Private prison corp. CoreCivic seems to have found a bank willing to lend it money

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

Education

1) National: Seven Democratic presidential candidates came together on Saturday for an all day forum on education, with school funding topping the list of concerns. Pittsburgh Federation of Teachers President Nina Esposito-Visgitis kicked off the event, urging the audience to “speak truth to power and ask hard questions” about improving public education. “Front-runners Vice President Joe Biden, Sen. Bernie Sanders and Sen. Elizabeth Warren were joined by Sen. Michael Bennet, Mayor Pete Buttigieg, Sen. Amy Klobuchar and Tom Steyer for the daylong, invitation-only event organized by national and local teachers’ union and public school supporters.” The forum can be viewed in full online here; about five and a half hours.

The Pittsburgh Tribune-Review reported, “Pennsylvania Gov. Tom Wolf, a Democrat, announced a sweeping plan to reform charter schools in September intended to improve accountability and stem the flow of money from traditional public schools to charters. Warren was among those who argued that public dollars should stay in public schools. ‘I believe it’s our responsibility as a nation, and will be my responsibility as president of the United States, to make certain that every public school is an excellent public school,’ Warren said.” Charter school supporters protested outside the forum. 

2) National: A major new report by the Network for Public Education reveals that millions of federal dollars have been wasted on failed charter schools. “According to our analysis, 37% of the charter schools that were funded by CSP during those years either never opened (11%) or opened and then closed (26%). That figure is the result of our confirmation of the status of nearly 5000 charter schools that received funds from CSP.” 

Jeremy Mohler of In the Public Interest says the report “adds to the bevy of data showing that charter schools are more volatile and disruptive than traditional, neighborhood public schools that, if given adequate funding, can help hold communities together. Students at charter schools are two and a half times more likely to have their school close than those at neighborhood schools.”

Citing the report, Valerie Strauss of the Washington Post says “in Michigan, where the billionaire DeVos has been instrumental over several decades in creating a charter school sector, 72 charters that received CSP money never opened, at a total cost of some $7.7 million from 2006 to 2014. California was second, with 61 schools that failed to open but collectively received $8.36 million.”

Jeff Bryant writes in The Progressive, “the report also identified a ‘pattern’ of charter school operators—even before their school opened—funneling money from grants to their own personal accounts, to purchases of expensive equipment, and to “for-profit consulting and education management organizations” that do not publicly divulge how they spend money. The report concluded that, due to these practices, the charter school grant program ‘has become a magnet for grifters, consultants, and charter entrepreneurs who see an easy way to cash-in.’” 

3) National: Steven Singer, aka Gadly on the Wall, shines a light on how charter schools exploit children of color. “Go to most impoverished black neighborhoodsand you’re bound to find three things in abundance. Liquor stores, payday lenders and charter schools. It is no accident. (…) Most descriptions of urban neighborhoods neglect to mention charter schools, but in the last few decades they have become an increasingly common part of the landscape. And this is no wonder. They fit the same pattern of exploitation as the other establishments mentioned above. Think about it: (1) charter schools disproportionately locate in poor black communities, (2) offer the promise of relief from inequality but end up recreating or worsening the same unjust circumstances and (3) they are often owned by rich white folks from outside the neighborhood who profit off the venture.” Nevertheless, the pro-charter movement continues to insist they promote “leaders of color.”

4) National: After the University of Phoenix, a private, for-profit college, came to agreement with the FTC to forgive $141 million in loans of former students, presidential candidate Bernie Sanders says “Good. Now $1,685,456,413,335 more to go.”  The FTC’s Bureau of Consumer Protection Andrew Smith, in a statement on Tuesday, said, “This is the largest settlement the Commission has obtained in a case against a for-profit school. Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist.”

5) Connecticut: Stamford school laborers are protesting against building privatization. “The district’s grand plan to makeover six of Stamford’s public schools by 2024 using a public-private partnership model is garnering pushback from the ranks of workers who currently maintain school buildings. ‘Nobody’s happy about it. Of course association members are worried about their future,’ said Eugene Molgano, vice president of the Stamford Board of Education Employees Association, which includes about 115 custodians and 30 mechanics.” 

Is the proposed P3 part of a longer term union-busting plan? SBOEAA’s concerns “reach further than the present moment, Molgano said. In 2005, the union signed a contract that allowed the city to bring on 42 part-time private sector workers that took the place of 21 full-time union jobs and, in return, the union workers received a 20-year jobs guarantee with no layoffs. That guarantee ends in 2025, and Molgano said he and other union members feared the public-private partnership plan is the first step toward getting rid of the union completely once the city again has the power to lay off workers in 2025.”

6) Florida: Accountabaloney reports that a massive voucher expansion is hiding in education implementation bills being pushed by Gov. Ron DeSantis (R). “While everyone is abuzz about minimum teacher salaries and another teacher bonus plan, Governor DeSantis is planning a massive expansion of his Family Empowerment (FES) voucher program. Neither his budget press release nor his Education Budget Overview mention the voucher’s expansion. Details of the Governor’s plan can be found in the Governor’s Budget Recommendation Conforming bills, specifically the bill entitled “The Family Empowerment Scholarship Program,” which can been found at approximately page 87 of a 174 page document.”

7) IndianaIn a stunning move, the Indiana Charter School Board has denied charter for three Indianapolis charter schools—Howe High School, Manual High School, and Emma Donnan Middle School—which now “face the prospect of another rocky transition to new management, or even possible closure. But the board’s 4-3 votes against the charters, which elicited gasps from the audience, marked a major victory for Indianapolis Public Schools, which could win back the three schools that have been under state takeover since 2011. (…) The charter requests were an unprecedented attempt to sever permanently the state-controlled schools from the district. But in IPS’s late efforts to reclaim the schools, district officials raised financial concerns over the complications of managing the debts on the three district buildings, were they to become charter schools. In the end, those concerns proved to be one of the critical issues leading to the charter denials.” Charter Schools USA officials declined to comment after the meeting.

8) Iowa: In an editorial, The Gazette says the University of Iowa “isn’t being transparent” about $1.165 billion dollar utilities “public-private partnership.” Among other things, it reports that the school “spent $26,000 on travel to Europe ahead of [the] massive utilities deal.”

9) New Hampshire: In a move that will complicate education secretary Betsy DeVos’ crusade to expand the number of charter schools across the country by pumping federal cash into the states, the Democratic-controlled majority of the Joint Legislative Fiscal Committee has rejected the first tranche of money under the program. “New Hampshire was awarded the largest grant in the country, with Alabama receiving the next largest amount at $25 million. Democrats argued that this grant would not help existing schools and only burden the future of the state’s education costs by creating new charter schools. Rep. Mary Jane Wallner, D-Concord, chairman of the Joint Legislative Fiscal Committee, said: “We need to support our existing traditional public schools and charter schools, work to reduce the 1,000 open enrollment spots and waiting lists at existing charter schools, and protect New Hampshire taxpayers.”

Infrastructure

10) National: In the Public Interest’s Donald Cohen and Shar Habibi had a conversation on privatization for a webinar conducted by Transform Finance. “As private capital (aligned or otherwise) will continue to flow into public activities, we need to tackle the question of how it can play its role properly, without exacerbating problems or cannibalizing the public domain. In this webinar, we learn about considerations around privatization from In The Public Interest, a comprehensive research and policy center committed to promoting the values, vision, and agenda for the common good and democratic control of public goods and services. ITPI has issued practical guidance for investors to evaluate the potential and the consequences of privatization.” Watch the webinar; about an hour and a half. For more see the report by Amy Cortese in ImpactAlpha, a go-to news source for impact investors.

11) California: Gov. Gavin Newsom (D) says that Pacific Gas & Electric’s restructuring plan does not comply with the law and meet the public interest, opening the way to a possible public ownership solution. “Mr. Newsom’s letter did not reject the utility’s settlement with wildfire victims but rather raised concerns with the overall plan. The governor said PG&E’s plan did not go far enough in improving safety, corporate governance and the company’s financial position. ‘PG&E’s board of directors and management have a responsibility to immediately develop a feasible plan,’ Mr. Newsom said. ‘Anything else is irresponsible, a breach of fiduciary duties, and a clear violation of the public trust.’”

12) CaliforniaMore money is going to be needed to prepare for the public buyout of California American Water’s Monterey facility. Today the “Monterey Peninsula Water Management District board is set to consider approving $1.24 million on consultants to prepare for a potential vote by the summer on a resolution of necessity to acquire Cal Am’s local system. (…) The district has already spent $650,000 on a feasibility analysis that valued Cal Am’s local system at $513 million and found a public buyout appeared to be economically feasible, and could likely be paid for through customer water rates with some left over to lower water bills.”

13) Florida: Anger mounts among elected leaders and community members as Jacksonville’s JEA meets with potential buyers in Atlanta. “The out-of-town meeting location didn’t sit well with City Council member Matt Carlucci, who opposes the sale of JEA and has called for the resignation of its Chief Executive Officer, Aaron Zahn. “So JEA’s executives couldn’t convince the respondents to connect a 1 hour flight to Jacksonville, where the investment they seek to buy is located,” Carlucci said in a Dec. 7 tweet. ‘Poor show of commitment by the respondents to our hometown. Unbelievable……’” [Sub required]

14) Maryland: Republican Gov. Larry Hogan’s plan to add toll lanes to the Capital Beltway and I-270 has hit a major political snag, the Washington Post reports. “A major sticking point for Franchot is a new plan to solicit private proposals for much of the Maryland Beltway simultaneously with all of I-270, said Len Foxwell, Franchot’s chief of staff. Franchot had previously agreed to add the lanes first to lower I-270 because he’s concerned about the environmental and community impacts of widening tighter sections of the Beltway between I-270 and Interstate 95, Foxwell said. Franchot has asked for more time to assess MDOT’s changes, which he has said would ‘substantially broaden and accelerate’ what he agreed to in June. Maryland State Highway Administrator Greg Slater said he doesn’t know yet whether MDOT will submit the new plan for a vote Wednesday. Agencies typically don’t seek approval from the Board of Public Works unless they know they have the necessary two votes, state officials say.”

15) Maryland: Transportation Secretary Pete Rahn, a strong advocate of “public-private partnerships,” has announced he will leave his post in January. Gov. Hogan (R) has named Gregory Slater, currently head of the State Highway Administration, to replace him, pending confirmation by the state Senate.

16) Michigan: Internal emails reveal that Veolia knew there was a lead problem in Flint’s water supply a month before the company told the state, and months before the state told the public, Common Dreams reports. “The documents show a Veolia executive, a month before the corporation told the city its water was safe, saying that ‘lead seems to be a problem’” said Alissa Weinman of Corporate Accountability. Weinman said, “I think anyone has to ask themselves how the story in Flint would be different five years later now if Veolia had made those private concerns public.” 

17) MissouriSt. Louis DSA conducts organizing training to fight against Lambert Airport privatization.

18) Think tanks: Kevin DeGood, director of Infrastructure Policy at the Center for American Progress, has published an excellent report on The Limits of Risk Transference Through Public-Private Partnerships. A must read for public officials and citizen activists considering infrastructure proposals and bids.

19) Think tanks/International: The London School of Economics has produced a very useful two-part report on the hidden costs of financialization. An interesting nugget from Part 2: “The heavy private investment in English water companies doesn’t bring down water bills either. Some 27% of our water bill goes on ‘return on capital’, meaning payout to investors, interest and debt repayments. In England water bills have increased by 40% since privatization– 16% in real terms – while in the Scottish public water utility, the real value of water bills has remained the same over the past 17 years.” 27%. Anyone know the figure for U.S. infrastructure?

Criminal Justice and Immigration

20) National: It appears CoreCivic may have found a bank as a source of financing. “On Wednesday, the ratings firm Moody’s rated a proposed loan to CoreCivic as somewhat speculative and subject to credit risk. The Moody’s rating doesn’t identify which bank might be behind the proposed $250 million loan. News outlet Debtwire reported CoreCivic is trying to strike a deal with the Japanese bank Nomura. A representative from CoreCivic said the company was unable to provide comment about the loan. The loan may not have the highest rating, but CoreCivic has struggled to get loans from any banks in recent months.”

DebtWire reports, “having been iced out by major U.S. lenders, CoreCivic has now turned to a foreign institution to help it raise money. Around Thanksgiving, Japanese investment bank Nomura quietly began reaching out to institutional investors to gauge support for a new term loan for the company, as reported by Debtwire. As with the deal CoreCivic attempted earlier this year, the $250 million loan will be used to pay down debt—this time, the company is repaying $325 million of senior bonds maturing in April next year, according to Moody’s. Investors in the loan will have a first priority claim on a pool of CoreCivic’s real estate assets that have active management contracts with the U.S. government, according to the rating agency’s report.”

21) National: Senator Elizabeth Warren (D-MA) and Representative Pramila Jayapal (D-WA) say GEO Group’s “spending at President Donald Trump’s hotel in D.C. raises ‘serious concerns about possible corruption, or the appearance of corruption.’” POGO reports that “their letter to the GEO Group’s CEO George Zoley is a reaction to a Project On Government Oversight (POGO) investigation co-published in The Daily Beast. POGO exposed a GEO Group executive’s spending at the Trump hotel as the company lobbied the Trump administration to cover millions of dollars in legal costs and intervene in lawsuits accusing GEO of forced labor and human trafficking at Immigration and Customs Enforcement (ICE) detention centers.” 

22) NationalGEO Group’s stock hit a 52-week low on Thursday, falling 2.11% to a low of $13.40. It rebounded to $14.64 on Friday.

23) California/National: A federal district judge has certified a class in a class action suit brought against GEO Group by immigrant detainees, who claim “the for-profit prison contractor treated them as a “captive” workforce, making inmates labor for as little as $1 per day.” A trial is set for June 2020.

24) Colorado: State officials have told lawmakers that the GEO Group has repeatedly failed to meet state standards for security, job training and substance use disorder treatment. “The criticism of conditions at GEO Group’s Cheyenne Mountain Re-entry Center comes as Gov. Jared Polis seeks permission from lawmakers to begin moving inmates out of the for-profit prison and into the state prison system. To do so, the administration wants to open a vacant state-owned prison in Cañon City known as Centennial South Correctional Facility.”

25) Kansas: The state is going to pay millions of dollars to CoreCivic to house hundreds of Kansas prisoners in Arizona. “State Rep. John Carmichael, D-Wichita, said the rise in prison population is due to decades of policies in which more people are being sent to jail and for longer periods of time.”

Last week it was reported that a former guard has filed suit against CoreCivic in Arizona, claiming “he was shot at point-blank range with a riot-control weapon in a racist attack. In a lawsuit filed Friday in Pinal County Superior Court, Jason Pearson said commanding officers at the CoreCivic facility “harbored racial animus leading to intentional mistreatment of black inmates and/or co-workers, and either tolerated or endorsed such attitudes and risks.””

26) MinnesotaTwo lawmakers are persisting in trying to buy and reopen CoreCivic’s Appleton Prison. “Both legislators said they believe the state could acquire the prison for less than the $99 million price asked by CoreCivic. They also believe the department’s cost estimate for preparing the facility for state use was high. The legislators said CoreCivic has made clear its interest in selling the facility to the state. In the meantime, the company continues to actively market it to hold inmates from other jurisdictions. CoreCivic has made a bid to the federal government to hold inmates for Immigration and Customs Enforcement, they said.”

27) New Mexico: A federal lawsuit has been filed against Doña Ana County for alleged abuses committed at its detention center. Also being sued is Corizon, the large for-profit prison medical company. “According to a lawsuit filed Monday, Susan Hylton, now 42, was placed in solitary confinement after she requested to report sexual and physical abuse. Hylton made the request after correctional officers ordered her to strip during a search for drugs, the lawsuit said. (…) When Hylton requested to speak to a coordinator to report sexual abuse, a female guard asked her, “Can’t we just work this out?” and placed her in solitary confinement, court documents said. The lawsuit said Hylton spent 85 days in confinement and ‘received burnt food for every meal’ in retaliation and lost 20 pounds, the lawsuit said. (…) Staff even laughed and joked while Reali remained unattended on a medical table after suffering a seizure and losing consciousness, the lawsuit said. The Reali lawsuit also names Corizon Health—one of the nation’s largest for-profit medical providers for prisons and jails. The company faces several lawsuits nationwide over allegations of inadequate medical care.”

28) New Mexico: The Lea County Detention Center, which is operated for profit by the GEO Groupwill no longer cooperate with federal immigration authorities. “[Losmin Jiménez], director and principal attorney for the Immigrant Justice program at the Advancement Project, said a civil document signed by an ICE agent is far from a court order signed by a judge. ‘With these types of measures, in detention centers immigrants have a little more constitutional protection, but there are still problems, because almost always the first contact is with the police, who detain them for their racial profile and [bring] charges for not having a license.”

29) Tennessee/National: Chris Mai and Jasmine Heiss of the Vera Institute look at how locales are filling their expensive new jails. “Coffee County’s story illuminates a troubling national phenomenon highlighted in our new report: As major cities decarcerate and close jails, smaller cities and rural communities are incarcerating people at higher and higher rates and investing heavily in jail expansion. Amid adecades-long decline in crime, this has created an uneven experience of incarceration across the urban-to-rural spectrum. There is an excess of empty beds in a small handful of places, with shocking overcrowding elsewhere. In 2017, there were far more jail beds available nationwide than people held in jail, yet one in five jails had a population at or above 100 percent of its rated capacity.” Once people have the information, however, the picture can change. “On election day in 2019, voters in Arapahoe County, Colorado—a suburb of Denver—brought these sentiments to the voting booth and overwhelmingly rejected a ballot issue that would have raised taxes to pay for an estimated $400 million jail.”

30) Washington/National: A federal judge has again ruled against dismissing a state lawsuit to force GEO Group to pay minimum wage to immigrant detainees. “GEO pays detainees at its Northwest Detention Center $1 per day to volunteer for tasks such as janitorial or kitchen work. Washington’s minimum wage is $11 per hour. Attorney General Bob Ferguson wants GEO to give up the profits it has made by relying on detainee labor over the past decade—potentially millions of dollars.”

31) Wyoming: Hot debate dominated a meeting in Evanston over possibly building a CoreCivic prison. “Divisions in the community over the project showed no signs of having cooled. During a public comment period citizens expressed support and gratitude to the prison company for choosing the struggling town. Others brought practical worries—will it be visible from the highway or a nearby park, will there be light pollution and undue pressure on city infrastructure? Some opponents just expressed contempt for the private prison industry as a whole. ‘How do you sleep at night?’ one angry resident asked the CoreCivic executives.” Have a look at CoreCivic’s presentation to the meeting.

Public Services

32) National: Postmaster General Megan Brennan has announced she’ll be leaving her post in January 2020. In the Public Interest says let’s send a message to the Postal Service Board of Governors that the next leader should keep America’s favorite federal agency in our hands, not the private hands of Amazon, FedEx, and UPS. Add your voice to this petition. Protect our public Postal Service.

33) National: HuffPost reports that Democratic presidential candidate Pete Buttigieg was part of a McKinsey team that pushed Postal Service privatization. “But in a statement to HuffPost, the Buttigieg campaign distanced the mayor from that report, insisting he didn’t work on cost-cutting but rather focused on raising revenue through products like greeting cards.” HuffPost said “another of McKinsey’s proposals, to cut costs by establishing public-private partnerships, replaced unionized Postal Service workers with staff at retail stores like Staples. In 2014, that swap ran into legal trouble with the National Labor Relations Board, which ruled it in violation with the collective bargaining agreement between the postal workers’ union and the USPS.” 

Mark Dimondstein, the president of the American Postal Workers Union, says “any objective observer would have to say McKinsey had a real and negative impact. These are corporate consultants and corporations are generally not about the public good and the public commons.”

34) National: Suzanne Gordon and Jasper Craven, writing in The American Prospect, have an update on the continuing bid to privatize veterans’ care. “The bill, deceptively titled the Improve Well-Being for Veterans Act, would, in the name of reducing veteran suicide, fund millions in grants to a plethora of private-sector providers outside the Veterans Health Administration (VHA) networks. These providers would be tasked with conducting outreach; helping with social support and delivering outpatient mental health treatment; and potentially other types of medical care, to the highest-risk veterans. While not a massive privatization measure like the VA Mission Act, the Improve Act is arguably more dangerous, as it begins paying for health care services for veterans and their families in the private sector, without pre-authorization or oversight by the VHA.” The bill has passed out of a House panel and been introduced with some bipartisan backing in the Senate.

35) National: The League of Conservation Voters is circulating a petition demanding that Interior Secretary David Bernhardt stop privatization of our national parks. LCV says “the Trump administration wants to expand privatization and commercial development on our public lands, allowing Amazon to have pick up locations and welcoming corporations to develop business on park grounds.”

36) Florida: Five state judges have been reprimanded for favoring one child welfare agency over another in a $500 million state contract, which is now before the Supreme Court. “Our Kids Miami-Dade Monroe Inc. was the agency of choice, who has held the contract with the state since former Governor Jeb Bush doubled funding for privatized foster care.”

37) Virginia/DC/Maryland: Metro and the Amalgamated Transit Union (ATU) have reached a tentative agreement on a four year contract “that would allow the transit agency to give up its strategy of privatizing some operations to save money. (…) The unexpected deal, which resulted from months of secret negotiations between Metro General Manager Paul J. Wiedefeld and Raymond Jackson, president of Amalgamated Transit Union Local 689, appeared designed to win labor peace by removing the biggest point of contention between the agency and its workforce. The union has strongly objected to Metro’s privatization of operations at the Cinder Bed Road bus garage in Northern Virginia, where a strike by ATU Local 689 is underway, and its plans to privatize the second phase of the Silver Line rail extension. (…) The deal also represented a significant reversal by Wiedefeld on privatization.” 

WTOP reports that “as part of the deal, Metro has agreed not to contract out Silver Line operations to Dulles International Airport and Loudoun County, Virginia, and has agreed to “create a path” toward ending contracting at the Cinder Bed Road garage in Lorton, Virginia, where workers have been on strike for seven weeks.”

38) International: Common Dreams staff writer Jake Johnson reports that in the wake of Tory Prime Minister Boris Johnson’s win in the general election, Britons are gearing up to defend their National Health Service from privatization. “Just two weeks before the vote, U.K. Labour leader Jeremy Corbyn unveiled over 450 pages of documents that he said showed a Tory plan to privatize the NHS in negotiations with the U.S. over a possible post-Brexit trade pact.

“Mega-corporations see Johnson’s alliance with Trump as a chance to make billions from the illness and sickness of people in this country,” said Corbyn. “And if the Conservatives have their way and this deal goes forward, the changes I’ve revealed will be almost irreversible.””

Everything Else

39) National: ProPublica reports on the mixed record of McKinsey & Company in its government work, and finds that the company often rides roughshod over rules designed to ensure responsible contracting. “In that field, consulting firms confront a web of contracting, disclosure and ethics rules that are designed to dictate and limit their behavior. These rules exist to prevent governments from wasting taxpayer money on underqualified or overpriced contractors and to protect government integrity and avoid conflicts of interests. In recent years, as McKinsey has burrowed deeper into this world, interviews and records show, it has developed a habit of disregarding inconvenient rules and norms to secure, retain and profit from government work.”

40) New York/New JerseyAn outsourced program for the homeless by New York City has led to tension with Newark and poor results for homeless people. “Last week the City of Newark sued New York City over New York’s placement of more than a thousand homeless individuals and families in Newark, through the city’s Special One Time Assistance (SOTA) program. Under the program, New York City employed private brokers to find homes for the families in New Jersey and elsewhere, and, without checking to see if the homes were habitable, paid a full year’s rent in advance and left families to live there. The result was thousands of families sent out of the city into homes that were uninhabitable.”

Governing for the Common Good

41) National: Nonprofits can also help increase public participation in governmental meetings, making our civic like more democratic, citizen-focused and accountable. One example is Politisit, which reimburses for childcare costs so caregivers can go to public meetings. A shout out to Rachel Sowray. (@PolitisitUSA)