Private firms are taking over many state services through public-private partnerships - a move that helps them seamlessly coordinate with taxpayer-funded departments but allows them to escape scrutiny of their spending and activities.
Governor Christie's reliance on so-called partnership agreements since taking office in 2010 is striking because where full privatization puts total responsibility and funding in a company's lap, these public-private partnerships put some state resources at the disposal of a private firm.
Public-private partnerships
New Jersey After 3
Revives an existing partnership between the state and a non-profit that supports after-school programs, by bringing in new private philanthropic partners.
Christie cut $3 million in state funds for the program for the fiscal 2012, leaving it without any state support since July.
State parks
Christie proposes that private-sector and non-profit organizations, as well as environmental foundations, pick up responsibility for concessions, rentals and lifeguard staffing at some of the state's largest parks.
By 2015, Christie says the state will double the revenue raised in the parks, from $8 million annually, to $16 million.
The Heights, Montclair State University
Through an amendment to the Economic Stimulus Act, the university was able to bring in a private developer and operator to finance, build and run a new dormitory center. The project did not go through a typical state contract bidding process. The private operators hired contractors and can make a profit from renters until their tax-exempt bonds, obtained from the state Economic Development Authority, are paid back.
The state avoided paying anything toward the building of the $211 million project but does not earn rent from student tenants either.
Atlantic City Alliance:
A non-profit group - the Atlantic City Alliance - was created to market the state-run zone around Atlantic City's casinos and tourist attractions. Responsible for boosting tourism revenue. District-wide efforts coordinated with the Casino Reinvestment Development Authority and the Atlantic City Convention and Visitors Authority.
To fund the alliance, casinos redirect $30 million from gambling revenue that the companies used to pay in taxes. The money used to provide a subsidy for the horse-racing industry.
The mix has created what some advocates call a patchwork of responsibilities. Residents who use outsourced services at state schools or through government agencies might not notice where state responsibility ends and private operation begins.
Partnerships have so far helped, for instance, private operators of after-school programs and developers of dorm rooms. The deals have also enabled specific projects like a new marketing effort for Atlantic City casinos and even a one-stop shop for attracting new businesses to the state.
In every case, however, there has been a tradeoff for the state's lighter workload. While taxpayer dollars or state resources are still in use, private operators don't have to disclose their side of the agreement.
Park operations
That has already led to secrecy over the cost of salaries for private partnership executives and a block on records detailing state activities that involve private partners. In the future, it could mean parents of children in after-school programs at many public schools will not learn from the school district how much is spent to operate those programs.
In the most recent example of a partnership, New Jersey plans to allow private operators to run rentals, lifeguard services and food concessions in state parks. Christie announced the plan on Thursday, but environmentalists quickly labeled the private management of state-owned lands a "slippery slope."
Only three days earlier, the non-profit New Jersey After 3 learned its partnership with the state to assist after-school programs at 35 districts would restart in 2012, thanks to a commitment from private donors to keep them operating.
While state officials seek a federal waiver to use public money for the program, New Jersey After 3's president, Mark Valli, has so far withheld the fundraising goal amount, and the size of the lead donation pledged by David Tepper, a hedge-fund manager and school reform advocate.
Christie last week labeled any unease among parents about that secrecy as "a ridiculous issue."
"Why would they want to know exactly?" Christie said when asked about the initial donations. "Why would that affect in any way the educational quality that their children [are] going to get, for them to know what the donations are."
Valli said on Friday that confidentiality was standard practice in capital campaigns, as potential donors were courted. "We don't want to set expectations too high or too low," he said. Donation totals to the non-profit group would be made public annually, but donors may remain anonymous.
Atlantic City effort
The shift toward public-private partnerships has hardly been a secret. Before Christie assumed office in January 2010, he assembled advisers to report on opportunities for private entities to take over whole or partial control of some expensive services from the state.
Christie, a Republican, committed to reviving Atlantic City as a tourism destination, in part through better marketing of the casinos. To achieve that, a non-profit group, the Atlantic City Alliance, was launched this year and staffed with casino executives.
Casino companies agreed to pay part of their former tax liability, totaling $30 million, to pay for the group's operations.
Elizabeth Cartmell, a former executive with the professional service firm Aramark, was hired as the alliance's chief executive in October. Because of the public-private arrangement, the alliance chose not to make her salary public.
Christie, who stressed government transparency as a candidate in 2009, defended that decision.
"Should they have to disclose that? I don't think so. Certainly nothing that's going to keep me up at night. Because if she does her job really well, no one's going to care how much she's making.
"I think when you're talking about folks that are elected to public office, there's one thing about transparency," he said. "When you're talking about what is essentially a privately funded enterprise, they have the right to make those decisions."
New Montclair dorm
At Montclair State University, a new public-private partnership allowed private developers to build a dormitory on the state school's campus and to operate it for profit for the next 40 years or until tax-exempt bonds are paid off. The $211 million project was partnered by Provident Resources Group, a Georgia nonprofit corporation, and Capstone Development Corp.
The private operators of the building receive full rent from students, according to Kathleen Ragan, associate vice president for student development and campus life. "They are responsible for maintaining and operating the building. And they choose some of their own contractors to do work on the site," she said.
Meanwhile, school-funded resources are on hand. Campus security personnel patrol the private building along with the rest of campus. To keep a "seamless" system for students, Ragan said, university administrators collect and process rent payments.
From college campuses to state parks, the growing presence of private companies may not be apparent but needs to be monitored, said Doug O'Malley, head of Environment New Jersey.
"Any time you invite private firms in to manage what the state used to do, it's a slippery slope," O'Malley said.
Christie, who has had to balance two budgets despite revenue losses tied to the recession, has made no secret of his plans to seek more partnerships to harness what he calls "an appetite" in the private sector.
"This is the model for what we should be doing for these types of programs across the state," he said on Monday.
"We said we were going to approach things differently in this administration," he added. "I know that makes some people who are stuck in the old status-quo way of doing things uncomfortable. Part of my job is to make people uncomfortable in this job and do things differently given the challenges we have from an economic and fiscal perspective."
