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
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.