Administration and Finance

• Audit and budgeting services
• Custodial services and building maintenance
• Event and facilities management
• Human resources
• Inspection and Licensing
• Investment advice
• Lotteries
• Outsourcing and acquisition policy
• Pension fund management
• Printing and mailing
• Purchasing
• Tax collection

Lured by promises of increased efficiency, cost savings, and increased administrative flexibility, many local and state governments and the federal government are privatizing administrative and financial services. Privatization in the Administration and Finance sector varies from simple office functions like printing and purchasing to sensitive policy areas like human resources and investment consulting. It also includes services like inspection and licensing that have public safety implications. Several states have considered selling off their state lotteries to finance holes in the state budget, although none have done so as of the end of 2009. Perhaps because they are relatively out of sight, many administrative and financial functions were among the first candidates for privatization. On the federal level, this type of privatization is best illustrated by the example of the Internal Revenue Service contracting out tax collection to private companies. Large state agencies have also attempted to outsource their entire human resources departments, with sometimes very frustrating results. And governments on all levels use private consultants to help justify difficult policy decisions, including further privatization. Problems such as cost overruns, service quality degradation, and outright corruption have been consistently documented with privatization in this sector. Especially administrative functions involving big money and high-level decision-making -- such as operating lotteries, managing pension funds, the sale and leaseback of government buildings, and the growing use of private sector consultancies -- have generated conflict-of-interest abuses and a variety of other problems when privatized.

Recent reports of interest:

A Bad Deal: An Analysis of the Pending California State Office Building Sale/Leaseback Program
Beacon Economics, 2010

For additional reports, please see the research section on the side bar or visit our research library.

Privatization Run Amok

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