Traverse City Record-Eagle


March 2, 2013

Officials: Mich. won't privatize prisons further

LANSING (AP) — Michigan officials said Friday they will not privatize nearly $350 million in prisoner health care and food costs, keeping intact nearly 1,700 state workers’ jobs but frustrating Republican lawmakers who questioned the bidding process.

State Department of Corrections spokesman Russ Marlan told The Associated Press that none of three contracts out for bid would have achieved the necessary 5 percent savings as required by state rules.

Privatizing all medical care could have been the largest privatization of state government services in Michigan history. State officials also decided not to contract with companies to handle inmates’ mental health care or meals.

The announcement was welcome news to psychologists, nurses and others who work in 32 Michigan prisons, but it angered or frustrated GOP legislators who oversee a $2 billion corrections budget that accounts for a big chunk of the general fund.

The United Auto Workers, which represents 800 prison employees that would have been affected by privatization, credited state management for working with the union on efficiencies in the medical and mental health systems.

“We knew that privatization would only result in diminished staffing and service, compromising safety inside the prison and outside in the surrounding community,” UAW Vice President Cindy Estrada said in a statement.

State civil service rules require any move to privatize a government function must save at least 5 percent. The best bids for the three contracts would have saved between 3 percent and 4.5 percent, Marlan said.

He said Michigan tried for the first time to get a true comparison of costs for private workers versus state employees by factoring in retirement liabilities. With state workers now paying more toward future pension benefits and retiree health care being eliminated for new hires, Marlan said, private companies cannot show as much savings even though they may pay workers less. Michigan also began pre-paying employees’ future health care liabilities.

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