Here’s our weekly analysis of privatization in the news and communities nationwide. Not a subscriber? Sign up.
- The National League of Cities reports that devastating cuts are coming to all kinds of infrastructure.
- Bay Area charter schools are taking tens of millions of dollars in small business coronavirus aid.
- A local bill to put privatization of St. Louis Lambert International Airport to a public vote in November has passed out of committee.
1) National: As the coronavirus roars through American prisons, jails, and immigrant detention centers, Federal Judge Dolly Gee orders U.S. Immigration and Customs Enforcement to release migrant children who have been detained longer than 20 days by July 17. She also ordered ICE “to promptly implement better social distancing measures and mask-wearing procedures recommended by the Centers for Disease Control and Prevention to protect against the novel coronavirus. (…) ‘The [family residential centers] are “on fire” and there is no more time for half measures,’ Judge Gee wrote. (…) The judge urged ICE to implement these measures ‘with all deliberate speed,’ rather than ‘hiding behind unevenly implemented written protocols,’ in order to comply with its obligation to provide safe and sanitary conditions for class members. (…) Wendy Young, president of Kids in Need of Defense, praised Judge Gee’s order and urged ICE to comply with it by releasing parents from family detention as well.” The Dilley, Texas, facility is operated for profit by CoreCivic.
For an inside account of what’s going on in the prisons see Peter Debelak’s must read piece from yesterday’s New York Times. “He knew it was naïve to think that something would be done, even if something could be done. We would die or we would not die from the virus. The institution wouldn’t care, nor would the public. The system would roll on, one backslapping news conference at a time. You couldn’t trust the system that incarcerated people like this in the first place to worry very much about saving their lives.”
2) National: Researchers at the University of California San Diego, a public university supported by tax dollars, have developed a technique which they hope can be used to reverse symptoms of Parkinson’s and other human neurodegenerative diseases. “These findings identify a potentially powerful and clinically feasible approach to treating neurodegeneration by replacing lost neurons.” The Financial Times reports that “Prof Fu said: ‘It is my dream to see this through to clinical trials [and] to test this approach as a treatment for Parkinson’s disease, but also many other diseases where neurons are lost, such as Alzheimer’s, Huntington’s disease and stroke.’” [Sub required]
3) National: Career regulators at the Securities and Exchange Commission are making a last ditch public interest effort to prevent private equity firms from looting pension funds, university endowments, and charities. David Sirota has the details. [Read the SEC’s new Risk Alert]
4) National: Community reinvestment groups are suing the Trump Administration for unlawfully gutting anti-redlining rules, Democracy Forward reports. “The National Community Reinvestment Coalition (NCRC) and the California Reinvestment Coalition (CRC), represented by Democracy Forward and Farella Braun + Martel, filed suit against the Office of the Comptroller of the Currency (OCC) for unlawfully eviscerating the vital anti-redlining rules put in place under the Community Reinvestment Act (CRA).” Paulina Gonzalez-Brito, Executive Director of the California Reinvestment Coalition, says “this decision not only seeks to silence community voices, but coupled with the aftermath of the pandemic will increase poverty and deepen racial inequities.”
In an open letter urging lawmakers to support the CRA, “a coalition of groups led by the Leadership Conference on Civil and Human Rights emphasized the role of housing in the protection of Black lives,” reports Common Dreams.
5) California: The state Senate has approved putting a referendum on Prop 209, which bans affirmative action, on the November ballot. Eva Paterson, President of the Equal Justice Society and Co-Chair of the Opportunity For All Coalition behind ACA 5, said “I am thankful for the grassroots coalition that has pushed for this legislation since August and I can’t wait for the next stage of this historic campaign. There are 132 days until November 3rd and 99 days until voting by mail is over.”
6) New York/National: The New Yorker’s Alexis Okeowo tells the story of a publically-funded community safety initiative that is getting results.
7) Texas: As COVID-19 spikes dangerously and threatens to spin out of control, Dr. Benjamin Marcum talks to his fellow Texan conservatives about the importance of government. “We have forgotten the role of government. I wish to discuss several of the tenets of conservatism and how they play into our concept of what a government should be but before I do that I would like to discuss why we have government to begin with. You may read it in the Declaration of Independence or the Constitution. Government exists for the common welfare.”
8) International: “The incredible NHS saved my life,” says children’s author and poet Michael Rosen. “I’m only alive because my wife and our friend who is a GP had a sense that I was on a downward spiral with coronavirus and got me to A&E. But I’ve got no recall of being critically ill it because I was in an induced coma. I’m only finding out now how the NHS saved my life while I was in intensive care for nearly seven weeks.”
9) National/California/Michigan: Debate on the role of police in schools has spread nationally. In Los Angeles, three different motions were debated in the school board, but no funding cuts to the school police were made. The Detroit school district “is under pressure to dismantle its police department, with advocates saying that armed officers create a climate of intimidation,” Chalkbeat reports. “The district has its own police department, setting it apart from school districts that contract with local police departments for security services. According to a statement provided to Chalkbeat Tuesday, the district spent $7.5 million on its police department in the 2019-20 school year, and currently employs 55 police officers across its roughly 100 schools.”
10) California/National: The San Francisco Chronicle reports that Bay Area charter schools are taking tens of millions of dollars in small business loans. “Fourteen charter schools or chains in Oakland combined to receive roughly $20 million from the program. They included Education for Change, which runs six schools in the city and received $5.25 million, and Lighthouse Community Public Schools, which has two campuses and got $2.3 million. Eight charter schools or chains in Santa Clara County combined to receive roughly $20 million. All but one received at least $1.5 million. Summit Public Schools, which has three schools in the county and a total of eight in the Bay Area, received $6.8 million.”
The Chronicle reports that “some of the loans were first publicized by Parents United for Public Schools and In the Public Interest, which oppose charter schools and the privatization of education. The Chronicle independently verified their research and conducted its own.”
UC Berkeley sociologist Bruce Fuller, who has studied charter schools for decades, told the Chronicle “It just is startling that charters that are supposed to be these beacons of market players actually benefit from federal largess in ways that regular public schools cannot.”
11) California: The founder and former CEO of Inspire charter schools received more than $1 million in payroll advances over the course of a year and a half, according to a newly released audit report. “‘We find these payroll advances to be troublesome in light of the Inspire-related schools’ finances, which oftentimes consisted of cash flow issues,’ the auditing firm said in its report. ‘In addition, we would expect approvals for such advances to be made at the school board level and before the advances were made.’ The payroll advances were one of many findings about Dehesa’s charter schools that were released in reports Thursday.”
12) Florida: In the midst of a spiking coronavirus epidemic that is hammering public school budgets, Republican Governor Ron DeSantis signed a bill creating a major expansion of Florida’s school voucher program. But “the criticisms did not disappear with the bill’s passage,” the Tampa Bay Times reports. “Kathleen Oropeza, a central Florida parent activist who sued the state to demand improved public school funding, called the bill ‘tone deaf’—especially in today’s economic hard times, when public education needs added support to serve students. ‘It’s appalling that we’re putting millions and millions of dollars into a group of private schools that have no accountability and that are still free to discriminate,’ she said. If families want to use private schooling, that’s fine, Oropeza said. ‘I don’t think tax dollars should be used to pay for it.’ Rep. Smith, an Orlando Democrat, shared the sentiment. ‘Expanding Florida’s $1 billion private school voucher program is as bad for our budget as it is for educational standards in our state,’ Smith said via text message. ‘Given the major revenue shortfalls we are dealing with, we cannot afford to bleed more money out of our public schools.’”
13) Illinois: The Chicago Teachers Union (CTU) is fighting against staffing cuts at some charter schools. “CTU members at three out of four unionized charter schools overseen by charter operator [Chicago International Charter Schools] are battling against a devastating round of proposed layoffs that would target 30 workers—over 15% of CICS’ unionized workforce. Management is proposing those cuts even as they continue to show an annual surplus of $800,000 and hoard more than $35 million in public education funds that they’ve refused to spend on student needs. The proposed cuts at Chicago Quest, Wrightwood and Ellison come on the heels of a strike against CICS in winter of 2019 that forced the charter operator to contractually commit to spending more of its education dollars from CPS on classroom needs.”
14) Louisiana: Baton Rouge’s new school chief “worked from 2004 to 2007 as the principal of a charter school in Hollywood, Florida, run by the for-profit Charter Schools USA, which has two locations in the Baton Rouge region.”
15) Ohio: The Dayton Board of Education has decided “non-DPS charter students will now have to ride [Regional Transit Authority] buses to school or find alternate forms of transportation. (…) This transportation decision affects nearly 4,000 non-DPS students, and will save the district around $7 million. Dr. Lolli says the district was facing a shortage of school bus drivers, overwhelming their transportation system and often leaving DPS students stranded for hours with no rides home. ‘It’s not a matter of trying to create problems for anyone else, it’s trying to solve problems for our own students here at Dayton Public,’ she said.”
16) South Carolina: A Richland County judge has granted a temporary injunction to block enforcement of new South Carolina High School League rules regarding athletic eligibility and transfers at private and charter schools that were set to go into effect this Wednesday. “At issue in the suit were new amendments passed by the SCHSL legislative assembly earlier this year seeking to address perceived competitive imbalance between traditional public schools and the private and charter schools, particularly among smaller schools. (…) ‘Over the past several years, competitive balance has been one of the biggest concerns around the state, especially for the Class A, AA, and AAA schools,’ said Rock Hill principal Ozzie Ahl, who introduced the new amendments in March. ‘The A, AA and AAA schools have been the ones most affected by the private and charter athletic schools.’”
17) Nevada/Utah: Anger boiled over at a board meeting of American Preparatory Academy of Las Vegas toward American Preparatory Schools (APS), headquartered in Utah. The Nevada charter school then severed its ties with APS. “For months, board members requested financial information from the private, for-profit APS, the Utah management company that handles back-office business for the Las Vegas campus. Sharette is listed in state records as the director, vice president, and treasurer of APS. Recently, the Vegas board demanded a detailed breakdown of a recent invoice from APS for $50,000 that was said to be for ‘teacher training.’ The Vegas board had questions about that bill. The board also wanted to see a ‘detailed report of monies received by Carolyn Sharette, individually and by APS,’ as well as money received by two other organizations affiliated with Sharette or her family members. An attorney for APS reminded the board that although APS works for them, APS had no intention of releasing any of the company’s financial information to the members of the Vegas board.” Another day another charter scandal.
18) National: The National League of Cities reports that devastating cuts are coming to all kinds of infrastructure as municipalities face a collapse in their revenues and little federal aid. “About 65 percent of cities either delayed or outright canceled their planned capital expenditures or infrastructure improvements. These cuts in particular could deprive local vendors, manufacturers and construction workers of critical business, experts said, meaning cities’ financial troubles could metastasize into a greater economic ill. ‘These cuts drastically impact not only the people who live in these communities,’ said Anthony, the leader of the NLC, ‘but it also impacts the jobs and essential infrastructure that’s needed in America right now.’”
MarketWatch says analysts think it is unrealistic to expect a major infrastructure package out of Washington anytime soon.
19) National: Institutional Investor reports that cracks are forming in a once stable infrastructure bet—toll roads. “Traffic has dropped 40 percent to 85 percent in the Covid-19 pandemic, depending on the road type and the stringency of efforts aimed at slowing the spread of the disease, according to an S&P Global report dated June 19. ‘With generally high fixed costs, many toll roads will not have much flexibility to maintain operating margins as toll revenues decrease,’ the credit rater said. S&P has lowered the ratings of several toll road operators since the outbreak of Covid-19, including in the U.S., Europe, and South America, while placing others on watch, according to the report. With no good precedent, the firm said it’s hard to estimate how well the industry—historically on the stable end of transport infrastructure—may recover from the crisis.”
North American roads tolled by Transurban, the Australian company, experienced traffic declines of 70% “and is still down 43 per cent on this time last year” according to the Australian Financial Review.
20) National: Writing in The Nation, Destin Jenkins raises some useful questions about public services infrastructure and physical public infrastructure. “There is a difference between the delivery of public services, the facilities to which people turn for those services, and the submerged infrastructure on which those facilities rely. If what the advocates of ‘divest and invest’ want is greater and transformed services, then shifting funds from one government agency to another makes sense.
“But what will maintain the infrastructure in which we seek revitalized services and through which we travel in our communities—the pipes, roads, bridges, and subway tunnels? These are the foundations on which any public service depends, and covering the cost of building and maintaining them cannot be so easily met by rearranging budgets. Indeed, this kind of transformative investment depends on a kind of financial wizardry that most people haven’t been encouraged to think much about.” [Destin Jenkins, “Just Investment,” The Nation, July 13, 2020]
21) National: Airports, which for the last few years have been a prime target of the privatizers, have seen their valuations nosedive, according to Infrastructure Investor. “At this point, it’s a given that most airports are in dire straits. But a recent conversation with a banker from an institution with significant exposure to the sector drove home just how bad things are. Looking across the institution’s portfolio, said lender expected to get their money back on most of their airports. For equity, though, they did not see a scenario where the airports in their portfolio would recover the value anytime soon—if ever.”
Could it be that that pot of gold the privatizers are eager to find in a lease of St. Louis Lambert International Airport is a mirage? Could the upfront cash and community investment they’re promising the public in exchange for a deal be equally illusory? Watch that number.
The same Infrastructure Investor piece notes that some pension funds, once eager to gobble up infrastructure investments, are now facing the music. “That chimes with a recent document from the Santa Barbara County Employees’ Retirement System, showing public airport valuations falling by 25-35 percent. The report remarked that ‘many of the core airport assets were held at 20-25x EBITDA multiples with very strong debt/EBITDA profiles and cash distributions [but] some of these assets are [now] facing debt/EBITDA covenant breaches in an environment where passenger volumes and distress among airline carriers have severely strained revenues.’”
22) National: It looks like private equity has “affordable housing” in its crosshairs. “Building housing for underserved communities serves a necessary social need while also generating sufficient returns for long-term, income-orientated focused capital,” says Infrastructure Investor. “Affordable housing should be considered an infrastructure investment,” they say. [Sub required] Could there be a White House connection? “In a letter to Andrew Maloney, which was delivered Wednesday and obtained by CNBC, [Elizabeth] Warren demanded information about the group’s communication with the Treasury Department and White House officials, including Jared Kushner, whose family real estate business has financial ties to private equity firm Apollo Global Management.”
23) National: A group of mayors has come together to produce a “playbook” on how they would like federal funding of infrastructure to be reformed. “Among the recommendations were refinements to programs like The Transportation Infrastructure Finance and Innovation Act, the Water Infrastructure Finance and Innovation Act and the Transportation Investment Generating Economic Recovery grant program, originally funded with $3.5 billion as part of the American Recovery and Reinvestment Act, the stimulus bill crafted in the wake of the Great Recession. Cities would also be encouraged to refinance existing debt into lower interest rates through the TIFIA program, something that had been discouraged because the priority was to fund new infrastructure, [WSP’s] Porcari said. The coalition also wants to bring back Build America Bonds, Porcari said.” The coalition, “originally created by Accelerator for America, now includes WSP USA, City Possible, the U.S. Conference of Mayors, Meridiam NA, ACEC Research Institute and HNTB.” [Sub required]
24) National: Student housing “public-private partnerships,” which until recently were a rather hot item, are running into trouble. “Student housing projects financed through public-private partnerships, already wounded by a shortened spring semester, could face default if the COVID-19 pandemic prevents college campuses from opening this fall, or cuts short a fall semester.
“Most colleges’ privatized housing projects emptied in early March, when classes were shifted from in-person to online in response to the coronavirus pandemic, prompting prorated refunds to be offered for the remainder of the students’ lease arrangements. (…) Moody’s analyst Florence Zeman said demand for on-campus housing would plummet for the for the next year if fall classes were forced online, since it would cause many students to defer enrollment until fall 2021. ‘At the end of the day it is going to come down whether these projects will have sufficient debt service,’ Zeman said. ‘It will be a matter of what support the universities provide.’” [Sub required]
25) Maryland: The consortium of companies building the Purple Line “public-private partnership” say they will pull out of the project in 60 days. The Maryland Department of Transportation says the consortium “doesn’t have the right to leave the project and doing so would be akin to default, according to a statement. MDOT said talks of proposed settlements to the dispute have been ‘substantive,’ but that Purple Line Transit Partners has not proposed ‘reasonable’ terms. ‘We intend to vigorously protect the interests of the citizens of Maryland and pursue all legal options available to the state,’ MDOT said in its statement. ‘We look forward to continuing discussions and remain fully committed to completion of the project.’”
The Purple Line P3 train wreck is also affecting prospects for Republican Gov. Larry Hogan’s massive P3 project to expand the DC Beltway and I-270 to introduce tolling. “Amid a contract dispute involving the Purple Line that a leading lawmaker described as ‘very serious,’ key members of the General Assembly served notice on Monday that they intend to exercise rigorous oversight over the Hogan administration’s plan to add express toll lanes to the Capital Beltway and Interstate 270. In a lengthy letter to Transportation Secretary Greg Slater, the legislators demanded a detailed history of the four firms that have expressed interest in bidding for the $9 billion to $11 billion contract, their track record on big-ticket projects around the globe, and how they would handle disputes with the state or their contractors.”
26) New Jersey: The economic crisis created by the coronavirus pandemic “may prompt New Jersey colleges to hold off on using the state’s re-launched public-private partnership program. (…) ‘They are going to be very cautious to take on any kind of risk in the near-term,’ said McClure, who has conducted extensive research into higher education P3s. ‘Construction probably isn’t a high priority now for colleges.’” [Sub required]
27) International: Brian Mier reports that “the Brazilian senate passes a bill authorizing privatization of water, which the Lula administration had blocked in the landmark Basic Sanitation Law of 2007 (Lei 11445/07). Brazil has the world’s largest fresh water supply- multinationals like Coca Cola have their eyes on it.” For some history see War on Want’s “Coca-Cola: Drinking the World Dry.”
Criminal Justice and Immigration
28) National: As speculation mounts that the GEO Group may follow CoreCivic and consider abandoning its REIT status, a commentator spells out a possible downside. “Given the adverse tax effect, GEO may even have to borrow more money or liquidate some assets to meet higher tax payments. Long story short, the benefits of becoming a C-corp so debt can be repaid faster are quickly outweighed by the unfavorable tax treatment that promptly raises the cost of doing business.”
29) National/Arizona: Listen to Capital & Main’s Detention Dispatches podcast with Marco Amador. “Arizona has a long history of being home to numerous detention facilities, and currently, the state can hold as many as 7,000 detainees at one time.” [Audio, about 12 minutes]
30) National/California: Immigrant detainees held by ICE at GEO Group’s Adelanto site in the high desert have accused guards of launching chemical attacks on them and stepping up repression of detainees in response to protests outside the facility. “On Friday evening GEO officials announced another emergency count and ordered detainees inside their cells. Roughly 150 stayed outside, standing or sitting in front of their cells. ‘We’re not interfering, we’re not going to fight with them,’ Ghahramanyan said, describing their plan. ‘We were going to let them do their count.’ After the final warning, according to interviews with five current detainees, dozens of guards dressed in black and armed with pepper-ball rifles, tear gas canisters and shields stormed three units of the west wing—Bravo, Charlie and Delta—and began firing rounds and spraying tear gas.”
31) National: Service Employees International Union (SEIU) President Mary Kay Henry says the union is moving ahead with a racial justice and anti-police violence initiative. “That process has actually been going on for three years inside our corrections council,” she says. “Because of our racial justice task force from the 2016 convention, they established a stakeholder table where they brought formerly incarcerated people, family members of the incarcerated, current corrections officers, retired corrections officers, and then employers from states into a stakeholder process where they’re trying to reimagine corrections in the United States.”
32) Alabama: As CoreCivic faces financial challenges and is considering abandoning its REIT status, questions have emerged over whether Alabama will go through with a contract with the company to take part in a plan to build three new prisons for close to a billion dollars.
33) National: Jon Talton of the Seattle Times says we need a better Amtrak for post-pandemic America. “In general, Congress rightly sees Amtrak as a public good. Even so, Amtrak’s $2 billion subsidy for fiscal 2020 is 0.0436% of the federal budget or 0.15% of discretionary spending. The Pentagon received $738 billion. As a consequence, Amtrak is in constant budget-cutting mode. This ensures a feedback loop of failure or disappointment. The spending is far below what’s needed to maintain a First World system of intercity passenger trains (and the economic stimulus of building high-speed rail is a subject that would require another column).”
34) Missouri: A bill to put privatization of Lambert airport to a public vote in November has passed an aldermanic committee. “The panel then rejected a separate measure pushed by privatization foes that could have potentially required a second citywide vote after a Lambert lease contract actually was negotiated. That measure also covered other large-scale city leases and outsourcing. (…) Opponents complained that the bill and an alternate proposal by an initiative petition drive both would channel an estimated $44 million from Lambert lease proceeds to a nonprofit funded by billionaire investor Rex Sinquefield and two other consulting firms.”
35) International: British taxpayers will have to bail out the private companies that own the rail network as a result of privatization to the tune of up to £6 billion, the Financial Times reports. [Sub required]
36) Maine/National: International Association of Machinists and Aerospace Workers (IAM) Local S6 have gone on strike to protest Bath Iron Works’ continued willingness “to take taxpayer dollars and outsource good Maine jobs to out-of-state contractors.
37) International/National: Writing in The Hill, Roger J. Cochetti delves into the issue of the privatization on the Moon. “It’s not surprising that many countries with little possibility of their ever reaching the Moon see things differently. The “first come first served” principle inherent in the Artemis Accords suggests to them that anything worth using on, or taking from, the Moon will be quickly taken by wealthy and advanced American businesses and American billionaires or by the U.S. government. And, since they see no possible benefit for their nations or their own businesses in the American-led Artemis approach, they tend to oppose it and to promote the notion that the resources of the Moon are the common heritage of mankind. As such, the Moon’s resources (and by implication the resources of many other “global commons”) should either be held in reserve for all nations or controlled by some global organization that collects rents for the benefit of all countries. Even if it takes a while to do so.”