Michigan Civil Service Commission Decision 2014-020

STATE OF MI CHI GAN
CI VI L SERVI CE COMMI SSI ON

IN RE DEPARTMENT OF CORRECTIONS CSC 2014-020

APPELLANTS: MICHIGAN AFSCME COUNCIL 25
MICHIGAN ASSOCIATION OF
GOVERNMENTAL EMPLOYEES
ERB 2014-010

TRN 2013-008
SPD 2013-01
INTERESTED PARTIES:
CIVIL SERVICE OFFICE OF TECHNICAL COMPLAINTS
DEPARTMENT OF CORRECTIONS
Ref. No. 2013-00479
CS-138 472S3200018

A Decision of the Michigan Civil Service Commission
Thomas M. Wardrop, Commissioner and Chair

James Barrett, Commissioner
Charles Blockett, Jr., Commissioner
Robert W. Swanson, Commissioner

ISSUED MAY 7, 2014

FINAL DECISION
As provided in civil service rule 1-15.5, the
civil service commission has reviewed the
recommended decision of the employment
relations board in ERB 2014-010. Because a
quorum of the commission does not concur that
the application for leave to appeal should be
granted in this case, the decision of the
technical review officer in TRN 2013-008 is
affirmed as the final administrative decision in
this matter.

Commissioner Wardrop would deny the
application for leave to appeal and accept the
majority recommendation of the Board for the
following reasons:

This appeal challenges staff approvals for the
department of corrections (DOC) to make
disbursements outside the classified service for
food services. The staff approvals were based
on standards in chapter 7 of the civil service
rules and regulations requiring annual savings
of at least 5% when compared to having
services performed by classified employees.
The technical review officer found that savings
were over 20%. Because this exceeded the cost-
savings threshold several times over, the TRO
committed no error in affirming the approval
and there is no basis under the rules to modify
the approval on appeal.

AFSCME and MAGE have raised various
arguments speculating on how the selected
contractor will obtain savings. How a
contractor performs is not a matter for
commission review. The constitutional role of
this commission is not to second-guess or
micromanage the administration of the various
CSC 2014-020 A Civil Service Commission Decision Page 2

departments.
1
The commission has never
approved individual contracts or monitored
contractor performance and the civil service
rules and regulations do not authorize such a
review.
2
The DOC is closely monitoring
contractual compliance and can make the
appropriate choices to ensure that necessary
services and service levels are maintained.
While the concerns raised by AFSCME and
MAGE may merit consideration, the technical
disbursement complaint process is not designed
or authorized for such investigations. As the
commission recently stated, these policy
choices are subject to many forms of oversight
by various elected officials.
3

While the commission retains authority to
approve disbursements for personal services
under its standards, the civil service rules and
regulations do not authorize the commission to
consider policy judgments on the wisdom of
using contractual services to fulfill agency
mandates. The DOC has demonstrated the
necessary cost savings under the limited review
authorized in the technical disbursement review
process. Accordingly, the application for leave
to appeal should be denied.
1
Spence v DOC, CSC 2011-041.
2
See SPD 2011-19, fn 9, citing ten past cases where the
commission has affirmed this understanding of its role
(affirmed by CSC 2013-025).
3
See CSC 2013-026, p 2.


Commissioner Barrett concurs with the opinion
of Commissioner Wardrop and would deny the
application for leave to appeal and accept the
majority recommendation of the Board. He
writes separately for the following reasons:

The dissenting opinion of Commissioners
Blockett and Swanson describes in detail their
judgment that the DOC should not provide
food services using contractual staff.
Commissioner Wardrops opinion succinctly
explains why the staff approval was appropriate
under the promulgated standards of review in
the civil service rules and regulations. The
dissent suggests what chapter 7 of our rules
should provide, while disregarding what our
rules do provide. This is an appellate
determination in the commissions quasi-
judicial role. It is not a rulemaking exercise in
our quasi-legislative role. Any attempt to
resolve this appeal based on individual
commissioners beliefs of what civil service
law should be is inappropriate.

I write separately to express my disagreement
with the dissents view of the commissions
proper role in state government. The dissent
begins by discussing the commissions genesis
and its important role in replacing a
dysfunctional spoils system. While I agree on
the importance of the commissions mission, I
disagree strongly with the dissents
(1) understanding of the breadth of our current
role and (2) minimizing potential benefits from
contractual services.

I. The dissents historical justifications
overlook or misstate the actual historical
development of commission authority
over disbursements for contractual
personal services.

The dissent describes the commissions
plenary authority to approve or disapprove
personal service contracts. The constitution,
however, actually grants a different power to
approve or disapprove disbursements for all
personal services. The word contract is not
used. Disbursement is defined as The act of
paying out money, commonly from a fund or in
settlement of a debt or account payable
1
or as
Money paid out; expenditure.
2
A review of
disbursements is different than a review of
contracts.

Looking to the history of Michigans civil
service confirms that the purpose of this
language approving disbursements is different
from what the dissent believes. In 1936, the
Civil Service Study Commission proposed
legislation, which was later adopted, creating a
payroll check:

Neither the Auditor General nor any
other fiscal officer of the state shall
draw, sign, or issue, or authorize the
drawing, signing or issuing of any
warrant or check upon the State
Treasurer or other disbursing officer of
the state, for the payment of a salary or
other compensation for personal
services, nor shall the State Treasurer or
other disbursing officer of the state pay
any salary or other compensation for
personal services unless a payroll or
account for such salary or other
compensation, containing the names of
every person to be paid and the amounts
to be paid them, has been certified by the
Director or a person designated by him
to the effect that the persons named on
the payroll or account are either in the
unclassified service or have been
appointed or employed or otherwise
established in their positions according
to the provisions of this Act, and that the
payment of the amounts shown on the
payroll or account will not violate the
provisions of the compensation plan or
1
Blacks Law Dictionary, Deluxe Ninth Edition.
2
American Heritage Dictionary, Second College Edition.


the rules pertaining thereto.
3

The study commission expressed concern that
there should be provided some independent
machinery for insuring that every person paid a
salary as a state employee actually exists, has
been appointed by someone having authority to
do so, is paid at the authorized rate, and is
really engaged at work at the location
reported.
4
Their solution was to formalize a
process for the approval and audit by the state
personnel director of payroll transactions
making disbursements.

This section establishes what is known
as the payroll check by the Director of
Personnel. It requires approval by him of
every salary payment. No names may
remain on the payroll, and no increases
in salary may be made unless approved
by the Personnel Director. In this way
the integrity of the classification and
compensation plans can be maintained
and the state treasury safeguarded
against padding of payrolls.
5

When the commissions powers were
constitutionalized by the citizens in 1940, the
language granting authority for the payroll-
check power was made more succinct. In 1945,
Deputy Director Edward H. Litchfield
summarized the intended continuation of this
auditing:

Among the broad powers granted the
Commission by the constitutional
amendment was that of approving all
disbursements for personal services.
This control, with its concurrent
authority to withhold salary payment,
places the Michigan Department in a
3
Report of the Civil Service Study Commission, p 76
(adopted with only capitalization changes by Public Act
346 of 1937).
4
Id., at 42.
5
Id., at 76.
unique position among public personnel
agencies. In most jurisdictions, where
this function is performed by the auditor
or comptroller, the civil service
department must resort to more devious
means to support its orders. In Michigan
all payrolls for the state service are
reviewed monthly by the administrative
staff, the information for each employee
being coded on International Business
Machine cards. Irregularities, usually
minor, cause deletions of from thirty to
forty names from each monthly payroll.
Although every effort is made to avoid
high-handedness, the payroll check,
constituting as it does the teeth of the
whole program, is a carefully guarded
and scrupulously administered
prerogative of the commission.
6

Absent from any of these discussions is the
notion that the language was intended as a
bludgeon to be used by the commission to
dictate how agencies conducted their affairs.
While the commission has a central
constitutional role regulating employment in
the classified civil service, that role was not
intended to stretch into regulating the day-to-
day operations of other state agencies. The
drafters of the 1963 Constitution made this
point even clearer during their deliberations
when they added language to our constitutional
provision clarifying that appointing
authoritiesand not the commissiondecided
when to create or abolish positions:

[T]he civil service commission should
not have the authority and the power to
control the actions of the executive
department that are taken in good faith
for reasons of administrative efficiency.
It should not be their decision as a super
6
Litchfield, Edward H. and McCloskey, Robert G, Civil
Service by Commission. National Municipal Review, Vol
34, No 1, p 7 (J anuary 1945).


board to determine whether or not the
executive department of this state is
properly organizing and carrying on its
functions. And we have proposed this
addition to the civil service section, to
remove that jurisdiction from the civil
service commission.
7

II. The dissent focuses on unnecessary and
unjustified reforms to existing rules
rather than the merits of the case before
it.

The dissent recommends revising chapter 7 to
create additional procedural steps for
disbursements that would result in displacing
classified employees. Their understanding that
our current procedures do not contain these
steps notwithstanding, they would still apply
them retroactively to the current appeal.

Some policy suggestions in the dissent would
require the commission, for the first time, to
evaluate the contractors chosen by appointing
authorities. While sometimes cost savings may
be realized because of a relatively generous
state pay package, savings may also arise from
innovative reimagining of methods to deliver
services. Different combinations of staffing,
equipment, and technology may render the
credential reviews sought by the dissent
impractical. Further, when would this review
end? Will private entities need a credential
review for every new employee? Our
constitutional charge is to determine the
qualifications of all candidates for positions in
the classified service. I find no constitutional
authority to weigh qualifications for positions
outside the classified service.

The dissent would also require the commission
to set performance standards for contractual
employees. Again, our constitutional charge is
to regulate all conditions of employment in
7
Official Record, Constitutional Convention 1961, p 669.
the classified workforce. The department of
technology, management and budgets
procurement office can and does establish
performance standards through the contracting
process. Media accounts cited by the dissent
demonstrate that those expectations are in place
in the current contract and are being enforced.
Regardless, I do not find the authority for us to
regulate conditions of employment outside the
classified service.

The dissent also ignores that the commission
already has a procedure to address just these
situations. Chapter 8 of our rules already allows
any employeeexclusively represented or non-
exclusively representedwho is adversely
affected by a position abolishment to file a
grievance challenging that decision in a
contested hearing. The standard of review in
that forum is the one established in our
constitutional provision: whether the abolition
was for reasons of administrative efficiency.
The dissent does not explain why a second
hearing is needed. I believe their preference
stems from a misunderstanding of the
commissions role and a predisposition against
contractual services. Neither is consistent with
our constitutional charge.

III. The dissent would improperly transform
the commission from a regulator of
conditions of employment to a manager
of all executive-agency operations.

The dissent of J ustice Dethmers in Kunzig v
Liquor Control Commission was the impetus
for and was quoted extensively in the
constitutional record when the paragraph
memorializing agencies primacy in directing
their own staffs was added in 1963:

In adopting the amendment, the people
intended to bring about a betterment in
administration of State employment civil
service by putting an end to the turnover
of personnel upon each change of


administration and substituting therefor
continuity and security in positions, so
long as they continued to exist, for
employees whose qualifications and
performance merited it. This was
calculated to increase efficiency and to
further economy. The ultimate object
was not, however, increased benefits to
employees, but, rather, by means of such
benefits the improvement of the State
service. There is nothing to indicate that
it was the thought of the people that
government jobs should exist for the
benefit of employees, as distinguished
from the concept that positions exist and
are filled for the purpose of serving and
benefiting the public, or that the people
desired that employees should be
continued in positions after appointing
authorities have determined that the
need therefor has ended. Neither does
it appear that there was a public demand
or clamor at the time for subjecting
administrative policies, in the manner
hereinbefore considered, to the approval
or disapproval of the civil service
commission.
8

The commission must create a system for
classified employees to operate under. This
includes establishing classifications for state
employees and setting their compensation. In
the veterans home case referenced by the
dissent, state employees were paid vastly
higher wages than similar workers outside the
classified service. Compensation surveys
offered by the office of the state employer in
past wage-setting processes indicated that
classified Resident Care Aides were paid 45%
more than other aides in the region in 2011.
The 2001 survey showed a gap of 48%. In
1995, it was 50%. This reflects only wages and
8
Kunzig v Liquor Control Comm, 327 Mich 474, 490-91
(1950) (citations omitted); Official Record, Constitutional
Convention 1961, pp 669.
does not include insurance, leave, and
retirement benefits, where the state is typically
significantly more generous than other
employers.

The high wages for Resident Care Aides for
several decades benefitted those employees and
perhaps the residents of the homes. But they
also led to a situation where expenditures could
be almost halved by using contractual personal
services. The unions and employees could have
eliminated the basis for a Standard D approval
by agreeing to wage concessions that
eliminated that basis for approving
disbursements. During the almost two-year
process before that contract was ultimately
implemented, I am not aware of any such offers
by the employees or unions.

In the current case, our elected officials again
determined that investigating privatization was
appropriate and the department proceeded
accordingly. The dissent would entrust the
commission with picking winners and losers by
attempting to prioritize who benefits from
departments fulfilling their duties. I instead
would defer to the judgments of our elected
leaders and the leadership for the individual
agencies, subject to our limited reviews under
our established procedures.

The dissent catalogs reports from newspapers
and prisoner-right organizations on apparent
problems involving employees of the contractor
selected by the department of corrections.
While I share the concerns raised by the dissent
over the apparent struggles during the
transition, that concern cannot form a basis to
exceed the established procedures of the
commission. Departments have full and proper
authority to address such concerns through the
procurement and contractual process. Similarly,
our elected officials can reassess their
directions to departments through the
legislative process in response to whatever
developments arise.


I reject the dissents implication that these
problems are unique to a contractual workforce
and that there would be no problems if only
classified employees were used. This
commission has presided over many employee
appeals involving allegations of overfamiliarity
and misconduct against state employees that
are similar to or worse than those referenced by
the dissent against contractual employees. The
dissent appears to suggest that alleged
individual shortcomings should be assigned to
an entire organization and disqualify it from
performing work for the state as a contractor.
What then to make of the $100 million
settlement addressing the sexual assault of
female prisoners at state correctional
facilities?
9
Or allegations of department of
corrections employees having sex with and
allowing the rape of juvenile prisoners?
10
If
some classified correctional officers were or
could have been responsible for this
misconduct, does this mean that the
commission should prohibit state employees
from performing this work?

Such suggestions should be rejected for both
contractors and state employees for their
absurdity, but also because they assume a
greater role for the commission than the
citizens intended. The dissent criticizes a
supposed confidence of mine in the decisions
of the department of corrections. I have
expressed no such confidence. Instead, I have
expressed deference to their legal authority to
make determinations entrusted to them by law.
9
J eff Seidell and Dawson Bell, $100 million ends
prisoner sex-abuse suit, DETROIT FREE PRESS, J uly 16,
2009,
http://www.freep.com/article/20090716/NEWS06/10125
0006/-100-million-ends-prisoner-sex-abuse-suit.
10
Kyle Feldscher, Lawsuit accuses MDOC guards of
having sex with juveniles, allowing them to be raped,
mlive.com, December 12, 2013,
http://www.mlive.com/news/ann-
arbor/index.ssf/2013/12/lawsuit_accuses_mdoc_guards_o
f.html.
It is a restraint absent from the dissenting
opinion, which offers an extended lecture on
preferred administrative theories for
correctional operations.

Whether the dissenters theories are correct or
not, I seeand they citeno legal authority for
this commission to impose its organizational
preferences on state agencies. The drafters of
our constitutional provision made clear that the
commission was not intended as a super board
to determine whether or not the executive
department of this state is properly organizing
and carrying on its functions.
11
I may have my
own opinions on operating the states prisons,
but appointment to the commission did not
grant my opinions any greater weight.

I am also troubled by the lack of any limiting
principle as to how the commission may
interfere in the daily operations of state
agencies under the dissents view. The dissent
asserts that positions do not exist and cannot
be filled until they are approved by the
commission. Of course, article 11, section 5
actually states that The appointing authorities
may create or abolish positions for reasons of
administrative efficiency without the approval
of the commission. While the commission
must classify each position so that appropriate
compensation can be set, our lack of
constitutional authority to approve each
position could not be clearer.

A technical appeal addresses the limited
question of whether the minimum cost savings
required under rules have been met. The dissent
questions the wisdom of the departments
decision rather than the issues relevant in this
forum. Even in the grievance forum, our review
of administrative efficiency is not intended to
weigh the ultimate correctness of a
departments judgment. The commissions
11
Official Record, Constitutional Convention 1961, p
669.


limited role reviewing position abolitions in our
grievance procedurewhich again is not at
issue in this technical appealis reviewing for
pretextual reasons. But even that review does
not involve the sort of armchair quarterbacking
that the dissent would engage in:

The Constitution does not require the
employer to establish that the net
balance of effect achieved by the
creation or abolishment actually was an
additional increment of administrative
efficiency. A grievants showing that the
employers managerial judgment was
faulty would not be relevant. The
Hearing Officer is not the proper judge
of whether administrative efficiency was
achieved, nor whether an alternative
course might have produced a greater
increment of administrative efficiency.
The grievant must show that an ulterior
motive on the part of the employer was
instrumental in causing it to abolish the
position.
12

I do not discount the custody and security
concerns raised by the dissent, but these are
longstanding issues. The commission has
previously reviewed challenges to, for
example, abolishing medical positions within
prisons. Even the constitutions drafters were
aware of and referenced contractual employees
at state prisons during their debates 50 years
ago.
13
Still, I find no basis in our constitutional
authority or our rules to interfere in
departments determination of the method,
means, and personnel by which government
operations are to be conducted. Rule 6-4
labels these management rights of the employer
for them to determine or exercise.

The dissent also questions whether contractual
12
Veeder and DMH, ERB 84-160, pp 2-3.
13
Official Record, Constitutional Convention 1961, p
2343.
personal services are even permissible past the
constitutional limitation of five exempt
positions in each department. This would be
news to the drafters of the 1963 constitutional
convention who referenced contractual
employees well in excess of the exemption
allowance for multiple departments,
14
to
commissioners who for decades have
authorized contractual personal services in their
rules, and to the judiciary who has repeatedly
upheld disbursements under the commissions
disbursement-approval system.
15

The dissent accuses me of minimizing the rate
of displacements and describes exaggerated
fears of a return to a spoils system. The state
employees laid off in the past few years from
these two cases of privatization represent a
small fractionaround one-half of one
percentof the classified work force. The
spoils system saw average annual turnover of
25%. The two disputed disbursement decisions
have involved the good-faith determinations of
our elected officials that the publics limited
resources can be more efficiently used. The
beneficiaries are intended to be all taxpayers. In
comparison, the spoils system was a bad-faith
arrangement, not beneficial to the general
public, between political parties and their
loyalists where jobs were awarded with the
understanding that a portion of salary and
workday would be spent for the party.

Relying on data from required reports to the
legislature since 1995, the dissent calls the two
high-profile cases in the last three years
unprecedented. Although they may predate the
legislative reports, there have also been past
large-scale privatizations involving janitorial,
road-maintenance, security, and medical
services going back decades during
administrations of both parties. Unlike 1941,
14
Id.
15
See., e.g., MSEA v Michigan Civil Service Comm, 141
Mich App 288 (1985); UAW v Mich Civil Service Comm,
233 Mich App 403 (1997).


privatization of some personal services is now
well-accepted at all levels of government. Food
services are routinely contracted out across the
economy to achieve substantial savings. The
departments of community health, education,
and military and veterans affairs, for example,
have long used contractual food management
services at some of their facilities. The
contractor chosen by the state is a major
international company that provides similar
services at hundreds of correctional facilities
throughout the country, including for many
neighboring states. With a shrinking workforce
and budget pressures, state agencies have been
asked to work more efficiently. Contractual
personal services are one option that can assist
agencies continued focus on examining the
efficiency of their operations.

The dissent expresses concern that the entire
classified workforce could be abolished. That
assumes that all state employees are paid
substantially above the market rate for their
occupations, which is not what the commission
has heard previously during the rate-setting
process. While this seems unlikely for many
reasons, I reject the dissents underlying
premise that contracting is usually a bad thing.
The dissent worries, for example, that
contractual employees could replace classified
clerical staff. If a contractual vendor could
provide support services for significant savings
when compared to the combined wage, benefit,
tax, and other costs for having a classified
employee perform the same work, the option of
benefiting all taxpayers by realizing those
potential cost savings should not be ignored or
denigrated. But I would also defer to each
agency to make those individual decisions over
how best to accomplish their own mandates to
serve the public.

IV. Conclusion.

The dissent protests that I view the
commissions authority as virtually
meaningless. I reject this characterization of
my understanding, which mirrors that of every
commission since its creation in 1941. The
dissent cites no time when the commission has
reviewed contractual terms or contractual
performance, while the chairs opinion
references several times when the commission
has disavowed such power. The dissent
contains no citation to any rule, regulation, or
administrative or judicial decision supporting
its expansive view of the commissions
authority.

The dissent describes a 50-year march toward
contracting out classified work to private
contractors. The march actually began at the
meeting of the commission on February 5,
1941, five weeks after its establishment, when
the acting state personnel director asked for
authority for approving vouchers for
contractual services. A voucher is defined as
A written or printed authorization to disburse
money.
16
I remain skeptical that the approval
of each disbursement is required or necessary
given our original constitutional grant and the
modifications to that grant in 1963. To the
extent that our rules provide for this review and
that courts have accepted it, I accept the current
process under its own standards. I reject,
however, the dissents attempts to transform the
process from its intended limited review for
basic concepts of administrative efficiency into
a boundless exercise in passing judgment on
agency operations.

The commissions current processes, which
provide (1) a review before disbursements are
made to ensure compliance with one of four
standards showing consistency with basic,
common-sense concepts of administrative
efficiency and (2) a post-abolition review for
affected employees including a contested
hearing offer adequate protections and due
process and are consistent with the intent of the
16
Blacks Law Dictionary, Deluxe Ninth Edition.


ratifiers of our constitutional provision. Staff
properly interpreted these provisions and their
decision should be upheld. While I find the
dissents justification for an expanded
commission role lacking, its attempts to
disregard our promulgated rules and standards
and decide this case instead based on their
personal preferences are against basic notions
of the rule of law. Accordingly, I would adopt
the majority opinion of the board and deny the
application for leave to appeal.

Commissioners Blockett and Swanson disagree
with the majority recommendation of the 2-1
split decision of the board. They would grant
the application for leave to appeal and remand
to the employment relations board to hold oral
argument, including allowing all interested
parties to present additional evidence for the
following reasons:

For over 70 years, the people of the State of
Michigan have enjoyed high-quality
governmental services provided by competent,
dedicated, professional career employees.
These employees protect the health and safety
of our youth, seniors, food supply,
environment, roads, commerce, and labor and
provide numerous other vital services. They do
this without notice or fanfare. The valuable
service they provide is seamless. There have
been few major cases of corruption, scandal, or
work stoppages or strikes.

This high-quality, uninterrupted service is not
by accident, but by design. Prior to 1941, this
was not the case. Political patronage and
cronyism was the rule of day. Employees got
and retained their jobs based on loyalty to the
political bosses. Each change in administration
resulted in a major turnover of the workforce
and service to the people suffered. Corruption
and scandal were common. Many were
unqualified for the positions they held. Merit,
competence, fitness, and service to the people
were secondary considerations.

In 1941, the people of Michigan got so fed up
with the spoils system that they changed the
state constitution by creating the commission.
They gave the commission broad powers to
improve service to the public by putting an end
to political patronage, cronyism, corruption,
and scandal.

A core constitutional responsibility of the
commission is to approve or disapprove
disbursements for all personal services in order
to protect the integrity of the merit system. In
1939, the legislature gutted Michigans first
1937 civil service statute by passing the
Ripper Act, which removed a huge part of the
state workforce from civil service coverage.
Now, once again, large parts of the state
workforce are being removed from civil service
coverage.

Our experience with good government is being
undermined at an accelerating rate. We are
moving to a covert, hidden, shadow workforce
of contractual employees. From 2004 until
2012 only six state classified employees were
displaced as a result of contracting out of
services based on cost savings.

In less than two years, over 500 classified
positions have been eliminated resulting in the
layoff of over 250 employees. Contracting out
work previously performed by resident care
aides at the Grand Rapids Home for Veterans
resulted in approximately 170 abolished
positions. The department of corrections (DOC)
food service contract has resulted in
approximately 350 positions being eliminated.
Both contracts resulted in many other
employees being displaced from their positions.
Yet, the work of civil service employees was
not eliminated or discontinued; the work is now
being done by contractual employees outside of
the civil service system based on projected cost
savings.

Serious concerns have been raised about the
qualifications and quality of work provided by
the two contractors. Unions, veterans, and
legislators have raised serious concerns and
allegations of abuse at the Grand Rapids
Veterans Home. When the selected contractor,
was unable to recruit enough contractual
employees subcontractors were used to meet
staffing needs. Many of the contractual
employees are part-time. This does not bode
well for a competent, dedicated, professional
career work force.

Even before the awarding of the Aramark
contract, articles had appeared in a number of
media outlets regarding various states that had
complained about the poor quality of service
they had experienced with Aramark food
service contracts. Last month, the Detroit Free
Press wrote an article stating that the
unhappiness with Aramarks food was one
reason for a demonstration by about 200
prisoners at Kinross Correctional Facility in the
Upper Peninsula. A March 11, 2014, Detroit
Free Press article by Paul Egan stated that the
DOC fined Aramark $98,000 for violating its
contract by employing workers who fraternized
with prisoners, making unauthorized menu
substitutions, and not preparing the correct
number of meals. There have been other
articles regarding over 50 Aramark employees
being dismissed for poor performance or
violating DOC rules or regulations.

Both of these contracts have put the health and
safety of our veterans, employees, and
prisoners at risk. What is so ironic is that this is
being done at a time the state has a huge
surplus.

Under Standard D, virtually any classified job
can be removed from the civil service system
based on projected cost savings of 5%. Some
hypothetical examples are:

a contractor could replace MIOSHA, food
and safety, boiler, nursing home, and other
safety inspectors
a private security firm or county sheriff
department could replace state police
troopers or conservation officers
a human resource organization could replace
personnel analysts and specialists
a personnel staffing firm could replace
clerical employees
a public relations firm could replace public
relation directors and specialists

What was wrong with the quality of services
state employees provided to the veterans and
prisoners? Answer: Nothing, but a contractor
may be able to do it cheaper. Is cheaper better?
A Yugo was cheaper than a Ford. Is Yugo the
standard we want for governmental service and
the standard the public expects and deserves?

Contracting out of state services has not always
proven to be the best decision. We need only
look at MDOTs decision to contract out the
maintenance of I-496 to a private firm which
was a disaster (a fact acknowledged by the
administration that contracted it out).

Contractual employees do not have the degree
of protection of state employees. It is easier to
coerce a contractual employee to contribute to a
political party or charity, make decisions, or
take actions not in the public interest than a
state employee.

We also must not lose sight of the fact that the
quest for profit is the true focus and motivator
for the contractors, not the health, safety, and
service to the public. Providing employees with
subpar wages and benefits and prisoners with
subpar food in order to maximize profits does
not bode well for a qualify workforce. It creates
an environment that is very dangerous and
could cost the state a lot more than a 5% to
20% cost savings.

We should be concerned with efficiency, but
we also have a responsibility for merit, fitness,
and a quality workforce based on a merit
system. Since the 1980s, the state classified
workforce has shrunk from over 70,000 to
under 50,000 employees.

State employees have a 70-year proven track
record of providing quality, uninterrupted
professional service to the public. Do we want
to jeopardize this by removing huge numbers of
state employees from civil service and
returning to the spoils system?

Historically, the commission has had visitors
from various states, local governments, and
foreign countries visit to learn about our civil
service system. The Michigan civil service
system was the envy of the public sector
because of its strong constitutional merit
system. Contracting out the workforce can
undermine the merit system and is not in the
best interest of good government.

In 1988, the commission created a blue-ribbon
commission to review civil service. The
Citizens Review Committee on Civil Service,
July 1988 Report states, The concern that the
merit system may be undermined by the
expanding use of contractual personal service is
a serious one.

Contrary to the assertions of Commissioner
Barrett, this does not mean that contracting for
services is inappropriate in all cases. In fact, we
should be concerned with efficiency and cost.
But we also have a responsibility for merit,
fitness, and a quality workforce based on a
merit system. And this must apply as much to
contracted personal services as to state
employees. We cannot require merit, fitness,
education, and experience standards for state
employees while evaluating contractual
services solely on the basis of cost.

The commission is charged by the Constitution
of the State of Michigan with the responsibility
to protect the public by ensuring that state
service is performed ...exclusively on the basis
of merit, efficiency, and fitness. Clearly, by
approving this contract, we have failed to meet
this responsibility.

The commission should revise chapter 7,
Disbursements for Personal Services outside
the Civil Service, to require contract approvals
to be based on merit and fitness, as well as cost.
Any contracts that will result in the layoff of
state classified employees should be held to a
higher standard and scrutiny. We should
guarantee employee organizations an oral
argument before a hearing officer or the ERB
so they can present their case, and require that
contractual employees education, experience,
and training be the equivalent of state
employees. Performance standards for
employees and the methodology for evaluation
should be clearly depicted. The standard should
include language that assesses the economic
impact outsourcing will have on state business.
We should also allow the employer and labor
organizations an opportunity for input on the
revisions to chapter 7.

Response to Commissioner Barretts
Opinion

The commission has broad plenary powers to
approve or disapprove personal service
contracts. This power cannot be diminished by
an administration or the legislature.

This appeal concerns a core civil service
commission responsibility. It is worthy of
detailed and thoughtful review by the
commission in light of the 50-year march
towards contracting out classified work to
private contractors.

We disagree with Commissioner Barretts logic
that commission authority is limited and
virtually meaningless, if the departments and
the legislature want contractual services. This is
a gross understatement of the commissions
plenary constitutional authority to approve or
disapprove personal service contracts.

We agree with Commissioner Barrett that the
1963 Constitution gives the appointing
authorities and not the commission the
authority to decide when to create or abolish
positions. However, the positions do not exist
and cannot be filled until they are approved
by the commission, classified according to its
classification plan, and filled based on merit,

efficiency, and fitness standards established by
the commission.

Article 11, section 5 of the constitution limits
the number and defines which positions are
exempt from the classified service. The
constitution states:

The classified state civil service shall
consist of all positions in the state
service except those filled by popular
election, heads of principal
departments, members of boards and
commissions, the principal executive
officer of boards and commissions
heading principal departments,
employees of courts of record,
employees of the legislature, employees
of the state institutions of higher
education, all persons in the armed
forces of the state, eight exempt
positions in the office of the governor,
and within each principal department,
when requested by the department head,
two other exempt positions, one of
which shall be policy-making. The civil
service commission may exempt three
additional positions of a policy-making
nature within each principal
department.

Notably, personal service contractors and their
employees are not among the exempt positions
on that list. The contractors and their
employees, in effect, create a new extra-
constitutional class of exempt employees, a
kind of shadow-bureaucracy providing state
programs and services.

Commissioner Barrett suggests that contracting
decisions be left to the legislature and
departments. Though the legislature and the
departments can propose, the decision is not
solely theirs under the Michigan Constitution.
The commission has the constitutional
authority to approve or disapprove proposed
contractual service contracts based on rational
criteria it establishes. Clearly, there is an
important and determinative role for the
commission.

The framers of our Michigan Constitution
wanted to provide a stable workforce when they
established a constitutionally-based civil
service commission and a classified service
with very few exemptions. It is well within the
powers of the commission, if not a requirement,
that the commissions regulatory scheme for
contracting personal services include a
component that evaluates the stability and
quality of the proposed workforce that would
supplant classified employees. To that end the
civil service rules and regulations clearly need
modification to reflect what the framers
intended rather than ignoring its responsibility.

Article 11, section 5 references the classified
service as positions in state service. State
service is not defined but the listed exemptions
do not include contractual employees. An
argument could be made that they are in state
service and should be classified.

In the last two years, more employees have
been displaced and laid off due to contracting
out, more than three times the number in the
last 16 years combined.

Commissioner Barrett has significantly
minimized the rate of displacements and lay off
of state employees in the last two fiscal years.
In fiscal years 2012 and 2013, over 500
employees were displaced and over 250 of
these were laid off. This is more than three
times the combined total number of employees
displaced (147) and laid off (6) due to
contracting out personal services over the
previous 16 fiscal years from 1995 to 2011. No
matter how you look at it, this was an
unprecedented number of employees removed
from civil service coverage.


Aramark has a demonstrated track record of
poor performance and contracting out the
prison food service is very dangerous.

Commissioner Barrett states that food services
are routinely contracted out by such state
departments as community health, education,
and military and veterans affairs. It must be
noted, however, that jobs within a correctional
facility are unlike those found in other state
agencies. Traditionally, prisons, to the extent
possible, have functioned as self-contained
entities. They typically employ, for example,
their own plumbers, electricians, maintenance
mechanics, food service workers, and often
even water, wastewater, and power facility
employees. This is not by accident. The goal is
to avoid having a constantly changing cast of
unfamiliar faces entering and leaving the secure
perimeter on a daily basis. Private firms, which
often achieve cost savings by providing
substandard wages and little or no fringe
benefits, tend to experience high rates of
turnover. Allowing this constant influx of
untrained and unfamiliar contractual employees
jeopardizes security and the safety of inmates,
corrections employees, and the public.

In addition, it must be noted that in the
provision of prison food services, the vast
majority of the work is performed by prison
inmates, not the food service workers. This
type of contract results in untrained contractual
workers overseeing the daily work of convicted
felons. Again, it jeopardizes security and raises
both safety and liability concerns that are not
experienced by other state agencies providing
food services.

Commissioner Barrett correctly states that
realizing potential cost savings should not be
ignored or denigrated. However, potential cost
savings should not be the only consideration in
situations where the safety and security of
employees, inmates, and the public may be
placed at risk.

Commissioner Barrett states that he would
defer to the judgments of elected officials and
political appointees to determine what is in the
interest of the public good. In the instant case,
whether the privatization of the prison food
services is in the public interest is questionable
at best:

In April 2008, over 270 prisoners in Florida
became ill after eating chili provided by
Aramark. In February 2008, up to 50
prisoners at a Colorado detention center
became ill after eating chili that had not
been kept at the correct temperature.
1

In Clayton County, Georgia, prisoners went
three months without hot food, from
October 2009 to J anuary 2010, under an
Aramark contract. Under Georgia law,
prisoners are to receive at least two hot
meals a day.
2

Florida ended its contract with Aramark and
food services reverted to state control in
J anuary 2009. Aramark had been fined over
$241,000 in 2008 alone for contract
violations, including insufficient staffing. A
Florida DOC audit stated that, The
outsourcing of food service operations has
not met its stated objectives. The audit
found that canceling the Aramark contract
would save the state $7 million annually,
while at the same time feeding more
inmates.
3

In Kentucky, corrections officers and others
said a 2009 prison riot was provoked by
poor food service by Aramark. A 2010
1
David M. Reutter, Gary Hunter, and Brandon Sample,
Appalling Prison and Jail Food Leaves Prisoners Hungry
for Justice, PRISON LEGAL NEWS,
https://www.prisonlegalnews.org/22246_displayArticle.a
spx.
2
Id.
3
Id.


report by the Kentucky Auditor of Public
Accounts identified food skimping, food
safety issues, and excessive billings and
said Aramark refused to provide requested
records related to its food costs and bonuses
paid to managers. The Auditor stated that
the privatization of government functions
should be approached with the same level
of accountability and transparency as if the
government operated the services itself.
Aramark still refused to provide the
requested information.
4

As of March 11, 2014, Michigan had
already fined Aramark $98,000 for
violating its contract by not getting
approval to make meal substitutions 77
times, failing to make the appropriate
number of meals 240 times, and allowing
12 instances of poor staff conduct. The
Department of Corrections acknowledged
that, Aramark staff violated rules and
regulations pertaining to over-familiarity
with prisoners. These actions have resulted
in safety and security risks and additional
costs to the Michigan Department of
Corrections. And in February 2014, about
200 inmates participated in a peaceful
demonstration over food conditions.
5

In J anuary 2014, union leaders complained
about food workers being overly familiar
with inmates, leaving them open to
manipulation and about contraband issues,
tons of no-show no calls and a complete
disregard to the handling of tools such as
4
Paul Egan, Michigan's new prison food contractor
accused of skimping on size and quality of meals to boost
profits, DETROIT FREE PRESS, May 7, 2013,
http://www.freep.com/article/20130507/NEWS06/30508
0007/prison-food-service-aramark-audit-riots.
5
Darren A. Nichols, Michigan fines Aramark $98,000 for
prison food rule violations, DETROIT NEWS, March 11,
2014,
http://www.detroitnews.com/article/20140311/METRO0
6/303110107.
kitchen knives.
6

The State of Ohio levied fines of $142,100
on Aramark for repeatedly failing to meet
the staffing levels it promised and failing to
have a certified food service manager for
several months. In addition, an internal
audit found incomplete documentation
showing inmates had received their
prescribed meals. The prisons agency is
disappointed in Aramarks performance.
7

These are only some examples of Aramarks
past performance. Despite the stated confidence
in the judgment of elected officials to determine
what is in the public interest, in this instance,
that confidence appears to be misplaced.

Contracting out can sabotage state service and
undermine good government.

Forty-four years later, in J uly 1988, the concern
that the merit system can be undermined by
contractual services was clearly stated by the
Citizens Review Committee on Civil Service.
Their conclusion was as follows:

One of the constitutional responsibilities
of the Civil Service Commission is to
approve or disapprove disbursements
for all personal services. In order to
protect the integrity of the merit system,
a process has been established for staff
review and approval of contractual
personal services. Added pressure has
been applied to this review system in the
past few years. It appears that state
agencies have looked to contract
employment as an alternative to civil
service employment. It may be easier to
exert political influence on a contractual
6
Id.
7
Andrew Welsh-Huggins, Ohio prison food vendor fined
$142,000, ASSOCIATED PRESS, April 18, 2014,
http://www.sfgate.com/news/article/Ohio-prison-food-
vendor-fined-142-000-5412613.php.


employment system than it is on a civil
service system, and for that reason civil
service review of contractual decisions is
significant. Attention needs to be given
to further defining the terms used in the
existing criteria and developing
guidelines to assist staff in their review.

In J anuary 1944, the commission ordered the
state personnel director, its legal counsel, and a
commissioner to provide a report on proper
modifications to the present rules, with
particular reference to consideration of a rule
on contractual services. The commissions
legal counsel, Robert H. Dunn stated, If the
practice of contracting for personal service was
allowed to go unchecked, it would be possible
to completely sabotage the State Civil Service
by placing the work of most of the positions in
civil service on a contractual basis.
8
We fear
Robert Dunns prophetic statement may be
realized.

J ust because the commission has interpreted its
role one way in the past doesnt make it right.
This is the perfect time and place to revisit how
the commissions role should be interpreted.

8
Memorandum from Robert H. Dunn to the commission
(February 11, 1944).

Notice: This final decision of the civil service commission is subject to review in the
Michigan circuit court. A claim of appeal must be filed within 60 calendar days
after the date this decision was issued.
A claim of appeal must name the Michigan civil service commission as an appellee
and must be served on the Michigan civil service commission at its main office,
located at 400 South Pine Street, Lansing, Michigan 48913.
(See Michigan Court Rule 7.117 and Michigan Compiled Laws 24.301-24.306.)

Michigan Civil Service Commission Decision 2014-020

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