Middlesex moment: The (re)making of Middlesex County

10 years ago, county was on verge of economic disaster ... now, it's model of fiscal success for peers around N.J.

By Tom Bergeron
Middlesex County | Mar 2, 2020 at 10:56 am
Special Report

In the spring of 2009, about a year after John Pulomena took over as Middlesex County administrator, the longtime freeholder and business executive knew the county had a problem: The economic downturn was underway — and Middlesex County was not going to survive it.

“Our way of doing business was not sustainable,” he said.

The county’s payroll was increasing — by about 6% a year — while its revenues were going in the other direction, down about $70 million.

Freeholder Director Ronald Rios knew it, too. By January 2010, when the next budget was due, the county was going to be in trouble.

“We had to get our hands around this and do it quickly,” Rios said. “The reality was that we were about eight months from having to cut 10% of our workforce. And that would only have been a short-term fix; it would have just exacerbated the whole economic downturn in Middlesex County because more people would be out of work. We would just be feeding the giant.

“We recognized we had to address the inefficiencies in county government. We had to transform how county government works.”

Ten years later, Middlesex County seemingly is the healthiest county in the state:

  • Its debt service, which used to be nearly 25% of the budget, is down to 14%, a reduction of $19 million — and continuing to shrink — while, at the same time, total debt was reduced by 35%, or a staggering $250 million;  
  • Its reorganization — and its willingness to embrace technology — has led to a more efficient workforce and more cost savings; 
  • This resulted in a 10% reduction in employees without a single layoff — and what remains are more engaged and better trained employees;
  • Its capital improvements schedule on needed projects has not waned — and only changed in the way they are paid for;
  • Its now-financially-efficient government was able to help bring in first-class arts centers throughout the county, and some of its county facilities are so well-run they profit from shared services with nearby counties;
  • And it is now aggressively marketing itself as a work-live-play destination around the state, region and country, in an effort to lure the next generation of companies it has identified.
  • How did one county turn around so quickly?

Here is a roadmap of Middlesex County’s 10-year journey:

Collaboration with the unions

Pulomena said one meeting started it all. 

“The very first step was to sit down with the unions, all 25 of them, and say, ‘We need to get our hands around this, and we have two ways to do it: Reduce the payroll by 10% or look at how we can restructure county costs and operations.’ All 25 unions would rather not see a person laid off. In order to avoid that, we needed to put a one-year salary freeze in place,” he said.

This was a short-term fix, but one the county had to make, Pulomena said. It was determined that the county’s head count of approximately 2,150 employees would be reduced through attrition. No one would be replaced when they left.

Anything that results in fewer jobs is a tough sell. In order to operate with a reduced workforce, the freeholders committed to ensuring the jobs that remained would be of higher quality.  

“We were creating a more skilled workforce, allowing us to increase the salary structure,” Pulomena said. 

The move worked. Seven years after this change, workforce headcount was down by 377, or approximately 17%.

Transformation through technology

The top governmental and transportation officials in the state were at the announcement that Middlesex County will serve as project manager for the North Brunswick train station. It is the first time NJ Transit has allowed a local government entity to build a train station.

The county needed to overhaul its organizational structure, especially in regard to human resources, information technology, payroll and communications. 

“We had 35 departments where redundant services and administrative costs were duplicated in many different places,” Pulomena said. “Our philosophy was that technology could play a key part in the transformation and efficiency to operation. 

“We started with human resources,” Pulomena said. “Our HR office worked out of file cabinets. We fixed that by introducing technology to automate and create a more efficient office. And, when people started seeing the benefit of what we did in HR, it started to build momentum around the rest of the organization.”

An evolving culture

Change does not come easily in the workplace. Especially in the public sector. The freeholders realized this. 

“It wasn’t until a few years later, 2012, that everyone bought in,” Rios said. “The toughest challenge we had was the cultural change of the workforce. The common remark was: ‘Why fix it? It’s not broken. Why are we changing anything?’” 

The county had to create small wins, Rios said.

The county invested in its people. Initiatives like the wellness program, which engages the county’s workforce periodically using a combination of advice, counseling and health coaching regarding lifestyle issues and chronic conditions, or the creation of the Office of Professional Development, proved to employees that the county was making an investment in their well-being and growth not only in the workplace, but in their personal lives. 

“We saved about $129 million in cumulative salary savings over the last 10 years without laying a single person off,” he said. “And we did so while enhancing the skillset of our workforce and making investments back in our people.”

Building a surplus

Governments rely on their surplus — so-called rainy-day funds — to pay for unexpected costs, such as the impact Superstorm Sandy had on the county in 2012. Middlesex County’s fund went from $11 million on a $410 million budget in 2011 to $80 million on a $518 million budget today. 

“The financially sound rule of budgeting is for the surplus to be 10% of the operating budget,” Pulomena said. 

Today, Middlesex County exceeds that number, with the surplus accounting for 16% of its operating budget. The county attributes this surplus increase to savings realized in the introduction of new technology, which allowed for streamlined operations and to the restructuring of the county organization. 

“Since 2011, we have not touched one penny out of a surplus that was generated from a previous year. That continues to accrue today,” he said. “Which also allows us to maintain our AAA bond rating.”

Creating a capital cash account 

The county had an overall debt of more than $700 million in 2009. The annual debt payment was more than 25% of its operating budget — debt payments were $94 million a year — and was threatening to lower its AAA bond rating. In order to keep interest rates down and debt payments low, the county needed to keep that AAA rating. 

Rios explained how a county completes those needed capital projects — like the improvement of roads, bridges, infrastructure and signals — while at the same time reducing overall debt. 

Each year, the county was able to free up cash because debt retired, and those savings, along with some of the savings realized from the creation of operational efficiencies, were used for the creation of a capital cash account to support key capital projects like roads, bridges, infrastructure and signals, he said. In fact, today, the county’s annual debt payment is 14% of its budget, and it was able to grow its capital cash account to $60 million in 2020. 

The payoff

The county also has created agreements for shared services with surrounding counties for the juvenile correctional and special rehabilitative services, serving Gloucester, Mercer, Monmouth, Ocean and Somerset counties, and provides medical examiner services to Monmouth and Mercer counties. Implementing these partnerships has resulted in significant cost savings and operating efficiencies for all partners involved, Rios said.

Similarly, the county serves as the provider of health services to all 25 municipalities and provides fire marshal services to six of those towns.

“When the systems in these surrounding towns and counties became antiquated, they turned to our facilities, because they are best in class,” Rios said. “For example, in our Juvenile Detention Center, we were able to make investments in our people and in that facility — in new technology, new equipment — to make us stand above many other counties in the area.”

The county has reduced its overall debt by 37% the past 10 years, dropping it from over $750 million to $450 million — all while increasing its surplus to $80 million because of the operational efficiencies gained. The taxpayers are benefiting. The county is able to invest in key projects that directly benefit its residents, like the $10 million investment it made in the New Brunswick Performing Arts Center, a mixed-used facility that opened last September, and contributions it made to arts centers throughout the county, including in Avenel, Metuchen and Carteret. 

Developing the Middlesex County story

By 2017, Middlesex County officials wanted to share their story — the story of their success on this journey — in the hopes of providing insight to other counties, but also showing what the county fundamentally stood for and how it directly served to add value and create opportunity for county residents and businesses. 

County leadership, led by the freeholder board, determined that what officials needed to do was create a fully aligned, integrated and disciplined marketing campaign to tell their story and speak to the opportunities the county was creating for its constituents: residents, businesses, municipalities, partners and other governmental agencies.

“We needed to tell the story of Middlesex County: Who we are. Why we do what we do. What it is we actually do every day on behalf of everyone in Middlesex County. We needed to change not just what we were communicating, but how we were communicating,” Rios said.

The county was building a brand.

To do that meant aligning all the marketing and communications efforts to effectively tell the county story with one voice and one look.  It forced the county to deliver the message with ruthless consistency. 

The county needed to create an actual Office of Marketing that would apply this kind of discipline, to streamline and consolidate all the ongoing marketing that was already happening, and to act as a coordinator and steward of the county’s story.

“This type of campaign would serve to educate people, inside and outside the county, about all the county has to offer and would create an opportunity to deepen the county’s engagement with all of its constituents across key areas and initiatives,” said Rios. 

Marketing its success

County leadership knew they had a great story. They also knew it was a well-kept secret. And that had to change.  

“What better way to tell our story than developing a marketing communication strategy that really starts to tell the story of Middlesex County?” Rios said. “Rather than just saying what we do as a government, we want people to understand and talk about where we came from, our history, how we got here, and better understand the real value of what is here.”

County leadership developed a marketing communication strategy.

That history, which would become the basis of the story the county would tell, is rich. Middlesex County is the birthplace of Thomas Edison’s incandescent light bulb, duct tape and college football — with the first game being held between Rutgers and Princeton universities in the county’s seat, New Brunswick, in 1869. Three universities, including Rutgers, the State University of New Jersey, bring students from around the country and the world to the county for a nationally recognized education. And, since 1886, health care giant Johnson & Johnson remains one of the country’s great innovators and one of the county’s greatest corporate partners.  

Since 2017, the county has in fact been telling its story through a fully integrated multichannel marketing and advertising campaign ranging from the traditional — billboards and television spots on news, sports and primetime shows — to the modern — digital marketing and social media.  

“Not only has it made a huge impact in the awareness, standing and consideration that people are giving to Middlesex County, but our workforce and our communities are taking pride in it,” said Rios. “It’s telling our unique story and helping us drive ownership of what we stand for and do.” 

In many states, counties are dominant entities. In New Jersey, however, people generally associate themselves with their hometown rather than the county they live in. Pulomena believes that’s one reason why the story about Middlesex County was lost. The county wanted to make sure they were clearly speaking to the impact, outcomes and opportunities that the county was delivering to all of its residents and show the municipalities that the county was able to offer additional value to their taxpayers.  

Welcoming new industry

All counties want to attract companies. Now that it has developed, and is actively telling, its story, Middlesex County feels it’s in a position to go after the companies that work best for its area. 

The board of chosen freeholders’ goal is to attract more companies from specifically targeted industries to help build the county’s base. That’s why the county will be advertising in New York, Boston, Pittsburgh and parts of California — all spots where they feel the county can be competitive for companies within the target industries of health care, food innovation and autonomous transportation technology.

“Our marketing strategy for economic development is designed to attract businesses within specific industries and to continue to strengthen the economic value of Middlesex County,” Rios said.  “We have a unique value to add to those businesses and industries, both from a business standpoint and a residential standpoint.”

Health care, with anchor Johnson & Johnson, makes sense. Food innovation, with anchor Rutgers, makes sense, too. Autonomous transportation technology? That makes sense, too, once you know the county’s history and what the county actually has to offer, Pulomena said.

He explained that, 30 years ago, when all of the telecommunication companies made their home here because of ATT, Bell Labs and Verizon, they built a significant amount of fiber-optic capacity. Today, that capacity — the kind of infrastructure and resources that the autonomous vehicle industry requires — is key. And the three universities that call the county home provide the talent that companies need to fulfill its workforce needs at the highest level. 

“It’s autonomous vehicles, but it’s the technology that’s going to support that, as well,” Pulomena said. “You’re not necessarily going to get the vehicle companies here, but we are well positioned to go after the ecosystem for this emerging and fast-growing industry — the manufacturers, and the research and development that supports those vehicles.”

The future

So, how is it that Middlesex County was able to solve its debt issues, lower its headcount without adding to unemployment, increase efficiencies through technology and have enough money — and energy — to make a marketing push around the region and the country to attract more business?

Pulomena said it was a mindset: You have to treat government as if it’s a business. And it starts with an org chart. The county’s core services — HR, IT, business engagement, labor relations, communication, marketing and government affairs — all support six departments (business innovation/education, community services, finance, infrastructure, transportation and public health/safety).

“The core functions support those six departments,” he said. “Those departments are like our customers. We had to put our house in order. And we did so through technology, through new processes, through new organizations, everything it took for those core functions to support the six departments. While we were doing that, the six departments were saying: ‘What’s our role? What are the services we want to provide? What’s the vision we were wanting to take us? And how do we get there?’”

It’s not an easy process. Middlesex County, after all, has been working to change for a decade.

“There’s a command and control that needs to be put in place,” Pulomena said. “There’s an organization to how you succeed. If there’s no organization, there’s too many fiefdoms and there’s too many chefs in the kitchen. It doesn’t work. That’s what you get at the state level.

“You need to find the core organizations that support the government leaders and do it in a way in which they’re allowed to execute on the vision of hopefully the political powers that be. Let them drive the change like that. That’s what you’re paying them for — to affect change.”