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This Week’s Outsourcing Scan 10-26-2015

1. National: The Council of the Great City Schools released a report finding that American students are subjected to an excessive amount of testing with no evidence that this improves performance. The CGCS report says “some 21.2  percent of the districts reported using a commercially developed formative test, and 7.6 percent reported using one of the PARCC or SBAC  formative  tests” (p. 39). The report prompted a response by the Obama administration, which said it will issue further guidance on testing. The administration’s response was welcomed by the AFT as a step in the right direction, but drew sharp criticism from other public education advocates. The New York Times notes, “parents and unions objected to tying tests to teacher evaluations and said tests hamstrung educators’ creativity. They accused the companies writing the assessments of commercializing the fiercely local tradition of American schooling.”

2. National: For the first time since 2000, OMB is proposing revisions to the federal government’s governing document establishing policies for the management of federal information resources (the A-130 Policy Circular). “It is meant to shift the federal space into a more ‘dynamic’ information process—meaning away from paper-based solutions. Circular A-130 outlines the general policy for the planning, budgeting, governance, acquisition, and management of Federal information resources. It includes agency responsibilities for managing information, supporting use of electronic transaction and protecting federal information resources. The public feedback period closes on Nov. 20.” [Bloomberg Government, October 23, 2015; sub required]

3. National: Sen. Lamar Alexander (R) and Rep. John Kline (R-MN), chairs of the two congressional education committees, leap to the defense of for-profit colleges after the Consumer Financial Protections Bureau seeks information from a national accreditor about the for-profit colleges it oversees. The Accrediting Council for Independent Colleges and Schools “has been a primary accreditor for two for-profit chains—Corinthian Colleges and ITT Educational Services—that the CFPB has sued over allegations of illegal lending practices. The bureau also in August sent an investigative inquiry to Ashford University, a for-profit chain owned by Bridgepoint Education. Ashford, however, holds regional accreditation.” Apollo Education Group employees have donated $17,000 to Kline’s campaign 2016 war chest. [Bloomberg Government, October 23, 2015; sub required]. Meanwhile, the Washington Post is asking “is this the beginning of the end for ITT?”

4. National: Investors are reportedly seeking refuge from the declining stock market by shifting their money into Real Estate Investment Trusts. Both GEO Group and Corrections Corporation of America (CCA) converted themselves into REITs in 2013, meaning they don’t have to pay corporate taxes but have to distribute 90% of their taxable income back to shareholders. Both are paying high dividend yields, though their stock prices are down by over a third in the past year.

5. National: After a decades-long battle by prisoners, their families, and human rights activists, the FCC caps and lowers phone charges for inmates. But Joseph Johnson, coordinator for the Maine Prisoner Advocacy Coalition, “said capping the cost at 11 cents per minute for inmates is an improvement, but is still much higher than what providers charge the state prisons themselves, which he said is 2.5 cents per minute. ‘Of course they’re making money on it,’ he said.”

6. National: Researchers find that immigration detention centers lack oversight, in part due to contractor transparency restrictions. “NIJC based the report off of a trove of documents obtained through FOIA and ‘years of resource-intensive litigation,’ because ICE does not make its reports readily available to the public. Researchers discovered there is no real independent oversight of ICE, as the Office of Detention Oversight (ODO) is housed within the agency and third party inspectors are employed as private contractors.”

7. National: The private equity firm BlackRock sees a promising market in privatizing municipal street lighting, and reveals it was involved in the Michigan deal. “Two months after financial close was reached on the Michigan Department of Transportation freeway lighting public-private partnership project, BlackRock has confirmed that funds under its management were involved in the transaction. While BlackRock was not originally involved in the tendering process in the freeway lighting P3, managing director and global head of infrastructure debt Erik Savi said his team at BlackRock was brought into the deal after the shortlisting process through relationships with the investment team at Star America Infrastructure Partners.” [Sub required]

8. National: Brian DeFee of the advisory firm Capstone Partners says “ironically, some of the largest US-based public pension funds are looking outside the domestic market for attractive [infrastructure] investment opportunities.” [Preqin Quarterly Infrastructure Update, Q3 2015; sub required]

9. NationalToll roads registered 8-10% growth in terms of traffic and revenue in the first half of 2015. “A main contributor to these results was the implementation of additional tolling points on the Miami-Dade Expressway (MDX), almost doubling transactions and revenue on the network.” [Sub required]

10. National: The debate over the role of Teach for America continues, with Brittney Packnett, Teach for America St. Louis’ executive director defending the program, and the Black Agenda Report’s Bruce Dixon criticizing it for promoting privatization.

11. National: Who are the top recipients of the GEO Group PAC’s campaign contributions for next year’s Congressional cycle? [via Bloomberg Government]:

Recipient  Amount  Date 
Joseph Patrick Kennedy $5,000 4/28/2015
Rebecca Negron $5,000 6/17/2015
Carlos Lopez Cantera $5,000 8/17/2015
Carlos Lopez Cantera $5,000 8/17/2015
Patrick Joseph Toomey $2,500 1/13/2015
Ronald Harold Johnson $2,500 3/19/2015
John Henry Hoeven $2,500 6/18/2015
John Rice Carter $2,500 3/19/2015
John Sidney Mc Cain $1,500 2/10/2015
Lucille Roybal Allard $1,250 9/14/2015
Trey Gowdy $1,000 2/4/2015
Jeanne Shaheen  $1,000 9/14/2015

Carlos Lopez Cantera is a Miami politician who is running for presidential hopeful Sen. Marco Rubio’s seat. GEO Group is headquartered in Florida.

12. National: On Friday, a number of business associations, including the National Association of Manufacturers, the Retail Industry Leaders Association, and the U.S. Chamber of Commerce sent a letter to the IRS urging it to reconsider regulations that allow the IRS to hire outside attorneys to carry out taxpayer examinations. “By contrast, the preamble provides that contractors’ roles will be limited to functions that are not stated to be inherently governmental, such as taking testimony by asking questions, reviewing books or papers, and analyzing other data. The preamble provides no support for the conclusion that these latter functions are not ‘inherently governmental.’”

13. National/InternationalSix teams of corporations responded to the Request for Qualifications (RFQ) to bid on the Gordie Howe International Bridge project linking Detroit and Windsor, Canada. “It will receive funding from Canada, which has already committed C$631 million (€428.6 million; $485.2 million), as well as from the US government and through a public-private partnership agreement.” [Sub required]

14. California/National: California’s labor oversight board is to file for a court injunction prohibiting a charter chain from interfering with employees’ right to form a union. “Leaders of United Teachers Los Angeles had asked the Public Employment Relations Board to seek the injunction, accusing Alliance College-Ready Public Schools, a charter organization, of intimidating employees, denying organizers access to school buildings and blocking emails. In its request, the union said there would be irreparable harm if the courts did not intervene.” PERB will hear the full range of complaints from UTLA on November 2.

15. Hawaii: A state settlement with the United Public Workers union could lead to a major insourcing of state jobs that were previously contracted out. “The United Public Workers union filed grievances in 2007 and a prohibited practices complaint in 2009, complaining that the state unlawfully privatized services that historically had been performed by unionized workers, such as grounds keeping along state highways.” At least 99 private contracts are involved.

16. Iowa: The Iowa Hospital Association says Gov. Branstad’s plan to privatize Medicaid is leading the state to “disaster.” Kirk Norris writes, “merely copying what 40 other states have pursued unsuccessfully is not new or innovative. It simply hands the reins of Iowa’s second largest insurance program to four out-of-state companies, along with a half a billion dollars of Iowa taxpayer funding.” Des Moines Register columnist Rekha Basu says “it doesn’t take an economics degree to understand why the cost of Medicaid coverage is generally lower than private coverage. Maybe you save on employee benefits, but as critics tried to point out, private businesses operate to make a profit. Administrative costs are generally higher.” But she says it’s “all but a done deal now barring federal intervention.”

17. Louisiana: Mark A. Joyce asks “So, why is an out-of-state funded, political action committee spending over $1 million to buy a school board election in Louisiana and bragging about it in the press. Why do private interests want to control seats on a local school board?” His answer: “They could not get our children’s data though [the Louisiana Department of Education], so instead this time around they are buying candidates and attempting to buy our school board. I do not want these same people on our state school board nor do I want people who are beholden to them.”

18. Louisiana: The New Orleans sheriff’s office needs yet another $2.8 million supplemental appropriation. “Andy Kopplin, Mayor Mitch Landrieu’s chief of staff, said at a Thursday (Oct. 22) City Council budget committee meeting that the $2.8 million comes from an expense related to Gusman’s health care contract with Correct Care Solutions. The money to pay for the unforeseen expense will come from the city’s fund balance, he said.” Correct Care Solutions, a private prison health services contractor, is currently defending itself from wrongful death claims in Michigan and North Carolina.

19. New JerseyFriends of Liberty State Park invite supporters to join them in a protest against the privatization and commercialization of the park next Sunday. “Attendees will have a chance to bike ride around the park and hear brief remarks about the battle to maintain the park as a public space. The event will feature The Milwaukees, Karyn Kuhl Band, DEVI, and the Sensational Country Blues Wonders, as well as face painting and food trucks.”

20. New YorkPrison healthcare insourcing moves ahead in New York City. After Mayor de Blasio terminates Corizon’s contract for healthcare at Riker’s Island, the public New York City Health and Hospitals Corporation is expected to approve contracts with the Physician Affiliate Group, an HHS contractor, to take over Rikers health services. “Administrative staff, who had been employed by Corizon, are expected to be hired directly by HHC.”

21. New YorkAs income disparities grow, so does concern that public housing in New York City is being undermined. “The mayor’s plan to generate more revenue for the New York City Housing Authority, known as Nycha, by leasing land within housing projects for mixed-income housing has fueled longstanding fears that public housing buildings may ultimately be steamrollered by the hot real estate market—privatized or demolished to make room for richer New Yorkers. ‘Is Nycha giving up public housing?’ a resident of Wyckoff Gardens in Boerum Hill, Brooklyn, one of the housing projects where some of the new housing will be built, asked at a meeting this month of residents with officials from the agency.”

22. North Dakota: The state is “very likely” to send some prisoners out of state by year’s end to Colorado facilities owned by Corrections Corporation of America (CCA), with whom they are now negotiating. “North Dakota lawmakers this year set aside almost $32 million for contract inmate housing and addiction treatment over the next two-year budget, up nearly $10 million from the previous cycle. North Dakota’s prison system population has tripled since 1995. At the current incarceration pace, the state’s prison population will double in the next decade and quadruple in 20 years, [DOC director Leann Bertsch] said. At the state penitentiary in Bismarck, a $64 million expansion completed last year—and the biggest since it was built in 1885—already is at capacity, and county jails across the state are full, Bertsch said.”

23. VirginiaA loss of public control over P3s costs taxpayers. The privately-proposed Norfolk Midtown Tunnel project, which was supposed to cost taxpayers nothing, will cost the public hundreds of millions of dollars and allow companies to collect billions of dollars in tolls over 58 years. “The state also agreed that the companies—Swedish construction giant Skanska and Sydney-based finance group Macquarie—are entitled to large government payouts if Virginia builds or expands other bridges or tunnels nearby, making fixing other traffic woes more costly for generations to come.” One reason for the bad deal: “local officials were excluded from negotiations as top leaders worked with the private firms. ‘The whole idea was to keep the political people out of this business deal, that they’d just sort of muddy the water,’ [Norfolk Mayor Paul Fraim] said. ‘It turns out there was no check on the guys who were trying to strike the deal.’”

24. Washington: The state charter school association filed a motion on Friday asking the Supreme Court to review its September decision that public funding of charter schools is unconstitutional.

25. Revolving Door News/Pennsylvania: Pennlive (the Patriot News) reports on the wildly spinning revolving door between the fracking industry and Pennsylvania government, especially the Department of Environmental Protection but also including top staffers for former governors Corbett and Rendell. Includes 29 profiles.

26. International/Upcoming Conference: On November 23-24 in London, a conference on “Infrastructure Finance: Bridging the Gaps between Policy and Investment” will be held. Among the sessions: “The ‘Politics’ of Infrastructure,” which will address the following questions: 

•  Can the ‘politics’ be entirely removed from decisions about infrastructure projects? Where is the balance between the need for democratic processes and a technocratic approach to infrastructure?
•  What policy frameworks are needed to ensure the efficient allocation of public and private resources to projects with long-term economic or social value?
•  What lessons can be learned from regions with regulatory and planning environments that are more favorable to infrastructure development?
•  How can infrastructure projects be paid for in the long run and how can the costs be shared?
•  To what extent should infrastructure be seen as a ‘common good’ for which everyone pays? 

Sponsored by HSBC, Institute of Faculty and Actuaries, and RBS.

Legislative Issues

1. National: The embattled for-profit Apollo Education Group reported last week that it spent $470,000 in third quarter of 2015 alone on federal lobbying: $350,000 for in-house lobbying of Congress, the DOE and Veterans Affairs on gainful employments regs and military education benefits; $80,000 to Brownstein Hyatt Farber Schreck to lobby Congress and the White House on the “for profit education sector and related issues” and gainful employment regs; and $40,000 to the Penn Hill Group on appropriations and higher education issues. Apollo’s chief in-house lobbyist is Joanna Acocella, a former executive of the College Loan Corporation (2004-2008) and Sallie Mae (1993-2002).

2. NationalMacquarie Infrastructure drops $20,000 on 12 lobbyists at K&L Gates LLP in the Third Quarter 2015 to lobby Congress and the Treasury Department on S. 1186, the Move America Act of 2015; and Highway Trust Fund reauthorization.

3. Indiana: A majority of aldermen in Bloomington indicate they would consider using “public-private partnerships” for downtown development, but say they need more information on specific proposals. “I’m not opposed to public-private partnerships, but we have to decide what level of risk we are willing to take,” said Ward 6 Alderman Karen Schmidt.

4. MinnesotaHurdles remain to reopening a private prison in Appleton. “American Federation of State, County and Municipal Employees Council 5, which represents state prison workers, apparently will keep pressure on Democratic lawmakers to oppose the Appleton prison plan. ‘AFSCME opposes a lease arrangement that would give CCA a foothold in Minnesota,’ AFSCME spokeswoman Jennifer Munt said about the Corrections Corporation of America, which used to run the prison itself. ‘Our union believes that private prisons should be prohibited. They shouldn’t be able to operate or lease their facilities in our state because it’s morally wrong for corporations to profit from human incarceration.’” AFSCME wants the state to buy the prison. The state legislature will consider the issue in a short session in March.

Meanwhile, the Minnesota blog Bluestem Prairie takes a closer look at the jobs creation and “reform”-friendly claims made by advocates for reopening the CCA prison, and finds them wanting: “We don’t see anyone pushing to open the Appleton prison … also advocating a sunset on the lease accompanied by a timeline of reform to reduce the prison population. Instead, without such assurances, this looks like a plan to help CCA draw some compensation for its idle property.” [Orange is the New Green]

5. Oklahoma: State corrections chief Robert Patton says adding beds isn’t enough to address Oklahoma’s prison overcrowding problem. “‘We don’t need more beds. We need less offenders. We don’t need to have this many people in prison, especially when they (lawmakers) don’t want to pay for this many people in prison,’ he said. Prison staffing levels are dangerously low and turnover is too high to handle the current prison population, he added.” Legislators are formulating proposals to respond to the overcrowding problem for when they reconvene on February 1.