February 2012

Legislators’ Rush to Privatize Prisons Will Benefit Corporation, Not Michigan Taxpayers

New Report recommends caution due to lack of cost savings, contractor’s troubled record

LANSING – Legislators should investigate the failed promises of prison privatization in Michigan and other states before rushing to pass proposals under consideration, state corrections officers familiar with the issues said today in releasing comprehensive research about risks to taxpayers and dangers to residents.

“The reality of privatization is that it ends up costing taxpayers more, not less – and we’ve seen that in Michigan,” said Michigan Corrections Organization Executive Director Mel Grieshaber.  “Privatization is tempting because corporations make all kinds of promises, but they don’t deliver on the cost savings and they don’t run their facilities safely. Michigan doesn’t need more prison space. Taxpayers should question why the Legislature is rushing to approve a plan that will give more profits to a corporation that already failed here.”

In addition to the privatization of various prison services that has hit unexpected snags, the Legislature is preparing to vote to authorize housing state inmates at a private prison in Baldwin in Lake County owned by the GEO Group, Inc. The prison was run as the North Lake Facility for Youth by GEO, then the Wackenhut Corrections Corp., from 1998 until 2005.

Its contract was cancelled after years of unusually high rates of costs and violence and failure to deliver contracted services – yet the for-profit company sued the state for $5.4 million when Michigan terminated the contract.

Now GEO is seeking to re-populate the prison, despite Michigan’s prisoner population being the lowest since 1998.  The legislation (HB 5174 and HB 5177) has appearances of being a   bailout for GEO for the money they put into the private prison, which they have kept running with a skeleton crew.

Money allocated to private contractors not only goes out of Michigan (GEO is based in Florida) but tends to be used to support the corporation’s focus on profit rather than public safety: GEO’s top six executives made $13.5 million in 2010.

Led by the Michigan Corrections Organization (MCO), SEIU, the UAW, AFSCME, and MSEA joined together to release the comprehensive examination of privatization,“Pitfalls and Promises: The Real Risks to Residents and Taxpayers of Privatizing Prisons and Prison Services in Michigan,” . It details the problems under privatization at Baldwin and elsewhere and GEO’s troubled history, including multiple lawsuits that have cost GEO tens of millions of dollars – liability costs passed on to state with which it contracts.

Officer Kevin McDaniels of the Michigan Department of Corrections worked at the privatized Baldwin facility from the day it opened until it closed. As a lieutenant, he screened job applicants and would often see candidates he recommended for rejection hired as corrections officers.

“We held nearly 30 training academies in those six years and we still ran without sufficient staff because so many would quit or call in,” said McDaniels, who now works at the Pugsley Correctional Facility near Traverse City.  “When you have the constant rotation in of new officers, most with little experience, the inmates are unsettled and there is a much greater risk of officers being hurt or security problems.  The difference between a state-run prison and a private-run facility is the difference between a secure, efficient operation and a chaotic danger zone.”

The report also details problems with the state’s privatization of prison services such as health care and food service.

“State food service workers also perform custody and security duties, just like Corrections Officers,” said Mark Smith, a 22-year food service supervisor at Chippewa Correctional Facility in Chippewa County. “Unlike us, when food service is privatized, those kitchen workers must have a Corrections Officer with them, which only drives the costs back up.  It’s another example of how privatization sounds good on paper but doesn’t actually save money in real life.  A better way is to have employees work with the state to find ways to cut costs, which is what we’ve been doing successfully and want to keep doing.”

Pitfalls and Promises: The Real Risks to Residents and Taxpayers of Privatizing Prisons and Prison Services in Michigan