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    The cost of “law and order” in Michigan has become too expensive. The state spends over $34,000 per year on each inmate in state prison; while some states spend more than this, others spend much less. Michigan’s costs are compounded by long sentences and relatively high incarceration rates.*

    All of this adds up to a $2 billion annual bill, almost a fifth of the state’s budget. 96% of these funds come from the state’s general fund,which means that Michigan spends a larger proportion of its general fund than any other state on corrections, and that the cost of keeping Michigan’s state prisons running is shouldered mainly by taxpayers.

    .

    One cost-reducing solution could be simply to reduce the prison population. However, after significant decreases in Michigan’s prison population from 2007 through 2012, the population has begun to rise again and further decreases are not expected in the near future.

    That leaves trimming per-inmate costs as the prevailing approach in Lansing. Attorney General Bill Schuette summed up this consensus when he told reporters last year, “Let’s run our prisons more efficiently instead of saying, ‘Oh gee, the only way we can cut costs is letting out dangerous prisoners.’ I’m not going to stand for that.”

    And, according to at least one narrative that has gained force in Lansing, running the Michigan Department of Corrections (MDOC) more efficiently means contracting key services out to private businesses.

    Neither MDOC’s budget woes nor the push to privatize are particularly new issues. As far back as 2005 the Michigan House subcommittee on Corrections heard testimony from an analyst at the conservative-leaning Mackinac Center for Public Policy who said that “by failing to

    adopt prison privatization “Michigan was “walking away from huge potential savings and doing a real disservice to taxpayers.” In 2007 Michigan’s Senate Judiciary Committee listened to representatives of private health and food-service companies who claimed that by contracting with them the state could slash its corrections expenditures by $40 million annually (a large amount in absolute terms, though only equivalent to about 2% of MDOC’s budget).

    In recent years Michigan has experimented with privatizing several corrections services in order to costs. Have these approaches saved money? And if so, what tradeoffs, if any, have they entailed?

    In the rest of this article we’ll attempt to answer those questions for the three main areas where MDOC has experimented with privatization: facilities management, health service, and food service.

    Running Private Facilities

    Sending inmates to facilities that are completely owned and run by private companies—perhaps the “purest” form of privatization in the field of corrections—has been quite limited in Michigan.

    In 1999 a private prison facility was built and operated near Baldwin, Mich., in Lake County, by Wackenhut (which was later acquired by GEO). The facility was often referred to in the popular press as a “punk prison” because it was built to house dangerous, high risk youth offenders.

    Did it save money?

    No. A report issued by Michigan’s Auditor General in May 2005 concluded that MDOC “did not efficiently use state resources when housing youthful prisoners” at the facility, that the private facility’s daily per-inmate costs were “higher than the daily cost per prisoner for 33 of 37 other State correctional facilities,” and that the state could have saved $2.2 million if it had housed most of the private facility’s inmate at state-run facilities instead.

    It should be noted that if the facility had actually housed high-risk inmates it may well have saved the State money; however, according to the 2005 audit report only 6% of inmates were classified at the maximum security level, rendering many of the facilities’ security features superfluous. Soon after the audit was released, then-governor Granholm effectively ended the state’s dealings with the facility.

    Current Outlook

    Various voices in Michigan politics continue to insist that privately-run correctional facilities could save Michiganders money. In June 2013, for example, the Detroit Free Press ran a guest column written by two professors from Pennsylvania’s Temple University who said their research in ten states indicated that private prisons could generate savings of 12% to 48%, “without sacrificing the quality of services.” (The professors later came under investigation by their university for failing to disclose that their study was funded by members of the private prison industry.)

    Legally, the door is still open. In late 2012, the State legislature approved a bill allowing the Lake County facility to house adult inmates and allowing MDOC to contract with privately owned correctional facilities if such arrangements would produce savings of at least 10%.

    However, nearly two years later the state has not taken any concrete action to reinitiate relationships with any private correctional facilities. MDOC spokesman Marlan told this site that no private correctional facilities are currently operating in Michigan.

    Health Services

    Inmate healthcare is a major contributor to Michigan’s corrections costs, and is likely to increase significantly in the coming years.

    Michigan prisoners are getting older, and as with any population age brings more health complications. The proportion of inmates over age 40 has nearly doubled over the last twenty years; as of 2012, over 41% of prisoners in state facilities were over 40 and 18% were over 50.

    Michigan has higher per-inmate health costs than all but 8 states in the union, and those costs grew by 14% between 2007 and 2011. Prisoner healthcare, including mental health, cost Michigan $284 million—about 14% of the total corrections budget—in the 2013 – 2014 fiscal year.

    Since the 1990s MDOC has used a hybrid health system, with some services provided “in-house” by MDOC employees while others have been provided through a series of contracts with private companies—some physical healthcare services were provided by Correctional Medical Services (CMS), then Prison Health Services (PHS), and currently by Corizon, a company which acquired both of the previous two. Between 2009 and 2012 Corizon’s contract with the State of Michigan was worth approximately $108 million per year, accounting for roughly a third of MDOC’s spending on inmate healthcare. The state also contracts with private companies to handle mental health care and prison pharmacies.

    Has it saved money?

    No. MDOC spokesman Russ Marlan told this site that “the health/mental health care positions (physicians and psychiatrists) were contracted not to save money but to help with filling vacancies—which it was successful in doing.”

    In August of 2012, the state reviewed proposals from private companies bidding on the opportunity to provide all mental and physical health care services in Michigan prisons—a move that was intended to cut costs. However, none of the bidders could guarantee the requisite 5% savings the state required, so the status quo hybrid system continues.

    Current Outlook

    A 2008 study by the National Commission on Correctional Health Care expressed concern that private healthcare providers contracted by the state did not appear to be providing adequate volumes and quality of service, and that the state did not appear to have adequate mechanisms in place to monitor contractors’ performance or ensure their compliance with their contracts. The report recommended that Michigan “seriously reconsider the advantages and disadvantages of continuing to contract out provider services” for healthcare.

    However, given MDOC’s apparent challenges in recruiting sufficient health personnel on the one hand (Marlan told reporters in 2011 that “the state pay structure makes it difficult to lure qualified health care workers into public work”), and on the other, private providers’ inability to produce significant savings if they were to take over all prison health services, MDOC’s current mishmash of public and private health service delivery appears likely to remain unchanged for the near future.

    Food Service

    A 2008 report by the Office of the Auditor General on MDOC’s food services concluded that the department “lacks assurance that its food service operations budget”—which at the time was around $93 million, roughly 5% of the state’s corrections budget—“is utilized efficiently.” The report noted that MDOC was providing prisoners with more calories per day than legally necessary, and also said accommodating special dietary preferences, such as providing kosher options, increased costs.

    The report strongly urged MDOC to consider contracting out food service to a private vendor, citing other states that had reduced costs in this way.

    In 2010 MDOC began whittling away at food costs by hiring a consulting company to establish a common menu across all state prison facilities. The increased efficiency and economies of scale brought about by this move were supposed to generate $6.2 million in savings.

    However, in 2013 Michigan’s corrections budget continued to be a major concern among lawmakers and the population, and officials in Lansing requested bids on providing all MDOC’s food service needs privately. A three-year contract was awarded to food-service industry giant Aramark, which as well as providing food service in correctional settings also runs school cafeterias, corporate dining rooms, restaurants at national parks—and even provided food to the Chilean miners trapped in a 2010 mine collapse.

    Has it saved money?

    Yes (tentatively). MDOC spokesman Marlan told this site that Aramark’s bid represented “20% savings” over previous costs. “The food service contact will save $12 million the first year and $16 million every year after that,” Marlan said. The state has also fined Aramark $200,000 for misconduct (more on that below), which reduces the price tag further.

    It’s not clear how much the dollar value of the time spent by Governor Snyder, his staff, MDOC staff, and other government personnel in responding to the scandals that have plagued the contract’s first year would affect the total savings.

    Current outlook

    The first year of Aramark’s contract, which began in August 2013, has been mired in scandal. Maggots were found in food. Employees were discovered performing sexual acts with inmates, selling drugs to inmates, and one Aramark employee even allegedly asked an inmate to arrange a murder-for-hire.

    However, several prisoners interviewed by the Michigan news service MIRS claimed that food quality and inappropriate conduct by food service workers had been issues when MDOC was in charge, too.

    In any case, Aramark’s lapses led the state to impose a $98,000 fine against the company in March 2014—which was rescinded when the company promised to clean up its act—and another $200,000 fine, which apparently has been charged, in August. The state also hired Edwin Buss, a former head of corrections in Florida and Indiana, to supervise the contract with Aramark for an annual salary of $160,000.

    Aramark, for its part, claims most of the problems were due to turnover and short-staffing, and has pledged to address these issues by increasing wages for new hires at certain locations by as much as $2 an hour and also keeping the number of personnel hired at 120% of the level required by contract.

    Despite the complications, Marlan is still optimistic about the contract. “We expected some bumps as we transitioned this large system to a private vendor and we did, in fact, experience some issues. However, we are seeing improvement and continue to work through the problems. In addition, I think we now have a contact management structure in place that will prove much more beneficial and effective,” he said in an emailed statement.

    He said that neither hiring Buss nor measures taken by Aramark would affect the expected savings from the contract. Aramark’s contract runs through September 2016; at least until then, further changes in MDOC food service appear unlikely.

    Conclusion: has privatization saved Michiganders money?

    The jury is still out. Michigan’s experiments with privately run correctional facilities and private health care services have not saved money. Its now year-old experiment with privatizing food service does appear to be cutting costs; however, further research will be required to determine to what extent the apparent savings may be mitigated by hidden costs such as additional supervision and contract monitoring required.

    What is clear is that even if privatizing some prison services saves money, those savings are rather small in proportion to Michigan’s total corrections budget. The expected savings from the Aramark contract, for example, equal less than 1% of the state’s expected annual expenditures on corrections.

    And with a prison population expected to remain stable or increase over the coming years, Michiganders probably won’t experience major relief from corrections costs any time soon.

    *As previous articles on this site have noted, the average prison term in Michigan is around twice the national average, and the proportion of Michigan’s population currently in prison is quite high compared to many other states: based on 2008 DOJ data, Wikipedia ranks Michigan as having the 17th-highest incarceration rate in the country at 445 per 100,000 members of the population; a more recent study by the Prison Policy Initiative cited Michigan as having a higher incarceration rate, but also showed 29 states as having rates that are higher still.

    Sources

    “A Comprehensive Assessment of the Michigan Department of Corrections Health Care System.” National Commission on Correctional Health Care, January 2008. http://www.privateci.org/private_pics/MDOC_HCS_Report.pdf

    “Bureau of Justice Statistics Bulleting: Prisoners in 2008,” US Department of Justice, December 2009, revised June 2010. http://www.bjs.gov/content/pub/pdf/p08.pdf

    “Cost per Prisoner per Day,” MI Dashboard. State of Michigan, 2014. http://www.michigan.gov/midashboard/0,4624,7-256-60564_60567_60618---,00.html

    “Michigan won't privatize prisons further.” Associated Press, March 1, 2013. http://michiganradio.org/post/michigan-wont-privatize-prisons-further

    “State Prison Health Care Spending: An examination.” The Pew Charitable Trusts and the John D. and Catherine T. MacArthur Foundation, July 2014. http://www.pewtrusts.org/~/media/Assets/2014/07/StatePrisonHealthCareSpendingReport.pdf

    “States of Incarceration: The Global Context.” Prison Policy Initiative, 2014. http://www.prisonpolicy.org/global/

    “The Price of Prisons: What Corrections Costs Taxpayers.” Vera Institute of Justice, 2012. http://www.vera.org/pubs/special/price-prisons-what-incarceration-costs-taxpayers

    Act No. 599, Public Acts of 2012, State of Michigan.

    https://www.legislature.mi.gov/documents/2011-2012/publicact/pdf/2012-PA-0599.pdf

    Aupperlee, Aaron. “Impact of privatizing prison health care not yet clear for Jackson correctional facilities.” Mlive, September 30, 2011. http://www.mlive.com/news/jackson/index.ssf/2011/09/impact_of_privatizing_prison_h.html

    Brandt, Joe. “University to review ethics complaint regarding two professors.” The Temple News, June 13, 2014. http://temple-news.com/news/university-review-ethics-complaint-regarding-two-professors/

    Egan, Paul:

    $1· “State is taking bids to privatize prison health care.” Detroit Free Press, July 20, 2012. http://archive.freep.com/article/20120720/NEWS15/207200446/State-is-taking-bids-to-privatize-prison-health-care

    $1· “Kitchen friendships, sex acts lead to firings for Aramark's prison staff.” Detroit Free Press, July 13, 2014. http://archive.freep.com/article/20140713/NEWS06/307130092/aramark-prison-food-fraternization

    $1· “Aramark prison worker suspected in attempted hired hit.” Detroit Free Press, September 25, 2014. http://www.freep.com/story/news/local/michigan/2014/09/25/aramark-worker-investigated-murder-hire-plot/16172713/

    $1·

    Hakim, Simon and Erwin Blackstone. “Data shows running prisons for profit is a win-win.” Detroit Free Press, June 7, 2013. http://archive.freep.com/article/20130607/OPINION05/306070023/prision-privatization-Michigan

    Kirkham, Chris. “Michigan Private Prisons Law Could Reopen Facility With Checkered Past.” Huffington Post, January 12, 2013. http://www.huffingtonpost.com/2013/01/12/michigan-private-prisons-_n_2453117.html

    McHugh, Jack. “Abandoning Prison Privatization Will Cost Michigan Taxpayers.” Mackinac Center for Public Policy. April 29, 2005. http://www.mackinac.org/7083

    McTavish, Thomas H:

    $1· Performance Audit of the Michigan Youth Correctional Facility. Office of the Auditor General of Michigan, May 2005. http://audgen.michigan.gov/finalpdfs/04_05/r4728004.pdf

    $1· Performance Audit of Prisoner Food Services, Department of Corrections. Office of the Auditor General of Michigan, June 2008. http://audgen.michigan.gov/finalpdfs/07_08/r471062107L.pdf

    Michigan Corrections Organization. “Pitfalls and Promises: The Real Risks to Residents and Taxpayers of Privatizing Prisons and Prison Services in Michigan.” February 15, 2012.

    http://www.mco-seiu.org/files/2012/02/MCO-Private-Prison-Report-v8.pdf

    MIRS ( http://mirsnews.com - all articles behind paywall):

    $1· “Private Firms See $40M In Prison Savings.” MIRS, March 27, 2007.

    $1· “Auditors To DOC: Cut Calories, Kosher Food.” MIRS, June 13, 2008.

    $1· “Common Prison Menu Saves $6.2M.” MIRS, April 20, 2010.

    $1· “Prisoners Pile On Aramark, Some Say Food Issues Predate Contractor.” MIRS, June 25, 2014.

    $1· “Maggots Again Found In Potatoes At Michigan Prison.” MIRS, July 24, 2014.

    $1· “First Fine To Aramark Was Canceled By State.” MIRS, September 11, 2014.

    $1· “$200K Fine Letter Aramark Cites July Violations Not 'Suspended' $98K.” MIRS, September 17, 2014.

    Neher, Jake. “Overhauling Michigan's parole system could save taxpayers millions.” Michigan Radio, August 8, 2013.

    Risko, Robin R. “Background Briefing: Corrections.” Michigan House Fiscal Agency, December 2013. http://www.house.mi.gov/hfa/PDF/Briefings/Corrections_BudgetBriefing_fy13_14.pdf

    Roelofs, Ted. “After spending more money on prisons than higher education, Michigan gets serious about high cost of corrections.” Mlive / Bridge Magazine, April 15, 2014. http://www.mlive.com/politics/index.ssf/2014/04/michigan_gets_serious_about_hi.html

    State of Michigan, Department of Technology, Management, and Budget Procurement:

    $1· "Contract NO. 071B9200147 between the State of Michigan and Corizon." http://www.michigan.gov/documents/buymichiganfirst/9200147_266870_7.pdf

    $1· “Contract No. 071B4300009 between the State of Michigan and Aramark Correctional Services, LLC.” http://www.mco-seiu.org/files/2014/08/ARAMARK-SIGNED-Contract-071B4300009_FinalFoodServiceBid.pdf

    Wikipedia:

    $1· “Aramark” http://en.wikipedia.org/wiki/Aramark

    $1· “List of U.S. States by Incarceration Rate” http://en.wikipedia.org/wiki/List_of_U.S._states_by_incarceration_rate

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