Avoid A Structural Deficit
Since the passage of California’s Proposition 13 in 1978, the message to local government has been that growth must pay its own way while continuing to operate in an efficient and effective manner.
The problem was that most agencies did not heed the message and continued down the same path, expecting the state and others to bail them out. A popular catchphrase today is “structural deficit”; however, there is no such thing.
If more money is spent than is taken in, there is a negative balance. Simply put, people need to live within their means. And that is exactly what a small district that grew into a large district did in southern California.
Making The Switch
Valley-Wide Recreation and Park District is a full-contract maintenance organization. The district’s climb from one park to its current inventory of 76 was an evolving process.
When the district added a 5-acre park nearly 10 years ago, it was decided an additional staff member was needed; however, it was also determined there was not enough work to justify an additional full-time employee.
Recognizing its strengths as a recreation-programming organization and not a maintenance-and-repair group, the district’s board of directors decided to hire an outside company to maintain the new park. And who better than a landscape contractor and maintenance company that already exists in the community? Not only do the contractors do similar work, but they also employ numerous community members who live, shop, and add to the local economy.
After experiencing some growing pains and a learning curve, the district found that the contractors exceeded expectations. Subsequently, another decision was made to contract out the maintenance of all existing and any new parks.
It is important to specify that some maintenance still needed to be done in-house. Although the core maintenance staff remains, members are now inspectors, contract monitors and field-preparation specialists, who assist in quality assurance. As such, their roles are less apt to utilize workers’ compensation and more apt to save on liability claims.
Adding Up The Savings
And what did all of these changes do for the department? Simply put, workers’ compensation, retirement, vacations, sick leave, liability, equipment acquisition and consistent maintenance were transferred to the responsibility of the contractors, which freed up the district’s available funds, and allowed it to continue to provide accessible programs at a reasonable cost.
Today, Valley-Wide maintains over 1,000 acres of developed parks. And while agencies similar in size have 40 to 60 full-time maintenance employees plus administrators, that amounts to 40 to 60 salaries to pay, plus additional benefits, such as health, retirement, holidays, sick leave, etc. That’s also an average of 80 weeks of vacations and 80 weeks of sick leave.
Also, since liability decreases, so does the cost of workers’ compensation. Organizations similar to Valley-Wide pay three to four times more in workers’ compensation rates while eating up operational dollars that otherwise could go to deferred maintenance and recreation programming. Currently, the district pays $36,000 annually, as opposed to $165,000.
When one includes 13 percent for retirement and 18 percent for medical, the numbers accumulate to over $1,000,000 in savings annually.
Below is a comparison of budgets for agencies similar in size to Valley-Wide. Granted, liability is based on budget, but workers’ compensation is based on loss module, which is definitely affected by the number of employees, compared to facilities maintained.
In 2011, as budgets are squeezed, Valley-Wide’s district officials are even more thankful for embarking on contract maintenance in 1992, the last time the state truly impacted the budget.
Streamlining operations also allowed the district to advance the use of technology, and specified that the contractors manage irrigation, scheduling and power consumption for lighted ball fields, tennis courts and soccer fields.
The district mandated specific equipment in the parks, and standardized all the fixtures that make parks work, such as Calsense controls for irrigation systems and Musco lighting solutions. The real-time programmable systems allow officials to control park operations from an office, home or any other place with an internet connection.
Of course, there is always the argument that employees take a greater ownership in maintaining local parks, but the reality is that when an employee is sick or on vacation, some maintenance is delayed or not done at all.
A contractor, however, will do the job on a consistent basis. If the job is not completed, the contractor can be fired for poor quality without the fear of wrongful termination and/or protection from labor groups.
Plus, those same maintenance workers still live in the community, except they are not public employees; instead, they are individuals working for a private enterprise. When one considers the entire picture, the taxpayers benefit the most.
The Kiplinger Letter, volume 84, number 5, verifies what the park district already knows from experience:
“It’s also good for taxpayers. ... As more state budgets are squeezed … half already face sudden revenue shortfalls due to the slump in housing and sales taxes. … Privatization projects are soaring. They’re a quick source of needed cash and a long-term hope for capping worker costs. That’s good news for many businesses that can nab new profit opportunities. It’s also good for most taxpayers, who usually gain cheaper and better service, plus it moves the risk to the private sector if a project turns out to be a money loser.”
Sam Goepp retired after 39 years in the field--the last 23 years as the general manager of the Valley-Wide Recreation & Park District. He can be reached via e-mail at email@example.com.