ESSEX COUNTY — During the past several local board of education elections, “privatization” and “outsourcing” have been key words espoused by candidates who see the hiring of private firms for services such as transportation and maintenance as a way to save taxpayers money.
A bill, passed by both the N.J. Senate and the N.J. Assembly, however, would have placed severe limitations on privatization, were the bill not vetoed by Gov. Chris Christie.
On Aug. 8, Christie announced his veto of Bill No. S-770/A-2873, which would have limited the number of instances in which privatization is acceptable, and forced the various agencies included in the bill to jump through bureaucratic hoops.
Bill No. S-770 was introduced in the Senate on Jan. 14 and passed May 12; it was sponsored by senators Loretta Weinberg of District 37, Shirley Turner of District 15 and Stephen Sweeney of District 3. The bill then went to the Assembly as Bill No. A-2873 on May 15, and was passed June 16.
According to the bill, its purpose is, “to ensure that no public services are privatized unless there are cost savings which are not based on increased charges or reduced services to the public, or lowered workforce standards.Each prospective private contractor would be required to demonstrate cost reductions based on improvements such as management efficiencies or technical innovation, not based on added burdens imposed on the members of the public using the services or the employees producing them.”
The bill would have applied to an “agency,” which is defined in the bill as “any department, division, board, commission or other office or officer of the state or of any political subdivision of the state, or any authority or other instrumentality of the state.” Essentially, it applies to businesses, municipalities and school boards, as well as nearly everyone else.
Under this bill, agencies would be required to solicit competitive sealed bids based on a comprehensive statement written by the agency that includes a dizzying amount of information and then, if a bidder were awarded a contract, the agency would be required to write a comprehensive report detailing the contractor’s costs and abilities. This second report would then be sent to the state comptroller, who has the power to reject the bid.
In order for the private bid to be acceptable in this bill, the contract could not exceed five years; the contract must be for less than $250,000, unless under certain circumstances; the agency must not pay the contractor less than the public service currently costs; the agency must offer jobs to employees displaced by the contract; and so on.
Christie found this bill too cumbersome and vetoed in a harshly worded written statement to the Senate earlier this month, saying that the bill would “impose costly and burdensome requirements” on agencies.
“Among the bill’s many restrictive provisions is an arbitrary prohibition on privatization contracts that exceed five years in length, as well as a requirement that private contractors pay wages and benefits to their employees that are equal to or exceed wages and benefits paid to their public sector counterparts,” Christie wrote. “Moreover, this bill requires contractors to hire public employees who are displaced from their employment due to the privatization of services and allows union representatives of public employees to review privatization proposals prior to the solicitation of bids by a public entity.
“In sum, this bill creates an onerous and overly bureaucratic, process-laden system for privatizing government services, which will only serve to frustrate attempts by state and local officials to save taxpayer dollars,” Christie continued. “By proposing additional red tape into an already time-consuming process, this bill will adversely impact New Jersey’s already overburdened taxpayers. I will not support this thinly veiled effort to stymie privatization efforts under the guise of transparency.”
In an Aug. 11 press release, the New Jersey School Boards Associated lauded Christie for his veto of the bill. According to the release, in a 2009 survey conducted by the NJSBA, state school boards reported more than $34 million in annual savings through the subcontracting of noninstructional services.
“Local school boards have directed the savings achieved through subcontracting to classroom activities, including hiring and retaining instruction staff, and to help control property taxes,” Lawrence Feinsod, the NJSBA’s executive director, said in the release thanking Christie for the veto. “For many school districts, subcontracting can be an important financial option.”
However, Christie’s veto of this bill does not mean the topic is off the table. Similar legislation has been vetoed in recent years, as well.