Calibrating Work Force Size

From Commissioner Jeff Rader:

Because of the country's economic recession, many states and counties are forecasting revenue shortfalls in the coming years. DeKalb County is no exception.

For 2010, a preliminary estimate is that DeKalb faces a $45 million revenue shortfall in its budget. The options to balance the budget are to increase revenue via taxes, or to decrease expenses.

DeKalb has the highest millage rate among any unincorporated area in the region. While the HOST tax credit substantially lightens the burden of this millage rate on homeowners, it falls heavily on others in the county. Therefore, I am opposed to raising taxes, just as I stated in last year's budget discussions. So, I recommend to the county CEO and the Board of Commissioners that they consider reductions in the county's expenditures.

The county budget in 2001, the first year in office for the former CEO, was $420 million. The county's budget in 2009 is $606 million, which represents a 44 percent increase.

In that time span, the Consumer Price Index increased by 23 percent and the county population grew nine percent. The simple product of these growth factors would yield a budget benchmark of $563 million, well below the current budget.
Just as every household is learning to make do with less, so should the county. The county CEO pledged this year to substantially reduce the cost of government.

Approximately 80 percent of the county budget is for employee wages and benefits (pension and health care plans). Therefore, any discussion of the budget must address labor costs. One set of numbers to consider is the county's staffing level relative to its number of citizens.

In 2008, DeKalb County had approximately 11 full-time employees for every 1,000 citizens. That is lower than the city of Atlanta, which had a per capita ratio of about 15 full-time employees per 1,000. That is a higher ratio than surrounding counties, Clayton (8 per capita), Cobb (7), Gwinnett (6), and Fulton (5).

While those numbers offer a benchmark, they are not valid for apples-to-apples comparison. Some counties rely on municipalities or have outsourced selected government functions so those employees do not show up on the county payroll. Some counties supplement their workforce with part-time or temporary employees, which are not reflected in the numbers above. Lastly, the numbers above do not reflect the quality of service provided by the respective counties.

Importantly, many functions funded by your county taxes are beyond the direct control of the DeKalb CEO and Board of Commissioners. Those functions, which include tax collections and the justice system (but excluding the police), are under the authority of independently elected officials. While county government sets their budget, these officials have organizational control over how their departments operate.

For the sake of math, consider the potential cost savings if DeKalb's per capita ratio declines to 10 full-time employees. Based on the average annual compensation (salary and benefits) for county employees in 2009 ($49,534), the reduction in workforce size would amount to annual savings of about $47 million, greater than the revenue shortfall mentioned in the second paragraph.

If DeKalb's per capita ratio declines to nine full-time employees, still higher than surrounding counties, using the same average compensation per employee, the annual savings is about $83 million. That last number is close to double the estimated revenue shortfall of $45 million mentioned earlier.

However, arbitrarily eliminating positions for the sake of cost savings would be counterproductive to providing quality government services to the citizens. Rather, the staffing level for each county department should be evaluated as part of a performance audit.

A performance audit would measure a department relative to best practices established by successful government entities elsewhere in the United States. Performance audits rely heavily on quantifiable measurements. Such measurements are commonly used in police departments which track number of patrol officers per capita, and average response time for 911 calls.

A performance audit should review each department's operation with four questions in mind.

1) Is this a service the county should provide to its citizens?
2) If yes, is this a service the county should administer in-house or outsource?
3) If yes, how can this service be provided in the most efficient manner possible?
4) If yes, what level of service (i.e. quality) should be provided to its citizens?

Government should be in the business of providing essential services. Other services are helpful, but it is not feasible or affordable for government to provide all things to all people.

Privatization is not a silver bullet but it is a legitimate option for some government services. Private enterprises can achieve operational efficiency by controlling the size of their workforce and their cost in labor and benefits. Many jurisdictions outsource building inspections, and more are experimenting with outsourcing for services such as tax assessment and information technology support. There have been notable failures, including the City of Atlanta's unsuccessful outsourcing of water and sewer services. Some smaller governments have been retreating from the private, turnkey model such as the one employed in Sandy Springs.

What's most important in these deliberations is an effective analytical and decision-making process. DeKalb has formal procedures for financial audits, which ensure that each department spends its money appropriately, but not for performance audits. The county CEO proposed the creation of an Inspector General position, not only to ferret out corruption and mismanagement, but also to help optimize the county operations. One person, however, is unlikely to be able to realize the full potential of performance audits.

Other counties have conducted performance audits by bringing in outside people, who have been identified as leaders in their fields or have achieved success in comparable government entities. The county could subject itself to performance audits in a few departments each year on a rotating basis.

With such information in hand, DeKalb could be in better position to deal with challenging budgetary decisions in the years to come.

(Commissioner Jeff Rader represents District Two on DeKalb County's Board of Commissioners. He was elected to the position in 2006 for a four-year term.)

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