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Government: Different Than Running a Business
Posted
7-16-07
Often we hear the statement, "government should
be run like a business". From the philosophical standpoint of
efficiency and sound financial practices, that is exactly what
we try to do with Westmoreland County government. But when the
operation of government and the operation of business are placed
side by side, there are a variety of factors that make running
government very different than running a business.
First off, the most distinct difference between
business and government is that businesses exist to make
profits. Whether they are selling goods or services, businesses
expect to do so in a manner that not only covers their
operational costs, but also allows some amount of money that
exceeds those costs. If a business deems production of that good
or the delivery of that service is not profitable, it likely
will end that business venture.
For government, the mission is very different.
Over time, a set of programs and services have been identified
from the federal government on down to local government that
form the missions of those respective governments. We haven't
just "thought up" what those services are; those that are the
mission of county government have been laid out by not only the
federal government but by state government too. Those services
tend to be in areas in which there is little, if any,
profitability, but that are essential for the common good. In
the case of Pennsylvania counties, we must protect and serve the
most vulnerable members of society, from children to our senior
citizens. We operate the court system that entails not only the
judicial function but every related function too. That includes
the offices where legal records are maintained including wills,
deeds and criminal records. The departments that deal with
people who have passed through the court system also are a
function of government, from domestic relations to adult and
juvenile probation programs to a county prison.
County government also protects citizens through
its operation of a 911 system that dispatches first responders
to emergencies of all types. County government is also involved
in planning and road maintenance. Everything mentioned is the
core of the services we provide. About the only thing we do that
is not mandated, but something unlikely the private sector would
ever undertake, is the operation of recreational parks.
Of course, government cannot function without
businesses. We contract with businesses for the products we use,
ranging from paper to computers to vehicles to food for nursing
home residents. We also contract with business to provide many
services ranging from maintenance on equipment we buy to
services for our mental health clients. Our job is to acquire
those goods and services in a manner that we get the best
quality for the best price. But at a minimum, we get them at
cost plus some measure of profit. In the cases where the county
can provide the service with the same quality but in a more
cost-effective manner, we do not contract out that service.
That brings to light the general issue of
privatization that has become a trendy term in recent years.
While some people march steadily ahead with the idea that
everything government does can be privatized at a better cost
than government doing it, the real answer isn't that simple.
Remember that profit business expects to make? That doesn't go
away if they are providing a service for government. A business
may be able to marginally drive down personnel costs, but it
cannot do it below what the market will allow. At some point,
they would not be able to recruit or retain workers if the pay
and benefits were too low.
Also, a challenge that many private sector firms
generally do not face is bargaining with certain unions that
cannot strike. So in most cases, good faith bargaining is
limited because those unions know that in Pennsylvania their
case will be heard by arbitrators that state law has given
excessive independence. Those arbitrators are supposedly under
the Commonwealth's Department of Labor and Industry, but
essentially have a free reign to set wages and benefits. In the
county's case that includes seven of our nine bargaining units,
or roughly 25 percent of our workforce. How would private
business owners deal with a situation where a significant part
of their wage and benefit costs are determined by a third party?
This phenomenon is one of the most distinct differences between
the challenges faced by those of us trying to manage budgets in
the public sector versus private business owners. Maybe in other
states the issue is dealt with differently, but in Pennsylvania,
it makes uniform pay and benefits for counties and some local
governments (those with police departments) virtually
impossible.
We have brought county government into the 21st
century not only in how we manage our finances, but also in the
wage and benefit packages of our employees. We recognize the
county must reflect existing job markets or we will continually
lose talented employees. We also recognize the benefit packages
we provide must be reflective of those who pay for the county's
operation -- the taxpayers. In the case of Westmoreland County
government, we continually try to take those fundamental
practices of "business" and apply them to the complex
environment of the public sector in a way that allows us to
fulfill our mission to serve.
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