ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, September 12, 2011

The New Yorker on Contracting Out for City Work

New Yorker The September 5th edition of The New Yorker has a nifty article by Tad Friend about the budgetary problems cities are facing -- the article focuses on Costa Mesa, California, but notes that its problems are not unique.   The story is a familiar one, but the reporting is great and the details are extreme.   

The problem is a small city whose budget is tied up in personnel costs, including a 911 operator making $176,000 and a new mayor who decides to address a reported $5 million budget deficit by firing half the staff.  The new mayor plans to give city workers their notice and then solicit bids to see which jobs can be more cheaply done by employing independent contractors.  The mayor also seems to think that hiring such contractors will insulate the city from liability, although that wouldn't always be the case.  

The flip side of the overpaid 911 operator is the dedicated maintenance worker who works for the city for four years and makes $45,600/year.  He does for $26/hour what a contractor would charge $40/hour to do.  Upon receiving his layoff notice, one such worker jumped off the roof of City Hall.  An already bitter struggle now turned bloody.  Moreover, the city has over $40 million in reserves.  Some residents wondered why "Costa Mesa should be the petri dish for pension reform."  An ally of the new mayor, who is a councilman and also the head of the local Pop Warner football league wasn't about to back down.  Friend quotes him as follows:

Politics is very similiar to Pop Warner.  People think they can bully you into making their son the quarterback, but once they realize their son's a lineman they stop bothering you.

Building to his conclusion, Friend makes the following observation about leadership:

Good leaders make unpopular decisions because they're necessary.  But they also work to explain and build support for their initiatives, especially when those initiatives threaten a way of life.

This is an important insight, not only for political leaders but also for university leaders in times of shrinking budgets and rising costs.


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