The Empire Page

Background: On October 15, Secretary of State Cortés-Vázquez issued a press release announcing the state of New York had achieved nearly a quarter of a billion dollars in local government cost savings as a result of the agency's shared services program. The release coincided with delivery of a report to the governor and the state legislature documenting that achievement.  The Empire Page interviewed Deputy Secretary Robert W. Elliott about that report.

Q:  Secretary of State Cortés-Vázquez issued a report last month that projects a quarter of a billion dollars in local government savings from 139 projects at a cost to taxpayers of $27.3 million.   Please spell out what that report says.

A:  The report documents current program activities to assist local governments in the implementation of shared services and the consolidation of activities.  Specifically, it summarizes the Department of State's technical assistance and grant delivery efforts under the Shared Municipal Services Incentive (SMSI) grant program and its successor the Local Government Efficiency (LGE) grant program.  

While the type and level of service provided by municipalities varies throughout the state, the Shared Services Progress Report provides a summary of sample projects that have been funded since the program’s inception, including municipal consolidation studies, special district consolidations, shared water and wastewater infrastructure and police consolidations.  At the Department of State, we recognize that one size will not fit all and that change to local government must come from local government.  Thus, our program is focused on providing local leaders with a clearinghouse of information and tools needed to effect efficiencies and when necessary, serve as an intermediary with a sister agency.   

Interestingly, while cost savings is often the leading driver behind these projects, we also advise municipalities that cooperation provides additional opportunities.  One of which is the leveraging of financial and technical resources.  For example, one of our partners, the United States Department of Agriculture’s Rural Development Office, has agreed to invest over $4 million in a joint infrastructure project in southeastern Erie County, due in part to the inter-municipal structure established with assistance of a SMSI grant.        

This grant program has provided the Department with an additional resource to complement our statutory charge under the Executive Law to be an ombudsman for local governments.  This charge includes working with local governments to identify cooperative efforts for solutions of common challenges, keeping the Governor informed as to the problems of municipalities, assisting in the formulation of policies to address these problems and utilizing the resources of the state government for the benefit of municipalities. 

While the findings in this report provide an exciting analysis of the grant program and other cooperative activities of local governments, the Secretary believes that the delivery of this report remains just a step in the process. Our local leaders are the state’s best resource to lead the effort to produce efficiencies and cost savings to promote a competitive New York.  In order to sustain these efforts, the state must continue to be a partner with municipalities and provide them with the resources and tools they require.

As Secretary of State Cortés-Vázquez mentioned in her September 16th interview for the Empire Page, ensuring the competitiveness and sustainability of our municipalities during these distressed economic times is of the highest priority.  The projects developed under the shared services grant program will lead to cost savings and service efficiencies for New York’s taxpayers.  However, we also must continue to effectively modernize our approaches to state government, both internally and externally to meet this challenge.    This includes building upon our network collaborations, such as the New York State Conference of Mayors, Association of Towns of the State of New York, and New York State Association of Counties, as well as our federal, state and local partners.  We recognize that each of these entities has a different role to play and we value that.  It is also imperative that we modernize activities within our own agencies. 

For example, within DOS, under the directive of Secretary of State Cortés-Vázquez, we have taken a group of inter-connected programs and re-configured them under one umbrella into the Office of Coastal, Local Government and Community Sustainability.  This office includes the Shared Services and Local Government Efficiency program, as well as Smart Growth, Ecosystem-Based Management, Local Government Training, Local Waterfront Revitalization, Brownfield Opportunity Areas and Community Services Block Grant programs.  I truly believe that we can lead by example by promoting better coordination within our own agency, to more effectively use our resources.  We are all in this together and DOS stands ready to lead the implementation.     


Q:  What kinds of projects have resulted in the greatest savings and where does the savings come from? Is it mainly from elimination of jobs?

A: We have found, and municipalities have estimated that greatest local savings will come from consolidated health benefit plans, joint infrastructure projects, and certain other combined business and government operations.  While the elimination of jobs is a concern, it can be mitigated. The real and anticipated cost savings lies in the reduction of duplicative services.

For example, the study that supported the project in the Town of Evans and the Village of Angola in Erie County to consolidate police departments identified $350,000 in annual savings for the Village of Angola by the elimination of operating expenses of the village’s police department including clerical services, equipment, and insurance costs, as well as the retirement of the Village Police Chief.  There will be no loss of positions, as the Town’s department will absorb the village’s three officers.   

In Tompkins County, the Tompkins County Council of Governments (TCCOG) and its sixteen members are working together to establish a health care consortium to develop a comprehensive employee health insurance program. It is expected that this initiative will achieve cost savings of $5,257,156 or a ratio of $19.76 per grant dollar through improved municipal efficiency and streamlined program design.  The savings will be realized in the out years of the program when anticipated initial enrollment increases with the addition of new members, and not through the elimination of jobs. 

In Jefferson County, the Town and Village of Cape Vincent are realizing efficiencies through the joint provision of water infrastructure.  In this program, the town is now receiving its water supply from the village, and has eliminated the need to manage two water tanks.   Service delivery improvements include fire fighting capability and public health safety by eliminating wells and fees for water hauling when wells were not sufficient.  There is also potential for other development opportunities to strengthen the economic base of the town and village.  The five-year savings is estimated to be $1,581,540.  This project has also leveraged these SMSI funds into $5.8 million in New York State Drinking Water Revolving Loan funds and resulted in a savings of $51.00 per household.

These are just a few examples.  However, as we move forward with the implementation of this program, we continue to identify new projects and opportunities for savings.  As Governor Paterson has made clear these are uncertain and unprecedented economic times and every level of government needs to take action.  It is also clear that as society’s needs change, as government resources become scarcer and as new laws are passed shifting management and the provision of services to different levels of government, new opportunities and challenges will continue to arise. 

One example would be the increased requirements for urban areas to manage stormwater collection more comprehensively.  It is clear there is a need, as stormwater collection affects other surface waters and drinking supplies.  This is additional level of services that needs to be provided by local government is most effectively provided on an intermunicipal basis.  In the past we have received inquiries as to why we would consider these types of projects.  Our response has been that the program needs to remain flexible and open to working with all officials, while always maintaining the focus on efficient and cost-effective local service delivery.        


Q:  What does the quarter of a billion savings represent time wise? Is it annually, over two years or over a longer period of time?

A: The quarter of a billion represents the applicant’s projected savings over a five-year time period.  This covers the term of the contract plus an additional period of time to realize cost savings objectives.  Going forward, staff will work with local governments to estimate two types of cost savings: cost savings that are not expected to recur and permanent cost savings that will recur indefinitely upon implementation of the project.  The permanent savings will be multiplied by a factor of ten to capture the future value of cost savings.  By then adding nonrecurring savings to this figure, we can determine the total value of cost savings generated by a project.

Q:  What does the $27.3 million cost to the taxpayers represent?  What was that money spent on and how was it allocated?

A: The $27.3 million represents the approved funding from Rounds 2 and 3 of the grant program.  However, the total amount awarded since the program’s inception is $29.8 million.  We used the $27.3 million figure because the original SMSI application for the initial round of funding did not specifically ask the applicant to estimate their cost savings.  This question was added for subsequent rounds.  The focus must be on achieving real savings for the taxpayer.  As we move forward, we continue to assess the previous year’s program to identify opportunities to better promote efficiencies. 

The $29.8 million that has been awarded to date has gone to both planning and implementation projects.  In fact, for Round 4 of the program, now the LGE grant program, applicants that have completed a planning project under the program will get credit towards the implementation of their project.  We feel that there is a need for both types of projects.  Of course we want to see projects implemented, but it is also very important that municipalities develop their ideas, identify their needs and establish a program direction through a planning process. 

The funding for the SMSI/LGE program has been awarded to municipalities through a competitive grants process.  Projects have been submitted by an established deadline and then scored against each other.  Successful applicants are required to submit a contract to DOS, and are provided funding on a reimbursement basis.


Q: Do any of the 139 programs include permanent consolidation of local agencies?

A: Yes, about 25% of the projects include the consolidation of municipalities or local agencies.  These projects will account for 17% of the total savings attributed to this program, to date. 

We have already talked about the dissolution of the Village of Angola’s police department, but there are others.  In fact the grant program is paying for expenses related to the dissolution of the Village of Pike, which is anticipated to reduce tax rates by 4.7% in the village and 5.3% lower in the town outside of the village.  In the Town of North Greenbush, an SMSI grant is assisting with the dissolution of Defreetsville Fire Protection District, which will be covered by the expansion of the North Greenbush Fire District to service the entire town.  The dissolution/consolidation will result in initial cost savings of $165,000. 

Some municipalities have looked at the issue of municipal consolidation and not moved forward.  In Hamilton County, while a dissolution study determined combined town and village general expenditures would be reduced by 2.2% the voters decided against dissolution. The study did identify areas where the two municipalities could instead share services without undertaking a full dissolution.  The Department continues to provide technical assistance to the Village and the Town to explore opportunities to share services identified in the study.

With consolidation of municipalities and agencies comes concern about loss of local control, local history and identity, and of course jobs.  At the Department of State, we are aware of these challenges and are working with municipalities and local leaders to address them creatively. 

Q: Is your agency monitoring whether these savings are being passed on to the taxpayer?

A: As I noted earlier, all project implementation grants must specifically identify nonrecurring and permanent cost savings.  Applicants will be asked to identify in their annual budgets where these cost savings will be achieved by using Office of the State Comptroller (OSC) accounting codes.    Upon completion of a project, we will evaluate its effectiveness by comparing actual results to the original projections.  We can then measure the impact of the project on the applicant’s annual budget.  Eventually, we expect to be able to directly measure the project’s impact on individual taxpayer rates.