Weekly privatization report

 


Here’s our weekly analysis of privatization in the news and in communities nationwide. Not a subscriber? Sign up here.

 

1) National/Maryland: Writing in the Washington Post, In the Public Interest’s Jeremy Mohler points to the problematic results of poorly conceived ‘public-private partnerships’ across the country while calling into question Republican Governor Larry Hogan’s flawed $9 billion plan to add tolled express lanes to the Capital Beltway and Interstate 270.

“Maryland transportation officials are proposing to borrow the project’s cost from private investors,” Mohler writes, “but they are downplaying how much more expensive it is to borrow directly from a Wall Street bank or a global corporation rather than use municipal bonds, the traditional method of financing. And they are minimizing the potential risks for Maryland residents now and in the distant future, as so-called public-private partnership contracts include pages of complex agreements that extend for decades. (…) If the price tag doesn’t scare you, consider this: Public-private partnerships almost always take decision-making power from the public. This is because they are written to all but guarantee high returns for private investors.”

2) National: Writing in Bloomberg, Baruch professor Andrea Gabor takes aim at the argument of pro-charter school organizations such as the Manhattan Institute that deregulation of the charter school sector is necessary. In fact, deregulation produces less, not more choice, Gabor says. “That faith in markets isn’t supported by the evidence, however. Studies show that, on average, charter schools and traditional public schools produce similar results. But freedom from regulation is associated not with success but with especially high failure rates; charter-school performance tends to be weakest in states with the laxest rules for ensuring education quality. Paradoxically, deregulation has also tended to narrow choices rather than expand them. New Orleans, for example, which has turned most of its public schools over to charter organizations, is dominated by charter-school oligopolies that enforce uniform curriculum and disciplinary standards. Instead of fostering creative pedagogy, the charter industry has focused on producing high test scores, the key measure by which philanthropists determine which charter organizations to finance. Teachers are typically required to teach canned curricula and rarely last more than a few years, and students are often subjected to one-size-fits-all discipline policies.”

3) National: “Incarcerated Pennsylvanians now have to pay $150 to read. We should all be outraged,” writes Jodi Lincoln of Book ‘em in a Washington Postop-ed. “Every year, thousands of people in Pennsylvania prisons write directly to nonprofit organizations such as the one I co-chair with a request for reading material, which we then send to them at no cost. This free access to books has dramatically improved the lives of incarcerated individuals, offering immense emotional and mental relief as well as a key source of rehabilitation. But as of last month, the Pennsylvania Department of Corrections (DOC) has decided to make such rehabilitation much harder. Going forward, books and publications, including legal primers and prison newsletters, cannot be sent directly to incarcerated Pennsylvanians. Instead, if they want access to a book, they must first come up with $147 to purchase a tablet and then pay a private company for electronic versions of their reading material—but only if it’s available among the 8,500 titles offered to them through this new e-book system.”

Books Through Bars and Book ‘Em are supporting a petition spearheaded by the Amistad Law Project that calls for an end to the new policies as they “further punish, restrict and control people incarcerated in PA prisons.” Over 7,300 people and counting have signed the petition.

4) National: Last Monday postal workers across the country staged a national day of action to oppose the Trump/GOP plan to privatize the U.S. Postal Service. “The unpopular privatization plan is already creating difficulties for the administration. In July, the House of Representatives introduced a resolution condemning privatization. Postal workers held a massive August rally against privatization in Pittsburgh during APWU’s biennial national convention. Then in September, two days before the unions announced their upcoming day of action, the Senate introduced its own resolution rejecting privatization. Both the Senate and the House resolutions boast bipartisan support.”

5) National: Private property questions are threatening access to our national parks. “Zion National Park stunned visitors recently when it stopped issuing permits for one of its bucket-list hikes, the 16-mile slot-canyon journey through the Zion Narrows, after the family that owns land the route crosses posted signs indicating access was subject to ‘trespassing fees.’ The closure soon was lifted when Washington County reached an agreement with the landowners, but this issue could spring up again and again across Utah where trails cross private property en route to popular destinations, especially along the Wasatch Front.”

6)National: CounterPunchpodcast’s Eric Draitser interviewed journalist David Dayen about his recent investigation into ICE contractors and his coverage of anti-ICE activist groups around the country. They discussed “the privatized detention and deportation system, and how corporate profits and impunity are driving the child separation and domestic removal policies. From there, David provides some insights into the courageous and determined activist groups and local movements that are fighting back against Trump and the entire immigration machine.” See Dayen’s “Below the Surface of ICE: The Corporations Profiting From Immigrant Detention Activists are Targeting the Companies that Make ICE Run.”

7) National/International: Erik Prince, the mercenary entrepreneur and brother of education secretary Betsy DeVos, has not given up his quest to privatize U.S. military involvement in the Afghanistan war, and is continuing to meet with local powerbrokers. “Prince frequently cites the British East India Company as a successful case study of privatization of state building, but it’s a terrific misuse of history,” Prof. Matt Dearing of NDU said. “The East India Company had no intent on building a nation state. Instead, they pillaged the Mughal Empire and enriched their shareholders, only to be bailed out and nationalized after terrorizing the population.”

8) National: As election day approaches, candidates for state and local office are taking a stand against public services privatization. In North Carolina, State Senate candidate Jen Mangrumsays she “supports public education and will fight the privatization of NC schools.” In Iowa, Patti Robinson, who is running for the State Senate, worked for years as a Medicaid case manager. Her program “was closed in 2017 because of the unilateral decision by the governor to privatize the Medicaid program in Iowa.”

9) National: Numerous organizations are weighing in to try and get the IRS not to block their efforts to use nonprofits to ease the federal tax burden. “A coalition of city, county and local government associations is asking the Internal Revenue Service to withdraw proposed rules designed to block attempts by states to use charitable deductions to workaround the tax law’s new $10,000 cap on the federal deduction for state and local taxes. State and local governments in several high-tax areas, including New York and New Jersey, have enacted workarounds for the cap on SALT deductions that allow taxpayers to make charitable donations in lieu of paying property taxes or local income taxes. (…) Another significant portion of the letters were submitted by supporters of private schools who asked the IRS for a carve-out to protect the tax credit for donations to scholarship funds or for private school tuition.” [Sub required]

10) National: Watch your wallet, municipalities. There’s a not-entirely-new idea going around Wall Street to tie revenue-producing public assets to pension obligations. It’s currently being touted by a University of Chicago professor who “is also the Managing Director for Fixed Income at Greenwich Investment Management, a firm specializing in high yield municipal bonds.” (Some impolitely call these junk bonds). “The transfer enables the asset to be accounted using its higher market value to boost funding ratios. Admittedly valuing public assets is not easy in that there isn’t a ready market for public assets. That said there have been numerous privatizations of public assets and public private partnerships across the country to arrive at a reasonable value—notwithstanding parking meters.” [Sub required]. Needless to say, tying public asset revenues to any one item, such as pensions, would reduce the ability of elected officials to make choices on which public needs to spend those revenues.

11) California: As tense negotiations continue between the LAUSD and teachers, “union officials have repeatedly blasted LAUSD Superintendent Austin Beutner in recent weeks, accusing him of spreading ‘disinformation’ about the contract talks. Last week, union officials blasted Beutner for holding high-dollar meetings at ritzy Southland restaurants, often with charter-school advocates and operators. Union officials said Beutner’s calendar revealed 34 meetings at restaurants during the four-month period, compared to 29 visits to school campuses. Beutner ‘must explain to the public why he was at these expensive restaurants and clubs during school hours,’ teacher Victoria Casas said at the news conference at UTLA headquarters.”

12) California: The Sierra Sands Board of Education has unanimously denied a renewal petition from Ridgecrest Charter School “based on a number of criteria, including lack of sufficient supporting documents in Ridgecrest Charter’s petition to the school district. (…) Sierra Sands board members remarked that while they didn’t wish RCS to close down—and likely won’t—past petition renewals should have provided the school with lessons on how to properly apply. ‘It’s obvious this isn’t the first time we’ve been down this road,’ said board member Bill Farris. ‘I think much is lost in the process as far as the district’s concern and what our responsibility as a board is.’”

13) Florida/Georgia/National: Chalk up another P3 disaster. Efforts by the City of Jacksonville to protect itself from the impact of a ruinous ‘public-private partnership’ deal to build two nuclear power plants in Georgia and get ratepayers to partially pay for it have gotten the city and its utility into hot water with Moody’s rating agency. “Litigation filed by Jacksonville, Florida and JEA in an attempt to invalidate the utility’s contract to buy nuclear power led Moody’s Investors Service to downgrade nearly all credit ratings of the two entities late Thursday. Jacksonville’s issuer-credit rating was lowered to A2 from Aa2. Six of the city’s credit ratings were also downgraded by up to three notches each, affecting about $2.1 billion of outstanding debt. The outlook was revised to negative from stable. Most of JEA’s electric and water bond ratings were also downgraded by three notches, including its senior lien electric system revenue bond rating, which was lowered to A2 from Aa2. The outlook remains negative.” [Sub required] And wait till the legal bills for this multisided, multiyear litigation start rolling in.

14) Illinois: The Chicago Tribunehas reported that the CEO of Chicago Virtual Charter School, Cheryl Pruitt, may be facing charges of theft from when she was Gary Superintendent, and her job may be in jeopardy. “Pruitt’s attorney Scott King said there was no intention to defraud the school system. ‘I’m having difficulty understanding (why) they brought criminal charges,’ King said on Wednesday night. It was ‘at worst, a bookkeeping error by someone.’”

15) Kentucky: This Thursday there will be a “Rally to Save Our Schools” in Louisville. Speakers include public education advocates Diane Ravitch and Jitu Brown. Kentucky BATs say “KY is ground zero right now for charter school corruption & the first door hasn’t even been opened.”

16) Louisiana: The Crescent Leadership Academy, an alternative charter school “that serves students who have been expelled from other public schools because of behavioral or other problems, will close at the end of the month, according to a letter from Orleans Parish Schools Superintendent Henderson Lewis Jr. Lewis said the charter board’s decision to shutter the school in the middle of the school year is ‘unacceptable and goes against everything we stand for as a community of educators leading schools in our unique system.’” [Video report]

17) Michigan: A former Detroit city councilwoman is being sued by a charter school “to prevent her from being on school premises and from accessing information and financial systems. The suit is also seeking to have the court order McPhail to immediately return and provide access to all property and equipment in her possession that belongs to the school. (…) ‘Despite her lack of academic or professional background in education, on Sept. 9, 2012, defendant attended a subcommittee board meeting and the board made a recommendation she be named interim superintendent,’ the lawsuit states.”

18) New Jersey: The Daily Recordapplauds state education officials for rowing back from former Republican Gov. Chris Christie’s policy of aggressively promoting charter schools, which “seemed less about providing choices and more about busting teachers’ unions and gutting the existing public-school system,” but the paper warns against becoming too cozy with the teachers union as they hammer out new charter school regulations. Still, “charter schools do not typically belong in successful suburban districts merely because some disgruntled parents develop a plan, or because a group wants to support a religious education with public money. We’ve seen such schools surface around the state, and while they may succeed on some level, they also diminish traditional schools by taking away funding to serve a small percentage of students.”

19) New Jersey: An audit released by Gov. Phil Murphy (D) says New Jersey Transit “requires more sustainable revenue streams and reliable funding sources to solve decades of systemic problems. (…) The audit, which was conducted by North Highland Worldwide Consulting, said NJ Transit should try and gain alternative funding sources through public-private partnerships, sales taxes and fees on ride-hailing services executed by other large mass transit systems.” [Sub required]

21) New Mexico: The founder of Southwest Learning Centers, who embezzled millions of dollars, has been sentenced to five years in federal prison. “Glasrud pled guilty to stealing millions of dollars from the school and state to feed his lavish lifestyle. He used the money to buy expensive cars like a Maserati, boats and a $10,000 square-foot home.”

The blame doesn’t only fall on the school and the perpetrator, however. As In the Public Interest noted in its December 2014 report, Standing Guard: How Unaccountable Contracting Fails Governments and Taxpayers, “Two state agencies, the Public Education Commission (PEC) and the Public Education Department (PED), failed in their oversight of and response to problems surrounding Southwest Learning Centers and SAMS Academy. Both agencies overlooked issues such as the high salary of the schools’ founder and conflicts of interest.”

22) New Mexico: A state judge has granted a reprieve to a Santa Fe-based online charter school, allowing it to operate for another year despite a decision by the New Mexico Public Education Department to close it. “The state Public Education Commission, which oversees state charter schools, voted in December to reject the cyberacademy’s request for a charter renewal on the grounds that its student proficiency rates in math had dropped to 11 percent and that the school had received an F grade for two years in a row from the state. The Public Education Department later ordered the school to shut down.”

23) New York: The Carlyle Group will lead the financing team for the proposed $12 billion ‘public-private partnership’financing a $12 billion redevelopment of New York’s John F. Kennedy International Airport. “Along with Carlyle, the private investors chosen to finance the project, one of the largest public-private partnerships in the US, include JLC Infrastructure and Ullico, according to a statement. (…) Investors will provide almost all the financing needed to complete the project, while Gov. Cuomo said the state government will contribute around $1 billion. It is not yet clear how the investors will structure the PPP with equity and debt.” [Sub required]

24) New York: The incoming head of the New York City Housing Authority will use ‘public-private partnerships’ to address the troubled agency’s $32 billion capital needs backlog. “Acknowledging a ‘triage and prioritizing’ approach to repairs and given the funding gap, [Stan] Brezenoff expects to tap into public-private partnerships through the federal Section 8 Rental Assistance Demonstration program, which the U.S. Department of Housing and Urban Development launched in 2012. ‘We are going all in to the extent possible on RAD,’ he said.” [Sub required]

25) North Carolina: Deanne L. Fuller, a teacher at the public Archer Elementary School in Greensboro, pushes back against a condescending op-ed by columnist Charles Davenport Jr. “In that article, he lauds the success that Gate City Charter Academy has shown with students of poverty. I also applaud their success, but also know that there are some issues that charter schools do not have to manage in the same way that a traditional school must. The article states that high expectations are key. I have high expectations for both my students and my parents, and I hope they have high expectations of me.”

26) Puerto Rico: The Education Anew: Shifting Justice 2018 conference convened in Puerto Rico over the past few days, and included a plenary on “Privatization and Disaster Capitalism: The Global Battle for Education Justice.” Antonio Travis, Founder of Black Man Rising and Program Director at Families and Friends of Louisiana’s Incarcerated Children, connected privatization of the schools in  New Orleans and in Puerto Rico: “What we lose a lot in these battles, is the kids. They are the ones that are directly impacted from privatization.” [Video]. Dignity in Schools says “Closing schools isn’t about education, it’s gentrification.” Mercedes Martinez of the Federación de Maestros de Puerto Rico says “we have been fighting privatization for the last 25 years. Way before the Hurricane.”

27) Puerto Rico: The Puerto Rico Oversight Board, the governor, and bond insurers are all battling over control of PREPA, the island’s electricity authority. [Sub required]. Bondholders have renewed their efforts to have a receiver appointed for PREPA.

28)International: The British government has paid hundreds of millions of pounds to private contractors to run its detention facilities, but no one knows for certain just how profitable the industry is. “One of the 10 UK facilities is run by Her Majesty’s Prison and Probation Service, but the rest are contracted out to outsourcing firms G4S, Mitie, Serco and the US-owned GEO Group. (…) Commercial confidentiality agreements mean the Home Office and outsourcing companies are not obliged to publish detailed financial information about immigration detention centers in the UK. But figures released under freedom of information laws and published on the government’s Contracts Finder website show the value of some contracts when they were awarded. (…) The profitability of detention facilities has proved to be a contentious issue for the contractors. A Guardian investigation last year pointed to a 20.7% profit margin at the G4S-owned Brook House in 2016, while at Tinsley House the margin was 41.5%. (…) GEO Group, which operates Dungavel House, Scotland’s only detention center, may be making up to 30% profits on its contract, according to an analysis by Corporate Watch.”

29) International: The chief executive of the public regulator of private water companies in England and Wales (Ofwat) says the companies “have ‘created the perfect conditions for renationalization” as a result of their actions. (…) ‘Some companies have focused more on taking money out of the business than delivering for customers, she added, stating that the current political threat faced by companies is ‘not a passing phenomenon,’ nor has it been ‘whipped up by politicians’. (…) Her comments come a day after the House of Commons’ Environment, Food and Rural Affairs Committee said Ofwat had failed to strike a balance between consumer interests and making water companies a financially viable investment, with results “skewed in favor of the latter”, while expressing skepticism over the regulator’s new pricing proposals.” [Sub required]

Writing in The Canary, James Aitchison says a damning report should spell the end of England’s privatized water industry. “The report, by the University of Greenwich Public Services International Research Unit, compared the privatised English water industry with the public Scottish industry. It provides compelling proof that the privatized water industry in England is inefficient, unnecessarily overpriced, and benefits shareholders at the expense of consumers.” [The Privatised Water Industry in the UK: An ATM for Investors, by Karol Yearwood, September 2018]

30) Think Tanks: Paul Romer, the NYU economist who was awarded a Nobel Prize last week, is the inventor of the concept of “charter cities”—fully privatized municipalities. Mark Ames(a close-up observer of the disastrous Russian privatizations of the 1990s) explains: “How to win a ‘Nobel’ in Economics: find a Latin American country whose military just overthrew its elected leftist president, propose dystopian privatization experiment giving multinationals complete dictatorial control over their sweatshop labor.”

Legislative Issues

1) Missouri: Today at 6:30 pm local time there will be an Aldermanic Committee Meeting on a proposed ordinance to require a public citywide voteon any proposal to privatize Lambert International Airport. (Greater Pentecostal Church 6080 West Florissant Avenue). See “10 Things To Do/Not Do To Help Stop Lambert Airport Privatization.” There was a solid turnout at a hearing on Saturday.

 

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