Privatizing City Services in Rochester Hills, Michigan
Strained budgets combined with increased demands for public services and public resistance to tax increases have forced many local government across the United States to re-examine how they provide municipal services (Dilger, Moffett & Struyk, 1997, p. 21). One result of this re-examination has been a focus on outsourcing city services to private businesses to economize the city's use of its human and financial resources. This paper attempts to explore the effectiveness of such outsourcing by examining privatization initiatives and experiences in the City of Rochester Hills, Michigan.
Privatizing Municipal Services in the United States
Privatization involves the contracting out of city services to private companies (Van Slyke, 2003, p. 296). Advocates of privatization argue primarily that it can significant reduce the costs of providing services. They also maintain that it can improve service quality, increase management flexibility, provide specialized expertise, and decrease the influence of monopolies (Van Slyke, 2003, p. 297). Detractors point out, however, the contracting out services creates the need for municipalities to spend money and human resources on programs to evaluate and oversee the privately-provided services and their contractors. Detractors also argue that privatization can lead to higher unemployment and underemployment (Van Slyke, 2003, p. 297) and hidden costs, such as increased Medicaid expenses for the these increased numbers un- and under-employed workers (Dilger et. al., 1997, p. 24).
Nonetheless, a report on privatization initiatives in America's 100 largest cities (by population) was published in Public Administration Review in 1997. That report found that these cities have privatized, on average, seven services, primarily in the areas of pubic works and transportation, support functions, public safety, health and human services, and pa...