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This Week’s Outsourcing Scan 10-13-14

Update: Upcoming Outsourcing Issues. October 13, 2014

1) National: On Saturday, the Network for Public Education hosted PUBLIC Education Nation, a spirited five hour discussion of major issues in education reform, schools privatization, testing and common core, and success stories. The meeting ended with a discussion between Diane Ravitch and Jitu Brown. A link to the video will be posted on the Schoolhouse Live website.

2) National: A new report by Justice Strategies and Grassroots Leadership shines a light on the for-profit family detention industry. “The GEO Group and Corrections Corporation of America have exceptionally troubled histories when operating facilities detaining children, immigrants, and families. The unprecedented move to expand immigrant family detention—largely relying on these same for-profit prison corporations—raises many concerns about ICE’s policies related to asylum-seeking families. Yet not only has ICE contracted with GEO for detention of families at their Karnes facility, but in September 2014 they announced a massive 2,400-bed contract with CCA. The company will convert a ‘man camp’ for oilfield workers into the largest family detention center to date.”

3) NationalA number of initiatives on education are on the ballot in November, including one in Georgia to privatize dormitories at public colleges. “Georgia’s university system isn’t the first to privatize dorms, but it would be one of the largest.” Higher education officials are also keeping an eye on minimum wage ballot initiatives.

4) National/Minnesota: Former English teacher Sarah Lahm reports on the role of dark money in school board races, focusing on the Minnesota school board race. “So what might out-of-state investors hope to gain from helping Don Samuels get on the Minneapolis school board? The answer may lie in the well-documented, billionaire-led push by education reform proponents to privatize the nation’s public school system. (…) This movement receives much of its funding from the bottomless bank accounts of prominent billionaires such as Bill Gates, Eli Broad, and the Walton family—known as the ‘big three.’”

5) National: Report finds that 27% of new charter schools have “been disrupted by internal governance conflicts.”

6) National: David Bacon looks at the for-profit schools industry, focusing on Rocketship. “But the takeover of privatized education isn’t inevitable. (…) Last fall, both Rocketship and Navigator applied to the school district and then the county to open charter schools in Morgan Hill. Instead of a rubber stamp, they ran into massive resistance.” Bacon reports that “the charter wave seeks to exploit years of budget austerity.”

7) National: Corrections Corporation of America announces it will hold its next earnings call and webcast on November 4.

8) National: The most-traded “public private partnership” bonds have retained this year’s gains after the bankruptcy filing of the Indiana Toll Road, analysts say. The low yield environment for government bonds is pushing investors to look for higher returns almost anywhere they can get them. “Investors are therefore driven to seek yield-enhancing alternatives. Infrastructure debt is one such alternative that does not require sliding down the risk spectrum. Repayment of infrastructure bonds comes contractually through government or quasi-government counterparties,” says David Frei of Fiera Capital. [Sub required]

9) National: Since the year 2000, the Federal Immigration and Customs Enforcement Office has paid$777.2 million to Corrections Corporation of America and $299.7 million to Geo Group.

10) National: Thom Hartmann explains why medical records shouldn’t be privatized. [Video, at 52:00]

11) National: Paul Krugman criticizes the low level of investment in public infrastructure despite very low interest rates. “A brief uptick thanks to the ARRA, then a plunge. This is hugely dysfunctional policy.” [IMF panel on “Public Debt, Public Investment, and Growth”]

12) National/International: FirstGroup, the parent company of school bus outsourcing company First Student, loses its £2.5 billion contract with ScotRail and sees its stock price plunge to the lowest level in over a year. “The loss of the ScotRail contract was the second blow in six months for FirstGroup, which has been struggling to turn around its bus businesses in America and the UK for a while.”

13) National: Students First, the troubled schools privatization pressure group founded by Michelle Rhee,selects Jim Blew as its new president. “Blew has served as an adviser to the Walton Family Foundation on a host of K-12 education reform issues and he has directed campaigns for the Alliance for School Choice and its predecessor, the American Education Reform Council.”

14) Arizona: The Arizona Daily Star endorses the Democratic candidate for attorney general, Felecia Rotellini, now running against Mark Brnovich, who “served at the Corrections Corporation of America, which runs private prisons, and as director of the Goldwater Institute’s Center for Constitutional Government.”

15) California: The San Diego Union Tribune endorses the incumbent board of the Tri-City Healthcare District. “Some peddle conspiracy theories holding that the board majority’s secret goal is to privatize Tri-City. (…) But they are jointly committed to keeping Tri-City a public institution and are methodically addressing its key issues.”

16) Florida/National: The operators of All Aboard Florida, the proposed $3.2 billion private railroad, apply to the Federal Highway Administration for the right to issue $1.75 billion in tax exempt private activity bonds. It is one of the largest such allocations ever sought from the federal government. [Sub required]

17) Georgia: The Federal Highway Administration has approved the GDOT’s Atlanta Transportation Improvement Plan. “To complete the funding of the improvements, GDOT will utilize a public-private partnership model.”

18) Indiana/Illinois: A regional planning body, the Metropolitan Planning Organization (MPO) Policy Committee, rejects a proposal to remove the controversial Illiana Expressway from the MPO’s transportation plan. “On Wednesday, the CMAP board voted against the Go To 2040 plan containing the transportation project. The MPO policy committee, however, has final say on the matter.” This is a matter of dispute, however: “The votes put opponents including environmental groups and Chicago area elected officials at loggerheads with the state. Critics contend it’s the agency board vote that matters while Illinois officials contend the policy committee has the final say.” [Sub required]

19) Indiana: Calls mount for the state to regain control of the Indiana Toll Road following its filing for bankruptcy. “‘From my perspective, I never wanted the state to lose control of the asset for 75 years, so if the state has the legal option to seize the road back, I think that would be the optimal solution for users, for the state and, frankly, for all of the parties involved other than the bankrupt party,’ state Sen. John Broden, D-South Bend, said. County commissioners in LaPorte County have gone so far as to adopt a resolution asking the state to intervene in the bankruptcy proceedings ‘to protect the public interest’ and, at the same time, ‘explore options available under the lease to re-take full control and ownership of the Toll Road.’” But there are obstacles to the state regaining control, not least the question of whether bankruptcy is sufficient to trigger a repossession. Legal wrangling may begin over whether a default would be required for that to happen.

20) Indiana: Indianapolis Mayor Ballard moves ahead with plans for a new criminal justice center to be procured as a “public private partnership.” The Bond Buyer reports “Indianapolis may not be taking on traditional bond debt, but availability payments still represent debt, and all the risk that comes with it, said John Gilmour, professor of government and public policy at the College of William and Mary, who studies P3s. ‘What’s good about it is a new asset is being built,’ Gilmour said about the new complex. ‘But the question is, how does it compare to a conventional financing deal?’”

21) Kentucky/National: The bankruptcy filing of a nonprofit public benefits corporation, which is “rattling Kentucky pension managers,” has raised questions about such quasi-public entities. “U.S. Bankruptcy Judge Joan Lloyd concluded that Seven Counties qualified as a private, nonprofit corporation instead of a government unit, and could move forward with its petition without state permission.” [Sub required]. Nonprofit entities are sometimes used in “public private partnerships.”

22) Maryland: The cost of the Purple Line “public private partnership” has “risen to $2.45 billion, up $21 million since September and almost $1.5 billion more than projected in 2007, according to the latest estimate by the Maryland Transit Administration.” The $200 million in annual subsidies are supposed to “come from the revenue generated on the Purple Line and other systems operated by MTA. The state will own the land and rail assets of the rail system that will be operated and maintained by the private partner.” [Sub required]

23) Missouri: The private security contractor involved in the shooting of a St. Louis teenager “paid out tens of thousands of dollars to settle lawsuits over incidents involving other off-duty police officers working for it, according to the plaintiffs in those suits.”

24) New York: The state has approved 17 new charter schools for New York City, “substantially increasing the size of one of the city’s largest and most polarizing charter networks, Success Academy,and setting up a battle over where the schools will be located.” The New York Times reports “‘for the record, everyone here spoke against—no one spoke for—and I’m going to be really shocked to find out that they approved this application,’ said David Goldsmith, president of the community education council for District 13 in Brooklyn. ‘Thanks for caring, Albany,’ he added.”

25) New York: Southbridge Towers, which is part of the public Mitchell Lama housing program, votes to go private. “Opponents to privatization believe that Southbridge is an important component of the city’s affordable housing stock and should be left for future generations to use. However, if privatization ultimately succeeds, residents will be able to put their units on the market for hundreds of thousands of dollars and, in some cases, upwards of $1 million depending on the size of their unit.” The apartments were “bought decades ago for $10,000 or less.”

26) New York: Lockport is to lay off nine more employees. “Daniel T. Cole, a Highways and Parks heavy equipment operator, said of the layoff package, ‘it’s unethical and it’s wrong.’ He said the city’s blue-collar union was promised there wouldn’t be any layoffs in its ranks when it agreed in 2008 to let the city privatize garbage collection. Since then, Cole said, 16 union members have left and haven’t been replaced, saving the city $3 million by Cole’s count.”

27) Ohio: A charter school company’s real estate dealings are being scrutinized after it comes to light that “a North Side charter school expects to spend more of the tax dollars it receives this school year on rent than on teachers and staff.” The Columbus Dispatch reports that “similar arrangements are in place for the other five Imagine Schools in Franklin County. Who is charging the charter schools such high rent? A company called SchoolHouse Finance—which is a subsidiary of Imagine. (…) The upshot is that the complex deals are diverting hundreds of thousands of public dollars to one of the nation’s largest charter-school operators, Imagine Schools Inc., and its affiliates.”

28) Ohio: Dozens of prison workers and union members picketed the offices of the Department of Rehabilitation and Correction last week, demanding that more corrections officers be hired and that the state’s contract with Aramark be terminated. “Last week, the DRC announced that Ohio will be the first state in the nation to experiment with using unmanned balloons to watch over state prisons.”

29) Ohio: School bus crash concerns Vandalia-Butler City Schools administrators and parents. “The district and First Student are cooperating with the police investigation and Biddinger stated the bus company is conducting an internal review of the incident. (…) However, Vandalia-Butler Superintendent Brad Neavin expressed the district’s concerns about the frequency of issues that have occurred this year. He said the district is evaluating to make sure all safety and operational processes and procedures are being followed.”

30) Pennsylvania: Special needs students are kicked off a First Student bus and forced to walk to school. “First Student, which operates the bus, issued a statement saying this action was a result of student conduct and the driver responded in accordance with policies of First Student and the school district. So far no comment from the Woodland Hills district.”

31) Pennsylvania: The Philadelphia School Reform Commission’s unilateral cancellation of the teachers union contract with the city is headed to court. Students walk out to protest the cancellation. “Randi Weingarten, AFT president, voiced outrage at the School Reform Commission’s bombshell earlier this week, which came after 21 months of negotiations with the local chapter. She assailed it as a last-ditch effort to aid Gov. Corbett’s fledgling campaign three weeks before the gubernatorial election.” Corbett istrailing very badly in the gubernatorial race.

32) International: Germany scraps tuition fees after mass student protests. “‘The trend towards greater student debt is part of the neo-liberalization of the economy. It’s about privatizing risk and saying, “okay, guys, you take your own risks now.” It’s no longer the responsibility of the government, or the institutions. The political scientist Jacob Hacker called it the Great Risk Shift. We treat corporations in exactly the opposite fashion,’ he said.”

33) International: The World Bank has launched a facility to boost “public private partnerships.” The Global Infrastructure Facility “will be a global platform for collaboration between public and private partners to help prepare and design complex public-private infrastructure projects, making them viable for new sources of long-term private capital. It aims to respond to the significant drop of private infrastructure investment in emerging markets and developing economies from $186 billion in 2012 to $150 billion last year, and to help trigger a staggering $1 trillion a year in extra investment needed through to 2020.” Macquarie has joined the GIF as an advisor. [Sub required]

34) International: Western Australia has launched a schools “public private partnership.” Payments to the contractor “would begin when a school was operational and money deducted if performance measures were not achieved. The company would manage services such as waste disposal, gardening, cleaning and security. Tender documents show companies might also profit from extra services such as day care before and after school or leasing out sporting facilities.” Unions said “privatizing WA schools was an abdication of responsibility that would lead to poorer services while companies skimmed off profits.”

35) Think Tanks: The Koch-funded Texas Public Policy Foundation advocates “school choice,” its euphemism for school privatization and vouchers, as a partial solution for the “school to prison pipeline.”

36) Report: The Canadian Union of Public Employees (CUPE) has released a new edition of  Our Best Line of Defence: Taking on Privatization at the Bargaining Table. “This guide gives an overview of the privatization, contracting out and contracting in issues CUPE members face—along with sample collective agreement language for local bargaining committees, bargaining councils and staff representatives.”

Legislative Issues:

1) National: Sen. Charles Grassley (R-IA) calls for an investigation of what he calls “an exclusive, longtime contract” for Bank of America to operate bank accounts for federal prison inmates. The no-bid deal with the Treasury Department, which was amended 22 times, was the subject of a two-part investigative report by the Center for Public Integrity’s Daniel Wagner and Eleanor Bell. [Contract]

2) Alabama: Despite the Republicans having supermajority status in both of the state’s legislative bodies, Senate Majority Leader Jabo Waggoner says the state’s liquor system will not be privatized. “I really don’t think the movement is in the Senate to take the state out of the liquor business. There’s a lot of unanswered questions. What would we do with existing leases if we do away with the state in that business?”

3) Illinois: A bill to tighten oversight of Chicago privatization deals finally moves out of the city council’s rules committee, where it has been stuck for nearly two years in what some saw as obstructionism. “ThePrivatization Transparency and Accountability Ordinance was moved to the City Council’s Workforce Development and Audit Committee. The [Better Government Association], some aldermen and advocacy groups have repeatedly called for a hearing on the ordinance. The Workforce committee will review the ordinance with an eye toward moving it on to the full council for wider debate and a vote. The BGA favors a more open and accountable privatization process that safeguards against another Chicago parking meter deal kind of fiasco.”

4) Illinois: Chicago Mayor Rahm Emanuel introduces a bill in the city council to use a social impact bond to expand early childhood education. The Chicago Board of Education must also approve the plan. “The lenders—Goldman Sachs Social Impact Fund and Northern Trust in senior roles and the J.B. and M.K. Pritzker Family Foundation as a subordinate lender—are only repaid if students realize positive academic results.”