Private prison corporation CoreCivic to change corporate status after grassroots pressure

Here’s our weekly analysis of privatization of schools, water, and other public goods in the news and communities nationwide. Not a subscriber? Sign up.

Highlights

1) National: Jeremy Mohler of In the Public Interest and Margaret Cook of the Communications Workers of America shine a light on how privatized contact tracing is harming the fight against the coronavirus pandemic. “Then there’s the issue of racism and the national reckoning with police violence in the wake of the police killing of George Floyd,” they write in Talking Points Memo. “Outsourcing critical public services to profit-driven companies like Maximus and IBM inherently contributes to racial (and gender) income disparities by converting decent public sector jobs to low-wage contracted work. For example, workers at Maximus’s federal call centers are predominantly women and people of color paid poverty wages as low as $10.80 an hour with unaffordable health care. In contrast, public sector employment has helped equalize American society since World War II by offering minority workers stable employment and a reliable path to the middle class.” 

2) National/California: A federal judge has ordered mandatory contact tracing at ICE’s Mesa Verde immigrant detention center. “In the ruling, Chhabria noted the brazen email correspondence between ICE officials and GEO Group, Inc., the private for-profit company that manages the facility and that appeared to show blatant disregard for the health and safety of detainees. ‘The defendants, having responded to the health crisis in such a cavalier fashion (even in the face of litigation and a string of court orders), have lost the credibility to complain that the relief requested by the plaintiffs is too rigid or burdensome,’ Chhabria wrote in the ruling. ‘The defendants have also lost the right to be trusted that they will accomplish on their own what the plaintiffs contend requires a court order to ensure.”

The Intercept’s Malaika Tapper reports that “internal emails released as part of a lawsuit against ICE show that the agency and GEO Group officials could have tested everyone in Mesa Verde for Covid-19 but chose not to, knowing that to make room for positive cases to isolate, they would need to drastically reduce the total number of people held in the facility. (The emails were first reported by the Los Angeles Times).” This would leave ICE with “no choice but to limit street arrests or release detainees to make room for people to isolate.” GEO Group’s warden at Mesa Verde is Ron Murray.

3) National: This Thursday and Friday AFSCME will be holding its virtual 44th International Convention. Former Vice President Joe Biden will address the convention. “When the coronavirus pandemic hit, AFSCME’s 1.4 million members rushed into action to keep their communities safe, healthy and strong. Often risking their lives, AFSCME EMS workers, hospital workers, custodians, sanitation workers, child care providers, home care workers, corrections officers, behavioral health professionals and unemployment claims providers and others worked around the clock to beat back the virus. At this year’s convention, they will channel that same passion to win in 2020; to organize like never before; to fight for racial and economic justice; and to unrig the system so it benefits all working people.”

4) California: The LA County Metropolitan Transportation Authority is selling $1.37 billion of climate bonds to refinance all four of its existing TIFIA Loans. Read the documents.

5) California: The San Diego City Council has approved two measures that will allow many businesses shuttered due to the coronavirus pandemic to reopen by moving their businesses outside. “The city was projecting a loss of one-third of its tax revenues when the budget passed in June. Hotel bed taxes were expected to be down $83 million and sales taxes off $26 million for fiscal year 2020, as compared to 2019. San Diego’s solution may not work in cities across the nation that face harsher winters. The coldest temperatures the coastal city typically experiences is 50 degrees Fahrenheit.” [Sub required]

6) Colorado: “We are at an inflection point with the potential for a great change in how we understand the role of government. It can’t happen soon enough,” writes Seth Cagin, a candidate for Colorado State House of Representatives District 58.

Education

7) Arizona: Former teachers at the Arizona Agribusiness & Equine Center charter school in Paradise Valley say they are owed money. “The school’s former principal said at least 15 other teachers at the high school were not paid bonuses they earned. Proposition 301, which voters approved in 2000, authorized a sales tax of which 40% goes to performance pay for teachers across Arizona. Ashley Faubion, who taught math at the school, said she’s owed at least $1,500. She’s not returning to the classroom because of concerns related to the coronavirus, she said.” The dispute over the pay at “highlights the lack of independent oversight of Arizona’s loosely regulated charter school industry.”

8) DelawareA charter school public board meeting was attacked by a racist Zoom bombing. “For nearly an hour, parents had been offering their input on how the school should start the year, the subject of the night’s emergency meeting. Then, a Black student used her time to speak about the racism she had experienced at the charter school—something students have been recounting to administrators for years. Shortly after the student finished speaking, the Zoom bombing began—someone hacked the meeting.” The student said “it disappoints me, disgusts me, and shows that Charter does not care to change the school environment.”

9) Florida: Thousands of parents and students at several charter schools in Palm Beach County have been left scrambling after receiving word that their schools will be going all virtual learning. “Charter Schools USA, which oversees seven charter schools in Palm Beach County and two in St. Lucie County, was giving parents three options, including in-classroom instruction. Alexis DeLuca tells WPTV she doesn’t know what to do with her twin daughters now that Charter Schools USA is no longer offering an in-classroom option for students. ‘I looked into the school,’ DeLuca said. ‘It was close to my home. It hit a lot of the marks I was looking for, so we enrolled.’”

10) MinnesotaThe Covid-19 pandemic is hitting private school bus operators hard. “School bus companies are wondering whether they will have enough drivers to cover routes this year — or perhaps even too many in districts such as Minneapolis and St. Paul, which plan to start the year with distance learning. That’s the dilemma facing bus companies as they prepare for the 2020-21 school year while waiting for districts to finalize teaching plans and assess their transportation needs.”

11) New HampshireEnrollment in the state’s only online charter has quadrupled. Virtual Learning Academy Charter School CEO Steve Kossakoski “said interest in online classes has shot up since July. ‘It’s really been over the last few weeks we’ve seen that, as school has come into focus for the fall,’ Kossakoski said. He guessed parents are responding to news of COVID-19 spikes in other states. ‘I think people are just very cautious, perhaps scared.’”

12) New York: The United Federation of Teachers says Mayor Bill de Blasio’s current plan for reopening school buildings “does not meet the safety standards our children and school staff need. The UFT worked with the city to develop many of the safety standards included in the reopening proposal, but the mayor’s current plan falls short.” They ask people to sign the petition. There is confusion over public policy. “New York City parents’ are feeling double the anxiety and concern, because Cuomo’s edict doesn’t provide firm answers about whether five-borough students will be returning to school this fall. Mayor de Blasio has said he won’t open school if the city’s positive test rate, currently at 1%, tops 3%. And state officials still have to approve the city’s specific reopening proposals.”

13) Tennessee: Knox County schools will consider a contract with Florida Virtual School at this Wednesday’s school board meeting. “Any time we are talking about outsourcing, that should be a big red flag to everyone in this room,’ school board member Jennifer Owen said. “I’m concerned that we have no applicants for these 65 positions.” Board members “also discussed a resolution that would encourage the state to end mandatory testing for the 2020-2021 school year.” 

14) Texas: Compass Academy Charter School in Odessa “has many parents concerned after failing to provide a virtual learning option, to every student, for the upcoming school year. “They’re trying to find these loopholes and immunities because they’re a charter school and they are acting like everything is fine and we are going to go back to normal we’re going to go back to school and everything is going to be normal,” said one parent. Right now, the only students allowed to learn virtually are the ones who test positive or have been exposed to COVID-19.”

15) Think Tanks: The Network for Public Education has released Broken Promises: An Analysis of Charter School Closures From 1999-2017. “We found charter closure rates to be alarmingly high, rising to 50 percent by the 15-year mark,” the report says.” And “the Black Lives Matter collective almost immediately joined the call for a charter moratorium. Its platform supported increased community control of public schools and an end to school privatization.” Yet “time and again, the charter sector has lobbied successfully to block needed reforms and instead demanded additional privileges (such as, most recently, access to funding provided by the COVID pandemic relief programs such as those administered by the Small Business Administration). Meanwhile, scandals associated with charter schools are well-documented.”

Infrastructure

16) Florida: In a major victory for the public good, North Miami Beach moves to terminate its private water utility contract with Jacobs (formerly CH2M Hill) and bring the water and sewer system back under public control. “Control of the city’s wastewater system and the Norwood plant has been hotly debated for years, dating back to a 2016 report that found the utility was run with substantial inefficiencies. A local AFSCME union and progressive activists railed against the privatization plan in 2017, raising concerns about profit motives and weaker labor protections for workers. For those who fought against the plan, Tuesday’s vote was a victory three years overdue. William Byatt, the treasurer of the Miami-Dade Democrats who managed a 2018 mayoral campaign in North Miami Beach, said he’s kept a close eye on the issue ever since. ‘It’s been like a three-year fight,’ Byatt said. The right time to cancel the contract, he said, ‘would have been to not have done it in the first place.’” 

17) Florida: Details about the failed and possibly improper efforts to privatize Jacksonville’s electrical utility JEA continue to surface. Last week JEA’s board “reviewed invoices from various firms related to last year’s failed attempt to sell the water, sewer and electric utility. They agreed to delay paying $8.4 million in bills until they determine which ones are legitimate. Utility managers have said the ‘invitation to negotiate’ the proposed sale cost more than $13 million. It was called off in December, when the prior board of directors rejected all bids. Since then, lead team members who participated in the endeavor have been fired.” [Sub required]

18) GeorgiaThe privatization of student housing at the University of Georgia has blown up in its face, illustrating once again the loss of public control that can come with poorly executed “public-private partnerships.” “The University System of Georgia is experiencing what I would call extortion at the hands of the company to which it outsourced the construction and operation of its dormitories,” writes author John Warner in Inside Higher Education. “This process involved the creation of debt that the USOG agreed to secure through student housing fee revenue. Corvias, the company that took over the operations of the dorms, made it clear to the USOG that it would be collecting that money whether students were present or not. (…) Here we have a clear example of leverage, perhaps the most powerful form of leverage—a threat over money, lots of money. I would call this a scandal, except it’s all in the contracts the institutions signed of their own free will. Doesn’t mean it shouldn’t make us angry, though.” 

For more details and background see this thread by Corey Goergen. For John Warner’s deep dive into the crisis in privatized student housing, see his other article in IHE, and this 2014 article by the Associated Press.

19) Maryland: In another blow to the “public-private partnership” model for infrastructure and service delivery, the state will step in to manage the collapsing and uncompleted Purple Line light rail project (which private contractors threatened to pull out of because of cost overruns) if parties cannot come to an agreement. Read MDOT’s letter. “A deal is still possible, but both sides have prepared for contingencies if one isn’t reached,” says constructiondive.com. “The state seems committed to completing the project, even at the cost of it becoming a cautionary tale for the future of P3s. The Purple Line has been a marquee initiative of Maryland Gov. Larry Hogan’s administration, which has touted private investment in public infrastructure.” What would happen if a $9 billion project like Hogan’s I-270/Capital Beltway toll road “public-private partnership” ran into cost overruns? Would taxpayers be on the hook? Meridiam is leading the Purple Line consortium, and is also seeking to bid on the toll road project, according to the Washington Post.

20) Missouri: The Greater St. Louis Labor Council executive board and delegate body has voted to oppose two proposals to privatize St. Louis Lambert International Airport. “The Labor Council opposition comes on the heels of several member unions and constituency groups coming out against the privatization effort. Five major unions—Communications Workers of America Locals 6300 and 6355, the American Federation of Teachers Local 420, the American Postal Workers Union St. Louis Gateway District 8 and UNITE HERE Local 74—joined with the Coalition of Black Trade Unionists (CBTU) and the A. Philip Randolph Institute (APRI) at an open-air press conference in Kiener Plaza July 13 announcing their opposition to the privatization efforts.” 

Lew Moye, president emeritus of the Coalition of Black Trade Unionists (CBTU) said “this rigged airport deal only benefits wealthy special interests and the well-connected. Working families in North City are sick of these empty promises; our neighborhoods need real investment, and airport privatization is not the way to do it.” 

Criminal Justice and Immigration

21) National: As CoreCivic and the GEO Group announce their second quarter financial results, the Financial Times reports that divestment and racial justice campaigns have had a material effect on their performance. The FT quotes David Webber, a law professor at Boston University who wrote a book on pension divestment, as saying “there seems to be some of the strongest evidence I’ve seen to date that divestment campaigns . . . can actually work in that bottom-line sense of hurting the target economically, and not just raising attention.” The FT says that “on top of that, the protests over police violence and racial injustice this summer have put private prison operators on the radar as investors try to identify companies that are inhibiting the move toward a more racially just society, says Olga Emelianova, executive director on MSCI’s ESG research team.” [Sub required]

22) National: In a dramatic move, CoreCivic intends to drop its corporate status as a Real Estate Investment Trust (REIT) effective January 1, hoping to free up cash it would have had to pay shareholders in order to reduce its corporate debt. “In addition, CoreCivic is also evaluating whether it should sell some assets to generate even more cash. That would be a quick and easy way for the private prison operator to generate new cash without going through U.S. banks, which have largely turned their backs on the private prison industry.” CoreCivic shares have lost nearly half of their value since the beginning of this year. 

The Nashville Post reports that “during the second quarter, CoreCivic posted net income of $22.2 million, which was 54 percent lower than the year before. That’s partly because border crossings surged in 2019 and CoreCivic was housing a historically high number of detainees for Immigration and Customs Enforcement, its biggest client. This year, the new coronavirus has reduced the number of ICE detainees as well as the prison populations of some states. The company has also increased wages for many of its detention center employees because of the pandemic.”

On its conference call, CoreCivic CEO Damon Hininger noted that “normalized funds from operations or FFO was $0.56 per share in the second quarter, which represented a 90% decrease from the prior year quarter.” Shrinking state budgets, including corrections budgets, are hitting the private prison industry hard. During the unusually detailed and informative question period with analysts, Hininger said the Trump administration has not asked CoreCivic to renegotiate its bed guarantees with the federal government despite the fact that populations have dramatically declined. Questions were asked on many issues including the implications of the new corporate structure, so people wishing to get a fuller picture should read this section of the transcript.

23) National: The share price of GEO Group, the largest private, for-profit prison and immigrant detention company in the U.S., dropped 6.6% after it cut its dividend and slashed its revenue guidance. The updated guidance reflects GEO losing its contract for the 1,900-bed D. Ray James Correctional Facility in Georgia, which expires on September 30. The federal government decided not to rebid the contract because of the Covid-19 pandemic. 

Despite speculation that GEO might follow suit with CoreCivic and drop its REIT status, GEO head George Zoley told analysts that “our new dividend payment level will also allow GEO to remain structured as a REIT and will give us sufficient flexibility to sustain our dividends should our cost of debt increase in the future.” In answer to an analyst’s question GEO said it expects a possible expansion of its detention facilities in California because “ICE needs beds in the State of California. And the procurement for these beds was done last year and executed in December for opening in the latter part of this year and we’re hopeful that that will take place.” One other tidbit. Zoley seemed to engage in a bit of election prediction: “Following the results of the election November, I think there will be a rebound in our stock price.”

24) National: Nicole Porter of the Sentencing Project joined Counterspin’s Janine Jackson to discuss Covid-19 and decarceration. Porter say that to go beyond immediate responses to the pandemic crisis such as cutting down on the entry of new incarcerated people, policymakers and activists should intensify efforts to reform sentencing practices, require community racial impact statements, recalculate property offenses, and make reform efforts part of a reparations agenda involving “justice reinvestment” in communities. [Audio, about 12 minutes]

25) National/California: In a stinging dissent, U.S. Supreme Court Justice Sonia Sotomayor accused the majority of failing to safeguard the health of thousands of detainees in the Orange County jail. The Supreme Court “temporarily stayed an injunction issued by Judge Jesus G. Bernal of the Federal District Court for the Central District of California that required officials at the Orange County Jail to allow detainees to maintain social distancing, be tested if they show symptoms and have access to cleaning supplies. (Judge Bernal denied a request to release all medically vulnerable and disabled individuals.)” 

26) Illinois: ProPublica’s Duaa Eldeib takes a look at a new reform plan for Illinois’ juvenile justice system and is somewhat skeptical. “This week, a group of young people, some of whom have been incarcerated, their families and advocates from Northwestern University’s Children and Family Justice Center launched the Final 5 Campaign. The effort calls for shutting down the last five state juvenile facilities in Illinois and ensuring that families are provided transportation to visit their children weekly in the replacement facilities, which the group doesn’t want to house more than 10 teenagers at a time. State officials haven’t responded to the campaign. But during last week’s press conference, Pritzker, Stratton, Department of Juvenile Justice Director Heidi Mueller and others described the state’s plan as a ‘new vision’ that ‘will completely overhaul the state’s juvenile justice system in the next four years.’ Whenever I hear that kind of categorical language, my reporter radar goes off. Is it really going to be a complete overhaul?” 

27) New MexicoRetirees want private prison corporations out of their pension funds, writes Gaile Herling. “On Friday, trustees have a chance to switch to the right side of history and to follow their constituents’ demands by choosing to dump GEO Group and CoreCivic stocks. They can prove to their beneficiaries that our voices are being heard with respect. Or, they can continue rationalizing their defenseless position and knowingly perpetuate violence against children and families, many of whom school employees have taught, formed close relationships with and love.” Herling suggests people should “go to prisondivestsfdp.org and sign up for two events: applying pressure for divestment at the Aug. 14 meeting and joining a COVID-safe demonstration to tell the board to divest immediately.”

28) Ohio: CoreCivic is being sued for ignoring a gang’s threats to an inmate in the company’s Northeast Ohio Correctional Center who was severely beaten. “The complaint states NEOCC officials placed Genco in segregation and limited privilege housing for a period of time, during which the inmate reached out to prison officials ‘begging for help and protection.’ However, Genco was released to the general inmate population on July 24, 2018, according to the filing. The following day, two prisoners entered his cell, demanded that he “had to pay” and attacked him. Documents say Genco suffered a cut on his face and a swollen eye.”

Public Services

29) National: As part of its effort to cripple the U.S. Postal Service to sabotage the coming presidential election by hampering mail-in voting, the Trump administration launched a “Friday night massacre” at the USPS, firing numerous senior officials and reshuffling more than two dozen other officials and operational managers. On Friday Democratic Senate and House members sent a letter to the USPS Inspector General asking for an audit of DeJoy’s practices.

The New Republic has intervened postal workers who talk about how the postal service is undergoing “death by a thousand cuts,” threatening “the end of a connected community.”  “This talk of taking away hours or privatizing has been going on for a long time, but this one feels a little bit different,” says Larry King, a retired letter carrier and former president of a National Association of Letter Carriers local. “‘It’ll be like working at Costco,’ one carrier said about a privatized post office. ‘You can make a living working at Costco. It’s just not as easy, and it’s not what we signed up for.’ Implicit in their feelings, though, is that like working at Costco or any other private employer means you’re now at the whims of a profit motive. It doesn’t feel like an overstatement to say there’s always been a bigger purpose to the postal service.”

30) National: In a commentary for WAMC public radio, Michael Meeropol says the post office is essential to American democracy—now more than ever. “The fact that the Post Office was a part of the government almost from the very moment our nation was founded makes a very important point. Unlike private businesses, where the goal is to earn sufficient profits for its owners so the organization can continue to exist—or even to grow—an entity like the Post Office has a singular goal—to provide a crucial service.”

31) National: Governments are falling short of providing and supporting addiction services, say Joseph A. Califano, Jr. and Creighton Drury of the Partnership to End Addiction “Our report, Shoveling Up II: The Impact of Substance Abuse on Federal, State and Local Budgets, found that only 2 cents of every dollar in 2005 was being invested in prevention and treatment. Tragically, not much has changed in the past 15 years.”

32) National/Minnesota/New York: Writing in Yves Smith’s Naked Capitalism, Sarah Lahm, a Minneapolis-based writer and researcher, looks at the role of high paid private consultants in watering down police reform efforts.

“Red flags flew up instantly, however, when this arrangement was made public. For one thing, Benchmark Analytics is a private firm that promises to deliver an “all-in-one solution to advance police force management,” according to the company’s website, primarily through the use of algorithms that supposedly predict which officers may end up behaving “problematic[ally]” on the job. This approach was at odds with the reallocation of resources from the police department to social services that many community leaders in Minneapolis and other cities are pushing for. Another bone of contention involved funding, as it was reported that Benchmark Analytics’ reform model would be paid for by the Minneapolis Foundation, a philanthropic group led by a former mayor of the city, R.T. Rybak.”

In New York, The Intercept reports that a private company is moving to profit from police reforms. “Following Cuomo’s order, Saranac Lake’s police chief reached out to colleagues across the state and found a solution: Lexipol, a California-based consulting company that has quietly drafted the policies of thousands of police departments across the country, would rewrite Saranac Lake’s for $11,000, plus additional yearly fees. ‘We’re a small village, we have 12 sworn officers including the chief,’ said Rabideau.

“Critics of Lexipol warn that the company is committed to its bottom line rather than transformed policing: The policies it sells tend to be conservative interpretations of the law that prescribe the bare minimum to keep police departments from getting sued — a promise that is central to Lexipol’s aggressive marketing campaigns. And critics fear that by outsourcing the drafting of their policies to a private company, departments can maintain an appearance of professionalism while de facto hindering transparency and cutting local communities out of the process.” Last year Lexipol, LLC merged with a company called Praetorian Digital.

33) International: Former U.K. Labour Part leader Jeremy Corbyn says “private track and trace isn’t working. It’s time to end outsourcing and local public health teams were given the resources they need to run it.”

Everything Else

34) National: The Trump Interior Department proposed a rule on Friday to slash the royalties private, for-profit oil and gas companies must pay to the American people for drilling rights on our public lands. “David Bernhardt all along has had one job to do and that is to give as many handouts as possible to his former clients in the oil and gas industry,” said Aaron Weiss, the deputy director of the Center for Western Priorities. 

35) Puerto Rico/New York: Five Members of Congress have written to New York Attorney General Letitia James requesting that an investigation be opened into the possibility that several investment firms involved in Puerto Rico’s ongoing bankruptcy “may have been engaging in insider trading and using the PROMESA restructuring process to artificially manipulate bond markets.” 

36) Think Tanks: EPI’s Economic Analysis & Research Network (EARN) will be holding a series of virtual conversations on economic issues, focused on race, gender and worker organizing. Begins September 29.