CITY OF SCHENECTADY,
DESCRIPTION OF PARTNERSHIP ARRANGEMENT
In 1991, the City of Schenectady entered into a partnership with Professional Services Group, Inc. (PSG) for the operation, maintenance and management (OM&M) of the City's 18 MGD wastewater treatment plant and its 15 ton per day sludge composting facility. Schenectady elected officials were motivated to adopt the five year contract in 1991 to solve chronic odor problems emanating from the wastewater and composting facilities which had plagued the surrounding neighborhood. Under the partnership agreement, the City maintains ownership of the facilities and contracts with PSG to operate, maintain and manage the facilities. PSG guarantees to meet effluent quality standards and pays all costs associated with daily operations under a fixed annual fee. In less than a year, PSG had made improvements to the composting system and wastewater facilities and, through rigorous application of its odor abatement plan, had resolved the odor problems. This success has resulted in a re-negotiation and a five year renewal of the partnership.
ESTIMATED/ACTUAL COST SAVINGS -- IMPACT ON RATES
Although solving the odor problem was the City's top priority during the early years of the partnership, the City has received something equally important -- operational cost savings amounting to more than $2.5 million over the term of the first contract. Additional savings of $1.5 million are projected over the life of the second five year contract term. Improvements in process operations have resulted in substantial reductions in electricity and fuel costs. The City has made capital improvements recommended by PSG which have further reduced costs and ultimately saved the City money. The City has been able to stabilize sewer user rates while cutting costs without sacrificing service. With the operational and odor problems a thing of the past, the city has achieved the ultimate goal of a public/private partnership -- quality service and low cost.
The City's labor unions strongly opposed the City's efforts to form a public/private
partnership for operations of its wastewater treatment plant. Job security, pay levels and
benefits were key employee concerns in the transition from public to private employment.
All affected workers were offered jobs with PSG, however one-fourth of them decided to
"bump" down into other city departments. Since that time, one-half of these
workers, filed applications for employment with the private operator after having seen the
positive changes that have occurred over the past five years. Pay and benefits ended up
being as good or better. With the change to private employment came new opportunities for
personal and professional growth and advancement -- opportunities that most cities simply
cannot provide. The first union contract between PSG and AFSCME was negotiated in only two
sessions. Union negotiations for the new five year labor agreement were completed in just
a single meeting. Morale among the plant workers has increased dramatically and labor
grievances have become non-existent since PSG has assumed responsibility for plant
operations in 1991.
The United States Conference of Mayors
J. Thomas Cochran, Executive Director
Copyright © 1996-97, U.S. Conference of Mayors, All rights reserved.