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This Week’s Outsourcing Scan 5-18-2015

Update: Upcoming Outsourcing Issues. May 18, 2015

1) National: The fatal Amtrak derailment in north Philadelphia has provoked renewed debate over privatization and whether starving the line of funding contributed to the event. The New York Times notes that just a day after the crash, Republicans refused to approve increased funding. “‘It is absolutely stunning to me,’ [former governor] Rendell said of the funding vote. ‘It shows that ideology trumps reality, and it shows that cowardice reigns in Washington. The callousness and disregard was shockingly contemporaneous.'” Rep. John Mica (R-FL), the former chairperson of the House transportation committee and an ardent proponent of privatization, renewed his call for private financing. Sen. Charles Schumer (D-NY) says “it is simply a fact that insufficient funding for Amtrak has delayed the installation of [Positive Train Control].” The pro-privatization Reason Foundation has called on Congress not to speed up the positive train control implementation deadline. For nearly two decades, Reason has called for the federal government “to liquidate Amtrak, privatize and regionalize parts of it, permit alternative operators to transform some long-distance trains into land-cruise trains, and stop service on hopeless routes.”

2) National/California: The American Civil Liberties Union of California calls for urgent medical care improvements at the GEO-run Adelanto immigration detention facility. In a letter to federal officials, the ACLU and nine other immigrant rights groups say that “since the facility first opened in 2011, GEO consistently has denied or delayed necessary medical and mental health treatment to Adelanto detainees, placing their physical and mental well-being at significant risk. These failures have directly led to the death of at least one detainee, Fernando Dominguez, and there are significant questions regarding whether the recent death of Raul Ernesto Morales-Ramos was due to the facility’s failure to diagnose and treat his intestinal cancer. To ensure that no further detainees’ lives are placed at unnecessary risk, we urge ICE to act immediately to address the systemic health care deficiencies at Adelanto, and to halt the planned expansion of the facility.”

3) National: The Center for Media and Democracy continues probing the charter school industry, focusing on the U.S. Department of Education’s lack of oversight, and saying the lack of oversight is “a design feature not a bug.”

4) National: With their contract expiring this Wednesday, postal workers rallied across the nation for improved customer services and against cuts. “‘There are people out there who want to privatize the Postal Service,’ says [APWU spokesperson Sally Davidow]. ‘So they’re starving it of funds and driving down service so the profitable routes can be picked off by private businesses who stand to make a buck.’ She says returning banking services to post offices would provide 10 million low-income Americans, who don’t have a bank account, an alternative to costly payday-lending stores.” [Danny Glover interview on the day of action]

5) National: Aaron Miguel Cantú reports on the Southeast Water Infrastructure Summit, hosted by the National Association of Water Companies (NAWC), the industry association of private water. “The discussions of the day touched on several private water sector interests, including desalination and how to circumvent eminent domain law. But the topic that received the most attention was the nation’s patchwork of rapidly deteriorating municipal water systems, which are estimated to need more than $1 trillion worth of upgrades. This, water executives said, not only represented a historic opportunity for their businesses, but could also be used as leverage to finally convince Americans to cough up more money for their tap water. It is the classic Shock Doctrine approach–turning a social crisis into a financial shakedown.” But John Hoy of Utilities Inc. says “there’s a new movement out there gaining steam that’s fighting privatization.”

6) National: According to the AFL-CIO’s executive paywatch database, Corrections Corporation of America CEO Damon Hininger makes 104 times the pay of the average American worker. GEO Group’s George Zoley makes 133 times the average worker’s pay.

7) National/International: Frost & Sullivan says that the private market for global water and wastewater networks will double by 2020 because of aging infrastructure.

8) National: The National Council for Public Private Partnerships, formerly the Privatization Council, hosted a discussion last week on the role of P3s in “solving” the “infrastructure crisis.” The event was co-sponsored by Aon, CH2M Hill, the National Association of Water Companies. [Video]

9) National/International: The Ontario Teachers Pension Plan is stepping back from infrastructure investments due to high valuations in infra and real estate. They are “unlikely to deliver appropriate risk-adjusted returns. (…) OTPP found that while there were about 10 to 15 global major investors in infrastructure 15 years ago, it could now identify more than 200 competitors. Returns had also changed dramatically, falling from a range of 12 to 16 percent for core infrastructure to single digits that often fell below 8 percent.” [Sub required]

10) National: The IRS rules that bus fare revenues would not cause bonds to be private activity bonds for managed lanes projects. “The ruling is an example of how tax-advantaged bonds can be used for P3 arrangements, but does not address all the tax issues relating to incorporating bond financing in P3 transactions, said Carol Lew, a shareholder at Stradling Yocca Carlson & Rauth in Newport Beach, Calif. Lew and others are working on a comment project about P3s for the tax-exempt financing committee of the American Bar Association’s taxation section.” [Sub required]

11) Arizona: Concerns about elitism and a lack of access for working families focus on Great Hearts Academies, the state’s largest charter school system. “While Great Hearts has expanded into Texas, its proposed Tennessee schools were killed a few years ago by critics on Nashville’s school board over concerns about diversity.”

12) California/National: Greg Beato, writing in the Stanford Social Innovation Review, looks at the Presidio Trust, whose creation generated anxiety about the possible commercialization of a valued space: “The Park That Paid Off: For a quarter-century, the Presidio of San Francisco has been a contested terrain. At the center of that battlefield is the Presidio Trust, a government agency that represents an alternative model for funding and managing a public asset. Here’s how the trust turned a large military facility into a large urban park.” Beato writes, “many onlookers worried that this provision would doom the Presidio to a bleak future as a heavily privatized business park—a place where corporate logos would bloom like wildflowers.” Two decades on, “the battle over the future of the Presidio has not ceased. But the Presidio Trust, in part by organizing its work around cross sector partnerships, has demonstrated the feasibility of one model for funding and managing a large public park.” [Sub required]

13) Connecticut: Contract settlement breaks down in Bristol over a dispute over outsourcing cafeteria workers’ jobs, and the issue is taken to the state labor board. Larry Dorman, public affairs director for Council 4 AFSCME, says “‘the reason we wouldn’t sign off is because they’re trying to stick in language that essentially would allow them to ignore the force of the rulings that have come down against outsourcing.’ The board has also filed a new request for proposals for a food service management contract. The new RFP is dated May 11 and states that the board is accepting proposals until 2 p.m. on June 11. At this time proposals will be opened in the city purchasing office.”

14) Florida: All Aboard Florida, the state’s proposed private railroad line, hires Miami-based contractor Archer Western  to work on upgrading track and facilities from Miami to West Palm Beach. “AAF announced the hiring of Archer Western two days after the company’s attorneys told a federal court that the company planned to build the entire project whether or not it can finance a portion it with the tax-exempt bonds. Indian River and Martin counties, which are located on Florida’s east coast north of Palm Beach County, have filed federal lawsuits challenging the bond allocation.” [Sub required]

15) Illinois: Chicago’s finances are battered by a two-notch downgrade by Moody’s, then similar action by Fitch. The downgrade “triggered a series of swap terminations and defaults on bank agreements, giving credit providers the ability to demand payment on $2.2 billion of floating-rate paper, interest-rate swaps, and short-term credit lines. The city is in negotiations with its banks to reach either forbearances or new terms.” [Sub required]

16) Indiana: The Indianapolis Justice Center “public private partnership” is likely dead ar least until after the November mayoral elections. “Barring some concessions from the developer and a change of heart by council members, it’s difficult to see a path forward. The winning bid from WMB Heartland Justice Partners expires this month, and rising interest rates coupled with inflation would push the costs higher if the same deal were re-priced. After the June 8 council meeting, a financing deadline will expire, too. Few questioned whether the center was needed … But ultimately, in the face of conflicting affordability studies, the rift between the Republican administration and Democrat-controlled council has proved too much to overcome on a project that seemingly had bipartisan appeal at its outset.”

17) Maryland: Gov. Hogan signs a bill to reduce the risk of contracting failures in the state and ensure a proposed outsourcing effort is truly the most effective option. Maryland had a few existing contracting protections, but HB 158 strengthens this process and ensures it is fair and deliberate for taxpayers and workers alike. Audit findings will be made available to the public.

18) Maryland: Montgomery County executive Ike Legett moves to privatize the county’s economic development department. “But even before his announcement, Leggett’s plan was met with deep skepticism from the DED employees whose jobs are now on the line. James Moody, the union shop steward at the Department of Economic Development, sent a letter to Shawn Stokes, the county’s human resources director, on Wednesday calling for “immediate intervention” and suggesting a lawsuit may be on the horizon.”

19) Michigan: A bid to unionize a Detroit charter school system remains unresolved. “Nate Walker, K-12 organizer and policy analyst with AFT Michigan … said the voting rights of 30 teachers were challenged before the election, during an April 30 proceeding before the National labor Relations Board. Of those, 20 voted Thursday, and their ballots are in question. David Hecker, president of AFT Michigan, said the vote Thursday is ‘not determinative, as there are 20 challenged ballots, most of which result from 90/90 not considering Teach for America teachers and long-term substitutes to be teachers.'”

20) Oregon: Thousands petition Gov. Brown to stop a public water swap with Nestlé Waters to open a bottling plant. “Public water should remain publicly owned for the public good,” said Jeff Klatke, President of Oregon AFSCME. The state is entering its fourth year of drought.

21) Pennsylvania: The Pennsylvania School Boards Association files Right-to-Know requests for financial information with charter and cyber charter school operators. “The Right-to-Know requests also ask for documents related to leases and real estate and donation information from foundations or educational improvement organizations. Nathan Mains, PSBA executive director, said the information being sought will help his association and the school districts it represents to better understand how charter schools operate and to provide transparency to taxpayers on charter school spending.”

22) Pennsylvania: The School District of Philadelphia may outsource the jobs of unionized nurses to a private, for-profit company. The Philadelphia Federation of Teachers called it a “shortsighted, Band Aid solution.”

23) Texas: Midwestern State University trustees put off an outsourcing plan for facilities operations, including groundskeepers and central plant staff. “The idea to privatize those jobs—94 employees would be affected—came about when Chartwells, the university’s new food service provider, spoke with MSU administration about other services it offers, including facilities management through SSC Service Solutions. Chartwells and SSC are owned by Compass Group North America. Rogers said that the university’s primary job is to educate students and that MSU always is looking to do that by offering research and study abroad opportunities, purchasing new equipment and hiring strong faculty, for example. But he said, ‘I have to balance that with … we call that morale. … Midwestern State University has a tradition of our administration, faculty and staff really knowing each other. … I think that’s kept us together.'” [Sub required]

24) Virginia: The Chesapeake Bay Bridge and Tunnel District issues a Request for Qualifications for the design and construction of the $724 million Parallel Thimble Shoal Tunnel (a second two lane tunnel under the Thimble Shoal channel). Statements of Qualification are due July 6; anticipated shortlist and draft RFP, August 11. [All documents]

25) Wisconsin: Union leaders and community activists demand good jobs if a new downtown Milwaukee arena is to receive public financing. “At a time of scarce public resources against the backdrop of an ongoing good jobs crisis, the people of Milwaukee must have the certainty that such significant investments yield good, family-supporting jobs.”

26) Think Tanks: The Reason Foundation issues its annual Privatization Report. Includes sections on state government privatization, federal government privatization, air transportation, surface transportation, transportation finance, criminal justice and corrections. Sections on education and local government privatization are to be published soon.

27) Think Tanks: The Bipartisan Policy Center launches an Executive Council on Infrastructure. “Suzanne Shank, president and chief executive of Siebert Brandford Shank, said she believed one of the enduring barriers to US-based infrastructure investment was ‘complacency’. She touted the efficiency of the municipal bond market, and said that while there had been some successful PPPs across the country, inequitable risk assignments had also led to some failures. ‘Risk is shifted either totally on the government or totally on the private investor. If there was a way to share the risk everyone would be moving in the same direction,’ she said.” [Sub required]. The council includes executives from McGraw Hill Financial, American Water, Xylem, FedEx Freight, the California State Teachers’ Retirement System, Meridiam Infrastructure (Jane Garvey, who is also on the BPC board), KPMG LLP, and Siebert Brandford Shank & Co.

Legislative Issues:

1) Alabama: Despite growing national concern about the lack of accountability of charter school authorizing bodies, state lawmakers introduce a bill to remove the state Board of Education from a role in approving charter schools. “Republican champions of charter schools are striking back this week after the state school board on Wednesday refused to confirm a list of nominations for a new charter school commission. The state commission would be designated with hearing appeals of charter school applications rejected on the local level. Board members said they didn’t have enough time to thoroughly vet the list of candidates, saying they felt the process was a set-up.”

2) Kansas: Wichita is considering a “public private partnership” for water infrastructure repair and upgrades. “The proposal would allow bids from companies interested in loaning money and expertise to the city as it evaluates the utilities. In exchange, the selected company would receive annual payments from the city.” Bids will be solicited and staff will come back to the city council for approval in July.

3) Michigan: A number of issues are before the state legislature that would affect public sector workers, including Lotto privatization, protections for employees who communicate with legislators, and authorization for state employees to bid on jobs the state wants to privatize.

4) New Jersey: Wrangling continues over proposed legislation that would call a moratorium on increased enrollments in charter schools. “Assemblywoman Mila Jasey (D-Essex and Morris), who proposed the bill, said in a statement to NJ Advance Media that she supports charter schools, but thinks that the state needs the time to reconsider how they are run. ‘The charter school law needs to be rewritten in a thoughtful, comprehensive way,’ she said.”

5) New York: Billionaires line up behind Gov. Cuomo’s effort to get tax credit legislation for private and religious schools and a lifting of the cap on the number of charter schools. Diane Ravitch reports: “The Legislature killed this proposal less than two months ago, but Cuomo is back with it on behalf of religious [groups] that supported his election. (This is also ALEC legislation.). No surprise that the Wall Street billionaire-funded group which is deceptively named ‘Families for Excellent Schools’ is supporting Cuomo’s tax credit proposal and advocating lifting or eliminating the cap on charter schools.” Meanwhile state Republicans are threatening to block an extension of Mayor DeBlasio’s control of the New York City schools unless he caves in and accepts Cuomo’s plan to lift the charter school cap.

6) Pennsylvania: A battle is brewing over two Republican-sponsored bills that would force a cost analysis of all proposed union contracts and post the contracts online for at least two weeks before signing. David Fillman, the executive director of AFSCME Council 13, writes that “if we are going to be held to this level of transparency, then all commonwealth contracts—and legislators’ general fund spending and per-diem costs—should be subject to the same scrutiny.”

7) Rhode Island: Gov. Raimondo’s effort to slash the Medicaid budget meets fierce opposition. “‘Taking away traditional Medicaid and forcing them into a managed care plan with no protection from inevitably declining services as a result of grossly inadequate reimbursement is unconscionable,’ [Jennifer Fairbank of South County Nursing and Rehabilitation Center] told senators. James Cenerini, the lobbyist for the largest state employees union Council 94, American Federation of State, County & Municipal Employees targeted his objections to implicit attempts to cut staff at the state-run Eleanor Slater Hospital and ‘privatize’ 28 state-run group homes for the developmentally-disabled by turning them over to private operators. ‘Privatization … will eliminate hundreds of middle-class jobs,’ he said. As an alternative, he said Council 94 would be ‘willing to work with the administration to collaboratively identify savings.'”