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Steve Cole: Public agencies can learn from private business

Guest column

Posted: November 3, 2011 1:55 a.m.
Updated: November 3, 2011 1:55 a.m.

The words “government” and “bureaucracy” seem to have been forever linked when we think about the way some public agencies are managed. Slow. Cumbersome. Full of paperwork and processes that seem to make even the simplest of tasks feel like we’re building a 50-story building and providing job security for public employees.

These common perceptions — many times inaccurate, sometimes spot on — are mostly the result of decades of rules and regulations imposed on government agencies to be more accountable.

Yet, the recent recession has taught many public agencies to further examine their operations and study private-business models for assistance to become more efficient and become even more accountable.

There are well-managed private businesses and well-run public agencies. There are also poorly run private businesses and poorly run public agencies.

The difference, however, is that a poorly run private business usually goes out of business. This doesn’t change the fact that public agencies should sometimes act like a private enterprise, like being flexible.

When a company looks to reduce costs, it usually looks at improving its operational efficiency.

This could mean investing in technology, outsourcing some services, changing work schedules or assignments and reducing paperwork and similar measures. Cost reductions also could involve the painful step of reducing the size of the workforce.

Public agencies have and should look at their operations in the same way, but also recognize there are many functions unique to a public agency that should be preserved or enhanced in the quest of maximizing efficiencies.

At the Newhall County Water District, we have taken some cues from the business world.

Advancements in technology have proven to be an efficiency savior. For decades, water agencies — like other public utilities — sent employees out onto the streets for monthly meter reads. This involved lifting the lid and opening a small cap to each meter, looking at the latest dial number and manually writing that figure into a record book. Obviously, this was an intense use of labor.

Today, NCWD and other utilities are replacing older meters with “radio read” ones that transmit usage. NCWD employees can drive — not walk — a neighborhood in a fraction of the time to collect data via radio transmission that can easily be transferred to our billing system computers.

Instead of having two or three employees taking up to nine days to complete a monthly meter read, one employee gets this accomplished in no more than three days.

We also have eliminated some safety risks to employees and incorrect meter reads because of human error.

NCWD also has recognized a business enterprise advantage by outsourcing payroll and human resources functions.

These and other efforts have enabled NCWD to reduce staff size without impacting customer service or water quality. At a time when employment at California public agencies and local governments grew by as much as 14 percent, Newhall County Water District managed to reduce its labor force by more than 11 percent.

The other item that NCWD “borrowed” from private industry was how to improve its future pension liability. You can’t talk about gaining public agency efficiency without addressing the benefit liability dilemma. In this case, small adjustments make for big rewards.

Today, most businesses provide retirement plans under a “defined contribution” process. This means employees contribute to their retirement benefits, such as health care. Many public agencies, however, operate a “defined benefit” plan, which essentially guarantees medical coverage without any contribution coming from the employee. In transitioning to a defined contribution plan, any new NCWD employee will not be eligible for the health plan coverage but will receive a matching contribution to their deferred compensation plan, which could be used to help pay for health care in retirement.

By combining the best private business and public agency attributes into one, NCWD believes the public’s best interest will be served and terms like “bureaucracy” will be a distant memory.

Steve Cole is the general manager for the Newhall County Water District. His column reflects his own views and not necessarily those of The Signal. More information is available online at


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