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This Week’s Outsourcing Scan 2-16-2016

1) National/Texas: “Government agencies often break bad or controversial news on Friday afternoons to blunt the impact,” reports Houston PressFriday was no exception. Two for-profit federal detention centers housing immigrant children “will not need to meet the state’s childcare standards starting next month, after the state’s Health and Human Services Commission lowered its standards on Friday.” 

According to Grassroots Leadership, the newly lowered standards “will not improve conditions for children in family immigration detention centers to a level that ensures adequate protection of child welfare, but instead will put the agency’s seal of approval on existing conditions that are deeply problematic. The emergency rules modify the standards to meet the practices at the facilities rather than requiring the facilities to ensure practices that meet minimum standards for child welfare.” 

Grassroots Leadership sent a 9-page letter to Gov. Abbott detailing their concerns about the state’s possible licensing of the family detention centers.
 
2) National: The recently concluded Conference of Parties (COP) 21 climate change agreement in Paris “may drive billions of dollars in government contract opportunities to federal vendors.” Contracting areas include energy performance assessment, demand management programs, and “conforming federal measures to city energy performance benchmarking and reporting requirements.” [Bloomberg Government, February 8, 2016; sub required]
 
3) National/Florida: After a series of scandals, G4S is considering exiting the business of monitoring youthful offenders in the U.S. and Britain. “In the latest incident [in the U.K.], staff at a young offenders centre run by G4S were filmed apparently squeezing a teenager’s windpipe as the 14-year-old screamed ‘I can’t breathe.’ (…) Meanwhile, in the US, there were riots last year at G4S’s Highlands youth academy in Avon, Florida, which caters for 130 young men aged 16 to 19.” [Sub required]. There are 10 facilities in the Tampa Bay area operated by G4S, and over the past year there have been hundreds of 911 calls to these facilities. WTSP warns that “taxpayers are on the hook to help fix problems. In the past, we’ve seen the aftermath from riots, fights and escapes caught on camera, staff arrested and accused of sex acts with the teens inside the detention centers.”
 
4) National: The FBI wants to swap its J. Edgar Hoover Building and throw in up to $1.8 billion of federal funding for a new headquarters to be built using a ‘public private partnership.’ Proposals are due June 22.
 
5) California: In a new report on “modernizing public finance,” state treasurer John Chiang calls for rethinking the state’s reliance on bond debt to finance its infrastructure. He wants to take an inventory of needs, rely more on available funds, and use a mixture of public and private financing. He also proposes setting up a Center of Excellence for Infrastructure Finance, and training for elected and public officials. [Report]
 
6) California: Los Angeles administrative officer Miguel Santana continues to push for the use of a ‘public private partnership’ to expand and renovate the convention center. “The City Council’s Economic Development Committee approved Santana’s proposal on Tuesday with some amendments after peppering the CAO with questions about the approach. ‘We selected a firm through a design competition,’ said the committee’s chair, Cullen Price Jr. ‘Now at the 11th hour, you are talking P3. It could take more than 18 months to select a firm for that.’ So far, no one in this country has used the design-build-finance-operate-maintain model to complete a convention center project, according to city officials.”
 
7) CaliforniaThe San Diego City Council has passed a $3-5 billion infrastructure funding package, which will be put to voters in a June ballot. City Councilor Mark Kersey “said that he and several other elected officials in the city have spoken about using public-private partnerships to leverage private finance in the modernization of city infrastructure. He noted that P3s ‘have tremendous potential that has not been anything close to realized in San Diego or Southern California or the whole state,’ but that their novelty and misconceptions about how they work are causing elected officials to view them with a cautious eye.” [Sub required]
 
8) Florida: The Tallahassee Democrat posts a reader’s zing of the week: “Last year, 354 inmates (a record number) died in Florida prisons. It looks like Gov. Scott’s privatization of Florida’s prisons is a failed business model.”
 
9) IndianaThe state earns an F for its commitment to public education from the Network for Public Education. “Indiana earns Fs for supporting teacher professionalism, resisting privatization and investing school funding resources wisely. It earned Ds for rejecting high-stakes testing and giving children a chance for success.”
 
10) LouisianaNewly elected Gov. Edwards gives his 2016 special session opening address, and says “as you know, we’ve had budget deficits in Louisiana for eight straight years, and rather than make the structural changes we needed, instead one-time funds were increasingly used to patch budget shortfalls. Today, all of that money is gone. Make believe efficiencies, more and more tax giveaways, and privatization schemes that actually increased costs all further exacerbated the problem.”
 
11) Louisiana: LSU selects a bidder for a student housing ‘public private partnership’ scheme (DBFOM). A proposal will go to the LSU Board of Supervisors in May. [Sub required]
 
12) MichiganSault Ste. Marie citizens fight back against plans to outsource custodial services. “Custodian Ted Folkersma was among those who spoke against privatization. He said 19 custodians would lose their jobs if the proposal is approved. He also argued that he and his co-workers do more than just clean. He said they maintain the district’s aging buildings, look out for students and staff, and occasionally handle electrical, plumbing, and construction work. ‘I have an exceptional group of custodians who truly care about the buildings, the kids and the staff, willing to go above and beyond what is required on a daily basis,’ he said.” Superintendent Tim Hall acknowledged there could be a “backlash” as the RFP proceeds.
 
13) Michigan: Donald Cohen of In the Public Interest weighs in on how competition hurts children in Detroit’s schools. “Under emergency management, DPS has lost funding while more and more money has gone to the city’s charter schools, which are some of the least regulated in the nation. The Washington Post has described Michigan, along with Florida, as being on the ‘cutting edge of shifting public education into the private sector.’ The result: what are essentially two separate school systems–one traditional, one charter–in direct competition for students and state funding.”
 
14) Michigan: Beecher School District finds that it is $700,000 short in the middle of the year, and is looking “to either outsource or reduce the pay for custodians, maintenance workers, secretaries and paraprofessionals. Along with additional concessions from teachers and administrators, the district aims to save $240,000.” The district is aiming to cut $300,000 a month.
 
15) New York: A video surfaces showing a Success Academy teacher harshly chastising a first grader. “The teacher takes the girl’s paper and rips it in half. ‘Go to the calm-down chair and sit,’ she orders the girl, her voice rising sharply. ‘There’s nothing that infuriates me more than when you don’t do what’s on your paper,’ she says, as the girl retreats.” A former teacher and assistant principal at Success says “It’s this culture of, ‘If you’ve made them cry, you’ve succeeded in getting your point across.’”
 
In Michael Moore’s new movie, Where to Invade Next, there is a lengthy segment on how Finland has risen to the top of global educational achievement by treating students humanely and positively, emphasizing cooperation not discipline, fear, and competition.
 
16) Pennsylvania: Sto-Rox school district successfully negotiates a new contract with custodial and cafeteria workers, avoiding outsourcing. “Al Magnelli, union president and a custodian with the district for the past 31 years, said even after the vote to outsource, he had faith the groups would be able to come to an agreement. His was one of the jobs that would have been cut had the outsourcing plan continued. He said he told his union, ‘We’re all family here, let’s stick together.’ His group had been working without a contract for a few years and had taken pay freezes in the previous two contracts, Mr. Magnelli said.”
 
17) Tennessee: East Tennessee State University custodian Heather Wilson speaks out on the impact of Gov. Haslam’s outsourcing plan. “‘You’re going to have people who don’t care about their jobs, the students or the place,’ Wilson said, whereas she’s stayed in touch with many students, even celebrating their path to graduation as they progressed.”
 
An important meeting will take place tomorrow. “Joe Smith, a spokesperson with ETSU, said [President] Noland has been against the idea of outsourcing and has held steady on his plans to see what happens at the state level. According the Knoxville News Sentinel, there’s a key meeting taking place Tuesday involving Haslam that’s expected to be the catalyst of a campaign supporting the outsourcing initiative.”
 
18) International/Think Tanks: The right wing Institute of Economic Affairs calls for the privatization of Network Rail, the state-owned company which maintains Britain’s tracks and major stations. Network Rail pushes back, saying that “splitting it up would make train travel more expensive, because it would undermine the organization’s ability to buy materials in bulk at a low price. ‘We currently have the buying power of a national company, and we buy millions and millions of tons of materials such as steel and sleepers. We would lose that if we were broken up.’” [Sub required].
 
19) International: British water companies are pushing for the government to exempt them from stricter tax rules, which are likely to be announced in next month’s budget. “Water UK, representing the industry, said the ‘great majority’ of water companies would be affected if the government caps tax relief on interest costs. It called for a ‘public benefit exemption’ that would apply to utilities.” [Sub required]
 
20) International: The British government is looking to privatize its Green Investment Bank. “Potential bidders have to commit to providing £2 billion (€2.6 billion; $2.9 billion) in funding to the bank over the coming three years as part of pre-conditions to entering the process, the sources said, on top of offering a price for the GIB’s existing £2 billion portfolio of assets. With the government looking to sell about 75 percent of the lender, they estimated that a sale could fetch about £3 billion.” [Sub required]

Legislative Issues
 
1) National: The House Transportation and Infrastructure Committee votes 32-26 along partisan lines to approve legislation privatizing air traffic control. The legislation, which now goes to the full House, has been blasted by The New York TimesJerrold NadlerEddie Bernice Johnson, and Peter DeFazio, among others.
 
The Times says the Republicans “have come up with a solution in search of a problem,” and that “there is no credible evidence that a privately operated system would be better than the current one, which is the busiest and safest in the world. And there is plenty of reason to believe it would be worse.” DeFazio says “by shifting existing trust fund revenue to airports, it leaves safety programs completely reliant on general fund appropriations dished out by Congress.” At last week’s hearing he called it “the largest devolution of public assets to a private interest in the history of America.”
 
The bill will have to get approval on the House floor from appropriators and tax writers, “who have been skeptical of a proposal to strip air traffic control from FAA” according to Bloomberg BNA (February 11). The bill’s chief backer is the Air Transport Association (dba Airlines for America), whose board is chaired by American Airlines and includes Federal Express, JetBlue, and UPS. Its president is Nick Calio, Citigroup’s former chief lobbyist.
 
2) National: The Obama administration’s proposed budget was sent up to Capitol Hill last week. Markups usually begin in the spring and floor action in the summer, but a CR is probable in September until after the elections, since the Republicans won’t act on the budget or even hold budget committee hearings. 

Some privatization and outsourcing-related highlights: 

The transportation department budget includes $3 billion per year for the National Surface Transportation and Innovative Finance Bureau, established by the FAST Act last year. The bureau will operate directly out of the secretary’s office.

The DOJ budget cuts 2.41% from the Federal Prison System budget, which now would be $7.3 billion. It slashes nearly 17% of funding from the Office of Justice Programs, which includes the Bureau of Justice Statistics, the Bureau of Justice Assistance and the Office of Juvenile Justice (to just over $2 billion). The Legal Activities and U.S. Marshals budget would increase 6.62% to $6.1 billion. The U.S. Parole Commission would get a 7.69% increase to $14 million.

The administration has asked for over $4.3 billion to modernize the Veterans Administration’s IT systems. [Bloomberg Government, February 9, 2016]

The budget includes $3.5 billion of public transit grants. First-time grants “include $75 million for a new pilot program in the FAST Act for eight public-private partnership projects selected by the Transportation Department that are seeking 25% or less of federal funding. Projects recommended for their first capital investment grant include the first phase of Chicago’s Red and Purple line modernization effort, Indianapolis’s Red Line bus rapid transit project, and a streetcar project in downtown Sacramento.” Numerous other grants will go to projects already under construction. [Sub required]
 
3) National: The Congressional Budget Office says states should be allowed to toll interstate highways and limit federal transportation investments to “cost effective” projects. “Congress could enhance the use of public-private partnerships in transportation projects by increasing funding options, CBO said. The proposals include more funding for low-interest loans through the Transportation Infrastructure and Finance Innovation Act (TIFIA), increasing the cap on federal transportation private-activity bonds, and authorizing P3s to sell tax-preferred bonds with a larger subsidy than current PABs.” [Sub required]
 
4) National: As the federal budget proposal is rolled out, Centers for Medicare and Medicaid Services acting administrator Andy Slavitt says that 75% of healthcare exchanges are funded by user fees, which is near the maximum since “there are some inherently governmental functions that aren’t eligible for user fees.” [Sub required]
 
5) California: The Legislative Analyst’s Office releases a review of the $1.1 billion project to expand UC Merced’s campus through a ‘public private partnership.’ “The LAO report is designed to give the legislature a rundown of the proposal’s financial impacts and provide suggestions for factors it needs to consider when deciding whether or not to move forward. In this case, the LAO suggested, the legislature must consider how quickly it wants to grow UC enrollment and whether it wants to adopt this format of P3 or a more traditional approach to delivering the project.” Lawmakers must decide on the project by April 1. [Sub required; LAO report]
 
6) Iowa: Friday is the last day for lawmakers to get bills past the first “funnel” of the session. Rep. Dan Kelley (D-Newton) has introduced a bill (SF 2125) to block privatization of Medicaid. The Senate has passed the bill and Kelly wants the House to take it up. He said “it is an unnecessary burden for Iowans, particularly our most vulnerable—kids and seniors in need of health care.” Senator Joe Bolkcom writes about “why I voted to stop Medicaid privatization in Iowa.”
 
7) LouisianaCharter schools issue dominates the race to fill the open District 4 seat on the East Baton Rouge Parish School Board. Anti-privatization candidate Dawn Collins “has been active in the school system for years and also is active at the state level. She recently served on the education transition team for newly elected Gov. John Bel Edwards. While she supports the original concept of charter schools as places for teachers to innovate, she is against what, to her, they’ve become—ways for private interests to profit at the expense of impoverished children. ‘I’ve been fighting for public education,’ she said. ‘It’s time to put family first instead of big business.’” The election is March 5.
 
8) New JerseyTransportation and energy infrastructure banks are proposed by lawmakers. “The proposal for the two separate banks would expand the New Jersey Environmental Infrastructure Trust beyond its current involvement with water and environmental initiatives. The proposal would establish two special non-lapsing revolving infrastructure bank funds within the trust.” Gov. Christie vetoed an infrastructure bank bill in October 2014. [Sub required]
 
9) TennesseeSchool voucher bill fails in the House. “Supporters said the measure, House Bill 1049, would provide public-funded scholarships so that high-risk students attending failing public schools could instead go to private schools. Opponents argued the vouchers would divert desperately needed funds from public schools without showing enough proof vouchers actually help students.”
 
10) Wisconsin: The cities of Milton and Janesville unanimously pass resolutions opposing state legislation that would privatize public water systems. “We call upon our fellow municipal leaders around Wisconsin to join us in protecting our public water systems in passing similar resolutions. Our state legislators are our voice in Madison and should hear the will of The People. ‘This is not a tool for balancing budgets’ Mayor Anissa Welch stated. ‘It’s not about making our government small. It’s about privatizing the governing of our municipalities.’ She added, ‘A private company does not work for the citizens, it works for Wall Street and their shareholders. Wall Street is betting on our water now.’ Councilmember Sam Liebert, who proposed the Janesville resolution said, ‘Water is a public commodity that needs to belong to the people. We have seen the egregious consequences nationally when a private entity takes over municipal water.’”

 

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