Minnesota is facing its greatest economic challenge in a generation, but as Gov. Tim Pawlenty said in his State of the State address, overcoming challenges is what we do best. Shared services are one way to improve efficiency and lower costs for state and local governments, including K-12 education.
Shared services are the consolidation of such back-office tasks as purchasing, financial transactions, personnel management, basic employee training and fleet services. We're doing this so Minnesota has less government bureaucracy, paper processing, administrative tasks and overhead. Combining efforts frees up resources so government can deliver the services that matter most.
Through shared services, we gain not only economies of scale but also economies of skill because the people performing this work are truly experts who focus on process efficiency and accountability. In many corporations and in governments outside the United States, shared services are now fundamental to operation.
Ontario estimates that it trimmed 30 percent of the cost of its back-office functions by implementing shared services across government nearly eight years ago. British Columbia reported savings of more than 35 percent. Massachusetts implemented shared human-resources services for all state agencies at the time when human-resources budgets were cut by more than 40 percent. A handful of states, including Illinois and Ohio, are in the initial stages of evaluating and implementing state agency shared services.
Here in Minnesota, the governor's Drive to Excellence initiative has already implemented a shared-services environment for managing information technology, real estate, fleet, grants, and state employee training and development.
The state's procurement office has been working across all levels of government for the past three years to reduce the costs of goods and services necessary for government to serve our citizens. This is done by combining purchasing power.
By utilizing best practices to achieve efficiencies and cost savings, state and local governments through 2010 will be paying at least $210 million less for goods and services. For example, by standardizing personal computer equipment, the state is anticipating five-year cost reductions of $95 million, with 88 percent of this amount accruing not to state government, but to cities, counties, school districts, colleges and universities. Recently signed contracts for multifunction copiers will trim costs by $45 million over the next five years, while purchasers are already saving on products and services as diverse as office furniture and supplies and fingerprinting.
State government is sharing these successes and others by significantly expanding its Cooperative Purchasing Program, in which local governments, K-12 schools, colleges and others can purchase directly from state contracts. There is no cost to participants, and the state will be working even more closely with members -- now nearly 700 -- on developing contracts that will meet some of their more specific needs.
