What Happened?
Newport Beach, California, is considering hiring a private company to provide lifeguard support along the more popular areas of the coastline at Corona del Mar State Beach. The decision to outsource some lifeguard duties would create a solution to the city’s pension problems by eliminating some public positions.
The Goal
Looking to replace city lifeguards with a private company that offers the same level of service, Newport Beach officials are hoping to save money if the outsourcing is approved. With many full-time lifeguards on staff preparing to retire soon, the city could simply eliminate the positions all together if an outsourcing deal is struck. While the seasonal positions are typically held by local teens and college students and have historical ties in the community, the outsourcing strategy could play a key role in lowering the city’s budgetary demands.
Lifeguard services in Newport Beach accounted for $4 million of the city fire department’s $37 million annual budget in 2013. While the city only employs 13 full-time workers, these positions earn between $94,000-$99,000 annually, and generate around $52,000-$55,000 in future pension costs the city is responsible for. Each full-time lifeguard captain contributes $8,500 annual toward pension benefits.
Because Newport Beach - like many municipalities across the country – is facing rising pension liabilities and tightened budgets, outsourcing would be one way to pay off what is owed. With pension liabilities growing steeper each year, the city is struggling to find ways to eliminate public positions in place of private companies for significant savings. Unfortunately, this can eliminate jobs within the community.
What To Consider With Outsourcing
According to Tholons research, outsourcing not only eliminates the cost of benefits for public employees for local governments, but also creates an efficient channel through which new technology and innovation can be implemented into stagnant public sector operations. End-users, or public taxpayers, can benefit from outsourcing strategies as well, so long as municipalities create a model that focuses on quality over cost savings.
If such a formula is not developed, inefficient outsourcing can occur which may result in higher costs, prolonged problems and new complications. If the local government selects the wrong company to step in and provide services, operations may be slowed, processes disrupted and inefficiencies underscored rather than eliminated.
To avoid this, officials must collect bids from a variety of private providers and base the decision on proof of performance and merit rather than cost alone. Furthermore, there must be buy-in from the public and possibly the local unions. Some outsourcing strategies call for private companies to rehire public workers whose positions are being eliminated in the process.
Outsourcing Left and Right
Gov1 has followed a number of outsourcing stories, from food and maintenance crews to license renewal services.