Date of Award

Spring 5-17-2006

Degree Type

Thesis

Degree Name

Master of Public Administration (MPA)

Abstract

Privatization of public services is being considered by more public agencies as a means to control escalating costs. This has been in direct response to the public's increasing resistance to paying higher taxes and/or user fees. However, concerns have been expressed by the public and public agency employees that privatization does not deliver the same level of service. This study will look at whether these cost savings/increases were realized by the City of East Palo Alto in the privatization of the operation and maintenance of their water system due to a cost advantage enjoyed by the private sector or if it was due to a change in these service level factors: 1) scope of service, 2) quality of service, and/or 3) a change in the condition of the capital assets (i.e. pipes, reservoirs, meters, valves, etc.). Financial and contract records, work orders, maintenance logs, complaint records were reviewed for a period of four years to obtain an objective record of the privatization contract and prior public agency operations. Operations and maintenance have generally improved, and the city now has a stable source of revenue that it had not been receiving under the previous public agency operation. Overall privatization is now firmly entrenched in the United States at the local level as a viable, alternative service delivery option in many cities, special districts and counties. It is clearly not the cure-all for fiscal difficulties and contracts have to be managed carefully. In the City of East Palo Alto's case, they are generally satisfied with privatization and have an important revenue source for the general fund that would have not been available if the -City had not chosen the privatization contracting option of an Asset Lease.

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