7997038195_d2c6451e20_o
SHARETweet about this on TwitterShare on FacebookEmail to someonePrint this page

This Week’s Outsourcing Scan 5-16-2016

1) NationalThreats to privatize airport security follow mounting reports of long lines around the country. The NY-NJ Port Authority, Atlanta’s Hartsfield airport, and airports in other cities, including Seattle and Charlotte, have expressed frustration with TSA. “Homeland Security Secretary Jeh C. Johnson said he has called on Congress to approve more money to pay overtime for TSA officers working at airports across the nation this summer. So far, that hasn’t happened. Factors like relatively lower fuel prices and fares are likely to drive passenger traffic higher this summer.”
 
The American Federation of Government Employees has called for 6,000 new TSA officers to be hired to deal with the shortages
. AFGE President J. David Cox said in a letter to congressional leaders that “TSA has failed to address chronic understaffing at airports for years. Congress is directly accountable for failing to fully fund even the limited and arbitrary cap on the number of TSO full-time equivalents during this time. TSOs are burdened with growing demands they cannot meet at current staffing levels, and passengers are faced with unnecessarily excessive wait times.” [AFGE letter]
 
2) National: The American Prospect reports “the hedge fund industry and the charter movement are almost inextricably entangled. Executives see charter-school expansion as vital to the future of public education, relying on a model of competition. They see testing as essential to accountability. And they often look at teacher unions with unvarnished distaste. Several hedge fund managers have launched their own charter-school chains. You’d be hard-pressed to find a hedge fund guy who doesn’t sit on a charter-school board.” But New York magazine reports that activists “have declared war on hedge funds—and they might be winning.” Hedge Clippers has been doggedly working to persuade pension funds to get out of hedge funds, with its efforts meshing neatly with poor hedge fund returns, high fees, and their right wing activism.
 
3) National: The American Society of Civil Engineers projects “a $1.44tn [infrastructure] investment funding gap between 2016 and 2025, warning of a mounting drag on business activity, exports and incomes.” Some, including economist Larry Summers and the Obama administration, have called for more private investment in the form of ‘public private partnerships.’ 
 
But “P3s remain a small slice of the infrastructure pie, featuring in just 60 projects around the country as of 2015. (…) A third of US states do not have laws that would allow P3s to be used, and skeptics fear they can be a costly way of delivering public services if poorly structured.” Jane Garvey tells the Financial Times “the P3 market is a way to tackle some of those large and complex projects, and we will see more of these, [but] it is a misunderstanding to think that the private sector can solve it on its own. You have to have a revenue stream to pay it back. A strong federal programme is important.” [Sub required]
 
4) National: Private prison companies are boasting about how much profit they are making “from locking up children and mothers,” Sarah Lazare reports in Alternet. Attorneys argued in court on Friday that “Texas is violating state law and jeopardizing families by approving child care licenses for the state’s two family detention centers.” The Texas Observer provides a detailed account of the proceedings. On Thursday, protesters gathered outside Corrections Corporation of America’s annual shareholders meeting and accused the company of “lobbying for longer and tougher criminal sentencing in order to increase profit and stay in business.”
 
5) National: In a twist on the usual revolving door story, a former Raytheon executive who went to the Defense Department has become “the most hated man in the Pentagon.” Contractors and their congressional allies have been waging war against Shay Assad’s efforts to save the taxpayers money by implementing sensible transparency and bidding reforms. POGO reports that “despite the ample evidence of overpayments that ought to legitimate Assad’s pro-taxpayer efforts, contractors’ moves to impede his progress through congressional action have worked: contractors successfully lobbied Congress to pass laws that prevent Assad and DoD from getting better deals when buying commercial items. Not only has he been prevented from accomplishing laudable goals, Assad has been personally maligned. According to Politico, Assad is the most hated man inside the Pentagon.”
 
6) NationalGovernment contractor CEOs are raking it inWashington Business Journal provides a rundown. “Tony Moraco, CEO of McLean-based Science Applications International Corp., made $6.4 million in the most recent fiscal year.”
 
7) National/International: An interesting paper jointly produced by Chartered Accountants Australia and New Zealand (CAANZ) and the global infrastructure practice of KPMG raises questions about the business and regulatory models being used for public infrastructure—especially water and power. “‘Fast-paced innovation could make projects obsolete even before they are complete,’ the paper notes, and ‘we are at risk of planning and building infrastructure that is outdated before it is even operational.’” [Sub required]. One question raised by the analysis is should the public enter into long—say 75-year or 99-year—deals for infrastructure ‘public private partnerships’ when the assumptions they are built on may be obsolete long before the term of a contract comes to an end? [Paper: Will Technology Disrupt Our Existing And Future Infrastructure?]
 
8) AlaskaThe state is seeking to sell the only federally-approved slaughterhouse in south-central Alaska. “Previous efforts to privatize the meat plant took place in 2000, 2002 and 2006, but no proposals were approved at those times.” The deadline for proposals in July 11.
 
9) Alabama: A member of the state board of education denies there is any connection between an appointment he made to an education committee and a $50,000 campaign donation he received. “Matthew Brown, a Republican who represents south Alabama on the BOE, said that in January, he nominated Ryan Cantrell, state director for the pro-school choice group the Alabama Federation for Children, to the Alabama Every Student Succeeds Act Implementation Committee.”
 
10) ArizonaVoters go to the polls tomorrow to decide on a ballot proposition to tap the state’s land trust fund to funds the state’s public and charter schools for 10 years without raising taxes. Legislators have failed to approve enough school funding through the normal budgetary process, and “opponents of the prop are worried the State Land Trust Fund will lose too much money if the proposition passes.”
 
11) California: A new report finds that the Los Angeles Unified School District (LAUSD) has lost half a billion to charter school growth. “As the number of independent charter schools continues to grow, it becomes increasingly important for LAUSD to quantify, forecast, and manage the costs associated with independent charter expansion. LAUSD oversees more charter schools than any other district in the country. Charters are privately managed despite relying heavily on district and taxpayer funding. Taken together, the findings in the report paint a picture of a system that prioritizes the growth opportunities for charter school operators over the educational opportunities for all students.” [Full report].
 
In the Public Interest and UTLA produced a policy brief drawing on the report which recommends
 “changing fiscal management practices to create an accurate accounting of independent charter school oversight costs; collecting all fees and reimbursements due to the district from co-located charter schools; fully funding all instructional mandates; identifying immediate opportunities at the state level to improve district programs to better serve the needs of Los Angeles’ students; and publically analyzing the educational and economic impacts of each charter school authorization.”
 
12) Colorado: The Denver city council has advanced large contracts for outsourcing the city’s workforce centers and youth employment programs this summer. “The committee voted 4-1 to send the three largest contracts to the full council, with final votes possible May 23. In recent months, council members and supporters of some current local program providers had protested that they were shut out of the $1.5 million out-of-school youth services program contract, awarded to Waukesha, Wis.-based Dynamic Workforce Solutions.”
 
13) District of Columbia: As the Washington Metro faces multiple crises created by years of underfunding and poor management, the vice chair of the Metropolitan Washington Council of Governments, Matthew F. Letourneau, suggests looking into privatization. Letourneau, a Republican on the Loudoun County Board of Supervisors, is also senior director of communications and media for the Institute for 21st Century Energy at the U.S. Chamber of Commerce. But Metro board chair Jack Evans, “a Democrat who represents Ward 2 on the D.C. Council, said that privatizing some parts of the regional subway system could happen but that it isn’t likely.”
 
The Washington Post
 ran an editorial yesterday calling for political leadership in Congress to step up and provide a long term fix for Metro’s capital and operating funding needs, instead of the “grandstanding” indulged in by Rep. John Mica (R-FL). “Better management will not suffice in the absence of more money.”
 
14) Florida: Miami-Dade moves closer to banning red-light cameras outside of city limits. Court rulings have already “boosted administrative costs by making it harder to outsource analyzing the footage, while elected leaders are at the forefront of a backlash that has led some cities—including North Miami last fall—to cancel their camera programs.”
 
15) HawaiiSeven charter schools are seeking state approval. “The commission denied three of the schools during the last application cycle, citing concerns over incomplete academic and financial plans. (…) Accelerated Learning Laboratory, a K-12 charter school that opened in Tucson, Ariz., in 1998, has set its sights on expanding to Hawaii. The school, which has its own proprietary curriculum, approaches learning and teaching as a science, David Jones, the school’s CEO, said in a phone interview from Arizona.” [Sub required]
 
16) Indiana: Attorneys for the state have filed a motion to change the judge who refused to award damages to the state in its case over IBM’s botched $1.3 billion social services privatization contract. They argue the judge exceeded his authority. “This order was issued without any hearing, briefing, argument or notice to the State, and before the state’s counsel had even been notified by the Supreme Court that its decision had now been certified,” the state’s law firm said in a statement.
 
17) Iowa: Davenport approves outsourcing parking enforcement for six months. Its finance director said salaries would go down from $60-72,000 to only $33,000.
 
18) KansasContracts with the state’s privatized Medicaid contractors are coming up for renewal, so a debate has taken off over how the system is working. “The three privatized Medicaid companies in Kansas—Sunflower, UnitedHealthcare and Amerigroup—are due for contract renewals, but have been criticized for not meeting previously promised expectations. Medicaid recipients have reported longer wait times and more reimbursement denials since the privatization. Medicaid recipients have reported longer wait times and more reimbursement denials since the privatization. And an inspector general position, which serves as a watchdog over the program, has been vacant since January 2014.”
 
19) New JerseyThe Christie administration is raising the white flag on its efforts to let commercial developers move in on Liberty State Park. “If this is true, that they’re giving up the plans, it does show that they have listened to the strong opposition of the public, of the mayor (Steve Fulop) and the Hudson County delegation,” said Friends of Liberty State Park president Sam Pesin. “I think they knew that if they were going to push privatization in the park, they were going to have to go against overwhelming opposition.” But the public is not out of the woods yet: the DEP “will now look to its 38 other parks and 800,000 acres it manages for other opportunities for investment.”
 
20) New York: The City of Troy, facing a budget shortfall, is considering outsourcing its fire department’s ambulance service. But “council members and their financial consultants, Cusack & Company admit an extensive analysis would be needed.”
 
21) New YorkBuffalo parents split over charter schools. “Discussions concerning an annual parents’ event turned ugly this week, as school district politics seeped into an ordinarily innocuous event. (…) The Buffalo Parent-Teacher Organization, which includes teachers who are union members, is recommending that its members boycott the first day of the event because its keynote speaker is charter school advocate and principal Steve Perry.”
 
22) New YorkPolitico New York reports that documents point to “possible cheating” at Success Academy. Diane Ravitch comments “Success Academy is the highest scoring charter chain in New York, possibly the nation. It is also very controversial, due to its no-excuses policies, it’s attrition rates, and its claim to have cracked the code of raising test scores of low-income minority children. At its last fundraiser, last month, it raised $35 million in one night, including a gift of $25 million from one of its hedge fund admirers.”
 
23) Ohio/NationalPlunderbund filed suit last week to give the public access to details of Ohio’s charter school scandal. The media organization is demanding “that Ohio’s Department of Education produce all personal communications from former charter school chief David Hansen. It’s been nearly a year since Hansen ‘was forced to resign after it was revealed that he did not include the grades of online charter schools in a $71 million grant application to the federal Education Department,’ according to the complaint, filed in the Franklin County Court of Common Pleas.”
 
A state audit revealed last week that a defunct Akron charter school mishandled records and took overpayments. “The audit also found the school was overpaid by the Ohio Department of Education, which failed to inform the school’s public board about issues handled by Next Frontier’s private management company. Auditors could not quantify the cost of misleading enrollment figures but did ask that the shuttered school repay $47,688 in money for career education. Where the other $450,000 in state aid went remains a mystery as the state adds the misspending to the more than $25 million in penalties yet to be repaid by Ohio charter schools.”
 
Not stopping there, Plunderbund reports “charter school scandals and corruption continue unabated. Everywhere. In one of the latest outrages, a charter operator in North Carolina was indicted a few weeks ago, claiming that 366 students were on the rolls, when only 189 were in attendance. And this week, a news report from Florida told the story of the collapse of three charter schools due to voodoo accounting and phony invoicing practices by Newport Education Partners, a charter management company. ‘I’ve prosecuted charter schools before, but not this particular type of scheme … I’ve prosecuted people involved with charter schools for committing theft of funds and prosecuted people for misusing children to work off campus during school, but this is the first time prosecuting a managing company,’ said Assistant State Attorney Russell Edgar.”
 
24) Oregon: A library privatization company that runs Jackson County’s libraries, LS&S (formerly LSSI), is feeling the heat “over charges that a private equity firm’s control has created excessive employee oversight and could stunt workers’ already low wages. ‘I’m not only embarrassed that we pay $10 an hour, I am ashamed,’ said Cathy Shaw, a library district budget committee member.” But the district may be trapped in the privatization contract: “Library board members have looked at ways to get out of the five-year contract, but they said it would be difficult. ‘We looked at terminating it, but they (LS&S) turned it down,’ said Maureen Swift, a board member.”
 
25) Washington: The Washington Education Association and several teachers unions plan on suing to block charter schools. “‘The Charter School law has an unelected charter school board which controls public money which there is not much oversight or accountability on that,’ said Phyllis Campano. Campano is a special education teacher who supports the upcoming lawsuit and says the second charter school law is still unconstitutional. Charter schools now get money from the lottery and not local tax levies, but it is still public money. That is one of the reasons why Gov. Jay Inslee didn’t sign the charter school bill.”
 
26) Wisconsin: In a letter to the editor of the Capital Times, John Finkler of Middleton denounces the appointment of a charter schools “czar” by Gov Walker as undemocratic. “It’s no coincidence Gov. Scott Walker and Republican legislators only created a ‘charter czar’ to take away authority from elected school boards in Madison and Milwaukee, the largest two Democratic areas of the state. They were likely politically fearful of taking away control of public education from school boards in Republican areas. It is all just another attack on public education and teacher unions in the state. It goes hand in hand with Act 10 and the continual increase in the private school voucher program. The goal: Destroy unions and slowly but surely privatize education.”
 
27) Think Tanks: A new report by the National Association of Charter School Authorizers finds that “authorizer shopping—when a charter school chooses or changes its authorizer specifically to avoid accountability—is an ongoing threat to charter school quality throughout the nation. The report, ‘Authorizing Shopping: Lessons from Experience and Ideas for the Future,’ provides five mini-case studies of the practice in action and calls for changes to practices and policies to prevent it.”
 
Legislative Issues
 
1) National: Sen. Charles Schumer (D-NY) opposes the appointment of Charles P. Blahous of the Koch-backed Mercatus Center to the Social Security Trust Funds board. “Dr. Blahous led President Bush’s efforts to privatize Social Security, which would have resulted in a complete decimation of Social Security as we know it.” Sen. Sherrod Brown (D-OH) asks “how can [the] public know when he’s speaking for his right-wing think tank or as a trustee?”
 
2) MichiganA budget impasse has arisen over the question of charter school oversight in Detroit. With the public school system in severe financial crisis, Republican lawmakers have approved more money for the district—but without the strengthened oversight of charter schools that would come with an education commission, which Democrats support.
 
3) Michigan: Following privatization problems with Aramark in prisons and with a private takeover of the Grand Rapids Home for Veterans, lawmakers debate bipartisan proposals to strengthen the data used to make outsourcing decisions. “The state House Government Operations Committee heard about an hour of testimony on six bills that would require more cost-benefit analysis before state services were outsourced and more contractor transparency after. The bills—collectively known as ‘the sunshine package’—would allow the state to measure the true costs and benefits of outsourcing proposals, the bills’ sponsors told the committee.” Under proposed legislation, “agencies would also have to study how outsourcing would affect local communities, how state coffers might be affected by laid off workers seeking public assistance, and how tax revenues might be affected. Large contractors would also be required to post more information online about how they’re using taxpayer money.” [HBs 4700-4705]
 
4) Ohio: The state Democratic Party executive committee has approved a resolution to seek tougher legislation on charter school accountability. “Ohio Senate Democratic Caucus Leader Joe Schiavoni, the sponsor of SB 298, said ‘Ohioans are deeply concerned about how this state’s for-profit charter schools are being run. Too many tax dollars are being wasted, and too many students are falling through the cracks because of lax oversight of charter schools.’ A recent poll by Public Policy Polling found that two-thirds of Ohioans support legislation creating more accountability for charter schools.”
 
5) Oklahoma: Several state lawmakers may hold the budget hostage over plans to close 15 prison work centers.“ Last Thursday, the Board of Corrections voted to close the centers and move the 1,200 offenders to the Oklahoma State Reformatory in Granite. The offenders currently at the prison would be moved to the now-empty North Fork Correctional Facility in Sayre, which the agency would lease from Corrections Corporation of America. (…) Lawmakers were upset that they were given little advance notice of the proposal and not consulted on closure of the work centers, which provide cheap inmate labor to cities and towns.”

 

We’d love to hear from you. Send us an email: info@inthepublicinterest.org.

Want one privatization story (private prisons, infrastructure, education, etc.) a week in your inbox?  Sign up for our email list.