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This Week’s Outsourcing Scan 7-27-2015

1) National: In a major victory for the Center for Human Rights and Constitutional Law and other legal organizations, a federal judge sharply criticizes Immigration and Customs Enforcement’s (ICE) holding of women and children in the privately-run Dilley and Karnes County (TX) detention centers. U.S. District Judge Dolly Gee in California ordered the Justice Department to show why the detainees shouldn’t be released from the facilities. “Peter Schey, executive director of the Center for Human Rights and one of the attorneys who brought the suit, said federal officials ‘know they’re in violation of the law.’ ‘They are holding children in unsafe facilities. It’s that simple,’ Schey told The Associated Press. ‘It’s intolerable, it’s in humane, and it needs to end, and end sooner rather than later.’”[Court order]

2) NationalThe Washington Post’s Valerie Strauss discusses the implications for the education business of Pearson’s decision to sell the Financial Times to Nikkei. Pearson will likely get $1.5 billion in net proceeds from the sale to double down on its education business. “The sales come at a time when the company has lost some big testing contracts in the United States and when its outlook from Moody’s, the credit-rating service, is negative. (…) In 2010, 26 states were aligned with PARCC, but now fewer than 10 are.”

3) National: In the final installment of its three-part series on the American bail system, John Hockenberry’s The Takeaway looks at supporters of the current setup. “Nicholas Wachinski, a retired executive director of the American Bail Coalition, Eduardo Guillarte, a bail agent opening shop in New York City, and his bail recovery agent Edwin Soto, describe how the system works and why they think it’s a success.”

4) NationalHundreds protest at the annual conference of the pro-privatization American Legislative Exchange Council in San Diego. Rep. Chris Taylor, who attended, discussed the meeting at PR Watch. “Charter schools seem to be the current craze, perhaps because their private school voucher scheme, directed at low-income children, failed to increase academic performance as they promised. ALEC thinks they have their answer in the independent charter school scheme, which creates another school system that is publicly funded but unaccountable to any elected body and has no regulation or public oversight.” A spat seems to have broken out between K12 and the National Alliance for Public Charter schools at the meeting. [ALEC CEO Lisa Nelson interview. Nelson, a former lobbyist for Visa, Time Warner and AOL, pushes “telemedicine” and charter schools as priorities.]

5) National: State public finance managers call for greater transparency from private equity firms on public pension fund investment management. “It’s time to take the detective work out of how private equity managers report their fees,” says New York City comptroller Scott Stringer. [Sub required]

6) NationalFederal contract workers stage a one-day strike to raise their wages to $15 an hour. “Now, advocates say, it’s time for the president to finish the job with a ‘Model Employer Executive Order’ that would set the base pay for federal contract workers at $15, bolster benefits and clear the path for collective bargaining for these workers.” The campaign is backed by the Change to Win Federation.

7) National: Corrections Corporation of America will announce its second quarter 2015 financial results after market close on August 5. It will hold its earnings call at 11 a.m. eastern on August 6. The GEO Group has not announced a date yet. MTC is a private company and doesn’t report financial results to the public.

8) National: The Medicare program, which presidential candidate Jeb Bush suggests should be privatized or voucherized, sees its spending outlook improve. Paul Waldman of The American Prospect says “Medicare is remarkably efficient, more so than private insurance. That’s because it benefits from economies of scale, and because it doesn’t have to spend money on things like marketing, underwriting, and big salaries for executives. The reason Medicare is expensive is that American health care is expensive, and it serves a lot of people.”

9) AlaskaLivestock producers want to privatize the state’s only federally-certified slaughterhouse. “Producers say the plant needs to be privatized, and removed from the vagaries of legislative funding decisions, before Alaska’s livestock industry can grow.”

10) California: The San Diego County Employees Retirement Association is insourcing its investment management, and has terminated its contract with Salient Partners effective August 15. “The debate for ending ties with Salient, which has been brewing for nearly a year, stemmed primarily from Salient’s risk parity strategy which leveraged four times the total of the risk parity fund, as well as the manager’s $8 million annual fee. During a September 2014 meeting the board voted to dial back the leverage to two times. Last November, SDCERA’s board voted 8-1 in favor of adopting an internal CIO model and terminating the contract the pension fund had with Salient and its CIO Lee Partridge.” [Sub required]

11) California: Education historian Diane Ravitch weighs in on education issues in Los Angeles as the city searches for a new schools superintendent. “What should the next superintendent bring to the job? Start with the vision and skills to revive public confidence in Los Angeles’ public schools. The ideal superintendent would have the courage, and the support of the board, to resist those who seek to undermine and privatize public schools.”

12) California: The California State Teachers’ Retirement System’s infrastructure portfolio posted negative returns for FY 2014-15, but it is looking for more infrastructure co-investment opportunities. [Sub required]

13) California: The Sacramento Public Financing Authority prevails in a lawsuit against its plan to finance a stadium for the Sacramento Kings, a private company. The lawsuit “alleged that that the project is a waste of public funds for which the bond sale would violate environmental laws and the California Constitution.” The underwriter is Goldman Sachs. Fitch has warned that the state court of appeals could still rule against the process. [Sub required]

14) California: A civil grand jury report criticizes oversight of the $2.7 billion debt of community facilities. “The Mello-Roos Community Facilities Act creates somewhat of a public-private partnership between developers and cities to get backbone infrastructure such as streets, sewer and water into new developments. It also helps fund construction of new schools in areas where large single-family developments are planned.” The report cited a “lack of transparency, a lack of oversight and auditing, and the lack of an end date [for special district taxes].” [Sub required]

15) California85% of the proposed rate hike for power and water in Los Angeles will go to improving the infrastructure, 7% to wages, some of that to outside contractors. The DWP has been criticized for oversight of nonprofits under its authority. “In May, city auditors found that the controversial nonprofits—created more than a decade ago to improve safety, training and labor relations—had paid millions to outside contractors without competitive bids.”

16) Florida: As South Miami considers introducing guidelines to promote “public private partnerships,” community activist Antoinette Fischer pens a must-read letter to the editor of the Miami Herald recalling last year’s Redflex P3 agreement, which was pushed hard by the mayor, contracted without an RFP, and concluded without due diligence. She asks, “do we really want our city to fast track public-private partnership guidelines that have been written for the express purpose of facilitating future partnerships? This should be seen as a red flag, given the history of public private partnerships in South Miami and elsewhere.”

17) FloridaMiami-Dade teachers are leaving public schools for charters. “As students leave for charters, not only are less teachers needed but there is also less money for the public school system. Charter schools are privately run but get public money on a per-student basis. Charter schools are projected to claim $400 million from the district’s general fund in 2015-2016.”

18) Florida: The story of a toll collector who was fired for paying a motorist’s toll fee goes viral.

19) Florida: Former state senator Paula Dockery calls for protection of the state’s public parks from defunding and privatization. She charges that Gov. Scott will “criticize management when parks’ facilities and resources deteriorate to justify the need to privatize the state park system.”

20) FloridaPrivate insurers of the state’s poorest residents are seeking a 12% raise from the state. “But state officials have been reluctant to approve the rate increase, which could wipe out any savings Florida stands to gain from privatizing Medicaid in 2014. In a scathing letter to the health plans sent Friday, state Agency for Health Care Administration Secretary Elizabeth Dudek said some of the plans had been paying hospitals more than is legally allowed. ‘By setting higher contracting rates for hospitals than what is allowed for in state law, plans are likely jeopardizing their profitability, which could cause them to come back to the agency for higher state rate payment—increasing the cost to taxpayers for providing the same services,’ Dudek wrote.”

21) Illinois: Students, community members and educators launch a campaign to oppose the establishment of two new Noble Charter Schools on the southwest side of Chicago. “Cook County Commissioner Jesus ‘Chuy’ Garcia, a former candidate for mayor, called on Mayor Rahm Emanuel and the CPS leadership to “rethink the chartermania that has been ramped in Chicago, to invest in neighborhoods schools throughout the city of Chicago. … And don’t think that any new vacant lot should just have a new charter built on it.’”

22) Illinois: Illinois Tollway Board awards $106 million in contracts to launch planning for rebuilding the central Tri-State Tollway. “Construction contracts for Illinois Tollway projects are competitively bid under the rules of the Illinois Procurement Code. As part of the process, contractors’ bid submissions for construction work advertised by the Tollway are opened and read aloud during public bid opening meetings, which are also broadcast live on the Tollway’s website.”

23) Indiana: IFM Investors, the purchaser of the bankrupt operator of the Indiana Toll Road “public private partnership,” concludes a financial agreement on the sale. “The refinancing involved a series of financings with banks and bond investors, in combination with a long-term interest rate hedging program to protect against raising interest rates. The result was $US2.5 billion of fixed-rate debt with tenors as long as 40 years, rated BBB by S&P and Fitch rating agencies.”

24) North Dakota: Bismarck may consider a “public private partnership” to finance a 66th Street interchange as part of the I-94 corridor improvement. The mayor hopes a P3 will speed up construction.

25) Michigan/International: The Windsor-Detroit Bridge Authority, the Canadian authority overseeing its part in the construction of the Gordie Howe International Bridge project, issues a Request for Qualifications for private sector partners. An RFP is expected late this year. “A key attribute for any successful respondent is their approach to engage regional resources and leave long-lasting benefits.”

26) Michigan: As the state prepares to transition from Aramark to Trinity Services Group for prison food services, Ed Clements, chapter president of the Michigan Corrections Organization, warns of cosmetic changes. “We are (glad), but the proof is in the pudding, whether they’re going to train these people or not, or whether they’re going to get new employees or just put a new shirt on the same ones.”

27) New York: New York City’s Independent Budget Office says that charter schools have lost ground on funding to public schools over the past five years. “City officials said they saw positive signs in the report. “We are encouraged that over the last two years we have increased funding for all our schools, while almost eliminating the disparities between them,” said department of education spokesperson Devora Kaye. (…) But union officials said the report might be misleading, because it doesn’t take into account the private sources of money that some charters receive.” [Sub required]

28) New York: The MTA, the New York’s transportation authority, has begun waging a campaign for the wider use of the design-build model in infrastructure development. “Under design-build, one entity works under a single contract with the project owner to provide design and construction services, thus re-integrating the roles of designer and constructor. The concept is an alternative to the traditional design-bid-build system, which the MTA has more commonly used.” MTA chairperson Thomas Prendergast says “we’ve got to find innovative project delivery ways—design-build—different ways where other people bring finance [and] we transfer risk to other parties who can probably deliver these projects better than we can.” [Sub required]

29) Ohio: William Phillis of the Ohio Coalition for Equity & Adequacy of School Funding asks “Will the Ohio political machine allow the state auditor to investigate chartergate?” Phillis says “news reports indicate that the State Auditor may investigate the Ohio Department of Education (ODE) for charter school data rigging. This could be as explosive as the Columbus Public Schools data rigging matter; however, don’t count on it.”

30) Pennsylvania: Almost a year after the Philadelphia City Council rejected the privatization of the Philadelphia Gas Wotks as an unsound move, Moody’s upgrades the public utility, citing favorable rate treatment by regulators, and because “the utility’s management has simultaneously enhanced PGW’s operating efficiency through favorable labor negotiations, operating cost savings, and other improvements regarding vehicle tracking and the cast iron main replacement program.” [Sub required]

31) Texas: An editorial in the Longview News-Journal discusses problems created for the GED program by privatization. “Privatization of GED testing—the high school equivalency exam—has led to a drastic decline in the number of people passing the test and in the number even trying to take it.”

32) TexasEl Paso County begins to transition out of its contract with Corizon, which expires on December 31. County officials begin negotiations today with the University of Texas Health System and the Emergence Health Network of El Paso to provide inmate health and mental services. Correct Care Solutions of Nashville is also competing for the contract.

33) Virginia: As the P3 industry lobbies hard for a “public private partnership” for the $2-3 billion I-66 improvement project, Dick Saslaw, the Democratic leader of the Virginia Senate, remains determined to objectively weigh the evidence before choosing a public vs. public-private option. “The commonwealth’s new law, which I supported, reforms the public-private partnership process to make it more transparent and accountable to taxpayers. The public’s negotiating power has been significantly strengthened so that taxpayers get the best deal, whether it is publicly or privately financed, for a project that is desperately needed.”

34) Virginia: The state’s termination of the Commonwealth Connector “public private partnership” project in southeastern Virginia is paying dividends for motorists. The state will use the $78 million it saved “to eliminate tolls on part of a privately built tunnel project in the Hampton Roads area when it opens to traffic in 2017.” [Sub required]

35) WisconsinThe Nation’s Dave Zirin looks at the “political money laundering” he says is going on over the deal to publicly finance a new $250 million stadium for the Milwaukee Bucks, a private corporation. “The optics of this are patently corrosive enough as is, but it’s even worse than that. Walker and the Wisconsin state legislature will pay for it by slashing roughly the same amount of the cost of the stadium from the state’s higher education budget.”

36) International: Former Greek finance minister Yanis Varoufakis denounces the coercive seizure by Eurozone leaders of $50 billion of public assets to repay unsustainable debt. “It did not have to be this way. On June 19, I communicated to the German government and to the troika an alternative proposal, as part of a document entitled ‘Ending the Greek Crisis.’”

37) International: HICL Infrastructure Company, a London-listed fund, is seeking shareholder approval to buy a Canadian mounted police headquarters P3 project from InfraRed Capital Partners. [Sub required]. P3 assets are often tradable on secondary markets.

38) Revolving Door News: The DC powerhouse law and lobbying firm Akin Gump hires Jeffrey Dennis, a former senior regulator at FERC, to work for them on energy regulation. Akin Gump has an extensive energy lobbying business, and has recently lobbied for Chevron, National Grid, the American Exploration & Production Council, and other energy interests.

Legislative Issues:

1) NationalA new wave of “education reform” legislation may be coming down the pike at the state level. “What new legislation appears to be aiming for, [Alyson Klein] explains, is a way for states to get out of [“adequate yearly progress”] and develop their own accountability systems. But as this mostly good thing appears to be happening a mostly bad thing is also in the works, and there is a danger punitive ‘accountability’ policies from the federal government are about to pivot to even more unreasonable measures from states.”

2) National: Rep. John Katko (R-NY) introduced legislation last Thursday to bar the IRS from using outside contractors to do taxpayer examinations. “He said outsourcing sensitive taxpayer examinations could compromise confidential information and is a waste of public funds. He also questioned the practice after a recent report attributed the agency’s declining customer service to a lack of funding and resources.”

3) OhioThe Toledo Blade demands that the state legislature act on proposed legislation to clean up the charter school industry. “Mr. Hansen’s cover-up made the schools’ sponsor, the Ohio Council of Community Schools, and White Hat Management, a charter school operator, eligible for state benefits. White Hat Management owner David Brennan is a major donor to Republican political candidates.”

4) PennsylvaniaThe state budget impasse between Gov. Wolf and Republican legislators continues. The GOP’s inclusion of a provision to privatize state liquor stores, and Wolf’s veto of the measure, is at the heart of the dispute, along with Wolf’s rejection of Republican efforts to cut public pensions.