In the Public Interest’s weekly privatization report

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1) National/Maryland: Baltimore becomes the first major city in the nation whose council votes to ban water privatization. The issue will now go to a ballot initiative in November.In order to be considered by voters Mayor Catherine Pugh must sign the resolution by today, which she says she will do.

“Water privatization is simply unethical, immoral, and dangerous,” said Rianna Eckel, Maryland Organizer with Food & Water Watch. “Such a loss of local control can result in skyrocketing water bills, escalating water shutoff rates, downsizing public sector jobs, and deteriorating service quality. Baltimore will be a public water hero when this legislation passes—and should act as an example for other cities across the country. AFSCME Maryland Council 67 has continually fought alongside our allies to keep our water public. By privatizing water and sewer systems, local government officials hand over control of a vital public resource.” said Glen Middleton, Executive Director, AFSCME Maryland Council 67 and President of Maryland Public Employees, AFSCME Local 44.”

But passage of the measure will have opponents. The deep pocketed water industry and its supporters will likely be staging a well-funded media campaign to try to defeat the charter amendment.

2) National: The Real News Network’s Taya Graham looks at how “America’s for-profit Criminal Justice is Crushing the Poor.” She interviews law professor Doug Colbert of the University of Maryland and Stephen Janis, an investigative reporter for the Real News Network. They discuss Sen. Bernie Sanders’ bill to eliminate cash bail, and the multiple ways that private interests profit from the criminal justice system, foster mass incarceration and detention without trial, and impoverish poor communities. “It’s really difficult, on a political level, to fight the money that this [bail] industry generates.” Janis says. “It generates huge economic rents on a population.”

3) National: A federal judge says she will appoint an independent monitor to look into reports of neglect and abuse of children at contractor-operated facilities along the U.S.-Mexico border. “In a hearing on Friday, Judge Dolly M. Gee said she reached her decision after seeing a ‘disconnect’ between government monitors’ assessment of conditions in facilities in the Rio Grande Valley, and the accounts of more than 200 immigrant children and their parents detailing numerous problems, including spoiled food and foul-smelling water.” In April, the Los Angeles-based Center for Human Rights and Constitutional Law filed a motion to enforce the Flores settlement agreement, targeting all Customs and Border Patrol (CBP) facilities along the Texas Border and the three ICE family detention centers: Berks Family Residential Center in Berks County, Pennsylvania; Karnes Residential Center in Karnes City Texas; and South Texas Family Residential Center in Dilley, Texas.

4) National: Education Secretary Betsy DeVos moves to undo regulations implemented by the Obama administration to protect student borrowers from the predatory practices of for-profit collegesCapital and Main’s education reporter Bill Raden says the action comes as “the latest confirmation that the department has left the business of improving access to high-quality postsecondary education. And she’s only warming up. Next on the chopping block are baseline student protections—whose ‘hollowing out,’ advocates warn, will open up Title IV federal student aid dollars to sketchy programs by virtually eliminating oversight. DeVos’ negotiated rulemaking committee is expected to dismantle regulations on: The credit hour, academia’s longstanding measure of student progress and a safeguard against course inflation and degree fraud; State authorization and its guarantee that online programs satisfy state licensing requirements; Accreditation, and assurance that colleges offer a quality education; Regular and substantive interaction by online instructors with their students.”

Comments on the rule change are due August 30. You can weigh in here, and see some of the already submitted comments here.

5) National: Commercial Property Executivereports that ESJ Capital Partners is building up a hefty portfolio of charter school assets, having recently added a $45 million acquisition of four new educational facilities. “The portfolio encompasses 176,000 square feet and serves 3,000 K-8 students. All properties are operated by Imagine Schools. According to Matthew Fuller, ESJ’s chief investment officer, the company has acquired its first Imagine campus in 2009. Since then, the firm purchased 28 charter school facilities, valued at more than $650 million. The four new properties have been successfully operating for more than 13 years, having high enrollment rates.”

6) National: The GEO Group has appealed to the U.S. Supreme Court to take its case challenging the class certification of several former civil immigration detainees at its Aurora Immigration Detention Center, who filed a class action lawsuit claiming the company violated the Colorado Minimum Wages of Workers Act and the federal Trafficking Victims Protection Act. [See the company’s latest 10-Q, p. 29]. The case is The GEO Group, Inc. v. Alejandro Menocal, et al.No. 17-1648. A judged also has certified as a class the plaintiffs in another forced labor case involving GEO Group’s Northwest Detention Center (NWDC), so perhaps that will end up in the Supreme Court too.

Since the company claims it was following government-set standards, the cases may shed light on where “public” ends and “private” begins in ‘public-private partnerships.’ This is a key question in the privatization of assets and services: the muddy and unclarified issue of who is responsible for failures, what records are public vs. private, whether an entity can be sued or not—and apparently whether a private company can use forced labor if it is working off a government contract permitting or requiring it.

7) National: Victoria Law of Wired digs into How Companies Like JPay Are Making Millions Charging Prisoners to Send An Email. “In the outside world there are numerous companies offering free email accounts—Gmail, Yahoo Mail, Mail.com—but inside prisons companies charge a fee, a token JPay calls a ‘stamp,’ to send each message. Each ‘stamp’ covers only one page of writing. Want to send photos of a nephew’s graduation, a niece’s prom dress or a new baby? Each picture costs an additional stamp. A short video clip? That’ll be three stamps. With the postal service, stamp prices are fixed, but JPay’s stamp prices fluctuate. Shortly before Mother’s Day, for instance, a stamp cost 35 cents; the price rose to 47 cents the following week. For a few hundred dollars, prisoners can skip kiosk lines by buying a tablet—a relatively expensive purchase that tends to lock them into JPay’s services.”

8) National: Nationeditor Katrina vanden Heuvel weighs in to oppose Trump’s plan to privatize the U.S. Postal Service as part of his government reorganization scheme. “Rather than solving the problem, privatization would create a host of new ones. The administration has cited the ‘successful model’ of postal privatization in other countries, but such efforts in Europe have resulted in severe job losses and wage cuts for postal workers, and increased prices and reduced mail delivery access for customers. These are the inevitable consequences of a system that views postal services as a vehicle for private gain instead of a public good.”

The President’s Task Force on the Postal Service was due to deliver its recommendations on Friday, but Government Executive is reporting that “multiple individuals engaged in discussions with the task force [say] the administration will not make it public immediately. The report is already being circulated within the administration, those individuals said, but the White House will not widely release it for at least a couple of weeks.”

9) National: Millions flow to banned Pentagon contractors via a “backdoor,Bloombergreports. “Some of the world’s largest companies have benefited from a little-known law that lets the Defense Department override decisions barring contractors accused or convicted of bribery, fraud, theft, and other crimes from doing business with the government. (…) Companies receiving waivers included some accused or convicted of major fraud, wire fraud, conspiracy, ethical bidding violations, and in the case of fuel-seller BP, an overall ‘lack of business integrity.’”

10) National: Public Works Financingasks some politely skeptical questions about Elon Musk’s “disruptive” no-or-little-public-financing model for infrastructure ‘public-private partnerships.’ PWF’s front-page Musk story by Cliff Eby (former transportation president of WSP Parsons Brinckerhoff, now WSP USA) shortly preceded the controversy over Musk’s tweet saying he would take Tesla private (see #15 below), offering notions such as that Musk has “the credibility to scale castle walls.” But Eby asks how successful Musk’s model, now playing out in Los Angeles, Chicago and Washington-Baltimore, will be at navigating the well-known difficulties of bringing projects to life.

Musk’s challenges are the same as those faced by both all-public and P3 projects: Tunnel boring machines and tunnels(Musk’s 14-foot diameter machines may be too small: “Smallbore tunnels create undesirable heat from braking, and air friction, they limit egress, and present fire and life safety issues”); NEPA, state and local environmental regulations; Speed(“Will the market support Musk’s desire for fast?”); Domain transfer(“Will Musk’s success in other forms of transportation create over-confidence from stakeholders in his ability to solve problems unique to underground construction and transit operations?”); and fiscal governance(“While the Boring company will take on the bulk of the project’s financial risk, the City [of Chicago] will be heavily invested as well…. Does the Boring Company have the experience to be a valued partner and embrace stakeholders with differing incentives?”). [Sub required]

11) National/Texas: The Texas Observer reports that ICE crashed a van full of eight mothers separated from their children in Texas. Then, for nearly three weeks, the agency denied it ever happened and ignored requests for information. “Now, ICE is taking increasing heat for its role in Trump’s family separations policy: #AbolishICE has gone from a fringe slogan to a position taken by some mainstream Democrats; even Trailboss, the transportation contractor, has come under fire for its association with the agency.” Cristina Parker, communications director for Grassroots Leadership, says “ICE has proven to us over and over we can’t trust them: They’ll lie when there’s a hunger strike, a crash… about anything, at any time. This is a vindication of what activists and organizers have been saying for a long time, which is ICE regularly lies to media and public officials.”

Trailboss is a major military contractor, and proudly boasts that it is “one of few companies qualified and actively leading the effort to privatize government operations and requirements.” It has a rather sheepish statement at the very top of its homepage explaining its ICE contract. Bloomberg reported in late May that the private company was just awarded a “$244,235,071 federal contract from the U.S. Immigration and Customs Enforcement for transportation services. The place of performance will be in San Antonio, Texas.”

12) National: Fun (possible) fact: “U.S. private equity managers have extracted $400bn in fees and expenses from investors since 2006 but on average they failed to beat the returns from an S&P 500 tracker fund, according to a new analysis.” For a similar take regarding institutional investors, see Angelo Calvello, “Your Fees Are Bull%$&*.” (Calvello is co-founder of Rosetta Analytics, and “The Dissident” at Institutional Investormagazine.)

13) California/Think Tanks: The San Diego-based Center on Policy Initiatives has published a 51-page study reporting that the vast majority of San Diego’s decision makers are white, male, and economically advantaged. “Our research identified structural factors that limited diversity and full representation. These barriers include a strong reliance on informal social networks to secure nominations (Planning and Port commissions), informal preference for professionals from related industries (Planning Commission), and disenfranchisement of large populations who are not U.S. citizens but are directly served by the board (Escondido Union High School District Board). In addition, membership on the boards we studied, except for the highly paid County Board, is unpaid or includes only token pay for a considerable time commitment, presenting a significant financial barrier to participation by low-income working people.” For more, listen to the KPBSinterview with Kyra Greene, executive director of the Center on Policy Initiatives.

14) California: Oakland’s BayTech charter school “violated state education lawswhen it required students and their families to purchase uniforms, graduation tickets, and caps and gowns, according to the Oakland Unified School District. All students were made to purchase uniforms from the Oakland charter school only, a violation of the education code. (…) The proceeds BayTech collected from these illegal activities amounted to thousands of dollars, said several sources. It’s unclear what the school’s administration did with the money.” That is not the only issue with this charter school. “In a separate notice of concern sent a week earlier, OUSD officials warned BayTech leaders that they repeatedly violated California’s Brown Act, which requires that charter schools provide public access to meetings because they receive public funding.”

15) Illinois: The Financial Timesran a brief profile of one of Elon Musk’s influential private equity partners, Antonio Gracias, on Friday, raising questions about Musk’s controversial tweet on taking Tesla private earlier in the week. A key question is whether the board had been consulted about Musk’s tweet, which the SEC may be investigating. Gracias, Tesla’s lead independent director, is also of interest because he is, according to the FT, “a significant donor to Chicago mayor Rahm Emanuel.” [Sub required]  

Emanuel, as In the Public Interest’s Jeremy Mohler has recently reported, just partnered with Musk’s Boring Company in a murky ‘public-private partnership’ deal to build an underground express train from downtown to O’Hare International Airport. The Chicago Tribunehas reportedt hat Gracias midwifed the deal by connecting up Emanuel and Musk. Is private equity-linked campaign money driving this P3 deal? Not according to Gracias, who told the Tribune “the contribution was not connected to the lunch and the meeting’s purpose was general and not to discuss Boring.”

“Emanuel is routing the train deal through a shadowy city agency called the Chicago Infrastructure Trust,” Mohler writes, “run by hedge-fund managers and real estate developers with a few alderman and labor leaders sprinkled in for good measure. When entire projects are bundled together under the control of investors, and contracts including arcane financing arrangements stretch over hundreds of pages, the public—particularly poor and working-class residents—get even less of a say than usual.”

16) Louisiana: The Edgar P. Harney Spirit of Excellence Academy in New Orleans is working on its fourth principal in the past year. “Leadership turnover is affecting other departments at the small school too. The board fired Brent Washington Sr., its chief financial officer, on June 30, the Rev. Charles Southall III, Harney’s board president, told The Lens. Washington faces a state ethics investigation for being paid $54,500 over three years to do accounting for the school, in addition to his salary. Public employees are not allowed to contract with their agencies to do work that overlaps with their job duties.”

17) Nebraska: Omaha fines Waste Management yet again for nonperformance, this time for $78,000 for not separately collecting yard waste in July. “The city pays nearly $500,000 a month for separate yard waste collection.” Omaha council members are demanding far heftier fines. The Omaha World-Heraldreports that “some question whether the penalty is severe enough because Waste Management also benefits from the amount of material brought to the landfill. Waste Management runs the Pheasant Point landfill and gets most of the so-called tipping fees, which the city pays to dump waste there. The city last month paid $334,000 to dump trash and yard waste in the landfill.”

18) New York: The state should proceed with caution before deciding to give the go-ahead for a charter school in the City of Poughkeepsie, the Poughkeepsie Journalsays in an editorial. “The proposal being put forth by Robert Watson, a former Poughkeepsie schools superintendent, raises questions and could do more financial damage to the public school district. That must not be allowed to happen.”

19) New York: Downtown New York City education advocates are concerned that chaos could ensue if a financial district charter school is co-located in a building that currently houses three public schools. “The swell of students on a handful of elevators is a ‘disaster waiting to happen’ said one Downtown education advocate who is on the public school’s parent teacher association. ‘The elevators are perpetually broken. They are incredibly slow and they weren’t built for the kind of traffic that they have right now,’ Tricia Joyce, the chairwoman of Community Board 1’s Youth and Education Committee and an executive member of the Lower Manhattan community school’s parent teacher association, told Patch.”

20) North Carolina: Elected leaders in Durham have pushed back against charter schools draining resources from traditional public schools. “The debate over whether charter schools are hurting traditional public schools in North Carolina will cost one Durham charter school—literally. Excelsior Classical Academy will have pay more for its building loan after the Durham City Council voted 5-2 against a resolution on Monday that would have allowed the school to get a low-cost loan through tax-exempt bonds. Federal rules require local government approval for Excelsior to get the $20 million loan, which would not have cost the city or state any money. The City Council vote was expected to be a formality, but council members said the rapid expansion of charter schools in the last few years is siphoning money out of the public school system, and they just couldn’t vote to help a charter school.”

21) Ohio: White Hat Management, once a leading charter school operations “empire,” has gotten out of the business. “The online school has been purchased by Virginia-based Accel Schools, which is amassing a White Hat-style empire of educational institutions. Utah-based Fusion Education Group is taking over contracts for seven of the Life Skills centers, including the North Akron branch. Life Skills Northeast Ohio in Cleveland has hired Oakmont Education LLC, a company associated with Cambridge Education Group. White Hat could find no buyer for the remaining two centers, located in Cleveland and Youngstown, which will close.” The Akron Beacon Journalsays “only 85 of Ohio’s 339 charter schools are independently operated. Most hire for-profit companies, which are consolidating operations from toppling old giants like White Hat.”

22) Ohio: The Ohio Supreme Court has rejected ECOT’s appeal and says the defunct charter school owes the state $60 million. The 4-2 ruling “comes as the now-closed Electronic Classroom of Tomorrow remains of interest to prosecutors reviewing audit findings and politicians raising accountability issues in a midterm election year.”

23) Oregon: The head of a Medford charter school has agreed to pay fines for ethics violations. “Concerns were raised by the Medford School District after Vondoloski quit Logos and started a private company that was then hired by Logos. In May, the ethics commission ruled that Vondoloski violated state ethics laws 22 times.”

24) Pennsylvania: Pittsburgh Mayor Bill Peduto fires back at Republican House Speaker Mike Turzai, who launched what Peduto called a “bizarre” emotional attack on the Pittsburgh Water and Sewer Authority, saying it should be privatized. “Activist group Pittsburgh United called out Turzai in a Twitter post on Wednesday, indicating a connection between him and People’s President and CEO Morgan O’Brien, who contributed $25,000 to Turzai’s campaign fund between 2012 and 2016. O’Brien gave the Turzai campaign two separate donations totaling $15,000 in 2016 and one totaling $10,000 in 2012.” Turzai has been a perennial advocate for the privatization of public structures, routinely failing to persuade lawmakers to privatize the state’s liquor operations.

25) Puerto Rico: The Commonwealth’s High Court has overturned a lower court’s finding that charter schools and vouchers were unconstitutional, opening the way to wide scale privatization. “‘Disaster capitalism strikes again!’ commented education historian Diane Ravitch, who also called it a ‘victory for rapacious billionaires, [Education Secretary and charter school proponent] Betsy DeVos, and DFER [Democrats for Education Reform]. Instead of putting the PR economy on a path to recovery,’ Ravitch added, ‘the disaster capitalists will give them charters and vouchers.’” The Puerto Rico Teachers Federation (FMPR) has called a strike for this Wednesdayto “demonstrate its members’ ‘indignation’ and ‘outrage’ with ‘the government and the Department of Education.’” Among its many demands are “zero privatization, educational vouchers and charter schools.” For more see @FMPRLucha.

26) Tennessee: Diabetic inmates at the CoreCivic-run Trousdale Turner Correctional Facility, the state’s largest and newest prison, have filed a class action lawsuit saying they had to wait for hours to get life-sustaining insulin during frequent lockdowns. Sometimes, they say, it wasn’t provided at all. “For the past 2 ½ weeks we have been on lock down, and it has been several evenings that we have not been called to the clinic to get our insulin,” Douglas Dodson wrote on a prisoner complaint form, now filed as an exhibit in a lawsuit against the prison. “I know my insulin is keeping me alive and I really need it everyday. This has went on long enough here at this facility!” The Tennesseanreports that “the class-action lawsuit is one of at least three ongoing suits that have accused CoreCivic of endangering diabetic inmates.”

27) Texas: In “The Rise and Fall of the ‘Freest Little City in Texas’ How a libertarian experiment in city government fell apart over taxes, debt and some very angry people,” the intrepid Texas Observerreports on the collapse of an antigovernment libertarian utopia. “‘This ain’t going well at all,’ he said. ‘We’ve got a bunch of empty buildings, a lot of [federal] grant money spent, and for what? We have a fire station that nobody wants to operate and a police station with no police. Where did all that money go?’”

28) Texas: The number of charter schools in central Texas is booming, “and likely will enroll 30,000 students in dozens of campuses this school year.” The Austin American-Statesmanreports that “critics have long warned that charter schools adversely affect traditional public schools, siphoning not only students, but state funding.” Elliott Nguyen, director of growth for the Texas Charter Schools Association, says “it’s a culmination of different factors coming together, but the exponential growth has been because of IDEA’s growth in the Austin area.”  But the overall growth also is bolstered by recent charter-friendly state laws that “offer money and resources to traditional districts that work with state-approved outside partners, including charters, to improve schools under so-called Transformation Zones.”

29) Utah: The Utah State Charter School Board has withdrawn its approval of LEAP Academy, which had planned to open in the 2019-2020 school year. They withdrew the approval “over concerns whether the school would be able to open on time or get off to a successful start.”

30) Think Tanks: The Teamsters are stressing the importance of the common good. “Given the wide disparities in wealth in our country and efforts to restructure programs that benefit many,” they write, Donald Cohen of In the Public Interest “is right on point in suggesting that we need to reclaim the very idea of the public and recognize that there are important things we can and must do together.  In that regard, we must reject attempts to delegitimize our government, and be on guard of campaigns to de-regulate aspects of our society under the notion that a free-market business model is what’s best for citizens.”

Legislative Issues

1) National: Following ineffectual Senate hearings on how Trump’s family separation policy was developed, authorized, and implemented, Project on Government Oversight investigator Katherine Hawkins notes that the paper trail is just as obscure. “But even more important than getting official answers to these questions is access to documentary evidence of how the family separation policy was developed and implemented,” Hawkins writes. “There must be a paper trail, but no one in Congress has seen it despite many written requests from representatives and senators. Few of those requests have come from Republican committee chairs, and none have been accompanied by subpoenas. As a result, the administration has largely ignored them. The July 31 hearing, and its lack of meaningful information, demonstrated how urgently that needs to change.”

So how much will the public get to know about the funding, contracting, development, authorization and implementation of family detention practices currently under way at CoreCivic’s South Texas Family Residential Center in Dilley and the Geo Group’s Karnes County Residential Center? Time to make all the contracts, bids and inspection results (if any) public.

 

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