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Maryland company builds library empire

Cities privatize services to cut costs

- The Washington Times - Monday, September 5, 2011

Cash-strapped cities and local governments across the country, having privatized services such as trash collection and prison operations in efforts to make up budget shortfalls, are increasingly eyeing another service as a prime candidate for outsourcing: the neighborhood library.

To save money, counties and cities in California, Kansas, Oregon, Tennessee and Texas have outsourced much of their operations to Library Systems & Services LLC.

The Germantown, Md.-based company over the past several years has quietly built up what amounts to the nation's fifth-largest library branch network, trailing only the systems run by major cities such as New York and Chicago.

As the company expands, many library workers are resisting the shift and others are challenging whether a service long associated with civic identity and pride should be run with an eye to the bottom line.

How it works

LSSI cuts costs in part by providing centralized services such as accounting and human resources. In most cases, library staff, formerly employees of the city or county, go to work for the company - although typically without the same levels of benefits and retirement support they received as public-sector workers.

Books, microfilm and other materials remain the property of the local government, and boards or library foundations still set policy and control the overall direction of the system.

While local governing bodies maintain some control, LSSI takes over decisions such as which books to buy or library hours. The company says it usually can maintain or even expand the hours of operation.

The average library patron will see little difference.

"When you walk into one of these places, you're not going to see a dramatic change. You'll see a lot of the same people working there, a lot of the same books on the shelves," said Molly Raphael, president of the American Library Association.

Problems of privatizing

Ms. Raphael's association opposes for-profit business control over libraries. Despite a familiar feel inside the library, the ALA says, any form of privatization can pose problems.

"Publicly funded libraries should remain directly accountable to the publics they serve," reads a portion of the ALA's policy on outsourcing and privatization.

In California, some lawmakers want to give residents direct control over the futures of their libraries. A bill awaiting a vote in the state Senate would require the public's approval and a clear demonstration of cost savings before a local governing body could hire LSSI. Among the bill's biggest boosters: the powerful Service Employees International Union, whose members often staff the libraries targeted for LSSI privatization.

"Taxpayers and the public deserve basic safeguards before such a valuable community asset is privatized," the union's California branch said in a statement last week.

Local leaders in Stockton, Calif., considered privatizing but ultimately decided against it, in part because of concerns raised by city residents, Ms. Raphael said.

Those misgivings may have been driven by controversies in Fargo, N.D., and Jersey City, N.J., along with other communities that signed contracts with LSSI only to terminate them early. In Fargo, the library board voted in 2003 to cancel the two-year deal after just eight months, citing concerns about mounting bills, according to the trade publication Library Journal.

Another reason communities should think twice before making the switch, according to the ALA, is that salaries of library workers are matters of public record while the wages of private employees are not subject to right-to-know laws.

Disputes also have erupted over the definition of the services. LSSI refers to them as "outsourcing" and rejects the term privatization, while Ms. Raphael views outsourcing as the use of contractors for tasks such as placing plastic jackets on books or cleaning restrooms.

Economic priorities

Regardless, some communities see their libraries as more appealing targets for savings than police departments, fire departments or other agencies that provide essential services.

Since the economic downturn of 2008, Ms. Raphael said, the idea has only grown in popularity.

LSSI doesn't seek out clients. Instead, the company waits for cash-strapped governments to request its services, said CEO Brad King. He told The Washington Times that LSSI typically signs a three- or five-year contract with a local government, and the price often depends on what officials think their taxpayers can afford. LSSI, he said, makes a deliberate effort to keep familiar faces behind librarians' desks.

"The company offered jobs to more than 98 percent of the incumbent staff members who applied," he said. "Of those offers, more than 95 percent were accepted."

In most cases, he said, LSSI matches or exceeds salaries.

Frank A. Pezzanite, who co-founded the company in 1981 and now serves as executive chairman, was far more caustic in a New York Times article last year during a fight over LSSI's contract to run the library system in Santa Clarita, Calif., the fourth-largest city in Los Angeles County.

Mr. Pezzanite told the newspaper that many municipal libraries are "atrocious."

"Their policies are all about job security," he said. "That's why the profession is nervous about us. You can go to a library for 35 years and never have to do anything and then have your retirement. We're not running our company that way. You come to us, you're going to have to work."

While some communities have resisted LSSI, others have embraced the concept.

The central Texas city of Leander partnered with LSSI from Day One. The city opened its library, staffed by LSSI employees, in the spring of 2007, said Steve Bosak, director of Leander's Parks and Recreation Department, which oversees the library system.

Mr. Bosak said Leander budgeted $523,950 for its library system this fiscal year. Of that, $485,425 was funneled to LSSI. The remaining portion was spent on building maintenance and other tasks performed by city employees, he said.

"It's been seamless. It's still the city library, and we emphasize to [the library staff] that even though you're not employed by the city, you still represent the city. We're all one in this," he said. "So far, we haven't had any problems with it."

The company, Mr. King said, plans to expand. With struggling economies, he said, more communities are likely to make the switch.

"We'll keep our eye focused on satisfying our customers, and the future will take care of itself," Mr. King said.

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