Michigan Privatization Digest - January 6, 2009

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Contents of this issue:

  • State looks to hire privatization expert

  • State discusses University of Michigan Privatization

  • Possible Ann Arbor golf course sale spurs ballot proposal

  • Pontiac seeks asset options

  • Reeths-Puffer privatization agreement includes no cost increases

  • Reed City school board recall passes

  • Southfield recall election, anti-recall campaign launched

State looks to hire privatization expert

LANSING - The state has hired KPMG to be its privatization expert. The firm is expected to provide the state with 12 ideas for privatization and better public-private partnerships each year, and anticipates working on implementing three to six of them.

Michigan policymakers have been interested in using more public-private partnerships, but recognized that it needed to look outside for expertise. As of Dec. 5, the administrative board approved the contract, but the state has not yet finalized the deal.   

KPMG will be paid $3.2 million over three years for its services. Its fees are expected to be paid by proceeds set aside by public-private partnership transactions, according to Treasury spokesman Terry Stanton.

State discusses University of Michigan Privatization

LANSING - A state government efficiency panel's report will include a discussion over privatizing the University of Michigan, according to The Ann Arbor News. The state currently provides the university with annual appropriations of $327 million, all of which is funded through general tax revenue.

While panel member and Senate Fiscal Agency Director Gary Olson does not like the idea, he stated that the university could survive without state funding, according to The News.

However, in order for the recommendation to be implemented, there would have to be a constitutional amendment passed. The Michigan Constitution states, "The legislature shall appropriate moneys to maintain the University of Michigan" and a number of other state universities.

The Mackinac Center recommended privatizing the university in 2004.

"Legislative study group explores idea of privatizing the University of Michigan," The Ann Arbor News, Dec. 18, 2008
"Privatize the University of Michigan," Mackinac Center for Public Policy, March 1, 2004. Available on the Internet at http://www.mackinac.org/ 6313

Possible Ann Arbor golf course sale spurs ballot proposal

ANN ARBOR - Afraid of the city's possible sale of its Huron Hills golf course, Ann Arbor residents passed a Nov. 4 proposal to require a city vote of any attempt to sell city parkland, according to The Ann Arbor News.

The city owns two golf courses, Huron Hills and Leslie Park. The courses essentially lost money in each of the past 10 years. It was suggested in 2005 that Ann Arbor sell parts of the Huron Hills course, according to The News.  However, city council members rejected the idea.

The measure passed 65-35 percent.

"Ann Arbor ballot measure would require future sale of any parkland to be approved by city voters," The Ann Arbor News, Oct. 31, 2008

Pontiac seeks asset options

PONTIAC - City officials are looking for new buyers of the Silverdome after its selected buyer did not turn over the cash by the sale deadline, according to The Oakland Press. The buyer needed to turn over $20 million to the city.

The deadline to turn in new bids was Dec. 8. The city had at least three other buyers interested in the facility, The Press reported.

Pontiac is operating under an agreement with the State of Michigan over its operations.  Selling the Silverdome was part of the deal.

"Unnamed companies inquire about Dome," The Oakland Press, Nov. 13, 2008
"Pontiac again seeks bids for former home of Lions," The Oakland Press, Dec. 5, 2008

Reeths-Puffer privatization agreement includes no cost increases

MUSKEGON - Reeths-Puffer Schools renewed a contract with EnviroClean to cover custodial service to the district. The contract included no increases in expense to the district.

Employees facing a privatization attempt often argue that contractors' first-year bids are artificially low to make the initial decision to contract easy and then increase rates after the district loses its employees. However, Reeths-Puffer's agreement is an example contrary to this argument.

When the district contracted out the service in 2006, the move was expected to save the district $480,000 a year over the contract's life. Opponents of the move distributed fliers calling for boycotts of the companies employing school board members.

Reed City school board recall passes

REED CITY - After voting to contract out for food and custodial services, four members of the Reed City school board were recalled.

The recall petition included three reasons: extending the superintendent's contract by two years, cutting nonadministrative positions and failure to consider "taxpayers' input," according to The Big Rapids Pioneer.

The Nov. 4 general election vote was close - the average of the votes was 51 percent in favor and 49 percent against.

"Reed City recall launched," The Big Rapids Pioneer, July 16, 2008
"Info in Todd letter was misleading," The Big Rapids Pioneer, Aug. 20, 2008
"Recall Showdown in Reed City," Michigan Privatization Report, Winter 2008

Southfield recall election, anti-recall campaign launched

LATHRUP VILLAGE - Employees of Southfield schools launched a recall campaign against its school board members but did not submit the necessary signatures to place the recall on the ballot. The union had initiated its campaign after the board voted to contract out its food, custodial and transportation services, a move that is expected to save the district $21.5 million over three years.

Lathrup Village resident Thom Bainbridge called a town hall meeting to counter the recall campaign, according to C&G Newspapers.

While supporters claim to have gathered enough signatures, they were not submitted. The district is now facing contentious labor contract negotiations, according to the MEA Voice.

"Residents rally to thwart recall effort," C&G News, July 15, 2008
"Southfield vigil draws more than 200," MEA Voice, Nov. 18, 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.