John Nalbandian

Department of Public Administration

University of Kansas

PRIVATIZATION CASE STUDY

A majority of the newly elected governing body has pledged to the voters that it would explore all avenues available to privatize city services. It has directed the chief administrative officer to present council with some options. After discussion with department heads, the CAO has suggested the following:

The city can save some $500,000 annually if it privatizes its sanitation service. These savings could translate into a reduction in the property tax of some five-percent.

Council member Rodriguez asks how this savings can be achieved and whether the present sanitation workers will lose their jobs. The CAO responds that in conversations with various private contractors it appears that the contractor could be expected to hire all of the displaced employees who apply. "However," she adds, "a large amount of the savings probably would be achieved by reducing employee benefits, including health care coverage. There will be no pension benefit."

Council member Johnston indicates that 70 percent of the employees who will have to change jobs are racial minorities. He noted that the skill level of the sanitation workers is such that they will not have any choice but to accept the reduced standard of living.

Council member Reyes acknowledges Johnson's concern, but indicates that the savings will be reflected in a property tax reduction that should benefit the poorest landowners the most--those on fixed incomes in modest homes.

Council member Richardson suggests that the city's economic development strategy is aimed at developing good paying jobs. He asks if the privatization of sanitation services will advance that goal.

Prior to the evening that the city council will discuss this item the council members report that a number of taxpayers have called urging privatization and following through on campaign pledges. It appears to the council members that the majority of voters would favor the privatization.

At the evening the item is on the council's agenda, the room is packed. On one side are members of a taxpayer's group in favor of the privatization. On the other side is a group of black and Hispanic clergy and community activists who are opposed.

Questions:

1. What makes this case so difficult?

2. What expressions of different values can you find?

3. What should the council expect from staff in this case? What should the staff expect from the council? What should the council members expect from each other?