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Wednesday, April 21, 2010

The Privatization Battle: Is the Milwaukee County Zoo Next?

A study is under way to explore the zoo’s long-term stability

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Is Milwaukee County quietly attempting to privatize the zoo?

That’s the concern of those who are asking pointed questions about a report being drafted by a consultant who specializes in transitioning public zoos to private, nonprofit entities.

In the 2010 budget, the county board approved spending $20,000 for a study of the zoo’s operations, which was to include a handful of funding and governance options for the long-term future.

But concerns are growing at the zoo and on the County Board that Philadelphia-based consultant Rick Biddle’s study focuses solely on privatizing the zoo.

Milwaukee County Supervisor Lynne De Bruin, whose district includes the Milwaukee County Zoo, wrote a stinging letter to Biddle on April 8, reminding the consultant that his assignment includes more than just finding a path to privatize the zoo.

“[S]taff and I are still concerned because an alternative county model has not been discussed with the Steering Committee [charged with overseeing the study],” De Bruin wrote to Biddle. “Current county operations have been discussed, but this is not the same as a new county operations model being an alternative option to privatizing.”

De Bruin and other zoo watchers are worried that if the zoo were to be turned over to a private entity, Milwaukee County taxpayers would be on the hook for substantial zoo expenses while losing control of the zoo’s operations and oversight.

“The board was very clear that we didn’t just want a plan for privatizing the zoo,” De Bruin told the Shepherd. “We wanted to know what improvements the zoo could make while being operated by the county.”

The board removed $40,000 earmarked in Milwaukee County Executive Scott Walker’s proposed budget for legal expenses leading to privatizing the zoo by Oct. 1, 2011.

Zoo Director Chuck Wikenhauser told the Shepherd that a report is likely to be delivered by June, and that a handful of options—not just privatization—will be included in Biddle’s report.

“The study is to look at the zoo and its long-term future,” Wikenhauser said.

Once the report is presented to the County Board’s Finance and Audit Committee and the Parks, Energy and Environment Committee, board staff will conduct an independent review of the proposal before the board would make any decision about the zoo’s fate.

 

County Budget Crisis Hits the Zoo

The Milwaukee County Zoo, one of the region’s most popular attractions, serves an estimated 1.3 million people a year and is home to more than 300 animal species.

But the county’s ongoing budget crisis is having a tangible impact on the Milwaukee County-owned and -operated zoo. Back in 2008, $6.4 million in county tax levy went to zoo operations; in 2010, tax support has dwindled to $3.8 million.

That reduction in support leaves the zoo in a bind. For example, even though the zoo is a 24-hour, 7-day-a-week operation that employs highly specialized zookeepers, a hefty portion of its employees is subject to the county’s 22 furlough days this year. That makes adequate staffing a challenge.

To complement the county’s tax support, the nonprofit Zoological Society of Milwaukee (ZSM) underwrites specialized programming—for example, the celebrated bonobo conservation program in the Democratic Republic of Congo—and has raised more than $15 million since 2001 in its 21st-century capital campaign for buildings and resources on the zoo grounds.

Although the Milwaukee County Zoo is a much-loved cultural asset, the county’s budget troubles in recent years have forced zoo insiders to consider other funding and governance options.

Director Wikenhauser has studied privatizing the zoo on and off over the years and he definitely leans toward privatization, but the idea never really got off the ground until last fall, when the county board approved $20,000 for “a plan for the possible development of a public/private partnership for the management and operation of the zoo.”

Wikenhauser says that privatizing the zoo—while continuing its county taxpayer support—is one way to ensure solid funding in the years ahead.

“We can’t just continue to raise admission fees every year to keep up with expenses because pretty soon people are going to say that they’re not going to pay that,” Wikenhauser said. “We have to come to terms with what the new revenue source is going to be.”

 

The Zoo’s Financial Options

Director Wikenhauser was asked to form a Zoo Steering Committee and find a consultant to study the issue. Biddle—who has guided the privatization process of zoos in Kansas City; Seattle; Fresno, Calif.; Detroit; and Houston—was hired for the project.

During an interview on Monday, Wikenhauser said that Biddle is looking at a range of options for the zoo, including changing its governance and placing it in the hands of a nonprofit entity.

However, De Bruin’s letter states that as of early April, “an alternative county model has not been discussed with the Steering Committee.”

“A key piece—how do you improve the county-operated model—had been lost,” De Bruin said.

But is an alternative, county-operated model even possible?

Wikenhauser seemed skeptical of a county-run zoo that doesn’t rely on the property tax levy, since a sales tax increase that would support the zoo and other county assets isn’t likely to be approved by the state Legislature, and raising admission fees or downsizing the exhibits wouldn’t be popular or satisfying fixes.

That said, transitioning the zoo to a privately run, nonprofit entity doesn’t seem to be a magic bullet, either.

De Bruin’s letter states that one privatization model being studied by Biddle doesn’t have a lot of upside for the county.

According to this option, the county would still provide $6.5 million annually for operations; absorb $1.4 million in annual county costs; pay roughly $1 million to $1.5 million in debt obligations annually; and maintain responsibility for all employee legacy costs.

In addition, the nonprofit entity would have to raise $1 million more than the ZSM currently does.

“Under this model, the county gives up operational control but keeps its current obligations plus the most expensive components of future employee cost obligations,” De Bruin wrote.

Her letter concluded: “If the county is going to be asked to continue this level of financial commitment, and potentially more if problems occur, my expectation is that the County Board would want to continue public operations.”

Wikenhauser, however, said that control of the zoo would be negotiated further down the road and that asking county taxpayers to continue funding the zoo is to be expected.

“In most of the zoos that have gone through this process, this change, there’s still a subsidy from the local government agency,” Wikenhauser said.

 

Red Flags for Front-Line Employees

Sources report that Biddle has interviewed zoo managers and ZSM staffers. But De Bruin, in her April 8 letter, admonishes Biddle for not meeting with front-line zoo employees.

“The idea that front-line employees might not be interviewed is so different from how the county has worked in past planning situations that my County Board colleagues would be shocked to learn this has not occurred,” De Bruin wrote. “To prevent this from becoming controversial, I’m asking for interviews of some front-line staff before any ‘draft’ final report is presented to the Steering Committee” [emphasis in the original].

Biddle was scheduled this week to interview three front-line, union-represented zoo employees selected by managers, and a draft report will be submitted later.

An internal zoo e-mail released to the Shepherd set out the parameters of the discussion. “At the meeting, Rick will talk about the information-gathering stage that we are in at the moment, details of what must be considered before decisions can be made, the decision-making process, and how other zoos have addressed issues similar to ours,” the e-mail states.

Wikenhauser stressed that taxpayers should keep an open mind about the zoo’s long-term options while being realistic about the county’s core responsibilities.

“If we keep going through these multimillion-dollar holes in the budget, pretty soon people will ask if the zoo is a core service of the county and if it will fund it at any cost,” Wikenhauser said.

De Bruin warned that the zoo could be privatized, more or less, simply by Walker’s continued funding shortages for it.

“The county executive may just put ‘reduce the funding for the zoo commensurate with a public/private partnership’ in the 2011 budget,” De Bruin said. “And if the board didn’t agree with that it would be forced to backfill funding for the zoo and keep it publicly run.”