July Legislative Report from Capitol Services

DOC Privatization Fight Continues

On the food service privatization front, the Internal Review did not go in our favor, with the claim being made that “quality” of services cannot be considered.  MAGE continues to meet with legislators, urging them to consider the safety issues inherent in “prison food” issues, as well as the negative economic impact on Michigan providers, including our state’s farmers.

Meanwhile, DOC has set up a special officer school for food service workers because there are vacancies in the officers’ rank.  This program will waive the entry-level corrections officers’ exam for food workers who have two or more years of service and provide food service employees up to 18 months to obtain educational credits that new applicants normally need to have upon application.  Around half of the 300 food service workers have expressed interest in this program. 

Also, Aramark will be offering some jobs to current food service workers but they would have to accept reduced pay and benefits from their current compensation package. 

In addition to the food service outsourcing, two companies have submitted bids to operate a state prison privately or run a privately-held prison that would hold DOC inmates.  The GEO Company (Florida) and Management and Training Corporation (Utah) submitted their bids.  Civil Service Commission rules require a savings of at least 5% to consider accepting bids, and DIC has sought a minimum of a 10% savings previously.


House Dems Call for Veterans’ Home Investigation

Earlier this summer, House Minority Leader Tim Greimel, Rep. Winnie Brinks, and Rep. Brandon Dillon called for Governor Snyder and the Michigan Department of Military and Veterans Affairs to investigate the quality of care at the Grand Rapids Home for Veterans. The request for an investigation came after lawmakers talked with 15 veterans and four staffers about the living conditions at the home. According to a report from House Democrats, patients communicated concerns of “low-quality care and high turnover among the caretaker staff.”

Democrats also want the Michigan Civil Service Commission to reconsider its April 2 decision that allowed the privatization of jobs at the Grand Rapids Home for Veterans.

The report says many residents claim that problems began when state caretakers were replaced by caretakers from the private sector. According to these legislators, the Civil Service Commission did not consider patient care when approving the contract which privatized 144 caretaker positions.


Federal Judge Places Preliminary Injunction on Domestic Partner Benefits Ban

Governor Snyder and his administration have been ordered to stop enforcing PA 297, a 2011 law banning school districts and municipalities from providing domestic partner benefits, after a federal judge granted a preliminary injunction. This law speaks directly to public employees, including public school employees and anyone employed by the state. U.S. District Judge David Lawson ruled that PA 297 violates the U.S. Constitution’s Equal Protection Clause and clearly discriminates against gays and lesbians.

In 2011, the Civil Service Commission (CSC) announced it had decided to extend health care benefits to certain adult co-residents of state employees. Later that year HB 4770 (Former State Representative Agema-R) was signed into law as PA 297, which stated that a public employer could not provide fringe benefits for domestic partners or individuals sharing a residence.

In granting the preliminary injunction, Judge Lawson did not formally declare the law unconstitutional but said that the plaintiffs had a strong case on their equal protection violation claim. However, Judge Lawson dismissed the plaintiffs’ due process violation claim because there was no reason to believe the statute would cause the dissolution of the plaintiffs’’ relationships.

Governor Snyder had stated that the law was about cost-savings for local government and strengthening traditional marriage between one man and one woman; however, according to Judge Lawson this reasoning did not justify discriminating against a class of individuals. Sara Wurfel, Governor Snyder’s press secretary, said that the administration will be reviewing the ruling and consulting with the Attorney General’s office to determine any next steps.


Moody’s Ranks State’s Pension Plans

A recently released report from Moody’s Investor Service shows adjusted pension data for all 50 states based on methodology for analyzing state and local government pension liabilities.  The report ranks states based on ratios measuring the size of their adjusted net pension liabilities (ANPL) compared to other measures of economic capacity: state revenues, GDP and personal income.

This report also highlights the fact that State pension burdens vary widely. The level of state contributions to cover pension costs is a significant factor in the size of state liabilities. The wide variation in state pension liabilities reflects the differences among states in historical funding efforts, management of benefit levels, and the extent to which states take on the responsibility for employer pension costs related to public employees.

The median value of the ratio of ANPL to governmental revenue is 45.1% for fiscal year 2011. ANPL for individual states ranges from 6.8% to 241% of governmental revenues—Michigan is in the 25-40% ANPL category.  Moody’s gave the SERS plan an Aa2 State pension plan rating.

Auditor General Issues First Single Audit

Michigan’s Office of the Auditor General (OAG) questioned costs in the FY 2012 expenditure of $12.3 million in federal dollars, out of $22 billion in federal awards.  In FY 2011, the OAG audited 20 major programs and found questioned costs of $6.4 million from the $7.6 billion of federal awards spend during that year.  The main area of noncompliance was with programs from the US Department of Health and Human Services. 


Ellen Hoekstra and Todd Tennis,
Capitol Services, Inc.
July 29, 2013