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Contents of this issue:

  • Auditor expects state to save with privatized prison meals

  • State looks for options on fairgrounds

  • Detroit city airport may be outsourced

  • Ann Arbor takes steps towards converting golf course

  • Dean Transportation case moves to U.S. Appeals Court

  • Alma looks at custodial contracting for savings

  • Petoskey extends food service contract

  • Manchester schools accept union concessions after privatization attempt

  • Northville unions give concessions to avert privatization


Auditor expects state to save with privatized prison meals

LANSING — A June report from the state auditor general found problems in how the state provides meals for prisoners. The auditor found that, while the state was moderately effective at managing food service costs, it needs to “consider additional ways to reduce the costs of providing prisoner meals.”

One of the ways it recommended controlling costs is through contracting. The report highlighted Florida and Kansas as states that use private contractors to provide the services, and also have costs per prisoner per day of 43 percent and 11 percent lower, respectively. The report also gave some details about private contracts for food services in the Oakland County Jail and the Grand Rapids Corrections Center.

“The state could provide the same three square meals with someone else doing the cooking,” Oakland County Sheriff Mike Bouchard told The Detroit News. “If they could get the cost down to my price, it would save the state $39 million without breaking a sweat.”

The House-passed prison budget appropriates $83.7 million for food services to inmates, and there are 494 full-time-equivalent jobs to provide the service. The cost of providing prison food services increased from $4.81 per prisoner per day in fiscal year 2005 to $4.98 in 2007. Labor costs were responsible for 14 cents of the increase, while food costs covered 4 cents of the increase.

In response, the Michigan Department of Corrections is working on issuing a request for information from private providers. The RFI is used to obtain information from vendors about their operations and capabilities, information that may be used in drafting a request for proposals.

References:
“Prison food takes $83 million bite out of state budget,” The Detroit News, June 24, 2008
“Performance audit of prisoner food services,” Michigan Office of the Auditor General, June 2008


State looks for options on fairgrounds

LANSING — The Michigan Department of Management and Budget is seeking proposals for the use of the state fairgrounds in Detroit. The state will still own the fairgrounds and operate the two-week fair, but looks to lease the land to someone for use the rest of the year.

The state received requests from interested parties and is establishing a process for awarding a contract. The grounds themselves are “in excess to fair needs,” according to the state’s request for proposals.

The grounds are zoned for business development, and the state will judge proposals based on four selection criteria. The state would like to select a partner in July and finalize a grounds lease agreement in October, according to the RFP.

The Mackinac Center has argued that the fairgrounds may be better run as a nonprofit and off of state assistance.


Detroit city airport may be outsourced

DETROIT — Detroit Mayor Kwame Kilpatrick is looking to contract out for the management of the Coleman A. Young International Airport, according to The Detroit News. The mayor would like the private management firm AvPorts to operate the facility.

Part of the plan would include renovations to the airport terminal and exploring extending the airport’s runways. Doing so may make the airport more attractive, as the current runway length is prohibitive for use by large jets, according to The News.

The mayor would like to spend $6 million to purchase lands and homes adjacent to the airport, and the company has pledged $50 million for renovations, The News reported.

In 1998, the Mackinac Center recommended selling the facility or contracting out for its management. The airport needed a $1.9 million annual subsidy to operate at the time. The city’s subsidy has increased to $3.4 million, according to The News.

Proponents of privatization may have a model in Chicago’s Midway Airport. Chicago city officials are looking for a long-term lease with a private operator, which could bring the city $3 billion, according to Budget & Tax News. Proceeds from the lease would go toward the city’s $1.2 billion debt on the facility.

References:
“Privatizing City Airport studied,” The Detroit News, April 12, 2008
“Airport Privatization is Taking Off,” Michigan Privatization Report, Spring 1998
“Chicago Midway Airport Privatization Takes Wing,” Budget & Tax News, June 2008


Ann Arbor takes steps towards converting golf course

ANN ARBOR — Ann Arbor began a process to convert its Huron Hills golf course to park land if it doesn’t meet its expenses within three years. However, the city is also planning on making improvements to the facilities to try to make them more competitive.

The city owns two golf courses, Huron Hills and Leslie Park. The courses have been losing money for almost a decade, and are trapped in what the city’s golf consultant called a “death spiral.” Overall, the city lost $243,576 operating the courses last year, an average of $7 per round played.

The city council has established a task force that will advise the courses on how to improve. It has also been commissioned to develop criteria that would determine whether Huron Hills is sustainable and review the performance of Huron Hills at the end of each season. Presumably, if the course is not sustainable by 2010, the city would explore converting it to park land.

For more information on Ann Arbor’s golf courses, see www.mackinac.org/9542.


Dean Transportation case moves to U.S. Appeals Court

MIDLAND — A case that may set a precedent regarding the successorship doctrine is headed for the U.S. Court of Appeals. In 2005, the Grand Rapids Public Schools contracted with Dean Transportation to provide transportation services to the district, but questions remained as to whether the union that represented the transportation employees would remain with the employees if they transferred to the new company.

The dispute landed in federal appellate court following a ruling by the National Labor Relations Board that Dean must bargain with the Grand Rapids Educational Support Personnel Association — the public-sector union that previously represented the district’s transportation workers — without a vote by the new Dean employees. The NLRB based its ruling on a doctrine meant to prevent unions from being circumvented by corporate shell games.

The Mackinac Center is one of five parties that filed a joint friend of the court brief in the case.


Alma looks at custodial contracting for savings

ALMA — Alma schools issued a request for proposals to seek custodial services for the district. The move is being driven by a projected deficit of $400,000 for its upcoming fiscal year, according to The Mount Pleasant Morning Sun.

The district investigated contracting out this service three years ago. The process showed that privatization would provide savings, but the district opted to only contract out lawn mowing at the time, The Morning Sun reported.

Reference:
“Alma schools may privatize custodial services,” The Mount Pleasant Morning Sun, May 29, 2008


Petoskey extends food service contract

PETOSKEY — After expanding its food service contract to include labor, the Petoskey school board voted to extend its contract to the next school year, according to the Petoskey News-Review.

Chartwells, the food service provider, was able to swing the food service program from an expected loss of $52,000 to a surplus of $150,000. The program was even able to cover the $112,500 in services it receives from the district’s general operations, according to the News-Review.

Reference:
“Petoskey School Board votes to continue outsourcing food service,” Petoskey News-Review, June 20, 2008


Manchester schools accept union concessions after privatization attempt

MANCHESTER — The Manchester school board agreed to a collective bargaining agreement with its support services union, according to The Ann Arbor News. The contract contained significant concessions.

The district had looked at contracting out its custodial services earlier this year.

Reference:
“Manchester schools contract averts privatization,” The Ann Arbor News, June 12, 2008


Northville unions give concessions to avert privatization

NORTHVILLE — After getting into the late stages of contracting out for custodial services, the Northville support services union offered concessions, according to The Northville Journal. The concessions are expected to save the district $400,000 annually.

The district had been looking to contract out its food, custodial and transportation services since the fall. It was expecting to save between $400,000 and $1 million from custodial contracting alone, according to The Detroit News.

References:
“Northville schools avoid privatization of services,” The Northville Journal, June 26, 2008
“Northville schools assess privatization,” The Detroit News, April 17, 2008



Michigan Privatization Digest 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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