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Ohio Supreme Court Rejects Union's Challenge to Prison Privatization

by Matt Clarke

On February 11, 2016, the Ohio Supreme Court rejected the Ohio Civil Service Employees Association's (OCSEA) challenge to the statute allowing for the private operation or sale of certain Ohio state prisons. In doing so, the court rejected the union's claim that the statute violated state constitutional prohibitions against combining multiple subjects in a single bill and co-mingling public and private property ownership. It also held that the State Employee Relations Board (SERB) had exclusive jurisdiction in determining whether private prison employees were public employees.

In 2011 Am.Sub.H.B. No. 153 (H.B. 153) the Ohio General Assembly appropriated funds to operate the state government and its programs. A section of the bill dealt with the operation, management and sale of state prisons. H.S. 153, R.C. 9.06(A)(1). In relevant part, it allowed government officials to contract for the operation, management and sale of five specific prisons.

Management and Training Corporation (MTC) and Corrections Corporation of America (CCA) took advantage of the provision. MTC contracted to operate and manage North Central Correctional Institution. As PLN previously reported, CCA contracted to purchase, operate and manage Lake Erie Correctional Facility.

OCSEA, which represents numerous former employees of the two prisons, filed a state action alleging H.B. 153 violated the one-subject rule of Article II, Section 15(D) of the Ohio Constitution and the prison privatization provisions in H.B. 153 violated the one-subject rule and the prohibition against joining of public and private property rights contained in Article VIII, Section 4 of the Ohio Constitution. In the alternative, OCSEA sought a declaratory judgment that the North Central MTC employees are public employees who are entitled to public employee benefits.

The trial court rejected the claims except for whether the MTC employees were public employees which it refused to rule on for lack of jurisdiction.

The court of appeals affirmed the dismissal of the joint public-private ventures claim and the employee-status claim, but reversed the one-subject rule claim and ordered the trial court to hold a evidentiary hearing to determine whether H.B. 153 violated that rule. Both parties filed discretionary appeals to the Ohio Supreme Court.

The Ohio Supreme Court determined that the subject of H.B. 153 was: "balancing state expenditures against state revenue to ensure continued operation of state programs." Both H.B. 153 in general and the prison privatization provisions fell within the scope of this subject. Therefore, H.B. 153 did not, in whole or in part, violate the one-subject rule.

OCSEA's joint public-private venture challenge centers around a $3.8 million annual "ownership fee" the state agreed to pay CCA for exclusive use of its prison. However, the constitution does not prohibit the state from selling its property or paying fees for contracted services. Further, there was no evidence to support OCSEA's allegation that the fee was, in fact, a subsidy. Therefore, the claim was rejected.

The SERB has exclusive jurisdiction to decide matters that arise from or depend on the collective bargaining rights created by R.C. Chapter 4117, including whether MTC employees are entitled to state employee benefits. Therefore, the court reversed the court of appeals' decision on the one-subject rule and affirmed the remainder of its decision dismissing the other claims. The case was returned to the trial court.

See: State ex rel. Ohio Civ. Serv. Emps. Assn. v. State, Slip Opinion No. 2016-Ohio-478

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Related legal case

State ex rel. Ohio Civ. Serv. Emps. Assn. v. State