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This Week’s Outsourcing Scan 2-22-2016

1) National/Michigan: The Flint disaster is apparently causing some conservatives to rethink their anti-government philosophy. “The ones who were in government worried that Flint showed that many of their fellow Republicans have lost the sense of what it meant to be in government and what government is supposed to do. ‘We keep saying we have to run government like a business. But government isn’t a business. You can’t run it like a business,’ one said.”
 
2) National: Food & Water Watch reports that, on average, private for-profit utilities charged households 58% more than local governments for drinking water service—an extra $185 a year. “‘Many of our community water systems are over 100 years old, and in desperate need of repair,’ FWW executive director Wenonah Hauter says. “Rather than running water systems like businesses, or worse, handing them over to corporations, we need increased federal investment in municipal water. With this federal funding, we can help avoid future infrastructure-related catastrophes.’”
 
Writing in Grist, Katie Herzog also points to problems with the public water supply, e.g., in Flint. But “privatization is hardly the answer: The answer is better governance.”
 
3) NationalAmerican Water, the largest publicly traded water privatization company in the U.S., will have its Q4 2015 earnings call this Thursday at 9 AM ET.
 
Aqua America
, which recently pushed failed legislation in Wisconsin to privatize public water systems (see below), gives its full year 2015 profit report tomorrow following market close, and will have an earnings call on Wednesday at 10:30 AM ET.
 
4) National: Public interest groups in the Open the Government Coalition give the U.S. government low marks for transparency. “The possible explanations for why government agencies were unable to complete the initiatives varied across the evaluations. For example, the evaluation on the commitment to ‘Modernize the Freedom of Information Act,’ attributed the limited progress on this commitment to the lack of a strong mandate, absence of political will, and need for greater leadership. The evaluation of the commitment on transparency for legal entities noted ‘corporate opposition’ as an apparent roadblock to that potentially transformative commitment.”
 
5) NationalFitch issues a report on managed lanes project ratings. Managed lanes are a type of highway lane that is operated with a management scheme, such as lane use restrictions or variable tolling, to optimize traffic flow, vehicle throughput, or both. They are often financed with private money for profit and marketed as ‘public private partnerships.’ The report says “given the relatively acute competition risks faced by managed lane facilities, it is highly unlikely that ratings above the ‘A’ category would be assigned, regardless of leverage or any other key rating factors assessments.”
 
6) NationalMoney saved at the pump pays the tolls.
 
7) Florida: The Department of Transportation is bidding out three ‘public private partnership’ projects (design-build) for highway improvements on portions of I-95 and I-395. Responses are due April 20. [RFP]
 
8) FloridaWexford Health Services files a formal protest against the Florida Department of Corrections award of a nearly $1 billion prison healthcare contract to Centurion. The contract was awarded after negotiations broke down with Corizon, which faced widespread accusations of poor performance. “Under this contract, Centurion is in a position where it can bankrupt the Department of Corrections of all the funds it has available to provide prison health services long before the fiscal year in question has expired,” Wexford said in the filing.
 
This month, Prison Legal News reprinted an in-depth look by David M. Reutter at the multiple problems of the Florida Department of Corrections in recent years and the dire need for reform in the accountability system for administrators, as well as in privatized services.
 
9) Maryland: As wrangling continues over the possible privatization of Montgomery County liquor distribution and sales, a county council committee kicks the can down the road. Under alternative legislation, a task force would be formed to study the public distribution system and come back with a recommendation next year. Earlier this month, legislation was introduced to privatize public liquor stores but give the state more access to news sales tax revenues generated by the change. The new bill would supersede this. For nearly a year, privatization advocates have faced off with county officials “who say giving up the more than $30 million in profit generated by the department would harm the county’s budget.” The Restaurant Association of Maryland has been heavily pushing privatization.
 
10) Massachusetts: Fall River Mayor Jasiel Correia II wants to privatize the city’s sanitation program, he tells Teamsters Local 251 in a letter. “During that meeting with another union official and two city union stewards, [Local 251 Business Agent Eddie Carreiro] said the Mayor claimed he ‘was 90 percent sure’ he would privatize the sanitation department. When Carreiro requested that ‘strong language’ be included in any contract with an independent trash hauler to protect the city workers, he said he was surprised when the mayor responded by asking ‘where was the union support’ during the campaign.”
 
11) New JerseyDebate is intensifying on the future of the Bergen Regional Medical Center—the state’s largest hospital—which has been operated by a private contactor for many years. The present contract expires in a year’s time. “That decision will affect tens of thousands of patients, renew scrutiny of the for-profit company that runs the hospital, and affect regional health care for decades.” But “selling the hospital, as a prior administration proposed, seems to be the only option that’s not on the table.” 
 
The union also has concerns. Health Professional and Allied Employees spokesperson Jeanne Otersen “said the union has requested a meeting with consultants to ensure any future agreement meets HPAE’s staffing plans for optimal care and worker safety. ‘I think we need a hospital that’s basing its service on what’s needed in our community, not what helps the bottom line,’ she said.”
 
12) New JerseyA strike by 4,200 New Jersey Transit workers could begin on March 13, paralyzing commuter services. “We simply cannot accept a situation where the state willfully fails to budget for reasonable wage increases, and then uses that as its rationale for bad faith bargaining,” Steve Burkert, general chairman of Local 60 of the SMART Transportation Division and a spokesman for the unions, told the Presidential Emergency Board. [Bloomberg BNA, February 11, sub required]. The state’s congressional delegation is urging both sides to compromise. [Letter]
 
13) New Jersey: A state plan to seize power from municipal officials in Atlantic City was whitewashed by being called a “partnership” instead of a takeover. “But the proposal that Sweeney (D-Gloucester) offered this week appears to be a takeover after all, an unprecedented seizure of power from the city’s elected government. Mayor Don Guardian lashed out against the plan, saying the city had been ‘stabbed in the back’ and excluded from decision-making.” Food and Water Watch’s Jim Walsh warns that the city’s water utility may be privatized. “The dissolution of union contracts and collective bargaining agreements, the sale of the water system, all these things, become even more likely scenarios.”
 
14) North Carolina: The Fayetteville city council is poised to give final approval today on seeking bids to outsource one of the city’s trash collection routes. Expanding red light cameras may also be on the horizon.
 
15) Pennsylvania: Gracedale Nursing Home, which was the target of a privatization effort that was pushed back by public employees and citizens, comes though its inspection with flying colors. It passed a state inspection without a single citation. “While the state will not release its official report until late March or early April, Northampton County officials took a victory lap Thursday afternoon. County Executive John Brown, flanked by members of his administration, members of County Council, staff and Gracedale residents, said inspectors found no deficiencies during the four-day random inspection. The news arrived weeks after Brown said Gracedale had cut its losses to $2.1 million in a year when the Upper Nazareth Township facility was expected to lose $7.7 million.” The facility is still facing proposals to turn it into a nonprofit.
 
16) Pennsylvania: Allegheny County improves human services delivery by integrating public data. “The initiative stated by consolidating its own internal human services data relating to topics such as behavioral health, child welfare and homeless services. Over time, the warehouse expanded to include data from other county agencies as well as the Pittsburgh Public Schools.”
 
17) TennesseeGov. Haslam and state lawmakers double down on their privatization agenda, proposing to outsource new public building construction and introducing transportation and transit privatization legislation. The Tennessee Department of General Services has issued a Request for Information for a consultant to identify potential ‘public private partnership’ projects, advise them on P3 contracting, “assist the state in the development of enabling legislation to provide authority to contract for Public-Private Partnership Contracting Services,” and “develop review screens and other processes to identify transactions with the highest potential value for money.” Responses to the RFI are due March 4. Last week Haslam agree to have an outside group review his plan to privatize building maintenance at the state’s public colleges and universities.
 
18) Tennessee: Memphis Area Transit Authority CEO Ron Garrison is considering privatizing the agency. “MATA has used capital funds to pay operating expenses for years, leaving little money to replace its buses, he said. [Last] Wednesday, Garrison said privatization has been in the ‘back of my mind,’ and talk about the option has gone on in ‘different circles,’ but his staff isn’t actively researching the possibility.”
 
19) WashingtonPrivatization has bankrupted many small business liquor stores. “Only 97 of 167 former state-owned stores and 111 of 162 former contract stores that were in business at the start of privatization are still operating.”
 
20) International: John Arnitt, the chair of National Express, the U.K.-based public transport multinational with operations in the U.S., says you cannot take the politics out of infrastructure decisions. He suggests “getting the debate about policy options out in the open. So when it comes time for the final decision to be made, politicians have a large amount of independent advice and the public is hopefully better informed. It also hopefully creates some better chances for cross-party consensus.” [Sub required]
 
21) International: As the government slashes $5.6 billion from the transportation budget, Mexico’s transportation secretary unveils a plan to use ‘public private partnerships’ to carry out this year’s projects. [Sub required]
 
22) Think TanksLeo Casey, director of the DC-based Albert Shanker Institute produces the second of two posts on Eva Moskowitz’s Success Academy. He finds that “Success Academy Charter Schools has made a conscious decision to not fill seats opened up by student attrition in the upper grades of its schools. And this is a deliberate, network-wide practice, as evidenced by Success Academy’s own website.” But changing the practice of culling student populations to boost their test scores “would strike at their ability to engineer student populations to achieve high test scores. And this would put the charter school brand itself at risk. (…) A major political battle is in the making.”

Legislative Issues
 
1) Florida: ‘Public private partnerships’ legislation is advancing in the House. The bill “Deletes Public-Private Partnership Guidelines Task Force; revises provisions regarding responsible public entities & unsolicited proposals submitted for qualified projects; revises provisions regarding comprehensive agreements entered into between responsible public entities & private entities; deletes provisions relating to notice to affected local jurisdictions; revises provisions regarding responsible public entity compliance with specific financial obligations; provides duties of DMS.” [CS/CS/HB 95: Public-Private Partnerships]
 
2) Iowa: A number of important bills advanced beyond Iowa legislature’s “funnel” deadline and are still alive, including:

  • End privatized Medicaid managed care changeover (SF2125)
  • Modify probation, parole and work release provisions (SF2059)
  • Expand regulation of commercial animal kennels (SF502)
  • Strengthen provisions of state wage discrimination law (SF2193)
  • Allow schools to redirect teacher development money (HF2312)
  • Require DOT traffic-cameras certification and fines deposited to courts (HF2109)
  • Establish pre-arrest diversion program for certain offenders (HF2155
  • Include jailors under criminal offense of interference with official acts (SF2115)

The bill to block privatizing Medicaid is now in the House. The March 1 privatization trigger date is now two weeks away.
 
3) KansasKansas lawmakers suspect that “the state’s two psychiatric hospitals had been mismanaged as a way to justify privatization.” Agency officials want to issue a request for proposals to privatize Osawatomie State Hospital. In November the federal Centers for Medicare and Medicaid Services decertified the hospital after finding that it “had failed to protect suicidal patients, properly supervise care and perform safety checks.” The decertification is costing the hospital about $1 million a month. Last Wednesday, the legislature sent a budget deal to Gov. Brownback that includes an extra $2 million for the hospital and includes language that will prohibit privatization of hospitals without legislative approval.
 
4) KentuckyThe state Senate has advanced ‘public private partnership’ legislation. “Also included in HB309 is a requirement that projects exceeding $25 million must be authorized by the General Assembly. The bill awaits assignment to committee in the Senate.”
 
5) LouisianaThe department of corrections is considering closing two prisons operated by private, for profit companies. “The proposal for the two private operators of the prisons, LaSalle Southwest Corrections and the GEO Group, sets up a difficult ultimatum: Either accept the lower per-prisoner pay rate or face total shutdown. The department currently pays $31.52 per day; the local rate the department wants to pay is $24.39 per day. Legislators will need to approve new appropriations to pay the lowered rate.” 
 
The New Orleans Advocate 
reports, “‘At this point, we don’t have the resources to do what we need to do,’ [Corrections Secretary Jimmy LeBlanc] said. Placing more state prisoners in local jails without funding re-entry and other programs for inmates, LeBlanc said Friday following the committee hearing, is a sure-fire way to see rising recidivism rates as convicts finish sentences with little to no training. ‘Basically, it’s lock and feed’ inmates at many local jails, LeBlanc said. ‘There wasn’t re-entry. We’ve got to stop that.’”
 
6) Maryland: Democratic leaders in the General Assembly move to tighten up evaluation of new transportation projects, and see a legislative role in approvals. They seek to limit the governor’s role in project funding. “The governor could direct funding to projects that do not get a high score, but would have to explain the decision when presenting the annual comprehensive transportation plan.” Democrats complained that Gov. Hogan’s decision last year to cut and shift funding from the Purple and Red Line ‘public private partnerships’ did not account for “where the job creation needs to take place, where people need to get back and forth to the workplace, where the growth of the state is.” [Sub required]
 
7) New Hampshire: A House bill has been introduced to enable municipalities to issue bonds for the expansion of Internet service “for purposes of economic development which shall include public-private partnerships involving capital improvements, loans, and guarantees. The public benefit in any public-private partnership must outweigh any benefit accruing to a private party. Bonds or notes for the purposes of economic development may be issued only after the governing body of the municipality or county has held hearings and presented the public benefit findings to the public and after such issuance has been approved by the legislative body. A municipality or county shall not issue bonds or notes to provide for the payment of expenses for current maintenance and operation except as otherwise specifically provided by law.” [HB 1180]
 
8) New Jersey: A bill is introduced to establish ‘public private partnerships’ for roads, public transit and other transportation projects. Requires 10% of projects to be set aside for small businesses. Referred to Senate Transportation Committee. Includes: “3. (New section) a. A public partner is authorized to solicit proposals from developers to plan, design, construct, equip, operate, finance, improve, and maintain, or any combination thereof, public-private partnership projects selected by the commissioner.” [S 1439]
 
9) Ohio: Transparent Schools Ohio submits an analysis of HB 401, a bill on charter school transparency now before the education committee. “As state policy changes over time (and it always will), it draws all manner of input by ‘experts.’ Parents can get left out … used as prop pieces.”
 
10) Rhode Island: A bill has been introduced to promote the upgrading of public facilities by using ‘public private partnerships.’ Referred to the House Finance Committee. [HB 7563]
 
11) Wisconsin: The State Senate scraps a vote on a privatization bill that would have enabled out of state companies to snap up the state’s water service assets. “The bill was written at the request of Aqua America, Inc., a Pennsylvania company that owns water utilities in eight states. Critics said the bill risked higher water bills for customers because private owners would extract profits. They said removing decision-making from the public could put water quality at risk. Senate Minority Leader Jennifer Shilling, D-La Crosse, called withdrawal of the bill a huge victory.”
 
Donald Cohen of In the Public Interest reports that “the evidence against privatization is plain as day. Customers of Wisconsin’s only privately owned system—which services the city of Superior—pay the highest rates in the state. On top of the costs of water and infrastructure maintenance, Superior’s residents pay an additional 9 percent to cover their private operator’s profit margin and higher private-sector debt costs.”
 
12) WisconsinAppleton residents have not given up on the idea of reopening Corrections Corporation of America’s Prairie Correctional Facility. They will be holding a local public meeting to press their case on legislators on Wednesday. Efforts so far have been encouraging, according to Gary Hendrickx, a member of the Swift County Board of Commissioners and Appleton business owner.
 
13) WisconsinAssembly approves voucher school compensation plan. “According to the Legislative Fiscal Bureau, 142 districts that lost students through the voucher program this school year lost a combined total of $16.1 million. Those districts raised property taxes enough to generate $21.4 million, or roughly $5 million more than their actual losses.” It now goes to the Senate.
 
14) West Virginia: A bill eliminating sunset provisions on Department of Highways ‘public private partnership’ agreements has been referred to the Senate Transportation and Infrastructure Committee. [SB 557]
 
15) Utah: A bill has been introduced to modify provisions for county funding of zoos, including ‘public private partnerships.’ [SB 137]

 

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