Media Scans
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This Week’s Outsourcing Scan 12-7-2015

1. National: Aramark, which has come under widespread criticism for the poor quality of its prison foodand serious staffing issueswill slash $6 billionin labor costs and $3 billion in annual food costs in order to boost their profit margins to 7.2 percent. “Among the strategies Aramark has explored to reduce food costs is a dramatic reduction in the varieties of bread it uses.” Eric J. Foss, Aramark’s CEO, was paid $32,422,382 million in compensation last year (p. 32). 
 
2. National/Iowa
: Federal officials arrive tomorrow to assess whether Gov. Branstad’s plan to privatize management of the state’s Medicaid program passes muster. According to the De Moines Register they will focus on:

  • Service Gaps: So-called “continuity of service” reviews will check whether Medicaid recipients might face treatment delays as a result of the transition.
  • Payment Timeliness: The agency will review whether the companies are set up to offer proper and timely reimbursement to health care providers for their services.
  • Potential For Problems: The checks will evaluate whether the companies and the state have adequately minimized potential for problems resulting from the transition

They want to ensure that there’s effective communication with members and that necessary services are available throughout the state.
 
3. National/International
: As the COP-21 global climate conference heads toward a conclusion, private investors are poised to increase their role in renewable energy. “Fund managers will find themselves increasingly bumping up against clean energy infrastructure. Savvier traditional infrastructure GPs, like Meridiam and Ardian, have already recognized this and have moved to offer fund products targeting low carbon infrastructure.” Will existing P3s become stranded assets? “Take toll roads. If you own a 99-year toll road concession, you might potentially have to deal with a scenario where electric vehicles (EVs), perhaps self-driving ones, are prevalent. How will that affect traffic and toll revenue on your asset? What about capex, perhaps to upgrade your lanes so they are able to charge said EVs, as is being tested in the UK right now.” [Sub required]
 
4. National
: The National Association of Bond Lawyers urges the IRS to extend tax breaks to longer term management and service contracts with private companies, and to make rule changes to facilitate the use of tax exempt bonds in ‘public private partnerships.’ [NABL’s 34-page recommendation]
 
5. National
: Democratic presidential hopeful Hillary Clinton proposes creating a $25 billion federally funded infrastructure bank “that she said would generate an additional $225 billion of low-interest loans to spur private investments in public projects.”
 
6. California
Bakersfield library supporters organize to push for a .0125 percent sales tax to keep their libraries public. “A letter from the Kern County Election’s Office states the group must collect the signatures of 13,269 registered voters to get the measure on the [November] ballot. Lomeli-O’Reilly, founder of the Advocates for Library Enhancement group that is leading the effort, is shooting for 26,537 signatures. ‘We are working with a political consultant to organize a ground strategy to target groups of voters in this beautiful county,’ she said.” Opponents say “not everyone uses a library.” LSSI’s local consulting firm has formed an advocacy group to support privatization. SEIU has opposed library privatization in other communities.
 
7. Connecticut
: Faculty and students rally outside the state Board of Regents for Higher Education to protest proposed contract changes that may lead to “more part-time faculty, the elimination of academic programs, and larger class sizes.” Mark Ojakian, president of the Connecticut State College and University System, denies there is an agenda “to destroy, privatize or corporatize public higher education, replace tenure-track faculty with adjuncts or move instruction to an online platform.”
 
8. Florida
: Donald Cohen of In the Public Interest calls on Miami-Dade County to take a responsible approach to rebuilding its infrastructure, rather than plunging into ill-conceived water privatization and other private financing schemes. “There’s no doubt that Miami-Dade needs to innovate to keep up with growth, eliminate poverty, and prepare for climate change. But the county can do so without privatizing their water supply. They could use public, tax-exempt financing, which provides the most flexibility for agencies and is the lowest cost of capital. But if commissioners feel the need to tap the private sector to finance projects more quickly, there’s no reason to hand over control of drinking water facilities to private operators. Vital public infrastructure should be operated and maintained by the county government with public employees accountable to the people of Miami-Dade.”
 
9. Florida/National
: Facing mounting pressure to comply with good practices in running prison healthcare, Tennessee-based Corizon cancels its contract with the state corrections department effective May 31. Jeremy Mohler of In the Public Interest writes, “if adequately caring for prisoners is ‘too constraining,’ then Corizon shouldn’t be in the business of prison health care.” Corizon has been struggling to win contracts, and its parent was downgraded by Moody’s in 2014. The Palm Beach Post, which has diligently covered the prison healthcare issue, reports “in two instances, records weren’t just missing, they were suspect. A patient’s vital signs in one file were identical for every day for more than a month. In another, vital signs taken twice weekly for several weeks never changed—except to record a massive and unexplained change in weight from 143 to 250 pounds.” Lawmakers may have to step in (see below).
 
Following problems in Escambia County over prison deaths, Commission Chairman Grover Robinson says “maybe we should be asking, ‘Do we really need to be incarcerating people who are that sick? If we are going to incarcerate, we need to provide them with the medical care they need (…) if the problem is staffing, if it’s medical costs, whatever it is, we need to figure it out and address it.”
 
10. California
: Another candidate jumps into the crowded Republican field seeking to unseat San Diego Rep. Scott Peters (D). His novel idea? Privatizing the immigration system. John Horst, an information technology and cyber security specialist who works for a defense contractor “wants to privatize the immigration system. He says the process for admitting people to the United States is, by design, unnecessarily slow, and he wants to create a federal charter allowing industries to create nonprofit organizations that would take over the immigration’s administrative processes. The nonprofits would select immigrants based on the needs of their industry.”
 
11. Georgia
: A critic and a supporter debate the privatization of Atlanta’s MARTA Mobility service to MV Transportation. Joseph Erves, MARTA’s director of rail, writes, “Unlike a previous attempt to privatize Mobility in the 1990s, MARTA staff will be keenly focused on ensuring MV is abiding by the contract. MV will provide monthly reports to MARTA’s Board of Directors. MV has proposed a robust communications plan to include a transition committee, an employee hotline and a number of community meetings. MV will recognize the Amalgamated Transit Union, which represents MARTA’s represented workforce, as the collective bargaining unit.”
 
Curtis Howard
, president of the Amalgamated Transit Union (ATU) Local 732, writes “Higher fares, massive service cuts and poor quality are the hallmarks of most private transit operations whose highest goal is profits, not service. The private companies’ selling point to cities is to provide savings by offering workers’ poverty wages, bare-bones health care, and no retirement security. Our union provided MARTA officials with a plan to reform the paratransit system to deal with the delays and scheduling issues plaguing the system. It focused on improving scheduling software; replacing and adding more vehicles; keeping drivers in zoned areas and reducing “deadhead” trips (trips without passengers aboard). Yet it fell on deaf ears at MARTA.”
 
12. Iowa
: The Des Moines Register denounces Gov. Branstad’s staff for distorting an administrative law judge’s decision on for-profit companies hoping to manage the state’s Medicaid program. Branstad’s process was “methodically packed with bias, cronyism, lack of disclosure, inappropriate correspondence with bidders and other problems. Few support the governor’s costly and problematic plan to privatize administration of the $4.2 billion health insurance program. If he does insist on continuing down that path, the procurement process for bidders should start over from the beginning.” A decision will be made next week by a Branstad appointee on whether to accept the judge’s recommendation. “Few people are holding their breath” waiting to see how she will decide.
 
13. Iowa
Dr. Michael Kitchell outlines some of the problems with the Gov. Branstad’s Medicaid privatization scheme. “One family in Marshalltown reported that each of their three children was inconveniently assigned a different MCO for coverage.”
 
14. Louisiana
: Behavioral healthcare services are being privatized. “Louisiana Medicaid members enrolled in the state’s separate behavioral health program were integrated into the Bayou Health privatized program on Dec. 1, the state said. Of the 1.4 million total Medicaid enrollees, about 980,000 will be affected by the change, the state’s department of health and hospitals said in a statement.” [Bloomberg BNA, December 4, 2015; sub required]
 
15. Mississippi
Jackson continues to debate the merits of parking meter privatization after the city council votes to move forward with a Request for Proposals from private bidders. The RFP will be finalized this month.
 
16. New Jersey
: Just before the Thanksgiving weekend, the state released an 18-page report outlining potential private commercial development of Liberty State Park. It envisages “a low-rise hotel, amusement park, outdoor amphitheater, conference center and indoor sports complex being built on the 1,212-acre site. The analysis comes after the administration of Gov. Chris Christie paid $120,000 to Biederman Redevelopment Ventures.” The proposal has drawn intense criticism from local residents and the public interest community, and from Jersey City Mayor Steve Fulop, who vowed to fight the scheme. [Sub required]
 
17. New Jersey
: Newark Mayor Ras Baraka and education superintendent Chris Cerf announce an agreement to support students at the city’s neediest schools. “The initiative has received a tentative commitment of $12.5 million from the Foundation for Newark’s Future—the organization created to manage the $100 million Facebook founder Mark Zuckerberg donated to the city in 2010 to reform the city’s floundering school system. Those reforms have been widely criticized for what many considered a narrow focus on classroom-based efforts rather than the city’s social ills, and for fostering the growth of charter schools that have stretched budgets for their traditional counterparts thin.” Cerf says the move will “create a level playing field with any school in the district, district or charter.”
 
18. New York
: As the national gun control debate intensifies, New York City Mayor Bill De Blasio renews his call to get public money out of the hands of gun manufacturers. He praises two public pension funds (NYCERS and the teachers fund) for divesting from gun manufacturing companies and calls for the remaining three to do so, and for private equity to get out of the gun business. [Audio starts at 5:00]
 
19. North Carolina
: Students, faculty, and state workers protest a proposal to privatize the UNC Chapel Hill bookstore. “Protesters said UNC’s move to seek bids from large bookstore chains is a solution in search of a problem. The UNC Student Stores is a self-sustaining operation that employs 200 students and last year generated $400,000 in scholarship funds for the university. The store has 49 permanent employees.”
 
20. Tennessee
: Bids will be opened this Friday from for-profit contractors wishing to take over hospitality functions in 11 state parks (inns, conference centers, cabins, restaurants, golf courses, marinas, and gift shops). “To sweeten the pot for would-be vendors, the Department of Environment and Conservation wants to give them $55 million to make the improvements that the agency estimates is needed at those facilities.” Don Clark of Pleasant Hill “said he doesn’t see any benefit to the state of Tennessee. ‘These out of state companies (applying for the operations position) are profiteers. They’ll come in and cut everything to save money and won’t guarantee anything. They won’t do anything for the state.’”
 
21. Tennessee
This Friday the state Achievement School District will announce which Memphis schools will become part of ASD. “Schools in the bottom 5 percent statewide in terms of student achievement are eligible for takeover. The Friday announcement includes which charter school operator will be paired with each selected school for the 2016-2017 academic year.”
 
22. Wisconsin
: Christine Ewerdt, the wife of a corrections officer, denounces the Walker administration’s record on prisons, citing “staggering” increases in correctional staff vacancies and mistreatment of employees. “Use common sense when asking yourself, what is the ultimate goal? The answer: Privatization. (…) Research has proven that private prisons are plagued with lack of security, falsifying records to cover up understaffing problems (much like we are experiencing now), prisoner abuse, staff assaults, riots and ultimately cost the taxpayers more money than state run prisons.”
 
23. International
: New Canadian prime minister Justin Trudeau announces that “infrastructure projects larger than C$100 million will no longer be required to consider the public-private partnership delivery method.” Canada currently has roughly 220 P3 projects worth $70 billion under way or in planning. [Sub required]
 
24. Think Tanks
: The American Legislative Exchange Council (ALEC) comes out against taxpayer subsidies for private sports franchises. Prefers corporate tax cuts across the board. “States would be better off if they improved their tax codes instead of offering one or two businesses a special sweetheart deal. There’s no reason to give them deals,” said a spokesperson.

Legislative Issues
 
1. National
: The Congressional Budget Office releases a report saying the government could save billions by replacing military personnel carrying out support functions with civilians. “A major demarcation involves whether functions are inherently governmental or commercial. Inherently governmental functions “require the exercise of substantial discretion in applying government authority and/or making decisions for the government. (…) Commercial functions, by contrast, generally involve skills and services available in the private sector (such as transportation services) that DOD has not deemed inherently governmental. DOD policy allows military personnel, civilian employees, contractors, or personnel from nations that host U.S. military bases to perform commercial functions.”
 
2. Florida
: The Tampa Bay Times says that in light of the disastrous privatization of prison healthcare to Corizon (see above), lawmakers should consider insourcing it again. “The Legislature also should use this opportunity to reconsider its decision to privatize prison health care. With years of evidence in hand, lawmakers would benefit from a robust debate about whether the decision to privatize medical care was a mistake and should be reversed. It may be time for the state to resume the role of medical care provider to inmates.”
 
3. Massachusetts
A key lawmaker’s resignation will remove a vote for charter school expansion from the state senate “at a time when the chamber’s leaders are considering whether the support exists to pursue charter legislation. If Senate leaders think the votes aren’t there by early next year, they may decide to simply let the voters decide in 2016, which made it all the more important that ballot petitioners got their signatures in on time.”
 
4. Missouri
: Republican lawmaker warns his colleagues not to rush into privatizing Medicaid by June 1. “Lawmakers who approved the managed care expansion have said it will cut the state’s costs associated with Medicaid, but some Ozarks-area providers have said they’re fearful it could limit access and possibly reduce the reimbursements they receive for treating Medicaid patients.”
 
5. New Jersey
Skeptical lawmakers haul lottery officials before a hearing to get answers on lottery privatization. Revenue from the Northstar deal has fallen well short of expectations. “While CWA currently represents some lottery employees, 64 union workers’ jobs were eliminated in the 2013 privatization. At the hearing, Seth Hahn, CWA’s New Jersey political director, pointed out that Northstar was the only bidder on the lottery contract. Its failures are the result of ‘politically-connected firms shoveling large sums of money to powerful operatives close to the governor,’ he said. This contract, he stressed, is ‘everything that is wrong with politics in New Jersey.’”
 
6. New Jersey
: Two Democratic lawmakers, Senate President Steve Sweeney, D-Gloucester and Jim Whelan, D-Northfield, want to expand the use of ‘public private partnerships’ in the state. They released a video press release last week. “The P3 legislation is stalled after Gov. Chris Christie conditionally vetoed the bill requesting changes including recommending the removal of provisions imposing prevailing wage requirements and mandating project labor agreements.” [Sub required]
 
7. North Carolina
: A bill authorizing a Request for Information from private bidders to take over the North Carolina Ferry System will be eligible for consideration by the state legislature when it reconvenes on April 25, 2016. [SB 382]
 
8. Virginia
: Whether there should be state approval for charter schools instead of local approval may become a hot issue in the upcoming legislative session. A referendum may go before voters in 2016 amending the constitution. “The proposed constitutional amendment says the State Board of Education ‘shall have the authority to establish charter schools within the school divisions of the Commonwealth.’” Sen. John Miller (D-Newport News) is opposed to an amendment. “The state senator said he has no objections to charter schools so long as they win approval from local school boards. ‘But we ought not have the state stepping in and establishing schools all over the commonwealth,’ Miller said.”

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