Ken McGinnis is the director of the Michigan Department of
Corrections. His responsibilities include directing and managing Michigans 39
prisons, 16 minimum security "camps" for prisoners nearing parole, and 20
community correctional centers. He has 25 years of experience in the management of
correctional institutions, programs, and organizations, and is a graduate of Southern
MPR: Would you give our readers some brief background on what the Michigan
Department of Corrections (MDOC) has done recently with respect to privatization?
Health care services performed by state prison employees may be turned over to private-sector job providers.
We have been looking at the issue of privatization from a wide spectrum. Several years
ago we began exploring the privatization of various health care functions. With the
approval of Civil Service, we began a pilot program at five institutions which would allow
private companies to provide basic health services to our inmates. It has been in place
for a year. In addition, we signed a managed care contract for privatizing all of our
purchase services from outside clinics and hospitals and physicians. Savings from that
program are estimated at $10 million annually.
MPR: What led you to consider building a youth correctional facility that would be
built, owned, and operated by a private firm?
It was a combination of recommendations from the governor and the legislature. Everyone
was interested in exploring whether the private-sector could operate a prison in Michigan
in a cost-effective way. The youth prison seemed to be very logical because it was a
specialized program. We just didnt have the expertise in running that type of
We are issuing two contracts: a contract for the lease of the facility and one for the
operation. That is designed to protect the interest of the state. In fact, if we have a
problem with the operator, we still have control of the building, and, if necessary, we
can replace the operator. There are many built-in safeguards to protect the interests of
the state and taxpayer.
MPR: Will private guards enjoy the same immunity from work-related lawsuits that
their public-sector counterparts enjoy?
No. Theyre are not indemnified as our employees are. There is, however, a
requirement of the private contractor that the vendor carry sufficient liability insurance
to protect not only the vendor, but the state, from liability.
MPR: Wouldn't it be cost-effective to provide private guards with the same
indemnification that public-sector employees receive?
Thats been discussed. There are a variety of ways that it has been dealt with in
other states. One of the things thats attractive about privatization is that it
gives you a fixed cost on your liability for lawsuits. It falls upon the vendor. It not
only saves the attorney general staff time, but it also saves us time and dollars in terms
of settlements and court costs. There has to be an evaluation of how much in charge-backs
is billed to the state, versus how much we would project to spend if we indemnify them.
One of the things thats attractive about privatization is that it gives
you a fixed cost on your liability for lawsuits.
MPR: Have you been able to determine the cost savings associated with a privately
run correctional facility of this nature?
No, not yet. Nationally, most jurisdictions have seen anywhere from 10 to 20% savings.
Particularly for the first five years. The MDOC and the Michigan Department of Management
and Budget (DMB) have evaluation teams going through the proposals we received from
private firms to build the youth correctional facility. When we award the contract to
build the prison, we will be in a better position to determine what the savings may be.
MPR: What precautions are you taking to avoid common pitfalls and ensure a smooth
bidding and contracting process with the private firms?
Once the legislature authorized the project, we contracted for the services of two
experts, and we have had teams from the attorney generals office, DMB, and MDOC
working to draw up the most important element of this project: specifications. We have
authored a highly detailed set of demands for the vendor so we can then do a fair
evaluation of our proposals. Our final contract will also be tightly written so nothing is
left to chance. Both parties need to understand what is expected of them.
MPR: How did you handle opposition from unions in your attempt to streamline
operations at the MDOC?
There remains a great concern among union leaders that we are eroding their membership.
Its my job to explain what we are attempting to do, why, and to reinforce that our
streamlining does not reflect on the performance of state employees. I try to remind them
that the private sector has clearly demonstrated that they can do our business better and
cheaper than we can. We should take advantage of that to the benefit of the agency and
taxpayers as a whole.
MPR: There have been public complaints by legislators about contracts to provide
products and services to Michigan prisons. Will you elaborate and respond?
The DMB has established what is called a "prime vendor" contract. It changed
the way we purchased bulk food. Instead of having multiple contracts, the prime vendor
contract establishes one or two vendors to provide bulk food to our prisons. That cuts out
a couple of steps in our process in terms of purchasing, requisition, and delivery. Some
people have pointed out that food costs have increased, and in some cases, theyre
right. What they havent recognized is that the increases are offset by the reduction
in costs for staff and transportation. There remains a substantial net savings.
MPR: Officials in Tennessee may contract with a private firm to run the state's
entire correctional apparatus. They expect annual savings to surpass $100 million. Is that
a viable option for Michigan?
It may be in the future, but not at this point in time. I have followed the Tennessee
debate, and I know that its very controversial.
Clearly, there would be a lot of opposition here in Michigan from state employees. The
best course of action is to put the youth prison into operation and determine whether it
can succeed before we engage in the widespread privatization of prison facilities.
MPR: To what degree have you considered alternatives to incarceration? For instance,
the Mackinac Center has recommended tethering, community service, and a repeal of the
650-lifer law. To what degree would that prevent continued prison construction?
The governor has led the push for alternatives for the last six years, particularly for
nonviolent, short-term offenders. There has been dramatic progress. We just enjoyed our
fourth consecutive year where the rate of new prisoner intake decreased. In the 1980s the
rate of new prisoners was growing at 17% annually. Our growth rate in the last two years
has been the slowest in twenty years.
There will be a continued, systematic review in the MDOC where we look to
establish public-private partnerships to streamline our operations.
MPR: What do you see as the future of corrections privatization in Michigan?
There will be a continued, systematic review in the MDOC where we look to establish
public-private partnerships to streamline our operations. There will also be a continued
evaluation of health care and the dietary services area. Much of what the MDOC does can be
examined for privatization. I must stress, however, that doing a lot of privatizing is not
as important as executing each project professionallywhich includes doing your
homework and avoiding privatization land mines.