Privatization Report: Denver ends massive public-private partnership after losses | and more

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EDUCATION

1) National: A new Walton family-backed revolving loan fund to finance charter school expansion, Equitable School Revolving Fund, sells its first bonds. ESRF consists of “national charter school revolving loan fund revenue bonds for the Arizona Industrial Development Authority and the California Infrastructure and Economic Development Bank.” See its roadshow presentation documents here. For the S&P rating statement see here. Documents on its portfolio are here, including an interesting June report on the charter school bond sector

The ESRF was inspired by state revolving-long funds for water projects, according to Bloomberg. “As loans are repaid, the ESRF will use the money to make new loans. The fund will be able to withstand the default on 26% of its loans, assuming a 0% recovery, according to ESRF. By contrast, a portfolio manager that had held individual charter school bonds would face the risk of losses immediately. Less than 4% of charter school bonds have defaulted, according to a 2017 study by NewOak Fundamental Credit.”

2) National: The pro-privatization American Legislative Exchange Council (ALEC) held its 46th Annual meeting in Austin last week, and was greeted by an “Unwelcome Reception” hosted by Progress Texas, the Texas Democratic Party, Texas Sierra Club, Texas AFL-CIO, Common Cause Texas, Workers Defense Project, Austin AFSCME, Extinction Rebellion ATX, ADAPT of Texas, Austin DSA. The private sector chair of ALEC’s Education and Workforce Development Task Force is Tom Bolvin of K12 IncClimate crisis activists also protested the right wing bill mill. For more on ALEC’s efforts to privatize public services and education see the recent report by the Center for American Progress, Corruption Consultants: Conservative Special Interests and Corporations Hurt State Economies and Democratic Processes. For Texas, see the new report by Common Cause and the Center for Media and Democracy, ALEC in Texas.

3) Alabama: The Washington Post’s Valerie Strauss focuses in on political battle in Alabama that exemplifies a central issue in the national controversy over charter school—a charter school is being forced upon a local community by an unaccountable state level authorizer, with dire risks that it will make the local public schools insolvent. “That means that ACD has relinquished its ownership of the Woodland Prep school to a holding company that ACD owns, and now ACD will charge itself rent and interest—paid for by the tax dollars that were once flowing into Washington County schools. And make no mistake, ACD is rolling in the cash—receiving 6 percent of the ‘total development costs’ in monthly lease payments, according to the heavily redacted contract it signed with Woodland Prep’s board. That fee does not include a guaranteed 8.9 percent capitalization rate that ACD is guaranteed.”

4) California: Voice of San Diego’s Will Huntsberry spoke to education advocate Jennifer Berkshire on her Have You Heard podcast on the Anatomy of a Charter School Fraud. [Audio, about a half hour; Transcript here.]

5) California: Bullis Charter School in Santa Clara County has had a staff shakeup over the summer. But the board refuses to give details on why the shakeup occurred, giving credence to frequent criticisms of the charter school model that its privately-controlled boards lack the transparency that taxpayers demand and deserve. “The leadership changes appeared on the board of directors’ Aug. 5 agenda, which included the approval of an interim superintendent contract and closed-session discussion on the founding superintendent. Speaking to the Voice, Hurd dismissed the need to formally make a public announcement about the changes, and said the people who need to know about the leadership changes already know. ‘It’s not a big deal to the community,’ he said. ‘You may want to make it into a big deal.’”

6) Florida: A bill has been introduced in the state senate to move workforce training money to charter schools. “Career technical education (CTE) charter schools could emerge, as Tallahassee seeks further guidance in aligning education to the needs of employers.”

7) GeorgiaK12 Inc. is locked in a bitter battle with a charter school, EdWeek reports. “Students locked out of their school’s computer systems. Educators unable to get access to some students’ records. Parents receiving emails asking that they return their children’s laptops. That’s the state of play as K12 Inc., a major for-profit provider of online education, is in the midst of an acrimonious split with the Georgia Cyber Academy. The school, which serves about 11,000 students, is one of the largest virtual schools in the country.” David Griffith says “that’s a pretty nice virtual charter school you got down there in Georgia. It’d be a shame if anything happened to the laptops and the kids’ access to their school work.”

8) Indiana: Just as five charter schools close for lack of enrollment and financial and academic problems, six new ones open up in Indianapolis.

9) Michigan@OTwithLisasays “This is my third year as a school based occupational therapist. I service 7 charter school campuses in the metro Detroit area. I’m usually not even given a desk to work at, let alone any supplies. Anything helps!” This is what Lisa’s not getting from the school system to do her job.

10) North Carolina: The superintendent, parents, and alumni in Greensboro are pushing back against the idea of closing a middle school as recommended by MGT Consulting, a private, for-profit company that specializes in school turnarounds. “Kiser was one of 10 schools that MGT Consulting Group recommended closing within the next decade or so as part of a study of the district’s facilities. The group also recommended replacing 27 other schools. The consultants made those recommendations based on factors such as the condition of school buildings and expected enrollment in various areas of the county. Superintendent Sharon Contreras was not entirely satisfied with MGT’s recommendations, for a variety of reasons. She has asked district staff to come up with a plan for Guilford County Schools going forward. District administrators are working with Cooperative Strategies, a new consultant, to build a master plan for the district, working from the data MGT provided in its report.”

11) North Carolina: In an editorial, the Mountaineer emphasizes the importance of breaking through charter school secrecy. Haywood County Consolidated Schools board meetings, are transparent, while Shining Rock Classical Academy charter school’s are not. “To us, it’s a matter of accountability for how taxpayer funds are spent and how the public’s business is conducted. In the case of Shining Rock, it is virtually impossible for the public to have any say in those matters. The school board is not an elected body and the school board’s typical response is to stonewall requests for information and interviews. The sterile discussions at their public board meetings indicate the real conversations about important decisions occur elsewhere.”

12) OklahomaThe online charter industry corruption saga has reached the Sooner State. California, Virginia, Ohio and Indiana have already been there. “Epic Charter Schools, which has no schoolhouse and serves pre-kindergarten through 12th grade students who attend online, has exploded in growth in the eight years since it launched and now boasts an enrollment that rivals the biggest districts in Oklahoma. Last year the school reported more than 21,000 students and received nearly $113 million in state funding. But those numbers are coming under scrutiny from state investigators who revealed in July they are looking into whether the school’s two founders, David Chaney and Ben Harris, artificially inflated the number of students and pocketed millions of dollars illegally.”

14) Pennsylvania: Gov. Tom Wolf (D) has released his charter school reform plan. Among the items: “Accountability on behalf of taxpayers. Initiate a fee-for-service model to cover the department’s costs associated with implementing the charter school law. Recoup taxpayer costs for thousands of hours of currently free services that the Department provides to charter schools when it reviews applications, processes millions of payments, and provides legal and administrative support.” The Keystone State Education Coalition explains Pennsylvania’s charter schools, “How they work, and why Gov. Wolf wants to reform them.”

15) Pennsylvania: A standoff has broken out between state officials who are demanding that the Erie school board outsource the jobs of school custodiansand implement rule changes on construction jobs, including apprenticeship programs, that have been described as “union friendly.” Under threat of a state takeover, the board will meet again tonight to discuss the situation.

16) TexasThe state’s charter schools got their grades last week. “In most cases, local charter school districts improved year-over-year. However, five charter districts – including KIPP Texas and Great Hearts Texas, which last year operated a total of 10 campuses in San Antonio – received lower grades than in the previous year. Great Hearts Texas fell from an A to a B, while KIPP Texas got a B for the second year in a row.” Overall “22 of the state’s 179 charter districtsgot Ds and eight got Fs.”

INFRASTRUCTURE

17) Colorado/National: The much vaunted 34-year “public-private partnership” contract to renovate the main terminal of Denver International Airport has collapsed. “In recent months, controversy has enveloped the Great Hall project as the contractor pegged delays at more than three years and cost overruns at more than $300 million. Issues range from delays over weak concrete in the original construction of the airport in the ‘90s to design changes initiated by the airport to arguments over materials. ‘We are very far apart in terms of cost and schedule,’ [Denver International Airport CEO Kim Day] said.” Privatization industry flacks often claim that PPPs do better on performance than traditional public design-build models in the initial stages of public works projects. Denver has now voted with its feet by taking back control of the DIA project. 

18) National: So with bond market volatility making the headlines, is this a good time for local governments to ramp up borrowing for infrastructure? Depends who you believe. Eric Kazatsky, a portfolio manager at Clark Capital Management says “on one hand, cheap borrowing rates should be very enticing to municipal issuers. However, those low rates are coming at a time where the SALT cap [state and local taxes—ed.] has made the ability of local taxpayers to broadly subsidize municipal spending very difficult. ‘Borrowing more debt, especially for non-essential projects, has most likely run into headwinds with taxpayers.’”

On the other hand, muni analyst George Friedlander says “this is a spectacular opportunity for state and local governments to start on major projects, at yields close to or at historical lows, and yields as a percentage of Treasury yields also close to recent lows, all along the yield curve,” and “governors in many states are beginning to become more proactive in starting needed infrastructure projects, rather than waiting on the Federal government. It will be interesting to see whether this new collapse in borrowing costs leads to a further rebound in the initiation of needed projects.” 

Issuers are in a mixed mood. On the one hand, The Metropolitan Transit Authority of Harris County, Texas, just decided to move ahead with a $3.5 billion bond authority proposal to expand the Houston area’s network of bus, rail and managed lanes projects. On the other, Birmingham, Michigan, voters rejected a $57 million bonding proposal to finance parking. [Sub required]. If you’d like to dig a little deeper, listen to this brief discussion of interest rates, muni bond fund flows and new issuance.

19) National: Jeremy Mohler of In the Public Interest writes in In These Times that the Kochs and Uber have a common interest in “destroying public transit.” In documents filed with the Securities and Exchange Commission, Mohler reports, “Uber’s executives claim to see a ‘massive market opportunity’ in the estimated 4.4 trillion miles traveled each year by people using public transit across 175 countries.” The Kochs are on the same page, “funneling money to their political action committee (PAC), Americans for Prosperity, to kill proposed public transit projects nationwide. Last year, they led the charge in stopping a popular $5.4 billion transit plan in Nashville, Tennessee, that had even been backed by a coalition of the city’s business community. The Kochs have funded similar anti-public transit efforts in Arkansas, Arizona, Michigan, Utah and other states.” Meanwhile, the lack of federal investment is harming public transportation systems across the country.

20) Missouri: St. Louis Post-Dispatch columnist Tony Messenger reports that the lobbyist leading the drive to privatize Lambert International Airport is being accused of an “outrageous” breach of contract by his former partner. The story, Messenger says, “sheds light on the man Mayor Lyda Krewson is depending on to manage the process by which St. Louis Lambert International Airport might eventually be privatized, leased to private bidders seeking to profit off of the city’s largest asset. (…) On these issues, it seems to me, Brown is Krewson’s shadow mayor. It’s no wonder the mayor wants to rush to issue a request for qualifications on the airport privatization before the company running the process goes to trial.” 

CRIMINAL JUSTICE AND IMMIGRATION

21) National/Colorado: The contract between Denver and the for-profit ankle monitoring company BI Incorporated, a subsidiary of GEO Group, will end in 2022. But the city will proceed with severing its halfway house contracts with GEO and CoreCivic after a short extension. Council member Candi CdeBaca, who led the campaign to sever ties with private, for-profit prison companies, says “‘the milk is spilled and we can’t cry over that one, and that’s why it’s more important for us to course-correct with the contract we can in the moment. I don’t think that pursuing an ability to end this contract with [BI] right now makes a lot of sense.’”

22) NationalPresidential candidate Senator Bernie Sanders (I-VT) has proposed a sweeping reform program for the U.S. criminal justice system, including an end to private prisons. Sanders would also end cash bail; make prison phone calls and other communications such as video chats free of charge; audit the practices of commissaries and use regulatory authority to end price gouging and exorbitant fees; incentivize states and localities to end police departments’ reliance on fines and fees for revenue; and Remove the profit motive from our re-entry system and diversion, community supervision, or treatment programs, and ensure people leaving incarceration or participating in diversion, community supervision, or treatment programs can do so free of charge. Among the many other changes Sanders proposes, he would “provide people struggling with addiction with the health care they need by guaranteeing health care—including inpatient and outpatient substance abuse and mental health services with no copayments or deductibles—to all people as a right, not a privilege, through a Medicare-for-all, single-payer program.”

23) NationalImmigrant detainees are being held in solitary confinement for profit. “The GEO Group, the private prison corporation that holds close to one out of every three ICE detainees nationwide, wrote this year that about a third of the nearly 2,000 detainees at its immigration facility in Adelanto are ‘chronic medically ill, chronic mentally ill, or seriously mentally ill.’ Yet it appears that at Adelanto a disproportionate number of detainees with mental illness are being kept in solitary versus in the general population: two-thirds of Adelanto’s reports indicate that the detainees being isolated have mental illness.” 

24) National/Mississippi:Detainees from the recent ICE raids are being held in the Adams County Correctional Facility, LaSalle ICE Processing Center and the South Louisiana ICE Processing Center. “Amanda Gilchrist, Director of Public Affairs for CoreCivic, said last month that ICE was facing an emergent need for detention capacity. ‘Working together with its federal partner and CoreCivic,’ Gilchrist said, ‘BOP has allowed the use of its available space at the Adams County Correctional Center as a flexible solution to help meet ICE’s needs.’ Gilchrist said the BOP has extended its contract with the Adams County Correctional facility. ‘The Bureau of Prisons contract has been extended until the end of the month (August 31),’ Gilchrist said Monday. ‘(CoreCivic) does not have an announcement regarding a new contract with (ICE).’”

25) National/Rhode Island: A prison guard at a privately-operated ICE facility in Central Falls drove his truck through a demonstration by the Jewish advocacy group Never Again Action. The Wyatt Detention Facility is operated by the Central Falls Detention Facility Corporation. The Wyatt board has been questioned about transparency at the facility at one of its meetings. “‘I would like to express concern, as the public hasn’t received any information regarding whether or not the (Immigration and Customs Enforcement) detainees being held at Wyatt have had access to legal representation and pastoral support,’ said Rodrigo Pimentel, a DACA recipient and immigration activist, during public comment. ‘I would like to know whether lawyers and clergy have been allowed access to the ICE detainees.’” In March, shortly after ICE began housing immigrant detainees at the facility, residents and politicians began demanding that it be shut. “Mayor James Diossa and City Council President Maria Rivera pledged to close the detention facility. ‘Not only is it unsustainable and broken,’ Diossa said, ‘it stands as a massive brick and barbed-wire monument to out-of-control capitalism, corporate greed and social injustice. Simply put, the Wyatt detention center needs to be shut down immediately. Therefore, I have instructed our city solicitor to pursue all legal avenues towards this end.’” 

26) National: Gin Armstrong of LittleSis’ Eyes on the Ties project reports that with banks now steering clear of them, private prison companies are facing an 87.4% financing gap. “As Real Estate Investment Trusts (REITs), CoreCivic and GEO Group are able to keep their income taxes low as long as they pass on much of their income to shareholders. This means that these companies depend heavily on short term borrowing through lines of credit and loans to keep their operations funded day-to-day. An 87.4% shortfall in the availability of that financing could therefore materially impact their ability to do business as usual.” 

27) National: Writing in Sludge, Alex Kotch and Donald Shaw report that the Congressional Black Caucus Institute is taking money from the private prison industry.

“The filing lists CBCI chair Rep. Bennie Thompson (D-Miss.) and CBCI board members Jim Clyburn (D-S.C.) and Cedric Richmond (D-La.), the former chair of the CBC, as honorees. CoreCivic made a similar donation of $25,000 to CBCI in 2018. (…) Another connected nonprofit, the Congressional Black Caucus Foundation, got $10,000 from the foundation of GEO Group in 2017, according to tax records.” 

28) Minnesota/NationalOpposition is building against turning a vacant CoreCivic prison in Appleton into an immigration detention facility. “More than 160 people attended a meeting Tuesday evening in Appleton called by an informal network of people who oppose the former prison’s possible use as an ICE detention center. Calling it “morally unjust and not compatible with Minnesota values,” organizer Amy Bacigalupo of Montevideo said a petition will be circulated and presented to legislators, county commissioners and city council members in the area. It will let them know that many in the region are opposed to the possible use of the facility as a detention center, Bacigalupo told the crowd.” If ICE accepts the bid, detainees would arrive in 2021.

29) TexasMcClennan County officials are assuming operations of their jail after terminating a contract with the private, for-profit company LaSalle. “The decision not to renew the contract came after the county first saw an increase in payments made to LaSalle last year, from about $6.1 million to $8 million. LaSalle failed three Texas Commission of Jail Standards inspections in August 2018, November 2018 and last March, resulting in the state placing a remedial order on the facility.”

PUBLIC SERVICES

30) National/Think tanks: Melvin A. Goodman, a senior fellow a the Center for International Policy and a professor of government at John Hopkins University, reviews Trump’s War on Science: Return to the Regulatory Dark Ages. “Major areas of scientific inquiry have been compromised by hiring freezes, staff cuts, and budgetary pressures,” Goodman reports. “Half of all respondents reported that political interests are hindering the ability to base policy decisions on science, and that self- censorship is worsening the problem. Any weakening of the role of science in government will hurt our most vulnerable citizens. Low-income populations are the hardest hit when regulatory policies are compromised or existing rules and standards are weakened.” [Sub required]

31) Texas: The Leander City Council is discussing changes to its policy on room rentals, which were previously administered by the private company LSSI, after a recent controversy over the city’s canceling of a Drag Queen Story Hour event at Leander Public Library in May. “After the city proposed new library room rental and background check policies in July, the policies drew criticism from state and national organizations including the American Library Association, the American Civil Liberties Union of Texas and the Texas Library Association.” 

32) Texas: Travis County is moving ahead with a “pay for success”/social impact bond program for dealing with homelessness. “The public sector entities – the city and county – will reimburse the investors based on the results of the program. If the program performs poorly, the investors may not earn any reimbursement. If it performs very well, the investors will get back enough money to turn a profit.” For the potential pitfalls of such schemes, see In the Public Interest’s Guide to Evaluating Pay for Success Programs and Social Impact Bonds

33) International: Writing in Tribune, the British Labour Party Shadow Secretary of State for Communities and Local Government and Co-National Campaign Coordinator Andrew Gwynne explains the party’s major new emphasis and program on insourcing public services. “Our policy document, Democratizing Local Public Services, lays out how and why local services can be brought back in-house, and sets out how we will achieve an insourcing-first approach in local government. Through this work, we aim to rebalance the legal playing field, so that it’s no longer tilted away from insourcing and so that councils have the powers they need to deliver public services directly.

Insourcing is the best example of community wealth-building. There is no better way to redirect wealth back into the local economy than by ensuring that our public services are delivered by councils, employing local staff, and accountable to local people.”

GENERAL/MISC.

34) National: The law firm Best Best & Krieger has offered a useful summary of federal, state, and local public interest regulatory efforts and legislative initiatives on chemical safety. “Concerns about rising health risks from a group of chemicals called PFAS in water supplies are spurring responses from both federal and state lawmakers, regulators and courts. Some of these actions will impact local governments and water agencies. PFOA and PFOS are the most common synthetic organic chemicals that are part of a group of elements referred to as per- and poly-fluoroalkyl substances, or PFASs. These substances are known for their nonstick, waterproof, heat- and stain-resistant properties. They are used widely in consumer and industrial products, such as fabrics, carpets, firefighting foams, food packaging, and nonstick cookware. Exposure to PFAS through drinking water is of significant concern due to its propensity to accrue in groundwater.” 

For more on how companies can be encouraged start clean when it comes to food packaging, see EDF’s recommendations.

35) National: Timothy Egan has written an op-ed in the New York Times on The Great Western Public Land Robbery. “The gallery of awful human beings, monumental incompetents, wife-beaters, frauds and outright criminals appointed to high positions in the Trump administration is large and varied. As wanted posters, they would fill an entire post office wall. But you have to go pretty deep into the ranks of the Worst People to find someone equal to the man Donald Trump has now put in charge of your public lands — William Perry Pendley. This is another Onion headline that writes itself: Trump’s pick for public lands doesn’t believe in public lands. The man now overseeing 245 million acres owned by every American citizen is a mad-dog opponent of the very idea of shared space in the great outdoors.” 

But see Randi Spivak’s How to Counter Trump’s Disastrous Attack on Our Public Lands. “With increasing frequency, courts have been rejectingthe efforts of Trump’s Interior Department to deny or minimize the climate consequences of its actions, including decisions for more oil and gas extraction on public lands. These cases are part of a growing pattern of judicial rulings that say federal agencies must do additional environmental review to weigh climate impacts before these projects can move forward.” 

At the end of this month, the Federal Accounting Standards Board will meet to discuss a draft statement of federal financial accounting standards (SFFAS) on federal land, including for ‘public-private partnerships.’ The 95-page memo with the briefing materials is here. Among the task force members are Deloitte, EY, and the National Council for Public Private Partnerships.

GOVERNING FOR THE COMMON GOOD

36) National: As Newark’s people struggle with a water lead poisoning emergency after decades of official inaction, Denver Water has just proposed a plan to remove an estimated 75,000 lead service lines in 15 years. Action is also possible at the state level. Fifteen states are now offering early help for kids with lead poisoning. Advocacy organizing is making a difference too. As Steven Greenhouse has reported in the Los Angeles Times, partnerships between labor and the environmental movement are taking root. “Working closely with the Natural Resources Defense Council, LAANE brought unions, environmentalists and community groups together to develop a plan that has greatly reduced air pollution at the nation’s largest seaport, the combined Ports of Los Angeles and Long Beach.”

37) California: Huron, a small town in the middle of Central Valley, has stepped in to provide two new all-electric vehicles for local people without cars who need to get around or to access medical and social services in Fresno, about 50 miles away. They are also providing a more formal dispatch system for the community. “The Green Raiteros program has been in the works for several years. Huron’s mayor, Rey León, founder and executive director of San Joaquin Valley Latino Environmental and Advancement Policy (Valley LEAP), has been cobbling together funding—and community capacity—from a variety of sources, including grants from Just Transit and the California Endowment, and funds from a pot of money created when the CPUC settled fraud charges with an electricity company.”