It's a Gray Area: Time to privatize out government work

June 11, 2011|By James P. Gray

When former Gov. Arnold Schwarzenegger first took office he promised to address the out-of-control worker's compensation system, and he did.

Unfortunately, after making progress on about 15% of the difficulties — the ones that were the easiest and least controversial — he basically declared victory, and sailed off to do other good deeds.

Recently I read that Gov. Jerry Brown said he would reduce the size and expense of state government by eliminating 37 state panels, advisory boards and agencies. Some of these are part-time, and pay their members $100 per meeting.


But others are supposed to be full-time and pay their members up to $128,000 per year, even though many of them, on average, meet only once per month. The savings to eliminate just these 37 agencies is estimated to be more than $10 million per year!

Well, how many state agencies do we have? I looked on the Internet and found that there are more than 500! You can see the list at

How many of these agencies are duplicative or even totally unnecessary? Surely many more than 37 can be consolidated or eliminated! Our state has a budget deficit, and all of the people on these agencies get salaries at taxpayers' expense, many get medical coverage and pensions as well, and all of the agencies have overhead expenses.

But even as importantly, it would be far more effective and much less expensive in many cases for many of these agencies to contract out the work they do to private companies.

Why? Because in the business world, much more than in government, incentives matter!

For example, a good friend of mine, Richard Esgate, has a company based in San Diego called Esgil Corporation. Here is his story.

Richard is an engineer, and during the 1970s he worked for San Diego County, supervising its Building Inspection Department. At that time, Richard had serious challenges staffing for all engineering plan checks due to large fluctuations based upon the time of year, government policies and the state of the economy.

The obvious answer was to have a private-sector firm available for overflow during the busy periods and staff absences, so requests for service proposals were sent out. But all of the private firms that submitted proposals were determined by County Counsel to have conflicts of interest, because they would be checking their own plans, potential clients or competitors.

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