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Mich. won’t privatize prisons further
By DAVID EGGERT, Associated Press
LANSING, March 1, 2013 (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.
``To get a real apples-to-apples comparison, you need to
incorporate these legacy costs,'' Marlan said. ``Whether these
1,670 employees work for the state or not, we're still going to
have that cost.''
The chairmen of the House and Senate subcommittees that write
the prison budget said they would hold a joint hearing next week
to question Gov. Rick Snyder's administration about the
decision.
Rep. Greg MacMaster, R-Kewadin, agreed the state has fixed
legacy costs but wondered why that needs to be factored in if
companies otherwise can offer significantly cheaper services.
``How can a department ethically and morally review bids for
approval when they too have a dog in the fight in the bid?'' he
said, alleging that he has not been given accurate numbers.
``It's not about saving state employees' jobs. It's about giving
the best value for our dollar to our taxpayers.''
The Legislature cannot force the independent Civil Service
Commission to change the requirement that privatization save at
least 5 percent, though it could still become a focus for
lawmakers. If the savings threshold was not in place, the state
could have saved between $11 million and $12 million, Marlan
said _ no small amount but not huge in the context of a $2
billion budget.
Privatization would have affected about one in 10 of 14,700
corrections workers. More than a quarter of state employees work
in the prison agency.
``It's a massive group of people and a huge legacy cost that
continues to burden our efforts to decrease the size and scope
of our general fund obligation to the Department of
Corrections,'' said Sen. John Proos, R-St. Joseph.
He said he wants prison officials to explain the bidding process
to his committee.
Friday's news drew a mixed reaction from House Appropriations
Chairman Joe Haveman, R-Holland. He said he was disappointed
because he thinks anytime a new company is hired ``you learn a
better way of doing things.'' But he also said it appears the
department has contained costs well in recent years if it is
fairly competitive with private companies.
For the largest contract that officials decided not to pursue—a
$200 million-plus deal for physical health care
services—Tennessee-based Corizon was the lone qualified bidder.
Michigan already pays Corizon to hire on-site prison doctors,
physicians' assistants and nurse practitioners and to handle
off-site specialty care.
That contract will probably be extended and eventually rebid,
Marlan said.
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