approach reforms in a piecemeal fashion, with no leader taking ownership of reform and little or no follow-through on reform efforts. Committees or legislative bodies are easily sidetracked by other priorities, lose focus during the process of consensus building, and react slowly when change is needed—all of which can hamper reform efforts. Lasting transformation requires the creation of institutions whose main task is to drive innovation, productivity and cost savings in city government.

Solicit Outside Assistance from the Local Business Community

Outsiders can bring a new perspective to government activities and operations. Many cities have created outside advisory commissions and task forces comprised of leading local business people, and charged them with taking a microscope to government operations. The most successful of these have had strong executive branch support, worked closely with department heads to implement quick wins throughout the process, and worked to obtain the trust and respect of the city council.

Establish an Independent Agency to Drive Reforms

All the expertise provided by outsiders is of little use unless their recommendations are implemented—and governments have a long history of ignoring private-sector reports on streamlining government. The best way to avoid such a fate is to have one highly organized agency charged with implementing and overseeing government reforms. A special executive agency, preferably within the mayor’s office, builds experience in both the politics and process of reform and can assist city departments trying to implement their own internal reforms. In San Diego, for example, an Optimization Program, comprised of analysts, engineers and economists, works with city departments on reengineering, process improvement and performance management, as well as budgeting, financial reporting and auditing processes.

Start a Productivity Bank to Stimulate Innovation

Another way to promote innovation in government is by creating a productivity bank. Using capital bases of anywhere from one million to thirty million dollars, productivity banks grant loans to city departments and agencies for projects that achieve cost savings, revenue gains, or service improvements. Funds can also be used to encourage innovation, accountability, or entrepreneurship. Savings and revenues achieved through bank projects are reflected in adjusted operating budgets, as are the loan repayments so that the bank’s lending capacity is never depleted.

Conclusion

It should come as little surprise that the most important requirement for transforming city management is enlightened leadership. In the 1990s, a new breed of innovative, business-minded mayors began the process of driving through far-reaching reforms in budgeting, finance, human resources, contracting, performance measurement and information technology. While some of these mayors are still running large cities, most have turned the reins of city hall over to a new generation of big-city mayors. It is up to them to complete the revolution in city management.

Support for the research used as a basis for this publication was provided by the Fannie Mae Foundation. The opinions expressed in this publication are those of the authors and do not necessarily represent the views of the Fannie Mae Foundation, its officers, or directors.

Endnotes

  1. “Privatization 2002: 16th Annual Report on Privatization,” Reason Public Policy Institute, 2002, p.18.
  2. Similarly, in Philadelphia the city’s managers and unions were consistently given the opportunity to demonstrate that keeping services in-house would be the most cost-effective option, and in four instances they were successful in generating $12.5 million in annual savings.
  3. Geoffrey F. Segal and Adam B. Summers, “Citizens’ Budget Reports: Improving Performance and Accountability in Government,” Reason Public Policy Institute, Policy Study No. 292, March 2002, p. 5.
  4. The six areas are: Aviation, Economic and Neighborhood Development, Environment and Utility Services, Public Safety, Recreation and Cultural Services, and Transportation
  5. David Osborne and Peter Plastrik, The Reinventor’s Handbook: Tools for Transforming Your Government, (San Francisco: Jossey-Bass, 2000), p.238.
  6. Drew Robb, “Plugging in to Electronic Procurement,” Government Technology, September 2000, p. 80.
  7. Desiree de Meyer, “Speed Up Financial Reporting,” Special Report: Payback, SmartBusinessMag.com, May 2001, p.56.
  8. David Rocks, “The Net as a Lifeline,” Special Report: Saving Money on the Web, BusinessWeek e.biz, October 29, 2001, p.EB 23.
  9. Renuka Rayasam, “Tame Travel Expenses,” Special Report: Payback, SmartBusinessMag.com, May 2001, p.59.
  10. Desiree De Myer, “A Smarter Way to Stay Smart,” SmartBusinessMag.com, May 2002, p.48.
  11. Ira Sager, “Big Blue Gets Wired,” Business Week e.biz, April 3, 2000, p.99.
  12. G. Christian Hill, “Dog Eats Dog Food. And Damn if It Ain’t Tasty,” eCompany Now (now Business 2.0), November 2000.
  13. Most of these savings are in cost avoidance. See: Don Steinberg, “Share Knowledge (Ignorance Costs Millions),” SmartBusinessMag.com, May 2002, p.52.
  14. Gary Ankabrandt, Pennsylvania Department of General Services, interview with the author, July 2001.
  15. Privatization 2002, (Geoffrey Segal, ed), Reason Public Policy Institute, April 2002, p.18
  16. This conclusion, however, is subject to the proviso that the difficulty of obtaining new capital provides some incentive not to return capital. Some departments believe that it is preferable to retain the capital on your balance sheet, and incur the capital charge, in order not to have to go through a rationing process at a later point when a capital injection may be required.

 

 


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SUMMARY:
This report, one of five in the "This Works" series on urban policy produced in conjunction with the Fannie Mae Foundation, analyzes how cities can build on the municipal management reforms of the 1990’s to both remain competitive in an increasingly decentralized economy and address the budget crises that have engulfed much of urban America. Authors William Eggers of the Manhattan Institute and Center for Civic Innovation Chairman Stephen Goldsmith, the former Mayor of Indianapolis, outline the strategies needed to continue to reinvent urban government: injecting competition into city services; making government performance-based; making use of information technology; improving asset and financial management; enhancing human capital; and creating institutions to drive continuous improvement.

 


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