Business Improvement Districts (BIDs) are privatizing police in cities nationwide

Your weekly rundown of news and analysis about the corporate takeover of education, water, and other public goods—and about the people fighting back. Here’s a direct link to this blog post. Not a subscriber? Sign up.

Highlights

First, the good news…

1) National: The good news is that last week a federal judge declared Texas’ privatized abortion ban unconstitutional in a blistering 113-page ruling. The bad news is that shortly afterwards the Trumpian Fifth Federal Circuit Court, which is based in New Orleans, nullified his ruling. The Department of Justice now has until this Wednesday to reply to the ruling, and the ban remains in effect until then. 

In his ruling overturning the Texas law, U.S. District Judge Robert Pitman repeatedly pointed to the intellectually dishonest and improper creation of a private right of action to enable people anywhere in the United States to enforce the state abortion ban. “Rather than subjecting its law to judicial review under the Constitution,” the judge wrote, “the State deliberately circumvented the traditional process. It drafted the law with the intent to preclude review by federal courts that have the obligation to safeguard the very rights the statute likely violates.”

The country now awaits developments at the U.S. Supreme Court, which will almost surely hear the Texas case.  But in its new term the court may also hear vital cases on an issue of deep concern to all Americans: the fate of public interest regulations. For a frightening litany of the damage that could be done across the legal landscape, listen to Sam Seder’s interview with Slate’s Mark Joseph Stern. [Audio, about an hour]

2) National: The Biden administration has reversed one of the worst acts of the Trump administration by restoring the central role of the National Environment Policy Act in infrastructure projects approvals. Under Trump and even before, weakening NEPA and undermining environmental assessments of proposed projects was a key goal of the so-called public-private partnership industry. 

“The basic community safeguards we are proposing to restore would help ensure that American infrastructure gets built right the first time, and delivers real benefits—not harms—to people who live nearby,” said CEQ Chair Brenda Mallory. “Patching these holes in the environmental review process will help reduce conflict and litigation and help clear up some of the uncertainty that the previous administration’s rule caused.” NEPA regulations have, over the years, blocked some of the most environmentally unsound road-building projects favored by the construction industry and banks. The Biden administration has also committed to increasing public input, which has been a key part of NEPA’s past success

The Council on Environmental Quality (CEQ) is inviting public comment on these proposed revisions. Two public meetings on the proposed rule will be held online on October 19, 2021 from 1:00-4:00 pm EDT and October 21 from 5:00-8:00 pm EDT.  To learn more or register, please visit http://nepa.gov.

3) National: President Biden has restored full protection to three national monuments that had been slashed in size by former president Donald Trump, including Bears Ears and Grand Staircase-Escalante in Utah—known for their stunning desert landscapes and historical treasures of Native American art and settlements, as well as a rich fossil record. “Biden also reimposed fishing restrictions in the Northeast Canyons and Seamounts Marine National Monument in the Atlantic Ocean off the coast of New England that Trump had opened to commercial fishing.”

4) National: This Thursday, George Floyd’s birthday, will be a national day of action to support educators, administrators and school boards in their fight to teach the history and present-day reality of racism in American schools. They are under attack from a well organized and funded extremist campaign to turn the clock back and intimidate those who refuse to let their students down. Attorney General Merrick Garland has ordered the FBI to work with local leaders to help address the threats. For details listen to CounterSpin’s interview with Stevana Sims, a public school counselor in Montclair, New Jersey, and a member of the steering committee of the group Black Lives Matter at School. [Audio, at 15:00]. Register for the teach-in, which will include a breakout session on “Know your Rights to Teach Truth in K-12.”

5) IndianaGood news as CoreCivic will end operations at the end of this year at Marion County Jail II, which it has managed for 24 years. CoreCivic will not be needed “because inmates will be transferred to facilities at the new Community Justice Center in the Twin Aire neighborhood. CoreCivic is not eligible to operate at the new complex because the Indianapolis City-County Council passed an ordinance in 2018 to prohibit private jail managers at the center. The Community Justice Center will replace not just Jail II, but also Jail I, the Arrestee Processing Center, and Hope Hall. Except for Jail II, those facilities are run by the Marion County Sheriff’s Department. The new center is expected to have 2,700 general population beds, 300 specialty, mental-health focused beds, and education and job-training facilities.”

6) Kentucky: A Franklin County judge has just ruled that the state’s new controversial tax-credit scholarship program violates the Kentucky Constitution. The ruling is a blow to advocates of K-12 school privatization. “Circuit Court Judge Phillip Shepherd agreed with the plaintiffs that the Educational Opportunity Account Program violates provisions in the Kentucky Constitution that prevent tax dollars from going to private schools. Shepherd cited a constitutional provision that states, ‘No sum shall be raised or collected for education other than in common schools until the question of taxation is submitted to the legal voters.’ (…) ‘Here, applying the plain language of the Kentucky Constitution, the income tax credit at issue raises a sum of money for private education outside the system of common schools. That it does so through a tax credit rather than a direct appropriation is not relevant, applying the plain language of §184,’ he wrote.”

Education

7) Colorado: Chalkbeat reports that more than two dozen Colorado charter schools have been subjected to lawsuits “alleging that questions on their application forms about whether prospective students receive special education services violate federal law.” Reporter Erica Meltzer says “Colorado charter schools enroll students with disabilities at a lower rate than the state average — and at a lower rate than charter schools in most other states, according to a study by the Center for Learner Equity. The study, commissioned last year by the Colorado Department of Education’s Schools of Choice Unit, identified such screening questions as one reason for the lower enrollment. Even when schools don’t use the question to screen out prospective students, advocates fear parents will be deterred. They might think a school isn’t prepared to serve their child—or doesn’t want to. The state has convened a working group to improve charter school practices and propose rule changes, but it hasn’t mandated any changes yet.”

8) Connecticut: Charter schools have become an issue in the Danbury mayoral and school board races. “The state has approved a charter school for Danbury, but not its required public funding. A philanthropist has promised $25 million to the school, which would be built downtown and run by the Brooklyn-based Prospect Charter Schools. The school would eventually serve 770 students, which would help alleviate overcrowding in the public schools at no cost to Danbury, said Esposito, the mayor’s chief of staff who is seeking the city’s top job. (…) The mayoral candidates will face off again at 7 p.m. next Wednesday during a virtual debate hosted by the Greater Danbury Chamber of Commerce. Election Day is less than four weeks away on Nov. 2.

9) Louisiana: Six New Orleans charter schools that have not had their charters renewed are making their case to stay open. Several schools had F and D ratings from the state. “Over the next month, the schools must host two school improvement meetings and the district will host its own meetings for parents at each campus. At the Nov. 16 Orleans Parish School Board meeting, NOLA Public Schools Superintendent Henderson Lewis Jr. will make his recommendation on the contract renewals.”

10) MinnesotaA tuition-free Minneapolis charter school is closing a month after it opened. “In an email to Fox 9, parent Joshua Bennett said he was extremely disappointed and felt misled by the school. ‘This school fell short from day one and should have never opened,’ said Bennett. ‘My son has now lost five more weeks of learning after 18 months of distance learning due to the pandemic. We feel scammed.’” 

11) Minnesota: Despite a scandal in which a charter school’s head lost $4.3 million from an illegal hedge fund investment, the school’s board is digging in and standing by the superintendent. “A U.S. District Court judge this week ruled that the case will be litigated in Minnesota, denying the hedge fund’s bid to move it to either New Jersey or Delaware.”

12) New York: The state has approved two new charter schools in Suffolk County. “Wyandanch school officials reiterated warnings Thursday that any outflow of students to a charter center could undermine the finances of their district, which recently began to stabilize. Charter schools are run by independent boards, and their funding is based on tuition payments from districts where students enrolled on charter campuses reside. Academy representatives estimate their new school, by its fifth year of operations, could take in $9.7 million in tuition from Wyandanch, equivalent to 13% of the district’s annual budget. The charter officials contend this will not adversely affect Wyandanch’s economic prospects; the district disagrees.”

13) Ohio: The Ohio Supreme Court has put the final nail in the coffin of Electronic Classroom of Tomorrow’s case against having to pay damages for inflating enrollment figures. “The high court ruling settled a long-running legal question, finding that a ‘plain reading’ of state law making state board decisions ‘final’ was all that was required.”

Cleveland.com reports that “ECOT founder William Lager made millions through two companies that had contracts with ECOT: Altair management, which ran ECOT, and IQ Innovations, which provided the online classes for students. Over the years, Lager donated more than $2.1 million to the campaigns of Ohio Republicans and Republican-related political organizations, including Justice DeWine, who had ruled against the school Tuesday.”

14) Oklahoma: Tulsa World reports that Epic Charter Schools’ new governing board chairman told lawmakers that “they had been ‘gaslighted’ for years by Epic’s recently ousted founders, suggesting that they now would be open to legislation intended to prevent millions in taxpayer dollars from being paid to ‘grifters.’”

15) Pennsylvania: The Coatesville Area School District is fighting against a requested transfer of about $4.5 million in total from CASD to a pair of charter schools. “The Coatesville Area School District is fighting a requested transfer of funds—about $4.5 million in total—from CASD to a pair of charter schools.” CASD Board President Robert J. Fisher “wrote that the district supports a parent’s right to choose whatever school they want for their child. School districts are required to pay for each student enrolled in charter schools. ‘PA charter School Funding is unfair, inequitable and outdated—and in dire need of reform,” Fisher wrote. He also said that the charter school’s position is ‘clearly contrary to law’ and the $4.5 million ask is unbudgeted by CASD.”

16) Tennessee: The state legislature, in which Republicans have a supermajority, will be holding a special session from October 27 for at least a week and will consider legislation “to prohibit mask mandates in schools, universities and public buildings, require legislative oversight to the governor’s emergency power and deny funding to event venues requiring vaccines, masks or ‘segregating attendees according to vaccination status.’” [Sub required]. 

17) Tennessee: The Tennessee Public Charter School Commission will meet tomorrow to consider two appeals, including from Nashville Classical Charter School II proposed for West Nashville, of the rejection of their charter applications.

18) Texas: Gee, what a coincidence. A few weeks ago The Dallas Morning News ran an editorial fulminating against the City Council’s alleged use of zoning laws to persecute charter schools in the city. Lo and behold, the editor who oversaw the paper’s editorial page has been named the lone finalist to head the Great Hearts charter school network.

19) TexasThe Texas AFT has testified against two crucial proposed rule changes covering charter schools. “The indicators within the [Charter School Performance Framework (CSPF)] are supposed to evaluate each charter school’s compliance with federal law, state law, state rules or regulations, and/or the charter contract. However, the proposed changes strike program indicators for bilingual and special education populations from the operations standards. In other words, this CSPF focuses on school operations and not on academic performance for these two major student groups, which charters have a record of under-serving. Quinzi testified that rather than abandoning these student groups, the CSPF needs stronger indicators—including those ensuring teacher qualifications, and to hold charter schools (with no elected board oversight) accountable for properly serving these student groups.”

20) TexasCleveland ISD, in east Texas, needed money. The state sent charter schools instead. “To keep up with a coming ‘tsunami’ of students, Trotter told the Cleveland school board this year that it would need to build two more high schools, five more middle schools, and ten more elementary schools over the next ten years: a project that would cost about $1.6 billion. After half a decade of approving bonds to build new schools, however, local voters are beginning to balk.”

21) Texas: IDEA charter schools are suing the state to keep records of their extravagant spending hidden from the public, Texas AFT reports. “While the attorney general agreed that some of the documents should be released—since the state funds charter schools with taxpayer dollars—IDEA stymied that order by claiming its central office in McAllen had been closed from July 2020 to June 2021. When employees returned to the office, IDEA still refused to release the records and instead filed the lawsuit.”

22) West Virginia: The West Virginia Professional Charter School Board is reviewing seven applications for charter schools in the state. “Last week, a lawsuit was filed in Kanawha County Circuit Court challenging the constitutionality of the state’s charter law. The suit says the law allows charter schools to open without approval from local voters. (…) Previously, the state’s charter school law required proposals for charters to go through a local county board of education.”

23) Think Tanks: Nancy MacLean of Duke University joined political economist Doug Henwood for a discussion of her research on Milton Friedman’s efforts to defend racial segregation in the schools and, she argues, ultimately destroy public education itself. [Audio, about 30 minutes]. Read her paper, How Milton Friedman Exploited White Supremacy to Privatize Education.

Infrastructure

24) National: The new issue of Public Works Financing (PWF), the house organ of the road privatization industry, carries a front page op-ed by Mick Cornett and Michael Nutter saying “We’re at the Finish Line” about the infrastructure bill. Of course we are very far from the finish line. That said, the discussion on infrastructure seems to be moving toward how we should assess particular projects and what frameworks we should apply. This fits into the longstanding debates over “value for money” models, public sector comparators, and other yardsticks for deciding what infrastructure is, how it should be built, maintained, and financed, and in whose interest. But on “value for money” in particular, since this appears at multiple critical points in the infrastructure legislation itself, and is therefore tied to money—who gets it and how they justify it—the coming debate on VfM and other criteria should be rather ferocious. 

Robert Poole, PWF’s in-house privatization evangelist (not to say zealot), says he likes a recent paper on the subject written by Edward Glaeser and James Poterba, Economic Perspectives on Infrastructure Investment. It is certainly worth reading, though still awaits a serious critical response. 

Poole soft-pedals the rather rude things the authors have to say about “public-private partnerships,” so let’s just quote directly from them: “Public-private partnerships require careful analysis on a case-by-case basis. While they can deliver operational and procurement benefits relative to similar projects managed exclusively by the public sector, they can also impose unpriced risks on taxpayers, and in some cases can impose a long-term increase in the cost of infrastructure use in return for a short-term relaxation of public sector liquidity constraints.” [Public Works Financing, September 2021; sub required; p. 2; for the full discussion of P3s see pp. 35-38]. Perhaps still the best analyses of these issues are in John and Salim Loxley’s book, Public Service, Private Profits, especially chapter 4; and Dexter Whitfield’s Global Auction of Public Assets. 

25) NationalIs American Water Works’ debt load making it a risky company? Simply Wall St. looks at the issues and says, “to be frank both American Water Works Company’s net debt to EBITDA and its track record of converting EBIT to free cash flow make us rather uncomfortable with its debt levels. But at least its EBIT growth rate is not so bad. It’s also worth noting that American Water Works Company is in the Water Utilities industry, which is often considered to be quite defensive. Looking at the bigger picture, it seems clear to us that American Water Works Company’s use of debt is creating risks for the company.”

26) National: It looks like blockchain is coming to municipal finance. “As background, smart contracts are a function of a blockchain. As the Department of Commerce explains, ‘a blockchain is a collaborative tamper-resistant ledger that maintains transactional records.’ Taking that one step further, as IBM describes ‘smart contracts are digital contracts stored on a blockchain that are automatically executed when predetermined terms and conditions are met.’” [Sub required]

27) Maryland: Public Works Financing reports that “Maryland’s Board of Public Works (BPW) voted to approve two modifications to the Purple Line settlement agreement to progress the solicitation of a new design‐build firm to complete the transit P3. The first was a 100‐day extension of the ongoing solicitation. The second was the approval of up to $375 million to pay off the project’s outstanding Private Activity Bonds (PABs) in anticipation of a new DB contract award.” [Public Works Financing, September 2021]

28) Tennessee: Memphis, Light, Gas and Water and Shelby County get all of the area’s electricity from Tennessee Valley Authority, “but, after years of drama, is asking the private sector for bids on its electricity supply and could leave TVA.” TVA is locked in a battle with the city over its dumping of coal ash. [Sub required]

29) International: A debate about the role of private corporations in polluting England’s waterways has taken off. “Critics say privatised water companies are wary of reducing their payouts to shareholders and are under pressure to keep prices for consumers down by the financial regulator, Ofwat. A scramble to fix and upgrade flood defenses, coming under a growing amount of pressure because of climate change, also means pollution has fallen by the wayside amid stretched resources, environmental groups said. There were also calls for fines on water companies to become more severe. Recent high-profile fines of £90m, handed to Southern Water in July for deliberate dumping of sewage between 2010 and 2015, and £20m handed to Thames Water in 2017, were outliers.” [Sub required]

Criminal Justice and Immigration

30) National/California: A favorable decision for private, for-profit prison companies by a federal judge—federal preemption of California’s ban on private prisons—provoked an exuberant response from the GEO Group, which sees smooth sailing for government contracting for the next decade. “Commenting on the ruling, GEO’s Executive Chairman, George C. Zoley, said, ‘We are pleased with this ruling and anticipate it will allow the continuation of our California civil detention support services contracts for the U.S. Department of Homeland Security, which are effective through December 19, 2034.’” That ruling, along with the private prison companies’ ability to successfully defeat the Biden administration’s stated goal of ending private prisons, produced a rather rare stock bump for the CoreCivic and the GEO Group. 

31) National: The Wall Street Journal reports that for-profit prison operators are striking deals with municipalities to replace expiring federal contracts, “cushioning the financial blow from the Biden administration’s efforts to disentangle the U.S. government from privately run detention facilities. (…) The multiparty contracts allow the federal government to avoid a direct relationship with the private prisons, as required by January’s executive order, according to financial analysts and researchers covering the industry. But federal dollars continue to flow to prison operators, albeit indirectly.” The Brennan Center’s Lauren-Brooke Eisen says the use of these intergovernmental agreements might increase under Biden. [Sub required]

32) National: Investment giant BlackRock is giving institutional investors such as pensions and endowments the option to cast shareholder votes tied to their investments. “As part of the changes, BlackRock will let large investors pick and choose resolutions on which they want to vote. An investor could decide to just vote on oil-and-gas companies or private prisons or gun makers—or all companies. The investor can vote in line with their own rules or values, or vote with firms such as proxy adviser Institutional Shareholder Services.” [Sub required]

33) National/MissouriCoreCivic’s maximum security Leavenworth Detention Center is “an understaffed ‘hell hole’ of violence, death and drugs,” The Missouri Independent reports. “‘The only way I could describe it frankly, what’s going on at CoreCivic right now is it’s an absolute hell hole,’ said U.S. District Judge Julie Robinson during a sentencing hearing in September. ‘The court is aware of it,’ she said. ‘The defense bar is aware of it. The prosecutors are aware of it. The United States Marshals are aware of it.’ For years, CoreCivic’s Leavenworth facility, which houses an average of 900 inmates at a time, has been dangerously understaffed. An audit in 2017 found that its officer vacancy rate, at one point, reached nearly 25%.”

34) Vermont/Mississippi: The state of Vermont is exercising the last extension allowed under the original contract signed with CoreCivic in 2018 to house inmates in Mississippi. “Out-of-state housing is a safety valve to prevent overcrowding and mitigate COVID in all of our facilities,” Corrections Commissioner Jim Baker said in a statement. “Ideally we would have space in Vermont for our entire incarcerated population, but that is simply not the reality of the situation at this point in time.”

Public Services

35) National: Lisa Graves, executive director and editor-in-chief at True North Research, joined Janine Jackson at FAIR’s CounterSpin to discuss the crisis at the U.S. Postal Service, where a Trump-appointed Postmaster General and a compliant board seemingly beyond the power of the Biden administration are determined to fulfill the Koch brothers’ decades-long goal of privatizing the national carrier. “The thing about the US Postal Service: Low-income people get the same service as the rich; rural people get their prescriptions and paychecks and ballots in the same timeframe as those in big cities. The idea has always been that postal service is a public good, not to be mined for profit, and not tiered to give the wealthy yet another leg up. USPS is the second-largest employer in the country, traditionally offering opportunities for people of color—and unlike the number one employer, Walmart, it doesn’t subsidize itself by paying wages so low that employees have to also rely on public assistance. That’s why it’s so worrying that the current leaders of the Postal Service seem intent on driving it into the ground.” [Audio, about 15 minutes]

36) National: Tyler Walicek of Truthout explains how “Business Improvement Districts” are quietly privatizing the policing of public space. “In hundreds of urban centers, invisible borders designate zones wherein local governments have granted control of the commons to private interests. Within the bounds of a BID, its corporate operators are empowered to contract for-profit companies to clean streets, make aesthetic and tourism upgrades and, more insidiously, enforce ‘security’ in collaboration with police. In practice, this often results in the exclusion and harassment of populations that businesses find ‘undesirable’—anyone that is perceived as a threat to consumer activity and profit, and especially the unhoused. BIDs are not unlike private governments; autonomous and often opaque, many operate free from meaningful oversight.”

37) National: Tax exempt advance refundings have emerged as the top issue in the reconciliation bill for the municipal bond industry, the Bond Buyer reports. “‘There is no question that the budget reconciliation bill is going to shrink and that our provisions, like dozens if not hundreds of other provisions, are in peril of being totally eliminated or restricted,’ said Charles Samuels of Mintz Levin, counsel to the National Association of Health & Educational Facilities Finance Authorities. ‘Unless we are working very hard to keep our provisions in, we have a good chance of losing them.’” [Sub required]

Everything else

38) OregonThe grocery industry in Oregon is making yet another run at trying to privatize liquor sales. “The Northwest Grocery Association last week withdrew and then quickly refiled a pair of 2022 ballot measures that would allow Oregon grocery stores to sell hard liquor. That desire, which would break the near monopoly that state-chartered liquor stores have held since Prohibition, is not new. This effort marks the third time in the past decade that grocers have sought permission to sell liquor. They failed to make the ballot the past two times, but the Legislature’s willingness to approve $90 million earlier this year for a new liquor warehouse for the Oregon Liquor and Cannabis Commission added urgency to the grocers’ push. As in the past, the state’s beer and wine distributors oppose privatization of liquor sales, and the American Federation of State, County and Municipal Employees, whose members staff OLCC warehouses, are likely to oppose it also.”

39) International: Undoubtedly the biggest financial story internationally last week was the leak of tens of thousands of documents on corruption and tax evasion by the world’s wealthy. The scale of corruption and obvious complicity by major financial institutions in the global chicanery gained headlines, but if you actually look through the various country reports one thing jumps out: much of the proceeds from the corruption went toward privatizing public assets, buying out profitable state-owned companies, and looting the public exchequer. Phil Mattera is surely right to highlight the increasingly important role played by states such as South Dakota as tax havens for U.S. elites seeking to shield illicit assets. But there’s something else that the media has missed: this is a privatization story.

That said, there are some constructive suggestions for action. Writing in The Hill, for example, Gary Kalman, the director of the U.S. Office of Transparency International, homes in on a really important target point that goes to the heart of privatization and the crisis of public services in the U.S. and indeed around the world.

“The administration should also take this opportunity,” Kalman says, “to announce plans to expand and make permanent a targeted pilot program that will bring accountability to the real estate sector and help ferret out dirty money laundered through U.S. real estate. They should also finalize anti-money laundering rules for the private investment sector, including for private equity, hedge funds and venture capital firms, which remains a key avenue for dirty money to enter the U.S. financial system.” 

Photo by Tony Webster.