7997038195_d2c6451e20_o
SHARETweet about this on TwitterShare on FacebookEmail to someonePrint this page

This Week’s Outsourcing Scan 4-25-2016

1) National/International: As the TTIP American-European trade and finance deal negotiations resume today in New York, protesters gather to register their opposition to potentially damaging effects on the environment, worker protection, and consumer rights. Among the concerns are that the TTIP could harm the public interest by forcing the outsourcing of local government services, the privatization of public assets, weaken public regulation of industries, and subvert democratic local planning. In Europe, activists are alarmed that the feeble system of union rights and labor protections in the U.S. will migrate over there.
 
State and local procurement and infrastructure control are key issues
: “For example, the U.S. procurement market for buses and public transportation is severely restricted for European suppliers, the EU official said. These restrictions are linked in particular to the Buy American Act, which requires that all steel and iron is produced in the U.S. Things get even more complicated when going to the sub-federal procurement level, which stands at 60% of total public procurement in the U.S. While U.S. officials say they provide guaranteed access to EU companies for $120 billion annually worth of contracts, the EU contends that the figure is overestimated. ‘Federal money comes with strings attached,’ said the EU official, stressing that this practically means that the most valuable infrastructure procurements are excluded from the [WTO Government Procurement Agreement] scope.”
 
2) National: The New York Times looks at race and the standardized testing wars. Some see standardized testing as a means for promoting school privatization, “as part of a larger agenda, driven by test companies and opponents of teachers’ unions, that seeks to wring profits from education while closing public schools and replacing them with non-unionized charter schools.” The Times reports that “as testing season unfolds this year, the debate is becoming murkier. More minority educators, parents and students are criticizing the tests, opening a rift with civil rights groups and black and Hispanic educators who support testing, like Secretary of Education John B. King Jr. Their complaints are wide-ranging.”
 
3) National: Writing in Daily Kos, Chauncy DeVega looks into how the system “feeds the black and brown poor to the maw of neoliberalism and military academies.” He explains how “Chicago’s military academies and other charter schools are a symptom of how the city’s public schools have been eviscerated by neoliberal policies. It would seem that Milton Friedman’s shadow hangs over all things as it descends down, even into some of the poorest and under-resourced urban communities in the United States. (…) When education becomes a business, it is the poor and working classes who are first made to suffer. Likewise, when prisons are privatized there is money to be made by locking people up—many of whom are the same poor and working class black and brown folks from the same neighborhoods that send their kids to charter schools. The school to prison pipeline has many routes.”
 
4) National:
 How does money shape the U.S. K-12 EdTech system? EdSurge follows the EdTech money by publishing the results of a year-long study of the sector. Includes information on Reach Capital, Owl Ventures, Learn Capital, and New York City’s Rethink Education. They have an interesting breakdown of “who are the investors?,” “what are their investments?,” and “what are their returns.” EdSurge says “more dollars have gone into K-12 edtech companies in the last six years than ever before—a significant step up for an industry with a rocky back story.”
 
But be that as it may, things may not be looking so rosy for EdTech. Vator reports a 75% decline in funding in the first quarter of this year, and says “the space is now on track to see its first annual decline in years.” They say “the space is projected to see $1.3 billion invested in 376 deals, according to data out from CB Insights [last] Monday. That would amount to a fall of 57 percent in dollars, and 23 percent in deals. That was after activity EdTech startups hit record highs in 2015.”
 
5) National/District of Columbia: The IRS is challenging the tax exempt status of bonds issued by the District of Columbia for a new school. “Mark Scott, former head of the IRS TEB office who now has a private practice focused on representing whistleblowers, recently tweeted that the Oyster School P3 ‘is a tax scam … that cost district residents millions in tax dollars.’ He called the transaction a ‘PPP disaster’ and asked whether this is the kind of project Mayor Muriel Bowser’s new P3 office wants to support. Bowser launched an Office of Public-Private Partnerships in November of last year ‘to build collaborations between private sector businesses and [the district government] to support large-scale projects such as infrastructure development and enhancements.’”
 
6) National: Bloomberg Gadfly looks at the takeover of University of Phoenix owner Apollo Education by Apollo Global Management. The deal may be blocked because at least two of Apollo Education’s owners think the selling price is undervalued, even though revenue and earnings have been steadily declining for years. The shareholder vote on the deal is this Thursday.
 
7) National:
 GEO Group is to report its financial results for the First Quarter 2016 before the market opens this Thursday, and will hold a conference call at 11 AM eastern. Corrections Corporation of America will announce after market close May 4, and hold a conference call the following morning at 11 AM.
 
8) California: Long Beach reaches agreement on a financing deal for a new courthouse complex to be built through a ‘public private partnership.’ Plenary-Edgemoor Civic Partners will design, build, operate, and maintain the complex in return for 43 years of subsidies. [Sub required]. LBReport, which called the close “controversial,” says “the P3 (‘public private partnership’) type of transaction is similar to the arrangement that State Legislative Analyst’s Office concluded cost millions more than traditional financing when applied to new LB courthouse.”
 
9) Florida/National: Ben Watkins, Florida’s bond director, says ‘public private partnerships’ “haven’t delivered on their promises to get public projects done faster and cheaper. Watkins, appearing at the National Municipal Bond Summit here Friday, said he does not believe P3s are necessary to do the financing, design, construction, operations and maintenance of public infrastructure projects. ‘The tax-exempt bond market has been adequate to finance infrastructure projects for hundreds of years.’” Watkins said “Mickey Mouse” analyses have been done on the public benefits of P3s because they are often done by industry insiders and supporters. [Sub required]
 
10) Illinois: Researcher Rick Perlstein lays out the long history of education privatization, and the school closings that drive it, in Chicago in an investigative piece in Jacobin. Perlstein begins with the concerted effort by anti-union corporate interests to expand charter schools, and then goes through more than a decade of political strategy centered around the Education Committee of the Commercial Club (McDonald’s, Exelon, the CBOE, etc.) and the Chicago Public Education Fund (billionaire hedgie Ken Griffith, Helen Zell, Penny Pritzker, etc.). “The Chicago school system aims to turn everyone it touches into a Gradgrind, extinguishing all traces of imagination, community feeling, and other, non-approved, non-market values. This past December, I watched that unfold in real time. It was, shall we say, an education.” [Sub required]
 
11) Illinois: The Chicago Infrastructure Trust is soliciting private partners to finance new Chicago streetlights. “‘This project also presents an opportunity for Chicago to leverage the light grid as a platform for connected technologies,’ the documents say. The project financing will be procured separately and is not part of the RFQ/RFP launched [last] Monday. ‘The project is not intended to lead to the privatization of the City’s or Parks’ operation and/or maintenance of Chicago’s outdoor lighting systems,’ documents say.” [Sub required]
 
12) Illinois: In a notable victory for public school activists, the Walton Foundation pulls out its backing for Chicago charter schools due to political resistance. Diane Ravitch says “Hallelujah! Resistance works! Jitu Brown, Karen Lewis, and other community leaders deserve congratulations.”
 
13) Indiana: There will be a public hearing on Wednesday to discuss four applications for new charter schools in Indianapolis.
 
14) Louisiana: The Orleans Parish school board has hired a for-profit company to monitor the security of its school tests. “They’re also the latest to do so by hiring test-security giant Caveon Test Security without going through a competitive bidding process, or seeking price quotes.” A debate has raged for some time over the question of student privacy vs. test security. Pearson subcontracts its social media tracking to Caveon LLC. The American Federation of Teachers has circulated an online petition calling for Pearson to stop “spying.”
 
15) Maryland: The Maryland Stadium Authority is being asked to finance a $70 “public private partnership” project for a downtown conference center hotel on Frederick’s Carroll Creek Park. “The authority is reluctant to lend money to a private hotel operator but the city of Frederick doesn’t want to accept responsibility for losses that would put its taxpayers ‘on the hook.’” The Maryland Public Policy Institute, which has been funded by the right wing State Policy Network, Donors Capital Fund, Roe Foundation, and Jaquelin Hume Foundation, has written a report on the deal calling for deregulation and complaining about public financing for the proposed conference center.
 
16) Massachusetts: Four Dennis selectmen will be sending a letter to Gov. Baker and other state officials, demanding a cap and “criticizing charter school funding for undercutting school districts with a large number of ‘high needs’ students.” Selectman Wayne Bergeron said on Friday that “the charter schools are being funded off the back of traditional public schools.”
 
17) Michigan: Staffing shortages continue to plague the outsourced Grand Rapids Home for Veterans. “The company responsible for staffing the facility with nurse aides, J2S, has admitted in the past it isn’t meeting contractual minimum standards when it comes to staffing the facility. New documents [WZZM] obtained show the Home for Veterans made a new agreement with J2S giving the company more flexibility to bring new people in.” AFSCME Local 261 President Mark Williams “says it’s been difficult to get people to come in on time.  He says the staffing issues are happening again inside the facility despite promises from leaders to get people to work at the facility. He points to Tuesday’s breakfast service as an example. ‘They were desperately short,’ Williams said.”
 
18) Michigan: White Lake Ambulance Authority, facing budget pressures, will explore outsourcing. “[Mayor Ed Whalen] said Whitehall was talking to Life EMS of Grand Rapids about providing service, and he invited representatives of the other municipalities to join negotiations.” But “White Lake Ambulance Authority Board Chairman Jeff King, who is also the Montague Township Supervisor, said he thought the authority’s staff and ambulances could still contract to serve the city of Whitehall.”
 
19) New York: Rochester officials debate the merits of public vs. outsourced ambulance services. The service is currently publically-controlled. Selectman Rich Nunes “questioned the number of people who respond to an incident, saying three or four people shouldn’t respond to every accident. Selectmen Brad Morse, however, said Nunes was reading the financial numbers incorrectly and that it was inappropriate to have the conversation without Fire and EMS Chief Scott Weigel present. Morse, who has worked as an on-call firefighter, said he has seen towns switch from in-house to privatized ambulance services with negative results. ‘If the numbers were explained properly, you’d find out that the cost is not bad at all,’ he said.”
 
20) New York: Amazon wins a $30 million contract to supply New York City schools with e-Books. “The deal is a boost to Amazon as it seeks to establish itself as a player in education. Many technology firms have set their sights on the classroom, viewing it as ripe for modernization and an effective way to establish their brands with potentially lifelong buyers at a young age.” [Sub required]
 
21) Ohio: In a letter to the editor of the Columbus DispatchCamren Harris demands more oversight of e-schools. “It’s time to dig deeper into Ohio’s online charter school scandal. Each year, Ohio taxpayers pay about $275 million to e-schools. However, recent reports have shown that these schools are likely being grossly overpaid. (…) Millions of tax dollars and thousands of students’ futures are at stake. This is no time for the public or the press to shy away. There is a bill in the Ohio Senate that would help us fix this problem. Senate Minority Leader Joe Schiavoni, D-Boardman, has introduced Senate Bill 298, which would require e-schools to track and report student log-in times. I can’t believe this isn’t a law already. It’s up to us to put the pressure on legislators.”
 
22) Washington: University of Washington students, faculty, staff, and community members gather to debate whether water is a human right or a corporate commodity. “Francene Watson, a clinical assistant professor in the College of Education, mediated the discussion. She began by talking about Flint, Michigan, and how residents there have not had access to a clean, lead-free public water supply for about a year. ‘The nature of today is really thinking about that tension around the effort to privatize water,’ Watson said.”
 
23) International: Secrecy feeds rumors that Australia’s New South Wales government is about to engage in a privatization of Sydney’s mass transit system. “Alex Claassens, the NSW secretary of the Rail, Trains and Bus Union, said privatisation had increased transport costs in Victoria. ‘The reality of life under privatisation is that the public never stops paying a price to the private providers,’ he said. ‘Selling off our train network would result in fewer jobs, a decrease in services, and an increased cost to commuters.’”
 
24) International: An American lawmaker, Rep. Gwen Moore (D-WI), takes on the World Bank’s support for privatizing water. “Under the guise of development, the World Bank and its investment arm, the International Finance Corporation, invest hundreds of millions in water privatization schemes that reduce access to water, increase costs and have a devastating impact on people. What’s worse is that the IFC often positions itself to profit from these projects, creating an irreconcilable conflict of interest.” Moore is the ranking member of the Monetary Policy and Trade Subcommittee of the House Committee on Financial Services.
 
In her letter to World Bank Group president Jim Young Kim, Rep. Moore wrote, “I am increasingly uneasy with water resource privatization in developing countries and do not believe that the current ring-fencing policies separating the investment and advising functions of the IFC are adequate. I would respectfully urge the WBG and IFC to cease promoting and funding privatization of water resources, including so-called ‘public-private partnerships’ (PPPs) in the water sector, until there has been a robust outside evaluation of the IFC’s conflicts policy and practices and an opportunity for additional congressional hearings on the subject.”
 
25) Think Tanks: The National Education Policy Center releases its 2016 report on “Virtual Schools.” The report finds that “although increasing numbers of parents and students are choosing virtual or blended schools, little is known about the inner workings of these schools. Evidence related to inputs and outcomes indicate that students in these schools differ from those in traditional public schools. The school performance measures for both virtual and blended schools also indicate that these
schools are not as successful as traditional public schools. Nevertheless, the evidence suggests that their enrollment growth has continued.”

Legislative Issues
 
1) National: Senate Democrats, seeking compromise with pro-privatization lawmakers, introduce a bill that includes both an increase in water projects financing for state revolving loans, and removing the caps on private activity bonds. The PAB cap removal is from Sen. Robert Menendez of New Jersey. [Sub required; S.2821]
 
2) National: With the Senate having passed an FAA reauthorization bill that does not include privatization of air traffic control, incoming Delta Airlines CEO Ed Bastian speaks out against privatization. “Keeping this program on track should be our industry’s collective focus; not risking the integrity of the most complex airspace in the world with a privatization experiment that is long on promises but woefully short on details. A privatized model does nothing to change the geographic proximity of airports, congestion or the weather.” Other airlines have backed privatization, but the House will now take up the contentious issue. The Indiana Gazette reports that there is “strong opposition to the [privatization] scheme from Democrats and powerful GOP committee chairmen reluctant to cede a large share of Congress’ authority over aviation to a private, nonprofit corporation.”
 
3) National: C-SPAN interviews Veterans Affairs Secretary Robert McDonald, who discusses “efforts to address long wait times for veterans at VA hospitals, reports of understaffing, and privatization. He’s interviewed by Huffington Post’s David Wood and Leo Shane of the Military Times.”
 
4) Kansas: At a community legislative forum, Rep. Annie Kuether (D) called Gov. Brownback’s willingness to cut school funding an attack on public education and said the governor wanted “to kill public education in this state. He wants to privatize education. This is his goal.”
 
5) Louisiana: The state senate votes to return New Orleans schools to local school board control no later than 2019. The current Recovery School District has faced charges of pushing privatization and overriding local communities. A majority of respondent to a recent poll “said that if charters that now fall under RSD governance were required to return to the OPSB, then a transition plan should be created before the schools shift to local control.”
 
6) Michigan: Activists demonstrate to head off any privatization of the Flint water system, pointing to a Veolia report. “‘Veolia saw the discolored water as an aesthetic issue and not a harbinger of one of the largest public health disasters in the history of the United States,’ [Nayyirah Shariff] said. ‘Veolia and Emergency Manager Jerry Ambrose weren’t interested in protecting the health of Flint residents. Veolia had a chance to sound the alarm and it didn’t.’”
 
7) Missouri: State Sen. Frank Libla, the Republican chairman of the Senate Transportation Committee, says during a floor debate on funding for highways and other transportation needs that “that the higher [gasoline] tax is a better way to raise the revenue needed to fund transportation infrastructure projects than public-private partnerships.” Voters may be asked to decide the issue in November. [Sub required]
 
8) Oklahoma: The Oklahoman cheers the passage of a sweeping charter school bill by the state legislature, including its contract-busting provision. “Under the Senate bill, schools would have been required to get a 60 percent supermajority vote of support from local teachers if conversion ‘alters the terms of any collective bargaining agreement.’ That would have given unions veto power over any effort to deregulate a district and adopt the practices of successful charter schools. It says much that Virgin and legislative Democrats embraced HB 2720 without that provision.”

 

We’d love to hear from you. Send us an email: info@inthepublicinterest.org.

Please sign up for our mailing list. You’ll get one privatization story (private prisons, infrastructure, education, and more) a week in your inbox.