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This Week’s Outsourcing Scan 3-30-2015

Update: Upcoming Outsourcing Issues. March 30, 2015

1) National: Ginia Bellafante of The New York Times profiles the Hedge Clippers, a new organization shining a light on the role of hedge funds. “‘This really all began with, “What are we going to do about these characters?”’ Stephen Lerner, a fellow at Georgetown University’s Kalmanovitz Initiative for Labor and the Working Poor, told me. ‘If you’re worried about money in politics, it’s hedge funds; if you’re worried about funding public services, it’s hedge funds; if you’re worried about the privatization of public schools, it’s hedge funds.’”

The group has produced reports on Rahm Emanuel’s ties to high frequency traders, hedge fund kings Daniel Loeb and Paul Tudor Jones, “How Hedge Funds Purchased Albany’s Lawmakers,” hedge funds and “the destruction of the upstate [NY] economy,” buyers into the One57 development, and Leonard Litwin, a politically influential wealthy residential development tycoon. [@GoHedgeClippers]

2) National: The privatization industry is gloomy about delays in finalizing the LaGuardia Airport Central Terminal P3 project. “‘The delay of the LGA-CBT project is certainly not helping the perception that the US airports privatization market is expensive and hard to penetrate,’ Mar Beltran, investment director, airport investments at Australia-based AMP Capital told Infrastructure Investor in a recent phone interview.” Another source said “turning the LaGuardia terminal over to a private operator over a long period of time is a big step.”  [Sub required]

3) National: Democracy Now! producer Renée Feltz reports on the Corrections Corporation of America-run South Texas Family Residential Center in Dilley. Feltz interviews some of the released detainees, as well as Barbara Hines, former director of the Immigration Clinic at the University of Texas Law School. Hines: “The vast majority of the women and children that have been held at all of the detention facilities that have been ramped up since June are asylum seekers. (…) The facility in Karnes is run by the GEO Group. The facility in Dilley is run by the Corrections Corporation of America. The Corrections Corporation of America is same facility that ran Hutto, the last iteration of family detention that I actually did litigate, where children were held in—babies in prison uniforms, and these corporations thought that was acceptable. The women and the children have no control over their lives. Everything is regimented—what time they get up, what they eat. The food is very bad. The medical care is substandard. Guards, just like when we litigated at Hutto, as I said, which was the last version of family detention, women have told us that they have been threatened that if their children misbehave, they’ll be reported to the immigration judge, that it can negatively affect their case.” [Part 2–web only]

4) National: NPR reports on bipartisan efforts to pass legislation that would reduce long sentences for drug crimes and provide for early release of nonviolent inmates. Last Thursday a Bipartisan Summit on Criminal Justice Reform was sponsored by organizations including Van Jones’ Dream Corps, the Koch-backed FreedomWorks, and Gingrich Productions. Program partners were ACLU and Koch Industries, with speakers ranging from Secretary of Labor Thomas Perez to Koch Industries and the Heritage Foundation, ACLU, the Center for American Progress, the Sentencing Project, and AFL-CIO. The Nation‘s Zoë Carpenter is skeptical: “More broadly, does it matter that the right is using criminal justice reform to legitimize its broader anti-government ideology? [University of Pennsylvania Prof. Marie Gottschalk] seems to think so. ‘Today’s left/right kumbaya moment on criminal justice reform rests partly on what I call the pathologies of deficit politics,’ she says.”

5) National: The Australia-based road privatization company Transurban is teaming up with a number of advanced technology players in a working group to develop new ways to charge user fees. “Transurban is working with telecommunications company Singtel Optus, navigation, map and traffic service provider TomTom, analytics software specialist QuantumIT and networking developer and manufacturer Cisco on applying emerging technology to the nation’s transport networks and the toll-road company’s customers. (…) Along with the working group, Transurban is also partnering with [Virginia Tech] and the Virginia government in the US to apply for a research grant to develop a regional network pilot program of connected vehicles, systems and applications. The US Federal Department of Transportation is sponsoring the project.”

6) National: Vickery Eckhoff of AlterNet investigates private ranchers who are collecting massive subsidies from the federal government while running their livestock on public lands for cheap, and allowing “ranchers to have thousands of protected wild horses removed from public lands at public expense.” She reports that “America’s .01 percent like the Kochs and the Hiltons are collecting massive subsidies from the federal government.”

7) California: As Palo Alto’s residential parking permit system nears introduction, SEIU denounces the city’s plan to outsource enforcement contracts. “Community Service Officer Gabrial Mora said the employees all believe that they can do the work in-house. They have been enforcing the parking-permit program in College Terrace for the past three years, he said, and the time it takes an officer to cover that permit area has gone down from about an hour to about 30 minutes. ‘We were all surprised that the city was thinking of contracting out, because we never heard that before from our managers,’ Mora told the council [last] Monday.”

8) Colorado: The state issues a Request for Qualifications from companies interested in bidding on the I-70 expansion project. The submission deadline is June 22. “The RFQ comes just one month after the state agency decided the design-build-finance-operate-maintain (DBFOM) model was the best way to procure the project “because of its ability to transfer more risk to the private sector in several key areas including the long-term costs of maintaining the corridor,” CDOT had said in a statement in February.” [Sub required]

9) Florida/Think Tanks: Randall G. Holcombe of the Koch-backed James Madison Institute proposes that Florida should privatize all of its future state pensions now. “The ultimate goal should be for the state to completely eliminate its pension plans and have them administered in the private sector, as many private businesses do.” The James Madison Institute has also released a report attacking Florida public sector unions.

10) Illinois: Fight for 15 and the Chicago Teachers Union join together to demand that Chicago Public Schools employees “should earn at least $15 an hour, including contract workers such as the janitors provided by Aramark in a controversial privatization of school sanitation that has provoked protests by public school principals.” Mayoral candidate Chuy Garcia has backed the demand. Mayor Rahm Emanuel “has already promised to increase the minimum wage to $13 an hour by 2018. The wage hike applies to all companies who do business with the city and its sister agencies, including CPS.”

11) Illinois: The Peoria school board has voted to outsource custodial work, claiming it will save $500,000.

12) Indiana: A board set up to review proposals for Indianapolis’ proposed $1.6 billion criminal justice center “public private partnership” is to vote the project up or down on April 8. Then its recommendation goes to the City Council. This leaves the board only two weeks to digest a mountain of material. A public hearing is set for April 7. The Indianapolis Star has reported that some see the project as “a boondoggle built on savings that may never occur.”

13) Indiana: As enrollment in Indiana’s school voucher program explodes, journalist John Krull calls out the state’s dysfunctional system of oversight. “Consider the ongoing campaign of obliteration of Indiana’s educational system. In addition to working to overturn by legislative fiat the election that put Democrat Glenda Ritz in the office of state superintendent of public instruction, they also have taken steps to spare the charter schools and voucher programs from any meaningful system of accountability. That might be forgivable in a less Darwinian era, but the world is about to experience a serious labor shortage. Only those places–city, state or country–that can offer a well-educated and adaptable workforce will survive, much less thrive. This is not a time to indulge in the fantasy that public investment in education is primarily a therapeutic exercise for parents. We need accountability and we need it across the board.” [Sub required]

14) Louisiana: Gov. Jindal’s privatization of LSU’s Shreveport Hospital “has created management and financial tensions that threaten the health of the university’s nearby medical school,” according to a report by ECG Management Consultants. “‘In most of those meetings they spend most of their time bad-mouthing LSU and the people there,’ [State Senator Robert] Adley said. ‘For some reason, the hospital appears to me not to want this med school. That doesn’t make sense to me.'”

15) Louisiana: Martha Jewson of the Hechinger Report details confusion and unpredictability in the decision-making process for keeping failing New Orleans charter schools open or closing them. Real estate plays an important role. “In the past three years, several charter schools have closed throughout the city. Some of them were taken over by new charter operators, while others closed completely. There’s little obvious consistency to those not intimately familiar with the education bureaucracy in New Orleans.”

16) Nevada: Elko school board votes to outsource its food services to Chartwells. “Superintendent Jeff Zander said a committee will be working on a contract with the company, which must be brought before the board again before being sent to the Department of Agriculture for approval.”

17) New Jersey: The proposed Ridgewood schools budget moves to outsource services. It would “outsource custodial, maintenance, transportation, cafeteria services, grounds and fields, trash and recycling removal” (p. 19).

18) New Jersey: Monmouth County is to sell off its two nursing homes “despite impassioned pleas from residents and employees asking them to save the facilities” at a board of freeholders meeting last Tuesday. “The vote was only the first step in a process that will include more public meetings and months of discussions. The county will need to write a request for proposals that will outline any provisions they want the future bidders to meet before handing over the keys to the centers.”

19) New Jersey: The Florence Board of Education votes to outsource its janitorial staff, “despite a large turnout of residents who attended the meeting to express their opposition.”

20) Ohio: April 22 is the deadline for firms to respond to the Request for Qualifications by Ohio State University to lease out its energy systems for 50 years. “Like the parking privatization, the proposed energy deal has its critics, including members of the faculty, which was vocal in its opposition to the parking deal. OSU Professor and director of the public history program Steven Conn wrote a March 20 op-ed piece for the Chronicle of Higher Education, titled ‘Welcome to Ohio State, Where Everything Is For Sale.’ ‘Yes sir, we are open for business! And by “open for business” I mean: Make us an offer for something and we’ll sell it to you like a pair of pants at a department store closeout,’ he wrote.” [Sub required]

21) Pennsylvania: The Daniel Boone School District, in Berks County, will outsource the jobs of its cafeteria workers effective July 1. “The district’s food services have been managed by Sodexo Operations LLC, Gaithersburg, Md., since 2010,” but the district-employed food service workers will be terminated. “We’re paying pension costs for them,” said [board president] Martino. “Martino said it is untrue that teachers are being fired for signing a petition that asks the school board to reconsider outsourcing the cafeteria workers. He denied that accusation published in The Mercury on March 26.”

22) Pennsylvania: Writing in the Ellwood City Ledger, Eric Poole warns against considering privatization as a panacea. “The problem is, unless efficiency gained outweighs the profit skimmed, privatization usually results in a net loss for the public. Like a lot of theories, it sounds nice. But privatization is now being applied as a cure-all, even while it usually gives taxpayers less for our money.”

23) Texas: Texas Prison Bid’ness reports that the GEO Group has abandoned the Maverick County Detention Center in the midst of a lawsuit against it over a rape at the facility. “This isn’t the first time that GEO Group has left a county with an expensive facility and no choice but to take it over. In 2009, we reported the Beaumont Correctional Center to be one of at least five GEO facilities that had been closed or put under new management in several years. Then there’s a long saga of Littlefield, a small Texas town still paying dearly for partnering with GEO Group on the promise that a detention center would bring jobs.”

24) Texas: Last Wednesday, Standard & Poor’s dropped its rating of Willacy County Detention Center bonds to CCC junk status. “The Federal Bureau of Prisons cancelled its contract with operator Management Training Corp. after inmates took over the 2,800-bed facility and caused enough damage to make the center uninhabitable.” [Sub required]

25) Virginia: A woman is about to lose her license because of a dispute with Transurban, the road privatization company. “For some reason, Lisa Comras’ EZ pass did not pay over a five day period. The missed tolls added up to $14. But because she can’t pay 10 thousand dollars in fees and fines, the state is taking away her driver’s license and her vehicle’s registration. ‘I think it’s an outrage. How does $14 turn in to $10,000? No way,’ said Comras.”

26) Virginia: Following a highly critical audit report, the Chesterfield County school district is considering outsourcing its construction oversight operations. “A contract is only as good as the person managing it,” said Andy Hawkins, the school system’s assistant superintendent for business and finance.

27) Think Tanks: Dennis Zimmerman, an expert at the American Tax Policy Institute, tells state treasurers that tighter controls are needed on non-profits’ access to the tax exempt bond market. Zimmerman “said he generally sees a case for the federal government subsidizing state and local infrastructure. But ‘what I find questionable is non-governmental debt,’ he said at the National Association of State Treasurers’ legislative conference. Historically, when private-activity bonds have become a bigger part of the tax-exempt market, interest rates for all tax-exempt bonds, including governmental bonds, increase, he said.”

28) Media: Fox News puffs the food services privatization company Chartwells. By contrast, The New York Times has approached the issue journalistically, delving into “How the Food Industry Eats Your Kid’s Lunch.”

Legislative Issues

1) National: A flurry of new bills mandating the spending of public tax dollars on private education has hit statehouses. “Lily Eskelsen Garcia, president of the National Education Association, the largest teachers union, describes the state bills as an effort to privatize public education, and says that as more families try new options like charter schools–independently run public schools–they are becoming disillusioned with the results.”

2) National: Despite the fact that the House cancelled a vote on renewing No Child Left Behind, furious lobbying on the issue is continuing, Politico reports. “Some advocacy groups are even hiring new lobbyists to make their case. ‘There’s a huge amount of activity right now,’ said Kati Haycock, president of The Education Trust. (…) Conservative groups, teachers unions and big education associations continue to play key advocacy roles, but now there are lobbyists for everything from music education to school libraries. And on many issues, the battle lines are fuzzy. ‘It’s hard to even know who is friends with each other,’ said Lanae Erickson Hatalsky, policy and politics director at Third Way, which has been in talks with moderate Democrats on NCLB. ‘There isn’t one line of demarcation—there are 50.'”

3) National: A House bill has been introduced that would require states to spend a portion of the federal transportation funds they receive on local road and transit projects. Rep. Rodney Davis (R-IL) says “this bill will also help our transportation dollars go further by encouraging public-private partnerships and creating more transparency.” [Sub required; HR 1393]

4) Kentucky: Cincinnati Business Courier reporter and columnist Chris Wetterich doesn’t believe that it was the prospect of tolls that recently killed “public private partnership” legislation. “In 2014, the P3 bill included a provision that allowed such partnerships to be used for local projects, such as sewer and water initiatives. While tolls took center stage in Beshear’s veto, the administration also had concerns about the level of state supervision over local P3 projects. In 2015, the legislation was filed late to try to buy time and build support. This year, it did not have a provision for local projects because Beshear’s office and the groups representing Kentucky cities and counties could not agree to language. That became a problem when the short, 30-day 2015 legislative session was made shorter by bad weather.” Depending on what happens in Kentucky’s November gubernatorial election, a bill might come back in 2016.

5) New Hampshire: AFSC’s Arnie Alpert criticizes the proposed budget’s option to privatize the state’s only juvenile detention center. Reminding readers of the costly and failed efforts to privatize corrections in the state, Alpert says “evidence from around the country has shown that for-profit companies are ill equipped to handle the responsibility of incarceration, whether the prisoners are juveniles or adults. Their facilities tend to be under-staffed, less secure and don’t even save money for taxpayers.” SEIU Local 1984 has called for people to assemble at the Capitol on April 1 before the vote on the budget.

6) Ohio: The House has passed a charter school reform bill by a wide margin. It now goes to the Senate. “House Bill 2 includes roughly three dozen changes aimed at transparency, accountability and oversight of charter schools that are spending upward of $1 billion a year in state taxpayer money to educate 100,000-plus students.”