New ways to save: partnerships, privatizing, city-to-city exchanges
By Bob Shaw
Ron Wasmund is nothing if not efficient.
He is inspecting a dark basement in a home near Cottage Grove and can't read a gas meter — so he flips open his cell phone.
"There you go," he murmurs, reading by the light of his missed calls.
Resourcefulness has made his Rosemount building-inspection company a favorite with Minnesota cities and townships that want to slash their costs. "We are a private company, and we are efficient," he says, walking upstairs to check a toilet.
His business, Inspectron Inc., is booming. That's because many Minnesota cities are in financial straits, thanks to the recession and cutbacks in state aid to cities.
Government can't do what it wants — so it is getting creative.
"Lots of cities are in survival mode right now," said State Auditor Rebecca Otto.
"They are doing everything they can to be efficient, whether that means co-ops, consolidating services, whatever. The financial situation continues to force the issue."
Financially wounded cities can learn from the handful of cities that already have tried unusual cost-cutting measures — including forming nonprofit partnerships, privatizing public services, hiring subcontractors and creating city-to-city exchanges.
Nonprofit service-sharing groups stand out as a cost-saving option.
In the metro area, they include the SBM Fire Department, which serves Spring Lake Park, Blaine and Mounds View, and the Lake Johanna Fire Department for Arden
Hills, North Oaks and Shoreview.
SBM Chief Nyle Zikmund said the savings — compared with the cities having their own departments — are "incredible."
Stand-alone departments, he said, "divide administrative costs by one. We divide them by three."
Blaine saves about 25 percent through SBM, he said. Spring Lake Park pays about $200,000 a year, he said, "but now they have a fire station worth $1.5 million."
He compared the costs of neighboring New Brighton, which has its own firefighting department and spends 63 percent more per capita than Mounds View.
He knows some cities balk at forming partnerships, worrying about quality of service.
"That is a fallacy," Zikmund said. "It's a function of parochialness. They have the misperception that they will lose control."
Service is guaranteed by the contracts, he said, and by representation on the SBM board.
Elsewhere, public services are becoming private.
Officials of the ALF Ambulance Service, serving Apple Valley, Lakeville and Farmington, thought they had cut expenses to the bone — slashing expenses by 80 percent since the service was established 20 years ago.
Then, last year they turned over management to a private company — Allina Hospitals & Clinics.
The result? Another $55,000 saved per year.
ALF gets its money from fees, which are no higher than anywhere else in the Allina service area, said ALF finance director Dennis Feller. And Allina is doing this with the same employees and the same ALF buildings, he said.
Building inspection also can be cheaper when done by subcontractors.
Wasmund, owner of Inspectron Inc., works mostly with small towns and townships. With the recession, he said, he is now negotiating with four new municipal customers.
"They save the full cost of one or more officials, at about $45,000 to $50,000 a year," Wasmund said.
Cost cutting even extends to lawn cutting.
Jeff Reisinger Lawn Service, of Lakeville, has seen increased interest from cash-strapped cities this year. Reisinger's 11-employee company mows lawns and plows parking lots for Lakeville and some Lakeville schools.
The service is less expensive and better, he said. "There are Lakeville guys who have to do 30 things: tree trimming, mowing, street sweeping," said Reisinger. "But this is all we do."
Other cities create new kinds of partnerships.
LOGIS (Local Government Information Systems), for example, is a consortium of more than 40 cities that serves the information technology needs of its members.
It has allowed Lakeville to get by with half as many tech workers, said Lakeville City Manager Steve Mielke.
With the partnerships, service is almost always improved. Mielke pointed out a joint radio dispatch agreement that enables 911 operators to locate whatever police car is closest to an address — regardless of what city the call comes from.
"If you are hurt in an accident, you don't care what badge the officer has. You care that someone is there quickly," Mielke said.
An increasing number of cities let the work flow freely between public and private employees to save money.
"There needs to be a cost analysis with every service," Mielke said.
That means work is done sometimes by public workers, sometimes by private.
Reisinger, who runs the lawn-mowing business, sees the flexibility when he bids for work in Lakeville. Every year, his work expands or contracts, depending on the city workload.
The city, he said, has several $60,000 mowers to handle large fields. But he bids on the smaller jobs, around water towers and small parks.
"If they did that themselves, they would be going out of their way for a 20-minute job," Reisinger said. "And we always try to pick up a few residential jobs in the area to make it worth our while."
Flexibility in a recession also might call for making the work flow from private to public.
Woodbury's engineering department, for example, noticed that the recession was cutting the amount of construction-related work it had for subcontractors. So it canceled some contracts and took on the work itself.
The flexible approach does not favor city employees out of some sense of civic pride.
"It's pretty tough to have that attitude now," Reisinger said.
When Wasmund was through inspecting the Denmark Township home, owner Jeff Seebeck was asked if it mattered to him that Wasmund didn't work for the township.
"Not at all," said Seebeck, who owns several auto repair shops.
As for the quality of the building inspection, Seebeck said, "I prefer a contractor. He is held to a higher standard."
And he likes to think of government as being smaller and leaner. "I prefer," he said, "to have one less government employee."
Bob Shaw can be reached at 651-228-5433.