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This Week’s Outsourcing Scan 07-28-14

Update: Upcoming Outsourcing Issues. July 28, 2014

1) National: Georgetown Law School announces a three part series of symposia on “public private partnerships.” The first, in October, will be on “Structuring Public-Private Partnerships for Asset Management.” The second, in early 2015, will be on “Partnering with State and Local Governments.” The third, later in 2015, will be on “Driving Successful Execution of Public-Private Partnerships.” The Law Center is also establishing “an ongoing working group composed of current and former government officials as well as academic researchers with expertise in crafting and delivering successful public-private partnerships.”

2) National: The U.S. Department of Agriculture has opened a $10 billion “public private partnership” to build “rural schools, hospitals, and water systems with investments by institutions, pension funds, endowments, and other private partners. Anchor investor CoBank has committed $10 billion of balance sheet capacity to co-lend with the new U.S. Rural Infrastructure Opportunity Fund.” [Sub required]

3) National/International: Only 11% of the world’s infrastructure deals by value came from North America in the second quarter of 2014.

4) National: HBO’s John Oliver takes on mass incarceration and the private prison system on his show “Last Week Tonight.” He zeroes in on Aramark, CCA and Geo Group. [Video]

5) National: The private, for profit network of colleges, Corinthian, outspent Harvard and the University of California in lobbying as it hurtled toward collapse. “Their firm—Akin Gump Strauss Hauer & Feld LLP—reported that it was specifically lobbying for a bill introduced by Representative Virginia Foxx, a North Carolina Republican, that bars the Education Department from crafting rules governing ‘gainful employment’ and ‘credit hours.’” Annual overall lobbying spending on education topped $84 million in 2013.

6) Arizona: The University of Arizona health network’s status as a “public private partnership” complicates efforts by Banner Health, one of the country largest private health companies, to buy it out. “the UA, which had previously owned and operated the hospital, decided to privatize it in 1984. At that time, the University Medical Center Corp. agreed to assume existing liabilities of $11.7 million and to pay a base rental fee of $10 per year. Despite its status as a private company, the network is closely intertwined with the UA, a public university.”

7) Florida: Physician Marc Yacht writes that “government cannot be run like a business.” For example, “Florida had one tuberculosis hospital. The most difficult patients were housed there. Florida’s Lantana TB hospital enjoyed an international reputation for treatment and training. A business decision based on costs closed the hospital. Improper patient placement put communities as risk. The hospital closed during one of the most dangerous TB outbreaks in the country that centered on Florida’s homeless population. A concerned governor would have worked with public health officials to protect health and welfare.”

8) Florida: As the state moves to privatize its massive Medicaid system, it bans advertising by private providers. “The Agency for Health Care Administration says marketing events are currently banned because officials want to focus on enrollment and making sure patients don’t experience lapses in care during the transition.” One worry is that companies may seek to “cherry pick customers.”

9) Florida: Osceola County begins negotiations with Miami-based Armor Correctional Health Services to privatize health services for prison inmates. “According to county documents, Armor scored worst of the three contenders after its bid was submitted in May of last year. But after Armor and the two other contenders—Correctional Healthcare and Correctional Medical Care—made presentations the following September, members of the evaluation committee revised their scores, and Armor came out on top. Marc Pierre-Louis, the jail’s health-services administrator, is skeptical of Armor’s upward move in the rankings. He argues that taxpayers will actually end up spending more with Armor in charge. ‘As a financial person, I cannot believe in subjective fact,’ he said. ‘I’m a math person.’”

10) Georgia: Although efforts to commercialize Paulding’s airport have continued since legal and procedural efforts by citizens blocked it, Propeller Investments continues to push the idea even as support further erodes. “In May, three candidates who have questioned the airport plan won primary elections for Paulding’s Board of Commissioners, with support from anti-airport commercialization residents.”

11) Georgia: Austell outsources its garbage pick-up services to Republic Services. An “information” hearing to inform the public will be held tomorrow.

12) Illinois: The Chicago Infrastructure Trust is to launch a competitive bidding process this fall for private investment in a project to upgrade outdoor lighting. The CIT is also working on projects for a cellular upgrade of two transit lines, the upgrading of swimming pools, and possibly compressed natural gas fueling centers. [Sub required]

13) Illinois: North Riverside puts its plan to privatize fire services on hold. “J. Dale Berry, the firefighters’ attorney, said he was open to a contract that saved the village the same amount as the proposed deal with PSO.  The debate over privatization burned hotly in the village of 6,700.”

14) Indiana: The Indiana Finance Authority sells $243.9 million worth of bonds to help pay for the $370 million I-69 “public private partnership” toll road. The DBFOM concession was given to Isolux Infrastructure Netherlands in February. [Sub required] The private activity bonds were sold by the state on behalf of the private developer, who will repay bond investors directly.

15) Indiana: Five failing schools that were turned over to private operators two years ago “are still rated F academically.”

16) Kentucky: A secret plan to privatize the General Burnside Island State Park in Burnside angers Rep. Tommy Turner. The authorities are about to release an RFP to build a lodge. “Turner is a member of the Appropriations and Revenue Committee. ‘Yes, I’m angry,’ Turner told the Commonwealth Journal. ‘I have a right to know … the public has a right to know. (…) It was built with taxpayers’ money into a really nice park and now they are going to allow someone go in there and make big money for themselves.’”

17) Louisiana: Democratic State Rep. John Bel Edwards, who fought to block or delay Gov. Jindal’s efforts to privatize parts of state government, throws his hat into the ring in the governor’s race.

18) Massachusetts: After resisting calls to privatize its school bus service, Pittsfield begins to take delivery of its new fleet of school busses. Superintendent Jason “Jake” McCandless proudly tells the city’s Public School Committee it was the right decision. “The superintendent said pushback on privatizing the bus operations is ‘a reoccurring theme,’ but not necessarily one that is supported by data. ‘We’re 300 or 400 less per pupil per year than these comparable school districts,’ McCandless added. ‘I think that’s worthy of noting, because I think that the School Committee made a good decision in moving forward with this purchase, and I’m grateful to the City Council for confirming that decision.’”

19) Michigan: Controversy and protests continue over cutoffs of water service in Detroit and the future of the water system. “Political protests, negative media coverage and ongoing activism could cause the bankruptcy court to force a different outcome than complete privatization: a public-private partnership (in which DWSD would pay a management firm to run the agency) or—the least [likely] given the pro-corporatism statements and actions of Emergency Manager Orr—keeping DWSD a public non-profit service for residents and area businesses.”

20) Michigan: The Detroit City Council may decide tomorrow on a proposal by Emergency Manager Kevyn Orr to privatize the city’s parking system. “If the council approves Orr’s request to seek bids, it is anticipated a contract would be negotiated and presented to the council by October.”

21) Michigan: Muskegon County board of commissioners race focuses on a vote that incumbent commissioner Ken Mahoney took to outsource the cooking and maintenance staff at the Brookhaven Medical Care Facility. Union-backed challenger Tony Barnes is challenging Mahoney in the Democratic primary. Barnes says the decision was taken by the whole board, but “I can only run against one commissioner.”

22) Michigan/National: David Sirota looks at public subsidies to private companies for  professional sports stadiums in cash-strapped cities, some of which are cutting pensions. “The officials promoting these twin policies argue that boosting stadium development effectively promotes broad economic growth. But many calculations rely on controversial and dubious assumptions that have been widely challenged.”

23) Michigan/Ohio: Maggots are found in a third Michigan prison served by Aramark. “The rotten potatoes were not in the kitchen, and were still in a pallet on a loading dock. MDOC spokesman Russ Marlan said he does not think the latest discovery is the fault of Aramark, which handles food service at prisons, but could be a supply issue in the Upper Peninsula.” In Ohio, a legislative committee is getting regular updates on complaints about rotten food in Aramark-run prison food facilities. “The Correctional Institution Inspection Committee said it will hear an update from Ohio prisons director Gary Mohr on Wednesday afternoon along with other witnesses.”

24) Minnesota: The state is suing two for-profit schools, Minnesota School of Business and Globe University, for “misleading criminal-justice students about their job prospects after graduation and deceiving them about the ability to transfer credits to other colleges or universities.” The schools have been sued four times since 1986, and “last August, a jury ordered Globe University to pay $395,000 to a former dean, Heidi Weber, who said she was fired in 2011 for complaining about unethical practices, such as falsifying job-placement numbers.”

25) Missouri: A petition campaign to stop the outsourcing of ambulance billing in Kansas City went into high gear this weekend. “Outsourcing opponents have until July 29 to collect more than 7,000 signatures to stop the city from transferring jobs. ‘Tax dollars need to be invested in our community and not driven outside by a private corporation,’ Jonathan Walker with [Amalgamated Transit Union] Local 1287 said.”

26) New York: Plans to rent out “a big chunk” of the Red Hook public library branch to an arts group “is a sweetheart deal that sells out everyday bookworms, residents argued at a packed community board meeting inside the branch on Thursday.”

27) New Jersey:  The U.S. Department of Education is investigating complaints that Newark’s school reform program, which critics say is an effort to privatize schools, discriminates against black students. “A complaint filed by parents and a branch of Parents Unified for Local School Education, or PULSE, with the departments of Education and Justice in May said 51 percent of Newark students were black but made up 86 percent of those affected by ‘One Newark.’ White students make up about 8 percent, but are less than 1 percent of the students directly affected, it said.”

28) Pennsylvania: The Department of Transportation is poised to sign a massive “public private partnership” deal with an international firm to repair or replace up to 600 bridges. PennDOT will announce which one of the four bidders will be given the work this fall. “Critics of such public-private arrangements complain of an uneven record of savings compared with more traditional approaches to roadwork, because the deals lean on large multinational companies to front the money. Proponents say there’s no better way for the state to take a big whack at fixing more than 4,000 structurally-deficient bridges—or nearly one in six of all bridges owned by the state.”

29) Rhode Island: A state judge will hear a petition Wednesday brought by bondholders seeking to block a receivership filing by the Wyatt Detention Center in Central Falls. The jail once housed federal detainees, but ICE removed them after a Chinese national died in the facility. “Wyatt owes $97.3 million in principal and $3.2 million in interest on $106.4 million of bonds the Central Falls Detention Facility Corp., as the quasi-public entity is formally known, sold in 2005 to refinance existing bond debt and finance an expansion project.” [Sub required]

30) Virginia/DC Metro: As the new Silver Line rail spur opens, the Washington Post reminds readers that if the Dulles Toll Road had been privatized, as some proposed, it would never have been able to serve as the new rail line’s “cash cow.” Revenue from the toll road would likely have been siphoned off to private investors and other pet projects and the Silver Line may never have been built.

31) Texas: A new law, HB 885, has saved charter schools millions. The law “enables the Permanent School Fund to back charter school bonds [and] has already saved KIPP Houston an astounding $10 million in financing charges. The concept, which took years to get smoothed out, allows charter schools to leverage school fund backing to finance bonds at the same interest rates as traditional public school districts. KIPP is the third charter system in the state and the first in Houston to take advantage of the lower rates.”

32) Washington: Promises that liquor privatization would lead to more funding for law enforcement and public safety are broken. “Legislators are running for re-election this year, which is their opportunity to defend their records and make new promises. Voters should ask for an explanation of what happened to the will of 59 percent of voters who supported I-1183, and what the Legislature should do to restore the cuts to local public-safety funding.”

33) Wisconsin: Milwaukee aldermen add a provision to outsource vehicle inspections to legislation lifting the cap on taxi permits and legalizing mobile ride-booking apps.

34) Revolving Door News: NY/NJ Port Authority Commissioners appoint John Degnan as chair. David Samson, his predecessor, resigned in March after calls for his resignation as the PA was hit by the “Bridgegate“ scandal. Degnan previously served as chief operating officer of Chubb, an international property and casualty corporation.

Legislative Issues:

1) National: The Senate is expected to take action on highway funding this week.

2) California: In the Public Interest’s Donald Cohen looks at the issue of bad court contracts. “As the push for privatization goes deeper into the local courts, Assembly Bill 2332 (Wieckowski) provides the road map that ensures private court contracts meet the test of public interest.” [AB 2332]. A hearing on the bill is scheduled for August 4 in the Senate Appropriations Committee.

3) North Carolina: The Senate passes legislation partially privatizing how the state’s Medicaid system would be run. The bill differs substantially from one passed by the House. “Several medical industry groups oppose the Senate plan, saying it would result in reduced care for Medicaid recipients. ‘Today the Senate had a clear choice between the health of our state’s most vulnerable citizens and the health of Wall Street corporations, and they chose the corporations,’ said Robert W. Seligson, CEO of the North Carolina Medical Society, in a statement Thursday.” If the House rejects the Senate plan, a conference committee would be established.

4) North Carolina: The House approves legislation “that allows private, for-profit management companies that run charter schools to keep their employees’ salaries secret, even though they are paid with public funds.” Gov. McCrory has previously said he would veto any bill that prevents public disclosure of charter school salaries.