Media Scans
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This Week’s Outsourcing Scan 2-23-2015

Update: Upcoming Outsourcing Issues. February 23, 2015

1) National: Inmates riot, take over privately-run federal prison in Raymondville, Texas, to protest the state of medical care. Prison reform advocates say they’re not surprised. The Willacy County Correctional Center, a federal Bureau of Prisons “Criminal Alien Requirement” facility made up of large tents, is run by Management and Training Corporation. It was the subject of an ACLU report last year that raised serious questions about inmate treatment and operating standards. “Brian McGiverin, a prisoners’ rights attorney with the Texas Civil Rights Project, said that he was not surprised inadequate medical care could ignite a riot. He said medical care is grossly underfunded in prisons, especially in ones run by private contractors. ‘It’s pretty abysmal with regard to modern standards how people should be treated, pretty much anywhere you go,’ he said.” [Frontline report on abuses at immigration detention centers; how MTC Medical promotes itself (video)].

2) National: Becky Sarwate discusses whether state governments and national agencies can be run like corporations. “This magical theory assumes both that state government is always the problem, and that private enterprise is always the solution. There’s no room in this model for inconvenient statistics, such as the fact that nearly 27,000 American companies filed for bankruptcy in 2014.”

3) National/Minnesota: ProPublica’s Marian Wang exposes the incredibly weak standards governing charter school authorizers, many of whom are “making it up as they go along.” Wang writes, “many of these gatekeepers are woefully inexperienced, under-resourced, confused about their mission or even compromised by conflicts of interest. And while some charter schools are overseen by state education agencies or school districts, others are regulated by entities for which overseeing charters is a side job, such as private colleges and nonprofits like the Audubon wildlife rehabilitation center. One result of the regulatory mishmash: Bad schools have been allowed to stay open and evade accountability.”

4) National: Coursera, the for-profit online education corporation, branches out into other areas of privatization by offering a four week course on “public private partnerships.” The course is “intended for the general public, policy makers and practitioners,” and is taught by World Bank staffers.

5) National/Massachusetts: Yves Smith condemns the lack of media coverage of how private banks’ interest rate swap deals with public transit agencies damaged their finances and performance. “The Refund Transit study concentrated on local transit systems. Some of its numbers are stunning. The study pegged annual swap losses at the Massachusetts Bay Transportation Authority (Boston area) at $25.8 million and suggested that the MBTA will ‘lose another $254 million on these swaps’ before they lapse. The study added that the MBTA was losing money on swaps even before the crisis, with total losses running in the ‘hundreds of millions’ of dollars.”

6) National: Fusion, the ABC-Univision collaboration, has published a series of stories about the growing federal CAR prison system and private prison companies. “Today, the Bureau of Prisons’ contracts provide more taxpayer dollars to private prison companies than facilities run by Immigration and Customs Enforcement. In the last five years, the two largest prison companies have made nearly $2 billion in revenue from their CAR prison agreements. In the years leading up to the crackdown, private prison companies spent more money than ever lobbying the federal government.”

7) National: The Federal Accounting Standards Advisory Board is looking into risks to the public from “public private partnerships.” It issued a 52-page draft document in December that raised a number of concerns about P3s, including disclosure requirements, how much risk is actually transferred to the private sector (as proponents claim), definitional issues (what is a P3?), and the need for more accounting uniformity. The board says “because P3s are a form of investment, they should be adequately disclosed in order to assist report users in determining: (a) the important assets of the U.S. government and how effectively they are being managed and (b) the identification of the risks (that is, fiscal exposure) associated with P3s.” The P3 industry has perked up and expressed concern about the increased scrutiny: “‘The exposure draft, as applied, would have a chilling effect on sensible risk transfer initiatives within government,’ said Christopher Voyce, senior managing director atMacquarie Capital. ” [Sub required]

8) National: The National Council for Public Private Partnerships, formerly the Privatization Council, is “excited” about a new agreement it signed with the EPA and the Chesapeake Bay Trust to “provide community support” for the concept of “community-based public-private partnerships (CBP3s).” CBP3s involve “a strong, long-term partnership between a municipality and a private equity group.”

9) National/International: Nobel laureate Michael Spence of NYU calls for a major expansion of public investment. “Given the extent to which insufficient demand is constraining growth, investment should come first. Faced with tight fiscal (and political) constraints, policymakers should abandon the flawed notion that investments with broad – and, to some extent, non-appropriable – public benefits must be financed entirely with public funds. Instead, they should establish intermediation channels for long-term financing.”

10) California: “Parent trigger” effort fails in Anaheim. “At a standing-room-only meeting Thursday, the Anaheim City Board of Education unanimously rejected a petition by parents to convert Palm Lane Elementary into an independent charter, which are publicly funded and usually non-union.”

11) California: Los Angeles Mayor Eric Garcetti names a waterfront development task force. “Garcetti named representatives from 13 city departments to the task force headed by Kelli Bernard, the city’s deputy mayor of economic development. They are to identify funding sources such as grants, bonds or private investment.” [Sub required]

12) Colorado: State road officials approve a “public private partnership” to help finance a $1.8 billion I-70 improvement plan on the same day a bill to establish tighter oversight of P3s is killed in the state legislature. SB 172 would have added more transparency to such deals. State Sen. Matt Jones, D-Louisville, the bill’s sponsor, said “the people have the right to know what’s going on with their roads. Secret Wall Street deals create very real Main Street problems. I’m disappointed that politicians killed this bill today, but I don’t think the public demand for it is going away anytime soon.

13) Florida: In a major move reflecting a lack of confidence in contracting and accountability standards in Florida, Department of Corrections Secretary Julie Jones announced on Friday she would order the rebidding of “contracts worth about $1.4 billion with private companies to provide health-care services to the state’s 100,000 inmates.” Corizon and Wexford are the major contractors. Julie Jones “also intends to demand higher penalties for the companies if they fail to meet minimum staffing or standard-of-care levels.”

14) Florida: A Miami attorney who represents developers and contractors urges the city to do more “public private partnerships.” Albert E. Dotson Jr. says “last week, more than 2,000 private and public sector leaders from across the country descended on Miami for a two-day conference to discuss our country’s existing infrastructure needs and the future of P3 partnerships to achieve them.”

15) Indiana/Illinois: The controversial Illiana Expressway “public private partnership” project may be dead after Indiana governor Mike Pence joins Illinois governor Bruce Rauner in putting the “boondoggle” on hold. Opponents of the toll road delivered boxes of petitions to Rauner’s office last week demanding that he kill the project once and for all.

16) Maryland: State officials push back the deadline for bidding on the Purple Line again. The new transportation secretary, Pete K. Rahn, is meeting with potential bidders to find out if the project can be done less expensively. The new deadline is August 19, 2015. Gov. Hogan’s plan to halt scheduled increases in the gas tax would cut deeply into future funding for Maryland’s transportation projects, including the Purple Line and Red Line (Baltimore) “public private partnerships.” [Sub required]

17) Michigan: A staffing agreement between various public agencies on a new customs house facility clears the way for the new $3.3 billion New International Trade Crossing Bridge. It will be procured as a “public private partnership.” “Funding will include tax-exempt bonds supported with availability payments by Canada to the P3 from toll revenues.” [Sub required]

18) Michigan: Trenton city council fails to back proposal to outsource trash collection. “Lucy Halwell of Trenton said that despite being new to the city, she wanted to attend the meeting to support keeping the solid waste disposal work in house. ‘I fully support keeping these jobs for our own residents,’ she said. ‘I worry that if a private contractor comes in offering a budget that looks appealing to residents that the council will accept it. … What will we do if they decide to hike up the costs at the end of the contract after the city has gotten rid of the equipment we have to get the job done?'”

19) New Jersey: Hunterdon County plans to outsource animal control services in 10 municipalities to a private, for profit company. “Hunterdon County officials wanted to incorporate all 10 participating municipalities to achieve the most savings. Most animal control services providers will charge a town based on its population. By offering a contract with 10 municipalities, the county knew the price would be less per capita, NJ.com reported.”

20) New Mexico: Inmates sue Corizon, Geo Group, a doctor and others for sexual abuse. “In both cases, the inmates claim they repeatedly filed complaints and reports of the sexually inappropriate medical procedures, but that their grievances were either ignored, ‘lost,’ or met with retaliation, such as administrative segregation. (…)  The inmates claim that the private medical companies discouraged staff from reporting their concerns, for fear of being sued.”

21) New York: Lockport slashes salaries of fire chief candidates, and refuses to apply for federal aid out of fear that it would jeopardize a labor arbitration case it is involved in over last year’s privatization. “‘They chose litigation over safety, safety on the fire ground, safety for the public,’ said firefighter Kevin W. Pratt, the union president.”

22) New York/National: Carol Burris, the award-winning principal of South Side High School in New York, is urging parent to opt out of high stakes standardized testing. “Cuomo’s constant berating of public schools and their teachers is right out of the privatization playbook. As Rick Hess of the American Enterprise Institute observed back in 2012, the purpose of setting cut scores on Common Core tests so high is to convince suburban parents that their schools and its teachers are failing. The collateral damage done to students by that agenda apparently is secondary to Common Core testing enthusiasts.”

23) Ohio/National: The ACLU is to release a documentary film on the first 18 months of Corrections Corporation of America’s ownership of the Lake Erie Correctional Institution. “Prisons for Profit” will be released on March 26 at the Cleveland International Film Festival. One minute trailer.

24) Pennsylvania: Reporter Jim Lockwood finds Scranton’s public parking lots to be in good shape, but the parking authority presses on with plans to “monetize” them.

25) South Carolina: Criticism of Durham Bus Services raises questions about safety, loss of public control. Last week, “several bus drivers said that Durham School Services—which provides bus service for Charleston County schools—isn’t keeping up with maintenance on its aging fleet.”

26) Texas: The Manor school board has cancelled its $2 million busing contract with a private company and is considering insourcing the service to save money. “Contracting with Georgetown-based GoldStar Transit was supposed to save the district money, but a recent audit found that the contract negotiated with GoldStar provided no incentive for the company to cut costs, as well as other concerns. Rebidding the service and changing the contract could save the district about $360,000 a year, the audit concluded. But two school board members have said they would like to explore bringing the district’s busing service back in-house.”

27) Texas: Gov. Abbot (R) appoints the first two members of the powerful Texas Transportation Commission. Bruce Bugg “is chairman and chief executive of Argyle Investment Co., LLC, a private investment firm.  He also serves as chairman and chief executive of Southwest Bancshares, Inc., as well as president of Texas Hill Country Bancshares, Inc. and as chairman of The Bank of San Antonio.” Tryon Lewis has been a state representative since 2008 and is a partner at the law firm Atkins, Hollman Jones, Peacock, Lewis & Lyon. [Sub required]

28) Texas: The IRS has closed an inquiry into whether bonds issued for a for-profit jail are taxable without terminating the exemption. “‘This a preliminary determination, and is not yet a final position for the IRS on this matter,’ the [IRS EMMA] notice said. The Burnet County Public Facility Corp. issued the bonds in 2008 to build a privately operated jail that has since defaulted on its debt payments, according to the trustee U.S. National Bank Association.” [Sub required]

29) Wisconsin: The Wisconsin Educational Approval Board, which oversees for-profit schools in the state, is defending its role in the face of attacks by Gov. Walker andRepublican lawmakers. “The report says that the highest dropout rates were at online for-profit institutions. A press release accompanying the report noted the Wisconsin Governor Scott Walker, a Republican, has proposed eliminating the board, to ‘decrease the regulatory and fiscal burden on private, for-profit schools.’ David C. Dies, director of the board, said in a statement that the new data show why it’s important to have an oversight board for for-profit higher education. Governor Walker’s proposal ‘eliminates the ability for anyone to collect and review student outcomes data from these institutions,’ Dies said.”

30) International: Noted Australian Radio National talk show host Phillip Adams hosts an interesting overview discussion on the Australian experience with “public private partnerships.”

31) Revolving Door News: The head of California’s private activity bond allocation committee is leaving for the private sector. Sean Spear will join the Arcadia office of 1410 Partners, LLC on March 2. [Sub required]

Legislative Issues

1) National: The Network for Public Education urges the public to contact their congresspersons to urge them to vote no on HR 5, legislation reauthorizing No Child Left Behind. Among other things, the bill “increases funding for charter schools and encourages the growth and expansion of Charter Management Organizations (CMOs), which will advance the privatization movement.” The vote is expected this Friday.

2) Maryland: Gov. Hogan (R) backs legislation to loosen up rules governing charter schools and expand their number in the state. “It has drawn quick and fierce opposition from teacher’s unions and public school officials but a more mixed reaction from Democratic legislative leaders, who say the bill might offer Annapolis a rare chance at bipartisan compromise.” [HB 486]

3) Ohio: Bill Phillis of the Ohio Coalition for Equity and Adequacy denounces the lopsided witness list for House Education Committee hearings on HB 2, a bill to tighten up oversight and accountability for charter schools. “17 of the 18 represented pro-charter organizations. Testimony from public school advocates is sorely needed.”

4) Ohio: Lawmakers introduce a bill to block any closure or privatization of Ohio prisons without legislative approval. “Each time the governor wanted to close, sell or privatize an institution, under Senate Bill 62, a 13-member commission would be established. Members would include lawmakers, officials of the agency in charge of the institution, others who have worked with the agency, a union member and members of the public. A companion bill was introduced in the House.”

5) Texas: HHS chief backs down from plan to privatize Terrell hospital without legislative approval. Says he now wants “a full discussion” with lawmakers. Last Wednesday, “while facing blistering criticism from the Senate Finance Committee over high-profile contracting and personnel blunders at the commission–Janek sought to soothe lawmakers by promising to involve them in any decisions involving the hospital.” [Sub required]