Hawkins Report measured efficiency in customer service
by Joe Naiman
A 1974 State of California document known as the Hawkins Report noted that if efficiency is measured in customer service smaller special districts are actually more efficient.
The official title of the 76-page report was “Public Benefits from Public Choice” with the subtitle “A Program to Reform and Revitalize Local Government in California, Increase Local Control of Government Costs and Services, and Enhance the Ability of the Public to Determine the Scope and Impact of Government Plans and Programs”. Robert B. Hawkins Jr. chaired the six-member Local Government Reform Task Force which also included Charles Hobbs, Gregory Krohm, Allen Hyman, John Phillips, and Earl Strathman and utilized five research associates, six professors as advisors, consultant Haug and Associates, liaison to the governor’s office Roger Magyar, and two secretarial personnel.
The Local Government Reform Task Force was created in early 1973 after state and local officials agreed that some type of reform was needed. Governor Ronald Reagan’s initial comments included the statement: “We are going into this with absolutely no preconceived ideas of what the final reform proposals will be. No solution, no suggestion is too drastic or too innovative to ignore.”
Reagan added some constraints on the result of the panel, stating “Only one thing we know for sure, we do not intend to add more layers of government” and “Whatever shape this reform takes, we want to guarantee that state government does not mandate new or expanded programs and responsibilities for local government — without providing the money to pay for them”.
California legally has six types of local governments: counties, cities, special districts, school districts, joint powers authorities, and redevelopment agencies. At the time the state had approximately 5,800 local government units including 58 counties ranging in population from fewer than 500 to more than 7 million, 410 cities with populations ranging from 146 to 2.8 million, and 4,235 special districts. Local governments collected $14.3 billion annually in revenue, not including $7.8 billion channeled through the federal and state levels, with education accounting for 22 percent of the expenditures, public safety comprising 15 percent of spending, and health and welfare constituting 14 percent of expenses.
During a nine-month period the task force received and analyzed comments from more than 2,000 elected and appointed state and local officials, interest group representatives, scholars, and members of the general public. The task force also collected fiscal, organizational, and operational data on the state’s local governments and research literature on local government problems and practices both in California and in other states.
The task force determined its conclusions based on the point of view of the citizen served by local government, stating: “This citizen perceives that a portion of his earnings are taken from him, and a set of services offered to him by local government. He does not, as a rule, concern himself with the mechanics of how government converts his money into services unless there is a dramatic discrepancy between what he pays and what he gets.” The point of view also included: “His currency of exchange with government is not money, it is his vote. And particularly with respect to local officials, he expects his vote to have greater weight.” The task force used that point of view to define and analyze problems which reduce the ability of local governments to meet their citizens’ expectations for public services and to seek solutions to make local governments more responsive.
“It is not necessarily bad to have many local government units if they increase responsiveness; and it is not necessarily good to elevate problem solving to a regional level if local control is reduced. What is essential to the reform of local government is the restoration of methods of public choice which allow citizens to change their local government structures and operations to meet local needs,” the Hawkins Report stated in its introduction. “Centralization of government, through consolidation of local governments and shifts of functions to higher levels of government, has been in vogue for the past 40 years. State and federal governments have systematically pre-empted local authority in the definition, regulation, and funding of public services. The recommendations in this report point in a different direction: Toward increased public choice and local control in California government. The task force believes that in this direction lies the best hope for ‘a government that is visible, responsive and efficient in meeting the needs of our people’.”
Although a 1966 Committee for Economic Development report found flaws in smaller governments such as limited taxable resources or legal powers, overlapping layers, confusion by the public, weak policy-making mechanisms, and the lack of a single executive, the framework which analyzed local government in terms of enhancing public choice defined small and numerous units as “diverse communities of interest”, duplication and overlap as “alternatives available to consumers” which permit “flexible resources to anomalous situations”, and controlled policy-making as the result of bargaining between parties of disparate interests. The task force focused its description of local government on the issues common to both types of analysis: costs and performance, problem-solving and planning, and responsiveness.
Special districts include independent special districts, which have independently elected directors, and dependent special districts, whose members are a county Board of Supervisors or a city council. The 4,235 special districts included 1,779 dependent districts, which are special taxing areas established to provide a desired service and have no independent power to budget or tax (most of those have advisory boards whose decisions are usually respected by the actual governing body), and 196 of the independent special districts were inactive over the previous year. The remaining 2,728 local governments excluding school districts ranked California 43rd in local governments per capita among the 50 states. The state’s 12 most populous counties accounted for 72 percent of the state’s population but only 20 percent of independent special districts, leading to a Hawkins Report line that as measured by number of governments per capita Alpine, Modoc, and Sierra were the most fragmented counties while Los Angeles, Alameda, and Santa Clara were the least fragmented.
The review of per capita service costs analyzed national and state data for cities in 1966-67 and 1970-71. Per capita costs increased with city size rather than by number of government units with cities of fewer than 50,000 residents having the lowest national and state per capita costs in both fiscal years and cities of 50,000 to 99,000 residents having the second-lowest per capita costs in each instance.
The economies of scale analysis found no statistically significant relationship between the size of the government unit and the cost of performance for labor-intensive services. The findings included significant cost reductions with size for sewage treatment (measured in gallons of effluent) and slight cost reductions with size for county road maintenance (measured in miles of county road). Findings of no overall relationship with possible cost increases at the extremes were made for county assessor’s services (measured in parcels of land) and municipal fire protection (measured by assessed value and population). For education, measured in pupils, costs increased and performance declined as a district exceeded 2,000 pupils. No overall relationship was found for county tax collection (measured in parcels of land), county elections (measured by number of registered voters), municipal street maintenance (measured by miles of city streets), county welfare (measured by families on caseload), and county medical assistance (based on families receiving aid).
Potential explanations for the lack of economies of scale included additional administrators in a hierarchical organization and the lack of incentives to innovate as well as the labor-intensive rather than capital-intensive nature of many government functions. Smaller units often contracted for service, either with private companies or with other local governments.
“Functional consolidation may be indicated in some service areas, but even in these uses functional consolidation — which may be arrived at by interjurisdictional agreement — may not imply a need for organizational consolidation,” the Hawkins Report stated. “Our evidence indicates that a highly flexible and independent local government system able to employ a variety of means in order to provide services to its citizens can best balance the need for cost-efficiency with the need to maintain a healthy political unit.”
The Hawkins Report also noted the need to define service performance. “The value of public services can only be determined by the individual citizen who benefits from the services. Even if government reorganization, for instance, can produce higher levels of service, the citizens may not want or need the new levels or kinds of services offered,” it stated.
The reorganization may actually deprive citizens of a desired service. “A characteristic effect of consolidated governments has been greater reliance on professional, non-elected staffs for critical decision-making. This effect has mixed blessings. While a more thoroughly trained (professional) staff should mean more responsive services, this goal has often not been realized,” the Hawkins Report stated.
The Hawkins Report cited an October 1973 Michigan Farm Economics article titled “The Impact of Michigan’s 1969 Lower Court Reorganization on Rural Citizens” which included the content: “After four years of the district court system, it appears the proposed benefits of reorganization are as illusive as some of the former alleged criticisms of the Justice of the Peace system. But some things are evident: the reorganized courts are less accessible with respect to time and location, certain groups of rural residents have lost some control over their judiciary, court utilization costs have increased for rural residents pursuing civil litigation and answering summons, reorganization has forced the local community to increase police budgets because overall police effectiveness has declined, and there may be a reluctance on the part of law enforcement officers to make certain arrests.”
The Hawkins Report also cited a 1968 study that a more centralized and professionalized form of government was “positively related to decreased policy responsiveness to the demands of disparate constituencies and, therefore, decreased the access of neighborhoods and citizen groups to city government”.
“After considering the wealth of evidence on the costs and performance of local government services, we have concluded that a system of highly flexible and independent local government units is as capable or more capable of providing the quality of service that people expect than a centralized and consolidated government system,” the Hawkins Report stated. “In fact, our evidence on functional costs, on economies of scale and on the impact of professional influence indicates that a reduction in the number of governmental units, through consolidation of local units, would produce a system less likely to provide public services of a quality and at a cost that suit the diverse preferences of the citizens of California.”
The legislative action recommended by the Hawkins Report included allowing citizens to petition for a vote to change jurisdictional boundaries including the partitioning of cities and counties, eliminating the ability of a county’s Local Agency Formation Commission to prevent an election for a proposed new unit of government or a consolidation or detachment, and requiring that each county LAFCO include representatives from independent special districts on the LAFCO board. The task force also recommended giving LAFCO the power to place a dissolution election on the ballot for any special district in which no district board position had been contested for three successive elections.
