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PROVIDING MUNICIPAL SERVICES IN TOUGH TIMESPrepared by:
DA Gunn for the University of Alberta
Faculty of Extension
Feb. 18, 2015
Topics• The Alberta revenue problem• Consolidating Costs - Four High Level Strategies to
support ongoing service delivery• Changing the Conversation – New and emerging
approaches to providing services and sustaining your community
Money Makes the World Go Around
• The provincial government recently announced a 9% overall reduction in expenditures.
Total Revenues = $46.7 Billion
Shortfall = $7 Billion or 15%. With a possible offsetting provincial government salary reduction, the amount could be closer to $5.9 Billion
The Impact on Municipalities
• Will the shortfall be distributed evenly?
• Municipalities are self sustaining?
• Example: City of Edmonton’s operating grants from other sources is estimated to be 4.4% of City revenues or $101,718,000.
• Smaller municipalities will be proportionally more affected
déjà vu All Over Again ?
• Impact may be somewhat smaller than the 1990s. Population continuing to increase.
• Cities are large enough to have more diverse economies.
• Municipal debt relatively low.
• Demands for Premier to “be like Klein”.
Silver Linings
• Lower costs on service inputs (labour and raw materials)
• Reduced public demand• More focused service delivery• More realistic expectations• Possible to shift some money around, borrow or increase taxes
How to Cope: Four Tried and True ways of optimizing costs in municipalities
1) Prune costs of inputs
2) Find cost savings within the organization
3) Find cost savings by improving business processes i.e. an integrated approach
4) Business Restructuring and Transformation
Each approach has costs and benefits to municipalities.
An Overview of Difficulty and Organizational Value
Business Restructuring and Innovation
Find cost savings by improving business processes i.e. an integrated approach
Find cost savings within the organization
Prune costs of inputs
Difficulty/Risk
Value
Source: Gartner Ltd
Pruning the Costs of Inputs
• No company wants to lose a contract
• Nearly all contracts have built in margins and contingencies
• Suppliers also have mark-ups
• Room to negotiate
What to Expect
Low
Low
Pros Cons
Contractor bears costs Negotiating skills needed
Some reduced costs Bad feelings (sensitivity needed)
Concessions from both parties
Short term solution
Value
Risk
Risk/Value Continuum
Finding Costs in the Organization• Reduce operating costs within business units• Good research and knowledge of organization and types
of costs needed
• Reduce payroll• Eliminate vacancies• Reduce salaries and benefits (provincial government roll
back example)• Eliminate discretionary expenditures
What to Expect
Moderate/Low
Moderate/Low
Pros Cons
Some economies of scale Counting paper clips
Any fat identified and reduced Staff anxiety and morale (sensitivity needed)
Union negotiations
Short-term results
Could miss something important
Value
Risk
Risk/Value Continuum
Improving Corporate Business Processes
• Examine enterprise business processes and look for opportunities to:
• Share resources, pool staff and equipment
• Integrate resources and processes
• Remove unnecessary processes (Just don’t do things)
What to Expect
High
High
Pros Cons
Benefits are more broadly based More difficult to coordinate
Maintains business continuity (not radical change)
Business areas become defensive (win-lose)
Easy to be sidetracked.
Tendency to lose momentum and to ignore new needs
Hard to track benefits
Value
Risk
Risk/Value Continuum
Business Restructuring and Transformation
Change the organization radically through wholescale change and adoption of completely new business processes and technologies
• Develop new business lines and products• Shift in technologies and approaches• Ending traditional approaches and services. Open
government• Significant value and impact to municipality and citizens• Usually an investment is needed
What to Expect
High
High
Pros Cons
Significant new services and processes
Can be very disruptive to staff (sensitivity needed)
Long-term cost reduction Requires extensive support
Transform organization Difficult to understand. Results uncertain
Long term solution
May need a significant start up investment
Value
Risk
Risk/Value Continuum
What is Needed for this to Work
• Governance
• Change Management Skills
• Staff Training
• Communications
• Organizational Support
Optimizing Costs and Providing New Services Never Ends!
“Changing the Conversation”*
• Sometimes Tried and True cannot do the job. • Problem too big, social and technological change is too
large or different.
Stories of Major New Approaches• The Rust Belt Experience• Targeting Communities i.e. Next Gen Initiative• Using Social Media
* Source: Terry O’Reilly, Under the Influence
The Rust Belt Experience• North Eastern United States. Massive decline in 1980s
but now staging a comeback• Scope of Problem
• 45% of population in some cities
30% median household income
Crime
Reduced education outcomes
Municipal Responses• Rebuild or maintain infrastructure• size of local government • Integrate strategies with other orders of government• Extensive research used• Developer tax incentives• Private philanthropy• Use Universities – R&D• Encourage the “creative class” (Richard Florida)• Adopt knowledge economies• Get residents to take pride in their community (New York)
A Response: The Grande Rapids Lip Dub
Grande Rapids’ response to a Newsweek Article about America’s Dying Cities (January, 2011)
The Edmonton Next Gen Experience• Targeted approach adopted• Captures unique Edmonton penchant for collective approaches• Intent was to develop engagement in 20-40 year olds in government• Challenge was Next Gen not getting involved• Approach was Next Gen advisory council• $40K/year to support Next Gen initiatives
Results• Make Something Edmonton (over 29 pages of Crowd Sourced
projects)• Art in the Heart• Winter Cities• Pecha Kucha events
A View of the Future
Social Media• Huge transformations in private sector through mobile
technologies, internet and cloud computing • Now becoming mainstream• Both private sector and government just starting to
harness capabilities• Government can reach new audiences and encourage
projects that • Provide municipal services• Connect to local and broader communities• Encourage initiatives to enrich community life
• http://www.makesomethingedmonton.ca/
Crowd Sourcing in Action
Conclusions
• Tried and true are important
• Longer term more innovative approaches need to be considered
• Draw on lessons learned
• Lots of good things can happen
Let’s Talk!
http://dagunnconsulting.com/
