Photo by pirate johnnyFalcon Heights (pop. 5,321) is a model for working cooperatively with its neighbors.

Minnesota has no shortage of local governments — more than 2,700 in all. They include 87 counties, 855 cities and 1,785 townships.

That puts Minnesota fifth among all states in local governmental units per capita and eighth in local governments per square mile. Together, they spend more than $11.5 billion a year.

That raises questions about whether there are ways to deliver local services more efficiently, especially since the state provides about 25 percent of county funding and 19 percent of municipal funding.

The Office of Legislative Auditor attempted to address these questions in a recent 85-page report (PDF).

The report doesn’t hold out a lot of hope for consolidation of small cities and counties, and says there is “no guarantee of savings or more efficient operations” as a result of merging entire governmental units.

Shared services a better bet

However, it does suggest that there are opportunities for savings through shared delivery of certain services, particularly those that are capital-intensive.

Consolidations of local government are a rare thing in Minnesota. The number and boundaries of Minnesota counties were established in the horse-and-buggy era, and have not changed since 1922.

Among cities and townships, there have been about 25 mergers or annexations since 1980, according to the auditor’s report.

Legislative Auditor James Nobles says that consolidations of local governments “do not happen naturally or normally,” and that the state has not played much of a role in recent years in encouraging public discussion of the issue.

Indeed, over the last several decades, the governor and Legislature have eliminated three state agencies that assisted local governments with issues relating to the consolidation and service delivery – the State Planning Agency, the Minnesota Municipal Board and the Board on Innovation and Cooperation.

Source: Office of the Legislative Auditor, survey of local government representatives, 2011Local government representatives' perspectives on consolidation, 2011

Local initiatives more successful

At the same time, however, the auditor’s report emphasizes that consolidation efforts historically have been more successful when they were initiated by local governing bodies or citizens, rather than pushed by a state agency like the old municipal board.

The report says the state could play a helpful role by providing grants to cities and townships interested in studying the possibility of consolidation.

The most recent municipal consolidation, and one of the more successful, was the 2007 merger of Elko and New Market in Scott County. The two small but fast-growing cities had a history of cooperation, and the merger won approval from residents with 84 percent of the vote.

Thomas Terry, the city administrator, said consolidation had been a topic of discussion since the mid-1980, but that talks began in earnest in 2004. He said the two cities already had collaborated to build wastewater facilities, and their city councils recognized they would have to invest in other new facilities as well as senior staff as population growth continued.

Terry said the challenges of consolidation were not as great as elsewhere because the two cities were similar in size, finances and the level of services they provided, and because many residents of both communities were relative newcomers. “So there weren’t a lot of issues involving community identity and loyalty,” he said.

“The merger turned out to be everything we anticipated, if not more,” Terry added.

For much of the state, though, the auditor’s report suggested that cooperative service agreements might be “a more appropriate and cost-effective approach” to the consolidation issue. In a survey of local officials, the auditor found that 74 percent of cities and 66 percent of townships had at least one cooperative service agreement.

Falcon Heights one success story

Falcon Heights (pop. 5,321) is a model for working cooperatively with its neighbors. The city contracts with St. Anthony for police protection, Roseville for IT and engineering services, Little Canada for building inspection and Ramsey County for snow plowing. Falcon Heights has its own fire department and provides fire protection to Lauderdale on a contracted basis.

“Falcon Heights has been very aggressive about contracting for services,” said Jim Mulder, former executive director of the Minnesota Association of Counties. “They are a really lean, mean machine. There is a lot more opportunity for that.”

Sometimes, even the most modest of consolidation efforts are challenging. In the mid-1990s, then-St. Paul Mayor Norm Coleman had to work hard to achieve a merger of the city and Ramsey County election bureaus and of the two public health departments.

About the same time, North St. Paul and Maplewood explored the idea of merging their police departments. The idea did not play well in North St. Paul, even though the two communities had a long history of being in the same school district.

Source: Office of the Legislative Auditor, analysis of U.S. Census Bureau 2010 Census dataPopulation and area of Minnesota local government units (LGUs), 2010

“Our council chambers was filled to the rafters, and nobody was for it,” recalled North St. Paul Mayor Mike Kuehn, then a first-term council member. “Residents felt that the police would be too busy dealing with problems at Maplewood Mall to respond quickly to calls in our community.”

More recently, after the retirement of several staff members, North St. Paul decided to contract with Maplewood for parks and recreation programming. “It’s worked out very well,” Kuehn said.

In 2008, officials of Hennepin County and Minneapolis engineered the merger of the county and city library systems, eliminating some administration overhead while providing seamless access to some 40 libraries with more than 5 million books.

12 counties developing complex plan

For the last three years, 12 counties in southeastern Minnesota have been engaged in a more complex undertaking – developing a plan for the redesign and collaborative delivery of human services. The initiative was funded with the help of grants from the Bush and Rochester Area foundations.

Jane Wilcox Hardwick, human services director in Dodge County, said she and her peers in the adjoining counties recognized “we had to do something differently” to contend with the challenges of aging populations and scarce public resources.

With the help of Accenture, a global management consulting firm, the 12 counties have developed a plan to collaboratively deliver “higher-quality, consumer-driven human services” at a lower cost. Hardwick says the plan could save the counties up to $60 million over the next five years from their separate anticipated costs.

The challenge now is developing a governance and funding plan that all of the counties will buy into. Olmsted County, the giant of the 12, has indicated it will not participate unless there is a system of weighted voting to reflect its 48 percent share of the total human services spending in the region. There also may be differences among the counties in desired service and benefit levels.

“It may be that we won’t have 12 counties going forward,” Hardwick said. “If we have fewer than 12 counties, there could be more than one group of counties working collaboratively. So we still have a lot of work ahead.”