Last December, Aramark (ARMK) began running Michigan’s prison kitchens under a three-year, $145 million contract. The deal, which eliminated about 370 union jobs, was supposed to make food service more efficient while saving the cash-strapped state millions.
It hasn’t quite worked out that way. More than 100 Aramark employees have been fired for alleged misconduct that included sneaking cell phones into prisons, distributing drugs, and having sexual contact with inmates. On Sept. 23 an Aramark worker at an Ionia prison was fired on suspicion that he’d tried to pay one prisoner to beat up another. The next day a worker at a maximum-security prison, also in Ionia, lost her job after corrections officers found a 65-page love letter she wrote to an inmate with whom she was allegedly having an affair.
Two days later the Detroit Free Press reported that a former Aramark worker at a prison in the Upper Peninsula was suspected of asking an inmate to help have a prisoner at another facility killed. That worker has been barred from prison property but not arrested pending investigation, police told reporters. “We will not hesitate to pursue justice,” Bill Schuette, Michigan’s attorney general, said in a statement.
Aramark is a publicly traded company valued at more than $6 billion that specializes in institutional services. It serves 380 million meals annually at more than 500 prisons and jails across the U.S. It also runs kitchens in schools, hospitals, and conference centers. In most states, it hasn’t had issues like the ones reported in Michigan, but the scale of the problems there provides ammunition to those who oppose privatizing sensitive government functions. “This gives competitive contracting a very bad name,” says Mike LaFaive, director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a conservative think tank.
Aramark says its problems go with the territory. “These are things that happen in every prison in the country,” says spokeswoman Karen Cutler. “It’s definitely not reported on until you see privatization.” In Ohio, where Aramark began a two-year, $110 million prison contract in September 2013, the company has been fined $272,000 for sanitation problems, food shortages, and staff misbehavior. According to a recent Dayton Daily News article, 113 Aramark employees were fired in the first year.
In August, before the latest revelations, Michigan Governor Rick Snyder, a Republican, announced he was appointing Edwin Buss, who has run prison systems in Florida and Indiana, to independently monitor the Aramark contract. Buss’s annual salary of $160,000 will be covered by a $200,000 fine levied on Aramark by the Michigan Department of Corrections following reports of meal shortages and maggots in food served to prisoners. (Officials subsequently cleared Aramark of responsibility for the kitchen infestations.) An additional $98,000 fine for infractions that included a dozen instances of “overfamiliarity” between employees and inmates was waived in March.
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Democrats in Michigan’s legislature have moved to end the contract. “I can’t believe anyone would want to continue using Aramark after all that’s happened,” says State Representative Dian Slavens. “It’s just irresponsible.”
Both Snyder and his Ohio counterpart, John Kasich, also a Republican, are reluctant to break the Aramark contracts. Michigan has saved $12 million this year and expects to save $16 million next year, primarily in reduced salary and benefit costs, according to Russ Marlan, a Corrections Department spokesman. On Oct. 1, Buss announced Aramark would increase worker pay from $11 to $13 an hour and add extra kitchen staff at its own expense. (The state workers Aramark replaced were paid $16 an hour.) The Ohio Department of Rehabilitation and Correction, which estimates $13 million a year in savings, announced in late September that Aramark will expand employee training and submit to inspections by an independent group.
Cutler says Aramark is the victim of a “propaganda machine” run by unionized corrections officers. In Michigan and Ohio prisons, she says, the company has encountered “quite a bit of antiprivatization sentiment within the facility that has not always presented the collaborative environment we’re used to.” Mel Grieshaber, executive director of the Michigan corrections officers’ union, openly acknowledges publicizing information about Aramark’s problems, because prisoners unhappy with kitchen service can become disciplinary challenges for the public employees he represents. “I never heard so many complaints, worries, and concerns about problems they were going to have with the prisoners,” he says.
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Aramark says the number of workers fired since it took over kitchen operations is evidence that privatization has helped Michigan move faster against bad actors by cutting out the lengthy disciplinary appeals required by unions. “Prior to Aramark’s contract, it could take up to three months to terminate a food-service employee who was suspected of improper behavior,” Cutler says. “Now employees can be dismissed swiftly, which improves safety and security.”