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This Week’s Outsourcing Scan 10-17-2016

1) National: In the Public Interest issues a detailed report on how private prison and other corrections companies spend millions of dollars influencing public officials. “Whether advocating for legislation that benefits their business models, making campaign contributions to candidates, or seeking new contracts, private prison companies’ government-relations arms aim to expand the role the companies play in America’s criminal justice system.” [Buying Influence: How Private Prison Companies Expand Their Control of America’s Criminal Justice System; listing of CCA’s federal and state lobbyists]

In the Public Interest researcher and policy analyst Benjamin Davis
 joined “By Any Means Necessary” host Eugene Puryear to discuss the report, the political influence of the private prison industry and the shifting nature of private prison companies. [Audio, at 17:00]

The Washington Post
 reports that the private prison industry has launched an all out political effort to turn back the Justice Department’s plan to end the use of for-profit prisons. “The private prison industry, which generates billions of dollars in revenue, has become a powerful lobbying force on Capitol Hill, and officials say they have tried since the Justice Department announcement to rally legislators to their side.” But “Justice Department spokeswoman Dena Iverson said in a statement that Yates’s directive was ‘in effect and the Bureau of Prisons is committed to implementing it.’ ‘Since August, the overall prison population has continued to decline and the Bureau continues to modify its contracts to reflect the reduced need for bed space in private facilities,’ Iverson said.”

2) National: Standing firm against political pressure from pro-charter special interests, the NAACP national executive board endorses the resolution passed by its 2016 annual convention calling for a moratorium on charter school expansion. Diane Ravitch applauds the move, writing, “So-called reformers, who falsely claim to be in alliance with the civil rights movement, should read the resolution with care. They should stop closing schools, they should abandon privatization, they should turn their efforts and money to helping improve public schools. They should help to foster desegregated schools and communities. They should insist on health care facilities and fully funded services at every school. They should support social justice for all children and families, not privatization of public services, which generates segregation and inequity.” [NAACP statement]

3) National/InternationalA longtime critic of private prisons is co-winner of the Nobel prize in economics. Twenty years ago Oliver Hart, now based at Harvard University, “wrote a paper for the National Bureau of Economic Research where he suggested that privatization of prisons created pressure to cut costs and increase profits, and this translated into under-trained, under-paid, overly-violent guards. Two decades later, the U.S. Justice Department finally arrived to a similar conclusion and decided to phase out the use of private prisons, arguing that these facilities were not run as safe, efficient or effective as government-run prisons.” The prize was also awarded to another specialist in contract theory, Professor Bengt Holmstrom, who studied optimal pay-for-performance contacts.

4) National: On Thursday, National Education Association President Lily Eskelsen Garcia told reporters that it is critical for all states to get it right under the new federal school testing law. Poorly designed school testing has been used in the past to drive privatization. Eskelsen Garcia said “the new law presents not an opportunity, but a ‘responsibility,’ and if it’s not taken, then ‘shame on us.’ ‘We get this right at the beginning, or it’s very hard to undo something that’s done poorly,'” she said. NEA has created a website to bolster its 50-state strategy on the issue.

5) National: The Corps of Engineers has a list of 10 new ‘public private partnership’ projects it would like to see pursued, “but in all cases a local partner with taxing power will be needed to fund the private component.” [Public Works Financing, September 2016; sub required]. But in August the Center for American Progress issued a report pointing out that “the public has a finite willingness to pay the taxes and fees necessary to service project debts. The borrowing behavior of state and local governments over the past 15 years demonstrates that tax revenues constrain indebtedness not a lack of investor demand.” CAP also points out that “while municipal bonds and equity investments have different characteristics, the important point is that both are private dollars financing infrastructure projects”-but that equity costs more. [Assessing Claims About Public-Private Partnerships]

6) National: Daniel Bergerson, a Columbia College senior studying history and urban teaching, looks back on Teach for America. “As a senior in high school, I did not yet know that ‘making a difference’ meant shortchanging students in need of real teachers, deprofessionalizing the teaching profession, and leading the charge to privatize schools. Over the next three years, however, Teach For America’s narrative of ‘teaching as leadership’ unraveled before me piece by piece, myth by debunkable myth.”

7) NationalFor-profit DeVry University has been placed on tight scrutiny as part of an agreement with the federal government. The company will have to post $68 million in collateral and has been placed on a heightened cash monitoring status in a settlement reached last week with the Education Department, which is also investigating its practices. The FTC filed suit against the company in January. An investment analyst called the settlement discouraging for DeVry. “The Education Department said it is working closely with the FTC and that it will ‘continue to support’ the regulator’s ongoing lawsuit. ‘Today’s agreement settles only the issue of a single, unsubstantiated claim and does not prohibit the department from imposing future enforcement actions against DeVry in the event of additional findings,’ the Education Department said.” [FTC Complaint]

8) National: Bob Rusbuldt, president and CEO of the Independent Insurance Agents & Brokers of America, warns against privatizing America’s flood insurance program. “Congress has to be careful not to go too far in its “privatization” of the coverage. Currently, the private market does not have the capacity nor desire to underwrite this risk on a widespread basis to meet customer needs. However, there are ways to begin to incentivize private carriers to increase their presence in the market.”

9) Alabama: Reviewing the 14 proposed constitutional amendments on the ballot, John Archibald says “Amendment 2 would ban shifting state park money to other uses, and would let parks use private companies for some park operations. I’m a fan of keeping park money in the parks, but if the privatization language makes your squeamish, default to doubt.”

10) ArizonaPublic lands policy is an issue in a race pitting a Tea Party incumbent against a former mayor in the LD6 senate race. “Bagley said she supports the creation of a national monument on lands around Grand Canyon National Park because it would forever prohibit uranium mining in the area. On her website, Allen promotes the expansion of natural resource development across the state, including mining, and wants to see more state control over federal public lands. Bagley said such a move would limit access to those lands, would hinder efforts around forest restoration and would lead to more privatization.”

11) California: Writing for Capital & Main, Joel Warner looks at what’s behind Netflix CEO Reed Hastings’ fight to charterize public schools. “Concerns about Rocketship extend to its most prominent backer: Reed Hastings, CEO of Netflix, who has heavily supported the charter chain, including a $2 million donation last year. Rocketship is far from Hastings’ only charter school effort. The one-time California Board of Education president, who declined to be interviewed for this story, helped launch the powerful EdVoice pro-charter lobbying group and so far this election season has donated more than $3.7 million to the California Charter Schools Association (CCSA)’s political action committee. But critics worry that the sort of technologies and efficiencies Hastings used to build his Silicon Valley empire and is now applying to education reform might not work for the nation’s schoolchildren.”

12) Colorado: Veronique Bellamy, a candidate for the Regional Transportation District Board of District I, is running on a platform based on opposition to privatization and ‘public private partnerships.’ “P3s are a way backward, not forward. We are not the first system saddled with a P3 failure, but we are the latest. The evidence, both theoretical and practical, shows that P3s are a spectacular failure. Academics like the late Dr. Paul Mees of the Royal Melbourne Institute of Technology have condemned transit privatization. We need to take back control of our rail in order to cut our costs. One of my top priority goals is to push for amending the RTD Act to ban any new P3s. I also intend to push to remove the clause in the RTD Act that requires us to privatize 50 percent of our bus service.”

13) ConnecticutCSEA and SEIU 1199 file suit to block Gov. Malloy’s privatization of state-run group homes and other services for people with developmental disabilities. “The Department of Developmental Services announced in August plans to privatize 40 group homes and other services, while cutting 605 positions. The unions, which recently filed a labor complaint, say the state cannot lay off members and contract out their services without bargaining with labor leaders.”

14) FloridaInmate re-entry contractors are fighting state efforts to change the way work-release and substance-abuse programs are funded. The change would reallocate funds from facilities like theirs to work-release and substance abuse programs inside prisons. “Re-entry contractors led by Bridges of America-which provides services in some major cities and has an Orlando contract set to expire Dec. 31-told reporters the Department of Corrections is running afoul of a requirement that substantial changes in corrections funding are subject to legislative and executive-branch review.”

15) Georgia: As voting on Georgia’s charter school expansion ballot initiative approaches, the Southern Education Foundation is sponsoring a showing tomorrow in Atlanta of “A Perfect Storm,” a film about the “myth of the New Orleans miracle.”

16) IllinoisVoters’ attitudes on criminal justice reform may be changing in southern Illinois, long a bastion of opposition to reform efforts. Local “tough-on-crime” politicians may have to adapt. “‘That’s been going on for decades, across party lines,’ she said. ‘It’s an easy one to attack, because if you’re reducing incarceration, even though it’s not being tough on crime, that’s the public perception.’ But attitudes might be changing among voters. ‘What I think we’re starting to more universally recognize is that this level of incarceration is not sustainable,’ [SIU professor] Pleggenkuhle said.”

17) Indiana: The Indiana Finance Authority and the private contractors on the I-69 road ‘public private partnership’ come to agreement that the project will be completed by the end of next October. “I-69 Development Partners has issued multiple default notices to Isolux in recent months, saying it failed to live up to the terms of that contract. The contractor has met the requirements of those notices by paying subcontractors and issuing a revised timeline, though state officials spoke in general terms of an ‘end of October’ completion date to the MPO’s policy committee.” The Public Sector Pension Investment Board became the sole shareholder of troubled Isolux Infrastructure in May 2016, now calld ROADIS. 

Public Works Financing
 reports “Indiana contractor sources say that IFA required the concessionaire to provide only a 5% payment/performance on I-69. Problems with the project are helping surety groups press their case for legislation in Indiana to require 100% bonding on the design and construction of all future P3s. In the past five years, 11 states have written 100% bonds into new or amended P3 laws, according to the American Insurance Association.” [Public Works Financing, September 2016; sub required]

18) New York/Massachusetts: Massachusetts governor Charlie Baker (R) is to take his pro-charter school show on the road with an October 25 talk at the Koch- and Donors Trust-funded Manhattan Institute, two weeks before Massachusetts voters decide whether to expand the charter school cap. MI’s board is chock full of hedge fund magnates, and counts among its members leading Trump backer and insider Rebekah Mercer. Hedge Clippers reports that more than $13 million has been spent since 2014 by two charter/privatization groups trying to eliminate New York’s cap on charter schools and win backing for an unprecedented tax credit that would divert huge amounts of public resources into private schools.

19) Ohio: 21 charter school authorizers–nearly a third of the total–have flunked a state review and may have to go out of business. “They can appeal their rating before having their authority revoked. Another 39 dubbed ‘ineffective’ were told to improve or they’d be next. That left only five sponsors rated ‘effective’; none received the top rating of ‘exemplary.’

20) Tennessee: In the Public Interest executive director Donald Cohen points out that Donald J. Trump is not only politician who refuses to release his tax returns. Neither has Tennessee Governor Bill Haslam, the richest politician in America. The secrecy “matters because Haslam has a plan that could plunge thousands of state workers into poverty. Since being elected, he’s slowly handed over management and operation of public buildings to a private company. All state-owned real estate is on the chopping block-from college campuses and prisons to state parks. The company, Chicago-based Jones Lang LaSalle, is the world’s second largest commercial real estate brokerage. While running for office in 2010, Haslam held a financial stake in the company. He might still be invested but we don’t know for sure-he’s since placed many of his investments in a blind trust. The governor clearly hasn’t read our new report, How privatization increases inequality.”

21) Texas: Texas is on a heightened state of alert about nine for-profit colleges. “The September bankruptcy of for-profit college operator ITT Educational Services has pushed the Texas Higher Education Coordinating Board to take a more deliberate approach to watch for-profit institutions it deems to be near collapse.” But the presidential election is in the picture. “Future plans for the Higher Education Coordinating Board may depend on if Donald Trump or Hillary Clinton wins the presidency, [higher education commissioner Raymund Paredes] said. ‘There might be an equivalent level of scrutiny of these institutions or there might be a lesser degree,’ he said. ‘Some of these political decisions were made in a political context. Since Trump himself developed a for-profit institution, it might be possible that the Trump administration would feel differently.'”

22) Think Tanks: Michael Paul Goldenberg gives us a nice graphic on why schools can’t operate like businesses (h/t Diane Ravitch)

Legislative Issues

1) HawaiiHawaii finds itself stuck as others abandon for-profit prisonsHonolulu Civil Beat reports. One reason: criminal justice and sentencing reform has lagged behind other states like Colorado, so prison population numbers held steady. “In a way, the 11-member task force, headed by Hawaii Supreme Court Associate Justice Michael Wilson, is a reprise of what was known as the Justice Reinvestment Working Group, which spent seven months in 2011 to come up with policy recommendations for the Justice Reinvestment Initiative. Meda Chesney-Lind, a criminologist and professor of women’s studies at the University of Hawaii who heads the task force’s education subcommittee, pointed out that the Legislature didn’t allocate any funds for the task force, severely undercutting its potential. ‘The kind of data analysis and research that has to happen requires resources,’ said Chesney-Lind. ‘Volunteer members will do what we can, but we all have other jobs and other responsibilities. Pixies are not going to write the kind of reports that we need if this state really wants to make any progress.'”

2) MassachusettsLawmakers back up unionists demanding the cancellation of Gov. Baker’s MBTA privatization moves. State Senator Marc Pacheco called on lawmakers last week to go back into session to prevent more outsourcing, and US Representative Stephen Lynch said outsourcing “not good for consumers, it’s not good for the citizens of Massachusetts, and it’s certainly not respectful to the workers of Massachusetts.” Critics “pointed out that Shellie Crandall, the consultant hired by the MBTA to analyze the cash collection department, had worked extensively for both Brink’s and GardaWorld, the two companies that bid for the contract. ‘Does that pass the smell test?’ Steven Tolman, president of the Massachusetts AFL-CIO, asked the crowd in a booming voice.”


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