Restore flexibility for delivery of public services
From Grassroot Institute, March 15, 2019
Imagine that you’ve just been appointed to a managerial position in county government. You’re looking for ways to make your department run more efficiently and you notice that janitorial services have been a perpetual headache for previous managers. Filling the positions is difficult, the work is spotty, and it uses a surprisingly large chunk of your budget.
So you make a few calls and discover you can save money by contracting to a private company for your janitorial needs. They have a great reputation, and you’ll have more room in your budget. You lose no time in signing that contract. It’s a win-win, right?
Wrong. You just violated Hawaii law. Get ready to be sued.
Many people don’t know that an obscure 1997 court decision has created a significant barrier to private sector contracting in Hawaii. In Konno v. County of Hawaii, the Hawaii Supreme Court held that the state Constitution protects civil service positions that have “customarily and historically” been provided by civil servants.
In other words, if a job has historically been provided by a civil service employee, it cannot be privatized absent specific action from the Legislature.
After the Konno decision, the Hawaii Legislature made a few efforts to enable private contracting at the state and county levels, but over the years, these provisions have disappeared.
In the absence of specific enabling language, managers have been stymied by the fear of lawsuits and confusion over when they are allowed to use private contractors.
Moreover, the bias in recent years has been toward creating more civil service positions, not fewer ones. The inevitable result is that some positions go unfilled because qualified candidates don’t want to leave the private sector for civil service. Meanwhile, managers are handcuffed, unable to run their departments efficiently because one option is off the table.
It doesn’t have to be this way.
Transitioning the formerly state-run Maui hospitals to private management in July 2017, which required a specific legislative exemption, is an example of how public-private partnerships can be beneficial for government employees, taxpayers and the community. Just a few changes from the Legislature would allow further sensible privatization of government operations without threatening government employees’ jobs.
A new report from the Grassroot Institute of Hawaii, “How to revive contracting as a policy option in Hawaii," explains three steps the Legislature can take to bring back privatization:
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Remove statutory language requiring civil service positions to be filled exclusively by government employees.
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Revive post-Konno laws that permitted privatization when fiscally beneficial, while still protecting civil service jobs.
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Make better use of statutes that allow for temporary private contracting when a job cannot be filled by a government employee.
Privatization is not a magic bullet for inefficient government, nor is it a bogeyman that will steal government jobs. The current policy prevents local government from contracting with entrepreneurs who could provide public services at lower cost and with more flexibility. As a rule, the cost savings achieved through privatization is between 5 and 20 percent. However, depending on the service, it can be as high as 50 percent.
What we need is a common sense approach to contracting that would help the government and taxpayers save money while providing more opportunities for the private sector.
Just a few small changes and Hawaii could have the best of both worlds — more efficient government while still upholding the values of civil service.
E hana kākou! (Let's work together!)
Keli'i Akina, Ph.D.
President/CEO
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