Sunday, February 01, 2009

Privatizing Refuse Collection

With the need to invest in new refuse collection equipment, ($12.2 million for 40 trucks), this is the optimum opportunity to consider privatizing (sub-contracting) refuse collection in Toledo. The Mayor was quoted in the Blade Article, 1/30/09 (Blade Article) that there would be an estimated savings of $3.6 million if refuse collection was privatized (sub-contracted). I have long advocated the switch to sub-contracted refuse collection to save cost and used the information provided in the Blade Article and other data to study the effects of such a change. It may be overly optimistic to expect a 31% savings by switching service to the private sector based on the following data.

In an analysis of the 2008 Budget, the actual expenditures from 2004 though 2007 and 2008 budget for the Refuse Department are listed with an estimated per cent of savings if $3.6 million is an accurate amount as quoted by the Mayor:

Per Cent Savings by Privatization
$10,324,386 34.9% 2004 Expenditure
$10,840,653 33.2% 2005 Expenditure
$11,348,331 31.7% 2006 Expenditure
$11,716,547 30.7% 2007 Expenditure
$11,348,181 31.7% 2008 Budget

(The above expenditures include all expenses associated with refuse collection in the 2008 Budget such as: Buildings, Capital, Maintenance, Office Supplies, Salaries and Benefits. See Google spreadsheet “ Toledo Refuse Cost “ for line item expenditures.)

One method of calculating savings is to figure the cost per household; however, there are different calculations by the City of the number of households. Councilman Collins stated in 2008 there were 91,000 households, the City website quotes 114,000 households (Solid Waste Deparment Webpage); therefore, both are shown in the calculation of annual cost per household:

Total Annual Budget 114,000 91,000 Explanation
$11,348,181 $99.55 $124.71 City collection per year per unit.
$7,748,181 $67.97 $85.14 City collection less $3.6 million savings
$23,256,000 $204.00 $255.56 Private at $17 per month
$20,520,000 $180.00 $225.49 Private at $15 per month

A sample of fees for Ohio Cities shows the annual fee for city operated and city sub-contracted service ranges from $64.44 to $200.04 per year. For Privatized collection, the rates range from $120.00 to $210.00 per year. Most of these cities have a more limited program of refuse collection than Toledo.

Private or Contracted Refuse Collection Cost
Per MO//Per Year
Stow OH 16.67 //200.04
Brunswick, OH 13.50 //162.00
Aurora, OH 13.90 //166.80
Mentor, OH 5.37 // 64.44
Parma, OH 7.11 // 85.32

City Collection Rate
Akron OH 10.80 //129.60
Sylvania, OH 10.00 //120.00
Barberton,OH 11.30 //135.60
Canton, OH 12.40 //148.80
Cuyahoga Falls 17.50 //210.00
Warren, OH 14.12 //169.44

Supporting Documents:
Stow OH
Brunswick OH
Sylvania OH
Parma OH Ref Pg 11

These numbers do not support a savings through subcontracting refuse collection in Toledo. However, several questions remain to be answered:

1. Are all expenses associated with refuse collection in Toledo charged to that department?
2. What type of service was included in the bids received by the Mayor?
3. How many households are in Toledo?
4. What is the basis for the claim of a $3.6 million savings quoted by the Mayor?
5. In the information received, what was the total annual and monthly fee quoted to the Mayor?

Is it time to privatize refuse collection and can it be successful? In reviewing the data, one would conclude it would be cost effect to keep the current form of service even if we do spend the $12.1 million for new equipment; however, a thorough study is crucial.

City Council must be diligent to ensure accurate data is used to make an informed decision. If the Administration is not forthcoming in providing all necessary detail to make an informed decision, Council must demand this information so they can analyze and justify any decision. If the above information is complete and accurate, Toledo will be better served by keeping the current form of refuse collection.