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.