How Regional Utility Partnering Can Save Money and Provide Needed Services
By Carmen S. Conglose, Jr.
Alumnus, Public Administration at American Public University
Special Guest Contributor to EDM Digest
The Great Recession hit local governments especially hard during in the past decade. As tax revenues earmarked for basic municipal services dwindled, mayors and city councils were forced to look for novel ways to pay for essential services.
One of the most basic private-sector business efficiency concepts is known as economy of scale. The concept suggests that consumer costs will decrease as expenditures are spread over a larger user base. Given the well-established positive impact that economy of scale has in the private sector, why is this concept not more extensively utilized in the public sector?
Local Government Attempts to Regionalize Services Can Save Money
Some local governments have attempted to leverage private-sector economy of scale principles by partnering with neighboring government entities to regionalize services such as wastewater collection and treatment. Regionalizing such services can be particularly rewarding economically because irrespective of community boundaries, it is generally much less expensive to convey wastewater to one central treatment facility by gravity than to send it to several smaller facilities using large pumps or siphons.
However, examining the experiences of several communities shows that successful regionalization of wastewater services depends on variables that transcend economics. By identifying and measuring the impact of several social, political and institutional variables, communities can develop a Regionalization Suitability Index (RSI) to predict the likelihood of forming successful partnerships.
Youngstown’s High Water Rates Could Soon Be Unaffordable to Most Residents
Struggling communities such as financially strapped Youngstown, Ohio, might utilize such a strategy in its regionalization decision making. Youngstown’s wastewater system has become an economic burden on the ratepayers who provide the system’s operating revenue. Compared to a percentage of median household income (MHI), Youngstown’s current wastewater user fee is one of the highest in the state. Combined with future planned rate increases, fees in a stand-alone system such as Youngstown’s, could soon become unaffordable to most residents.
For my thesis I examined several communities in which wastewater regionalization efforts have met with mixed results. The idea was to identify some of the non-economic variables that contribute to the RSI calculation. For example, since the 1960s regionalization has been successful in reducing user costs in the multi-community partnership known as the Allegheny County Sanitary Authority (ALCOSAN) in Pennsylvania.
Pennsylvania County Regionalization Benefits from Strong Home Rule Authority
The region is highly homogeneous in its minority-population distribution and levels of education. Voters in the ALSOCAN region also predominantly support candidates from the same political party in presidential elections. Institutionally most of ALCOSAN’s political subdivisions have critical home-rule authority, which creates flexibility in structuring multi-jurisdictional partnering agreements.
By contrast, regionalization efforts failed in the Pontiac-Oakland County, Michigan, region despite an engineering study that identified a number of economic advantages to regionalization. This region is also politically unified but is socially divided. Most of the poorer and less educated minority population is centered in the core city of Pontiac.
Regions that Have Attempted Wastewater Partnering Have Had Mixed Results
We find mixed results when weighing and measuring social, institutional and political data from various regions that have attempted wastewater partnering. For example, the ALCOSAN region scored a respectable 1.17 on a continuum scale where a median of 1.50 indicates the ideal regionalization environment. The Pontiac-Oakland region, however, scored an ineffectual 0.00 on the same scale.
The RSI methodology was then used to assess the potential success of regionalizing Youngstown’s wastewater services with several neighboring communities. The data suggest that, similar to the Pontiac-Oakland County region, the absence of uniform home rule authority across the Youngstown region presents a significant barrier to intergovernmental agreements vital to successful community partnerships. The disparate distribution of minority populations and median household income levels also presents formidable social obstacles to forming a consensus among residents with varying needs, resource levels, and expectations.
In addition, political unity was found to be a weaker indicator of regional suitability. Despite a strong Democratic Party ideology across the region, Youngstown scored a relatively low 0.512 score on the continuum scale, making the city less than an ideal environment for regionalization.
In a general sense, the Youngstown region’s disaffection for partnering originates from a condition that afflicts many communities faced with difficult decisions – the inability to propose solutions that are attractive to people of divergent perspectives.
In Youngstown’s case, a relatively poor inner city population would likely favor wastewater regionalization for its economic benefits. Residents in the more affluent outlying communities with higher incomes and more resources, however, are more likely willing to pay more for such services to avoid partnering with Youngstown’s economic ills and its perceived inferior social identity.
Local Government Officials Must Level the Social, Institutional and Political Playing Fields
For communities such as Youngstown, providing lower cost services through economies of scale requires government leaders to level the social, institutional and political playing fields of the potential regional participants. In this regard, the research has introduced several possible paths for future analysis.
First, research has identified several factors and proposed a scale for measuring regionalization suitability. Additional research could delve into how communities can create such conditions.
Second, additional research is needed to investigate further why such relationships exist in some regions and not in others, what specific actions are required to manipulate the relationship strengths, and whether there could be additional factors that affect regional suitability.
The lessons learned from this research, however, suggest that regional partnerships capable of lowering the costs of public services are likely to be most successful when citizens, government institutions and political preferences are more similar than they are different.
About the Author
Carmen S. Conglose, Jr., P.S., earned a Master of Public Administration degree from American Public University and a Bachelor of Public Administration from Capella University. He is a licensed professional land surveyor in the state of Ohio, and owns and manages Technical Resource Consultants, LLC, a construction management and consulting firm in Youngstown. Conglose previously served as a project manager for several engineering consulting firms, and in various capacities for the city of Youngstown.
During his public sector career with the city of Youngstown, he held a number of administrative and technical positions including Director of Public Works, where he managed seven divisions and more than 200 employees. Under Carmen’s direction, the department was responsible for the construction of over $73 million in public improvement projects.