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This Week’s Outsourcing Scan 6-6-2016

1) NationalPresident Obama opposes privatization of the Veterans Administration, saying his administration has made progress modernizing the VA and providing veterans with more timely health care following criticism over wait times. Privatizing the agency would delay that progress. “The notion of dismantling the VA system would be a mistake. If you look at, for example, VA health care, there have been challenges getting people into the system. Once they are in, they are extremely satisfied and the quality of care is very high.”
 
2) National/Texas: In a major legal victory for groups supporting immigrant rights and opposing incarceration for profit, a Texas state judge issues an injunction against the state giving Corrections Corporation of America a license to run its Dilley detention center as a childcare facility. Judge Crump’s injunction “will remain in place until the case is decided after proceedings resume in September, according to [Grassroots Leadership’s Bob] Libal. During that time, the facility can still run, but it risks running afoul of the Flores Settlement ruling.” The order, however, did not affect the Karnes detention center. “GEO Group, the company that runs Karnes for profit, obtained a temporary license to operate as a child care center at the end of April, before the lawsuit led by Grassroots Leadership was filed.”
 
3) National: The $40 million lawsuit and controversy over Donald Trump’s allegedly fraudulent Trump University draws comparisons with other for-profit college disasters. “Exploiting desperation is the same kind of strategy employed by Corinthian, the defunct for-profit chain that operated Everest, WyoTech and Heald Colleges. An investigation by California Attorney General Kamala Harris uncovered a Corinthian marketing plan targeting single mothers, veterans and people with low incomes.”
 
4) National: Although Friday’s weak jobs report showed a slight uptick in government employment, the effects of the recession remain. “Public sector employees—postal workers and bus drivers, teachers and police officers—have also not made up ground lost during the recession. Add in the normal growth that would be needed to keep pace with an expanding population, and there is about a 1.8 million job shortfall in public sector employment, said Elise Gould, an economist at the Economic Policy Institute, a labor-oriented research organization in Washington.”
 
5) NationalAmtrak seeks a private equity partner for the redevelopment of Chicago’s Union Station, including its parking garage. “The US rail passenger company, which owns the station, is seeking to team up with an entity that will create an ‘implementable’ Master Development Plan; design, build, and finance the potential operation and maintenance of non-rail assets; and identify expansion opportunities and commercial development in surrounding areas in the West Loop. The plan must also take into consideration growing passenger volumes, Amtrak said in a statement.” [Sub required; RFQ]. A meeting for potential bidders will be held this Thursday and responses are due July 1.
 
6) National/InternationalPearson plans to privatize education worldwide. “The company has its eye on much, much more. Investment firm GSV Advisors recently estimated the annual global outlay on education at $5.5 trillion and growing rapidly. Let that number sink in for a second—it’s a doozy. The figure is nearly on par with the global health care industry, but there is no Big Pharma yet in education. Most of that money circulates within government bureaucracies. Pearson would like to become education’s first major conglomerate, serving as the largest private provider of standardized tests, software, materials, and now the schools themselves.
 
7) California/NationalCapital & Main runs a five-part series on charter schools, privatization, and the future of public education in California. Kevin Welner, director of the National Education Policy Center at the University of Colorado at Boulder, says supporters “like charters in part because they decrease the publicness of public schools. They want a system much more based on market forces because they don’t trust democracy.”
 
The weeklong series “is based on extensive interviews with education experts, community advocates, parents, teachers and elected officials on both sides of the escalating controversy over charter schools. ‘Failing the Test’ documents how charter advocates are aggressively pushing for dramatic growth despite evidence that these schools do not improve overall student performance. The series reports on how privately operated charter schools leave some kids behind, even as they enjoy taxpayer support and broad exemptions from the laws that govern traditional public schools. ‘Failing the Test’ will also present a set of ideas for how Los Angeles and California can address the challenges facing public schools.”
 
8) CaliforniaThe San Francisco park reservation system draws strong public pushback. “‘Our city shouldn’t be for sale—and it shouldn’t be for rent either,’ said San Francisco supervisor Jane Kim in a statement shortly after news of the fees’ spread last week. ‘We could well be on a slippery slope where the very wealthy are the only ones who can fully enjoy public spaces in San Francisco. We already have a growing income gap between the ultrawealthy and everyone else. We shouldn’t have a park gap too.’ Park officials swiftly announced the suspension of lawn rentals in Dolores Park, turning protests scheduled this weekend into celebrations.”
 
9) California: With a crisis in affordable housing deepening, State Treasurer John Chiang, who ran on a platform of dealing with the issue, is moving aggressively to “to put billions of dollars in unused private activity bond authority to work building affordable housing.” The shortage is affecting the state’s business climate as well as putting housing out of reach for working families: “S&P Global Analysts’ Gabe Petek warned in a February 2015 report that ‘the persistently high cost of housing contributes to a relatively weaker business climate in California.’ The state’s nonpartisan Legislative Analysts’ Office said in a March 15 report that ‘high housing costs make California a less attractive place to call home, making it more difficult for companies to hire and retain qualified employees.’” [Sub required]
 
10) CaliforniaCharter school interests are spending lavishly in California legislative races. “Their advocates regularly clash with teachers unions in the California Legislature, the state education board and courtrooms. But any semblance of a campaign fight with teachers unions in legislative races on next Tuesday’s ballot is decidedly lopsided. Until last week, the 330,000-member California Teachers Association was all but a non-player in primary races around the state, two years after putting more than $5 million outside spending efforts leading up to the June 2014 primary.”
 
11) CaliforniaCharter school and civil rights advocates are denouncing an LA school district policy requiring random checks of students with metal detectors. “The charter’s standoff with district administrators has drawn an unlikely ally in United Teachers Los Angeles as both groups joined civil rights organizations to craft a letter that was sent to the district May 25 calling on the district to revise or rescind the policy.”
 
12) FloridaThe financial collapse of a vocational charter school brings a call for taxpayers to step in. The First Coast Technical Center fills an essential need, says the St. Augustine Record, which wants the district to revoke the charter and take it over.
 
13) Louisiana: The Times-Picayune looks into how three top New Orleans charter schools keep students out. “For years, these schools have been accused of secretly saving seats for children from well-connected families. Their leaders say they don’t, that they conduct transparent and fair public lotteries for admission. They argue that their policies are intended to equalize opportunity, not limit it. But the question of whether a handful of children get a wink and a nod pales in comparison to the larger number of students who are effectively excluded from attending, public education advocates say—the children who arguably most need help. The result: a student body that looks nothing like almost every other public school in the city.”
 
14) MarylandRating agencies and state officials differ on whether “availability payments” should be counted as state debt. “S&P Global Ratings said on May 26 that it considers as state debt the availability payments as well as the milestone payments going to the investment consortium during [Purple Line] construction.” So the agency will count the payments in its Maryland ratings anyway. [Sub required] Some have argued that leaving long-term subsidies off of state debt tables amounts to keeping public obligations and risks off the books.
 
15) MichiganDemocrats blast the new Detroit school system bailout for failing to include “any mechanism to ensure charter schools are opening in the right areas of the city.” Associated Press reports that “more than half of students living in the city attend a charter school or suburban district, prompting criticism that charters have opened largely unchecked, to the detriment of the district.” Democrats also oppose “what they call anti-union language that calls for pay increases based on merit for administrators and principals and the ability for the district to use non-certified teachers.”
 
16) New YorkCharter school chain operator Eva Moskowitz demonstrates at City Hall to demand more public school money and real estate. “Moskowitz canceled prekindergarten classes for 100 students Wednesday after losing a legal fight over funding rules with the city. Officials had ruled she must accept city supervision if she takes pre-K funds.” Mayor de Blasio says “they need to figure out when to give it a rest.”
 
17) New YorkParents sue the Harlem Children’s zone, a former staffer, and the city for sexual abuse of multiple students. The charter school and its founder, Geoffrey Canada, were lauded in the documentary “Waiting for Superman.” 
 
18) New York/New Jersey: The Port Authority’s $4 billion La Guardia airport redevelopment project, the largest P3 project in the U.S., reaches financial close. “The project will be financed using equity, debt, Port Authority milestone payments, as well as retail and airline revenues with equal shareholding amongst the three consortium partners, which along with Meridiam, include Skanska Infrastructure Development and Vantage Airport Group.” [Sub required]
 
19) New York: John F. O’Mara, the former chair of the state public services commission, says taxpayers should bail out the money-losing FitzPatrick nuclear plant by shelling out subsidies, calling it “a creative public-private partnership.”
 
The plant is owned by Entergy, which wants to close it and has rebuffed state offers to help. According to Morningstar, Entergy had 2012-2015 revenue of $11.5 billion and paid out executive compensation of $28.5 million last year.
 
20) North Carolina: Durham commissioners raise doubts about whether the charter school funding model is sustainable. “Commissioner Wendy Jacobs said she thinks it is not sustainable for DPS to continue funding 39 charter schools. ‘There are states that are further along in this process than we are,’ L’Homme said about putting a cap on charter schools. ‘(Those states) are finding that it is unsustainable and they’re looking at alternate funding formulas.’”
 
21) Pennsylvania: On Friday, Scranton announced that it is entering a ‘public private partnership’ for its parking system. The 501(c)3 nonprofit National Development Council “will manage the distressed city’s parking system. The agreement, which will include city parking garages, street meters and the Marketplace at Steamtown mall, is expected to relieve the city of $53 million of parking authority debt, Mayor Bill Courtright said at a City Hall news conference. Courtright said the city garages also need $40 million in renovations. Officials did not specify bond transactions, capital investments and property transfers necessary to close the deal.”
 
22) UtahPro-and anti-charter school candidates will be facing off in the June 28 state senate Republican primary. “Sen. Lincoln Fillmore works for a charter school management company and has the backing of charter school supporters. While he previously wasn’t seen as leaning one way or the other in the charter vs. traditional school debate, Rep. Rich Cunningham is now seen as the traditional public school candidate.”
 
23) Virginia: Hopewell resident says the proposed Virginia American Water rate increase is “outrageous.” Charles Bowers says “I have been a Hopewell residential customer of Virginia American Water for 36+ years, and have always thought that their water service charge was excessive. This recent water rate increase is absurd, unjust, and monetary abusive. (…) Who is getting a pay raise of 40 percent? The average worker in Hopewell may get 2 percent, if he’s fortunate to get one. A person on Social Security, like me – it ain’t happening.” A hearing on the increase will be held at the state corporation commission in Richmond on June 21.
 
24) Texas: Amsterdam & Partners, a law firm acting on behalf of the Turkish government, has filed a formal complaint against Harmony Public Schools, “urging the Texas Education Agency to conduct a full investigation into Harmony based on documented abuses suggesting a widespread pattern of fraud, discrimination, and abuse in the Harmony network. Harmony—which is financed by over $250 million federal and state tax dollars annually—operates seven open-enrollment charter school districts serving forty-six charter campuses in Texas. The complaint sets out numerous substantiated violations of laws and regulations designed to ensure transparency, accountability, and responsible stewardship of public resources.” The complaint also asserts that Harmony and many of its directors, employees, and related vendors are connected to the Gulen movement. [Atlantic piece on Gulen’s American charter school network]
 
25) InternationalBrazil is to start a “road show” to privatize state assets. “The assets for sale have not been disclosed yet, but people familiar with the matter have postulated [interim president Michel Temer] wants to dispose of the states majority stakes in Petroleo Brasileiro SA Petrobras and power utility Furnas Centrais Eltricas SA, among other state investments.”
 
26) InternationalMexico’s new air pollution control laws for the capital may crimp the toll road industry, according to Fitch Ratings. “The latest and most prohibitive restriction, which came into effect on 5 April, is set to expire 30 June. If the broadening of the air pollution regulations is indeed temporary – a narrower restriction is set to go into effect on 1 July—Fitch does not expect a change in toll road ratings. ‘However, making those changes permanent could have a negative rating impact,’ the ratings agency said. According to Fitch, some concessionaires estimate that during the three-month period of the broader restrictions, traffic volume will decline around 10 percent.” [Sub required]
 
27) InternationalInvestors grow shy of ‘public private partnerships’ in China. “Liao Qun, chief economist at Citic Bank International in Hong Kong, said slim returns on public projects also dampened the will of private firms to participate. ‘Many infrastructure projects are for the public good and offer low returns for operators. It’s hard for private firms to earn enough profit to cover their original expenses,’ Liao said.”
 
28) International: DBRS, a ratings company owned by Carlyle, places a Canadian ‘public private partnership’ operating company under review for a downgrade during its operational phase. “In other words, the payments from the Oakville Hospital (which in turn come from the Ontario government) are not being made to the service providers.”
 
29) Revolving Door News: After months of criticism over understaffing, unreported violence in prisons, and other issues Department of Correction Commissioner Derrick Schofield is leaving his job for a position at GEO Group, the for-profit prison corporation. Rep. Mike Stewart (D-Nashville) said “I do think that this change of leadership is a good opportunity for the governor to bring in a new team from the outside,” and that Schofield ran the department like “temp agencies with short-term hires.”
 
Legislative Issues
 
1) National: The House has voted against an amendment to the Defense Bill to make taxpayer-funded ($100 million a year) Congressional Research Service reports public. “Both Chairman Tom Graves (R-GA) and Ranking Member Debbie Wasserman Schultz (D-FL) of the Legislative Branch Appropriations Subcommittee spoke in opposition to the amendment.”
 
2) National: Legislation is introduced to allow the Veterans Administration to enter into five ‘public private partnerships’ to build or modify medical facilities and expand VA cemeteries. “Secretary of Veterans Affairs Robert McDonald told a House subcommittee in April that he supports the P3 concept for the Omaha project as an example for future efforts.  ‘I think public-private partnership is the way of the future for us,’ McDonald told the panel. ‘We need to prove out this model, and I think Omaha is a good place to do it.’” [Sub required; S. 2958]
 
3) National: Senate Finance Committee chair Orrin Hatch (R-UT) has launched a probe of private museums that use tax-exemption but may not be providing enough public benefits. “In a letter to Internal Revenue Service Commissioner John Koskinen, Hatch said short public hours, admission costs and donors’ roles bring into question whether these museums merit tax-exempt status and are sufficiently serving the public interest.” [Sub required]
 
4) CaliforniaCharter schools are actively working to avoid legislative transparency requirements. “The California Charter Schools Association (CCSA) has explicitly opposed state legislation that would clearly define the existing transparency laws and codes for charter schools — standards charters can now avoid despite their use of public funds. ‘Charters don’t have to disclose budgets,’ says Jackie Goldberg, a long-time Los Angeles school teacher and former Los Angeles Unified School District (LAUSD) board president, who also served in the California State Assembly. ‘Once a charter is written, it’s not subject to the Brown or the Public Records acts.’”
 
5) New Jersey: On Thursday, Declan O’Scanlan (R-Red Bank) introduced legislation to require charter school board members to reside in the charter school’s district of residence. [A 3875]
 
6) North Carolina: In a move that will rattle the P3 industry, lawmakers move to terminate the I-77 ‘public private partnership’ project (DBFOM), even though financial close was reached a year ago and construction has already begun. “Of the $655 million the project is estimated to cost, NCDOT’s contribution will be limited to $88 million, according to the state agency’s website. The contract, signed in June 2014, protects NCDOT and North Carolina taxpayers from any damages in the event the private partner defaults. Jeter’s reasons for describing the contract as “inherently flawed” remain unclear. He did not respond to a request for comment.” [Sub required]. HB 954 now moves to the Senate. Petitions objecting to the toll lanes were signed by thousands.

 

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