Despite signs of recovery in the economy, the near future looks grim for the public sector. A lag-time between economic recovery and its impact on the public sector means the situation has not yet turned for public entities.

Most are struggling to provide services with less money and smaller staff. What's more, many senior staff members with years of knowledge and experience have taken forced retirement. This leaves the direction of a number of departments and the decisions they will make up in the air.

Recently, Camden, N.J. laid off half its police force and one-third of its firefighters when talks between unions and the mayor's office stalled. “This is a severe example of what's happening to a lot of cities,” said Christopher Hoene, research director, National League of Cities. He recently discussed on C-Span's Washington Journal how cities have been impacted by the financial downturn and the sacrifices that are being made.

According to Mr. Hoene, the NLC found that 25 percent of its cities were making cuts in public safety in 2010 and that about 500,000 jobs were expected to be lost in the local government sector between 2010 and 2012. Many of those jobs in transportation, roads and parks and recreation.

He said that many cuts also have been made in the level of response from fire stations. On top of layoffs of personnel, some have implemented “brownouts,” where stations are not at full service 100 percent of the time.

According to police chiefs, he said:

â–ª 47 percent of services have declined

â–ª 8 percent of departments no longer respond to motor vehicle thefts

â–ª 9 percent no longer respond to all burglar alarms

â–ª 14 percent of departments do not respond at all to non-injury motor vehicle accidents.

“The money is not there,” he said, adding that municipalities are making cuts they believe will have the least impact on the public, to minimize any risk to the public.

The public understands what is happening and they know the money isn't there, he explained, but people understandably are concerned when they hear about cuts such as rolling brownouts with fire stations. He called for a reassessment of services. For example, why send a firetruck and an ambulance when on a call that requires medical services only?

While one caller to the program believed there are still areas of fat that can be cut, citing lavish salaries of some public sector employees, another caller cautioned that any cuts need to be made with care.Fire departments that lose points for safety can see a rise in insurance coverage costs, he said.

With a crumbling infrastructure in many locales, less money and staff to deal with the necessary improvements and citizens expecting services and repairs they are accustomed to, public entities are stuck in an uncomfortable situation.

While not a panacea, governors in some states, such as California and New York are beginning to look carefully at unnecessary expenditures. California's governor has called for cutting in half the number of cell phones used by employees, estimating savings of $20 million annually. Next Gov. Brown announced cutting auto usage in half. California's Department of General Services estimated there are about 11,000 passenger cars and trucks in the state fleet, and nearly 4,500 home storage permits that don't serve a health or public safety function.

New York's Gov. Cuomo just announced the state will review use of 60,000 vehicles in its fleets as well as other expenses, such a third year training class for new State Police troopers.

As I've said, this is a long-time coming. While steps such as these arenen't the only answer to deep problems in the public sector, this kind of thinking will drive meaningful reform.

Any suggestions from risk managers—public or private?

Special Reports /

Public Sector Coping With Ongoing Cutbacks

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