Tag Archives: sunset review

Lowering government costs: a crucial policy issue for chief executive candidates

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Summary: Allegheny County’s services are provided by 6,125 employees, with 4,681 in the executive branch.  County government is required by the Home Rule Charter to review its operations with regularity to determine if departments should continue in existence.  What should the next chief executive emphasize for this requirement in coming years?

 

 

A breakout of the 2023 operating budget by function shows the county will spend just over $1 billion in the following manner: $398.9 million (39.1 percent) on health and welfare; $300.7 million (29.5 percent) on public safety; $87.4 million (8.6 percent) on general government; $75.0 million (7.3 percent) on debt service; and the remaining $158.2 million (15.5 percent) on transportation, education, public works, culture and recreation and economic development.

 

Looking longer term, a 2016 Allegheny Institute Report (#16-02) used population, inflation and audited financial data to show that per capita spending grew from $817 to $1,239 (52 percent) between 2000 and 2015, which was faster than the change in the Pittsburgh-area Consumer Price Index (CPI), which was 43 percent.  The number of county employees per 1,000 people increased from 5.4 to 5.6 (4 percent).

 

Updating that data to measure from 2000 through pre-pandemic 2019 with some adjustments (substituting the Northeast CPI for the Pittsburgh-area CPI, which is currently updated only to 2017 and using the official 2020 Census population for the county, which is more reflective of 2019 population than an estimate), per capita spending grew from $817 to $1,455 (78 percent), faster than inflation (50 percent) and employees per 1,000 people grew from 5.4 to 5.5 (2 percent).

 

The Home Rule Charter contains a mechanism that allows the county government to regularly analyze what it does and if it should continue to do so. The charter requires the county manager, who is appointed by the chief executive and confirmed by the county council, to “evaluate the need for each County department, agency and function over a four year sunset review cycle and recommend to the Chief Executive and the County Council the modification or elimination of any department, agency, or function that no longer meets the needs of the County’s taxpayers.”

 

Beginning in 2015, the manager implemented a schedule in which one-quarter of the departments and related agencies are reviewed and recommendations published each year.  Between 2019 and 2022, a total of 19 departments were reviewed.

 

The review includes each department’s legal mandate; public need; how the functions are carried out; what the effect on public safety, health and welfare would be if the department did not exist and a recommendation regarding the department’s existence.  The recommendations go to the chief executive and council; council may then take action to retain, abolish or modify the department(s).

 

In each review, an examination of “alternative methods that may be employed to achieve the Department’s legal mandates” and “whether County government is the most effective body to implement the Department’s programs” are included.  Here the reviews are to determine if privatization, outsourcing or contracting or turning the service over to another level of government is appropriate.

 

The reviews from 2019 through 2022 carried out these alternative analyses. Indeed, there were instances where departments were contracting out specific aspects of their operations, including Parks, Human Services, Public Works and the Jail.  As the reviews noted, some functions mandated by the state cannot undergo an alternative service delivery method.

 

Where the reviews pondered moving a county service from a county department, perhaps to the private sector, the municipalities within the county or to the commonwealth, the reviews typically came to the same general conclusions: control would be lost, costs would be higher, reliability would diminish and it would be better to maintain the status quo.  Specific cost comparisons between what the county spent to provide a service and what a private vendor would charge, however, were lacking.

 

In the end, the reviews recommended that the 19 departments continue without modification. This included the Shuman Juvenile Detention Center, which was included in the 2021 review (published June 30, 2021) but then was closed in September 2021 when the state revoked its license. This past March, County Council passed a motion calling for a review “of the current needs of the County’s juvenile justice system” and the “formation of a Juvenile Justice Study Group.”

 

The manager, beginning with the 2024 sunset review, should be required to collect and include data on what the county spends on services and what it would cost if handled by the private sector where there is an opportunity for contracting out or outsourcing. The administrative code’s sunset review procedures allow the manager flexibility to include criteria that “would aid in the furtherance of making County government more competitive and performance-oriented.”  To make sure that the cost data is included in all reviews, it would likely be advisable to amend the procedural language to include it.

Quantifying savings and showing what that would mean for the county’s 4.73 property tax millage rate would be a positive addition to the reviews and should be mandatory.

 

If the staggered arrangement does not change, next year the Departments of Administrative Services, Facilities Management, Parks, Public Works and Information Technology (spun off from Administrative Services in 2020) would be reviewed.  This year, those departments have a combined 955 employees and $112.3 million in expenditures.

 

Creating a low-tax environment where the county government is not growing in headcount and responsibilities is a critical piece in addressing the population and labor market trends pointed out in previous Policy Briefs.  In the last few years, the county has created two new departments, Children Initiatives and Sustainability.  If county functions expand and revenues are negatively affected by lack of business start-ups, property tax appeals and office downsizing and work-from-home, the county’s revenues could be impacted significantly.  The sunset review could become a critical tool at the county’s disposal to focus on its core services and head off tax increases.

 

It is recommended that the next chief executive lead the way to sharpen the focus on what might be alternative methods of delivering county services.

Tough Sledding for Lift Proposal

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As part of the drive to find efficiencies in County government and determine the proper functions of County government the Parks Department and Council’s Parks Committee might test the slopes to see if there is a private interest out there who might want to take over the skiing and snowboarding functions at Boyce Park. We have written previously about the County’s efforts (here, here, and here) which go back to a 2007 study on identifying revenue sources in the park system. The County put out a request for proposals for the Boyce Park facilities but it was not successful in drawing interest.

The Executive, sounding a bit like the Governor when discussing the liquor store privatization plan, stated "We’re going to take a look at, say, our ski slopes, (and ask) is that a business we should be in. I don’t know that it is."

That’s the perspective the County needs to take as part of its next Sunset Review and not be dismissive of getting the report done and being serious about it. The 2003 Review raised the issue of looking for alternative revenue sources for the parks,

Savings to be Found at the Jail?

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The Allegheny County Jail has a prominent place in the Pittsburgh visage (being situated on the banks of the Monongahela River and next to the Liberty Bridge) but a relatively small place in the overall County budget. In 2011, the Jail totaled $55 million in expenditures, about 7% of the $767 million operating budget. There are ways to save money on its operations, however, and County Council is going to look at how to get that done.

An article today raised issues related to electronic monitoring and prisoner work detail in order to control the institution’s costs. The 2010 sunset review said that the Jail should "…manage inmate population growth, continue development of alternative incarceration programs". The report pointed out that the County does contract out a portion of the Jail’s operations: a non-profit provides medical services, a for-profit provides food service; laundry and halfway house programs are handled by contract. The sunset review also said that "the County could contract additional functions to make the jail a private facility".

The Jail’s most recent annual report for 2009 shows that most of the people that did end up there stayed for two weeks or less and that over the five year period through 2009 admissions decreased.

Sunset Review: Time for a Change?

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As we wrote last year and earlier this year in a series of Briefs the County dropped the ball on its sunset review of departments. The Home Rule Charter calls for departments to be "evaluated every four years, and be eliminated unless specifically renewed" (emphasis added) and charges the County Manager with the review and vests Council with the power to continue, reorganize, or eliminate departments. Council can follow the recommendations of the Manager, but they are not bound by them.

A funny thing happened between the time of the Charter and the creation of the administrative code that spells out the specific sunset review procedures. Section 5-1201.05 B spells out Council’s role once the review is in their hands. "Upon receipt of the County Manager’s recommendation, County Council may adopt an ordinance or resolution on or before October 15 to either (1) continue the existence of the affected department for another four years; (2) to abolish the department, or; (3) Reorganize the department subject to evaluation and review" (emphasis added).

The most recent review-which was published seven years after the first, well past the mandatory four year cycle-came on December 31, 2010. By the code language, Council would have had ten months to take action. They did not have to, since the section says "may" and not "shall" but silence on the matter should not convey continued existence since that is at odds with the Charter language that there ought to be a specific renewal. That is different from renewing by not taking action, or using the budget process as a tacit blessing for a department to continue.

By all indications Council has not taken any action. A search of legislation on Council’s portion of the County website does not turn up anything related to sunset review in 2011 and the latest action recorded was as of December 6 of last year, some three weeks before the review was published on the Manager’s page.

One of two things has to happen: either Council has to amend the administrative code language to change "may" to "shall" so that present and future Councils take an up-or-down vote on sunset reviews or they need to propose an ordinance to strip the sunset review out of the Charter and the code so that is no longer required. The halfway method of delayed reviews and no follow-up makes a sham of the sunset review.

Chief Executive Goes to Washington

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The Allegheny County Chief Executive participated in a meeting yesterday with other county level officials from around the country as they met with the President and other high ranking Federal officials on the issues pertaining to county services. Since "Federal policy, regulatory and budgetary decisions can have tremendous impacts on county governments" the meeting "was a great opportunity to share our thoughts and positions on a number of critical issues" according to the Executive’s press release.

Infrastructure and air traffic were topics, as was the jail. The Executive raised the Federal regulation that suspends Medicaid benefits after the end of the first month of incarceration, which cost the County $11.3 million in 2010 (the County contracts this service out to Allegheny Correctional Health Services according to the 2010 budget) and the Jail’s budget for 2011 is $55.6 million.

Allegheny County’s jail is one of 69 county jails in Pennsylvania. Some operating statistics from the PA Department of Corrections: in 2009, Allegheny County’s jail "usage" (average in house daily population/bed capacity) was 87%; the statewide average for all county prisons was 83%; its average cost of housing an inmate was $57.04, roughly the middle of the pack for the county prisons in the state; Allegheny was also lower than the statewide average of full-time security per 100 prisoners (based on the average daily population) at 17 to 21. Data from the County Jail’s annual reports shows that the average number of inmates maintained grew 8% from 2005 to 2008.

Short of a major change in Federal policy on Medicaid coverage for incarcerated people, could the County find savings elsewhere at the jail to offset the expense? The sunset review stated "the County contracts halfway house programs, food services, and laundry services. The County could contract additional functions to make the jail a private facility". Note that the review did not specify what the additional functions were. And it is not clear if by the last part of the statement the review the intention was a full privatization of the jail. That idea would likely be quickly dismissed by the public sector unions and their backers.

Charter Members

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The respective partisan caucuses of Allegheny County Council will soon be meeting to select members to fill the two vacancies caused by Council members who vacated their seats in order to run for the office of County Chief Executive.  The Home Rule Charter of the County, in essence the local “Constitution”, spells out how vacancies on Council have to be filled (Article III, Section 9b) and that Council members who want to run for another office must first resign their seat (Article III, Section 6b).  Therefore, by all indications we have an instance of the Charter being followed as written.

 

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Improving Home Rule in Allegheny County as the Second Decade Begins

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As home rule government begins its second decade in Allegheny County-the effective date of the Home Rule Charter was January 1, 2000-taxpayers and residents of the County have several big issues coming at them related to their government. 

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Sunset Review Redone?

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Realizing that the County’s departmental sunset review is well overdue (the Charter requires one every four years, yet the Manager’s office has not completed one since July 2003) three of the Republican members of Council (the Council is responsible for taking action on the Manager’s recommendations in the review) have put forth an ordinance that would get the ball rolling on this fundamental duty.

Under their proposal the Manager must have the review that was due in July of 2007 done in six months from the effective date of the ordinance. The Manager would then have to submit a departmental evaluation schedule by October 1 of this year. Each department would have to be reviewed at least once every four years (it could be reviewed more than once in that time period) and the schedule would have to be communicated in writing to the Executive and the Council. The due date for the sunset review would be July 1 of 2011 and every four years thereafter. If a review cannot be done, a six-month extension would be granted.

Currently the Charter and the Code prescribe no sanctions for failing to have a sunset review on time. The proposed ordinance would tie Council’s role in confirming or denying appointments to the completion of the review, disapproving of all new and pending appointments to County authorities (PAT, Airport, Housing, etc.) until the review is received.

Sunset Review Still Hasn’t Seen Light of Day

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Back in March of this year (Policy Brief Volume 10, Number 16) we inquired as to the whereabouts of Allegheny County’s mandated periodic sunset review. Under language in the Home Rule Charter-“the constitution of Allegheny County” according to its drafting committee-the County’s departments, agencies and functions are to be subjected to periodic review to determine if the needs of County taxpayers are being met.

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