The League joins the New Jersey Association and the New Jersey School Boards Association in opposing A-5430. The requirements of A-5430 would apply to any privatization contractor valued over $500,000 that results in the loss of employment for regular employees. It would not apply to legal, management consulting, planning, engineering or design services, any public work contract subject to prevailing wage, or services principally provided by persons with disabilities employed by the “Rehabilitation Facilities Set-Aside Act”.
Prior to soliciting bids, the municipality would have to prepare a comprehensive estimate of the costs of regular employees providing the services subject to the contract, including the costs of employee benefits. The municipality would have to provide such a cost estimate to the employees and their union providing the services. The employees and their union will have 30 days to review and submit an alternative cost estimate and a proposal to reduce costs and increase efficiency. The municipality must review any proposal submitted and revised estimate after bidding and decide whether or how much to reduce the municipalities estimate when making the comparison between the bid and employee’s proposal. The employee’s alternative estimate or proposal cannot be disclosed until bidding is complete.
Any contract award must include an offer available employee positions to qualified regular employees displaced or dismissed from the municipality due to the privatization contract. Prior to the start of the contract, the municipality must, in consultation with the affected employees and their union, prepare an assistance plan, including any training, for each employee displayed because of the contract.
The municipality must make its determination public within 60 days of completing the bidding process. If the municipality chooses to designate a contractor it must issue a comprehensive written analysis of the total contract cost, including the cost to transition from public to private, additional unemployment and retirement benefits and costs to monitor and administer the contract. Such written analysis must be submitted to the State Auditor and Comptroller. The Comptroller has 30 business days to review and prohibit the municipality from entering into the contract if they determine that the bid does not provide costs savings or the municipality failed to comply with the provisions of this bill.
Making the decision to move from an in-house operation to a private contractor is never made lightly. Municipalities will often conduct a thorough analysis of the benefits and pitfalls of such a change. When developing their analysis municipalities will involve the affected department and will examine alternatives to delivering the services. As local units struggle with raising inflation while subject to 2% levy cap, officials are forced to re-examine their budget and delivery of their services. In order to deliver the services that residents expect and want local officials have been making structural changes not only to their budget but to their services. A-5430/S-1350 would create such a burden on both the municipality and potential contractors that there would be limited privatization of services.
This bill adds many layers of review and oversight, rending the process burdensome and lengthy. If the municipality passes all the hurdles to bid, we are concerned that there will be limited bidders willing to bid for the project that can potentially result in a loss of any savings. Municipalities must continue to have the flexibility to meet the current fiscal demands, and not have their hands tied further by legislation.
Contact: Lori Buckelew, Deputy Executive Director & Director of Government Affairs, lbuckelew@njlm.org, 609-695-3481, x112.