Revenue – Privatize Parking Enforcement

Savings: $1.1 million

Currently, the City enforces parking regulations with Department of Revenue employees and additionally contracts with a company named Serco to perform parking enforcement on nights and weekends.

In this option the City would privatize all parking enforcement, either by expanding Serco’s contract or contracting with another vendor.  The table below compares the hourly cost of enforcement between the Revenue Department and the Serco, the private company.[1]

Monthly Cost*

Hours of Enforcement Per Month**

Cost Per Hour

Revenue Department

$704,363

22,598

$31.17

Private Contractor- Serco

$90,737

3,332

$27.23

*Based on 161 budgeted parking enforcement aide (PEA) and field supervisor positions in the 2011 budget, and assumes fringe benefits are 35 percent of salary.  To estimate monthly cost, salaries are divided by 12.

**Hours of enforcement for Revenue only includes hours worked by the 149 PEA positions, not the Field Supervisor positions, and a 35 hour work week.  For Serco, hours of enforcement only includes the hours worked by non-supervisory staff. To estimate monthly cost, salaries are divided by 12.

The cost of enforcement with the private contractor is almost $4 less per hour than with Revenue Department employees.  The disparity is likely to be even greater given that the in-house cost reflects only the City’s personnel costs.  Assuming the City could purchase the 22,598 monthly hours of enforcement that Revenue employees currently perform from a private contractor at the same rate it currently pays Serco, the privatization of parking enforcement would result in a savings of approximately $1.1 million annually.

Proponents might argue that the City cannot afford to pay City employees a premium to perform the same service that private contractors could perform for less.  They might also argue that placing all enforcement of parking regulations with one provider would create greater continuity and may enable Serco to achieve economies of scale that would further reduce costs to the City.

 

Opponents might argue that the City would give up too much control by fully privatizing parking enforcement. If one company is given complete control over parking enforcement then they might gain a competitive advantage over time and make it impossible for the City to contract with anyone else.

Discussion and Additional Questions

A key consideration in deciding whether to implement this option would be to first determine which set of employees is more effective at parking enforcement.  This could be done by examining how many valid tickets on average Serco employees write compared to Revenue Department employees.

Budget Details

Dept: Revenue, 029 Bureau: NA
Fund: Corporate, 0100 Approp Code: Salaries and Wages – On Payroll, 0005
The appropriation is located on page 64 of the 2011 Annual Appropriation Ordinance.

http://www.cityofchicago.org/content/dam/city/depts/obm/supp_info/2011BudgetOrdinance.pdf

 


[1] Sources: Requested Contract Modification for Purchase Order 14852 for Parking Enforcement Services. June 25, 2008.

City of Chicago. 2011 Budget Ordinance. pg. 68.

http://www.cityofchicago.org/content/dam/city/depts/obm/supp_info/2011BudgetOrdinance.pdf