Weekly privatization report: JPMorgan Chase finally divests | Atlanta fights “portfolio model” | and more

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

THIS WEEK’S HIGHLIGHTS

  • JPMorgan Chase has yielded to pressure and ended its financing of the private prison industry.
  • U.S. Rep. Peter DeFazio (D-OR) urges congress to support a major infrastructure package but points out that there’s no such thing as free money, i.e., private financing that doesn’t come with expensive strings attached.
  • Atlanta, Georgia, residents are taking head on the “portfolio model” of forcing charter schools into their school district.

EDUCATION

1) National: Capital calls are still happening in the private education sector, courtesy of private equity-backed entities. Primavera Capital Group (primary office: Beijing) “contributed additional equity to SSH Group Holdings Inc., the corporate entity for Spring Education, as part of a deal that also included $106 million in additional debt to acquire five private schools, according to Moody’s Investors Service Inc.,” Steve Gelsi reports in The Deal. “Macquarie Capital led the transaction to add to SSH Group’s senior first-lien term loan. The company will use the additional financial flexibility to buy the five K-12 schools, located in New York, California and Virginia. The company also has signed a licensing partnership in Thailand and China, according to LCD News.” [The Deal, 1 March 2019; sub required]

2) National/Think tanks: Despite the success of recent teacher strikes, education funding is still lower than a decade ago. This shrunken pie is now being fought over by traditional public schools and charter schools. [CBPP report]. Most states have cut teacher pay in recent years.

3) California: Gov. Newsom (D) signs SB 126, bringing transparency and accountability to CA’s corporate-run charter schools on behalf of all parents, students, and taxpayers. The Washington Post reports that “the move marks a shift in the state government’s attitude about charter schools—and more changes may be coming. Last week, Assemblyman Patrick O’Donnell (D), chairman of the Education Committee, along with some colleagues, introduced legislation that would significantly restrict the growth of charter schools in the state in important ways. There are more than 1,300 charters in California. While it is not clear what will happen with the four new bills—Newsom has not taken a position—a charter moratorium has new support in unlikely places.” [Text of SB 126]. Writing in The Progressive, Cynthia Liu takes a close look at some of the pending legislation to rein in charter school expansion and tighten oversight.

4) CaliforniaState education officials say San Diego-based Thrive charter schools should not be renewed for another five years because of poor academic performance. “Critics, such as the San Diego teachers union and the Oakland-based organization In the Public Interest, have argued that Thrive has grown too quickly at the expense of students.

Thrive intends to grow to more than 1,200 students next school year and to more than 1,400 students in 2023, according to the staff report.”

5) CaliforniaCharter schools continue to be a point of contention despite the settlement of recent teachers strikes in Los Angeles and Oakland. “A 2018 study done on the cost of public charter schools for Oakland Unified may help explain why. It came from the Oakland-based nonprofit In The Public Interest. ‘When the charter school takes those students away, that amount of money per student goes with the student,’ said Bob Lawson, director of special projects for In the Public Interest.”

6) Georgia: Atlanta citizens are taking head on the “portfolio model” of forcing charter schools into their school district. Read “An Open Letter to Atlanta Board of Education: Why the Portfolio Privatization Plan for Atlanta is a Bad Idea.” 

And Chiara, a commenter on Diane Ravitch’s blog, posts an interesting item: “The City Fund’s goal is for cities to have a large charter sector, ‘often scaling to serve 30-50% of students,’ the presentation reads. Those schools, it argues, creates a competitive environment, one pillar of The City Fund’s model. They believe this will help ‘all boats rise.’ Whoa. Wait a minute. Isn’t the claim that they are ‘agnostic’ and won’t be favoring one system of schools over another? Yet they somehow know ahead of time that ‘30 to 50%’ of schools will be charters?”

7) Missouri: The Network for Public Education and Opportunity Action have sent out an alert warning about charter and vouchers privatization legislation making its way through the Missouri legislature. Opponents are mobilizing. “Our members are extremely engaged in this issue and have been contacting their local legislators about it in significant numbers. They are concerned about both of these issues,” said Brent Ghan, deputy executive director for the Missouri School Boards’ Association. “We’ve seen a higher level of engagement from our members on both of these issues than we’ve seen in a long time.”

8) Tennessee: The new Republican governor, Bill Lee, is seeking a major expansion in the number of charter schools in the state and the introduction of school vouchers “in a state in which public school districts are chronically underfunded.” Will Pinkston, a member of the Nashville School Board, writes, “In Tennessee, our state constitution guarantees ‘a system of free public schools’—not a system of taxpayer-funded private schools, which is what you’d be creating with vouchers. Setting aside the unconstitutional nature of vouchers, it’s just bad policy at a time when the state is already underfunding our public schools. If your plan is enacted, it will likely end up in court. Regarding expansion of charter schools, which I see as taxpayer-funded private schools that are basically vouchers in a different form: You should examine the negative fiscal impact that charter schools have on public schools as well as the meltdown of your capital city’s charter industry.” 

INFRASTRUCTURE

9) National: Rep. Peter DeFazio (D-OR) urges congress to support a major infrastructure package, but points out that there’s no such thing as free money. Testifying to the House Ways and Means Committee, DeFazio said “I want to be clear that financing solutions for infrastructure have merit, but financing does not actually increase Federal revenue. Borrowing money using municipal bonds, private activity bonds, infrastructure banks, TIFIA, or Build America Bonds helpfully lowers borrowing costs, but revenue—government revenue at either the Federal, State, or local level—is still needed to repay loans. Furthermore, asking state and local governments to borrow and repay loans only further magnifies the long-term trend of declining Federal spending.”

DeFazio also took aim at a favored idea of some conservative think tanks and industry groups, a Vehicle Mile Travelled (VMT) tolling scheme, pointing to some serious problems with the idea, and saying there is no substitute for a substantial commitment of public money to any infrastructure program. “We need real federal investment,” DeFazio told the committee. “Others say we should go to a VMT. Well, we’re not ready to jump to a vehicle-miles traveled. I would like to do a nationwide highway program. My state is on its second pilot. There are a lot of issues with VMT. If you are going to do it fairly, you have to do it with real-time pricing, congestion pricing, because someone who drives 25 miles to the feed store in a rural area is not contributing to deterioration or congestion. Someone who jumps on 205 in Portland is, so they shouldn’t be paying the same per mile fee. And there is a little bit of concern, particularly by people in my rural areas, about the government tracking their movements.”

Others testifying to the panel included AFL-CIO President Richard Trumka (testimony), who told lawmakers that “public sector pay, benefits and labor rights must be protected when special interests push privatization and contracting-out schemes.”

10) National: The U.S. Army Corps of Engineers is establishing a civil works ‘public private partnerships’ pilot program. Responses to the RFI are due in three weeks. “USACE is to identify up to 10 additional P3 pilot projects and provide guidance on the screening and selection criteria along with how the USACE Civil Works budget should be allocated to P3 projects.” Will “the Wall” be a P3?

11) Hawaii: A bill to establish a state office of ‘public-private partnerships’ has passed the House and is now in the Senate. HI H 889 2019 establishes the Office of Public Private Partnership and the position of state Office of Public Private Partnership Coordinator, adds public private partnership project delivery methods and related conditions and requirements to the Public Procurement Code, requires an annual report, and appropriates funds.

12) Illinois: Jeffrey Schoenberg, a former Democratic member of the Illinois Senate, is advocating that the Illinois Tollway be leased out to private interests in a ‘public-private partnership’ to help pay down the state’s pension obligations. 

13) Missouri: Incumbent Louis Reed held on last Tuesday to be reelected to his fourth term as president of the St. Louis Board of Aldermen. “Reed stated that he supports a binding voter referendum on [Lambert airport] privatization. Reed should now remove roadblocks to legislation ensuring such a referendum would take place if privatization moves forward,” says the St. Louis Post-Dispatch.

14) International: The New York Times has run a front page investigative story on the collapse of the Morandi Bridge in Genoa and how privatization and weak government oversight contributed to it. “Beyond potential negligence,” the Times reports, “the case has exposed what critics say are deep systemic failings in how Italy privatized roadways. Autostrade reaped huge profits and acquired so much power that the state became a largely passive regulator. While no evidence has emerged that inspection findings were manipulated, the company effectively regulated itself—because Autostrade’s parent company owned the inspection company responsible for safety checks on the Morandi Bridge. ‘The government was happy to leave the system to exploit drivers and share in the bounty produced by tolls,’ [Prof. Marco Ponti] said in a recent phone interview, having just headed a commission to assess the viability of a high-speed rail link with France. ‘And because it’s a long concession, nobody is really looking at it, except bureaucrats and the superpower that is Autostrade,’ he added. ‘And they became close friends.’” 

15) International/Think tanks: Maria Romero of the European Network on Debt and Development (Eurodad) asks “Can public-private partnerships deliver gender equality?” Eurodad’s new report says “Public-private partnerships (PPPs) are being actively promoted by donor governments and international financial institutions to finance social services and infrastructure projects around the world. They feature prominently as a financing mechanism for delivering the Sustainable Development Goals (SDGs). However, support for PPPs runs counter to governments’ commitments to promote gender equality and the fulfilment of women’s rights under Agenda 2030 and elsewhere.”

CRIMINAL JUSTICE AND IMMIGRATION

16) National: In a major victory for citizen groups pushing for an end to for-profit prison and immigration detention, JP Morgan Chase yields to sustained pressure and ends its financing of private operators of prisons and detention centers. The bank “has previously underwritten bonds and syndicated loans for both GEO Group and CoreCivic, according to a report from Reuters. Private prison and detention center operators have been the focus of heightened scrutiny after it was revealed that the industry received more than $1 billion worth of federal Immigrations Customs and Enforcement (ICE) contracts in 2017, following a nationwide crackdown on immigration along the U.S. southern border. Geo Group was the recipient of approximately $470 million of those contracts, according to data from USAspending.gov.” [Sub required].

For an overview of financial sector support for private, for-profit prison and immigration detention corporations see In the Public Interest’s report, “The Banks That Finance Private Prison Companies.”

@MomsRising says“Thank you #FamiliesBelongTogether@MaketheRoadNY@MorganSimon1@PresenteOrg@popdemoc@domesticworkers,@HiHemployers@twittlesis@PubInterest@CREDOMobile@mujrsunidas@MomsRising@MamasConPoder& over 100 others for the @Chasevictory today!”

Ana Maria Archila, co-executive director for the Center for Popular Democracy, “said the protests had been part of a broader effort by activists to call out corporate entities who they see as ‘legitimizing’ the Trump administration’s policies, including the aggressive enforcement of immigration policies and the forcible separation of immigrant children from their parents at the border.”

Forbes reports that “Chase’s announcement calls into question the policies of other financial institutions such as Wells Fargo, Bank of America, BNP Paribas, SunTrust, and U.S. Bancorp who maintain relationships with private prisons—even while Moody’s and S&P have provided these companies with speculative grade (aka ‘junk’) credit ratings because ‘their revenues are at risk to changes in government policy and public scrutiny of companies profiting from detention.’”

It should also be noted that JP Morgan Chase has not completely severed its ties to the private prisons industry. In its most recent disclosure, JPM reports that it held $67,269,000 in stocks in the GEO Group and $20,751,000 in CoreCivic.

17) NationalTeachers are urging divestment from private prisons, reports Negin Owliaei at inequality.org. “‘As a parent and the spouse of an educator in New Jersey,’ said Byheijja R. Sabree, a member of the Journey for Justice Alliance, which supported the [AFT] report, in a statement from AFT, “I was surprised to find out that part of my husband’s pension money was being used to fund the prisons we are desperately trying to keep our children out of. The pension fund in our state just voted to get out of these risky investments, and I know other states are following suit. Pension funds can play a powerful role in holding private prison companies accountable.’”

18) National: Eight states have signed contracts to give incarcerated people ‘free’ tablets. “But often,” the Prison Policy Initiative reports, “the real beneficiaries are the tablet providers—who profit from tablet services—and the prisons, who get an excuse to eliminate things like law libraries.”

19) Pennsylvania: Education historian and public school advocate Diane Ravitch shares a letter reporting that it’s a new day in Philadelphia: “The new Board, which replaced the state-imposed School Reform Commission last year, voted last night to deny all three of this year’s charter applications. The decisions, with the exception of a few abstentions due to conflicts, were unanimous. There was not a single yes vote for any of the three applicants. Board members gave several reasons why they rejected the applications. The SRC would approve applications for clearly inadequate applicants, mostly for political reasons. These schools would have cost the District over $161 million over 5 years, including stranded costs.  Now we can use that money to hire more support staff and fix our older buildings. These schools would have cost the District over $161 million over 5 years, including stranded costs. Now we can use that money to hire more support staff and fix our older buildings.”

20) Puerto RicoThe partial privatization of the commonwealth’s police and security training system has begun. Late last month, the government published the request for qualifications (RFQ) for entities interested in operating the public-private partnership (PPP) that will administer the projected “Center for Training and Development of Public Security,” an institution that will include the Police Academy. The RFQ says the privatization contract will last 30 years and allow the operator to use the facilities of the Police Academy in Gurabo, as well as the four shooting ranges and the training areas of the other participating agencies.

21) International: In the middle of a debate on knife crime in the UK, a Good Morning Britain weatherman broke into the discussion to explain why building more prisons won’t work. [Video, 1 minute]

22) International: In a rare encounter, prisoners in France held a direct policy debate with parliamentarians. “They asked questions about the privatization of motorways and airports and questioned the value of these privatizations. They also talked about the wealth tax. One of them had good thought which surprised me on the relative impoverishment of France while noting that wealth is now being redistributed to other countries like China.” [Midi Libre, 8 March 2019]

PUBLIC SERVICES

23) National: Senators Gary Peters (D-MI), Jerry Moran (R-KS), and 23 of their Senate colleagues have introduced legislation to block privatization of the U.S. Postal Service. The measure is also supported by the National Association of Letter Carriers, the American Postal Workers Union, the National Rural Letter Carriers Association, the National Association of Postal Supervisors, the United Postmasters and Managers of America, and the Coalition for a 21st Century Postal Service.

24) FloridaWaste Management shut down a deposition by Broward County’s top administrator over the presence of a reporter. “The secrecy is the result of Waste Management’s decision to broadly mark its documents confidential—a move that gave the defense access so long as they agreed to keep the documents secret, yet blocked public access to those records. Many of those records clearly involve matters of great public interest, including information relevant to federal and state antitrust reviews of Waste Management’s $525 million acquisition of the assets of Davie-based Southern Waste Systems in January 2016. SWS was the parent of Sun Recycling, which was 50-50 partners with Bergeron Environmental in Sun Bergeron, a joint venture that in 2013 broke Waste Management’s decades-old monopoly on the county’s waste disposal business and began processing tons of recycled trash for 17 Broward municipalities.”

Consolidation of the nation’s waste disposal companies is running rampant, for example in Colorado. “The deal leaves national players owning three of the four largest trash haulers in Colorado Springs, including Houston-based industry giant Waste Management, Canadian giant Waste Connections, GFL-owned Bestway and Springs Waste Systems, owned by the Colorado-based Shrader family. Waste Management began buying up local trash haulers in the mid-1980s, Browning-Ferris Industries bought up several trash haulers in the late 1980s before selling them to another company that sold the operation in 2007 to Waste Connections.”

25) IllinoisRemunicipalization of Peoria’s ambulance service is going smoothly. “Peoria is within months of completing phase two of its ambulance system, implementing two more full-time ambulances on a path to a more complete city-based program. The program has also been bolstered by the department’s Low Acuity Unit, which has improved efficiency, says Emergency Medical Chief Jim Bratcher. Last March, Peoria City Council approved $1.4 million to fund the acquisition of three ambulances—two full-time staffed vehicles and one non-staffed reserve vehicle, as well as 14 firefighters to staff the vehicles.”

26) IowaThe Des Moines Register praises two lawmakers for their efforts to address the state’s Medicaid privatization disaster. “A rose to Democratic state Sens. Liz Mathis of Hiawatha and Amanda Ragan of Mason City for introducing a common-sense bill on Medicaid. Senate File 156 attempts to address some of the many problems created by the Republican-led experiment of privatizing the $6 billion health insurance program. The bill would, among other things, return Iowans with complex medical needs to state management, end prior authorization for substance abuse treatment, encourage private insurers receiving billions of public dollars to work toward expanding the health care workforce in Iowa, and make it easier for Iowans to change insurance companies.”

27) Kansas: The Garden City Telegram praises Shawnee County Commission Chairman Bob Archer for deciding against the privatization of the county’s waste management service, citing Kansas’ bad experiences. “We’ve seen that contractors charge more than expected. They can fall short on their promises and gamble that states or municipalities will keep working with them rather than go through the contracting process again. We’ve seen how privatized foster care and Medicaid systems have created extra difficulties for our state’s poorest and neediest residents.”

28) Texas: The Texas Standard shines a light on the importance of press coverage for helping to drive fixes for privatization failures, such as Medicaid privatization. They point to a Dallas Morning News series that “contains a number of stories about specific patients seeking care, and the consequences they faced because of decisions made by private care providers. An omnibus bill by Republican Rep. Sarah Davis would address the big picture of privatized Medicaid care. It would completely revamp the appeals process that McSwane says has been effective in getting private companies to revisit care decisions. Davis’ bill would transfer appeals to a third-party entity that would decide cases on the basis of medical need.”

OTHER

29) National: The dinner bell is ringing for private contractors to come running to the trough of deals at U.S. border crossings. Industry flacks are gushing: “Public-private partnerships (P3s) will likely become common at border crossings because needs are so great and projects need to be launched immediately.”

30) National: PBS NewsHour has a helpful report on the details contained in the massive bipartisan federal public lands bill passed by Congress after years of work. 1.3 million acres are newly designated as wilderness, meaning it is undeveloped now, and must remain so. “It is not all expansion. A few parks, like Acadia in Maine, will see future growth limited. But what some see as the biggest game-changer is making permanent the Land and Water Conservation Fund, the largest federal conservation program, used in nearly every state. Funding currently comes from oil and gas drilling. The bill doesn’t guarantee that money, but it does safeguard the program’s existence.” At least some business interests are weighing in to implore Congress to fully fund the program “this year and every year moving forward.”

31) National: Concerns are being expressed that the same mistakes made in the privatized military housing fiasco may be repeated in contracting out military moves to private companies. “In the wake of problems such as damaged household goods and delayed moves, a number of frustrated military families have called on TRANSCOM to hold moving companies accountable for problems. TRANSCOM officials are in the early stages of developing a plan to contract out the core function of managing military moves to a private company, with a current timeline of having the transition completed by the beginning of peak summer season in 2021.” 

32) National: The Army plans to follow the Navy and Air Force in outsourcing much of its IT infrastructure. “In a request for information the Army issued to industry in January, it asked for feedback on two possible structures: One in which the Army’s infrastructure is owned by the government but operated by contractors, and one in which contractors both own and operate the infrastructure.”

33) Virginia/National: As Amazon’s agreement with Arlington County is released, critics take aim at the absence of community benefits. “In exchange for giving Amazon about $23 million in incentives, activists wanted Arlington County to require the retail giant to pay union-level construction wages, donate to affordable housing funds or end its partnership with federal immigration authorities,” The Washington Post reports. “But when the proposed incentive agreement was released Tuesday, it primarily said Amazon must fill a certain amount of office space in its Crystal City headquarters to receive the staggered payouts over the next 15 years. ‘What does Amazon have to do to get $23 million from Arlington? Just show up!’ said a tweet posted by the anti-Amazon account @hqpoo.” The deal has “no living wage requirement, no contributions to affordable housing fund, and the govt must give Amazon advance notice anytime anyone seeks to look at public records Amazon provides to the county.”

34) International: Canadian public service unions are mounting a major effort to resist Ontario Premier Doug Ford’s efforts to privatize healthcare and other services. OPSEU President Warren (Smokey) Thomas says Ford is engaging in “deficit fear-mongering to justify deep public sector cuts and costly privatization schemes.” Despite assurances from the government that they will not use new health restructuring legislation to privatize services, “key sections of Bill 74 are designed to do just that,” Michael Hurley, the president of the Ontario Council of Hospital Unions/CUPE (OCHU), warned. “One of those sections explicitly removes reference to keeping hospital and other health services public and not-for-profit.”HIGHLIGHTS