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LANSING–In 1993, the Engler administration decided that a popular magazine produced by the Department of Natural Resources (DNR), Michigan Natural Resources, should be turned over to a profit-making private firm. The magazine was free of advertisements when the DNR managed it, but it was also a money-loser. It was $600,000 in debt when the administration contracted it out to Kolka & Robb, a Bingham Farms-based publisher.
Under the privatized arrangement, the private firm was to pay the DNR $125,000 annually plus a percentage of advertising revenue and the DNR would provide editorial content and an editor. Not long into the seven-year contract, Kolka & Robb fell behind in its monthly payments and the DNR restructured the contract and lowered the amount of the monthly payments.
Last November, the company again stopped making its payments and state officials are not expecting any resumption. If that proves to be the case, taxpayers will be stuck with a $1.4 million bill. According to reporter Bob Gwizdz, "The magazine’s failure seems to stem from a poorly structured contract and Kolka & Robb’s overestimation of how much revenues advertising would generate."
Payments by Kolka & Robb were supposed to be used to reduce the magazine’s debt but the debt only grew bigger after privatization because the DNR used the payments, according to Gwizdz, "to offset salary and benefits" for at least one agency employee.
