A Guide for Councillors

Part 5 Understanding the Municipal Finance Management Act

In-year monitoring by council does not mean that councillors should get involved in the day-to-day running of the municipality.

5.2 Mechanisms for providing services Municipal services may be provided using either internal or external service delivery mechanisms. Councillors need to know what the options are and the regulations that apply to these options. It is also important to understand the implications of each option, both fi nancial and non- fi nancial; the use of external service providers has implications for monitoring and contract management of the service being provided. Internal service delivery Amunicipality may decide to deliver the service internally. They can do this by using a department within the municipality, a business unit or another component of municipal administration. External service delivery A municipality may also decide to use an organisation outside the municipality to deliver a service. The municipality may choose to set up a private company or a service utility. Municipalities in the same area may establish and manage an entity or a utility together. Entities that are established by several municipalities as a service utility are referred to as multi-jurisdictional service utilities.

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A private company is a separate company that has been established under the Companies Act. It is controlled by the municipality. This company is referred to as an entity. A service utility is established through a municipal by-law. It is owned by a municipality. Amulti-jurisdictional service utility is established by more than one municipality by a written contractual agreement. It is owned jointly by these municipalities.

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The Role of Councillors in Municipal Finance Management