Michigan Privatization Digest - March 3, 2009

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Contents of this issue:

  • State re-contracts prisoner health care

  • State may privatize fairs

  • Macomb sheriff looks to cash in on foreclosure processing

  • Wexford County faces tough budget, floats privatization idea

  • Royal Oak Privatizes Parking

  • Grand Traverse County uses contractors to control overtime costs

  • Dean Transportation receives ruling on federal suit

  • Upper Peninsula districts reject contracting

  • Grand Ledge looks to contract out transportation and custodial services

State re-contracts prisoner health care

LANSING - The state selected a new vendor, Prison Health Services, for management of the health services for its prisons, according to the Michigan Information & Research Service newsletter. The contract expires March 31, 2012, and will pay the company $326 million, according to the state's Web site.

Prisoner health care had been provided by Correctional Medical Services since 1998. That company was selected after the state's previous vendor did not provided the performance it promised.

A December 2007 report by the National Commission on Correctional Healthcare made 54 recommendations to improve Michigan's services. The new contract reflects those recommendations and the company will be held responsible for maintaining NCCHC standards.

Michigan is not alone in contracting out for inmate health services. In 2004, the Mackinac Center found that 32 states contracted with private firms to provide these health services.

"Choice of prison health company angers some," The Grand Rapids Press, Dec. 23, 2008
"DOC Changes Health Care Provider," The Michigan Information & Research Service, Feb. 10, 2009
"Privatization for the Health of It," Michigan Privatization Report, December 2004

State may privatize fairs

LANSING - The state may eliminate its subsidy of state fairs and solicit donations as a replacement. The fairs - one in Detroit and another in Escanaba - have been a perennial money-loser and required $350,000 in state money last year, according to the Detroit Free Press.

Gov. Jennifer Granholm highlighted the fairs in her State of the State address. "[W]hile they are a wonderful tradition, the state fairs are not an essential purpose of government. I'm grateful that others are stepping forward to continue this tradition," she stated.

The Mackinac Center has called for the elimination of the state subsidy for the fair since 1996. Authors Joe Overton and Aaron Steelman argued, "[T]here is no reason to believe that we need the state to run the Michigan State Fair in order for there to be one." Mackinac Center scholars argued in 2003 that selling the fairgrounds may bring the state $59 million, although the real estate market has changed since then.

"Money sought to keep State Fair alive," Detroit Free Press, Feb. 3, 2008
"Fairs to Remember," Michigan Privatization Report, February 2003
"Advancing Civil Society: A State Budget to Strengthen Michigan Culture," Mackinac Center for Public Policy, April 1996

Macomb sheriff looks to cash in on foreclosure processing

MOUNT CLEMENS - Macomb County is looking at changing its document serving contract, The Detroit News reported.

Counties must deliver foreclosure and eviction notices as well as personal protection orders. There are fees to defray these costs, but that fee is set by the state, according the The News. In 2004, Macomb County hired a company to provide these services, with the company earning the difference between the fee and the cost of serving paperwork. Sheriff Mark Hackel would like the county to look at a contract where it would pay a company to provide the services and have the county keep the excess, according to The News.

With the rise in foreclosures growing from 3,579 in 2006 to more than 6,700 in 2008, county officials believe that its contractor has become more profitable, The News reported.

"Sheriff sees paperwork profits," The Detroit News, Jan. 28, 2009

Wexford County faces tough budget, floats privatization idea

CADILLAC - Wexford County may spend $350,000 to $1 million more than revenues next year and its commissioners are looking at a laundry list of savings measures that include privatization, according to The Cadillac News. The county is facing possibly higher expenses through union-negotiated wages, expenses to the Department of Environmental Quality over water system construction, and a groundwater lawsuit that may result in additional costs, The News reported.

Proposals include eliminating or consolidating the county general accounting office and privatizing building and grounds maintenance. The county issued a request for proposals for its payroll services, but according to the county's January 21 minutes, an RFP has not yet been issued for building services.

"There's nothing compassionate about budget cuts, but they're happening everywhere," Commissioner Larry Copley told The News. Another commissioner, Jerry Bulock, added, "There's nothing compassionate about tax increases, either."

"$1 million in cuts possible for Wexford?," The Cadillac News, Jan. 15, 2009

Royal Oak Privatizes Parking

ROYAL OAK - Royal Oak commissioners contracted out the management of three parking structures by a 6-1 vote, according to city minutes. The selected vendor, Ampco, will be paid $1.2 million over three years to manage the facilities. They also offer a program that allows attendants to assist customers with problems like flat tires or if they're locked out of their vehicles.

The city expects to save $16,000 from the move. The facilities have revenues of $950,000, according to The Royal Oak Daily Tribune.

In addition to parking contracting, the city has a long list of ideas to save money or increase revenues available on its Web site, including reform suggestions and updates on how the city has followed up with the reforms. It includes issues such as converting city vehicles to biodiesel and contracting out ambulance services.

"Privatizing parking structures for revenue hike the best choice," The Royal Oak Daily Tribune, Jan. 15, 2009

Grand Traverse County uses contractors to control overtime costs

TRAVERSE CITY - The Grand Traverse County Road Commission is turning to contractors to offset overtime costs. Commissioners signed contracts with three companies to plow certain neighborhoods in the county, the Traverse City Record-Eagle reported.

The agreement gives the contractors six hours to plow the county's subdivisions after a six-inch snowfall, according to the Record-Eagle.

The county will evaluate the effectiveness of the move at the end of the season. "We're doing this as a cost-saving measure, but there will be a lot of things to look at to decide if it's successful," road commission Manager Mary Gillis told the Record-Eagle.

"Some plowing privatized," Traverse City Record-Eagle, Jan. 10, 2009

Dean Transportation receives ruling on federal suit

GRAND RAPIDS - A federal appellate court ruled that Dean Transportation, the contractor providing transportation services to Grand Rapids Public Schools, must bargain with an MEA affiliate whose members provided the service prior to contracting.

Grand Rapids Public Schools contracted with Dean Transportation to provide busing services to the district in 2005. At the time, the move was expected to save $18 million over five years.

To provide the services, Dean hired a number of employees that had been working for the district. There was a question as to whether the employees' old union, an affiliate with the Michigan Education Association, would still represent the workers or whether they would become part of union that represented the company's workers.

Going from a public-sector union to a private-sector union involves different governing laws. In Michigan, public-sector unions are not permitted to strike. The ruling did not cover the right to strike issue. Mackinac Center Senior Legal Analyst Patrick Wright commented, "The court specifically saved for another day [this] fundamental workers' rights question."

An audio file released by the Education Action Group indicates that the MEA may use bargaining with Dean Transportation as an opportunity to strike.

"Grand Rapids recording," Education Action Group

Upper Peninsula districts reject contracting

HOUGHTON - After looking into consolidating and contracting transportation services, Hancock Public Schools and Houghton-Portage Township Schools decided to keep services in-house, The Daily Mining Gazette reported. The districts discussed consolidation, sharing services and possible privatization, according to board minutes.

At an October meeting the districts floated cost-saving proposals such as combining food service programs, contracting out transportation and custodial services, sharing administrative personnel, and shifting building use. Districts in the area are also looking to consolidate bookkeeping services at the ISD level, according to Superintendent William Polkinghorne.

The districts were negotiating with Schilleman Transportation, a business that provides services to some Upper Peninsula districts. Hancock voted against it in December and Houghton-Portage decided to hold off the purchase of a school bus and will re-evaluate contracting options in the future.

The district is also soliciting bids to contract out its food services.

"Hancock schools to keep bus system," The Daily Mining Gazette, Dec. 18, 2008
"Buses headed back to committee," The Daily Mining Gazette, Dec. 18, 2008

Grand Ledge looks to contract out transportation and custodial services

GRAND LEDGE - Grand Ledge Public Schools is seeking bids to contract out its transportation and custodial services, according to the Lansing State Journal. The district expects to spend $1.8 million more than revenues if it does not find cost saving opportunities.

"G. Ledge has bids for bus driving, school cleaning," Lansing State Journal, Jan. 12, 2009


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.