STATEMENT OF POSITION ON THE PRIVATIZATION OF PUBLIC SERVICES (2003)
The League recognizes the trend for various governmental units + cities, counties, and states + to consider the privatization of public functions and services. Across the nation, there has been privatization of services in such areas as corrections and prisons, child welfare, solid waste, water works, engineering services, human resource management, vehicle maintenance, and so forth.
The degree of success and the rate of adoption vary with circumstances, with stories of both success and failure. Cost savings and efficiency are usual considerations, but individual cases vary widely, and outcomes are highly dependent on particular conditions. Some services are best provided by public agencies, while private providers may be advantageous for others.
When proposals for privatization of public services come forward, the decision-making process must be conducted openly with ample opportunity for public participation and input. Timely notice of meetings must be given and necessary background documentation provided.
The League understands that approval of the privatization of public services depends on the circumstances of each case and that the historical record is mixed. Therefore, the League believes that, as public bodies decide on individual proposals, the following requirements must be met:
- Public health and safety are paramount in any community. Therefore, water services, emergency medical services, and fire and police protection must be operated and funded through the responsible public entity + city, township, county, state, etc + and must not be considered for privatization.
- Provision must be made in privatization contracts to ensure that displaced public workers are dealt with equitably and that the provider complies with current public policies for equitable wages, federal employment laws, worker safety, and environmental protection as well as for safeguarding the health and safety of the public.
- Contracts and agreements for privatization must be drawn with sufficient specificity and clarity to define 1) the subject services being privatized, 2) the authority and responsibilities of all parties, 3) the performance standards and criteria that measure outcomes, 4) mechanisms for monitoring and accountability, 5) penalties and sanctions applicable to unsatisfactory performance and non-performance, 6) the evidence required to fully justify future cost increases, if any, 7) the adequacy of insurance and public liability coverage, 8) mechanisms for dealing with public complaints, including redress where appropriate, and 9) terms for cancellation of such contracts and agreements, including timely notices allowing for continuity of service.
- To fulfill its ultimate responsibility, the responsible public body must make provision for establishing and funding the monitoring of performance and for assessing outcomes on a regular basis.
- Approval of privatization must depend on the existence of meaningful competition in the field and on evidence that a provider has sufficient capitalization, qualifications, and experience to perform the subject services.
- Cost comparisons for private/public sector services must extend over the near and longer term, including direct and indirect expense, and should give clear documentation of relative values to the public. The responsible public body must provide clear justification for privatization of a function or service. Such justification must provide evidence that privatizing a function or service will create a permanent, net advantage to the overall community.
- Personal gain and/or conflicts of interest must be identified and disclosed as part of the decision-making process.