Here’s our weekly analysis of privatization in the news and in communities nationwide. Not a subscriber? Sign up.
This week’s highlights
- Move over TikTok. Generation Z, whose members were born after 1996, is positive about the role of government.
- New polling shows American voters overwhelmingly approve of significant federal funding for states, cities and towns.
- Ohio’s state auditor says a Cincinnati charter school owes the state $2.6 million.
Governing for the Common Good
1) National: New polling conducted for AFSCME and AFT that shows American voters overwhelmingly approve of significant federal funding for states, cities and towns to counter the devastating economic effects of the coronavirus on the economy and vital public services. And they decisively reject the state bankruptcy alternative proposed by Senate Majority Leader Mitch McConnell. The Portland Press Herald reports “last week alone governments at all levels across the nation shed more than one million public sector jobs—more than the total lost during the Great Recession of 2009, said Lee Saunders, national president of AFSMCE. ‘We cannot defeat this pandemic if our front line workers are faced with a pink slip,’ Saunders said. He said those workers include public health nurses, paramedics, firefighters, teachers, sanitation workers, water treatment technicians, prison guards and dozens of other critical jobs.”
2) National: The HEROES Act, passed by the House on Friday, would provide $915 billion in state, local aid. The Bond Buyer reports that “the bill proposes $500 billion in direct funding to state governments to address the fiscal impacts from the public health emergency as well as $375 billion for local governments, $20 billion for tribal governments and $20 billion for territories, such as Puerto Rico. The $375 billion for local governments would be split between cities and counties, based on population, according to National Association of Counties Executive Director Matthew Chase.” [Sub required]
3) National: The Pew Center reports that Generation Z, whose members were born after 1996, is positive on the role of government. “Seven in 10 members of Gen Z said the government should do more to solve problems—compared with just 49% of Baby Boomers (born 1946 to 1964) and 39% of the Silent Generation (born 1925 to 1945).”
4) National: Topos has some tips on making the case for federal aid to the states. “The issue is really about making sure that families and communities can rebound quickly and equitably. This is about helping our communities thrive by keeping teachers, nurses and firefighters employed, keeping our public transit and hospitals running, and so on. Communicators should overtly make the link to the services people rely on, and not assume people will connect-the-dots on their own.”
5) National: Dan Balz of the Washington Post says the pandemic exposes how America has hollowed out its government. “The question is whether the weaknesses and vulnerabilities exposed by the current crisis will generate a newfound interest among the nation’s elected officials—and the public—in repairing the infrastructure of government and a sense of urgency on the part of the public to encourage them to do so. Or will partisanship and public indifference lead to a continuation of the status quo?”
6) Florida: Unite Here Local 355 thanks @SouthFlaAFLCIO and @DLCAVA for feeding South Florida and distributing groceries to UNITE HERE Local 355 hospitality workers who are still waiting for their unemployment checks to come in.
7) California: Gov. Gavin Newsom (D) has called for the abolition of the youth prison system in California. “The governor’s proposal would close the last three youth prisons and a fire camp run by the state’s juvenile justice system, halting a more than 100-year tradition of incarcerating California’s youngest offenders at remote warehouse-like facilities. Instead, juvenile offenders who have committed the most serious and violent crimes would remain at county-run detention facilities overseen by local probation departments. If the governor’s plan is approved by the state legislature, it would end the brutal legacy of a youth prison system in California that once housed as many as 10,000 youth and teens. In the past, young people were locked in cages for school and recreation, and held in solitary confinement for 23 hours a day.”
8) California/New York: ProPublica reports that strong action by California public officials resulted in a much lower infection and death rate than in New York. “California’s governor and San Francisco’s mayor worked together to act early in confronting the COVID threat. For Andrew Cuomo and Bill de Blasio, it was a different story, and 27,000 New Yorkers have died so far.”
9) International: Focus on the Global South, AIDC and Public Services International (PSI) are sponsoring a webinar next Wednesday at 10 am Eastern Time titled Public is back: Proposals for a democratic just economy.
“Support for public services and limits on private profit is at an all-time high in the wake of the pandemic. How do we ensure this prioritization of public needs and goods becomes permanent? What are the best models of democratic and participatory public services? Join a webinar with trade unionists and activists in Italy, Nigeria and India advancing bold new visions for a public future. (…) The coronavirus pandemic has painfully revealed the damage caused by neoliberalism and its policies of deregulation, privatisation and subsidizing big corporations. It has also shown how little neoliberalism has to offer in a crisis like this. It has finally laid to rest the neoliberal lie advocated by Thatcher that ‘there is no such thing as society.’ (…) The public sphere is back is vogue now, with even conservative governments prioritizing public needs over private profit in ways that could not have been imagined a few months ago. However turning this into lasting change will require strong collective action and a clear vision of the democratic, equitable public solutions we need. A door has been opened, but vested interests will soon demand a return to the neoliberal status quo.” Register for the webinar.
The webinar will also be a chance to reflect on a new book TNI has launched, The Future is Public: Towards Democratic Ownership of Public Services. It addresses remunicipalization, local insourcing, public water success, providing affordable, fast broadband internet in the U.S., and much more. Download the 258-page book for free.
10) Think Tanks: A study published in Health Affairs finds that strong social distancing measures encouraged by the federal state and local governments reduced the COVID-19 growth rate. “These results imply 10 times greater spread by April 27 without SIPOs [social distancing efforts—ed.] (10 million cases) and more than 35 times greater spread without any of the four measures (35 million).”
11) National: School and college support staff participated in a webinar organized by the American Federation of Teachers where they shared encouragement and advice on how to keep everything going. “Lunchroom and School Heroes: Celebrating our Essential Work” looked at “the ways that paraprofessionals, cafeteria workers, bus drivers, teachers aids, and more ensure that children get the nutrition, education and safety they need to succeed, in and out of the classroom.”
12) National: The New York Times reports that education secretary Betsy DeVos, using discretionary authority contained in the CARES Act, is using millions of dollars to pursue long-sought policy goals that Congress has blocked. “The most contentious move is guidance that directs school districts to increase the share of dollars they spend on students in private schools. Under federal education law, school districts are required to use funding they receive for their poorest students to provide “equitable services,” such as tutoring and transportation for low-income students attending private schools in their districts. But the department said districts should use their emergency funding, which was doled out based on student poverty rates, to support all students attending private schools in their districts, regardless of income.”
13) National/New York: The Alliance for Quality Education released a statement on news that New York Governor Andrew Cuomo (D) is partnering with school privatization billionaire Bill Gates to “reimagine” schools hit by the pandemic. “Both the Gates Foundation and Andrew Cuomo have a history of pushing privatization and agendas that have the potential to destroy public schools. This collaboration raises a red flag and real questions about what shape our ‘reimagined’ public schools will take post-pandemic, and whether they will be recognizable as public schools at all. In 2018 there was an attempt by a different billionaire to promote online learning in NYC public schools, the failed program led to student walkouts and dismal results. Studies have shown that the fully online learning model harms the students who need the most help.”
Writing in The Progressive, Sarah Lahm says “Given the emerging economic crisis and the devastating impact it will likely have on state education budgets, Gates, DeVos, and other well-heeled proponents of disruptive education plans should not be granted unchecked access to taxpayer money and the students, teachers, and communities who depend on public schools.”
14) National: National Education Association (NEA) President Lily Eskelsen Garcia discussed K-12 education and the coronavirus funding crisis on C-SPAN Saturday. [Video, about 30 minutes]
15) New York: Leonie Haimson, the Executive Director of Class Size Matters, has some suggestions on how New York schools can reopen safely and save some money, including lowering class sizes, split sessions, reduced spending on consultants, administration, unnecessary testing and contracts, reduced spending on unnecessary/unused school busing contracts, a freeze on spending for school safety agents.
16) Colorado: Facing a budget crisis, Denver’s public schools are considering pay freezes, school mergers, and employee furloughs. “The district could ask Denver voters in November to support a bond issue and mill levy override, both of which allocate tax dollars to schools. The district could use the mill levy money to fill budget gaps—and it could do so in a way that wouldn’t raise taxes [district Chief Financial Officer Jim Carpenter] said. The bond money could be used to pay for things the district currently funds out of its operating budget, such as school remodeling projects and school bus purchases. That would free up money for salaries and student needs.”
17) Minnesota: A St. Paul charter school is closing permanently. “The school has been on probation for six years. Officials say the first-through-fifth graders are not learning enough. It’s best for the children, they say, to send them to more successful schools.”
18) Mississippi: Mississippi is fourth from the bottom in spending per pupil ($8,702; New York is $22,366). But despite the massive challenges presented by underfunded schools, some of Mississippi’s students, with the hard work and support of their parents, educators and school staffers, are shining through. Can you imagine if the education budget was doubled? But with COVID-19, things are going in the opposite direction. 78% of cities in the state won’t have revenue to meet budget requirements for the upcoming budget year, which starts Oct. 1.
19) Ohio: Carol Burris, executive director of the Network for Public Education, reports that “public schools in Ohio are deliberately slammed in funding—three times more than charters. Yes, charters that are getting PPP loans!” For details see the Columbus Dispatch story.
20) Ohio: State auditor Mary Taylor says a Cincinnati charter school owes the state $2.6 million. “Ohio law requires community schools to provide 920 hours of educational curriculum each school year. A large portion of the funds owed back to the state relate to a lack of documentation showing that Harmony met state curriculum requirements. As a result, auditors determined that the school was not entitled to $2,146,516 in state funding that it had previously received. Additional funds owed back to the state include: $293,517 received for students who were no longer attending the school; $180,962 received for students who failed state mandated residency or self supporting requirements; In addition, Harmony’s director is alleged to have spent $6,551 of the school’s money to renovate the deck on his personal residence.”
21) Oklahoma: As public school district revenues decline, the state legislature slashes the amount of fees charter schools must pay to the districts. The bill is on the way to the governor’s signature. “Most recently, the district incurred $3 million in expenses after Justice Alma Wilson Seeworth Academy closed June 30. The district had to quickly prepare a vacant school building, now Putnam Heights Academy, in a matter of weeks to take on former Seeworth Academy students.”
22) Texas/National: Turner Impact Capital, a private equity fund and “real estate investment firm dedicated to social impact” (which manages the Turner-Agassi Charter School Facilities Funds to facilitate the development of charter schools) “has acquired a Dallas-area workforce housing community.” Acquiring a community?
23) National: As expected by many, the issue of infrastructure has yet again been kicked down the road. The $3 trillion bill passed by the House on Friday did not have an infrastructure component, prompting MSNBC host Ali Velshi to say “I suspect I`ll grow full head of hair before we get an infrastructure gig done in this country.” [The Last Word, May 15, transcript].
State and local transportation coffers are empty, rendering pointless any hopes that they could kickstart an infrastructure boom. AASHTO had requested $50 billion of transportation aid from the federal government, but that went nowhere. “Without aid, many in the industry said, it could be years before transportation projects are fully funded again,” The Wall Street Journal reports. “After the 2007-09 recession, it took until 2015 for U.S. highway spending to rebound, said Dave Bauer, president and chief executive of the American Road and Transportation Builders Association, a trade group. ‘We didn’t even have to deal with the traumatic drop-off in gas tax revenue that we are currently experiencing,’ he said. ‘It’s very hard not to look at our history and see how this situation could become even more of a disaster if we don’t have action.” [Sub required]. With Mitch McConnell, a stalwart. opponent of major infrastructure spending, digging in his heels on additional recovery spending, it looks like déjà vu all over again, but worse. And all that supposed dry powder of private investors sitting on the sidelines is a mirage as private equity corporations and banks face serious and possibly dangerous financial pressure due to the economic collapse.
24) National/Revolving Door News, international edition: Nevertheless, the privatization industry is still looking for ways to profit from infrastructure, and is eyeing the renewable energy sector and public services, according to the Australian Financial Review. The plan seems to revolve around gutting environmental permitting and also putting the squeeze on desperate governments to part with their assets in a hurry. A veteran proponent of road and electricity privatization, former Australian ambassador to the U.S. Joe Hockey, has just been hired by Macquarie to lead the effort.
“A former infrastructure adviser to President Donald Trump—and a Macquarie Group alumni—D.J. Gribbin, told the Financial Review last week he is urging the administration to adopt an Australian-style environmental permitting system to accelerate new project spending. Mr. Hockey is betting that governments across America will come under fresh pressure from voters to reconsider the traditional opposition to the public sector in essential services. If governments are driven to spend more money on hospitals and medical stockpiles, just as their tax incomes are hit by the economic downturn, they will need to find new ways of getting the most out of existing assets.” Look for the industry boosters and Trump strategists to fan out to push this old idea, which has never gotten any traction in Congress or the statehouses before. Green New Dealers beware. Bankers are approaching with a smile and a handshake.
25) National/International: Transurban, the private, for profit road tolling giant, has seen its tolling revenue fall by halfbecause of traffic level collapses due to the pandemic. “Transurban said it would push ahead with annual toll increases, despite a political backlash against the hikes given the economic crisis unfolding due to the pandemic,” the Sydney Morning Herald reported. In the DC area, plunging traffic levels have also hit the company’s toll lanes business, Fredericksburg.com reports. “INRIX also reported that traffic in the Washington, D.C., area was still down 53 percent in late April. The decreases in traffic have hit express lanes operator Transurban, which reported a drop in traffic of about 60 percent in since early March, according to the Australian-based company’s May investor briefing report.”
The crisis has hit toll roads across the country. In the Lone Star State, the Central Texas Regional Mobility Authority, which operates the U.S. 183 and 183A, SH 71, US 290, 45 SW and MoPac toll roads saw “somewhere between a 54%-60% decrease from the week ending March 6 to the week ending April 3. But the MoPac express lane saw a 90% decrease from early March to late in the month.”
26) Florida: The private, for profit operator of a luxury dorm financed with public municipal bonds has collapsed into bankruptcy less than 16 months after selling the bonds. “It’s the latest muni-bond financed project that’s fallen into distress after being sold at the height of buyers’ interest in risky investments that offered higher yields. BlackRock Inc. said in a report last week that student dorms are among the areas in the $3.9 trillion state and local government debt market that are vulnerable to the economic impacts of the coronavirus.”
27) Indiana: Fitch has reaffirmed the private Indiana toll road’s debt rating at BBB, but assigned it a negative outlook. “[Year to date] traffic and revenue in 2020 has been significantly impacted by the ongoing coronavirus pandemic. ITR has experienced significant softness for light vehicles as generally observed nationally, with shelter in place orders from Indiana, Illinois and Michigan seeing light traffic across the road down approximately 70% versus the same time period in 2019. Heavy vehicles have performed far better than light vehicles, with traffic softness only beginning in the back end of March into early April and stabilizing around 15% down for the month of April.” In 2014 the foreign-owned operator of the road filed for bankruptcy.
28) Maryland: Contractors are threatening to withdraw from the $5.6 billion Purple Line “public-private partnership,” citing their frustration at not being able to get taxpayers to pick up the tab for delays and cost overruns. “There have already been grumblings about the PPP structure from North America’s private sector in recent years. In December, Nicholas Varone, director of the US corporate finance group at Fitch Ratings, told Infrastructure Investor that there are ‘undertones of frustration’ about cost overruns and delays in PPP projects.” [Sub required]
29) Massachusetts: Questions are swirling around Boston MBTA’s “public-private partnership” contract with Cubic to upgrade the transit system’s fare collection technology. The contract weighs in at 3,000 pages, rather complicating transparency. (“I have a 982-page version that is some subset of the 3,000-page version, and I’m trying to track down the other 2,000 pages,” says Chris Dempsey of Transportation for Massachusetts). “The project has been a work in progress since its announcement in December 2018. Late last year, T officials warned the oversight board of looming cost overruns in addition to a phased-in implementation as opposed to an all-at-once rollout” the Bond Buyer reports. “The T now intends to pay Cubic $35 million up front, veering from the original plan of no down payment. ‘It’s very clear that this is a troubled project,’ said Dempsey, a former Massachusetts assistant secretary of transportation and former consultant at Bain & Co. He also led opposition to Boston’s bid to host the 2024 Summer Games and is the co-author of ‘No Boston Olympics: How and Why Smart Cities Are Passing on the Torch.’” [Sub required]
30) Think Tanks: With the COVID-19 crisis biting deeply into public works financing, this is a good time to reread the Kevin DeGood’s of the Center for American Progress’ report The Limits of Risk Transference Through Public-Private Partnerships.
Criminal Justice and Immigration
31) National/New Jersey: Attorneys for immigrants detained in Elizabeth by ICE in a CoreCivic-run detention center that used to be a warehouse have filed a class-action lawsuit demanding the immediate release of everyone held in the facility. “The suit alleges that the close proximity of beds and other unhealthy conditions make the men and women there susceptible to the illness. Detainees have told their attorneys that there is limited cleaning supplies and disposable masks that they must use for at least two weeks. The $1-a-day cleaning jobs are no longer being offered to detainees. If not releases, attorneys hope a judge will at least order expedited bail hearings and bar ICE from admitting new people into the facility. A similar class-action lawsuit in Massachusetts led to hearings and a significant number of releases.”
CoreCivic has just released a report on its Environmental, Social and Governance (ESG) practices, which covers ethics.
32) Alabama: Gov. Kay Ivey (R) is moving forward with a plan to lease three mega-prison complexes built by private companies. “Alabama Prison Transformation Partners, a partnership of multiple companies including BL Harbert International, and CoreCivic were the two companies to submit responses. The governor’s office said the successful developer team or teams will be announced this summer. Her office said financial terms will be announced in the fall regarding negotiations.”
33) New York/National: Rep. Nydia Velázquez (D) has condemned conditions at New York City’s lone private jail, which is operated by GEO Group. “‘Conditions at these detention centers are so poor that this man contracted #COVID19TWICE,’ Velázquez tweeted. ‘These institutions are not a safe place for inmates or those detained. We need compassionate release of vulnerable populations who present no public safety risk.’ At least 38 inmates tested positive for COVID-19—including the man who tested positive twice—before GEO Group stopped testing last month, according to court-ordered reports issued by the jail’s warden. Over the past two months, the Eagle has reported regularly on the surging rate of COVID-19 inside the federal jail, which is operated by private prison firm GEO Group under contract with the U.S. Marshals Service.”
34) Tennessee/National: Trousdale County, site of the CoreCivic Trousdale Turner Correctional Center, is the number one hotspot in the U.S. for COVID-19. “Only 13 cases to date in Trousdale County are not related to the prison. Elsewhere in the state, Bledsoe County is currently fifth in the nation due to the Bledsoe County Correctional Complex, which accounts for 586 confirmed cases out of 604 prisoners tested, according to a county report. The complex of three prisons houses 2,539 prisoners and is operated by the Tennessee Department of Corrections.”
35) National: The Municipal Employees’ Federation, American Federation of State, County, and Municipal Employees, Local 101, says “Front-line public service workers are risking their lives under the most difficult possible conditions. Believe it or not, many are being thanked with layoffs. Tell Congress to #fundthefrontlines #HeroesAct before it’s too late. @IFPTE21 @cema_oe3.”
36) National: Will Mitch McConnell destroy our public services? Veteran teacher Arthur Goldstein weighs in. “We urgently need aid for states, red or blue, that are suffering under this pandemic. It’s unconscionable that we decide whether or not to help Americans based on how they voted in the last election, or any election. (…) It used to be, in times of national crisis, that we put aside partisan bickering and came to the aid of those who most needed it. If ever there’s a time to return to that tradition, it’s right now.”
37) National: The postal service helped us survive 1918 Spanish Flu. Amid coronavirus, Trump is trying to bankrupt it, says Jeremy Mohler of In the Public Interest. “But sticking out like a sore thumb is an article urging readers to use a U.S. Postal Service program delivering farm-fresh food. President Woodrow Wilson’s ‘Farm-to-Table’ initiative had been launched in 1914 to connect rural farmers with city dwellers. Four years later, as a war-time food shortage swept the nation, postal carriers were delivering meat, produce, and other goods to 41 cities, from Baltimore to San Francisco. As the Trump administration downplays the need for greater coronavirus testing, refuses to use federal power to ramp up production of masks, and even tries to cut Social Security and Medicare, it’s hard to imagine such an ambitious federal program happening today. In fact, Trump is kicking the 245-year-old Postal Service while it’s down. He blocked a bipartisan plan to provide $13 billion to the agency as it struggles through the pandemic. He appointed a businessman with no postal experience to be the new postmaster general. ‘The Postal Service is a joke,’ he said, at an April bill signing. (Sign this petition to help #SaveThePostOffice.) The postal service is not a joke. It’s a pillar of American life.”
38) National/Tennessee: Rep. Steve Cohen (D-TN) has written to House Speaker Nancy Pelosi, Majority Leader Steny Hoyer and Majority Whip James Clyburn asking them to prevent the privatization and outsourcing of federal jobs during the ongoing pandemic. In his letter, Cohen said “it is extremely disappointing that TVA is going against its own mission of ‘making life better for the people of the Tennessee Valley’ and is defending its decision to eliminate these jobs to ‘leverage the market.’ Unfortunately, it is clear that Congress must step in to ensure additional jobs are not outsourced as the economy begins to recover from the effects of COVID-19. Therefore, as you negotiate the next coronavirus relief package with the U.S. Senate, I respectfully request the inclusion of language that prohibits federal government agencies, including the TVA, from privatizing federal jobs during the COVID-19 pandemic and any other national emergency in the future.”
39) Revolving Door News: Public Citizen is sounding the alarm over Trump’s appointment of a pharmaceutical industry heavyweight to head his COVID-19 vaccine task force. “he administration named Moncef Slaoui, former head of GlaxoSmithKline’s vaccine division and a venture capitalist in the pharmaceutical field, to act as chief adviser for the program, called ‘Operation Warp Speed.’ Slaoui worked at GlaxoSmithKline for 30 years until 2017, and since then has sat on the boards of a number of pharmaceutical firms which are now researching potential vaccines for the coronavirus—leaving the former executive with what Public Citizen called ‘blatant financial conflicts of interest.’”
40) National: “‘We will use this crisis to grow aggressively,” says KKR, the global private equity investment company. “KKR is treating the crisis brought on by the coronavirus pandemic as a strategic “inflection point” for the firm, which it has been preparing for over the last decade,” Infrastructure Investor reports. Co-President and Co-Chief Operating Officer Scott Nuttall told investors on an earnings call that “during times like this, the firm can use its balance sheet to be ‘aggressive,’ including for new investments, strategic acquisitions and for buying back its own stock. ‘We expect to be able to use this crisis, as we did the last one, to evolve and grow our business aggressively through and coming out of this and to create the next inflection point for our firm.’” [Sub required] They try never let a good crisis go to waste, but they can be stopped by public interest campaigning.
41) National: Moody’s reports that before the coronavirus crisis, tax-supported debt in U.S. states had declined. “Median debt service costs for states fell for a sixth straight year in 2019, to 3.8%, with lower interest rates and recent refinancings driving down costs, Grundleger says. Debt service coverage ratios remained highest in Connecticut and Massachusetts, while Mississippi’s ratio improved the most.” But “Moody’s believes state debt levels will rise in 2020 as states manage pandemic-induced financial pressures. ‘Although some debt issuances were canceled or postponed as the pandemic took hold, increased deficit financing is likely this year,’ Grundleger notes. ‘Additionally, states that relied on pay-go financing of infrastructure projects in recent years will likely see a return to debt financing as excess revenue diminishes.’”
42) Ohio/National: Twenty years ago, The Plain Dealer had more than 340 journalists. In its heyday, it had even more. Today, it has four.