BUSINESS

Fight over sale of state prison heads to Ohio Supreme Court

Staff Writer
Columbus CEO

COLUMBUS, Ohio (AP) — The status of the nation's first privately-owned state prison is up for debate in Ohio as litigation brought on behalf of union workers displaced by the historic sale is argued before the state's high court.

The Ohio Civil Service Employees Association, a group of individuals and the liberal think tank ProgressOhio sued in 2011 after Republican Gov. John Kasich and the GOP-controlled state Legislature passed a biennial budget bill authorizing the sale of Lake Erie Correctional Facility in Conneaut, along the shores of Lake Erie, and placing a second state prison under private management.

The union argues that placing the privatization plan in the budget violated the Ohio Constitution's single-subject rule for legislation. State attorneys contend the plan rightly belonged in a budget bill because it raised revenue for Ohio's coffers and cut operational costs from the state prisons budget.

A trial court dismissed the case, but the Tenth District Court of Appeals allowed a single argument brought by the civil service union, prison workers and the liberal advocacy group to move forward: that the 3,000-page budget bill contained more than one subject.

The state appealed, facing the prospect of future budget bills — which contain the most sweeping policy changes of any legislative session — being subject to line-by-line scrutiny. Justices accepted the appeal in June.

The case will go before the Ohio Supreme Court on Wednesday.

Prior to the Lake Erie prison's sale, state lawmakers had enacted legislation in the mid-1990s that allowed the Ohio Department of Rehabilitation and Correction to contract with private companies for the operation and management of its prisons as long as at least 5 percent was saved compared to state costs.

The budget passed in 2011, Kasich's first, went further — including non-permanent language that allowed up to five state prisons to be sold outright. At the time, the state was facing a projected deficit approaching $8 billion following the national recession. The state ultimately found a buyer for only one.

Lake Erie Correctional Facility was sold to Corrections Corporation of America in December 2011 for nearly $73 million and contracted with the company to run it. The state also hired Management and Training Corporation as part of the same deal plan to operate the state-owned North Central Correction Institution in Marion.

Embedded in the civil service union's legal challenge is the suggestion that the privatization plan wasn't about money, but about reducing jobs represented by organized labor.

They have argued that money the state pays CCA to operate the prison — including $29 million in management fees each year, plus annual ownership fees of nearly $4 million — will eventually completely negate the revenue generated by selling the prison.

They name 11 individuals who lost prison jobs and list others to whom the privatization meant pay cuts, long commutes, lost seniority and lost retirement coverage.

In its filings, the state said any item seen to "rationally affect the state budget and operations" should be allowed to be included in a state budget. It raised particular issue with the Tenth District's request for the trial court to review the entire budget and conduct a line-by-line review to excise offending passages. Besides the prison provisions, the bill contained hundreds of passages, including some limiting abortion access.

"These holdings cast a cloud over vital legislation, and leave the General Assembly in the dark on what it may include in future bills making appropriations," the state wrote.