Waste Advantage Magazine

Growing the “business” of your municipal solid waste program: enterprise fund management and you

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Courtesy of Courtesy of Waste Advantage Magazine

Bringing the “business mindset” to a municipal waste management program can be the key to success in these tough economic times. With an enterprise fund approach to management, municipal programs can build the foundation for sustainable program management, customer oriented service enhancement, stronger environmental performance and more efficient operation, ultimately resulting in a stronger “bottom line” for your community.

These practices may be normal and even required for an efficient private sector waste company—at least for those that strive for high performance. However, the challenges are different for a municipal program—operating at economies of scale sized for their community needs, not for lowest cost operation.

Municipal programs striving for high performance need to drill down to the bottom line financials for each service area—accounting for all costs to provide each waste management service to their residents, much like a private sector business would do for their marketplace goods or services. This total-cost-of-service approach clearly identifies all direct and indirect costs, as well as revenues, for each service area—the basis for strong decision making focused on peak performance.

The enterprise fund approach is commonly used within the government sector for public utilities (water and sewer), recreational areas (parks, golf courses) and transportation services. Increasingly, the enterprise fund approach is the answer for solid waste and recycling programs as well. The enterprise fund creates a “bottom line” focus—building a foundation for prioritizing services, setting rates and fees, and developing and allocating capital. For a municipality, developing a focus on stewardship of their solid waste enterprise fund protects key assets (trucks, facilities, workforce), provides an incentive for cost-effective performance by capturing end of year budget surpluses and fund investment interest, and establishes reserve funds necessary for capital investments that can be defended in the public sector financial management environment.

Financial Challenges Are All Around Us

In this time of deep financial crisis in both the private and public sectors, municipal solid waste and recycling programs are confronted with a myriad of challenges to maintain financial stability. Municipal solid waste and recycling programs are facing common problems. For example:

Municipal operating deficits require the solid waste program to cut capital expenditures that are essential to service capacity and program efficiency

Operating costs continue to rise, exceeding revenues from current service fees while elected officials and top administrators block needed increases in those service fees

Solid waste capital reserves carefully developed over years are being tapped for other governmental projects

An enterprise fund approach to your program will build viable financial program options, even during times of financial instability, while allowing the focus to transfer to better management and operational efficiencies for greater program performance.

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