Contents of this issue:

  • Medicaid Processing Privatization Bill is Proposed

  • Nonprofit takes over Detroit’s Eastern Market

  • Detroit to Sell Rackham Golf Course

  • Redford Township Outsources Assessments

  • School Districts turn to privatization for savings


Medicaid Processing Privatization Bill is Proposed


LANSING — In an effort to combat the ever-increasing costs of Medicaid, state Rep. John Garfield has introduced a bill that would outsource the processing of Medicaid claims to a private vendor.

Medicaid, a federal and state program that provides health services to the poor and the elderly, is straining under the weight of growing health care costs. Increased Medicaid expenditures are draining state coffers; the budget now allocates a quarter of its general fund to Medicaid expenses.

The bill, according to MichiganVotes.org, would “contract out the state’s Medicaid health care claims review and payment process to a qualified private firm …; issue a separate contract to ensure that services are properly provided and billed; require prices for services and products (including drugs) be negotiated and set by contract with health care suppliers and vendors; and require that policies and procedures be established which ensure that seniors live at home (rather than in a nursing home) as long as it is feasible and medically prudent.”

This arrangement would inject a degree of market control over the administration of a program currently managed by state employees.


Nonprofit takes over Detroit’s Eastern Market


DETROIT — The city of Detroit turned over management of its popular Eastern Market to a newly formed nonprofit. The Eastern Market Corporation plans a $17 million renovation of the facility and has raised $7 million so far, according to the Detroit Free Press. Renovations will include the construction of a greenhouse, housing and a food education center, The Flint Journal reported.

The move could save the city more than $1 million a year, according to the Free Press.

The Kresge Foundation offered a $2 million grant for improvements to Eastern Market contingent on the city turning over management to a nonprofit, the Free Press reported. The Kresge Foundation funds projects to help revitalize Detroit, and also works to strengthen nonprofits nationwide. As a nonprofit, the Eastern Market Corporation will be in a better position to obtain donations.


Detroit to Sell Rackham Golf Course


DETROIT — The city of Detroit has issued a “request for proposal” for the sale of its Rackham golf course in Huntington Woods. The sale was initiated when the city received an unsolicited bid from Premium Golf LLC for $5 million. Wanting to maintain the facility as a golf course, the city of Huntington Woods countered with an offer of $5.5 million.

Premium Golf increased its bid, but the Detroit City Council decided to issue a request for proposal, calling for at least $6.25 million for the sale. The city wants an additional $5 million if the purchaser is able to remove the deed restriction on the facility that limits use of the land to a golf course.

Huntington Woods responded with an offer for the facility at the minimum price required.

The 6,339-yard course is located next to the Detroit Zoo. Huntington Woods recently rezoned both the golf course and the zoo as residential properties, according to The Detroit News.

The Kilpatrick Administration plans to sell $30 million in city assets to balance Detroit’s budget this year, the Detroit Free Press reported.


Redford Township Outsources Assessments


REDFORD TOWNSHIP — In a move expected to save $100,000 annually, Redford Township contracted with Wayne County Appraisal for its assessor functions.

The contract was spurred by the retirement of one of the township’s three assessors. One assessor will remain on the payroll during the transition to the private company’s services.

The township is certified to inspect only residential and commercial properties — when an industrial facility needed assessing, the township would use Wayne County inspectors. Under the new agreement, Wayne County Appraisal will provide all these services.

The township had been paying $280,000 for its three assessors and an additional $100,000 to Wayne County.

Wayne County Appraisal also provides assessment services to Canton Township, Northville, Northville Township, Plymouth, Plymouth Township and Ann Arbor.


School Districts turn to privatization for savings


As public school districts begin another year, rising employee health care costs and participation in the state’s retirement system are expected to consume much of the state funding increases they receive. In order to bring district budgets into balance, a number of school districts have turned to privatization.

GARDEN CITY — The Garden City school district selected Grand Rapids Building Services to provide custodial services to help mitigate its projected $1.7 million deficit. The contracting process became adversarial and school board members that voted for contracting are now facing recall.

In April, the district issued a “request for proposal” for its custodial services. It received bids from six companies, offering annual costs between $1 million and $1.2 million for the service. The district currently spends $2.1 million. However, severance costs for the first year are expected to offset some of the savings. The district expects to save between $260,000 and $510,000 in the coming school year, depending on how many custodians accept positions under the new management.

In response to the board’s decision, one laid-off custodial worker started circulating recall petitions. Recall language could be on the November ballot if enough signatures are collected.

The district already contracts out with Aramark for food service. This year, the district expanded its contract with the company to cover its cooking positions — a move that is expected to save the district an additional $70,000.

JACKSON — Jackson Public Schools received concessions from its support unions after the district looked into private contracts for special education bus drivers and monitors. The district was facing a $1.76 million deficit for coming school year, according to the Jackson Citizen Patriot. The district has cut $14 million out of its budget over the last five years.

By switching insurance plans for several employee groups, the district was able to save $700,000 in the coming fiscal year. To attain some additional savings, Jackson agreed to do maintenance work for the local Catholic school’s buses.

JPS hired Enviro-Clean for fiscal year 2005 to handle its custodial services. Before contracting, the service cost the district roughly $3.5 million annually. Enviro-Clean performs the service for roughly half as much, according to Superintendent Dan Evans.

YPSILANTI — The Ypsilanti School District rejected privatizing transportation as a way of eliminating its $4.6 million deficit. Instead, the district sold its Ardis Renaissance Academy to the Salvation Army for $3.85 million. The district also addressed some safety issues that helped reduce worker compensation costs by $160,000, according to Superintendent Dr. James Hawkins.

Ypsilanti had previously explored privatizing and consolidating its transportation services with Willow Run and Lincoln school districts. However, the deal fell through after meeting stiff opposition in Willow Run and after an accelerated request-for-proposal schedule left vendors struggling to meet deadlines.

Even so, the district had entertained an offer from Durham Transportation that was expected to save $500,000, but the proposal was rejected when the company would not take over operations until the middle of the school year.

Budget problems are likely to persist for Ypsilanti Public Schools, however. Increased health insurance and retirement costs are expected to create a deficit of $3.9 million that will have to be addressed in next year’s budget, according to the Ypsilanti Courier. Privatization is expected to remain an option.

MUSKEGON — Muskegon Public Schools worked with its non-instructional employees union to switch health insurance coverage from a MESSA-sponsored plan to a Priority Health insurance plan. According to the Muskegon Chronicle, the move is expected to save the district $370,000. A union negotiator told the Chronicle that the Priority Health plan is “pretty much the same package”.

The Chronicle reports, “Union negotiators are well aware that their jobs are the types that are being privatized at other school districts and [Local Union President] Dawson said they are grateful to come to a ‘sensible, logical conclusion.’”

FREMONT — Over the last three years, Fremont Public Schools has experienced declining enrollment and increased expenses for employee retirement and health insurance. To address budget deficits in recent years, the district has already eliminated 22 teaching positions, reduced athletics, cut bus routes and even timbered some of the trees on its properties. This year, in addition to early retirements and layoffs, the district has privatized its custodial services.

The move is expected to save the district $100,000 in the first year alone. School board member Jim Featherstone told the Fremont Times Indicator, “As a board with no fund balance, we look at: Do you put in a teacher or a custodian?”

AVONDALE — The Avondale Public School district contracted with Enviro-Clean to provide custodial service, a decision that is expected to save the district $450,000 in the first year alone and $3 million over the next five years, according to the Rochester Eccentric.

Custodians from Enviro-Clean are expected to earn between $9 and $11 per hour, while Avondale’s employees had been earning $18 an hour on average, the Rochester Eccentric reported.


Around the State is a service of the Michigan Privatization Report, a twice-yearly publication of the Mackinac Center for Public Policy with a circulation of more than 22,000. The Mackinac Center for Public Policy is an independent, non-profit research institute located in Midland, Michigan.

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