Around the State 2006-02

Contents of this issue:

  • Baldwin Prison to Reopen

  • Tiger Stadium to be Dismantled

  • Houghton Lake Schools Contracts Out for Food Service

  • Mona Shores Looks to Privatization to Balance Budget

  • L’Anse Area Schools Contracts Out for Custodial Service

  • Gwinn Area Community Schools Saves Through Privatization

  • Lakeshore Fills Retirees’ Positions with Enviro-Clean Employees

  • Pontiac Contracts for Controller

  • Lansing Schools Contract with Aramark

  • Whitehall Hires Custodial Contractor

  • Midland Public Schools Investigates Outsourcing

  • County Outsources Plowing

Baldwin Prison to Reopen

LANSING — Gov. Jennifer Granholm recently signed legislation allowing the Michigan Youth Correctional Facility, Michigan’s only privately operated prison, to accept inmates from other states should it reopen. She signed the bill after it had passed both the House and Senate by large margins. Gov. Granholm had originally closed the facility in 2005.

The GEO Group, the company that operated the facility before its contract was terminated, had been legally required to accept only Michigan youth prisoners. The new law allows the company to use the facility once again and house inmates from outside of Michigan.

According to the Senate Fiscal Agency, the company reports that it already has prospects for the facility, anticipating it would need three to five months to prepare and house inmates.

The facility is located in Lake County, one of Michigan’s poorest. When operational, the facility accounted for more than 50 percent of the county’s commercial/industrial base, according to the Senate Fiscal Agency.

Tiger Stadium to be Dismantled

DETROIT — After seven years of proposals, feasibility studies, indecision and decay, Tiger Stadium will soon meet its demise. Detroit’s Economic Development Corporation is soliciting bidders to dismantle the facility to make room for condos and shopping.

The city plans to remove all of the memorabilia from the stadium and sell it at auction, The Detroit News reported. This will help defray the costs of the dismantling, estimated at $2 million to $5 million, according to The News.

The city will also solicit bidders to develop the property into a mixed-use facility of 150 condos and 40-50 stores, The News reported.

Houghton Lake Schools Contracts Out for Food Service

HOUGHTON LAKE — Houghton Lake Community Schools is expected to reap savings this school year after contracting with Chartwells Educational Dining Services.

The district already had a contract with the company for management of the district’s food service. This year, believing that more savings could be obtained by contracting for all food services, the district issued a request for proposals and awarded the contract to Chartwells.

The district is experiencing tough fiscal times. Enrollment is declining, two elementary schools have closed and approximately 100 employees have been shed. The district has also gone through four superintendents over the course of one year, according to current Superintendent Peter Injasoulian.

Among the three chief support services — transportation, janitorial and food — the latter is the most commonly outsourced. Nearly 160 Michigan school districts contract out for food services. Houghton Lake has taken it a step further by contracting for meal preparation as well as management.

Mona Shores Looks to Privatization to Balance Budget

MUSKEGON — The Mona Shores School District will consider contracting out for janitorial and transportation services for the upcoming fiscal year, according to The Muskegon Chronicle.

The district projects that its expenses will exceed revenues by $500,000 next year, The Chronicle reported.

The district will also investigate other ways to save money, including eliminating programs, positions and adding rental fees for use of the district’s facilities, noted The Chronicle.

The district had been part of a consolidation and privatization deal for transportation services, but the effort collapsed in the face of stiff union opposition.

L’Anse Area Schools Contracts Out for Custodial Service

L’ANSE — L’Anse Area Schools has contracted out for janitorial services. The district solicited bids for the cleaning and maintenance of its middle school and high school. The district had been spending more than $100,000 for those services, but UP Janitorial was awarded a contract that would cut that cost in half, according to the L’Anse Sentinel.

The district had been facing a $120,000 deficit. Like many school districts across the state, its contractual obligations to its workforce have squeezed the school budget. Contracting out was seen as a way to prevent cost-cutting from impacting students. “My focus is to provide an education to the students, and we want to provide it as efficiently as we can,” stated Superintendent Ray Pasquali. “Thirty-four percent of Michigan school districts are contracting out to some degree,” Pasquali told the L'Anse Sentinel.

The district had wanted to contract out for the service in early August, but gave its employee union more time to present a bid for the service.

Gwinn Area Community Schools Saves Through Privatization

GWINN — Gwinn area community schools may see lower costs and improved services for its custodial work this fall. The district contracted out custodial services to Hi-Tec Building Services, based in Jenison, Mich. The company will use two more custodians than the district had and will service the schools nine more hours per day, according to Superintendent Steven Peffers.

Gwinn had been facing a $740,000 deficit. The contract with Hi-Tec is expected to plug $186,000 of that hole in the first year, $250,000 in the second and $280,000 the following year, according to the Marquette Mining Journal.

In addition to custodial privatization, the district is looking for savings by using a firm for substitute and coaching services, switching its administrators to a less expensive healthcare plan, and leaving its swimming pool unused for the year.

Even so, the district will not be able to balance its budget and is expecting to take a $550,000 hit to its general fund in this fiscal year.

The community will vote on a special bond in February to address some of its capital improvements. The district school buildings are all more than 40 years old and in need of new roofs, Peffers stated. However, the bond proceeds could not be used to cover any general fund expenses.

As with many contracting experiences, there is a question over what to do with current employees. The district has a number of vacancies in positions around the school, including bus drivers and lunch room supervisors. The current employees will have priority for those jobs, according to the Mining Journal.

Still, the support staff union filed a grievance against the school board. The union alleged that its contract bars the school district from using nonunion labor for the service. The school board responded that there was not any such provision in its contract, and that state law bars them from putting such a clause into the contract.

Lakeshore Fills Retirees’ Positions with Enviro-Clean Employees

STEVENSVILLE — Retiring employees are occasionally replaced with contract employees. Such is the case at Lakeshore Public Schools, where two retiring members of its custodial staff were replaced by employees from Enviro-Clean, a cleaning service from Holland.

The move is expected to save the district roughly $50,000 of the $100,000 it had been paying for these services, according to the St. Joseph Herald Palladium.

The district has had to cut its budget in each of last four years. “Our focus is to keep the cost-cutting away from the students,” stated Superintendent Don Frank.

The district has no plans to contract out for other employees. The agreement with Enviro-Clean is seen as a trial for these services. “We’re not tied to this, if it’s working then that’s fine. If it’s not working, then we’ll hire our own employees,” Frank said.

Pontiac Contracts for Controller

PONTIAC — The city of Pontiac contracted with public accounting firm Plante and Moran last summer to act as official controller for city finances. The contract, according to The Oakland Press, will cost $155,000 through 2006 and $351,000 for calendar year 2007. In each succeeding year the cost is $326,000; however, the city intends to replace the firm with its own staff within two years.

The city hired the firm because its own books were in such disarray that officials were unable to determine the precise financial position of the city. In addition to Pontiac, Plante and Moran “also performs day-to-day operations” for communities such as Highland Park and River Rouge, according to The Oakland Press.

The city of Pontiac has experienced deficits ranging between $50 million and $60 million. The city has floated bonds to mitigate the deficit and is currently weighing its options to privatize its golf course, sell the Silverdome and other assets, and even contract for janitorial services within its police department, among other facilities.

The next financial audit is due by Dec. 31, at which time much more will be known about Pontiac’s financial position and its need for additional cuts or privatization.

Lansing Schools Contract with Aramark

The Lansing School District in October picked Aramark School Support Services to provide management of its food program. Aramark beat out two other companies for the contract, including SodexhoMagic, in which Earvin Johnson, the former Michigan State University basketball and Los Angeles Lakers stand-out, is a partner.

According to the Lansing State Journal, the contract is expected to save “up to $2.25 million over four years by enticing more students to eat at school and making the system more efficient.” Apparently, both students and their parents have complained about the district’s in-house program, which lacked the quality and choices offered by a private vendor. According to the Journal, the contract with Aramark means:

  • More than $440,000 in new cafeteria décor, equipment and marketing efforts;

  • A breakfast program for all elementary school children at no cost; and

  • Greater choice in food selection.

According to the 2006 school privatization summer survey conducted by the Mackinac Center for Public Policy, 37.8 percent of all districts surveyed reported contracting out for at least one of the three major noninstructional services.

Whitehall Hires Custodial Contractor

WHITEHALL — The Whitehall school district has seen its fair share of privatization debates in 2006. Earlier this year Whitehall considered joining forces with five other school districts to contract for school bus services, but ultimately decided against it.

But in September the Whitehall District Schools board voted 4-3 to contract out for custodial services, according to the White Lake Beacon. The contract is expected to save at least $40,000 annually.

Midland Public Schools Investigates Outsourcing

MIDLAND — Officials from the Midland Public Schools have been investigating possible outsourcing initiatives involving both cafeteria and custodial services, according to the Midland Daily News. In October, the district received comments from opponents of outsourcing, including teachers, custodians and cafeteria workers.

The idea to outsource noninstructional services came from the district’s Program Analysis Committee, which met from January to April to review ways to reduce expenditures in the district.

Superintendent Gary Hughes has said that any savings generated through privatization would be reinvested in the classroom.

The district intends to issue a request for proposals in 2007 to help determine the most cost-effective way of providing cafeteria and custodial services.

County Outsources Plowing

GRAND HAVEN — The Ottawa County Road Commission has contracted with Countryside Snowplowing to clear and salt some of its roads for this winter, the Grand Rapids Press reported. The company will provide services to roads in Sheldon, Olive and Park townships.

The road commission will pay the company $72 an hour which is $8 less than it costs the road commission to do it themselves, the Grand Rapids Press stated. In addition, the road commission will not have to hire additional employees.

Around the State 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.