Executive Summary
This research papers analyzes interlocal agreements (ILAs) and how their monitoring mechanisms function within vertical and horizontal agreements. Interlocal agreements established in the name of emergency services in Denton County, Texas are examined. Three hypotheses were introduced, and the researchers found that monitoring clauses are likely to crossover to multiple agreements. In addition, it was found that more than half of the interlocal agreements contained financial monitoring clauses that required financial records to be made available for third parties. Lastly, interlocal agreement patterns were found to cluster in specific geographic areas, allowing researchers to hone in on Denton County and their increasing number of ILAs.
Issue
Interlocal agreements are essential to the flow of emergency services for local governments and counties. This research study focuses on Denton County, Texas and the monitoring mechanisms found in their interlocal agreements. An interlocal agreement is an agreement “between city and city or city and county governments,” and “are a vital part of local governments’ strategies to produce and provide services on behalf of, or jointly with, other jurisdictions” (Andrew, Arlikatti, Jung & Short, p. 401).
The purpose of this study is to understand how monitoring mechanisms influence whom local governments form agreements with (Andrew, Arlikatti, Jung & Short, p. 401). According to the article, ILAs are a fundamental aspect of contract management, and monitoring mechanisms and clauses allow agencies to perform financial audits associated with the agreements (Andrew, Arlikatti, Jung & Short, p. 402).
This study examines vertical and horizontal agreements within Denton County, Texas, in order to understand restrictive contract features and the embedding of monitoring clauses in multiple agreements. Denton County was chosen as the subject of this study due to its long-standing relationship with the local governments in its borders (Andrew, Arlikatti, Jung & Short, p. 405). The researchers examined:
Three main features of the agreements: (1) the presence of an annual scheduled fee, (2) agency’s financial records avail- able for audit by a third party, and (3) the specification of a financial reporting system. These features captured the restrictive nature of an agreement and the formalized relationships established by the individual localities. For example, the presence of an annual scheduled fee is evidence of an ILA that specifies how a contracting party keeps the payments for services on schedule (Andrew, Arlikatti, Jung & Short, p. 405-406).
Background
Interlocal agreements are managed based on two legal frameworks in the state of Texas. The Interlocal Cooperation Act of 1971 allows local governments to form agreements with both the public and private sectors (Andrew, Arlikatti, Jung & Short, p. 404). The Texas Government Code allows interlocal agreements to be formed for the purpose of public safety or aid. This allows local governments to provide emergency and public services over local and county lines (Andrew, Arlikatti, Jung & Short, p. 404).
Denton County, Texas is located in the Northeastern edge of the state, within the fourth largest metropolitan area of the country, the Dallas-Fort Worth-Arlington metropolitan area. In addition, the country lies just below the Oklahoma state line (Andrew, Arlikatti, Jung & Short, p. 405). Denton County is roughly 953 square miles, and has 662,000 residents, with about 754 people per square mile (Andrew, Arlikatti, Jung & Short, p. 405).
In a seven-year span, 2000-2007, Denton Country became one of the fastest growing counties for population due to an increase of 41 percent population growth (Andrew, Arlikatti, Jung & Short, p. 405). The county is home to 45 small towns and municipalities, in which at least 20 percent have political jurisdiction extending to another county (Andrew, Arlikatti, Jung & Short, p. 405).
Analysis
Researchers requested information on interlocal agreements from all 45 cities and small towns within Denton County from January to May 2013 (Andrew, Arlikatti, Jung & Short, p. 405). Researchers hoped to gather agreements that were currently active within the county. They received a 64.4 response rate from the cities and towns (Andrew, Arlikatti, Jung & Short, p. 405).
“The total number of ILAs collected was 103, including various for- mal arrangements such as interlocal service agreements, lease agreements, mutual aids, and memoranda of agreement. Examples of interlocal agreements in public safety activities include police patrol, providing ambulance and EMS services, and fire prevention. In the sample of agreements received, the maximum number of signatories to an agreement was 27. They were mostly horizontal arrangements entered into with municipalities, with the exception of one agreement involving Denton County (Andrew, Arlikatti, Jung & Short, p. 405).
Interlocal agreements that were sampled varied from a six-month duration to about five years long agreements, with the majority of agreements lasting one year (Andrew, Arlikatti, Jung & Short, p. 405). There were three hypotheses developed for this study.
• Hypothesis 1: ILAs established by local governments with higher-level governments are more likely to have restrictive contracting features (Andrew, Arlikatti, Jung & Short, p. 403).
• Hypothesis 2: ILAs established by local governments with other local governments are less likely to have restrictive contracting features (Andrew, Arlikatti, Jung & Short, p. 404).
• Hypothesis 3: A set of monitoring clauses embedded in one agreement is likely to be correlated with monitoring clauses in another agreement (Andrew, Arlikatti, Jung & Short, p. 404).
According to the article, in order “for an agreement to be effective, it must be supported by (1) specific state statutes or (2) legal or economically defensible local ordinances” (Andrew, Arlikatti, Jung & Short, p. 403). In addition, when entering ILAs with higher governments, the burden of regulation enforcement will be placed with the higher authorities rather than on the local governments (Andrew, Arlikatti, Jung & Short, p. 403).
“Moreover, local governments engaging in joint activities with county or regional governments may be subject to the standard language of preexisting agreements because much of the public funding channeled through public agencies demands accountability” (Andrew, Arlikatti, Jung & Short, p. 403).
It is important to note that local governments that choose to enter into horizontal agreements generally establish contractual expectations in which the overlapping of services provides a mutual trust among counties and local governments due to their similar goals for services (Andrew, Arlikatti, Jung & Short, p. 403-4).
There are other reasons for motivating local governments to enter into less restrictive agreements. Specifically, monitoring ILAs is costly. Close proximity implies that the frequency of previous interactions and communications have generated trust among the partnering local government officials, which, in turn, reduces the need for formal control mechanisms (Andrew, Arlikatti, Jung & Short, p. 404).
Lastly, overlapping of clauses and monitoring mechanisms found in multiple agreements provide a necessary outline for interlocal agreements between government agencies, allowing both parties to make informed choices (Andrew, Arlikatti, Jung & Short, p. 404). The repeat of monitoring clauses through multiple ILAs reduce potential issues in the future, and “ensure that all parties are in compliance with their agreements” (Andrew, Arlikatti, Jung & Short, p. 404).
Findings
Researchers for this study developed a coding protocol that identified patterns among agreements within Denton County, Texas. These coding sheets contained two sections: information on the various types of interlocal agreements, and the clauses contained in their agreements (Andrew, Arlikatti, Jung & Short, p. 405).
The study employed two coders to identify the clauses within the agreements. Researchers found that about half of the ILAs contained a clause for a financial supporting system, allowing their records to be analyzed by a third party (Andrew, Arlikatti, Jung & Short, p. 406). It was also found that more than 80 percent of interlocal agreements did not have annual service fees (Andrew, Arlikatti, Jung & Short, p. 406).
“The findings support hypotheses 1 and 2: ILAs established by local governments with higher-level governments are likely to have restrictive contracting features, while ILAs established by local governments with other signatories are less likely to have restrictive contracting features. us, it appears that monitoring mechanisms embedded in ILAs are associated with vertical and horizontal relations in order to safeguard transactions” (Andrew, Arlikatti, Jung & Short, p. 406).
In addition, researchers found support for hypothesis 3, in that there is a presence of cross monitoring mechanisms amongst interlocal agreements (Andrew, Arlikatti, Jung & Short, p. 407). Researchers provided an analysis of the correlations between the close proximity of neighboring jurisdictions and how that dictated the amount of interlocal agreements within Denton County (Andrew, Arlikatti, Jung & Short, p. 407-408).
Researchers encountered several limitations while conducting this study. The first limitation being their inability to distinguish the various characteristics of ILAs, and the second being their inability to generalize their findings (Andrew, Arlikatti, Jung & Short, p. 408).
Conclusions
This study expands on contract management and how interlocal agreements are conducted on a county level. It was found that vertical level interlocal agreements are more likely to contain legally binding features. It can be determined that interlocal agreements with higher governments are more likely to contain financial clauses requiring financial records to remain readily available for monitoring (Andrew, Arlikatti, Jung & Short, p. 406).
It can also be determined horizontal agreements are less likely than vertical agreements to contain restrictive contracting features, due to the fact that they have similar goals for their services (Andrew, Arlikatti, Jung & Short, p. 404). Lastly, it can be determined that monitoring clauses in one interlocal agreement is more than likely to appear in another agreement in order to reduce potential conflicts (Andrew, Arlikatti, Jung & Short, p. 404).
Implications & Recommendations
Understanding interlocal agreements is essential to the ease of flow in municipal services, emergency services, and public policy. If there are multiple local governments acting in agreement, the public must be made aware and have access to interlocal agreements in the name of transparency. It was found that only a little more than half of interlocal agreements in Denton County, Texas provided financial monitoring clauses that made finances in the county readily available for auditing, mainly due to the vertical agreements made by the county. In order to keep public policy transparent, the county may want to consider adding financial disclosure clauses to more agreements.
Many local governments rely on the resources of higher governments when it comes to emergency services and public safety. This research provides valuable data for local governments aiming to draft new interlocal agreements, specifically in the name of public safety. This research helps to mitigate future contract agreements and their potential failures, giving local governments the opportunity to identify which types of agreements are in their and the public’s best interests.