Here’s our weekly analysis of efforts to privatize public goods and services in the U.S., and the communities fighting back. Not a subscriber? Sign up.
This week’s highlights
- South Koreans are getting free food, masks, and more, as Americans wait in line for relief.
- 11 warning signs that someone is trying to privatize your public school.
- Jacksonville’s JEA has been handed a federal grand jury subpoena concerning efforts to privatize the electric utility.
(photo by Joseph Kim)
Governing for the Common Good
1) National: In the Public Interest sees a wave of privatization efforts coming and has produced two documents on how to meet the challenge, a checklist for monitoring privatization threats in localities and states as a result of the Covid-19 crisis; and 11 Warning Signs That Your School District Is Under Attack.”
Among the key items to stay on top of are identifying drivers of privatization (e.g., the erosion of the public sector workforce), emergency actions that may pave the road for privatization (such as the suspension of normal procurement rules), the need to monitor corporate interests (e.g. which companies are positioning themselves for future privatization efforts?), and the need to monitor government leaders’ actions. “Decision makers at some localities and states may already be ideologically open to privatization and see the health crisis as a way to push forward their privatization agenda. While emergency powers and suspension of procurement rules may make this easier even in the absence of increased authority and power, it is important to monitor decision makers’ contracting actions.”
Turning to the threat of school privatization driven by the COVID-19 shutdowns and the aggressive renewed drive by for-profit education companies, ITPI’s 11 warning signs include whether emergency powers have been requested, given, or exercised by superintendents that circumvent normal oversight rules; whether procurement rules and processes are being suspended, overruled, or ignored; whether virtual/online charter companies are expanding their outreach and recruitment of students in your district; and whether existing charter schools and new charter schools are pushing for immediate charter expansion.
“Just because we are in a crisis doesn’t mean we should give up one of the strongest elements of our democracy: universal public education. By watching for these signs that privatizers are using this crisis, we will be in a better position to stop their relentless efforts to undermine public education while we continue to fight for the quality of education that all of our kids deserve.”
2) National: State leaders are moving to protect stimulus checks from predatory debt collectors. Oregon Gov. Kate Brown has signed an executive order barring private debt collectors from accessing stimulus money. Ohio Attorney General Dave Yost has alerted all creditors and financial institutions that stimulus checks were protected from collections under state law. The Treasury or Congress has to step in, says Lisa Stifler of the Center for Responsible Lending. “It’s a common sense idea. These are payments meant to put food on people’s tables, pay rent, and, as the name ‘stimulus’ suggests, inject some money into the economy. To see them go towards old debt goes against that purpose.”
3) National: Writing in The National Interest, Paul Pillar says “much punditry at the moment is speculating on how the pandemic will reshape the international order, and on such questions as whether it will hasten China’s replacement of the United States as a global leader. Those are important questions, but it also is worth asking where, coming out of the pandemic, the United States will appear on a global spectrum of recognition versus non-recognition of the vital role of the public sector in addressing major public problems. The answer—subject to change depending on the result of this November’s U.S. election—is that the United States will appear more isolated than ever at the extreme non-recognition end of that spectrum. It will be markedly different in that regard even from the Conservative-governed Britain led by Donald Trump’s friend Boris Johnson.”
4) National: Gene Sperling, a former national economic adviser to Presidents Bill Clinton and Barack Obama, calls for action to support outsourced workers in both the private and public sectors. “The trend in recent decades toward subcontracting has been a substantial cause of economic inequality and second-class citizenship in the work force at odds with notions of equal dignity. Many corporations now contract out jobs like cleaning, food service and data entry. This lets companies save on benefits for workers whom they artificially define as not essential to the “core competency” of the organization. Labor economists estimate that this type of sorting accounts for a quarter to a third of the increase of wage inequality since 1980. Janitors are now 12 times more likely to be subcontracted out than they were in 1950. Subcontracted janitors are paid less, and a California study found they are 44 percent less likely to have health insurance through their employer.”
5) California: Laid-off janitorial, hotel workers, and others in the decimated hospitality and building services industries won a major victory in the Los Angeles City Council. “Council members voted 15-0 to draft an ordinance requiring employers in the hospitality, property management and other targeted industries to reach out to their pool of workers who lost jobs during the coronavirus outbreak, with rehiring based on seniority. The measure is meant to ensure that workers—especially those who are older and more experienced—are not replaced by newer, cheaper labor once the economy rebounds, said Councilman Bob Blumenfield, who represents the west San Fernando Valley.” The Los Angeles Alliance for a New Economy says “we are grateful to @CD6Nury & the entire city council for standing with workers.”
6) California: Rob Puentes over at Brookings points us to this video from Metro Los Angeles. “It tells the story of what their heroic frontline employees are doing to sustain and provide a mobility lifeline to LA County.” [About 2 minutes]
7) New Jersey: Good government is on the ballot, says The Press of Atlantic City. “Special election ballots are being mailed to all voters in Atlantic City right now, asking them the most important question they’ll answer about improving their town. Should they keep the current form of local government they’ve had for decades, or switch to one that uses a professional city manager and lets everyone vote on all of their elected municipal officials? In the midst of the COVID-19 statewide lockdown, the vote will be by mailed ballots only. The county board of elections sent them to voters on Friday.”
8) Pennsylvania: The Bond Buyer reports that the public Pittsburgh Water and Sewer Authority has launched an investor relations website that “officials say is a significant step at attracting more investors to its bond programs and enhancing transparency. (…) BondLink, a Boston-based financial technology company, is powering the site. BondLink’s has partnered with bond issuers across the country, including other municipal water authorities such as DC Water, the San Francisco Public Utilities Commission and the Las Vegas Valley Water District
The firm’s co-founder, former Massachusetts deputy state treasurer Colin MacNaught, called Pittsburgh Water “one of the most sophisticated issuers in Pennsylvania.”
9) Think Tanks: A week ago the Heritage Foundation released a document on national recovery from the COVID-19 pandemic that amounts to a privatization blueprint. They continue to assert that “businesses and other private-sector institutions” “will be drivers of recovery.” Rather ludicrously in light of Trump’s disastrous daily TV performances, Heritage urges him on: “The Administration should continue regular briefings, as needed, to educate the public on the progress against the pandemic,” with the objective of minimizing massive public concern about the likelihood of a redoubled pandemic if restrictions are loosened too early.
On education, the Heritage “commission” says that “Congress should allow federal Title I dollars for low-income districts to follow students to private online education options of choice.”
10) International: “A person in South Korea comes home to a box full of food, snacks N95 masks and a thank you letter for staying at home. Provided by the government.” [h/t Tim Shorrock]
11) International: The Center for Economic and Social Rights reports that the Initiative for Human Rights Principles in Fiscal Policy has called for vigorous redistributive programs to confront the effects of the COVID-19 pandemic. “These devastating consequences could be mitigated through the adoption of redistributive and participatory fiscal policies to fund basic elements of welfare states. Such measures should have been adopted long ago in the region, but the pandemic—and similar potential emergencies in the future—make further delays unconscionable. While some measures have already been taken (with substantial differences among countries, ranging from an equivalent of 0.5% to 15% of their GDPs), more robust responses that prioritize the protection of rights are needed.”
12) Think Tanks: William H. Frey of Brookings has news for Mitch McConnell and those Republicans who want to stick it to the Blue States by declining to finance their emergency needs. “There is a stereotypical view of the places in America that COVID-19 has affected most: they are broadly urban, comprised predominantly of racial minorities, and strongly vote Democratic. This underlines the public’s perception of what kinds of populations reside in areas highly exposed to the coronavirus, as well as some of the recent political arguments over social distancing measures and the states easing their restrictions. While that perception of high-prevalence areas was accurate during the earlier stages of the pandemic, COVID-19’s recent spread has changed the picture. During the first three weeks of April, new counties showing a high prevalence of COVID-19 cases are more suburban, whiter, and voted more strongly for Donald Trump than counties the virus hit first.”
13) National/Indiana: It seems the privatizers, never letting a good crisis go to waste, are using the massive unemployment disaster spawned by the coronavirus pandemic to get some federal funds for their pet projects—this time adult vocational education schemes. Here’s the head of Churchill Capital, a real estate investment bank, pitching the idea of “a National Work Force Development Initiative—administered in partnership with a private sector consortium, appropriate government agencies and leading digital education providers, including Coursera, Arizona State University, Skillsoft, edX and others—that will not only prepare workers for better, higher-paying jobs, but also help America fill the millions of jobs the country will need over the coming decade.”
Of course, many job training schemes, including joint union-company programs and public school-based science and engineering magnet programs, exist and could be more fully funded and expanded. Is this a federal version of real estate-linked charter school efforts to siphon funds from our local public schools? Time for some sleuthing.
14) National: Cornell University Professor Noliwe Rooks, author of Cutting School: Privatization, Segregation and the End of Public Education, was interviewed by Chris Hedges. “With the rise of charter schools, a cover for privatization, steering public monies towards corporate profits, the most disturbing trends are cyber charter schools where children only have to check-in with teachers three times a week, term papers outsourced and graded in India, and the advent of cyber classes for pre-K children.” [Video, about 26 minutes]
15) National: Jeff Bryant of the Independent Media Institute, writing in AlterNet, explains how Trump’s education secretary Betsy DeVos and the charter school movement are exploiting the pandemic to advance their agenda. “COVID-19 has shuttered public schools across the nation, state governments are threatening to slash education budgets due to the economic collapse caused by the outbreak, and emergency aid provided by the federal government is far short of what is needed, according to a broad coalition of education groups, but the charter school industry may benefit from its unique status to seek public funding from multiple sources and expand these schools into many more communities traumatized by the pandemic and financial fallout.”
16) National: Eleanor J. Bader of Truthout explains how online schooling is highlighting the inequality in our classrooms. “NPR reported in early April that 47 percent of public school and 18 percent of private school students had not connected to any online learning platform in the first three weeks of the transition. These realities highlight a long-ignored but blatant fact: The biggest obstacle to online learning is not a lack of technological gear, but the persistence of class privilege and class bias. And needless to say, homeschooling can’t happen for those without a home—or, at the very least, a place where they can sit, focus and learn.”
17) Pennsylvania: An op-ed in lancasteronline.com written by Susan Knoll and signed by multiple Lancaster School District parents says public school funding is at risk during the pandemic, and they demand that Gov. Wolf and state lawmakers “do everything within their power to maintain their commitment to strengthen our public schools.” They say that “now, in our current health crisis, many public school advocates worry that the gains made will be moot, and that many legislators will look at the money set aside for public education as up for grabs. Now more than ever, it’s imperative for our governor and legislators to avoid that scenario at all costs.”
18) National: The American Association of State Highway and Transportation Officials (AASHTO) estimates that due to revenue shortfalls state departments of transportation need a $50 billion backstop to continue functioning. “‘Every state is expected to face challenges in delivering their capital and construction program. Examples include delays in project design, bid lettings, and construction,’ noted Jim Tymon, AASHTO’s executive director. ‘In addition, projects planned to address recovery from prior natural disasters like hurricanes and flooding are unable to continue in certain states.’ Routine state DOT operations can be adversely impacted, including rest area operations that support the trucking industry, traffic and safety management including incident response and 511, and public transportation and ferry services.”
19) National: What’s next for public infrastructure? The pundits and flacks are confidently predicting Trump will weigh in to support an infrastructure package—as they have before to no avail—and the proposals are coming in thick and fast, even amid the cascading disasters. This is possibly wishful thinking. The Republican Senate has been blocking major infrastructure initiatives—contrary to Trump’s (and Pelosi’s) wishes—for years. Are we heading into another “Groundhog Day”-type series of infrastructure weeks?
Whatever does emerge from the Pelosi-McConnell talks over a COVID-5 rescue package, if anything, will probably go to public services rather than infrastructure, though some on the Hill are speculating that “if you’re spending another trillion dollars, unpaid for, Republicans would rather spend it on infrastructure than on direct aid to prop up states.” Whatever the outcome, however, we can be sure the road privatization industry, which is in desperate straits and dead in the water right now, will try to horn in on the money.
20) Florida: The federal investigation into possible improprieties in the effort to privatize Jacksonville’s JEA electric utility has kicked into high gear as JEA has been handed a federal grand jury subpoena to fulfill a comprehensive records request related to the federal investigation into the utility. “The federal subpoena requests a slew of records on everything from the invitation-to-negotiate process (ITN) to the workings of the senior leadership team at the time. Along with information on the ITN process and communications from leadership, the document requests information about a secure messaging app called Confide, and any records associated with the usage of the app by former CEO Aaron Zahn, lobbyists and the mayor’s administration.”
Criminal Justice and Immigration
21) National/California: The McFarland City Council has voted to allow the GEO Group to convert two state prisons into ICE detention centers. “Initially, the company presented their plans to the McFarland Planning Commission but were denied after community activists protested the potential expansion in a February meeting. Even though AB-32, a new state law for 2020 banned private prisons like this from opening up new facilities in California, the GEO Group started negotiations with ICE before the law went into effect.” Community organizers “say the centers will bring fear to the Latino-based community.” The prospect of a protracted legal fight remains.
Meanwhile, immigrants held in the Mesa Verde ICE Processing Center in Bakersfield and the Yuba County Jail have filed a class action lawsuit against U.S. Immigration and Customs Enforcement and GEO Group Inc., “demanding the release of the more than 400 individuals held in the two facilities.”
22) National/California: The City Council of Adelanto met last Wednesday to discuss an appeal against a February decision of the Planning Commission to grant a use permit to allow the housing of federal immigration detainees at the Desert View Facility. A full set of documents about the issue was included in the agenda for the meeting, which can be found here (beginning on page 313). Audio and video of the meeting can be found here. But the Desert Sun reports “two local offices of the American Civil Liberties Union of Southern California have warned leaders in both cities that holding virtual meetings ‘of extraordinary interest and importance to the public’ could violate the state’s Brown Act, which guarantees the public’s right to attend and participate in meetings of local legislative bodies. They also argue the arrangements could violate state anti-discrimination law, as well as California’s Constitution.”
On Thursday a federal judge “ordered US Immigration and Customs Enforcement (ICE) to reduce the number of detainees in their Adelanto Processing Center in Los Angeles due to COVID-19 concerns. The injunction requires ICE to lower the number of detainees so that they can keep six feet of distance between detainees at all times. They are required to complete the process by May 4.”
23) National/California: The ACLU has filed two lawsuits “calling for a dramatic reduction in California’s incarcerated population and a halt to all transfers of inmates to federal immigration detention centers amid increasing signs throughout the U.S. that jails and prisons are hot zones for the spread of the coronavirus. The suits filed with the California Supreme Court name Gov. Gavin Newsom and Atty. Gen. Xavier Becerra and come as the Otay Mesa Detention Center in San Diego and Lompoc penitentiary in Santa Barbara County have become home to some of the worst outbreaks in the federal prison system. In the lawsuits, the ACLU argued that outbreaks behind bars pose threats not only to the incarcerated, but also the families of jail and prison employees.” Otay Mesa is operated for profit by CoreCivic, which just turned down donated masks.
24) National: The Federal Bureau of Prisons will begin reporting coronavirus cases at privately run prisons holding federal inmates, two days after The News & Observer reported those facilities were being left out. The N&O has asked GEO Group “for information regarding any cases at the rest of its prisons for federal inmates. Its prisons house the bulk of the roughly 17,600 inmates in private prisons. Two other companies hold contracts to house federal inmates: CoreCivic in Nashville, Tennessee, and Management & Training Corporation of Centerville, Utah. On Wednesday, a CoreCivic spokesperson said 17 staffers at its McRae Correctional Facility in Telfair County, Georgia, have the virus. The facility can house 1,483 inmates.”
25) National/California: Immigrant detainees at Mesa Verde and the Yuba County Jail are suing ICE and the GEO Groupdemanding the release of over than 400 individuals held in the two facilities. “Represented by a collection of attorneys from San Francisco law firms and the American Civil Liberties Union foundations of Northern and Southern California, the plaintiffs say the cramped conditions and lack of access to hygiene products in the detention centers exacerbate the health crisis from the coronavirus and put their lives in danger.”
26) National: “We’re in a public health crisis and jail phone companies like ICSolutions continue robbing Black and Brown families of millions with high call rates. @HIGCapitalLLC enough is enough. Make all jail and prison calls free! #ConnectFamiliesNow ” says Worth Rises.
27) National: CoreCivic has announced that it will release its 2020 first quarter financial results after the market closes on May 6, 2020.
28) National: Fitch Ratings has downgraded CoreCivic’s Issuer Default Rating (IDR) to BB-, saying “the downgrade reflects Fitch’s view that CXW’s leverage (net debt-to-recurring operating EBITDA) will sustain above 4.0x through 2022, partly due to occupancy and expense pressure related to the coronavirus pandemic. The Negative Outlook reflect the fact that the issuer has more limited ability to reduce leverage than other U.S. Equity REITs due to the negative capital access trends for private prison operators. Increased institutional lender and investor focus on ESG could reduce the company’s access to attractively priced public equity and debt capital. Furthermore, the issuer lacks access to secured mortgages, a key contingent liquidity source for equity REITs, making it more reliant on bank and debt capital markets access. Fitch will assess the company’s ability to replace existing bank syndicate members and access new and existing capital sources during the one-to-two year Outlook horizon, including public and private bonds and equity.”
29) National: GEO Group’s financial release and earnings call will be held this week. The company will release its first quarter 2020 financial results on Thursday, April 30, 2020 before the market opens, and has scheduled a conference call and simultaneous webcast for 11:00 AM (Eastern Time) on Thursday, April 30, 2020.
30) New York: There is a “wildfire” COVID-19 epidemic in the GEO Group-operated Queens Detention Center, and the local assemblymember says they can’t extinguish it. “The inmates also said there has been a severe staff shortage—including a single correction officer patrolling two separate units—as employees get sick or otherwise call out. GEO Group reported that 21 staff members have tested positive for COVID-19 and six have recovered.”
31) National: The Center for Budget and Policy Priorities (CBPP) has laid out in the starkest of terms the fiscal crisis faced by states and municipalities, which is posing a massive threat to the well being of communities across the country by threatening the provision of vital public services in the midst of a pandemic. “States appear on the brink of shortfalls that—based on historical patterns—could total more than $500 billion,” CBPP reports, “mostly concentrated in a single fiscal year, the one that begins in less than three months. Even after accounting for the federal fiscal aid that’s been provided so far and states’ own rainy day funds that they can draw down, states still face shortfalls of as much as $360 billion, not including the substantial new costs they face to combat the COVID-19 virus.”
In light of this looming disaster, Sen. Mitch McConnell’s suggestion that states should consider bankruptcy instead of pushing for federal relief was greeted with widespread disgust and contempt. Apart from the moral and political issues with McConnell’s gambit, there are other problems. Granting states the right to bankruptcy is likely unconstitutional, and from a practical standpoint would be “a farce.” Writing in Bloomberg, columnist Brian Chappatta says “never mind that an article from the latest Bloomberg Businessweek magazine is about how seven years after bankruptcy, Detroit is once again staring down a huge budget shortfall that puts it on the brink of a state takeover. Far from a panacea to get out from under onerous obligations, municipal bankruptcies have proved to be so messy, costly and time-consuming that they’re often not enough to solve the underlying issues. Case in point: Puerto Rico.”
32) National: Trump has taken aim at the financially troubled U.S. Postal Service, saying he will not provide relief unless the service raises its package prices fourfold. “Several administration officials, speaking on the condition of anonymity, have said Trump’s criticism of Postal Service rates is rooted in a desire to hurt Amazon in particular. They have said that he fumes publicly and privately at Amazon’s founder Jeff Bezos, who owns The Washington Post, for news coverage that Trump believes is unfair.”
Trump and the Republican Party are apparently weaponizing the pandemic to achieve goals they have pursued for years—the destruction of public sector unions, the privatization of profitable public assets, and perhaps to plunder the postal service’s pension fund, which is worth tens of billions of dollars.
“Right now, I see a big danger for our country in the form of the administration’s interest in privatizing the post office,” Speaker Nancy Pelosi told reporters. “The is just about somebody on the outside making money off the post office instead of recognizing the important role [it] plays.”
The Cleveland Plain Dealer says “some believe the Trump administration’s refusal to consider a bailout reflects hopes among conservatives that it will be easier to privatize a fatally weakened postal service. Critics of possible privatization note that the mail service’s monopoly on residential mail was intended to make sure that every American can get mail. USPS now also delivers prescription drugs, Census form invitations, and mail-in ballots.”
33) National: Public interest groups are expressing alarm over Trump’s appointment of a conflicted private, for-profit company, UnitedHealth Group, to help distribute billions of dollars in taxpayer funds to hospitals struggling to cope with the COVID-19 pandemic. “Wendell Potter, a former insurance executive turned Medicare for All advocate, tweeted late Tuesday that ‘nothing my old industry does shocks me—but this is close.’ Potter said he has ‘never heard of anything like this’ and warned that the involvement of UnitedHealth raises serious alarm bells, despite the company’s vow not to profit from the arrangement. ‘UHC execs are canceling contracts with doctors and raking in millions, during a pandemic,’ Potter wrote. ‘And now, the Trump admin is having them manage a multi-billion dollar pot of relief aid?!’”
34) Georgia: Candler County has decided not to privatize its EMS service. “The Commission considered the EMS service as a whole, including our ability to deliver the service, our personnel and the needs of our community and Candler County Hospital. They determined that the residents were best served by maintaining the service with the county.”
35) Useful Resources: For those interested in following developments in the crucial municipal finance space—on which the delivery of public services will depend—it’s worthwhile regularly checking into postings by the Government Finance Officers Association for municipal managers’ perspectives and the weekly Municipal Commentaries posted by Hilltop Securities, one of the leading muni companies, posted here. Those interested can register for GFOA’s virtual conference, which is scheduled from 5/18/2020-6/25/2020. (Members $549; Associates $649; Nonmembers $849).
36) National/International: Should private airlines be permitted to administer COVID-19 tests? Aviation marketing specialist Bryan Del Monte says the tests could make passengers feel safer, but thinks this function is an inherently government responsibility.
37) National: The COVID-19 pandemic and the fiscal challenges it has created have given a new opening to for-profit recreation corporations, trade associations and lobbyists to try and force privatization of the national parks, a fight they were on the way to losing just last year. Emily Douce, director of operations and park funding at the National Parks Conservation Association, told National Geographic “that a park may want to keep running its own campgrounds in order to interact with visitors and keep an eye on operations. ‘The presence of a park service ranger has many benefits, from educating to seeing what’s going on and making sure that people are being responsible,’ Douce says, adding that the privatization of ranger positions would be a cause for concern. ‘Their mandate is to make sure that the resources are protected and that the visitors are educated about that site. And so if you privatize those, there’s a concern there that some of that would be lost,’ she says.”
38) National: How about privatized drones monitoring of Americans? Former Senate Majority Leader Bill Frist thinks it’s a capital idea. This wouldn’t have anything to do with his being a partner at healthcare Investment firm Cressey & Co and Frist-Cressey Ventures, would it? Spotting new marks?
39) National: Here’s a breakdown by SBA of where all that Paycheck Protection Program money went through April 16, with target states and sectors.
40) National: In case you were wondering, yes the DoD contracting machine is still humming along.