Michigan Privatization Digest - October 30, 2007

Contents of this issue:

  • Detroit shops around for incinerator savings

  • Judge attempts to privatize Friend of the Court

  • Bay County investigates new public attorney contracting

  • Port Huron to sell municipal building, privatize recreation center

  • Hospital privatization explored in Saginaw County

  • Rackham Golf Course sale delayed

  • Pontiac receives bids for Silverdome

  • Mental Health Authority looks to privatization

  • Privatized coaches expected to save money in Montague

  • Muskegon ISD consolidates and privatizes substitute services

  • Coaching services privatized in Atherton

  • Howell discusses privatizing administrators

Detroit shops around for incinerator savings

DETROIT — The Detroit City Council is reviewing a proposal to change its incineration of sewage that could lead to decreased costs and reduced emissions, according to The Detroit News.

All told, the proposition would save the city $5 million annually, according to The News. The city’s own incinerator costs $52 million per year to operate and would require $125 million in upgrades to bring it up to federal standards.

The city had entered into a contract in 2001 with a company to build an incinerator, but the company had financial trouble, according to The News.

The city plans to shut down its incinerator once the new plant is built. Current employees would be transferred.

The Detroit News, "City considers private sludge burning deal," Sept. 18, 2007

Judge attempts to privatize Friend of the Court

DETROIT — Wayne County Chief Judge Mary Beth Kelly has been trying to privatize her court’s Friend of the Court functions, according to The Detroit News. As chief judge, Kelly has the responsibility of operating the circuit court.

Friend of the Court collects and distributes child support money and works to enforce court orders on child custody.

Judge Kelly added a contract stipulation that there would be a 33 percent increase in staffing levels for the service. It currently employs 169 people, according to Gongwer News Service. The judge would like the overall expense to remain at $28 million annually.

In response, employees are seeking an injunction to stop the bidding process.

The court extended its request for proposals deadline to Nov. 12.

Gongwer News Service, "Wayne Co. privatization controversy mimics foster care arguments," Sept. 12, 2007

Bay County investigates new public attorney contracting

BAY CITY — Bay County officials are looking to contract a public defender position, according to The Bay City Times. The county had employed three public defenders and contracted out any additional work to in-county attorneys.

The county sought bids to offer defense services to those accused of a criminal misdemeanor who cannot afford an attorney. It received nine bids in response, but only seven met bid point thresholds. The county also solicited bids from outside of its borders to ensure that its resources were being used efficiently.

Still, it is uncertain whether contracting out will save money for the district. The lowest bid received was $50,000 higher than it currently costs to provide the service.

The Bay City Times, "Officials looking at public defender bids in attempt to find savings," Sept. 11, 2007

Port Huron to sell municipal building, privatize recreation center

PORT HURON — The city of Port Huron projects it will overspend its budget by $42 million in the next five years if it doesn’t act to improve its finances, according to The Port Huron Times Herald. It is taking a look at its holdings and activities to see where it can save money.

One of the ideas is to sell its Municipal Office Building. The city issued a Request for Proposals two years ago, but did not accept any of the bids, according to The Times Herald. It will be considered again. The office overlooks the St. Clair River, but it is located next to the city’s wastewater treatment plant.

The city is also looking at contracting out for the management of its recreation center. The general manager of the facility stated that he had been approached by two companies to manage the center, the Times Herald reported.

The Port Huron Times Herald, "City, residents face tough budget questions," Sept. 5, 2007

Hospital privatization explored in Saginaw County

SAGINAW — County commissioners in Saginaw are looking at selling HealthSource hospital, according to The Saginaw News. The commissioners formed a committee to explore their options.

Complaints against the facility include a renovation project that ballooned $8.5 million higher than its expected $35.5 million price tag and additional operation costs from health care for its unionized work force.

However, county commissioners have little legal authority over the hospital, although it does receive county millage support. The hospital is directed by trustees appointed by the county commission.

In order to sell the facility, officials would have to pay off the current debt on the facility and seek approval of a number of regulatory agencies, according to The News.

The committee is expected to have a recommendation in early 2008.

The Saginaw News, "County may sell hospital," Aug. 22, 2007
The Saginaw News, "Attorney: County can’t sell hospital," Sept. 14, 2007
The Saginaw News, "CEO: Privatize mental health facility," Oct. 21, 2007

Rackham Golf Course sale delayed

HUNTINGTON WOODS — Over a year has gone by since Detroit opened bids for its Rackham golf course, a city-owned golf course that resides outside of the city, and the sale has yet to be completed.

The City of Huntington Woods made an offer on the property, which was accepted after its main competitor dropped its bid.

Huntington Woods also won a designation of the land as a historic area, which will prevent it from being developed.

Disagreements over ownership and rights to a cell phone tower located on the property and items included in the sale have stalled the sale of the course.

A conservancy has also been meeting with Detroit officials to discuss an alternate sale or lease of the property, according to The Detroit News.

The Detroit News, "Lawsuit stalls Rackham land deal," Sept. 19, 2007

Pontiac receives bids for Silverdome

PONTIAC — The city of Pontiac has received seven proposals for the sale and redevelopment of the Silverdome, according to The Detroit News.

The Silverdome has sat empty and largely unused since the Lions left the facility in 2002. The city unsuccessfully attempted to sell the dome in 2005. Most of the seven bids did not meet the proposal specifications, according to The News. It is up to the city council to decide whether to exclude any of the bidders due to lack of information.

The proposals range from turning the dome into a horse racing track, a spiritual center, or a concert venue. Pontiac officials will decide which bidders will be allowed to make a public presentation. The city council will then decide whether to accept or reject the bids.

The Detroit News, "Silverdome plans disappoint officials," Oct. 20, 2007

Mental Health Authority looks to privatization

SAGINAW — The CEO of the Saginaw County Community Mental Health Authority is recommending the privatization of its Communities Ties North and Community Ties South facilities as a way to save the county $1.1 million annually, according to The Saginaw News. The facilities offer day care and training for the developmentally disabled. CEO Sandra Lindsey recommended contracting with Michigan Community Services Inc. to operate the two facilities, The News reported.

In response, union officials representing the current employees made concessions that would save $700,000 annually. Concessions included switching some full-time employees to part-time, reducing the number of paid holidays and offering early retirement.

CEO Sandra Lindsey stated that contracting out is unlikely and will be exploring other cost-cutting alternatives.

The Saginaw News, "Outsourcing ‘the right decision,’" Aug. 31, 2007

Privatized coaches expected to save money in Montague

MONTAGUE — Montague school board members voted to contract out the district’s athletic coaching services to Professional Educational Services Group, according to The Muskegon Chronicle. The district expects to save between $1,000 and $10,000 annually from this move. By using PESG, the district will avoid making a mandatory contribution to the school employee retirement fund, from which coaches are unlikely to draw.

The Muskegon Chronicle, "Some coaches will work for private firm," Aug. 27, 2007

MUSKEGON — All but two districts in the Muskegon Area Intermediate School District have signed onto a consortium of county schools to privatize their substitute teacher services, according to The Muskegon Chronicle.

One district, Whitehall, did not sign up for the privatization. It is currently implementing a new automated system to call subs and did not want to change the provider until it is familiar with using the system. Districts estimate they will save an average of 9 percent under the new format, The Chronicle reported.

The Muskegon Chronicle, "Private firm to supply substitute services," Aug. 24, 2007

Coaching services privatized in Atherton

BURTON — The Atherton school district in Genesee County contracted out its coaching services and paraprofessionals to PCMI, according to The Flint Journal. The move will save the district $50,000, The Journal reported.

For most coaches in the Atherton school district, the school board’s decision to contract out for their services simply means that their paychecks will come from a different source. But having a different entity sign the checks allows the district to avoid paying an additional 17.8 percent to the Michigan Public School Employee Retirement System. Coaches who are also teachers will opt-out of the contracted company three years before retiring in order to get a full draw on their retirement, according to The Journal.

The Flint Journal, "Atherton privatizes athletic coaches, causing stir in school district," Sept. 19, 2007

Howell discusses privatizing administrators

HOWELL — The Howell board of education is discussing contracting out four of its administrators, a move that could save an estimated $135,000, according to The Detroit News. Administrators can retire and draw pension funds in addition to a salary from the contract company by returning to work in their previous capacities. The district will avoid paying pension contributions for the employees and additional payroll costs like Medicare and Social Security, according the The News.

The district recently contracted its custodial services, a move that is expected to save $400,000 for the current fiscal year.

The Detroit News, "Howell school board may outsource administrators," Oct. 16, 2007.

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.

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