Are Corrections Costs a Mystery?

A story in the Jan. 10 edition of the MIRS Capitol Capsule reports that, according to the National Institute of Corrections, Michigan spends more than $5,200 more to lock up a prisoner for a year than the national average. Also, nearly 29 percent of the state workforce is employed by the Department of Corrections, and it will absorb 23.1 percent of the current year’s general fund budget. This is hardly new information.

Not surprisingly, Gov. Rick Snyder and others are looking to lower those costs.

Without a full analysis that incorporates all the possible factors it’s difficult to say with certainty, but one likely suspect in the above-average costs is employee fringe benefits.

For several years the Mackinac Center has provided evidence showing that public employees in this state are compensated quite well, particularly when non-salary benefits including health insurance are considered. Recent research indicates that Michigan’s state, local and school employees receive fringe benefits that exceed private sector averages by some $5.7 billion each and every year.

On the salary front, in 2007 we compared the state’s compensation for corrections officers to the compensation offered by private-sector correctional-facility operators and then looked at some health benefit differentials. We found:

According to the state, the range of pay for a state corrections officer (level 8) runs between $14.35 an hour and $21.06 an hour or between $27,500 and $40,400 annually, plus fringe benefits, vacation and a sick package that add up to about 54 percent of base payroll. Once hired, the officer would collect this compensation even during his or her two-month training period.

By contrast, private corrections officers hired into Michigan’s [now closed] youth correctional facility in Baldwin could expect a training wage of $9 an hour, which would be raised to $14.48 an hour upon completion of their training — a competitive entry-level wage. Frank Elo, former warden of the private facility, also has 30 years of state corrections experience in Michigan. He notes that the overall compensation for public and private corrections officers differs sharply outside of the wage scale.

For instance, state corrections officers get a 5 percent pay premium for working the afternoon or night shift while GEO, the firm the state hired to run the Baldwin facility, paid the same regardless of shift, according to Elo. A GEO officer would earn four hours of sick leave for every month of work, which is half the state rate. He would also get 10 paid holidays versus the 12 (sometimes 13) provided by the state. After working for GEO for a year, officers would earn two weeks of vacation. The state grants vacation days to its employees immediately.

One of the biggest differences in benefits is in employee health care benefits: The GEO Group split the cost of providing health insurance with employees who chose to add dependents to his or her insurance plan. In other words, if an employee has a family and the cost of GEO insurance is $700 a month, the employee must pay $350 of that amount. By contrast, a state employee with a family of four on the state health plan might pay less than $63 per month in premiums while the state paid more than $1,100 for their coverage.

In the early 1990s, the state commissioned the Segal Company of Atlanta, Ga., to compare employment benefits between Michigan’s state employees and the other 49 states’ employees. Their report said that in 1994, the state of Michigan paid the nation’s richest health benefits at $6,897 per employee on average — twice the national average of $3,012, and $1,408 more than second-ranked New Jersey.

Whether it’s still the case that “we’re number one,” there’s no question that government employee benefits are out-of-balance with the private sector.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.