Tulsa’s Pain—and Gain

The city demonstrated that a comprehensive approach to efficiency could resolve a fiscal crisis while improving service delivery.
by | March 7, 2012 AT 5:00 PM

Tulsa, Okla., is among the many local governments that have been pushed to the brink of fiscal disaster by the recession. By the time Mayor Dewey Bartlett Jr. took office in December 2009, new classes had been discontinued in the academies that train police officers and firefighters, streetlights had been turned off and the grass was no longer being mowed on public property.

But those cuts weren't enough. The city had blown through 80 percent of its reserve fund during the first five months of the fiscal year, and Mayor Bartlett's new team had 45 days to find another $10 million in cuts. Like so many governments, Tulsa was trying to do too much. As a result, core services were suffering.

Tulsa needed a comprehensive strategic plan, and decided that it should be developed around some key themes:

• Focusing on core functions;

• Measuring customer satisfaction;

• Knowing the true cost of city government;

• Budgeting for and measuring performance;

• And embracing competition in service delivery.

But the city had another pressing issue to deal with. They had to collect all of the tax revenue that was due. Oklahoma is the only state in which localities rely solely on the sales tax to fund their operations. Taxes are remitted to the Oklahoma Tax Commission (OTC), which returns the revenue to the municipal governments minus a fee of 1 percent of the total collected. It turned out that more than $4 million in Tulsa tax revenue was going uncollected. Once the city began talking to a private firm about tax collections, the OTC succeeded in changing state law to require that municipalities use its services. After a court ruling in the city's favor, the state Legislature acted to provide the OTC with the resources to collect taxes more efficiently.

On the expenditure side, Bartlett used a grant from the George Kaiser Family Foundation to retain the private firm KPMG to conduct a six-month review of city operations that resulted in more than 1,100 recommendations for eliminating or consolidating services or opening their delivery to competition. A comprehensive survey of 1,800 Tulsa households found that more than 65 percent supported the recommended efficiency initiatives.

Recommendations are one thing; implementing them within a large bureaucracy is another. To do that, Bartlett created a Management Review Office (MRO), essentially an in-house consulting firm staffed with accounting, auditing, information technology, systems analysis, project management and performance measurement professionals. The MRO works with department managers to implement reforms that save money, improve and measure performance, eliminate unnecessary functions, shed extraneous assets and create competition opportunities.

A number of efficiencies have been achieved. The MRO identified more than 550 unneeded city vehicles, which will be sold. As a result, two maintenance garages will be closed. Five-year savings are projected to exceed $6 million.

Other reforms that are yielding savings include replacing police officers with civilians for jobs in which uniformed officers aren't needed. A review of the local wastewater utility due out this spring is expected to save $20 million to $40 million annually.

Gain-sharing has been implemented to encourage employees to find efficiencies by allowing them to keep part of what they save. The seven employees who successfully bid against a private company for the contract to maintain City Hall were able to do the job for even less than their bid price. As a result, each recently received a check for nearly $4,000.

A public-private partnership was created to run the Tulsa Zoo. After the partnership raised $550,000 to fund capital investments and catch up on deferred maintenance, zoo attendance increased by 5,000 between September 2010 and September 2011.

The comprehensive approach to efficiency was a winner for the city. Tulsa's fiscal 2010-2011 budget was about $555 million, $13.5 million less than the previous year. The police and fire academies are operating again, street lights are back on and the grass is being mowed.

Nobody enjoys the pain that budget crises inflict, but Tulsa demonstrates that it can be the catalyst for reforms that reduce taxpayer costs and improve service quality.