City Outsources Police, Fire and Parks

"If we can save $3 million per year on fire and can guarantee it for 10 years, we could do some interesting things with $30 million."

by / April 7, 2011

Update: 27 April 2011. According to an article in the San Mateo, Calif. Daily Journal, "The city of San Carlos has a tentatively balanced budget without a structural deficit for the first time in 11 years, based in no small part on $1.5 million in savings from dismantling its joint fire department with Belmont and pursuing a hybrid model with Redwood City."

San Carlos, Calif. -- in Silicon Valley -- has many advantages: an educated workforce, pleasant climate and a fairly affluent population of 28,000. This 85-year old "city of good living," however, saw its full-service mandate eroding under a decade of relentless budget cuts.

Those cuts weakened the Police Department and left the city unable to afford maintenance of some school athletic facilities. Police and fire protection costs grew to 62 percent of the city budget. Fire services costs rose 30 percent in the past five years while revenue stayed flat. And voters turned down four separate revenue measures.

Vallejo -- a neighboring city of 120,000 -- saw police and fire costs rise to 70 percent of the budget before the city declared bankruptcy. A former city manager warned that San Carlos had maybe three years of "business as usual" before it, too, would suffer a similar fate.

Andy Klein -- who grew up in San Carlos and became vice-mayor in 2009 at age 27 -- said that for years the city kicked the can down the road as budget cuts kept coming and things got worse. Finally, he said, the city decided enough was enough. Payroll was outsourced to ADP and then the city contracted out maintenance of parks. "These were warm-up matches," he said, "for the big fights," of police and fire protection.

Landscape and Parks Maintenance
The city wanted a savings of $500,000 per year for the same level of landscape and park maintenance. And got it. In fact, said Assistant City Manager Brian Moura, the level of service improved.

The transition -- while not without its problems -- went fairly smoothly, said Moura. Most maintenance staff were transferred over to the Sewer Unit at the same job classification and pay, but with less draw on the general fund, as sewer service is funded by ratepayers.

The contractors plunged in, upgrading sprinkler and other systems, and instead of individual staff members rotating through the various maintenance tasks at fixed locations, the contractor brought crews in to do them all at once, and moved the crews around as needed.

Police Contract
With two successful "warm-up matches" under its belt, the city approached policing. In the beginning, said Klein, there was opposition from the police officers and from the public. Fire and police services -- the bulk of many cities' budgets -- are critical for the safety and well-being of a community, and tinkering with them can be politically treacherous. In addition, city residents identify with the police and fire departments -- to the public, they are the city. But the city figured it could save $2 million per year -- 8 percent of the general fund -- and that finally won the day.

Nearby Redwood City was interested in the contract, as was the San Mateo County Sheriff's Office, and the Sheriff was chosen. "We had 38 people," said Moura, "and the Sheriff has 623. That's a deep bench." The Sheriff hired the city's police staff and even bought all the city's patrol cars. Sworn staff got a 10 percent pay raise and that deep bench was attractive to many younger staff who could rotate through different departments gaining valuable experience for later -- something not possible in the smaller city Police Department. Only the shield and motto changed on the patrol cars, so most residents didn't notice that Sheriff's deputies had replaced city police officers. And the savings allowed the city to add back some services cut earlier, such as a school resource officer and a traffic unit.

According to an article last month in the San Jose Mercury News traffic citations dropped, and felony arrests increased in the three-month period following the transition. Emergency response time is the same. According to Klein, six months after the transition, the public loves the Sheriff's Department, the schools are happy about the new resource officer, and there are now plans to reinstate the DARE (Drug Abuse Resistance Education) program.

Fire Services
The city is now tackling fire services. It currently shares fire protection with the neighboring city of Belmont, but costs have risen substantially. The savings benchmark for fire was set at $1 million per year. Wackenhut, a private firm, said it could triple the savings and still improve services. That is very interesting to Moura, as might be expected. "If we can save $3 million per year on fire and can guarantee it for 10 years, we could do some interesting things with $30 million," he said. "Like handling our flooding problem, or fix some buildings that have deteriorated."

And the city has some other ideas as well. Like insourcing. The city has a good recreation program, says Moura, and just won a contract to provide recreation services to the neighboring city of Half Moon Bay -- which on April 2 also decided to outsource its Police Department.

Klein said he thinks that contracting requires some courage and that San Carlos was at the forefront with a sort of "leap of faith." Now that there are some successful examples, he thinks many jurisdictions will follow.