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This Week’s Outsourcing Scan 12-14-2015

1. National: In the Public Interest and its partners published a new resource guide for evaluating ‘Pay for Success’ and ‘Social Impact Bond’ private financing models for public social programs. The guide “aims to help advocates identify the critical issues surrounding PFS contracts and their impact on vulnerable individuals and the public. We describe these issues and include a list of key questions advocates can raise to help ensure that decision makers make choices that advance the public good.” It reports that PFS/SIB schemes are more costly to taxpayers, limit the conversation about solutions, face difficulty in measuring their outcomes, and minimize risk to investors while leaving risk on the public.

2. National: The American Correctional Association (ACA) will be holding its annual Winter Conference in New Orleans on January 2227. In the Public Interest recently released a report, Buying Access: How Corporations Influence Decision Makers at Corrections Conferences, Trainings, and Meetings, shedding light on how for-profit companies use conferences such as ACA’s to build influence with decision-makers in the public prison system. Event sponsors include Corrections Corporation of America (CCA), Centurion, and MHM Correctional Services Inc. Workshops include “Demystifying the Wizard Behind the Curtain: Navigating Legislative Meetings and Understanding Bills 
Impacting Community Corrections,” “Stress Management: What About the Officers?,” “Marijuana Legalization: Pros and Cons,” and “Leveraging Federal Resources to Support Local Reentry Initiatives.”

3. National: Tom Steiger looks at how privatization is eroding our democracy. “As we de-public our democracy, we create fewer and fewer spaces where those cherished rights can be exercised.”

4. National: The New York Times Magazine takes a deep look at what it’s like to go through the ‘purgatory’ of the immigration detention system. “One day, I sat at a table beside Dennis Abraham, a 30-year-old singer-­carpenter with wide-open eyes and shoulder-­length hair tied up in a samurai bun. Abraham wore a laminated ID card around his neck that featured his photo beneath a logo for the GEO Group, the international corporation that operates a facility in Texas where he himself was detained just two months ago. When new arrivals sat down across from him, Abraham showed them the ID and said, ‘I’m like you.’”

5. National/Texas: The San Antonio Water System says the likely bankruptcy of Abengoa, the Spanish parent company whose subsidiary, Abengoa Vista Ridge LLC, is in a ‘public private partnership’ with the city to build a $3.4 billion water pipeline, will not affect the project. Opponents of the project say it will seriously deplete groundwater and that the looming bankruptcy has added to their concerns about risk to taxpayers. “Councilman Ron Nirenberg said Wednesday that ‘the timing is very surprising and, frankly, concerning,’ noting that he met with Abengoa officials three weeks ago to discuss the company’s shaky finances and was given ‘direct assurances of their rebound and, thus, ability to proceed with the project. ‘This will clearly test the theory of whether or not the child can survive without the parent,’ he said.” Last month the San Antonio city council voted for a hefty rate increase to help finance the project. If the project collapses, the city water system may be forced to buy the contract.

According to Public Works Financing, the collapse of Abengoa would also deal a blow to the Obama administration’s clean energy program, since “starting in 2010, the U.S. Department of Energy provided Abengoa with loan guarantees and grants to support $4 billion in financing for two utility scale solar power projects in Arizona and California.” [Public Works Financing, November 2015; sub required]. 

Bloomberg Business reported on Friday that “Abengoa Yield Plc’s Mojave and Solana solar farms in the U.S. Southwest are both producing electricity and generating revenue to pay the debt incurred building them. Yet they’re still at risk of default, along with three other solar and wind farms owned by the company. (…) Solana and Mojave were both financed by the U.S. Federal Financing Bank, and received a combined $2.65 billion in loan guarantees from the U.S. Energy Department.” The Treasury Department also reportedly made $818 million in grants to Abengoa.

6. National: Activists protest the detention of Pakistani and Bangladeshi asylum seekers in the federal Denver Contract Detention Facility, which is operated for profit by the GEO Group. The asylum seekers are on hunger strike along with others around the country. “The hunger strikers in Aurora joined a total of 149 asylum seekers around the country at 10 different detention facilities, according to Piper. The hunger strike began the day before Thanksgiving at two different detention centers in California and one in Alabama by men from South Asia and East Africa, mostly from Muslim-majority countries. It quickly spread to the other facilities, including the one in Colorado.”

7. National/North Dakota/Minnesota: Federal funding for a proposed flood control ‘public private partnership’ in Fargo-Morehead is uncertain. The Flood Diversion Board of Authority, a bi-state agency, has state-granted DBFOM authority to approve a 30-year deal. But “mixing [Army Corps of Engineers] funding with state and local borrowing for the P3 component would require Corps oversight of the design and construction of all project elements, says Corps Major General Ed Jackson, including the operating period in the proposed DBFOM segment.” [Emphasis added; Public Works Financing, November 2015; sub required].

8. National: Presidential hopeful Donald Trump applauds the privatization of outer space. “You know, space is actually being taken over privately, which is great. It is being taken over by a lot of private companies are going after space, and I like that maybe even better, but it’s very exciting.” Trump’s remarks put him at odds with his Republican rivals, who favor some continued public funding of NASA.

9. California: Los Angeles Mayor Eric Garcetti will hold an industry forum on February 4, 2016, to discuss a $5 billion plan to decongest LAX street traffic. “Environmental studies and negotiations with intransigent rental car companies have begun by Los Angeles World Airports (LAWA), a city department, toward a 2017 construction start for the initial elements, which will be delivered as 30-40 years DBFOMs.” [Public Works Financing, November 2015; sub required].

10. CaliforniaThe San Diego County Regional Airport Authority approves a plan to renovate Lindbergh Field’s Terminal 1. “Scott Brickner, finance and asset manager vice president, said in addition to bond financing, the airport could invite airlines to finance all or part of the expansion or enter into a public-private partnership with a company that would build, maintain and operate the terminal.”

11. Florida: Proponents of more accountability for how charter schools spend taxpayer money have an example of good practice to point to: Marco Island Charter Middle School. “The school holds a highly performing label from the state, but if it did eventually fail, the building it occupies and most of the assets inside would return to the district for the benefit of public school students. (…) That’s how proponents of more accountability for taxpayer money going to charter schools think the system should work. But it’s not the norm in Florida, according to an Associated Press review of state tax money for building and other capital needs sent to charter schools.”

12. KansasSocial workers call for a wide-ranging review of the state’s privatized child welfare system. “Although conditions have become noticeably worse in recent years, they say, the root of the problem dates back to a decision made nearly 20 years ago to privatize the state’s child welfare system. ‘In a nutshell, I think that almost 20 years into privatization, what we’ve seen is exactly opposite of what they intended,’ said Sky Westerlund, executive director of the Kansas Chapter of the National Association of Social Workers. ‘It has not cost the state less. It has not created efficiencies. It has not created the one-child, one-social worker model.’”

13. LouisianaDrama builds as the education community awaits recommendations from a 53-member education transition panel appointed by incoming governor John Bel Edwards. “Edwards has long advocated curbs on charter schools, criticized vouchers and opposed public school letter grades—all hallmarks of Jindal’s education ‘reform’ package, especially in 2012. The incoming governor also is firmly aligned with Louisiana’s two teacher unions, the Louisiana Federation of Teachers and the Louisiana Association of Educators, which have long blasted charter schools, vouchers, letter grades for public schools and a wide range of other public school changes enacted in recent years.” The panel has one final meeting this week.

14. New York: Elected officials join the Battery Park community board to demand that the Battery Park City Authority withdraw its plan to privatize Parks Enforcement Patrol officers with a private security firm. BPCA issued a request for proposals in May and then awarded a contract to AlliedBarton Security Services in October without input from residents. “The city’s public employee union, DC 37, which organized the City Hall press conference, warned that privatizing public services hurts not just the union’s members, but the public as well. ‘The community is the one that ends up suffering,’ said DC 37 executive director Henry Garrido.”

15. OhioDozens of charter schools still owe more than $6 million to Ohio taxpayers for misusing education funds. “The funds were to be used to open new charter schools in Ohio. But officials with the U.S. Department of Education said they were concerned about the state agency’s rigging of charter-school evaluations and wanted assurances that the grant money would be spent properly. The federal review is ongoing, officials said on Friday.”

16. Ohio: The state school board will choose a company to conduct a search for a new school superintendent at its meeting tomorrow. The current superintendent, Richard Ross, retires at the end of the year. “His departure comes as questions linger over a decision by former Ohio charter schools chief David Hansen to omit certain failing grades from charter school sponsor evaluations. Hansen has since resigned and Ross has turned over thousands of pages of his emails and calendars to authorities.”

Melissa Cropper, president of the Ohio Federation of Teachers in Columbus, says Ohio’s school children need a leader with vision. “One way to do that is to provide full and vigorous support for community learning centers, a model proven in cities such as Cincinnati, Philadelphia, Washington, New York, and Austin. The community learning center model brings community resources into schools to help meet the needs of children. This public-private partnership engages community members, neighbors, parents, and educators in identifying barriers to learning, as well as needs of the greater community. It includes all voices in crafting a plan.”

17. Vermont: A citizen activist has filed suit in Washington County superior court demanding that a government contractor disclose how $85 million of public money was spent on developing information technology used in Vermont’s health care system. “Stephen Whitaker was told that because much of the work was being done by a private, nonprofit state contractor he could not use the state’s public records law to gain access to its records. (…) Whitaker sued in Washington Superior Court this past week. And he’s getting support, at least in principle, from Vermont Secretary of State Jim Condos, who frequently advises state agencies, towns and other public entities on public records issues. ‘The public still has a right to know what its government is up to, even when government services are outsourced,’ said an email from Condos’ office in response to an inquiry from The Associated Press.”

18. Vermont: A panel chaired by Attorney General Bill Sorrell holds its last public hearing today to consider alternatives to prison. Last week, “the panel got an earful about heartbreaks endured by family members forced to travel to Michigan to visit relatives in [a GEO Group] prison. Panel members heard about the benefits and lower cost option of addiction treatment facilities and re-entry housing, such as halfway houses, for released convicts.”

19. VirginiaAs the privatized I-95 toll lanes turn one year old, opinions differ on whether they have been a success. Virginia transportation secretary Aubrey Layne says they’ve been a success. “The trip through the corridor ‘has gotten better,’ he said. ‘We didn’t get the southern end right, there’s no doubt about it. That’s got to be fixed.’ Layne believes express lanes are the way of the state’s transportation future.” But “regardless of the positive impacts of the express lanes, many area commuters have been critical of the congestion around the North Stafford merge and the high tolls. Local elected officials also have criticized the toll prices and merge problems. Tim McLaughlin, Spotsylvania Supervisor and chairman of the Fredericksburg Area Metropolitan Planning Organization Policy Committee, has repeatedly said that, ‘The express lanes broke 95.’” Transurban recently negotiated an extension of the I-95 toll lanes to run north on I-395 to the DC border.

20. VirginiaThe transportation board approves tolling on I-66 from the Capital Beltway to the DC line. “Toll revenues will be used to pay for road and transit improvements in the area, VDOT says.” But local residents think this will drive motorists onto local roads, worsening congestion. Also, the board has announced “it will likely pursue a public-private partnership to fund the portion of the I-66 project that stretches from Gainesville to the Beltway.”

21. Think Tanks: The National Education Policy Center publishes a new research brief by Bruce Baker and Gary Miron detailing “some of the prominent ways that individuals, companies, and organizations secure financial gain and generate profit by controlling and running charter schools. To illustrate how charter school policy functions to promote privatization and profiteering, the authors explore differences between charter schools and traditional public schools in relation to three areas: the legal frameworks governing their operation; the funding mechanisms that support them; and the arrangements each makes to finance facilities. They conclude with recommendations for policies that help ensure that charter schools pursue their publicly established goals and that protect the public interest.”

22. Revolving Door News: Robert Patton, who resigned recently as Oklahoma prisons director over two botched lethal injections and a third that was called off because the wrong drug was delivered, is hired by the for-profit GEO Group as deputy warden of its Kingman, Arizona prison.

Legislative Issues
 

1. National: As President Obama signs the new five-year $305 billion FAST ACT highway bill into law, the ‘public private partnership’ industry sees it as a mixed bag, increasing federal TIFIA infrastructure subsidies to private investors on the one hand, and allowing states to dip into National Highway Performance Program apportioned funds on the other if TIFIA funding is constrained. “On top of the approximately $1.8 billion carried over from previous years, that means the total potential subsidy funding is over $3.2 billion, which is twice the amount of subsidy funding the program has used in its 17-year history, according to Bryan Grote of Mercator Advisors.” But they regret the defeat of Rep. John Delaney’s proposal to extend a massive corporate tax break on repatriated earnings to fund highway infrastructure. [Public Works Financing, November 2015; sub required].

Critics maintain the Delaney measure would have amounted to a huge giveaway of tax revenue to companies in the midst of wide public concern over the use of so-called inversion deals to avoid taxation by relocating corporations overseas.

Mayer Brown, a major law firm specializing in ‘public private partnership’ deals, says the bill will spur P3s.

The FAST Act also allows private debt collection agencies to recover unpaid tax debt, which critics warn may open the door to abuse. “The IRS would be in charge of negotiating any contracts with private collection agencies, determining an acceptable fee structure and developing requirements for how the debt is collected. Any debt collector involved in the IRS program will be thoroughly vetted by the IRS and continually monitored by IRS employees. As an added measure of accountability, the law stipulates the IRS must present two reports to Congress detailing the effectiveness of the program.”

The FAST Act also restores authority for the operation of the U.S. Export-Import Bank, which the Koch brothers and right wing political groups fought bitterly to eliminate. The U.S. Chamber of Commerce and National Association of Manufacturers joined with the AFL-CIO, most industrial unions, and the Democratic House leadership to wage a tough and successful campaign to save the bank.

2. Ohio: State Sen. Joe Schiavoni, a Democrat from Boardman, near Youngstown, has introduced a bill to prohibit charter schools from spending taxpayer money on advertisements. ““If you want to promote your charter school, then raise the revenue in order to do so,” said Schiavoni. “But using taxpayer dollars from taxpayers that may not even be in that specific district? I think that may be a problem.” The Columbus Dispatch reported in March “that the online Ohio charter Electronic Classroom of Tomorrow, or ECOT, spent at least $2.27 million of state education tax money last school year on advertising to attract students, or about $155 for each student who enrolled that year.”

3. Pennsylvania: House Republicans continue to dig in their heels and demand the privatization of state liquor stores. The issue has paralyzed state operations for weeks, amid growing social services layoffs , threats of school shutdowns and the approaching end of the year. Compromise measures passed by the Republican-controlled Senate last week on charter schools, pensions and liquor sales have been rejected by what Democrats call “extreme right-wing members that kowtow to special interests.”

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