Mayor and Council –
I reviewed the MNP Service Review Final Report and thought I should share some of my thoughts with you.
Overall, the recommendations are well founded particularly the ones involving reorganization and uploading regional services to the county. I think that the city can make some improvements if the recommendations are implemented. However, I don’t think these go much beyond what we already know.
As far as the report itself goes I was expecting much more for the $108,000 price tag. Some will argue that we shouldn’t be concerned about the cost given that the province is paying. However, Council has a fiduciary responsibility to ensure the city receives fair value for every dollar it spends regardless of the source.
I found that much of the report was boilerplate – constructed using a previous study as a template. There is evidence of this throughout the report.
For example, if you look at the asterisk at the bottom of the Benchmarking Comparator Profiles on page 72, it refers to the City of Lake of Bays.
Lake of Bays has a population of 3,100 and is not a comparator municipality for Owen Sound and is not mentioned anywhere else in the report. The practice of selling the same work to multiple clients is common practice in the industry and in itself is not a problem. It is the sloppy work and the lack of attention to detail that calls into question the validity of the results.
Overall, the report lacks credibility and is devoid if true scientific analysis for many reasons.
To keep this brief, I will only focus on two areas; the Calculation of Service Value, and the Appropriateness of Comparator Municipalities used for benchmarking city services and programs.
First, my observation is that the calculation of service value is flawed in that it relies on customer satisfaction data without giving any consideration to service usage. How much a service is used is an important factor in assessing the value of the service in the eyes of residents.
For example, consider a hypothetical municipality of 1,000 residents.
If a particular service is only used by 100 residents and 70 are satisfied with it, MNP would assign it a rating of 3. If a different service is used by all 1,000 residents and 700 are satisfied with that service, MNP would assign it the same rating of 3.
However, intuitively we all know that a service that is used by 100% of the population is far more valuable to the municipality than a service that is only used by 10% of the population. The satisfaction survey clearly states that it does not consider those that do not use the service when calculating satisfaction percentages.
The MNP report states that: “the citizen satisfaction scores are a large component of the service valuation framework”. However, by not considering how much the service is used by the population it gives a distorted view of how the residents value the service.
In regard to the benchmarking city services and programs, I believe that the comparator municipalities they used are not at all true comparators for Owen Sound.
Three of the five comparators they use are single tier municipalities where Owen Sound is a lower tier municipality.
One, Cornwall, has 221% of the population and 213% of the number of private dwellings as Owen Sound.
Another, Pembroke, has a population of less 15,000, which puts in a different category based on the BMA Studies. As well it has only 66% of Owen Sound’s population and dwellings.
Also, Orangeville has a population that is 140% of Owen Sound’s. BMA places it in a different municipal category than Owen Sound given that is has a population that is greater than 30,000.
Of the five comparators they used it appears to me that only one, Cobourg, actually meets the MNP stated criteria for comparator municipalities. As a result, the benchmarking of city services and programs is of little value, given that four of the five comparators were well outside the range of reasonableness.
My guess is that these were the only municipalities that they had access to the 2018 - 2020 annual financial information returns. So, instead of taking the time to mine the audited financial statements for each municipality, to obtain the same financial information, they opted to use municipalities that were clearly out of range to be used as comparators.
I reached out to the senior consultant on this project, Steven Luckie, using both his corporate email and his LinkedIn contact address, in an attempt to better understand his reasoning behind his selection of the comparator municipalities. He has not yet responded.
It’s important to note that when I did my comparative study of salaries and benefits expense I only used municipalities that had populations and total occupied dwellings within 15% of Owen Sound’s and delivered very similar services.
For that study I used Strathroy-Caradoc, Huntsville, Amherstburg, Essex, Tillsonburg, Thorold, and Kingsville as comparators. You would think that on a balance of probabilities that at least one of these would have made the cut for the MNP study, given that there are only a handful of urban municipalities the size of Owen Sound in Ontario.
My personal assessment is that the substance of this final report falls well short of what I have experienced for consultant’s studies with similar $100,000 price tags.
I believe that the project failed to deliver on at least one of its key project objectives, that is, benchmarking city services and programs with comparative municipalities.
As well, the service value data it calculated is of questionable value given that it does not consider service usage, which is an important factor that should not have been ignored.
Additionally, the cost of protective services represents over 40% of the budget. The fact that this study did not include protective services also significantly degrades the value of the report.
For these reasons I encourage you to act in the interest of all taxpayers and send this report back to the consultant to correct these deficiencies, at the consultant’s expense, and not authorize final payment at this time.
Jim Hutton
Owen Sound
After retirement from the navy, Commander Hutton earned a Master’s Degree (MBA). His graduate studies included a research project focused on reducing the cost of municipal services. He then entered the world of post-secondary administration where he gained a reputation for bringing a business focus and sound fiscal management to public institutions. After a 15 year career in post-secondary administration Commander Hutton retired for the second time and chose to return to Owen Sound where grew up. He has published his local analyses here.