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This Week’s Outsourcing Scan 1-18-2016

1) National: Oral arguments were heard in the U.S. Supreme Court on the landmark Friedrichs case involving the right of unions to collect fees for their collective bargaining expenses from all of the beneficiaries of collective bargaining negotiations. 

Scott Hiley, a member of the Chicago Teachers Union, writes “if the high court rules for Friedrichs and her corporate backers, the public sector nationwide will become right-to-work. Without the right to levy dues and fair share fees, our unions will collapse, along with the last substantial barrier to the privatization agenda of the one percent.” 

Anti-union amicus briefs have been filed by over two dozen right wing organizations and politicians, including pro-school privatization organizations such as Public School Teachers Who Favor School Choice, the Goldwater Institute, and the Friedman Foundation for Educational Choice. Donald Cohen of In the Public Interest writes that Friedrichs is “part of their crusade against democracy is taking public goods and services from our hands by privatizing them.” 

Numerous amicus briefs have also been filed by public interest groups and unions defending agency fees, including the American Federation of Teachers and American Association of University Professors. Eric Heins, president of the California Teachers Association, says “the Friedrichs case is fundamentally about something we teach our students every day: fairness. (…) According to a study by In the Public Interest, by providing family-friendly wages and benefits, governments “historically created intentional ‘ladders of opportunity’ to allow workers and their families to reach the middle class.” A decision will be handed down by the end of June.

2) National: The Education Department finally releases an incomplete list of charter schools that have received federal aid, two years after the Center for Media and Democracy initially filed a request. “So on January 13, 2016, CMD filed a new set of open records requests with the Department of Education asking that it fill in those gaps and also provide information about communications regarding closed charters and prospective charters.”

3) National: Delaware North, the former private concessionaire of some facilities in Yosemite National Park, a public resource, is suing the National Park Service for using what it claims is its intellectual property—the names of park-related trademarks, including “Yosemite National Park.” 

Donald Cohen of In the Public Interest writes of the Yosemite lawsuit, “that’s the fundamental problem when we ask a private company to manage public goods. Anticipating the unforeseen is almost impossible and full of risk. The public agencies that write, negotiate and sign the contracts have to have smart and tough staff who can stare down armies of company lawyers and understand the contractors aim is to generate profits for their owners and shareholders and will look for any opportunity to do so. And they need to have enough staff to monitor those contracts and contractors all the time.” 

The chairman of Delaware North is Jeremy M. Jacobs, the owner of the Boston Bruins hockey team—a key architect of the 2012 NHL labor lockout. Jacobs is reportedly worth $3.7 billion. Sportswriter Dolly Reynolds has written that “Jeremy Jacobs is a bully. He’s got an attitude, and expects everyone to bow down to him. Yes, he’s owned the Bruins for more than 30 years and blah blah blah. That is no excuse to tell people when they can or cannot speak or what they can and can’t say, simply because they are newer to the NHL.”                                                                                                

MoveOn.org’s petition page says “these historical names include three indigenous American names, people with ancestors dating back 12,000 years in the region, long before Delaware North was a corporation. Our tax dollars support Yosemite National Park and no corporation may own that great heritage.”

4) National: The Florida-based hedge fund Eagle Asset Management “raised its stake in the GEO Group by 65.9% in the third quarter. Eagle Asset Management now owns 4,858,190 shares of the real estate investment trust’s stock worth $144,482,000 after buying an additional 1,930,439 shares in the last quarter.” 

Some on Wall Street are betting that talk of shutting down private prisons is an election fad and will fade away. “With election rhetoric propagating a shutting down of the private prison industry, the private prison REITs could face substantial headwinds in the near term, which would limit upside to the stocks in the coming months, [Canaccord Genuity] analyst Ryan Meliker said. He added, ‘We believe the anti-private prison presidential stance is largely a posturing move.’ The costs associated with this would be extremely high, and unlikely to be approved by Congress. With the Congress unlikely to pass the inflated budget and in view of the jurisdictional control, the actual exposure of the prison REITs ‘is minimal at best,’ Meliker wrote.” 

GEO stock has declined nearly 35% in the past year, CCA’s by over 30%.

5) National: Fitch Ratings issues an updated report on how it rates the obligations of public sector entities involved in ‘public private partnerships’ with private companies. It includes a framework to “guide how to consider the PPP obligation in the public sector counterparty’s general credit rating.” Fitch also considers “the nature of the legal framework supporting the grantor’s PPP payment obligation,” including its source of funds, budgetary process and legal status and enforcement commitment. [“Rating Public-Sector Counterparty Obligations in PPP Transactions,” January 15, 2016; sub required]

6) National: Harvard lecturer Robert Behn writes “government’s purpose is not to cut costs. Its real purpose is to produce results that citizens value. And when doing anything, public executives must ‘always start with purpose.’ If a public agency wants to do a better job at accomplishing its real purpose, it ought not to ask: ‘How can we relentlessly eliminate waste?’ It ought to step back and ask: ‘How can we improve by focusing on what we are trying to accomplish?’”

7) NationalHow much does your city spend on open data? The Sunlight Foundation is collecting the numbers. “So, to any public leader helping to manage your city’s open data program or its budget, please help us out by completing the quick survey below so that every city can get a more complete picture of the resources required to achieve a desired level of service in a municipal open data program.”

8) National/Arizona: K12 Inc., the for-profit online education company, sees its stock hit a 52-week low. Meanwhile Craig Barrett, a K12 board member, takes in $190,000 from the company. The Tucson Weekly’s Davis Safier writes, “Barrett is a very, very busy man with his fingers in a whole lot of pies. You can be certain he didn’t put in 40 hour weeks to earn his Board pay. Why, you may ask, should we care about Barrett’s involvement in K12 Inc.? The answer is, Barrett is a powerful voice in Arizona education, advocating for what he says are necessary reforms to improve our schools.”  

10) National: The Apollo Education Group, owners of the private for-profit online University of Phoenix, may be bought for $1 billion by a private equity firm, Apollo Global Management LLC (no relation—yet). Apollo Education disclosed the talks “as it reported its third loss in four quarters in the latest sign of stress in the for-profit college industry. In recent years, such institutions have seen enrollment slide amid scrutiny of their recruiting, career outcomes and student-loan default rates. Shares of a number of the companies, especially Apollo Education, have been battered as a result.” [Sub required] On Friday the Pentagon lifted its suspension of the University of Phoenix “over concerns about improper use of military logos and other government inquiries.”

11) National: The chairman emeritus of Cessna Aircraft says proposals to privatize the national air traffic control system are “the most significant threat to the future of general aviation I have seen in over four decades in the industry.”

12) National: The ‘public private partnerships’ industry is cheering a provision in the recently signed transportation bill that creates a new a federal oversight entity to expedite environmental reviews for major infrastructure projects. The Federal Permitting Improvement Steering Council, whose executive director will be named by the president, will include delegated representatives of the secretaries of agriculture, the army, commerce, interior, energy, transportation, defense, homeland security, and housing and urban development; the administrator of the Environmental Protection Agency; and the chairperson of the Federal Energy Regulatory Commission, Nuclear Regulatory Commission, and the Advisory Council on Historic Preservation. K&L Gates recently expanded its infrastructure practice in Los Angeles.

13) National: Duncan McLaren and Julian Agyeman investigate how cities are doing in the new ‘sharing economy,’ and find shortcomings. “‘Sharing’ is often too narrowly conceived as being just about economic transactions. The poster children of the ‘sharing economy’ are being co-opted by the interests of venture capital and its insatiable demands for rapid growth and high-value exit strategies,” they write. “Unconstrained commercial models threaten to force workers into casual contracts, privatize public services, and drive up rents, deepening social and spatial inequalities and injustice.”

14) National: As the standoff at the Malheur National Wildlife Refuge in Oregon continues, the National Wildlife Federation is urging people to stand up for wildlife habitats on public land. “The occupation of the rural Oregon refuge comes on the heels of several state-level and congressional attempts to privatize federal lands. But research from Colorado College indicates more than 95 percent of voters support keeping public lands in public hands.”

15) National: “Charter forests?” The University of Maryland’s Robert Nelson says “today westerners of all political stripes resolutely oppose proposals to privatize public lands. At the same time, they are increasingly willing to consider transferring federal lands to the states or other steps that would radically decentralize management authority while keeping land in public ownership. I have recently proposed, for example, the creation of ‘charter forests,’ modeled after urban charter schools.”

16) National: Beryl Lipton revisits “5 concerns about private prisons from the ’80s that are still valid today.”

17) Arizona: Phoenix bus drivers represented by Amalgamated Transit Union Local 1433 reach a deal with private transit company Transdev after a weeklong strike. Issues included bereavement time, uniform allowances for bus drivers, bathroom breaks, a tiered payment system, and vacation time. During the strike, Transdev cancelled workers’ health insurance. “Driver Gilbert Balderas says he can’t afford cancer treatment because of Transdev’s insurance cancellation. ‘I’m just disgusted,’ Balderas said, referring to Transdev’s decision to cancel his insurance. ‘We’re human beings. Even if we have our differences, they have no integrity to do this to us. I just can’t believe it.’”

18) California: Pro-privatization Los Angeles administrative officer Miguel Santana urges the city to develop a new convention center using a ‘public private partnership.’ Santana “questioned the city council’s decision in late December to use a traditional procurement approach to replace the existing convention center, which calls for the city to pay for it by issuing $470 million in debt, and suggested a partnership approach instead—much like its neighbor to the south, Long Beach, is doing with a civic center renovation project.” [Santana memo]

19) California/National: The NFL’s decision to allow the Rams, and either the Raiders or the Chargers, to return to Los Angeles will likely put a public financing decision before San Diego voters. “San Diego officials said at a City Hall news conference they’re open to any local stadium solution the Chargers propose and that a deal can get done if the team cooperates. They said that they won’t consider increasing the $350 million public contribution they’ve offered and that any public vote would probably have to happen in November, not June. 

The proposed LA stadium deal does not involve any public money and comes with upfront private payments for infrastructure, according to media coverage. Dave Zirin on “sports as political money laundering.” David Haddock, Tonja Jacobi, and Matthew Sag look at how monopolistic control of sports leagues sharpens “stadium rent seeking” against the public interest, and call for antitrust action.

20) Florida: Corrections officials say they have learned some valuable lessons on responsible contracting from the prison healthcare debacle with Corizon. “What we found as we looked at the history of this contract and talked with medical professionals was that you need to figure out what your really important, unique services are and look at negotiating those, and have separate contracts. It will get us to the best service providers at the best price. It will also get us to one company doesn’t walk and we are left with none of these services. So, there’s a protection element built into that as well,” said Stacy Arias, the Florida Department of Corrections chief of staff.

21) Massachusetts: Charles Chieppo, a senior fellow at the Pioneer Institute, which has been funded by the Koch, Walton, Donors Capital Fund, and Hume foundations, calls for the outsourcing of bus maintenance at the MBTA by “taking advantage” of the Pacheco Law and for ending binding arbitration.

22) Illinois: The Chicago City Council, which waved through Mayor Daley’s disastrous parking meters deal and bottled up legislation to rigorously review privatization deals for months before finally passing it, seems to be getting a backbone on public finance oversight.

23) IndianaUnderfunding of overburdened Adult Protective Services has tragic consequences. “To assess how Indiana’s Adult Protective Services compares with other agencies nationwide, IndyStar filed public records requests in all 50 states. By multiple significant measures, Indiana is lacking.”

24) MassachusettsThe Boston Globe reports that “Roxbury Community College has abandoned a plan to privatize its information technology department after the state auditor criticized the school for failing to competitively bid the deal.” The state auditor says the fast-track hiring of a contractor was “exactly the type of procurement practices that public bidding laws . . . were designed to avoid.”

25) Minnesota: Gov. Dayton decides against reopening a private prison to deal with overcrowding. Instead he wants to add beds at correctional facilities Lino Lakes, Willow River, and Togo, and hopes that the lawmakers will enact sentencing reduction. “Nonetheless, Swift County and its lobbyists will persist.”

26) TexasGEO Group Inc. is facing a food scandal at its Central Texas Detention Facility, which handles inmates from the U.S. Marshals and ICE. The San Antonio Express reports “it’s bad news when someone spots roaches in the kitchen, but it is even worse when a food inspector finds roaches living inside a food preparation table. In this week’s list of restaurant inspections, Geo Group Inc. at 218 Laredo St. was cited after an inspector found live roaches crawling inside of the table’s hollow legs. (…) The insects were seen ‘hiding in crevices and crawling on (the table’s) underside.’”

27) International: “So important to remember as we mourn #DavidBowie & #AlanRickman: both were products of govt-funded arts programs,” blogger coldplums tweets.

28) InternationalChina-led Asian infrastructure bank opens for business. “‘Setting up a development bank is relatively easy, running a bank is hard,’ said David Loevinger, a former China specialist at the U.S. Treasury and now an analyst at fund manager TCW Group Inc. in Los Angeles. ‘China has committed to hold the AIIB to high standards of governance and transparency. They’ve talked the talk. Now they’ve got to walk the walk. If China delivers, its role as a global leader will be enhanced.’”

29) Think Tanks: The National Association of Counties reports that only 7% of the country’s 3,069 counties have fully recovered from the 2008 financial crisis, and that falling energy prices threaten the recovery of many of those. “Adjusted wages in the county increased in about two thirds of county economies between 2013 and 2014. Large county economies—those in counties with more than 500,000 residents—fared the best, with more than three-quarters seeing growth in their cost-of-living and inflation adjusted wages.”

Legislative Issues
 
1) IowaThe privatization of Iowa’s Medicaid system would require oversight costs of $17 million. “Senate President Pam Jochum, D-Dubuque, said during a news conference Thursday that Senate and House Democrats will be offering legislative proposals this session to ensure that accountability and safeguards are part of the program providing healthcare to some of Iowa’s most vulnerable residents. The recommendation that Iowa hire scores of additional patient advocates would cost just over $16.9 million, according to the report from the state’s long-term care ombudsman and about a dozen other state agencies and offices, including Iowa’s departments of Public Health and Veterans Affairs and its Civil Rights Commission.”
 
2) KansasLocal school districts are “anxious about pressure from legislators to privatize business operations, soften resistance to administrative consolidation and spend down cash reserves.”
 
3) Michigan: As lawmakers return to Lansing, they face a major problem with the debt of the Detroit school district. House Speaker Kevin Cotter says he might tie together debt relief legislation with legislation to ban sickouts by Detroit teachers, who have been protesting “poor building conditions, large class sizes and supply shortages.” But State Rep. Harvey Santana (D-Detroit) says “‘if you’re mad at teachers for doing these sickouts, you should have been mad 20 years ago, or 16 years ago, when state government intervened in local affairs and destroyed the public school system,’ referencing a mayoral-appointed ‘reform board’ with one gubernatorial appointee and emergency managers who have long overseen the school district.”
 
4) Washington: As state lawmakers grapple with a crisis over local school levies (and a $10,000 a day court fine that has now mounted up to $14 million), they face a choice between two proposals to bring the charter school system into compliance with a court order: “One plan would put the charter schools under school district board authority. A second would fund the schools with revenue from the state’s lottery program. The former appears to more closely meet the court’s requirement for public accountability.”

5) Wisconsin: Writing in the New York Times, Dan Kaufman sounds the alarm over a piece of legislation that would corrupt the state’s civil service by gutting longstanding public protections. The bill is being promoted by Gov. Scott Walker and is based on template bills developed and promoted by ALEC and the Heritage Foundation. Kaufman writes that a “culture of fear” is gripping the workplace.

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