Moving Forward

Establish an Open and Collaborative Environment

There are several ways to establish a collaborative working environment that helps facilitate productive communication:

  • facilitate open and direct communication between stakeholders and non-supporters;
  • engage all stakeholders and key personnel;
  • identify and include opponents;
  • identify all perceived and real obstacles and barriers;
  • understand personnel issues including collective bargaining and union viewpoints;
  • establish reasonable timelines for action;
  • establish a clear vision and firm objectives before the proposal is presented to the public;
  • hold well advertised public hearings;
  • appoint an advisory board comprising the people most impacted by the change, and
  • create a website and issue press releases to increase public awareness and project visibility.

Conduct a Cost-Benefit Analysis

 

Whether the goal is to improve service or save money, every project’s costs and benefits should be evaluated.  This work helps to:

  • define the proposed shared service;
  • sell the proposed changes to decision makers, and
  • illustrate potential changes needed to the proposed arrangement to make it beneficial for all participants.

Some costs and benefits are hidden or at least not easily recognized such as the cost to process payroll, provide program oversight and supervision, or deal with contracting issues so careful thought should be given to the analysis. 

Determine Type of Agreement Needed and Which Laws and Regulations to Follow

Determining the most appropriate type of legal agreement to use depends on a number of factors, but starts with knowledge of the applicable Massachusetts General Laws (M.G.L.).

Seek the advice of legal counsel early on, before deciding which type of legal agreement would best suit a particular regionalization project. The M.G.L. may directly govern the provision of the service to be shared, and there also may be laws that govern regionalizing the service. The Massachusetts Department of Revenue produced a list of statutes providing for regionalization that can be found online at: http://www.mass.gov/dor/docs/dls/mdmstuf/Technical-Assistance/region-resource/enabling-statutes.pdf.

Other service provision factors will help guide the decision as to which type of agreement to use. Addressing questions about funding sources, governance structure and staffing, including benefits and retirement considerations, are important to determine if a simple intermunicipal agreement (formal contract, joint service agreement, or service exchange agreement) is warranted, or if a different process, such as a town meeting vote or passage of special legislation is required to implement the shared service.

  • Early legal research saves time and effort later in the process
  • Knowing the applicable M.G.L. provides the foundation on which to build the shared service arrangement
  • Abiding by M.G.L. reduces potential liability for the service
  • Finding the applicable M.G.L. can be difficult to do with existing staff
  • Local officials may be reluctant or cannot afford to hire legal counsel to do the research

Set Objective, Measurable and Achievable Performance Standards

Legal agreements for shared services should consider the delivery of the service and how success will be determined. Establishing objective, measurable and achievable performance standards allows for all participants to understand how the service will be provided and how success will be measured.

Performance standards provide a basis for evaluation of the program over time. Objectivity brings fairness to the evaluation process, both for the participating municipalities and for the staff members providing the service. Making the standards achievable and measurable ensures that the service has a good chance to succeed.

It is important to include the performance standards in the formal service agreement. They can either be written into the agreement or attached to it as an appendix. Including a process in the agreement for amending the performance standards further serves to make the shared service flexible and able to adapt to a changing environment.

Establish Clear and Equitable Funding Formulas

Perhaps the most difficult discussion to have when planning to share a service is how the participating municipalities will share the cost of providing the service. Participants must believe the formula is fair and equitable.

There are many examples of funding formulas in use across Massachusetts that can be adapted as needed. Some examples of objective data to consider when developing a funding formula are the following:

  • Equalized valuation (EQV) percentages
  • Municipal population percentages
  • Actual usage of service, either by dollar value or quantity
  • Other quantifiable measurements:
    • Miles of roads
    • Number of invoices/checks processed
    • Hours of service provided per week

The actual formula can be as simple or as complicated as necessary to capture the desires of the participants. Regardless of the details of the agreed-upon formula for allocation of cost, it should be written into the formal agreement.

  • A fair formula eliminates arguments over funding the service
  • Including the formula in the written agreement maintains its validity through changes in staff or local officials
  • Using objective data reinforces the fairness of the formula
  • Different formulae may have widely different results. Determining the most equitable can be contentious
  • It can be difficult to change the formula in the future
  • There may be differing views on what the service should entail.

Determine Liability, Insurance and Indemnification Issues

Involving legal counsel and an insurance representative in early discussions about the proposed sharing arrangements will inform how local officials think about and approach implementation of the shared service.

Hosting a service carries means more liability than contracting for service provided by others. An accurate determination of the level and type of liability is essential to managing the risk involved and determining the level of insurance required to protect the municipality. Whether your community is providing a service to or purchasing a service from another community or host agency, ensure that all parties to the agreement have adequate amounts of insurance for the types of risks inherent in the service.

Indemnification is the act of insuring against or providing compensation for any hurt, loss or damage arising out of the service to be provided. Most formal agreements have a clause relative to indemnification or “holding harmless” the other parties to the agreement if something bad should happen. Consult legal counsel for appropriate language to include.

  • Accurate liability risk assessment is vital to protecting the interests of the municipality
  • Adequate insurance coverage is necessary to cover the possible risks inherent in the service
  • Indemnification serves to further protect the participants in case of injury, loss or damage during the provision of the service
  • Determine the extent of potential liability
  • Ensure that all parties carry appropriate levels of insurance throughout the life of the agreement

Craft a Solid Legal Agreement to Avoid Future Problems

A well-constructed legal agreement that covers all conceivable conditions, from service implementation through dissolution, will go a long way toward ensuring success of the sharing arrangement and avoiding future problems.

Establishing the rights and responsibilities of the participating municipalities in the formal agreement serves as guidance for future interaction. To do otherwise leaves an element of chance involved and increases the risk that future issues will arise and need to be resolved.

Some ingredients to include in a formal agreement include:

  • adequate insurance coverage required to cover liabilities and indemnify project partners;
  • objective performance standards;
  • clear and equitable funding formulae;
  • a process for amendment, and
  • a dissolution or disbanding clause.

Investing the time and effort required to craft a solid legal agreement will pay off over the lifespan of the sharing arrangement.

  • Avoiding problems means less staff time will be required to resolve problems
  • Setting boundaries and expectations early in the process leaves little to interpretation later
  • The element of chance may be fun at a casino, but leaving little to chance is fun in municipal management
  • Focusing the required attention on details of the legal agreement can be a daunting task for volunteer local officials
  • It may be difficult for municipalities to find funding for legal review

Consider a Dissolution or Disbanding Clause in Legal Agreement

When starting a shared service it may not be on the radar screen to consider the potential lifespan of the agreement. Future changes in local political leadership, advancements in technology, updates in the requirements of state or federal law or other as yet unknown circumstances may lead to a need to dissolve or disband the service sharing agreement. It is important to insert language into the service sharing agreement from the start that will provide for an orderly transition if the agreement must be terminated.

Items to consider include:

  • how to return any surplus funds to participants;
  • how to handle disposal or transfer of joint assets, and
  • how to allocate any transition costs involved in ending the service.

Also consider adding to the agreement a mandatory “cooling off” period before dissolution to allow time for the parties involved to reconsider the decision to disband. At the very least, the agreement should allow for enough time for participants to make other arrangements for delivery of the service.

  • Including language in the formal agreement provides a roadmap to disband, if necessary.
  • Clear language adds a sense of fairness to the process
  • Clear language reduces the possibility of future litigation over the demise of the sharing arrangement
  • It  can be difficult to focus on the idea of disbanding when the shared service has not yet been implemented
  • Negotiating a potential breakup adds a layer of complexity to the relationship between service sharing municipalities that may just be getting to know each other.