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This Week’s Outsourcing Scan 8-1-2016

1) NationalRestaurant Associates is ordered to pay more than $1 million to Senate food service workers for illegally denying them wages. “After learning of the decision, Senate Minority Leader Harry Reid of Nevada and Sen. Sherrod Brown of Ohio called for terminating the Senate’s contract with Restaurant Associates. ‘The Senate must refuse to do business with any unscrupulous vendors who flout the law and put profits above the rights and economic security of their employees,’ Reid said in a statement. ‘We should take steps immediately to audit this company’s contracts throughout the federal government to ensure that this isn’t happening anywhere else.’”

2) National/Colorado: Colorado Gov. John Hickenlooper and former Interior Secretary Ken Salazar denounce the Republican Party platform for supporting the privatization of public lands. “Hickenlooper said he fears that such action could have unintended consequences such as states selling the land for short-term economic gain. He said privatization of public lands puts at risk Colorado’s thriving outdoor industry that generates ‘tens of billions of dollars.’” Democratic presidential nominee Hillary Clinton, warning that “special interest groups are waging a constant campaign to privatize our nation’s public lands,” has proposed creating an American Parks Trust Fund “to help keep our parks and public lands around for another century.”

3) National: The new Democratic platform vows to “fight every effort to cut, privatize, or weaken Social Security, including attempts to raise the retirement age, diminish benefits by cutting cost-of-living adjustments, or reducing earned benefits.” The Republican platforms says “all options should be considered to preserve Social Security.” The Green Party platform says “we oppose privatization of Social Security, call for the program to remain under the aegis of the federal government, and seek to expand its effectiveness.” Libertarian candidate Gary Johnson has said “a portion of Social Security ought to be privatized, if not all.”

4) National/Florida: Mounting worries about the spread of the Zika virus are setting off debates in local communities about public-vs.-private mosquito control. In Jacksonville, the mayor wants to buy a new helicopter to use in spraying. Mayor Lenny Curry “said he doesn’t feel comfortable outsourcing public safety. ‘Say something changes in the weather pattern, and we need to immediately deploy and spray. We need to have control over that. We need to make sure that we can get it done,” said Curry. The Mayor’s Budget Review Committee recommended the city still keep its two current helicopters as back-ups.”

5) National/TexasDetainees at the Corrections Corporation of America-run Eden Detention Center federal facility in Texas stage a protest against inhumane treatment. San Angelo Live reports that CCA “attempted to run our photographer and a KLST-TV cameraman off when both set up late this evening to investigate reports of a prison riot at the Eden Detention Facility, 702 E Broadway St, in Eden.” A sheriff told the media that “since the facility is operated by a private corporation that any information about a disturbance inside its walls will come from CCA, Inc.” The disturbance reportedly stemmed from tough new regulations imposed by Eden’s new warden, Mike Pugh. Pugh, a longtime CCA warden, was accused of covering up a similar disturbance when he was warden at the Northeast Ohio Correction Center.

6) NationalTaxpayers are revolting over having to pay hundreds of millions of dollars for stadiums for the benefit of private sports teams. “In Cobb County, Georgia, taxpayers watched as county officials borrowed $376 million by issuing bonds—including nearly $300 million that will be paid out of property taxes—to finance the new SunTrust Park for the Atlanta Braves. During the process, ballpark opponents were barred from speaking against the lending scheme, the Braves’ president shrouded the deal in secrecy to prevent a public vote and the Georgia Supreme Court struck down an appeal against issuing the bonds. The county also ended up fronting the Braves another $9.9 million to build a pedestrian bridge over a highway to a convention and arts center after that somehow wasn’t included in the original deal. To cap off the whole messy affair, Cobb County quietly passed an ordinance preventing businesses or private parking lots within a half mile of SunTrust park from selling spaces for people attending stadium events. That diverts all parking revenue to the Braves under the guise of ‘safety.’” Last week, voters voted out county commission chairman Tim Lee by an over 2-1 margin.

7) National: Hat tip to Diane Ravitch for pointing us to an article by Dave McKenna of Deadspin on the release, under court order, of emails written by outgoing Sacramento Mayor Kevin Johnson, “about his efforts to take control of the National Conference of Black Mayors, bankrupt it, and open a new organization that would promote charter schools. Johnson is married to controversial Michelle Rhee, who has been a beneficiary and advocate for charters and vouchers.”

8) National: Nossaman, one of the leading law firms advising on ‘public private partnerships,’ hires a specialist on the Foreign Corrupt Practices Act for its infrastructure practice. “Ed’s experience,” says Nossaman, “fits nicely with our plan for growth here in the Washington DC office.” [Sub required]

9) NationalState Street Corporation has raised its stake in the Geo Group, the for-profit prison company, to $53,061,000. State Street’s chairman and CEO is Joseph L. Hooley, a board member of the Federal Reserve Bank of Boston, a member of the Financial Services Forum in Washington, DC, and a trustee of the board of Boston College.

10) National: As moneyed interests lined up to curry influence and favors at last week’s Democratic convention, for-profit education was in the mix. “At a private luncheon on Wednesday at El Vez, a Mexican restaurant, over a dozen Democratic governors mingled with representatives from a host of labor unions and companies, among them the Apollo Education Group, an operator of for-profit colleges that has faced a series of state and federal investigations into allegations of shady recruiting, deceptive advertising and questionable financial aid practices. ‘It’s business as usual,’ said Libby Watson, who monitored lobbying events in Philadelphia on behalf of the Sunlight Foundation, a group devoted to government transparency.”

11) National: CINTAS, a significant government contractor to provide uniforms and facility services, files its annual 10-K report, in which it makes clear its attitude toward the rights of workers to organize unions: “Unionization campaigns could adversely affect our results of operations. Cintas has been and could continue to be the target of a unionization campaign by several unions. These unions have attempted to pressure Cintas into surrendering its employees’ rights to a government-supervised election by unilaterally accepting union representation. We will continue to vigorously oppose any unionization campaign and defend our employees’ rights to a government-supervised election. Unionization campaigns could be materially disruptive to our business and could adversely affect our consolidated results of operations.” Another risk factor to its business: “failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety.”

Despite its hostility to workers’ organizing rights, CINTAS has received almost $15 million in state and local subsidies, mainly tax credits, rebates and abatements, according to Good Jobs First’s Subsidy Tracker.

12) National: Writing in the Financial Times, Jonathan Knee of Columbia Business School outlines some of the key challenges facing for-profit educational content providers and the public. “The ubiquitous availability of digital distribution has reduced the fixed cost requirements. This has facilitated the introduction of innovative new competitors but also undermined financial returns across the board,” he says. “Understanding the structure of educational markets is essential for building strong and sustainable businesses. It is equally important for successful non-profit planning, and developing effective government regulations in the sector. Our collective interest in ensuring a better appreciation of the true drivers of resilient education business models is not just as shareholders and managers but as citizens and taxpayers.” [Sub required]

13) National/Colorado: The Department of Defense Office of Economic Adjustment will be funding a utility privatization study for a plan to redevelop the Pueblo Chemical Depot.

14) California: Alameda County Sheriff Greg Ahern is recommending that the county reject all bids and start its search for a jail healthcare provider over from scratch, KTVU reports. Corizon Correctional Health’s contract would be extended six months while the process is completed. The board of supervisors will consider the recommendation at this Thursday’s meeting.

15) Illinois: After terminating Northstar Lottery Group’s contract to run the state lottery, Gov. Rauner is seeking a new private manager. “Lottery officials said it took nearly a year to start the search for a new manager because of complexities in crafting the contract. New terms include a push to expand technology, paying up front licensing fees, complying with the Freedom of Information Act and not allowing the private manager to act as both a manager and supplier. Northstar won’t be able to bid, under the termination agreement.” Changes will require the approval of the Democratic-controlled legislature.

16) Indiana: Work to refurbish and privatize a pavilion at Indiana Dunes State Park along the Lake Michigan shore has been put on hold until the state Department of Natural Resources gets permission from the National Park Service to proceed. “Park Service and DNR officials say the main obstacle is a technical matter of determining whether the pavilion and adjacent banquet center will be designated as a public facility or whether the state will need to find replacement land of the same or higher value to replace the land it is using.” Opponents say “the move by Pavilion Partners, a group formed by politically connected Valparaiso developer Chuck Williams, is a sell-off of public land that should be free of commercial interests.” They also say the process lacks transparency.

17) Indiana/NationalIndiana teachers denounce vice presidential candidate Mike Pence (R-IN) for speaking at the American Legislative Exchange Council’s annual convention. ISTA President Teresa Meredith said “ALEC has driven the privatization of public education in Indiana. Our state is a leader in funding private school vouchers and charter schools with taxpayer money to the detriment of the more than 90 percent of Hoosier kids attending public schools.”

18) MassachusettsGov. Baker presses ahead with plans to privatize some departments of Greater Boston’s transit system, “taking advantage of the MBTA’s exemption from the Pacheco law to explore greater levels of outsourcing. The Pacheco law aimed to prevent officials from privatizing public services without first making a case that the private company would provide higher or equal quality service for less expense than could be achieved in-house, and that the cost savings would not be reliant on cutting employee wages and benefits.” Jimmy O’Brien, president of Boston Carmen’s Union Local 589, says Baker isn’t considering alternatives to privatization, such as “finding cost savings for the MBTA, making necessary investments and improvements for the system, and giving riders a better performing public transportation system.”

19) New HampshireNewly-released emails shed light on the 2015 debate over outsourcing school custodian jobs in Nashua. “A Sunset Heights teacher wrote in March 13 to advocate for Nashua custodians keeping their jobs. “They are important and valued members of our school community, and deserve to be treated as such,” said Heather Duffy.” The Nashua Telegraph reports “the issue is not yet resolved. A decision is pending from the NH Public Employee Labor Relations Board on a Fair Labor Practice complaint filed by union representatives December 2015.”

20) New YorkDespite promises, there have been no savings from the privatization of Nassau County’s sewer system, according to the county’s Office of Legislative Budget Review. The for-profit sewer operator had been expected to save $10 million. “In a memo to lawmakers, the legislative budget office said district expenses were $2.1 million higher in 2015 than in 2014, the last year before Suez North America — then United Water — began managing Nassau’s three wastewater treatment plants, 53 pumping stations and 3,000 miles of sewers. That increase came even after a $12 million payment from the company meant to guarantee savings to the county.”

21) OhioCharter school sponsors, after a scandal over corrupt evaluation practices, complain that they are finally being made to observe state school rules and regulations. “Critics have argued that sponsors have not been properly held accountable for poor-performing schools. The evaluations were crafted in December based on recommendations from a three-member panel that met after the state scrapped its prior evaluations. And that came after a data-rigging scandal involving former state school-choice chief David Hansen.”

22) TexasWaco City janitors fight outsourcing. The mayor is pushing the idea, but Councilman Wilbert Austin opposes it. “‘We have these people working for us who have worked all these years and can’t find another job,’ Austin said. ‘I’m not for contracting it out. There’s some of these people who cannot qualify for those (other city) jobs. They’re going to be out of work. They’ve got homes, light, water and gas bills to pay.’ (…) Community activist Robert Aguilar also addressed the council, saying the proposal would be a betrayal of the city’s Prosper Waco effort to lift people out of poverty. ‘Why are they balancing the budget on the backs of the lowest-paid people?’ Aguilar said later.”

23) WashingtonDeep-pocketed corporate charter school supporters are building up a financial war chest to try to oust state Supreme Court Chief Justice Barbara Madsen, one of six judges who ruled in September 2015 that the state’s charter school law is unconstitutional. “Stand for Children Washington, a political group that supports charter schools and other educational issues, has so far spent $116,000 supporting Madsen’s opponent, Greg Zempel. That’s a hefty sum, considering Zempel’s campaign itself has been able to raise only about $38,000. Madsen’s has raised $30,000 so far. One of Stand for Children’s biggest supporters is Connie Ballmer, wife of billionaire Steve Ballmer, who was previously Microsoft’s CEO. Connie Ballmer has given $500,000 to the group. Reed Hastings, who founded Netflix, and Vulcan Inc., a Seattle company owned by Microsoft co-founder Paul Allen, have also donated heavily to the group.”

24) Wisconsin: On September 7, Marquette University Law School is convening an interdisciplinary conference titled Public Policy and American Drinking Water. “The speakers and attendees will discuss lead and aging infrastructure, privatization of water systems, public perceptions of water quality issues, the (under)valuation of water and quality and quantity concerns related to groundwater.”

25) Wisconsin: State Representative Katrina Shankland, D-Stevens Point, criticizes Gov. Scott Walker’s record on transparency, saying Walker’s office has “failed to release requested records regarding the governor’s plan to privatize our state’s lauded long-term care program.”

26) International: Education International investigates the privatization of education in India in Profiting from the Poor: the Emergence of Multinational Edu-businesses in Hyderabad, India. “Two actors that stand out as having launched the low-fee private schools (LFPS) ‘movement’ in India are James Tooley (professor of education policy at Newcastle University, UK) and the global corporation, Pearson. But there are a host of other actors and institutions including, for instance, the World Bank and the UK’S Department for International Development (DFID), think tanks and foundations such as the Bill and Melinda Gates Foundation.” 

The study
 says “Tooley is also the founding president of the Education Fund set up by the Singapore-based private equity firm, Orient Global. This fund invests in private education services and commissioned research on LFPS primarily in India and Ghana, but also other emerging economies.”

In April, Bridge International posted a job vacancy notice for a project manager in Liberia. They are looking for “an absolute rock star” who is “a networking mastermind.” Parents and students are referred to as “customers,” and applicants are advised that “every dollar you spend is a dollar our customers, who live on less than $2 a day, will have to pay for.

27) International: Writing in The Nation, Andy Robinson looks at how a legal coup in Brazil set the stage for privatization. “Once the jewel in the Workers’ Party crown, Petrobras was torn asunder by the collapse of the price of oil and a massive, ongoing anti-corruption probe. It may now be in the first stage of privatization. In the subterranean meeting rooms under Oscar Niemeyer’s futuristic Congress building in Brasilia, a bill that would open up the exploration of Petrobras’s Atlantic pre-salt reserves to foreign multinationals is making the rounds. The company’s assets in Argentina and Chile are also up for sale.”

28) InternationalThe privatization of ports in Australia backfires as a huge row breaks out between the new private owners of ports in New South Wales and their big customers over rent. The problem? The Australian Financial Review says “to attract better upfront prices, assets are being taken to market with inappropriate oversight and the new owners of those assets are very sensibly exercising their under-regulated monopoly pricing power.” So “that marginal cost added up to big money for Glencore while clearly exposing a lack of regulatory oversight that would allow similar price gouging in perpetuity.” It seems that replacing public monopolies with private unregulated ones is not such a great idea.

29) Revolving Door News, International Edition: José Manuel Barroso, the former Portuguese prime minister and one-time head of the European commission, who defended the forced privatization of water systems as part of the EU’s “rescue” packages to crisis countries, takes up a position at Goldman Sachs. The trade union representing EU civil servants has called for his pension to be cut.

30) Think Tanks: The National Council for Public-Private Partnerships will be holding a series of trainings on P3s this Fall in Phoenix, Boston, Miami, Jackson, and Chicago. Issues include “ways to develop local champions to support your project.” Faculty are industry players from CH2M Hill, Bostonia Partners, Aon Infrastructure, Nossaman and other companies.

Legislative Issues

1) California: State lawmakers return today for the final month of its biennial session. Transportation is a major issue. “Brown wants a new, multibillion-dollar financing package to chip away at a huge backlog of deferred highway maintenance. But new taxes would require at least some Republican votes, local governments want a share of the proceeds for their roads, and mass transit providers also want in on the action. (…) But Republican legislators have been leery, suggesting that they would want [California Environmental Quality Act] reforms and perhaps more privatization of highway maintenance work as prices for their votes.”

2) California: The Berkeley city council has approved a resolution “calling on the city to divest from private prisons and to send a letter to the city’s business partners requesting them to do the same.”

 

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