Managed competition reduces county tax rate.

Faced with a $6.5 million budget deficit for the 1995-1996 fiscal year and a projected deficit of $29 million over the next five years, Lee County, Fla., which sprawls over 800 square miles and is home to 380,000 people, turned to managed competition. County commissioners asked the private sector and in-house administrators to bid on operating water and sewer facilities and the county’s nursing home facility, Shady Rest Care Pavilion, in Ft. Myers, because “commissioners don’t want to see the mill-age rate increase,” says Donald Stillwell, county administrator.

ST Corp of Austin, Texas, won the bid on the public works operations. County administrators retained operating control of the nursing home. The county saved money in both cases, Stillwell reports.

“Our own people had projected operating costs [for the utilities] of $42 million over the next five years and then bid $32 million when competing with private bids,” he says. The Texas company won the contract with a bid of $27 million and began operations June 1.

The county kept a cadre of in-house people to administer the contract, ensure compliance with state and federal regulations and to make certain customers were getting quality service, Stillwell says.

Safeguards in the extensive contract include performance bonds to ensure that sewer and water plants and equipment will be maintained according to county standards and returned to the county in good condition in five years.

The county operates two wastewater plants, one with a capacity of 6 mgd, the other with a 5-mgd capacity, and a 10 mgd water treatment plant.

Additionally, the county realized “significant savings” when in-house administrators outbid several private competitors to operate the 180-bed nursing home facility, Stillwell says.

The projected budget for the fiscal year ending in September had been $6.38 million. “Placed in a competitive position, our people bid $5.9 million,” he says.

These and other measures taken by the county not only eliminated the projected five-year deficit, but also reduced the county-wide millage rate 0.7 percent, Stillwell says. “We expect to reduce the rate even more next year unless the board decides to take on new projects.”

John Albion, chairman of the county board of commissioners, feels competition is the key to operating more efficiently and dropping prices. “We have found that by creating competition, we effectively create efficiencies and often improve service,” he says. “Even though the private sector did not win the contract [for the nursing home], our own administrators had to find more efficient ways to operate to compete in the bidding process.” He adds it is imperative that government officials “challenge the system. We have to be more shrewd like the private sector in service delivery.”

Anticipating savings in the 30 percent to 40 percent range, Albion expects to invite bids on disposing of county solid waste.

When there is a possibility that service levels may drop, Albion explains the impact to citizens and determines what service level they are willing to live with. “We do not want to adversely affect service.”

With revenues currently exceeding expenditures, Albion says the commissioners are now in a position to do some long-range planning.