Reexamining the Relationship Between Fiscal Stress and Outsourcing

Zhang, Zhiwei; Gibson, Bryan; Schafer, Josephine Gatti

doi:10.1080/15309576.2017.1358645

Cited by 12 publications

(12 citation statements)

References 47 publications

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“…Drawing on the approach of previous studies (e.g., Alonso & Andrews, 2020; Ferris, 1986; Zhang et al, 2018), we operationalize the degree of a certain municipality's outsourcing practice as the ratio of the number of services contracted out to other governments, private firms, or nonprofit organizations to the total number of services provided by the municipal government. Figure 1 displays the distribution of the total number of services provided by the sample municipalities, with an average of approximately 37 services.…”

Section: Methodology: Model Data and Variablesmentioning

confidence: 99%

“…In the literature on public service outsourcing, empirical studies primarily focus on three broad groups of driving factors: fiscal stress, economic efficiency, and political processes and ideological attitudes (Bel & Fageda, 2007, 2017). First, previous studies generally find that fiscal stress (budget deficits, outstanding debt, and reliance on fiscal transfers) pushes governments to outsource more services (e.g., Bel & Fageda, 2007; Ferris & Graddy, 1986; LeRoux & Pandey, 2011; Morgan & England, 1988; Zhang et al, 2018). Second, regarding the factors of economic efficiency, previous studies can be classified into two categories: studies belonging to the first category focus on economies of scale in public service provision, while those belonging to the second category explore cost savings based on transaction costs theory.…”

Section: Literature Reviewmentioning

confidence: 99%

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Local institutions and public service outsourcing: Managerial professionalism, mayoral strength, and electoral rules

Wei

Zhang

Yang

2022

Public Administration Review

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This research examines how institutional contexts matter for US municipalities' service outsourcing decisions, deriving data from the ICMA's multiple rounds of surveys concerning local institutions and service delivery choices. We focus on seven pivotal local institutions that address managerial professionalism, mayoral strength, and electoral rules. Moreover, a composite index measuring the general nature of the municipal structure on a political-administrative scale is constructed based on the local institutions examined. The empirical estimations use the existence of initiatives and popular referenda allowing citizen voters to adjust local statutes as instrumental variables for local institutions. We find that municipalities with a council-manager municipal form, a professional manager, a weak mayor, and nonpartisan and at-large elections of council members outsource less services. Professional managers can moderate the effects of contextual factors on government outsourcing decisions. Moreover, municipalities with a more political or a less administrative municipal structure outsource a larger portion of services. Evidence for Practice• The statutory council-manager municipal form, the existence of a professional manager, a weak mayor, and nonpartisan and at-large elections of council members have negative effects on the degree of government service outsourcing. • Professional managers within municipalities can moderate the influence of key contextual factors, such as population size and fiscal stress, on local outsourcing decisions. • A municipal structure that is more political or less administrative in nature positively affects government service outsourcing, especially outsourcing through interlocal cooperation. • The driving factors are distinct across different forms of public service outsourcing, including outsourcing to private firms, nonprofit organizations, and other governments.

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Section: Methodology: Model Data and Variablesmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Local institutions and public service outsourcing: Managerial professionalism, mayoral strength, and electoral rules

Wei

Zhang

Yang

2022

Public Administration Review

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“…Chaney, Copley, and Stone (2002, 297) argue that the outstanding debt level 'is inversely related to the state's ability to issue new debt'. Kim and Sorensen (2019) and Zhang, Gibson, and Schafer (2018) apply the same logic to local governments by using debt level as an inverse proxy for the local governments' ability to borrow external resources. Thus, we hypothesize that the ability to manage debt reduces expenditure gaps.…”

Section: Hypothesesmentioning

confidence: 99%

Financial capacity and organizational stability in U.S. local governments

Park

Kim

Chen

2020

Public Management Review

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Stabilizing local governments' expenditures over time is essential to ensure the continuity of public service provision. However, there is little agreement on the managerial determinants of expenditure stabilization. We identify whether and which aspects of financial capacity are related to expenditure stabilization. Using a sample of local governments in New York State, we find that the ability to maintain fiscal reserves, the potential to borrow external financial resources, and the fiscal flexibility to run deficits reduce expenditure gaps. This study contributes to our understanding of the link between the financial capacity and local governments' decisions on expenditures.

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“…In some cases, a high debt level may indicate investment in capital assets that could be used in the future and generate positive returns for student performance in the long run. However, prior studies suggest that debt is generally inversely related to a government’s borrowing capacity because the capital market may start to doubt its ability to repay debt in the future if its debt level is high (Chaney, Copley, and Stone 2002; Zhang, Gibson, and Schafer 2018).…”

Section: Model Specificationmentioning

confidence: 99%

Caught in the Crunch: School District Financial Condition and Performance

Kim

Sorensen

2019

State and Local Government Review

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The ability of public organizations under fiscal stress to achieve their goals and maintain public service delivery warrants attention. Using an eleven-year panel of school-district data from New York State, this study examines how different dimensions of financial condition affect district performance. The findings indicate that increasing debt burdens have immediate negative impacts on school-district performance. These adverse impacts may be driven by the cutback strategies that districts choose in response to declining financial conditions. These findings have practical implications for how public organizations can best cope with rising debt while maintaining high performance.

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Reexamining the Relationship Between Fiscal Stress and Outsourcing

Cited by 12 publications

References 47 publications

Local institutions and public service outsourcing: Managerial professionalism, mayoral strength, and electoral rules

Local institutions and public service outsourcing: Managerial professionalism, mayoral strength, and electoral rules

Financial capacity and organizational stability in U.S. local governments

Caught in the Crunch: School District Financial Condition and Performance

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