Orange County Register, September 9, 1997

Riverside’s recently privatized library has increased hours, books, and staff

This summer, Riverside County’s public library system became the first
privatized public library in the country. While some feared staff reductions,
an end to children’s programs, or other spending cuts in the name of
efficiency, changes so far demonstrate that the quality of service has
increased under privatization.

As management costs of public industries multiply, government officials are
looking to the private sector more and more. Privatization, an idea often seen
as radical and threatening, has proven more efficient and effective than
bureaucracy. Better service and fair prices are not threatening or radical,
they simply make sense.

Privatization occurs when a government run firm is turned over to the private
sector. In the case of transportation, telecommunications, and utilities, the
government deregulated prices and let individual companies set their own
rates. Much to the relief of consumers, increased efficiency and competition
prevented rate increases, demonstrating that markets benefit consumers more
than regulation.

Other privatized industries, including garbage collecting and school busing,
involve the government choosing a private contractor to provide a service for
which the government maintains responsibility. This type of privatization,
which applies to the library, is called contracting out.

While Riverside county still owns the library, a private Pennsylvania firm,
Library Systems and Services, Inc., manages each branch. Their
responsibilities include everything from deciding which books the library
purchases to sending out paychecks for the library staff.

The new management has already started making changes. By September 1, they
will increase library hours by 25 percent. Over the next year, they will spend
$36,000 more on books. Wages for library workers will remain the same, and
they have hired more clerical staff to ensure that things run smoothly.

These changes are being made on a very limited budget. Their contract of $5.3
million annually translates to $9.98 per county resident, one of the smallest
in the state. Frank and Judy Pezzanite, who now run the Riverside branches,
explained to the _Los Angeles Times_, “sometimes improvements don’t cost
money. It can be as simple as taking an employee’s suggestion on how to do
things better.” Effective methods for them include rewarding suggestions with
Mrs. Field’s cookie certificates and offering school tuition reimbursements
for library workers.

The primary reason that privatization increases efficiency and service is that
the private sector is more able and willing to innovate and experiment.
Imagine the EPA or IRS rewarding employees with cookies. Or the post office
announcing that they will be open on Sundays with no additional funding. Such
things simply do not happen in the public sector.

Because private owners operate on a limited budget and want to maximize
profits, they have incentive to both innovate and reduce waste. Government
agencies, however, have no such incentives because they do not get to keep
profits. Their budgets are determined according to political fiat, and if they
lose money it does not come out of their paychecks.

Many people associate privatization with corporate greed. They think that in
the absence of regulation, prices will skyrocket as businesses try to make a
buck. This perception is just plain wrong.

First of all, deregulation leads to competition. In the absence of set prices,
individual companies must compete for customers. Competition not only drives
prices down, but brings service up. For example, a 1993 study by Yale
economist Paul MacAvoy shows that since deregulation, prices fell 14.3 percent
in the rail freight business, 7.2 percent in the trucking industry, and 7
percent in the passenger airline industry. Simultaneously, customer gains and
satisfaction have increased.

Furthermore, increased profits usually result from cutting costs, not from
raising prices. By listening to employees, Riverside County’s new library
managers discovered ways to spend less and still increase service through
longer hours, increased staff, and more books. While the public sector usually
responds to lost revenues by asking politicians for a bigger budget, the
private sector does not have that option. They therefore must figure out
innovative ways to do more with what they have.

As Gary Christmas, a new Riverside County librarian puts it, “a public library
is one that’s open to the public.” Privatization does not endanger our access
to public goods. Instead, it promises higher quality and service and increased
efficiency. The Riverside County Public Library offers policy makers a prime
example of the benefits of privatization without even opening a book.

Erin Schiller is a Public Policy Fellow at the California-based Pacific
Research Institute.