Upjohn ready to start consolidation analysis

December 5, 2011
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The W.E. Upjohn Institute for Employment Research is getting ready to dig into a two-part analysis ordered by a Kent County subcommittee on consolidation and collaboration in response to a proposal made by One Kent Coalition last February to merge the county and the city of Grand Rapids into a new metro government.

The first portion of the analysis will involve the institute’s staff examining various governmental service-sharing agreements to identify what key elements they have in common.

“The reason for that type of analysis is to see if there is shared commonality. If there is, then we can see where partnerships are more likely to prevail than not,” said George Erickcek, senior regional analyst for the institute, from his office in Kalamazoo.

“In that one, what we’re really hoping to do is to really see if there is a common characteristic that is shared in successful efforts. I can imagine that these common characteristics could include a defined goal that everyone agreed upon and that everyone agreed that a solution was best to reach that goal,” he added. “That’s pretty straightforward stuff.”

Upjohn plans to file a report on that portion of the analysis with the county’s subcommittee in early February. Subcommittee members feel the report will help a 13-member committee they created. The committee’s mission is to find the best means to achieve effective and efficient government, and to try to determine whether actions done through collaboration or consolidation can be used to reach that goal. It’s hoped the report will give the committee some background on what has worked in the past and why previous service-sharing agreements succeeded.

The committee is expected to hold its first orientation meeting Jan. 12.

The second portion of the analysis is a tad trickier. The staff will examine governmental consolidations in other metro areas to determine the economic performances of those mergers and compare them to the business gains in non-consolidated areas, with an eye toward outlining what economic change a merger might bring to the county. Erickcek told the Business Journal there are two reasons that study will be a challenge.

“The first reason is that there is not one set way to do a consolidation between governments. So when you take a look at Nashville or take a look at Louisville or any of the other models, they’re all a little bit different. So there isn’t one standard model that has been adopted by metropolitan areas that has led to governmental agreements,” he said.

In this case, Erickcek said the first step for the Upjohn staff is to find a way to measure the degrees of successful mergers. The staff’s second challenge is an age-old one, and that is to find a statistical way to hold other separate actions constant across the mergers being studied. By that, Erickcek means that, for instance, a company might have moved into a metro area, bringing jobs and improving its economic performance. That move, however, might have happened regardless of the consolidation effort — not because of it, and analysts need to know if circumstances such as that exist for each merger they study.

“That’s going to be one of the challenges with that. Are we going to be able to control for all the other things that are likely to have happened during this historical time period? And are we going to be able to identify the actions that contributed to the consolidations?” he said.

“We’ll probably rely on regression statistical analysis very heavily, seeing if there is a difference in the growth rate between those areas that have a consolidated government and those that do not,” he added.

Erickcek said the plan is to gather as much data as possible for all the metro areas over a certain time period, and then compare those areas that have consolidated governments to those that don’t, while controlling for everything including the “kitchen sink,” and see if there is a difference in economic performance outcomes. He said it was fair to call it a cost-benefit analysis of consolidations.

A report One Kent issued in June revealed that 19 city-county consolidations took place in the U.S. from 1957-2000. The same coalition report showed voters rejected 25 consolidations from 1948-2010.

Erickcek said it is quite possible that the county’s subcommittee and new committee will learn more from the first portion of the study than from the second part because reviewing successful service-sharing agreements is a beneficial thing to do.

“I think those success stories can be more useful than looking at a statistical analysis that may or may not show results,” he said. “And if it doesn’t show results, we don’t know if it was just statistically impossible.”

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