Lansing— A law requiring contractors to pay prisoners minimum wage is holding up a privatization push meant to shave up to $93 million from the state Corrections budget this year, officials confirmed Tuesday.
Requests for proposals to privatize roughly $400 million in prison services were put on hold in January after a review by Attorney General Bill Schuette’s office revealed private contractors using prisoners for kitchen, janitorial and other duties would have to pay Michigan’s $7.40 an hour minimum wage — 10 times what unskilled prisoner employees are paid by the state.
Prisoner pay is one of a number of legal issues raised by attorneys after Gov. Rick Snyder made turning over certain prison services to private companies a priority in this year’s budget. Snyder is to unveil on Thursday his budget for the fiscal year that begins Oct. 1. He’s expected to make public safety and Corrections one of his priorities, along with education and transportation.
State law also prohibits private contractors from using any state assets — from kitchen stoves to prison buildings — without compensating the state, according to Russ Marlan, spokesman for the state Department of Corrections.
“Our (requests for proposals) are all tied up still with the AG’s office, and the fix here is going to require some statutory changes, so they’re going to be tied up for a while,” Marlan said. “By statute, if state prisoners are used for labor, they have to be paid minimum wage. They can’t even use state assets as a private contractor. We’d have to declare all of that property surplus and sell it.”
Schuette’s office didn’t respond to requests for comment.
Rep. Joe Haveman, R-Holland, chairman of the House Appropriation subcommittee on corrections, thinks the problems are more like speed bumps than roadblocks.
“They are being cautious about being sure we don’t issue these things and then have problems with them later. If it takes a little while longer, it’s not the end of the world,” Haveman said. “We’re going to try to do it right the first time.”
Bob McCann, spokesman for Senate Democratic Leader Gretchen Whitmer of East Lansing, said Republicans’ hasty passage of the budget may have caused the delays.
“It also speaks to the larger issue that privatization is not a magic bullet solution to saving money, as other states have found out,” McCann said.
Mel Grieshaber, executive director of the Michigan Corrections Organization, which represents 7,500 Corrections officers, said: “This addresses the issue of hidden costs.”
According to Marlan, the state hoped to save:
$11 million on prisoner health services and $3.1 million on mental health services; the two combined cost the state roughly $300 million annually.
$7 million annually by privatizing food services, which employ 394 state workers and cost Michigan $57.7 million annually.
$1.6 million annually on operations of Woodland Center Correctional Facility, a Whitmore Lake mental health facility treating 328 male prisoners. It cost $34.7 million annually to run and employs 346 workers.
$1 million from the Special Alternate Incarceration Program, which provides intense supervision and services to offenders on probation. The program costs $10.1 million and is staffed by 120 employees.
Marlan said the Corrections budget is on track for the budget year that ends Sept. 30.
“The budget office is probably going to take money from us because of the employee concession part,” Marlan said. The state sought about $100 million in employee cost savings.
Asked how quickly the Legislature can adopt the statutory changes, Haveman said he doesn’t have a time frame in mind. Haveman and Sen. John Proos, R-St. Joseph, said they were familiar with the issues raised by the attorney general, but not aware the requests for proposals had been put on hold until new laws are passed.
The Department of Corrections budget for the fiscal year that started Oct. 1 included $13.25 million cost savings from privatizing food services and prison stores. Another $79.13 million in savings was to be achieved by allowing the department to “reduce the costs of incarceration.”
According to Proos, the department was given flexibility to choose how it achieved these savings, whether by bidding out facility operations, closing prisons or by other means.
“We’ve chosen not to micromanage the details of that,” Proos said.