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Outsourcing for Better Government Services

July 3, 2012 by John Prestbo

Accelerating U.S. economic growth will require taking a fresh look at the ways we do all sorts of things — including how we provide government services on the state and local level. It is no secret that these governments were hit hard by the recent, and for many the continuing, recession. The list of travails — budget shortfalls, thousands of layoffs, underfunded pension benefits — seems endless. Bankruptcy proceedings have been the result for a growing number of cities. There must be a better way. One approach was described in a New York Times article about Sandy Springs, Ga. This Atlanta suburb has outsourced all of its city services except police and fire. Business licenses, building permits, trash collection, and all the other official minutiae of local daily life are handled by contractors. The “city hall” is rented space in an industrial park. Only seven people are on the city’s payroll, including the city manager, which means no out-of-control public-employee pensions to worry about. Sandy Springs is, the article says, “one of the country’s purest examples of a contract city.” Officials say residents are happy with the quality of services, unlike some other places that have experimented with outsourcing. The city manager says tightly written contracts are the secret to Sandy Springs’s success. This strategy wouldn’t work everywhere. However, outsourcing clearly is a tool that some cities, counties, and states might apply judiciously to reduce costs without compromising their citizens’ quality of life. The redundancy of government services across the country is becoming a luxury we increasingly can’t afford.


Author

John Prestbo
John Prestbo

2012 Economic Growth Fellow

John Prestbo is retired as editor and executive director of Dow Jones Indexes. Previously he was markets editor at The Wall Street Journal. He has co-authored or edited several books over the past 30 years. The most recent is “The Market’s Measure: An Illustrated History of America Told Through the Dow Jones Industrial Average,” published in 1999 by Dow Jones Indexes. His column, Indexed Investor, appears on the highly regarded “MarketWatch” business and finance website. He received his bachelor's and master's degrees from Northwestern University.

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