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This Week’s Outsourcing Scan 06-16-14

Update: Upcoming Outsourcing Issues. June 16, 2014

1) National: “Privatizing climate change.” In the Public Interest Executive Director Donald Cohen and Roosevelt University Professor Stephanie Farmer explore “how poorly structured public-private partnership (P3) deals threaten long-term environmental sustainability.”

2) National: “Common Core” sparks a flood of legislation in the states. “As of May 15, lawmakers introduced over 340 bills in 46 states—every state that had had a regular legislative session this year— that addressed college- and career-readiness education standards, including the Common Core, according to the National Conference of State Legislatures. Of those, 30 would slow down or delay college- and career-readiness standards and 35 would halt or revoke implementation altogether. At the same time, implementation of the standards is well underway in most of the states that originally signed on.”

3) National: Hard questioning begins to challenge the “irrational exuberance“ around social impact bonds, which outsource social policy to private financial institutions and selected nonprofits. WAMU’s Kojo Nnamdi presents a critical discussion of the issues surrounding SIBs in a program on “Social Impact Bonds come to Washington.” Rick Cohen of Nonprofit Quarterly, who appeared on the program, has also weighed in with “Eight Sobering Thoughts for Social Impact Bond Supporters.” Cohen observes that  “given that there are only four social impact bond projects underway in the U.S., the hoopla for SIBs is something else.” He asks, “is it possible that a potential SIB/PFS downside is that private capital might overly influence the decision-making and priorities of government through the SIB/PFS model?” [Maryland Dept. of Legislative Services study of SIBs]

4) National/Alaska: The U.S. Forest Service is seeking a regional partnerships coordinator for its Alaska regional office. Among the “skills and abilities” it seeks are to “implement a public-private partnership strategy to achieve significant results, including substantially leveraged funds to support increased accomplishments on the ground.”

5) National: A top executive at Sentinel Offender Services, a law enforcement private contractor, pleads guilty to embezzling $3 million from the company. “Sentinel provides GPS monitoring services to federal, state and local courts, probation offices, law enforcement agencies as well as correctional operations.” Sentinel will be in court in Georgia in September in a key lawsuit on the private probation industry involving 13 separate cases.

 

6) National: Oaktree Capital, the $86 billion Los Angeles-based alternative assets manager, has gobbled up Highstar Capital, one of the leading infrastructure fund managers. Highstar was involved in the privatization of Puerto Rico’s Luis Munoz Marin International Airport. Highstar is also a significant investor in Advanced Disposal Services, one of two firms to which Detroit recently privatized its waste management services. Highstar bought out Veolia’s U.S. waste management business and folded it into ADS.

7) National/California: The IRS has declared that general obligation bonds issued by a health district (Sierra Kings) are in fact private activity bonds, so are not tax exempt. “The conclusion is based on the IRS’ assertion that the bonds met the private business use and private payment tests. Under federal tax law, bonds are PABs if more than 10% of the proceeds are used for private business use and more than 10% of the debt service is secured by or paid for by private users. PABs are taxable unless they fall into certain qualified categories.” [Sub required]

8) National: Boosted by a major gift by New York civic leader Richard Ravitch, the City University of New York’s Graduate School of Journalism is ramping up its training for journalists to cover state and local fiscal issues. “The Ravitch Fiscal Reporting Program will offer fully funded fellowships for state and local reporters to attend one-week advanced training sessions at the CUNY Journalism School. The program will also host two-day seminars on topical fiscal issues and create a community of journalists specializing in the issue. The first training session is scheduled for the week of Aug. 18 at the J-School.”

9) National: Lambert Strether looks at efforts by public university leaders to “shake off government control,” and analyzes degrees of privatization and different paces of the privatization process. “Basically, the Shock Doctrine seems acute; but privatization in the universities, the Post Office, and the Veterans administration seems chronic.”

10) National: Jack Lynch, CEO of Renaissance Learning, discusses how the K-12 digital private marketplace has changed. “My view is that you have to earn your stripes. You have to be worthy of the trust of the school. They’re making a pretty significant commitment when they bring in your technology or services to the classroom. They don’t want their kids to be lab rats. They want research to show it’s efficacious.”

11) Alabama: Gov. Bentley announces an attempt to overhaul the state’s severely overcrowded prison system. “The Justice Reinvestment Initiative, a partnership between the Pew Charitable Trusts and the Department of Justice, will examine the state system and suggest ways to contain costs without risking public safety. The nonpartisan Council of State Governments will help Alabama through the review.”

12) California/National: A Los Angeles Superior Court judge’s decision to throw out tenure and other protections afforded to California teachers is expected to “embolden those who have tried to impose their vision of public education—or a privatized version of education—on California,” the California Teachers Association’s Frank Wells says. The decision faces an appeal, and may become a major election issue in the Fall. Diane Ravitch reports that “spokespersons for the corporate reform movement hope to launch legal attacks on tenure and seniority in Connecticut, following the example of the Vergara case in California.”

Blogger Mike Klonsky reports that “the legal costs were covered by Silicon Valley billionaire David Welch. Welch is also a founder of the New Schools Venture Fund, a powerful force behind the growth of privately-run charter schools.”

13) California: The Palo Alto Humane Society has proposed a “public private partnership” for a new animal shelter. “The proposal comes at a critical time for Palo Alto Animal Services, which needs a new shelter but recently avoided being outsourced. (…) While the City Council killed the outsourcing plan in response to public outcry, it ordered Animal Services to increase revenues and reduce expenses, with the goal of being cost neutral by 2016.”

14) California: A poorly worded contract drafted when Mendocino County privatized its mental health services has led to a lack in crisis care for the severely mentally ill. “The grand jury’s report, titled, ‘Privatization of Mental Health Delivery Services,’ found ‘a serious oversight in the preparation of the contract.’ According to the report, ‘The clients most in need of mental health assistance were specifically excluded from the language of the contract.’”

15) Colorado: Although he vetoed the Transportation Enterprise Transparency Act, Gov. Hickenlooper issued an executive order containing some transparency measures covering “public private partnerships.” These include “holding a minimum of three public town hall meetings for communities affected by a project before issuing a Request for Proposals; considering other alternatives when analyzing any surface transportation project that involves toll lanes or managed lanes; and making the essential terms of a P3 agreement available to the public on the HPTE website. The order also calls for the creation of a Centre of Excellence that would establish P3 best practices, including programs for ensuring transparency and openness.” [Sub required]

16) Connecticut: Outsourcing custodial jobs at Sacred Heart University to Compass Group Inc. means the loss of free tuition for the workers’ kids. “The change has many workers worrying about how they will pay for their children’s college education, according to [Deb] Carabetta, who was chosen as a group spokesperson because of her proficiency in English.”

17) Florida: Five investors make a $1.2 million bid for the now-vacant Glades Correctional Institution. It “probably” won’t be reopened as a prison. “[Former Mayor Tom Altman] said the partners have not had contact with any private prison companies and were surprised that none bid on the land. In fact, there were no other bids on the property. ‘We wouldn’t want to close the door on any avenues (but) Belle Glade has been somewhat stigmatized over the years because of the prison,’ he said.” [Sub required]

18) Florida: The Sun-Sentinel reports on a school voucher system for disabled students that “makes no effort to ensure the schools are providing the required services.” In Palm Beach County, “there are 59 private schools in the county that accept the vouchers—and at least 28 of them don’t have full-time special education teachers, nor are they required to.”

19) Maryland: Residents and union workers protest plans to privatize public housingunder RAD, a federal program. “Protesters fear the Housing Authority of Baltimore City’s plan would lead to lost jobs, displaced residents and less available public housing.”

20) Michigan: Ann Arbor school district outsources the jobs of its custodians to GCA Services. “A proposal from current custodians to form an employee-owned co-op to provide custodial serviced to the district came too late in the process to be considered, Board President Deb Mexicotte said.” GCA is owned by the multibillion dollar Blackstone Group.

21) Michigan: The Plymouth-Canton school district is to outsource the jobs of its custodians to Grand Rapids Building Services, Inc. “Jon Stamper, a third-generation support staffer in the district, urged board members to find a different way to save money. ‘For over 50 years, my family has served as familiar faces to the administrators, students and faculty of these schools,’ Stamper said.”

22) New York: Dutchess County is to issue a request for bids to privately operate some functions of its airport. The RFP will be issued this summer.

23) Ohio: The Ohio Supreme Court strikes down a lawsuit challenging the privatization and operations of JobsOhio, finding that the litigants, including ProgressOhio and two state legislators, lack standing. “Justices Paul Pfeifer and William O’Neill wrote dissenting opinions asserting it’s in the public interest to address the JobsOhio question.” [Opinion and dissents]

24) Pennsylvania: Residents demand to know why Warren Haven nursing home is restricting admissions despite revenue shortfalls. “Tensions have been high since the Warren Haven Advisory Committee offered a set of recommendations for keeping the nursing home in county hands that included selling or privatizing the facility if certain benchmarks aren’t met.”

25) Tennessee: The Knoxville News Sentinel runs an editorial saying that a Lazard Frères study should close the door on privatizing the Tennessee Valley Authority. “In sum, the privatization of TVA would be bad for American taxpayers and bad for TVA ratepayers. President Barack Obama should abandon this misguided effort to dismantle the nation’s largest federal utility.” [Sub required]

26) Texas: Austin may study raising its living wage. “The living-wage issue has political undertones. Martinez and four other people are running for mayor this fall and will be vying for the endorsement of the city employees’ union, AFSCME. (…) Carol Guthrie, the business manager for Austin city employees’ AFSCME union, said the union would want some assurance that the city wouldn’t privatize, eliminate or replace regular jobs with seasonal or contract workers if it enacts a higher living wage.” [Sub required]

 

27) Texas: Houston reaches contract agreement with its firefighters. One key provision is “that the city will not privatize or civilianize EMS functions during the term of the agreement. Subject to the required approvals, the agreement is to become effective July 1, 2014 and last until December 31, 2016.” The agreement must still be ratified by the union and approved by the City Council.

28) Texas: The Dallas Morning News reports that “the era of the toll road” is coming to north Texas. “The overall move from free carpool lanes to a network of managed toll lanes theoretically will free up more space on existing free lanes. It will also add a revenue source for transportation coffers. Carona, the state senator, said the reliance on tolls actually costs North Texans more than raising the gas tax would have. He said that toll projects cost more than three times what free roads do because they involve much more complicated financing methods and typically involve private developers who aim to make a profit. [State Sen. John Carona] said politicians who pat themselves on the back for not raising the gas tax have effectively hit their constituents’ pocketbooks harder. ‘It’s been a hoax on the public,’ he said.” A public meeting about planned toll lanes on the LBJ Freeway will be held tomorrow.

Tollroads News gives the stories on a possible boom in tollroads a “maybe.”

29) Vermont: The state has hired a new contractor to “provide evaluation, remediation and operations support” for its online health insurance marketplace. “The state chose OptumInsight for this remedial contract because it has already assisted in fixes for the federal health insurance exchange and for several other state-based online insurance marketplaces.”

30) Infographic: Venture capital flows into for-profit education.

31) Think Tanks: Chris Chocola, president of the right wing Club for Growth, says “Congress should devolve highway funding to the states and privatize the United States Postal Service completely.”

 

 

Legislative Issues:

1) National: Republican congressman Frank LoBiondo (NJ) wants to privatize some services of the Veterans Administration. “But Ben Whaley, 66, of Englewood said an array of programs offered only to veterans might be lost if portions of VA health care were privatized. ‘I don’t think they would have the pulse of the vets if they were to privatize it,’ he said. Tony Koridge, 41, of Leonia is dead set against any privatization. ‘This is about money,’ he said. ‘We shouldn’t be throwing our vets at big pharma and big health care,’ he said, referring to the pharmaceuticals industry.”

Legislative action to introduce some level of privatization is moving forward in Congress. “Republicans would also like to privatize the VA to whatever degree they can, just as they’d like to privatize Medicare and Medicaid. And this bill starts down that road,” writes Paul Waldman in the Washington Post.

2) National: The American Federation of Government Employees weighs in to support Rep. Rosa DeLauro’s amendment to block the outsourcing of Agriculture Department poultry inspections. “The [outsourcing] proposal also would allow plants to increase their line speeds up to 175 chicken carcasses per minute, meaning that the lone remaining federal inspector on the slaughter line will have one-third of one second to examine each chicken carcass for disease, infection and contamination.”

3) Ohio: A ban on traffic cameras “appears to have the votes needed to pass the legislature this fall,” according to lawmakers. “The debate over the cameras has pitted law enforcement officials, local government figures, and camera company lobbyists, who say the devices make roads safer, against civil-rights advocates who believe such monitoring is intrusive and only serves as a money-maker for cash-strapped municipalities.” A key case on the issue is before the Ohio Supreme Court, which is expected to rule soon.

4) Pennsylvania: As the legislative session winds down for the summer, negotiations are taking place to allow beer and wine sales by private distributors. “The deliberations are happening as the June 30 deadline for a state budget creeps closer. The weeks leading up to passage typically are the height of legislative activity.”