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A City on a Shoestring

Budget shortfalls, cuts in federal funding, and the threat of total financial ruin are pushing municipalities to innovate—and they’re pushing hard. Case in point: the Economist recently profiled Sandy Springs, a northern suburb of Atlanta that, emergency services aside, only employs seven people full-time and outsources many of its essential services to private companies.

The unorthodox practice began when Sandy Springs contracted an engineering firm to perform city services:

Then Sandy Springs took the experiment further and solicited competitive bids for different services. It also signed contracts with losing bidders for every winning one. These contracts came with neither pay nor work; they simply provide insurance in case the winning bidder fails to provide good service or raises prices. John McDonough, the city manager, estimated the move will save Sandy Springs $7m each year for the next five.

Private companies across the country now manage or administer the city’s parks, court, and finances, and staff the offices of a handful of public employees, like the finance director and city manager.

What’s more, without hordes of employees, the city also chose not to implement a pension system when it was incorporated in 2005. Instead, what few employees the city actually pays are part of a 401(k) plan, thus eliminating the liabilities that a defined-benefit pension scheme might create.

This strategy probably wouldn’t work for all cities; Sandy Springs is by no means a metropolis, with just under 100,000 residents. But its ability to manage tight finances by unconventional means nevertheless should teach something to the the Stocktons and San Bernadinos of America. There are ways to save on costs without sacrificing services, but you have to think outside the blue box.

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  • Trent Kelso

    WRM: Itsy bitsy correction. There’s another “r” in “San Bernardino” one that goes just before the “d”.

    Absolutely love your writing. -T Kelso

  • Anthony

    Government services are not all scalable via privatization at savings to tax payers; public safety delivery being perhaps most notable for cities 250,000 or more. Nevertheless, going forward city functions and long term ability to provide functions under sustainable costs are imperative policy/fiscal/structural matters facing most governments – though Sandy Springs model may not be answer.

  • dearieme

    “Sandy Springs is by no means a metropolis, with just under 100,000 residents”: nor is it a mere village.

    But why… ah: “Apart from its policemen and firemen—which, under Georgia’s constitution, must be public workers …”

  • J Pritchard

    Two things to note about Sandy Springs:

    1. It is a very new city, incorporated less than ten years ago from a small but densely-populated section of north Fulton County. The thoroughly-corrupt Fulton County Commission had long used the unincorporated suburbs north of Atlanta as a piggy bank for its bloated bureaucracy. When the Georgia Legislature flipped from Democrat to Republican, breaking the power of the Democrats to block new cities in Fulton several brand-new cities popped up as a result (and more still, notably Brookhaven, are in the process of incorporating today).

    2. Given that history, it’s hardly surprising that Sandy Springs has opted for a minimal-footprint local government. After years of paying through the nose for marginal services (the Fulton commission concentrated its spending in the home bases of its elected majority, namely south Fulton, all-but ignoring the northern ‘burbs), the founders of the new northern-tier cities had a ready-made role model of what they and their constituents did NOT want from government: high taxes and poor services.

  • Jeremy Skog

    I think a key point here is that Sandy Springs is a young city. Remember that the blue model provided services for decades at apparently low costs (because the future costs of those pensions weren’t explained to taxpayers). There may be externalities that aren’t fully captured in the contracts but may become apparent in future years. It’s the risk of the “unknown unknown.”

    A while ago Steven Pearlstein wrote a column about these sorts of outsourcing ( that many of the cost savings come from standardizing processes and giving up Hayekian local knowledge and the ability to respond. How important is it for city employees to have strong local knowledge of all the areas they’re entrusted with? Time will tell, I suppose.

    Also, in these situations it’s very important to identify which jobs are inherently governmental. Planning zoning and future development, probably. Mowing grass, probably not. Is there a “job of the future” in providing consulting services for governments hoping to make this distinction?

  • Joe Huey

    this is how the city I live in (Centennial, CO) was sold as, & started out as. lo & behold now there is a city staff & a city hall. We have managed to continue contracting out public works (CH2MHill) and police (Arapahoe County Sheriff’s) water & sewer are handled by various districts, but we will see how things creep.

  • Kris


    “… If you can keep it.”

  • Ari Tai

    Note that Mr. Romney lived through the transformation of corporate America in the 70s and 80s – when industrial age Carnegie and Sloan command-and-control organizational structures were discarded for decentralized – close to the customer networked information-based companies – with headquarters’ staff slashed to 10% – often with the board buying off the executive office’s loss of perqs (in that they no longer had hordes of staff looking after their every need) by quadrupling their salaries and more – splitting the savings with them as an incentive to do what was necessary to compete with the much lighter-weight and more nimble up-and-coming companies.

    We’re long overdue to see these “efficiencies” in the Federal (and State) governments – returning all those (we are told are so well paid because they are so) well above average ability employees to the private sector as their jobs are eliminated because they either aren’t needed (local governments or voluntary organization or even the people can do), or they are redundant because a machine can do their job.

    The return of these people that are currently overhead to “above the line” returns (like happened in the corporate America that survived the transition out of the industrial age) will pay for all the bills they ran up in our behalf twice over. No reason for the civilian (and contractor) workforce for the federal government to number over a few 10s of thousands – since service business can always be automated once the rules are purpose written so they can be automated and self-service – especially easily for the Federal government since Congress insists on process (not intellect or judgment) in how the government runs their business.

  • tomw

    One note is that Fulton County wanted the new cities, Milburn and Sandy Springs, to buy the county owned parks. Hmmm, didn’t the citizens of said cities already pay for the parks when they paid their taxes… ???
    Dunno how that turned out, but it just illuminated more brightly how much the Fulton County ‘government’ regarded its northernmost citizenry. Piggy banks? Nah, mugging victims.


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