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This Week’s Outsourcing Scan 06-02-14

Update: Upcoming Outsourcing Issues. June 2, 2014

1) National: The AFL-CIO is backing the American Postal Workers Union’s boycott against Staples over the outsourcing of postal workers’ jobs. “The AFL-CIO is the latest labor organization to formally endorse the ‘Don’t Buy Staples’ campaign. The National Postal Mail Handlers Union’s National Executive Board officially endorsed the boycott on May 27. The California Federation of Teachers was the first to sign on to the campaign on April 27, followed by the American Federation of Teachers-Michigan on May 17 and the AFT-New Hampshire on May 23.” [Letter]

2) National: As the controversy over the Veterans Administration scandal widens, adebate over privatization begins to take shape. Leah Binder writes in Forbes that privatization “assumes the hospital community as a whole performs better than the VA, and the sad truth is we don’t have any evidence of that. We know that on average, other hospitals are not doing a great job. Upwards of 500 people each day die from preventable errors in American hospitals.” Binder calls for more transparency, ending the rules that exempt the VA from public reporting. Rep. Andy Harris (R-MD) is to introduce legislation promoting a voucher system. IAVA Executive Director and Founder Paul Rieckhoff on privatization of the VA.

3) National: Writing for Alternet, Alex Henderson lists “six things that should never be privatized.” Henderson says “The idea behind operating gas, water or electric services as public utilities is that those things are important to people’s health and survival and therefore, must be protected from corporate greed. Some things belong in the private sector, others don’t.”

4) National: The Newark Advocate looks at corporate involvement in the “education industry.” William Mathis, managing director of the Colorado-based National Education Policy Center, says “‘It’s about setting up tests like the Common Core with high cut-scores and inadequate resources. The push would then be to privatize schools.’ He thinks companies want a chunk of the billions in public dollars being spent on education annually.”

5) National: A new NASBO report on capital budgeting in the states says that “public private partnerships” should be considered, but on a case-by-case basis. “For example, highway public-private partnerships can provide new transportation infrastructure without using public funds, reduce budgetary commitments, and transfer fiscal and constructions risks from states to the private sector. Yet, many road projects can be done more cheaply under traditional models with tax exempt financing and without a need to account for profit margin, financial and legal advisory costs or a risk premium, which are all added costs that come with public private partnerships.” The industry-sponsored Eno Center for Transportation recently rolled out a toolkit for analyzing whether public or P3 options are better for particular projects.

Massachusetts-based Community Labor United, part of the Partnership for Working Families, is “developing a different model” for P3s that emphasizes community involvement and a stepped up role for union pension funds. “Working with state officials, they can outline the job standards and community participation that will make their partnership a responsible investment. Then they can approach Wall Street and see who’s interested in participating on those terms. Now the shoe is on the other foot. The public officials and union trustees have most of the financing they need, and if one investor balks, others may respond differently.”

6) National: Municipal bonds, which are often used to fund public infrastructure construction and improvement, are at their highest prices in a year, creating a more favorable financing environment for states and municipalities. “I don’t think the need for tax-exempt income ever went away, and there appears to be pent-up demand,” said one analyst. But issuance is expected to fall this year.

7) National: The U.S. Agriculture Department announces a “public private partnership” program to clean up waterways. “The RCPP will competitively award funds to conservation projects designed by local partners specifically for their region. Eligible partners include private companies, universities, non-profit organizations, local and tribal governments and others joining with agricultural and conservation organizations and producers to invest money, manpower and materials to their proposed initiatives.”

8) National: The bankruptcy of ConnectEDU puts 20 million student records at risk. “The assets of ConnectEDU, including 20 million personal student records, are being bought by a venture capital company called North Atlantic Capital. Now the FTC is stepping in, to try to block the handing over of all these personal records.”

9) Alabama: A Montgomery County judge has ruled unconstitutional a law that “allows parents of students in failing schools to apply for tax credits to use for private school tuition.” The right wing Institute for Justice has vowed to appeal and will meet with the Alabama Attorney General’s Office this week to plan strategy.

10) California: The widely watched race for state education superintendent, in which school privatization is an issue, takes place tomorrow. [Profiles]

11) California: Palo Alto is considering downsizing and outsourcing street sweeping. The Finance Committee will review the plan tomorrow and decide if it should be recommended to the City Council. “The proposal has attracted opposition from Service Employees International Union Local 521, which represents the employees.”

12) District of Columbia: DC hires Veolia Water “to implement operational and process improvements” at the Washington Aqueduct. Veolia just completed a four month evaluation contract.

13) Illinois: The Chicago Infrastructure Trust, a vehicle set up with much fanfare by Mayor Emanuel to promote “public private partnerships,” is off to a slow start with a $12 million project, “piddly in the world of infrastructure.”

14) Maryland: The Montgomery County parks department is seeking approval this week from the Planning Board to allow companies “naming rights for dog parks, ice rinks, playgrounds and other facilities within county parks. Last year, Parks hired sponsorship consultant IEG to look at what sponsorships should cost and which kinds of companies to target.”

15) Michigan: Aramark could be the new food supplier to the Ann Arbor school district. Chartwells is the current contractor. “Trustee Simone Lightfoot said she’s had experiences with Aramark in her professional life and that they have not made a good impression. She questioned whether a difference of 6 cents per meal between the two companies was enough to prompt a vendor change.”

16) Michigan: Fruitport school district moves to privatize custodial positions. The district will contract with CSM Services beginning July 1.

17) Michigan: Upland is negotiating with Library Systems and Services Inc. on a five year contract to outsource library management operations.

18) Mississippi: State hospital cancels private contract. “Now that the privatization is off, all Community Services employees who wished to remain employed with Mississippi State Hospital were offered the opportunity to transfer to work assignments at the main hospital campus.”

19) New Jersey: As controversy over the possible privatization of toll collections continues, a previous privatization, that of Atlantic City Expressway toll collections, is coming under scrutiny. “The expressway’s contract with Faneuil Inc. of Hampton, Va., runs through November. The South Jersey Transportation Authority, the expressway’s operator, has previously said the Faneuil deal is expected to yield $7.5 million in savings. (…) Critics contend the Faneuil deal is actually costing the SJTA more for toll collection.”

20) New Jersey: The Nation publishes an in-depth report by Owen Davis on “The Newark School Reform Wars.” Says that “students who leave the district for charters—privately managed nonprofit schools exempt from some regulations—take 90 percent of their funding with them. A quarter of Newark students currently attend charters, a share that will rise to nearly 40 percent by 2016.”

21) Missouri: British-based private bus operator Go-Ahead is to pull out of the U.S.after losing its bid to renew its contract in St. Louis. Its bid for the next contract was 10% higher, leading the nonprofit Voluntary Interdistrict Choice Corporation to reject it.

22) Oregon: The State Supreme Court has ordered a change in ballot language for an initiative that would privatize liquor sales. “Supporters of privatization can’t collect signatures until the court approves a revised ballot title. That could take another week or two, and backers need the names of 87,213 registered voters by July 3.”

23) Pennsylvania: Food & Water Watch senior Pennsylvania organizer Sam Bernhardt takes aim at Mayor Nutter’s idea to privatize the Philadelphia Gas Works. “PGW is good for Philadelphia because, as a nonprofit public utility, it benefits the entire city with gas rates that, though high, would be three times as high if a private corporation like UIL (which exists only to maximize shareholder value) gained control of it.” Last week protestors turned in a petition to the City Council signed by over 1,000 opponents of privatization.

24) Pennsylvania: Bridges in Jefferson and Clinton townships are to be replacedunder Pennsylvania’s multiple bridge replacement “public private partnership.” PennDOT will hold a public meeting in Saxonburg this Thursday.

25) Tennessee: Shelby County puts off outsourcing of substitute teacher hiring to Kelly Services. “Board member Teresa Jones posed several questions about the proposal during the board’s work session last week and said she would not support it because it contained ‘too many holes.’ (…) The Memphis-Shelby County Education Association has voiced opposition to the district’s recent outsourcing decisions of custodial work and transportation.”

26) Texas: TxDOT awards an $847 million contract to Southgate Mobility Partners to rebuild State Highway 183. “The free lanes will be rebuilt and new managed toll lanes, also called TEXpress Lanes, will be constructed, one in each direction.” Construction on this phase will begin by the end of the year. “But what’s still unclear is how much a motorist might pay in tolls on such a route. The state Transportation Department will hold a public meeting in June in Fort Worth to discuss toll pricing.”

27) Texas: Tea Party sees its ousting of David Dewhurst in the GOP primary for Lieutenant Governor as a victory for “anti-toll” forces.

28) Utah: Mike Oviatt, head of food service for the main hub of the Utah State Prison in Draper, talks about budget pressures and operations. Oviatt “has been serving meals that cost a miniscule $1.31 a plate. Now he’s being asked to lower that to 80 cents.”

29) Virginia: News surfaces that Virginia’s private port operator, Virginia International Terminals, was offering additional discounts while the public Port Authority was losing money “even as cargo volume soared. (…) The board members told Layne that no one at the authority had known about the discounts until a few days earlier—not even Rodney Oliver, the authority’s chief financial officer and then interim executive director.” The state turned down a proposal to privatize the port last year. Reports from March and April this year suggest the port is back on track financially.

30) Washington: Alcohol-related hospital emergency room visits spike following privatization of state liquor distribution. The privatization initiative means that hard liquor is available at four times as many stores and during twice as many hours as previously. This is despite a jump in prices since privatization.

31) Washington: The Washington Policy Center, part of the right wing State Policy Network, is to hold a briefing tomorrow that will “give attendees a behind the scenes look at the effort to bring Eastern Washington its first public charter school.”

32) Wisconsin/Think Tanks: One Wisconsin Now releases an investigative report into the working of the quasi-private Wisconsin Economic Development Corporation (WEDC), created by Gov. Scott Walker. Among the key findings are that Walker received more than $2 million in campaign benefits from WEDC recipients; that WEDC economic development dollars are not resulting in promised job creation; and that WEDC recipients feature companies engaged in health and safety violations, mass layoffs and conflicts of interest.

33) International: Australia cuts back its plans for privatizing state assets in the face of public opposition. Last month Australia’s new government published a plan to privatize A$10 billion worth of public assets. “Privatizing Australia Post would have been particularly sensitive given the perceived danger that people in far-flung, rural parts of Australia would see their services reduced or cut if the entity fell into private hands.” [Sub required]

34) International: Applications for 2015-2020 rate increases by water companies in Britain are under scrutiny by Ofwat, the industry regulator. “Southern Water, controlled by a consortium of investors led by JPMorgan Asset Management, has had £375m, or nearly a quarter, of a proposed five-year investment budget queried by Ofwat.” The Financial Times expects “further challenges to spending plans totaling in excess of £2bn.”

35) Think Tanks: The Reason Foundation bristles over conservative criticism of private High Occupancy Toll (HOT) lanes. In April, The Weekly Standard ran a front page story on the toll lanes. Commenting on the I-495 beltway lanes near DC, the magazine said “and it turned out that most of the ‘private’ money would be coming from the public, too. By the end of 2007, the projected cost was up to $1.9 billion—these deals rarely get better as they go along—and Transurban announced that it had secured $1.2 billion in sweetheart loans and ‘private activity bonds’ from the U.S. Department of Transportation and the state of Virginia in addition to the $409 million Virginia had already committed to spending for the cause. In the end, Transurban plunked down just $350 million of its own money.”

 

Legislative Issues:

1) National: The House GOP has voted down a measure to prohibit the federal government from giving a contract to any company that has engaged in wage theft. “In a joint statement, Reps. Keith Ellison (D-Minn.) and Raúl M. Grijalva (D-Ariz.), chairmen of the Congressional Progressive Caucus, said House Republicans voted ‘to continue wage theft.’”

2) National: A bill introduced in the Senate would remove state volume caps on Private Activity Bonds for water utility projects. “A U.S. Treasury report on the president’s proposal to expand water and sewer PAB volumes said it would result in a $201 million reduction in federal revenues. A study by the congressional Joint Committee on Taxation estimated the revenue loss would be $166 million through 2024.” The bill is now in the finance committee. [S. 2345] Sen. Mark Kirk, R-Ill., has introduced a bill to raise the cap on federally allocated PABs for surface transportation projects. [The Bond Buyer, June 2, 2014; sub required]

3) Colorado: The deadline is this Friday for Gov. Hickenlooper to sign the recently passed “public private partnership” bill or let it take effect without his signature.

4) Illinois: As the State Senate votes to abolish the charter school commission, eyes turn to the House to see if it will follow suit.

5) Illinois: Chicago housing activists warn about the threat to civil liberties from a bill that would allow the outsourcing of eviction processes. The bill “would change eviction laws to allow any ‘peace officer,’ including off-duty police in the employ of private security companies or landlords, to remove tenants from their homes. Critics have denounced the idea of ‘rent-a-cops’ unfamiliar with the nuances of tenant law carrying out this procedure.” The bill has been re-referred to the Rules Committee. [HB 5395]

6) Illinois: Gov. Quinn is backing legislation to give funding priority to the controversial Illiana Expressway “public private partnership” over all other state roads. “Illinois road funds could also be tapped as a means to make up for shortages in toll revenue. The proposed draft legislation comes in an effort to get private investors on board with the project.” An amendment to SB 1825 covering Illiana funding was introduced into the General Assembly on Friday, and includes subsidies (“availability payments”).

7) Louisiana: For the second year in a row, a state senate committee has killed legislation that would require “review and oversight of contracts that would privatize services provided by state government.” Gov. Jindal’s staff lobbied against the legislation. One lawmaker who favored the measure says “it’s hard for us, as representatives, to go back home and tell our constituents that we didn’t review the contract and we’re 100 percent sure that it’s going to be saving us money.” [HB 128] Another House-approved bill to curb contracts had better success in the Senate last week. [HB 142]

8) Ohio: Competing bills are introduced to ban or regulate traffic cameras. “Speaking at a Statehouse news conference, [an Ohio Municipal Council official] admitted some communities have abused traffic cameras to raise money.”