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In some smaller cities, almost all of the municipal budget is consumed by having their own fire and police departments. When those cities go bankrupt, they contract with neighboring cities or the county for fire and police services. I haven't seen any evidence on whether that results in better or same or worse service. My suspicion is that it is at least the same.
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I'd have to look at our latest budget, but last I looked I think more than 50% of our town budget was school department related. Why not stretch your idea to schools? School buildings in all locations, supervisory staff to maintain behavior in the buildings at 40% the salary of a teacher, and 25% of the current number of teachers teaching classes from a centralized location broadcast over the web to video screens in the schools?
I'll say it again - if my house is on fire, or I am trapped in a crushed car and need the jaws of life to be extricated, I want someone on call ready to roll.
Re: volunteer status - you'd also need to look at the demographics of the community. This may work in small towns where people live where they work - but do they work in bedroom communities where the majority of candidates that would volunteer work 20, 30 or 60 minutes from where they would volunteer?