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This Week’s Outsourcing Scan 5-9-2016

1) National: Last week was celebrated around the country as Public Service Recognition Week. “Now in its 31st year, the week—which is organized by the Public Employees Roundtable, a group of federal employee unions and associations—puts a spotlight on the importance of the service that public sector workers do for the common good. ‘It’s great to be a public servant, and I think it is nice, at least once a year that we recognize all of those folks and the great work that they do,’ American Federation of Government Employees President J. David Cox said.”

2) National/TexasGrassroots Leadership wins a temporary restraining order from an Austin judge blocking Texas’ effort to grant a childcare license to the federal South Texas Family Residential Center in Dilley, which is run for profit by the private prison company Corrections Corporation of America. 

The TRO is pursuant to a lawsuit Grassroots Leadership has filed to block the Obama administration’s effort to keep the immigrant family detention center open—which depends on Texas declaring the detention center a childcare facility. The order lasts until this Friday, when the judge will hear Grassroots Leadership’s application for an injunction to “indefinitely halt implementation of a Texas regulation that allows Texas childcare licenses for federal immigrant detention facilities near the cities of Dilley and Karnes City, Texas.” In the TRO, the judge said there is a “probable right to a declaratory judgement” against the state’s action, since it was “adopted without statutory authority.” 

Grassroots Leadership’s executive director Bob Libal says “family detention camps are prisons. They are not childcare facilities. (…) [Texas] came up with a regulation allowing a license in three months. It was not done to protect children, but to protect the Obama Administration’s family detention program, putting children in harm’s way.”

3) National/International: Secret details of the negotiating text of the TTIP American-European trade and financial regulations deal are leaked by Greenpeace Netherlands, adding to concerns about the deal’s potential impact on democratic control and public regulation of U.S. state and local government services and acquisitions. ‘Public private partnerships,’ buy-local and buy-American laws, bidding ordinances and service contracts are at the heart of the deal, as European companies try to gain access to American government assets and services. Public Citizen has produced an analysis, and the ramifications of the deal were discussed on FAIR’s Counterspin and The Majority Report. The leaked documents dealing with public services can be found here and here.

4) National/International: A high powered team of institutional investment managers descended on Washington last week to press their case for opening up American public infrastructure to global capital. They “will meet officials from the White House through to state administrations to discuss ways of opening up infrastructure investment in the U.S. for a wave of global capital. The meetings, organised by peak body Industry Super Australia and brokered through U.S. ambassador Joe Hockey, are building on discussions in 2014 ahead of the G20 meeting in Brisbane that introduced Australia’s ‘social privatisation’ model to finance ministers including U.S. Treasury Secretary Jack Lew.”

5) National: The Center for Media and Democracy files an appeal against the Department of Education’s claim that it has no records about closed or never-opened charter schools referenced in its “Commitment to Transparency” press release. “It strains credulity and common sense that, despite spending billions in taxpayer dollars on charters and putting out this press release—among several—on the accomplishments of the Charter Schools Program, the Department claims to have no databases, no data analyses, and no internal communications about the program mentioned in its press release,” CMD said in its appeal letter. CMD says it intends to file a lawsuit to compel disclosure if the DOE’s response to its FOIA appeal letter is inadequate.

6) NationalBloomberg Government reports that the federal government is set to release 13 major contracting requests for proposals by June 30. “Nine professional services deals valued at $135.8 billion and four information technology (IT) opportunities valued at $75.3 billion are coming up for bid. (…) Three of the nine professional services deals are valued at more than $10 billion each: One Acquisition Solution for Integrated Services (OASIS) On-Ramps; Sandia National Laboratories; and Building, Maintenance, and Operations Phase 2.” [Bloomberg Government, May 3, 2016]

7) National: The Bureau of Labor Statistics released a weak jobs report on Friday, showing an erosion of government employment. Federal employment declined by 11,000, 7,900 in the U.S. Postal Service alone. Local government employment overall was flat, but local government education employment declined by 8,500 while non-education government employment increased by 8,100. [BLS report, p. 31]

8) NationalAmerican Water Works holds its quarterly conference call with investment analysts, touting its Scranton wastewater privatization (which it wants to complete by September 30) and a strong military “pipeline for privatization.” Its business supplying water for fracking operations is down significantly due to the collapse of oil prices, but they hope it will pick up. President and CEO Susan Story said “we also closed seven acquisitions in six different states during the quarter, welcoming another 7,000 customers to the American Water footprint.” The company also recently announced it will buy the wastewater system of the Borough of New Cumberland (PA) pending regulatory approval. It has rate cases filed in six states (VA, IL, KY, NY, IA, CA), and pending acquisitions in four states (CA, IL, MO, PA). [Earnings call slides]

9) NationalCorrections Corporation of America held its earning call last week, and claimed “CCA’s existing facility portfolio is young and operationally efficient, allowing our government partners the opportunity to lower their operating expenses when compared to relatively older and less efficient government owned facilities.” It also pointed to a strong position in residential reentry services. CCA’s strategy is focused on owning and operating correctional detention services, real estate only “solutions” (where states lease their facilities), and “acquiring residential reentry provider either owned and managed or owned and leased to a third-party operators.” Damon Hininger dismissed the vigorous election year debate over whether for-profit prisons should exist at all as “a lot of fun on cable TV.”

10) National: The National Federation of Municipal Analysts meets in Chicago and hears a keynote from Mayor Rahm Emanuel. Among the panels: “Democracy in Peril: What to do When Elected Officials Haven’t, Won’t or Can’t.” 

11) Connecticut: Bristol’s rejection of a school lunch outsourcing deal and signing a new contract with AFSCME Local 2267 works out well for taxpayers. The school lunch program’s deficit is now lower than it has been in years. “In previous years, the budget had consistently run deficits averaging $250,000, causing a Republican-led board to seek to outsource the cafeteria services to Long Island-based Whitsons Culinary Group. (…) The contract ended up being voided in the wake of a Connecticut Board of Labor Relations decision that the school board had negotiated a tentative agreement with the cafeteria workers’ union in bad faith. (…) [Karen Vibert, chair of the Board of Education’s finance committee,] said new smaller deficits are due to the union agreement finally being fully put into place.”

Local communities in Connecticut, such as West Haven, have been backing In the Public Interest’s Taxpayer Empowerment Agenda to push back against predatory privatization.

12) Illinois: A contract impasse between Governor Rauner and public sector workers has turned bitter, with Rauner turning to the state labor board to force through an arbitration bill. The state’s contract with the American Federation of State, County and Municipal Employees (AFSCME) expired in June 2015. “An AFSCME statement says that in asking the Illinois Labor Relations Board to declare the contract at impasse, Rauner is seeking to unilaterally impose demands ‘including doubling what employees must pay for health care, freezing their wages for four years and eliminating protections that prevent irresponsible privatization schemes.’”

13) Indiana: Immigrant rights and anti-privatization groups win as the Gary City Council blocks approval of an ICE facility that would have been operated for profit by the GEO Group. “The groups, that include the Northwest Indiana Federation of Interfaith Organizations, Black Lives Matter—Gary, Baptist Ministers Conference of Gary & Vicinity, and the Indiana branch of the League of United Latin American Citizens among others, wrote an open letter earlier saying that ‘GEO is bad for Gary.’ In addition to complaints about the immigrant detention procedure and how GEO operates its facilities, the group contends that the facility will deter other commercial development from locating around the airport.”

14) Indiana: Australian fund manager IFM Investors sells a 10% stake in the privatized Indiana Toll Road to the public pension fund CalPERS. It is CalPERS’ first direct investment in North American transportation infrastructure. [Sub required]

15) Maine: Concern rises that if Portland closes a municipal public health facility, “lives will almost certainly be lost.” The clinic is the only public facility “that provides overdose antidote prescriptions, sexually transmitted infection testing, a needle-exchange program and an HIV positive primary health care clinic that even the local government acknowledges has a stellar track record.” Some councilors “are justifying putting this clinic on the austerity chopping block by trumpeting their simultaneous pursuit of a privatisation scheme.” Michael Lighty, policy director for National Nurses United, says “it’s severely detrimental to public health when you have a public crisis like the opioid epidemic and then privatise services in response. That can only mean less access.” Alternet reports that “like many stories of privatisation and austerity, this one starts with an unelected city manager, Jon Jennings.”

16) Massachusetts: The city council in Northampton considers an ordinance that would prohibit the city’s water system from being privatized. “More than three quarters of U.S. cities and towns had water systems run solely by public employees in 2011, according to the International City/County Management Association.” Concern has increased that the private water industry will try to take advantage of the Flint, Michigan, lead poisoning scandal to launch an aggressive effort to privatise public water services.

17) NevadaTaxpayers may be on the hook for $750 million of the $1.4 billion cost of a proposed new stadium to let the Oakland Raiders relocate to Clark County. The project is being spun as a ‘public private partnership,’ and would be partly financed by bonds issued by or on behalf of the public. “The stadium authority, which would be responsible for financing, would have to be approved by the Nevada state legislature.” A bill has been introduced to block public financing (H.R. 4838), and President Obama “in his fiscal 2016 and 2017 budget requests, also proposed prohibiting tax-exempt bonds to be used for financing private sports facilities by eliminating the private payment test for them. As a result, bonds would be taxable private activity bonds if more than 10% of the facility was used by private parties. The Office of Management and Budget has estimated that repealing tax-exempt bond financing stadiums would lower the budget deficit by $542 million over the next decade.” [Sub required]

18) OhioWalbridge looks to outsource its police department to another public police force. “[Mayor] Kolanko said the majority of residents want to keep a police force in Walbridge. But finances may dictate outsourcing.”

19) Rhode Island: Opposition grows to plans to privatise Providence’s water supply. “‘Privatizing Providence Water was included in the City’s list of possible actions to take to resolve its budgetary pressures. We want the City to know from the start that selling the Providence Water System assets is a non-starter with Rhode Island residents,’ said Georgia Hollister Isman, the State Director for Rhode Island Working Families, who started a MoveOn.org petition entitled ‘Providence City Hall: Don’t Privatise Our Water!’”

20) Tennessee/PennsylvaniaBlount County plans to outsource management of its substitute teacher system. “Substitutes will be employees of the company rather than the school district under the arrangement, and an automated system will schedule classroom coverage. Blount County Schools included $150,000 for substitute management software and outsourcing in its 2016-17 budget request pending with the county commission, but the exact cost is underdetermined. Under the arrangement, the district will pay the company 30.5 percent above its daily rate for current substitutes and retirees who join the company, and 34 percent above the daily rate for new substitutes Source4Teachers brings in.”

The Philadelphia, Pennsylvania, school system has had a serious problem with Source4Teachers, where outsourcing substitute teacher fill-ins left the school system in an even worse position. “At James G. Blaine elementary in Strawberry Mansion, one of the district’s ‘internal turnaround’ schools, Source4Teachers filled six substitute positions for 363 teacher absences.” Philadelphia has thrown in the towel on Source4Teachers, and plans to vote on a contract with Kelly Educational Staffing at its next meeting on May 19.

21) Utah/National: William (Bill) Jensen, in a letter to the editor of the Logan Herald-Journal, lifts the curtain on the agenda behind campaigns to transfer public lands in the west to state control. “The whole idea to seize public lands in Utah was founded on greed and deception. Utah has already passed a bill to seize public lands and has sent a demand to the government that lands would be turned over to the state by 2015, but of course, the government ignored it. This grandstand was the brain child of Ken Ivory, a Utah Republican legislator closely associated with the American Legislative Exchange Council, an extremely conservative think tank, linked to extractive businesses that would profit greatly from the public lands being opened up to drilling, mining, logging, etc.”

22) Revolving Door News: Jennifer Shasky Calvery, director of the Treasury Department’s Financial Crimes Enforcement Network, the anti-money-laundering regulator, is leaving her post to take up a job at HSBC Holdings PLC in a senior financial compliance role. HSBC agreed to pay a nearly $2 billion fine for money laundering in 2012, and according to the Wall Street Journalcontinues to “struggle” in its battle against money laundering.

23) Think Tanks: The American Legislative Exchange Council held its secretive Spring Task Force Meeting in Pittsburgh over the weekend. Protesters burst into the banquet on Thursday night. Allen Kukovich and Barry Kauffman of Common Cause Pennsylvania write that “ALEC’s power is emblematic of a major problem in our democracy, in which the interests of major corporations and interest groups outmuscle those of the public at large.” ALEC’s local government arm, the American City County Exchange (ACCE), held workshops on “public/private partnerships to confront opioid and heroin addiction in our communities,” “merit pay vs. collective bargaining,” and “ACCE Model Policy Development.”

24) Think Tanks: The International Labor Organization has published a report on workplace stress, including in the public sector, and on steps to reduce it. The ideological drive for more privatization and competition is worsening the situation. In Australia, labor inspectors “developed a model covering eight risk factors to screen reported stress incidents, along with a campaign to raise awareness on stress in the public sector; the purpose was to educate organizations on notification of stress incidents, and to develop their capacity to address stress in the workplace.” [PSI General Secretary Rosa Pavanelli on “Work-related stress: What impact in the public services?”]

25) Think TanksNational Review is worried that the progressive movement is “trying to expand and perfect its own state-based networks of organizations and activists as a counterweight” to the state-based right wing infrastructure. “Do such networks really make a difference? Absolutely.”

Legislative Issues

1) NationalPublic sector unions are preparing to fight a number of bills in state legislatures aimed at limiting the setting of labor standards in municipalities. A key strategy of the pro-corporate American Legislative Exchange Council is to promote “state ‘preemption’ measures that override the authority of local governments to enact progressive policy initiatives.”

2) National: Lawmakers seek guidance from the IRS and Treasury Department on using tax-exempt bonds to refinance student debt. “The lawmakers said they appreciated guidance (Notice 2015-78) the Treasury and IRS issued last year clarifying that state student loan programs can issue tax-exempt bonds to fund parent loans for students and that tax-exempts can be used for a broad range of refinancings that help student loan borrowers take advantage of lower rates. But several technical issues remain that may inhibit state and nonprofit organizations from fully implementing refinancing programs, they said.” [Sub required]

3) Colorado: The state senate has passed a bill to require equal distribution on a per-student basis of local funds to charter schools.

4) Louisiana: The state house passes a bill to return control over New Orleans charter schools to the elected school board. “Under the legislation, the schools will remain charters run by their own appointed boards, but the Orleans Parish School Board would have the authority to decide whether charter contracts are renewed or schools are shut down.” SB 432 now returns to the Senate.

5) New Jersey: The plan by Gov. Christie, Senate President Steve Sweeney, and South Jersey Democratic boss George Norcross III to sell off Atlantic City’s public assets and bust union contracts advances to the next step. “Assembly sources pointed to Atlantic City’s beachfront property as the real prize. Joseph Jignoli and Jack Morris, two politically connected developers with ties to Sweeney by way of public-private developer Devco’s work in Cherry Hill and New Brunswick, could be first in line as plots of land on the coast fall into the state’s hands.” 

“Sweeney has repeatedly insisted that he favors monetizing the city’s water by handing the authority over to Atlantic County to cut costs. Phillip Norcross, another brother of George Norcross, is a lobbyist with New Jersey American Water, the company most likely to purchase the authority under a state takeover.”

6) New YorkProgress Queens digs into an opaque deal to privatize public land in the borough. Politicians stay mum. “In response to past criticism about the lack of transparency into how developers have been selected by [the New York City Housing Authority] for its privatization plan, officials with each of the offices of Comptroller Scott Stringer (D-New York City), New York City Department of Investigation Commissioner Mark Peters, and State Attorney General Eric Schneiderman (D-New York) have not answered requests made by Progress Queens about questions raised by actions by NYCHA that included the fact that NYCHA had sidestepped the requirement of Section 197-c of the City Charter that governs the disposition of city real property.”

7) North CarolinaLawmakers want to scrap the state’s first ‘public private partnership’ toll road, I-77, which reached financial close last year. Bonds have been sold, work is underway, and cancelling the project could cost $300 million. The state attorney general has opened an investigation into the P3 “following the bankruptcy of a Cintra-led P3 in Texas a month ago.” Fitch, the rating agency, said “that no new free lanes are expected to be added during the concession’s 50-year term, a factor that has fueled opposition to the project.” The session runs through mid-July. [Sub required]

8) TennesseeLawmakers approve a mass transit construction, operating and maintenance ‘public private partnership’ bill. “The Public-Private Transportation Act, first introduced in January, was originally intended to cover a greater portion of the transportation space. In mid-March, however, the bill suffered the loss of a segment that would have allowed Tennessee’s local governments to enter into availability payment P3s for road and bridge projects. Primary bill sponsor Republican Senator Bill Ketron said in a statement at the time that the roads and bridges portion was removed after pressure from the roadbuilders’ lobby.” Gov. Haslam has singed the bill, which takes full effect on October 1. [Sub required; SB 2093]

 

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