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This Week’s Outsourcing Scan 10-3-2016

1) National: The privatization of public services is contributing to increasing inequality in terms of income, wages, wealth, and opportunity, In the Public Interest reports. The creation and increase in user fees, privatization of the social safety net, decreased wages and benefits, and increased socioeconomic and racial segregation have helped fuel
an increasingly unequal society. ITPI recommends four steps to address this problem: Invest in the public; understand the social and economic impacts of privatization; ensure government contracts promote instead of undermine shared economic prosperity; and increase transparency. Donald Cohen, executive director of In the Public Interest, tells In These Times that since the right wing made privatization an ideological project, it has generated huge profits for corporations and harmed public sector workers and their unions. “They want to contract out not because it makes sense, but because that’s their jobs. They’re right-wingers. (…) Part of the strategy of management is to contract out part of the work to keep the pressure on the non-contract part of the work.” [How privatization is increasing inequality; McKinsey report on global inequality]

2) NationalAva DuVernay’s “13th,” the only documentary ever chosen for the opening night of the New York Film Festival, receives strong reviews. The film looks at mass incarceration in America. Variety calls it “a crucial and stirring document—of racism and injustice, of politics and the big-picture design of America” that “fills in each level of how it works, starting with the rise of the American Legislative Exchange Council (ALEC), the lobbying club on steroids that unites corporate leaders and politicians, so that the corporate leaders can write big checks and craft the legislation that is then ‘recommended’ to Congress. As the film reveals, it was ALEC that came up with the cornerstones of President Clinton’s 1994 crime bill: the mandatory sentencing, the ‘three strikes’ clause, and so on. The conflict of interest is stunning. For a long time, the Corrections Corporation of America (CCA), the nation’s largest private prison company, was a member of ALEC, and so was Wal-Mart, which had a vested interested in playing up ‘stand your ground’ laws because the result of those laws is that gun sales shot up (and Walmart is a major merchandiser of firearms). The very notion that the American prison system is now being run by private corporations, with a profiteering interest in maintaining a large prison population, represents a fundamental—and indefensible—transfer of power in our society. The entire prison system has become a racket.”

3) National: The Labor Department issues new rules that federal contractors must provide paid sick leave to their workers. The move is expected to benefit 1.1 million workers once it is implemented. “It seems such a minor, sideline type of measure, but it does strike at the core of whether a job is workable within the context of family life,” said Lisa Guide, associate director of the Rockefeller Family Fund, which has financed research and advocacy on this subject. At issue, she said, is “whether a person will be able to take care of their kids and also hold down a job at the same time and pay their bills.” 

Ellen Bravo, executive director of Family Values@Work
 and one of the nation’s leading experts on paid sick days and paid family leave policies, said “this action by DOL helps set an example for the rest of the country. Such a move is precisely the government’s role: to create model standards for the rest of the country to follow and to make sure taxpayer dollars are used wisely. We also applaud the President’s call on Congress to pass the Healthy Families Act to create a national standard of paid sick days.” Family Values @ Work member groups and partners have fought a determined campaign for paid sick leave in states and cities across the country, and have won paid sick days in 37 locations to date—5 states, 1 county and 31 municipalities. Once all the laws are implemented, more than 11.5 million workers will newly gain access to paid sick days.

4) National: Should a poor person who can’t afford bail be sent to jail? The Atlanta Journal Constitution reports the latest on a critically important federal case on the issue. The Southern Center for Human Rights and Equal Justice Under the Law, U.S. Department of Justice, American Bar Association, Southern Poverty Law Center, Cato Institute and human rights advocates have lined up behind Maurice Walker in a class action suit. Walker won the first round when a federal district judge ruled Calhoun Municipal Court’s bail requirement is unconstitutional. On the other side? The American Bail Coalition, Georgia Sheriffs’ Association, and International Municipal Lawyers Association. The 11th U.S. Circuit Court of Appeals has not yet scheduled oral arguments. The attorney of record for the American Bail Coalition is right wing attorney Paul D. Clement, who led the challenge on behalf of 26 states to overturn the Patient Protection and Affordable Care Act in the Supreme Court on March 26–28, 2012. [For a backgrounder on the American Bail Coalition see the ITPI report, Profiting from Public Dollars: How ALEC and Its Members Promote Privatization of Government Services and Assets].

5) National: The IRS makes its third effort to outsource federal tax debt collection to the private sector. As the Project On Government Oversight (POGO) documented in their Bad Business report, “the IRS’s previous experiments with private debt collection, in 1996 and 2006, were resounding failures. Both times, program costs offset the amount of revenue collected, and taxpayers complained of abusive and underhanded tactics by the collection companies. Government tax collectors have one critical advantage over private collectors: discretion. IRS agents can exercise discretion and flexibility when working with delinquent taxpayers, while contractor collectors can only demand payment.”

6) National: Educators, advocates, and watchdogs respond to the announcement of Department of Education charter school grants to eight states and 15 charter operators totaling $245 million. The National Education Association reports that “even as a wealth of research shows a shocking absence of oversight and accountability in the charter sector, voters this November will weigh the radical expansion of charter schools in Massachusetts, which was awarded as much as $15.8 million according to ED’s announcement, and also in Georgia, which was awarded as  such as $46.4 million under the latest round of grants. Several states and operators receiving CSP grants in 2016 received grants in previous years, and research has found a shocking lack of accountability and transparency in how those funds have been used.”

7) NationalThe public sector steps in to address a problem that private insurers can’t handle: mental healthcare shortages, especially in rural areas. “The Affordable Care Act has been expanding the number of insured people, which improves access to care in places where services are available. At the same time, however, the mental health workforce has been shrinking and is distributed unevenly across the country. To meet that challenge, President Obama has pledged to increase the number of workers in the National Health Service Corps to 15,000 by 2020 from 9,200 in 2014. The corps sends health professionals to underserved areas for five years in exchange for repayment of education loans.” Governing reports that “back in Codington County, the jail population has eased down a bit in recent months, thanks in part to a program the county is using. Known as Stepping Up, it is an initiative that the National Association of Counties introduced in 2015.”

8) National: A new HHS rule bars nursing homes from forcing patients and their families into private arbitration.

9) National: Corrections Corporation of America has seen the worst quarterly fall in its share price since 2000, down nearly 60.4% in the last quarter.  GEO Group stock is down more than 30 percent for the quarter, its worst since the third quarter of 1999. CCA shares fell nearly 12.8% last week, and GEO’s shares were down 5.3%.

10) National: In the wake of a sharp downturn in its share price caused by the federal government’s announcement that it will phase out the use of private prisons at the Bureau of Prisons, and a review that may lead to similar action at Immigration and Customs Enforcement, Corrections Corporation of America announces layoffs in its Nashville headquarters and a cost reduction plan. “CCA expects that 50 to 55 full time positions will be eliminated as a result of the restructuring, or approximately 12% of the corporate workforce at its headquarters.” Damon T. Hininger, CCA`s President and Chief Executive Officer, will also take a compensation reduction.

11) NationalThe Daily Beast reports that “Hillary Clinton’s Pitch to End Private Prisons Is the Surprise Hit of the Presidential Debate.”

12) National: Hella Winston reports on how charter schools try to block their employees from unionizing. “These actions include harassment and outright intimidation of teachers by the administration; anti-union appeals to school parents and, in some cases, even students; the use of hired guns to try to influence teachers and others to oppose unionization; and the deployment of a variety of management strategies to stall the unionization process, leaving the teachers and schools in limbo.”

13) NationalThe Wall Street Journal reports on the issue of bed quotas and federal immigration detention, and points to criticism of the practice. “Critics of ICE question why there are so many people in custody when illegal immigration has slowed. ‘The growth in the private-prison industry has been driven by more enforcement that fills beds, even at a time of relatively low immigration levels,’ said Bob Libal, executive director of Grassroots Leadership. The bed quota, which Congress first mandated in 2009, benefits the private-prison industry and promotes detention, Mr. Libal and others say.” [Sub required]

14) National: Dominion Privatization Texas LLC of Richmond, Virginia, has been awarded a maximum $740,282,112 fixed-price with economic-price-adjustment 50-year contract by the Defense Logistics Agency for the ownership, operation, and maintenance of the electric and natural gas distribution systems at Fort Hood, Texas.

15) California: Gov. Brown vetoes another bill that would have established greater charter school accountability. Diane Ravitch comments, “the California Charter School Association wants no restrictions, no limitations, no transparency, no accountability. They want for-profit schools, and they refuse to clean their dirty house. And Governor Jerry Brown dances to their tune. How sad. He doesn’t need their support. He doesn’t need their money. He won’t run for office again. Yet he has succumbed to the privatization movement, those who would destroy our communities and the public education system.” 

Last week, The Washington Post’s Valerie Strauss ran the second of four posts, this one by Carol Burris, on the state of the charter school sector in California, which Strauss calls the “Wild West.”

16) California/National: Writing in the Orange County RegisterJennifer Muir Beuthin, general manager of the Orange County Employees Association, calls for an end to the use of for-profit prisons by federal, state, and local governments. “You may not know this, but the corporations that own private prisons also operate jail facilities in cities throughout Orange County, where elected officials have handed over control of this important public safety function.”

17) California: Sacramento’s incoming mayor Darrell Steinberg is putting the brakes on plans for all-public financing of renovation of the convention center, and may try to bring private finance into the project. “Before the October council vote, the advocacy group Region Business plans to release alternative financing ideas and possibly a proposal to privatize the entity that operates and manages the convention center. (…) Region Business has allied with the Sacramento Central Labor Council, a regional union group, to advocate for its plan. ‘We don’t want to build something that is too small, that doesn’t keep us competitive,’ said Fabrizio Sasso, executive secretary of the labor council.” Steinberg takes office December 13.

18) District of ColumbiaThe head of DC’s Department of Corrections is to leave next month. “Faust’s tenure wasn’t without incident, however, including a controversy about video visitation after the elimination of face-to-face visits, as well as four suicides in less than 12 months a few years ago. The Department of Corrections is also set to resume control next year of the Correctional Treatment Facility, an institution next to the D.C. Jail that houses women and juveniles, among other offenders. The facility is run by the Corrections Corporation of America, one of the companies affected by the Justice Department’s recent announcement that it will no longer use private prisons to house federal inmates.”

19) FloridaThe IRS says Florida jail bonds are likely taxable. “The detention center, which opened in Sept. 2009 and is roughly 30 miles west of Jacksonville, is owned by [the Baker Correctional Development Corp]  and operated by the Baker County Sheriff’s Office. BCDC was formed as a nonprofit in 2006 to acquire, construct, maintain and/or operate one or more jails in Baker County. Jails in border states often have contracts to house inmates from the U.S. Citizenship and Immigration Service or the U.S. Marshals Service.  The U.S. Immigration and Customs Enforcement’s (ICE) enforcement and removal operations division began housing detainees at Baker County Detention Center in 2009 under an intergovernmental service agreement with Baker County, according to ICE.”

20) Iowa: LCTV reporter Allison Wong interviewed a Dubuque family about their experience with Medicaid privatization, and reported on State Senator Pam Jochum’s listening session of caretakers and providers where both expressed concerns about the system. [Video]

21) Massachusetts: The Boston Carmen’s Union Local 589 (ATU), which is battling plans to privatize the MBTA, notifies potential private bidders to run its cash room that they will have to hire union workers or face legal action. Though MBTA brass complained about “bullying” in the media, Mayor Martin J. Walsh spoke up for the union, saying “the union can advocate however they want. The bullying question is getting a little ridiculous now. Unions advocate for their members, that’s what they do, they’re supposed to advocate for their members. (…) This whole conversation around unions, bullying, every time a union has a conversation now it’s a bullying tactic, that’s not true.”

MBTA recently announced that it will be paying $21 million to CH2M and contractor Alstom for consulting and renovation of trolley cars. The head of the Boston Carmen’s Union has said that the contract with Alstom is a “disaster.”

22) Michigan: Tom Watkins, president and CEO of the Detroit Wayne Mental Health authority, the largest provider of services in Michigan, says there is “tremendous fear among advocates” about Gov. Snyder’s possible plan to privatize mental health services. “The prison food scandal was bad enough. But far worse are the scandals at the now-privatized Detroit Medical Center, where the Detroit News reported last month that medical instruments are frequently filthy, and that doctors have attempted to operate with tubes clogged with old blood and bone fragments. Willie Brooks, executive director and CEO of the Oakland County Community Mental Health Authority, put it this way: ‘Why are advocates, the community and the people served concerned about a for-profit takeover?’ Simple: ‘Health plans by nature are risk-adverse entities,’ as are all for-profit institutions. ‘As they lower their exposure to risk, they benefit with higher profits.’”

23) New Jersey: Atlantic City Mayor Don Guardian says the city could raise $100 million in much needed cash by selling a disused airfield to the city’s quasi-public water utility. Guardian is due to present a recovery plan on debt and fiscal health to state officials the week of October 17. “New Jersey officials have long said the city could make more money from the water utility, which is called the Municipal Utilities Authority (MUA), through privatization, leasing or some other means. But city officials and the utility have resisted a sale to private operators, and the deal to buy the airfield could make such a sale less appealing. The MUA would have to borrow to buy Bader Field, the defunct former airstrip owned by the city, saddling it with debt that would effectively be a poison pill for potential private buyers, Guardian said in a phone interview.”

24) New York: The state legislature’s stripping of Comptroller Tom DiNapoli’s oversight of SUNY contracts in 2011 has led to a contracting train wreck, critics charge. “Now, eight defendants face various state and federal big-rigging and corruption charges on SUNY-led projects. A ninth defendant has pleaded guilty. ‘The comptroller’s authority to review contracts is an important deterrent to waste, fraud or abuse. But over the past few years, that oversight has been eroded,’ said Jennifer Freeman, director of communications for the comptroller’s office. ‘Last year, state agencies issued nearly $7 billion in contracts for which our oversight was removed,’ she said Tuesday. ‘Meanwhile, the governor and the Legislature have created entities such as Fort Schuyler and Fuller Road that effectively remove our oversight for projects such as the Buffalo Billion. Such shadow entities are bad business for the state and for taxpayers.’”

25) OhioA judge allows officials to look at the attendance records of the state’s largest online charter schools, Electronic Classroom of Tomorrow. The Associated Press reports that it could jeopardize the school’s $106 million in annual funding. Last week, “the state said ECOT’s enrollment is nearly 60 percent lower than originally reported, potentially jeopardizing about $60 million in state funding from last year. School spokesman Neil Clark said an appeal was being filed immediately and the school continues to believe state law is on its side.”

26) Puerto Rico/Think Tanks: J.W. Verret, an associate professor at the Antonin Scalia Law School and senior scholar at the Koch-funded Mercatus Center, calls for an end to the minimum wage in Puerto Rico. “Verrett said the privatization of infrastructure should be high up on Puerto Rico’s list of priorities. ‘The island needs more fee-based services and toll roads. It also has too many teachers and not nearly enough tax collectors,’ he said. ‘You’ve got to fire 10 to 20 percent of the teaching force and offer them jobs as tax collectors. I would institute that today.’”

27) International/NationalThe World Bank has released a 166-page survey report on ‘public private partnerships,’ including discussion of regulatory frameworks, procurement, unsolicited proposals, and contract management. The report emphasizes transparency and holds out “market competition” as a measure of “value for money” (but offers no VfM methodology). “Approximately two-thirds of the economies surveyed require socioeconomic impact, affordability, risk identification, bankability, and comparative assessments (PPP versus traditional procurement) of a potential PPP project. However, only about one-third of these economies have adopted specific methodologies for conducting such assessments.” [Report]

For a discussion of how ‘public private partnerships’ contribute to global inequality see Nicholas Hildyard’s just-published Licensed Larceny: Infrastructure, Financial Extraction and the Global South; for the United States, see the ITPI reports How privatization increases inequality; and Race to the Bottom: How Outsourcing Public Services Rewards Corporations and Punishes the Middle Class.

28) InternationalThe Intercept reports that Brazil’s new president concocted an impeachment case against his predecessor, Dilma Rousseff, in part to drive through a massive privatization drive. “Temer clearly stated what impeachment opponents have long maintained: that he and his party began to agitate for Rousseff’s impeachment when she refused to implement the pro-business economic plan of Temer’s party. That economic plan which Rousseff refused to implement called for widespread cuts to social programs and privatization.”

29) Think Tanks: Harvard University has invited Jeb Bush to lecture at the Kennedy School’s Taubman Center for State and Local Government in the Program on Education Policy and Governance. “Bush as much as anyone led the reform movement that centered on using standardized test scores as the chief metric of ‘accountability’ for schools and pushing for the privatization of public education.”

30) Think Tanks: The Koch- and Donors Trust-funded Reason Foundation releases reports on local government privatization and ‘public-private partnership’ trends, and trends in federal government privatization. David Koch sits on their board.

Legislative Issues

1) New York: New York City Public Advocate Letitia James backs legislation to prevent contractors from exploiting inmates’ families. “The current service fee structure is akin to an ATM that charges a fee that increases as you withdraw larger amounts of cash,” said Public Advocate Letitia James. “This type of exploitative practice would not be tolerated from a bank, and we cannot allow it to happen to well-meaning New Yorkers trying to send money to their loved ones. These transaction fees are nothing more than profiteering by third party contractors at the expense of New Yorkers. No company should be allowed to take advantage of New Yorkers, and my legislation will ensure families are protected.” [Audio of City Hall public event, at 21:00]


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