Monday, July 26, 2010

Maywood, California: How to Fire a City Government

Note: I'm re-posting this item that originally ran on July 21 because the comments are really worth reading. As readers have pointed out, the comparison between Flint and Maywood isn't that useful, but the discussion of city budget's in the comment section is useful and thought provoking. Here's the original post...


Like many cities across the country, Flint is struggling to maintain city services; hang on to police, firefighters and other city workers; and still maintain a balanced budget with a declining tax base and increasing legacy costs for retired workers.

But what if Flint simply fired all city workers and outsourced their jobs? Maywood, Calif., located southeast of Los Angeles, did it.

David Streitfeld of The New York Times reports:

While many communities are fearfully contemplating extensive cuts, Maywood says it is the first city in the nation in the current downturn to take an ax to everyone.

The school crossing guards were let go. Parking enforcement was contracted out, City Hall workers dismissed, street maintenance workers made redundant. The public safety duties of the Police Department were handed over to the Los Angeles County Sheriff’s Department.

At first, people in this poor, long-troubled and heavily Hispanic city southeast of Los Angeles braced for anarchy.

Senior citizens were afraid they would be assaulted as they walked down the street. Parents worried the parks would be shut and their children would have nowhere to safely play. Landlords said their tenants had begun suggesting that without city-run services they would no longer feel obliged to pay rent.

The apocalypse never arrived. In fact, it seems this city was so bad at being a city that outsourcing — so far, at least — is being viewed as an act of municipal genius.

17 comments:

  1. I saw this too, and I started down the same thought path, having worked in the outsourcing areana alot in the last 6 years. But I realized (as usual) Flint faces more that a few extra problems.

    First, Maywood is relatively small in area (1 sq mile)and population. Surrounding it are city governments of equal or larger size, and large county governments who have the ability to absorb workload. Flint is actually the largest city physically and in the county. It will difficult for a suburb to absorb the county seat. I think the police deal, for eaxmple worked because the City of Bell could take on the police workload (and revenue stream) without alot of extra cost. I can't see, say Grand Blanc being able to manage FPD duties at a price Flint could afford to pay.

    The second technique they employed, converting employees to independent contractors, at a cost-neutral basis, is a byproduct of a really job bad market. At the point that the economy recovers, this strategy will likely fail, as job prospects improve and ex-city employes just 'happy to have a job' move on.

    ReplyDelete
  2. All good points, Jim. In a sense, Flint is the L.A. of Genesee County in this scenario. Too big and too troubled for the smaller municipalities to help. Even contracting employees — regardless of whether you believe in that approach or not — would be a tough move politically, as witnessed by Walling's recent attempt to negotiate with the police and fire unions.

    ReplyDelete
  3. I'm so tired of jobs being contracting out,outsourced, etc. And I'm tired of hearing these sound bites, well, these city workers must "stay competitive" is these tough times!

    How about reducing top heavy administration jobs. Or how part-time legislation. part-time(reduction of city council), If there are less people in the city of Flint dont how about less wards? Less government! Do we really need them in these times of tough economy? Have they really done much for the city? Maybe they should become "competitive" in these Tough Times!

    ReplyDelete
  4. Along the same lines, I was wondering why the Maywood council didn't downsize themselves as well, especially given how dysfunctional, at at times criminal, they appeared to be.

    And anyone know the history of ward system in Flint? Is the council/ward system the same as when Flint had 200,000 people?

    ReplyDelete
  5. Agreed, viability is obviously going to hinge on agressive cost control to match declining revenues. So something has to be done while Rome is burning... That's going to require some collective creative problem solving. Otherwise, on the current trajectory, the only hope for a current employee is to retire before final impact and hope some government agency bails out the pension fund.

    ReplyDelete
  6. So out of sheer curiosity, I pulled the proposed budget for Flint ( http://www.ci.flint.mi.us/finance/2010_11Bgt/budget_proposed.pdf ), Just to see what the city council costs. I also pulled my adopted home town of Atlanta ( http://www.atlantaga.gov/client_resources/government/finance/budget%202011/fy2011probudget.pdf ). While I know this is not fair in terms of like-for-like, it is none the less intersting, because I am familar with both cities.

    The first thing I noticed is that the transparency and detail in the Atlanta version is much higher than Flint (487 pages vs. 20) , but on to the analysis...

    Flint has a population of 111,475, and area of 34.1 square miles, and forecasted expenses of $280M, or roughly $2500 per resident.

    Atlanta (just the city proper, not all the burbs) has a population of 540,921, and an area of 132 square miles, and forecasted expenses of $557M, or roughly $1000 per resident.

    This, in an of itself, is a surprise to me: That Flint's budget is almost exactly half of that of Atlanta which has almost 1/5 the population,and 1/4 the area to support. I know there are economies of scale to take into consideration, but still, wow.

    FLint city coucil's buget is $1.175M, or 0.4% of the budget. Atlanta's is $6.8M or 1.2% of the budget. While only cursory, even cutting the council in half is not going to do much for either city.

    Flint's mayor's office + city adminsitrator has a budget of $950k, compared to Atlanta's 'Executive offices' at $19.6M!

    Now maybe they are good at burying some top administrative costs, but at the level of detail presented, I do not think there is a quick fix there, the problem seems much more systemic.

    ReplyDelete
  7. Who is the "head decider" (G.W. Bush) in this town. Who makes the final call on who gets the independent contracts? I am all for privitization. However, i am not for corruption or "red tape".. How are they getting around all of that?

    ReplyDelete
  8. The Maywood story is incomplete. It's actually about insider dealing...one government dumping its low level employees so that it has more money for its remaining high level people, and another government "doing its neighbor a favor" so as to deflect attention from its own PR problems.

    Bell, which now provides services to Maywood, has 38,000 residents and an average household income of about $22,500...about 1/3 below the California average. It has high taxes, but still runs on bond revenue. Its debt per resident has roughly doubled in the past five years. It pays its City Manager $788,000 a year, with guaranteed 12% annual raises. The Assistant City Manager makes $388,000. The Police Chief makes $460,000. The Councilpeople make almost $100,000 a year each for three or four hours of work a week.

    I'm not sure that anything in the Maywood and Bell examples is desirable to emulate around here.

    ReplyDelete
  9. JWilly, WOW. 100,000.00 to be a council member? What the hell is going on in this country? Do these people really think they are worth THAT much? I could go on. Way to many unanswered questions. The real answer to all the questions to these problems is LEGALIZED FRAUD!

    ReplyDelete
  10. Jim, your second post was excellent and you're really on the right track. Check out Sioux Falls, South Dakota for a good apple to apple comparison with Flint. They have about twice as many people (Around 200,000...where we were in our heyday!)and manage to provide much higher quality services to their people at approximately the same budget as Flint(The crime rate there is ridiculously low and they still have pools in their parks!). I love Flint and the state of Michigan, but it always annoys me when I have to sit and listen to people on television use copouts and say that they simply don't have enough funds while I look around the country and see other cities and states doing the job much cheaper and getting much better results. I know its sacrilegious to say it in our town but the unions need to realize that the rest of the city has 25% unemployment and they need to quit fighting to keep pay and benefits on jobs that other people would do for half the price.

    ReplyDelete
  11. Beware Of StatisticsJuly 25, 2010 at 1:10 PM

    Actually, Anonymous, a quick look at factual information will show that this is far from an apples to apples comparison.

    http://en.wikipedia.org/wiki/Sioux_Falls,_South_Dakota

    #1, the 200,000 figure quoted is for the Metropolitan Area of Sioux Falls. Flint Metro more than likely still exceeds 400,000, as Genesee County population is relatively stable, and even grew over the last few decades. Often, this growth exceeded the loss in Flint.

    #2,Sioux Falls is 68.9 square miles, compared to Flint's 34.4 square miles. If Flint had twice the area, it would have a much bigger tax base and much lower crime statistics. The population density of Flint is much higher.

    #3, Sioux Falls is considerably different demographically from Flint.

    In short, city limits are quite arbitrary and result in wild statistical variations which make comparisons difficult.

    ReplyDelete
  12. Here's an article about Maywood that doesn't dance around the problems like the New York Times does.

    First of all, a great percentage of Maywood's population is, as euphemistically as possible, "undocumented" aliens. Thus, this isn't a good comparison to Flint.

    http://capoliticalnews.com/blog_post/show/5771

    ReplyDelete
  13. Thanks Jim for the link to Flint’s Budget. This is a long post, but I think there’s some useful information.

    I agree that Council’s and Mayor’s budget need justification. However, without knowing the detail, it’s hard to say definitively that these budgets are too high. That said, I’d bet they are excessive.

    For outsourcing options which have potential to save real money, I would look at overhead areas, namely IT and Fleet Central Garage and enterprise funds, such as Garbage & Rubbish, Sewer, Water, and Golf. It’s likely that annual cost will be lower through outsourcing, and more importantly, the future liability of health care & retirement will be eliminated. Unfortunately, any real cost savings will be vigorously resisted by the various unions. I completely understand this because if I were in their position, I would do the same thing.

    IT has an annual budget of $3m with 14 FTEs. In Ann Arbor, where I live and work as an accountant, their IT budget is $3.5m with 23 FTE. Also, Fleet looks like it has a $3m accumulated debt, and it will run a $775,000 deficit in this budget. This doesn’t seem sustainable.

    For some perspective, I’ve closely examined Ann Arbor’s operations and financial statements for a year, and I’ve found several areas of improvement. Unfortunately, city officials haven’t taken my advice. Since I’m moving back into the Flint area soon, I’m going to use this experience to analyze Flint’s numbers. Maybe they will be more responsive.

    ReplyDelete
  14. Brad, we eagerly will be awaiting your data and conclusions.

    As to getting your advice adopted...I'd be willing to bet that Flint won't be any more enthusiastic about change than Ann Arbor was, in regard to direct private presentation of expert suggestions. I'm sure you have your own ideas on communications, but my guess would be that you'll find better luck presenting your data as a periodic analytical series on a website, and maybe making it available to Ron Fonger.

    It might also be worth inquiring as to whether someone at the Mott Foundation would like to receive your info directly as a courtesy. It's conceivable that if their thinking parallels yours, they might want to support your analysis professionally.

    ReplyDelete
  15. An update on Bell, California, a good place for illegal aliens who hold solid jobs to pay their taxes without complaining:

    Many people, hearing that the Bell City Manager was trying to get by on $787,000 a year, were embarrassed for California. Asking a public servant like that to starve and wear threadbare clothes...it was unseemly.

    Fortunately, it turns out that he was able to at least keep the wolf from his door, since his total compensation was actually $1.5 million if you include the 143 vacation and sick days he was paid for, plus $70K of retirement contributions, plus his gold-plated medical, dental, optical, life, automobile and probably happiness insurance policies.

    ReplyDelete
  16. geewhy said... "And anyone know the history of ward system in Flint? Is the council/ward system the same as when Flint had 200,000 people?"
    Most likely the city has the same number of wards. The 1974 charter Sec. 2-202 indicates that the ward boundaries shall remain the same as under the previous 1929 charter. Given that the charter state there shall be 9 wards (Sec. 2-201), there for mostly like it did have 9 wards with 200k pop. The difference is that the 1929 charter has a mayor as a member of the city commission (council) and a city manager. The 1974 moved it back to an executive mayor.
    The wards go back to the original 1855 charter, it had only 3 wards and added another one in 1871. Alderman were elected 2 from each ward. There were also elected ward officers, street commissioners and assessors. Additional, the Genesee County Board of Supervisors had a supervisor elected from each of the wards.

    ReplyDelete

Thanks for commenting.
www.teardownbook.com