LANSING — Legislation to privatize the state’s payroll processing system was approved in the state House last March and is expected to be taken up in the state Senate this Fall, once budget negotiations for fiscal 2006 have been completed. The House vote was primarily along party lines, passing by an eight vote margin. To see how your legislator voted visit www.michiganvotes.org/2005-HRC-34.
The Mackinac Center recommended that the state consider contracting out for human resource activities in its Winter 2003 edition of Michigan Privatization Report. The article argued that the state could reasonably project savings of $5 million annually through privatization of its human resource functions (not just payroll).
The focus of the MPR article was Florida’s new contract with Convergys, Corp., a public, for-profit group headquartered in Ohio. Since publication of that original article, Florida state officials have tussled over forecast versus actual savings expected from the contract with Convergys. According to a February St. Petersburg Times article, the original contract was to have saved $93 million over seven years but is now expected to save only $25 million over nine years.
Supporters of the contract, including Convergys, dispute the revised figures, arguing that the new accounting does not consider savings generated by the contract that have been diverted to other uses. In addition, say Convergys officials, critics are not counting the estimated $80 million the state saved by not having to purchase new human resources software and implementation services for their own aging system.