Welcome to the Legislative Audit Committee's privatization review web page. We hope the links provided on this page will help you understand the requirements of the privatization laws, as well as provide you information on current and past Committee reviews of privatization proposals.
Privatization is use of the private sector in government management and/or delivery of public services. Reasons for privatizing vary, but in general fall into one of four areas: 1) cost savings, 2) administrative expediency, 3) management improvement, and 4) ideology. There are numerous types of privatization including:
Contracting (contract with private sector to provide service)
Service Shedding (reduce/stop providing service - private sector can assume)
Sale of Assets (sell assets to shift function to private sector)
Franchises (give private firms governmental authority to provide service)
Vouchers (government coupons used to purchase private sector services)
Leasing (use of goods or services without ownership risks)
Grants/Subsidies (reduce costs of private sector providing public services)
Public-Private Partnership (conduct cooperative projects with private sector)
Private Donation (rely on private sector to assist in providing public service)
Volunteerism (volunteers provide public service)
Deregulation (remove regulations in favor of self or no regulation of service)
Contracting is the most common form of privatization.
The privatization laws were enacted by the 52nd Legislature and became effective July 1, 1991. According to statute, the definition of "Privatize" means an agency contracting with the private sector to provide services that are currently or normally conducted directly by the employees of the state.
Before an agency can privatize a program, they must prepare a privatization plan, which must be released to the public and submitted to the Legislative Audit Committee. The Committee must review the plan, conduct a public hearing on the proposal, and make a recommendation of approval or disapproval to the Governor. There are statutory timeframes for each step of the process.