Fewer state tax dollars for Ohio’s local governments and schools have public administrators talking, in the light of day no less, about mergers and shared services – topics long taboo in the Buckeye State. Most public officials fear the former and suspect that the latter is just a catchy phrase that stands for comingling their funds for the benefit of others.

Elected officials can be forgiven for their reluctance to discuss mergers and service consolidations. They didn’t create this maze of public service delivery; and until stagnant population growth and the weakening economy caught up with Ohio, the status quo seemed sustainable. Citizens also have misgivings about consolidation and sharing. They view merging their local governments as a potential loss of identity and fear their sense of community will be sacrificed in the process. In Ohio, all politics really are local, and local control has been a sacred cow politically.

The reality is that public institutions have long succeeded in gaining taxpayers’ approval to dig deeper in their wallets because citizens fear that doing otherwise will result in bad schools, crumbling infrastructure, community decay, and lower property values. Times have changed. The economy tanked in 2008 and is only slowly recovering, state government is cutting back on local funding, property values have fallen, and it’s increasingly difficult to pass school levies and other local tax increases.

Local officials – and citizens – are left contemplating significant service reductions, higher local taxes and fees, and/or, collaborative efficiencies with neighboring jurisdictions.

It is hard to argue that from a governing perspective that Ohio is not overbuilt. Nearly 4,000 separate political entities create a lot of mouths to feed – from officials and employees to bricks, mortar, computer systems and more. Clearly, no one in the 21st century would design this scattered public service delivery system from scratch, but the political nature of the organizations involved makes finding solutions hard, and implementing them even harder. Ohio’s over-capacity in governmental agencies is fundamentally structural, and local governments and schools have an important opportunity to cooperate on matters like regional health benefit pools, shared talent pools, information technology consolidation, and procurement to protect vital services and programs. Progress begins with leadership that recognizes public funding limitations, embraces best practices and technology and is committed to change. Unwinding a system that has evolved to appeal to everyone’s desire for individualism will be tedious work but necessary as we battle to regain public confidence.

In what may come as a surprise to many, K-12 public education systems in Ohio are ahead of the pack in many ways. There are two high-performing shared services models up and running that provide critical support for member districts: Educational Service Centers (ESCs) and Information Technology Centers (ITCs). These organizations represent viable platforms and valuable resources in constructing more efficient and regional approaches to common challenges that schools and local governments face. Currently these fee-for-service entities provide valuable curriculum support services, network connectivity, and other assistance to local school districts.

Developing partnerships between schools and governments that pay tangible dividends to taxpayers should be among the highest priorities for state and local government. In the greater Columbus region, for example, the Central Ohio Regional Shared Services Steering Committee, led by the Mid-Ohio Regional Planning Commission and the ESC of Central Ohio, provides an important forum for local governments to optimize resources, improve services, leverage economies of scale, and reduce costs through collaborative government agreements and shared services. Public managers and elected officials from over 40 communities, school systems, nonprofits, and higher education gather regularly to evaluate how to increase their buying power and develop regional service delivery solutions while protecting vital services and curriculum.

Notable shared services initiatives by these entities include:

• Economic development and shared fleet maintenance – City of Columbus and contiguous local governments
• IT Consolidation Planning – Mid-Ohio Regional Planning Commission and the ESC of Central Ohio
• IT Consolidation Planning – Union County, City of Marysville, and Marysville City Schools
• Health Benefits Cooperative – Managed by the County Commissioners Association of Ohio for 23 Ohio counties

Rebuilding trust with stakeholders and voters by maximizing tax dollars already approved, and in the system, is critical short term work. Turning talk into projects that pay with dividends of efficiency and trust among communities facing similar challenges will strengthen this state’s ability to weather the current fiscal storm and bolster public trust in the stewardship of tax dollars.

Columbus: January 10, 2012
10:00 a.m. – 12:00 p.m.
William Green Building
Second Floor Auditorium
30 West Spring Street
Columbus, Ohio 43215

*Session will include webinar presentation

Southeast Ohio: January 11, 2012
10:00 a.m. – 12:00 p.m.
Washington State Community College
Graham Auditorium
710 Colegate Drive
Marietta, Ohio 45750

Cleveland: January 17, 2012
1:00 – 3:00 p.m.
Cuyahoga Community College
Corporate College East – Super Conference Room
4400 Richmond Road
Warrensville Heights, Ohio 44128

Toledo: January 18, 2012
10:00 a.m. – 12:00 p.m.
Owens Community College
Center for Fine and Performing Arts
30335 Oregon Road
Perrysburg, Ohio 43551

Cincinnati: January 24, 2012
1:00 – 3:00 p.m.
Miami University – Hamilton
Parrish Auditorium
1601 University Boulevard
Hamilton, Ohio 45011

For questions about these sessions, contact the Dept. of Development’s Urban Development Division at (614) 995-2292.

• LGIF Criteria for Funding

• LGIF Application for Funding

Local Government, School Shared Services Discussion Set For Monday

A group of Ohio organizations plan a nonpartisan look at the concept of shared services that one host said Friday he hopes will change perspectives about collaboration.

The event scheduled for Monday will focus on how local governments, schools and higher education institutions can find cost savings through shared services.

Sponsoring the event are the Thomas B. Fordham Institute, the Nord Family Foundation, Ohio Grantmakers Forum, Educational Service Center of Central Ohio, Ohio Education Matters and Public Performance Partners.

“The genesis of this was discussions that I had with Terry Ryan with the Fordham Foundation about the need to talk about and create an event where folks could share productivity and efficiency stories,” Public Performance Partners President and Founder Hugh Quill said in an interview.

“Our focus is really to lead a discussion around how we have to view public capacities differently and not necessarily operate solely within our areas of discipline.”

Mr. Quill, former director of the Ohio Department of Administrative Services, said the government entities should collaborate “to figure out the sweet spots, if you will, where we can save some money in buying things better together.”

Speakers at the three-hour event include, among others, State Auditor Dave Yost and Controlling Board President Randy Cole, who Mr. Quill described as the “tip of the spear for the governor on shared services models.”

Among the possible areas where local entities can realize savings are in combining information technology services, health care, back-office operational and transactional duties, and human resources and payroll services.

“There’s no question that there’s an awful lot of IT capacity out there among a lot of different partners that could be leveraged to assist smaller partners to enhance service and to enhance performance and service for some of those smaller entities,” Mr. Quill said.

One of the speakers, John Weithofer of the Miami Valley Communications Council, created a procurement group of 20 governments that buy things together at a savings for all, Mr. Quill said. “It’s really instructive in terms of kind of how we have to be thinking about how we buy services and commodities in the local government and public space.”

Shared services have been a hot topic at the state level this year as schools and local governments saw state funding reductions. The subject often is tied to the more contentious concept of school district and local government consolidation.

“I think that consolidation is always the toughest conversation, but I think the talking about shared services and looking for ways to work together is a natural stepping stone to that next level, if it’s possible,” Mr. Quill said. “There are all kinds of political obstacles for that, but mainly it’s a sense of community.

“There’s a huge sense of community with schools, no question, and ownership, as there are with local governments, too. I think that that’s the toughest, that’s the nuclear option that we’re dealing with here, but I think that the shared services discussion is the logical first step toward making those conversations more credible and removing some of the barriers.”

Mr. Quill said he hopes the event will start the 150 expected guests – ranging from school superintendents to local government officials – thinking about their entities differently.

“Primarily we want folks to start thinking about public capacities more broadly and not just operating within their comfort zones that have become institutional,” he said. “They need to be thinking about how education space can work with the local government space.

“Also I think that we want folks to start thinking about how difficult and important it is to work on the governance structure. The toughest part of any shared services delivery is making sure all partners are respected and involved in the governance.”

The event will also be rife with success stories. “We want to share some tangible success stories in this space because I think that oftentimes there’s a presumption that these governments have not been sharing, that these schools have not been sharing services and there’s some really significant success stories out there that we should be talking about and modeling,” he said.

“We want folks from all spaces to attend and to contemplate this, county level, city level, township level in addition to local governments. So we expect it to be a pretty significant crowd and one that’s eager to think about the new revenue environment.”

The event is set for 3 to 6 p.m. Monday at the Renaissance Hotel, 50 N. Third St. in Columbus.

Media Advisory

For Immediate Release                                                 Contact: Emmy Partin

October 20, 2011                                                              Phone: 614.439.4836

COLUMBUS – Local officials today are faced with tightening budgets and less direct financial support from state of Ohio government. Will they cut services, raise taxes – or perhaps work together to create efficiencies.

This Monday, October 24, in Columbus, the Thomas B. Fordham Institute – along with the Nord Family Foundation, Ohio Grantmakers Forum, Educational Service Center of Central Ohio, Ohio Education Matters, and Public Performance Partners – will host a free, non-partisan event titled, “Working Smarter Together: Enhancing savings and performance for local schools and governments.”

The event will be held at the Renaissance Hotel, 50 N. Third Street, Columbus from 3 to 6 p.m. Registration is free. To register, call 614-223-1580 or email OhioRSVP@excellence.net. The event is open to the media. Local government, school and higher education administrators are encouraged to attend.

The goal of the event is to help local government administrators – from county commissioners and city managers to school district superintendents – think differently about how they operate, and learn tangible strategies for sharing services and saving money. Featured speakers will include: C. Jackson Grayson, founder of the American Productivity & Quality Center; Dave Yost, Ohio Auditor of State; Randy Cole, Ohio Controlling Board; Hugh Quill, Public Performance Partners; Bart Anderson, Educational Service Center of Central Ohio; Barbara Gellman-Danley, Rio Grande Community College & University of Rio Grande; and John Weithofer, Miami Valley Communications Council.

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State of Ohio Auditor Dave Yost

In testimony before the state of Ohio’s Senate Finance Committee, State Auditor Dave Yost outlines his proposal for providing local governments additional tools for cutting costs and increasing efficiency. Find an excerpt from his testimony below and a link to his full testimony after the excerpt.

Excerpt from Yost testimony, May 16, 2011:

LOCAL GOVERNMENT STABILIZATION TOOLKIT

This is a time for finding new ways of doing public business.

Ohio needs to offer tools to local governments that will help with the hard choices ahead. That’s why I’ve been working on an initiative, called the “Local Government Stabilization Toolkit.” The Toolkit is designed to break down barriers for local government leaders looking for ways to achieve more sustainable futures.

The first part of this initiative gives local governments more tools to voluntarily join together. The current process for merging local governments is complex and cumbersome. Communities that would like to merge are hindered from doing so by the amount of time required to establish the required mini-constitutional convention and create a new government out of whole cloth. Also, certain mergers are not even permitted under current law.

My proposal addresses these issues three ways. First, it allows two or more neighboring townships to voluntarily join force as a single, lower-cost government. Subject to the people’s right of referendum, boards of township trustees could kick-start this process by a 2/3 vote. Trustees could also place the question on the ballot, or a joinder could be initiated by the people.

Second, two or more neighboring counties would be able to merge under this proposal. County joinders would begin by initiative petitions and, as required by the Constitution, would be done by a vote of the people in the counties proposing to merge.

Finally, I propose to streamline the process for mergers between townships and municipalities, including the ability of villages to merge into a neighboring township.

All of these processes are voluntary and initiated at the local level. Most importantly, local governments would be able to pick their own partners, and leaders would have flexibility to decide what works best for their community. To ease the process, a backup set of statutory default provisions would govern any major issue the two governments do not agree upon. Initially, I proposed allowing 60 days for local government leaders to negotiate a merger agreement, but in response to suggestions from key stakeholders have changed this to 120 days. This window helps prevent the process from being hijacked by overzealous politicians.

You may ask – how likely is it that local governments will take advantage of these opportunities? As I’ve traveled this great state, I’ve talked with local government leaders who would like to have these options. Also, recently my office conducted an informal survey of nine townships and 15 villages. Of the people surveyed in these townships, 58% were open to the idea of merging with another local government; 55% in the villages. If the merger results in cost savings or tax reductions, this number goes up to 75% for townships, 74% for villages.

The reality is there are local governments that are struggling to make ends meet.

• One county is only open four days a week due to budgetary constraints. Plus, some people requesting copies of public records have been told to bring their own paper.
• There’s a village in Northwest Ohio currently in fiscal emergency, with deficit fund balances increasing each year. Other than a clean-up and leaf pick-up day, the village’s general fund doesn’t pay for any public services.
• Another local government – a township – has been in fiscal emergency for over 8.5 years with no fiscal improvement. Our understanding is they don’t want to merge with the neighboring village because they want to remain a township.

Ohio also needs to strengthen its early warning system and repair process for local governments in fiscal distress. These laws have been on the books since the 1970s, with very few updates. Unfortunately, it appears they were not designed to address the multitude and vast differences of Ohio’s governments.

We did a much better job when putting together laws to provide earlier intervention for school districts in fiscal distress. Therefore, I encourage adding similar proposals to the laws governing local governments in these conditions.

Financial problems are harder to fix the longer they go undetected and unaddressed. Like we have for schools, we should have a “fiscal caution” designation for local governments struggling to make ends meet. My office would develop guidelines for indentifying “fiscal practices and budgetary conditions” that, if not corrected, could lead to fiscal watch or emergency. These entities could then receive assistance from the Auditor’s office.

Today an entity can languish in fiscal watch forever. There is no law requiring the local government to do anything to get back to fiscal health. To address this issue, we propose requiring these entities to adopt a financial recovery plan. If they fail to do so, the entity could be declared in fiscal emergency unless granted an extension for good cause shown.

Currently, our system also allows a fiscal emergency to continue with few consequences when a local government refuses to take action. Part of this is due to a convoluted oversight process, so the Auditor of State would serve as the sole financial supervisor for small villages and townships with populations fewer than 1,000. In reality, this is what we do now since commissions often only meet once every two or three months.

This proposal would impound state funding, except benefit assistance, if a fiscal emergency entity fails to adopt and substantially adhere to an approved financial recovery plan. As a last resort, a court could also order dissolution of small entities (population of less than 5,000) when the entity has been in fiscal emergency for three years and its financial recovery plan and fiscal forecast do not demonstrate an ability to remedy its condition within five years.

Finally, the last part of my proposal is to cut through red tape and give local governments more flexibility to share services. I support the proposal in House Bill 153 to give universal authorization for sharing services to all local governments. In addition, Ohio law should specifically allow small villages and townships to contract with the county auditor to act as the village or township’s fiscal officer.

Also, working with the Ohio Township Association, I support simplifying record-keeping for township trustees and fiscal officers by allowing these officials to provide pay documentation for audit purposes via certification rather than a time log.

Read Yost’s entire testimony.

The following article appeared in The Plain Dealer on Sunday, March 13, 2011.

More bang for health care buck

By Hugh Qull

There is strength in numbers. This is an inherent truth in battle, politics and, most importantly, in the marketplace. Volume brings leverage to bear on suppliers and vendors at every level so that margins are tightened through competition.

The next Ohio budget will undoubtedly give motivation to every public entity to seek solutions short of draconian cuts in curriculum and public services, and increases in income taxes, property taxes and tuition. Voters and taxpayers have not lost their patriotic spirit. They have lost their capacity to fund redundantly. It is vitally important that government at every level demonstrate and implement best practices that honor every tax dollar in their current custody.

How can taxpayers get the best bang for their buck? By buying together. Why do vendors sell products a la carte to each public entity? Because it’s profitable, and they can. And since we all instinctively default to and prefer local control, there are plenty of emotional and practical barriers to driving the proper margins for public purchases. But we all pay a huge premium for not acting together, driving down the price and crafting airtight requirements that will hold vendors accountable.

In my former post at the Ohio Department of Administrative Services, we reorganized purchasing with an emphasis on enterprise value and pricing. Many of the same obstacles existed and thrived in the state agency environment that local governments, school districts and colleges face. We found that it was critical to align contract terms and conditions, contract cycles and commodity standards before we could act as one big public family.

This purchasing power also applies to a major line item in any state or local government’s budget: health care benefits. In the most prosperous country in the world, with the very best health care quality, and inarguably the most inefficiently delivered services, let’s give public managers the tools to get the very best care for every public worker at a price that reflects our stature in the marketplace.

Yet, in the dust-up over the rights of public employees to collectively bargain, state unions have not received the credit due for their partnership in the redesign and restructuring of the state health plan. In the last contract cycle, they supported additional out-of-pocket support, backed a dependent eligibility audit and promoted better disease management and wellness initiatives — all saving the state tens of millions of dollars.

The labor-management dialogue and relationship was constructive and focused on holding the line on a budget item that continues to creep north of $500 million. Everyone around the table recognized that shared sacrifice was required to weather a withering recession and control highly volatile health care costs.

What is a very sophisticated process at the state of Ohio, however, is not replicated in every jurisdiction.

Notwithstanding the many examples of collective-bargaining success on health plan redesigns in individual communities, the compromise proposal on Ohio Senate Bill 5 that removes health care from the bargaining universe will give public entities important leverage in managing this volatile line item.

Think of the marketplace potential of a service contract that covers city, county, state, township, K-12, college and university employees. Add in the five public retirement systems, and the result would be maximum leverage to acquire the best plan for a rock-bottom price.

It’s time to carve health benefits out of bargaining, give all public managers and employees the same benefits with the same percentage of premium, and drive the hardest bargain with health care vendors that have, for too many years, been laughing all the way to the bank.

Simply put, the myriad bargaining agreements statewide, designed uniquely, pose a substantial barrier to effective aggregation. With the Ides of March looming and the unveiling of the state’s executive budget, one thing is a sure bet: When the state of Ohio catches cold, local governments and schools of every kind are sure to catch pneumonia. Cuts and dramatic shifts in service responsibility always roll downhill, and public entities need to respond like the 800-pound gorilla in the marketplace that, together, they can resolve to be.

Quill is the former director of the Ohio Department of Administrative Services and former Montgomery County treasurer. He currently serves as president and chief executive officer of Public Performance Partners, a nonprofit group that assists local governments, local school districts and colleges with collaborative efficiencies.

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