City, schools seek saving by consolidating operations

City and school administrators say their ongoing consolidation effort has already generated some minor savings and bigger-ticket ideas are under development.

The consolidation of duplicate functions in city government and the school system has become a priority in the wake of last year’s school deficit and the onset of the revenue-shrinking recession. City Council, in particular, has been keen to cut costs by combining services where possible.

Council and the school board heard an update on the consolidation work during a joint meeting Tuesday. Both bodies spoke positively of the changes made to date, but several members also pressed for more aggressive action on more profitable ideas, such as combining health care plans or merging parallel positions.

Only one concrete change has been made since consolidation talks began in May. The city now handles procurement duties for the schools.

On Tuesday, staffers said it was difficult to determine the total savings achieved by that, but they did point to individual examples of cost cutting. Examples included $3,000 saved on dairy products for the cafeterias in the schools and the juvenile detention centers. Another $17,800 or more is expected after the schools switched to the city’s credit card provider to take advantage of a rebate program.

Administrators on both sides said the consolidation process has been complicated but added they were committed to moving forward. Council members nudged them to take more action on higher-return items, specifically mentioning health benefits and comparable employee positions.

Personnel costs represent a majority of the operating expense for both organizations. Merging health benefits alone could yield six-figure savings, according to projections from city staff.

“If we’re talking about bigger fruit on the tree, this is bigger fruit in my opinion,” said Vice Mayor Bert Dodson, who specifically raised the benefits proposal.

Councilman Jeff Helgeson said the local government is facing difficult times and must be prepared to make difficult decisions, including laying off people to consolidate duplicate jobs.

Staffers say they’re studying both of those possibilities. Combining jobs has not proven as easy as once thought, they said, because eliminating some people means increasing the workload for others with limited or no potential increase in efficiency.

The city and schools actually explored combining health plans as recently as five years ago, but negotiations fell apart. Both sides say they see the benefit in making a change now but must still discuss details such as which parts of whose plan will be kept. The earliest a switch could be made is October 2010, when each organization’s current contracts with their respective providers will expire.

School board member Regina Dolan-Sewell said the health benefits proposal appeared to offer “deep potential for collaboration.”

“I think considering what we’re facing all these options have to be on the table,” she said.

Board member Keith Anderson struck a cautious tone about layoffs, noting those decisions affect families and the effectiveness of operations. But he also said he was glad officials were having hard discussions.

“Philosophically, I know we have to go ahead and be aggressive about coming to solutions,” he said. “Yes, it may be difficult to do some of these things. No one wants to lose things. But I certainly support investigating.”