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This Week’s Outsourcing Scan 8-10-2015

Update: Upcoming Outsourcing Issues. August 10, 2015

1) National: Frances Oldham Kelsey, one of the foremost champions of the public interest and pharmaceutical regulation, dies at 101. “Dr. Kelsey … became a 20th-century American heroine for her role in the thalidomide case, celebrated not only for her vigilance, which spared the United States from widespread birth deformities, but also for giving rise to modern laws regulating pharmaceuticals.” Kelsey’s work led to the passage of vitally important drug approval laws and FDA regulations, which are still being challenged by the industry. Donald Cohen of In the Public Interest writes, “but one of the most remarkable things about her was that after she became famous, she didn’t go work for the private sector. She stayed at the FDA for many more years as a committed public servant.  She could have probably made millions–instead she stayed working for the government agency saving lives and protecting us from unsafe drugs. That’s a life lived in the public interest.”

2) National: In the Public Interest publishes a report on corporate influence on public decision makers in corrections. “This report first details how companies spend millions of dollars sponsoring conferences, paying vendor fees, and providing other funding to gain access to the professional corrections associations. This report then shows how corrections companies leverage this access in ways that can influence decision makers and benefit the companies’ bottom lines. Considering corrections companies’ track records of providing low-quality services that harm prisoners, communities, and taxpayers, the influence they exert through professional corrections associations is cause for concern.”

3) National: Shadowproof, the successor website to Firedoglake, will be publishing regular pieces on public and private prison issues. Brian Sonenstein kicks it off with a close look at Corizon Healthcare. “2015 has been a big year for Corizon Health Services: in the span of six months, the nation’s largest for-profit inmate healthcare provider has managed to break not one, but two different state records for the largest wrongful death settlement payouts in history.”

4) National: Charter School Advisors and the Local Initiatives Support Corporation (LISC) release their third report detailing charter school bond issuance. The Walton Family Foundation, the National Alliance for Public Charter Schools, and KIPP New Jersey are on LISC’s advisory board. The report says “with the addition of record annual volume in each of the past three years through December 31, 2014, the tax-exempt charter school bond sector has grown to over 800 transactions, totaling more than $10.4 billion of original par issuance. These record years resulted in annual increases of 40%, 18% and 41%, respectively, and contrast considerably with the flat volume levels of the broader tax exempt bond market during the same period, reflecting the increased demand for affordable, long-term charter school facility financing.”

5) National: The Pew Charitable Trusts says that July was “the biggest month for prison reform in 20 years,” and claims it lays the basis for “data-driven federal legislation.” Pew writes, “the good news is that the federal government can look to the states for solutions. (…) Many of the states have taken a ‘justice reinvestment’ approach, drawing on research into effective practices as well as data about their own systems to craft policies that prioritize prison space for serious, violent offenders and use the savings to strengthen alternatives for lower-level offenders.” [The SAFE Justice Act (HR 2944) has been referred to the House Energy and Commerce Committee and the Judiciary Subcommittee on Crime, Terrorism, Homeland Security, and Investigations. It has the support of Families Against Mandatory Minimums, FreedomWorks, Generation Opportunity, Human Rights Watch, Koch Industries, Legal Action Center, National Council of La Raza, Peace Alliance, Police Foundation, and Right on Crime.]

Although Pew does not address whether the private prison industry is driving up incarceration rates through measures such as lockup quotas, sentencing reduction is considered a risk factor by the private prison industry.

6) National: Donald Cohen of In the Public Interest and Jennifer Zelnick, an associate professor and Social Welfare Policy Chair at Touro College Graduate School of Social Work, explain “What We Learned from the Failure of the Rikers Island Social Impact Bond.” They write, “there are far too many questions remaining to conclude that SIBs are an effective vehicle for funding social programs. Other approaches, such as reducing misdemeanor arrests, disrupting the school-to-prison pipeline, changes to the bail system, and raising the age of criminal responsibility would have significant impact on the numbers who cycle through Rikers. If the goal is to solve social problems, not privatize the public sector, we should consider a simpler solution—public investment in schools, jobs, social programs and innovative criminal justice.”

7) National: The Treasury Department and IRS have announced that they will issue guidance on the tax exemption rules governing water “public private partnerships” as a priority matter. “Last year, the National Association of Water Companies sent Treasury a letter asking for the remedial action rules to be clarified so that state and local governments could ensure that the tax-exempt bonds they use to finance water projects will not become taxable if they enter into public-private partnerships. The NAWC said that if a municipality issued governmental bonds to finance a water facility and then later entered into a long-term lease, concession or operating agreement with a private company, the lease or agreement could create private business use. As a result, the bonds could become taxable private-activity bonds unless the issuer took one of three permissible remedial actions –two of which would not be practical for issuers and a third that would not clearly apply to P3s.” [Sub required]

8) National: D.J. Gribbin, one of the foremost advocates and dealmakers in road privatization and toll roads for Macquarie Capital, is to leave the company. He was chief counsel of the Federal Highway Administration from 2003–2005. “Gribbin also served as director of business development and director of government affairs at Koch Industries, having started his career on Capitol Hill where he worked for US Representative Larry Combest.” [Sub required]

9) National: The 2014 issuance of private activity bonds, which are subject to state volume caps, was up nationally to $11.6 billion from $8.8 billion in 2013. “Private-activity bonds are issued by public entities to provide low-cost financing for the projects of nonprofit organizations or companies that serve a public purpose.” [Sub required]

10) National: Presidential candidate Hillary Clinton is to roll out her plan for dealing with student debt. “As part of her plan, Clinton is expected to unveil a federal-state partnership to increase funding for public colleges and universities, several sources said. The proposal is expected to create an incentive system for states to increase their investments in higher education — a commitment to increasing public college funding would trigger further investment from the federal government, reducing tuition overall and, more specifically, the portion financed by the student.”

11) California: The state labor board has issued a complaint “alleging that the largest charter school organization in Los Angeles interfered with the right of its teachers to unionize.” The allegations include that Alliance College-Ready Public Schools “violated state laws by denying pro-union organizers access to school buildings after work hours, distributing documents that criticized unionization efforts and blocking emails to employees.” The board will try to mediate a settlement on August 21.

12) Colorado: Denver officials blame federal policy for forcing them to outsource 180 jobs at workforce centers, but “in deciding to privatize its workforce centers, Denver is making a choice that sets it apart from the state and some other metro-area counties. Faced with a similar choice, the state Department of Labor and Employment, which oversees 49 workforce centers in rural areas, has opted to compete with any private or nonprofit bidders to continue running them, a spokesman said.”

13) District of Columbia: The DC Fiscal Policy Institute finds that DC charter schools get only 6% of their funding from private sources, contradicting the widespread view that charters are backed by piles of private money. Soumya Bhat of the institute says “‘A lot of folks anecdotally think charter schools have a great deal of private resources coming in, but we actually saw the majority of the D.C. Charter schools studied are still relying primary on local resources.’ The data is broken into broad categories, like occupancy, personnel and direct student expenses. Bhat says she’d like to see something a little more specific. ‘It’d be really great for the public to understand more details breakouts of how they’re spending that money, for example summer programming or after school programming or maybe they have extra technology they’re able to afford because of spending trends.’”

14) Florida: A new database created by the National Association of Charter School Authorizers will help schools districts track who owns charter schools. “The state is also creating a database tracking charter school operators and the State Board of Education has required applicants to reveal past affiliations with charter schools.”

15) Florida: All Aboard Florida, the privately owned railroad, gains approval for $1.75 billion of private activity bonds from the conduit issuer, Florida Development Finance Corp. “The determination, however, came after hundreds of public commenters spoke to the FDFC board during an eight-hour meeting—the longest ever held by the agency, according to its director, Bill Spivey. ‘Despite the compelling, heartfelt, and hard-hitting testimony from residents from the Treasure Coast and north Palm Beach regions, the FDFC Board has voted as expected approving an almost $1.8 billion tax-free windfall to All Aboard Florida,’ said Brent Hanlon, a Jupiter resident and treasurer of Citizens Against Rail Expansion, or CARE.” State Rep. Gayle Harrell, R-Stuart, said “I question the solvency of these bonds.” [Sub required]

16) Florida: Protestors denounce North Miami Beach’s move to privatize trash collection. “The protestors, which included members of the American Federation of State, County and Municipal Employees local 3293, said they wanted more public input on the contract and ultimately want the city to find another way to save money. A spokesman said the union had received 1,500 signatures on a petition asking the city not to outsource the work.”

17) Hawaii: United Public Workers, one of Hawaii’s largest unions, sues in federal court to block the privatization of Maui Hospital. “UPW is arguing that the legislation violates the contract clause in the U.S. Constitution, which prevents the government from abrogating its contracts. The union has two contracts with the state; both go till June 30, 2017.”

18) Illinois: Chicago unveils its plan to improve and upgrade Midway Airport, which the privatization industry has been trying to privatize for years. “[Mayor] Emanuel said the proposal proves the city has no plans to privatize the airport. ‘This shows we will take Midway’s future into our own hands,’ he said.”

19) Iowa: Gov. Branstad’s decision to veto funding for two state mental hospitals leaves the Department of Human Services “scrambling to find placements for the hospital’s remaining residents (…) Two dozen Democratic legislators and the public employee union, AFSCME, are suing Branstad and his Department of Human Services director over the closings.”

20) Louisiana: Lack of federal approvals and nursing home industry foot-dragging stalls efforts to privatize Medicaid. “The administration already has contracted with private managers to handle the medical and behavioral health components of the state’s $8 billion Medicaid program. The long-term care portion would have been the third and final installment of Gov. Bobby Jindal’s privatization of the government insurance program for the poor.”

21) Massachusetts: Charter school backers push a ballot initiative to expand their number. “The ballot question would not eliminate or lift the cap. But it would provide a mechanism for the state Board of Elementary and Secondary Education to approve up to 12 new charter schools or charter school expansions a year that would not be subject to the cap. Priority would be given to districts that are in the 25 percent of lowest performing school districts in the state and to districts that have significant waiting lists for charter schools.”

22) Michigan: Lansing school board considers outsourcing maintenance staff jobs. “Dozens of current maintenance and custodial workers came to the meeting to voice their concerns, primarily that switching from being public employees to working for Sodexo could jeopardize pensions. ‘I’m one of many,’ Pattengill Head Custodian Lucy Rensberry said. ‘I have six months to get my 30 years in, if I don’t, I’ll have to wait until I’m 60.’ The school district and a private company would have different requirements for retirement.”

23) New York: Newsday reports contracting irregularities in Nassau County’s outsourced welfare fraud detection program. “Nassau’s social services department rewrote bid requirements for a seven-figure contract to investigate welfare fraud, allowing the company already doing the work to stay on the job amid heavy competition, records show. The changes to the county’s 2012 request for proposals amounted to just a few sentences in an almost 16-page document, but narrowed qualifications in such a way to all but eliminate bidders other than the large Uniondale security firm that had long held the contract.”

24) North Carolina: Lee Quinn, a public school teacher in Raleigh, says school voucher proponents ignore poverty as a cause of educational underachievement, instead blaming public schools. “It’s no coincidence that as $17 million was allocated to unaccountable private schools via vouchers, the elimination of 8,700 teacher assistant positions – the largest layoff in North Carolina history – was set into motion. These concerted actions represent the progress of the legislative plan to eviscerate public education and the teaching profession.”

25) Oklahoma: The Tulsa World applauds Tulsa County Criminal Justice Authority’s decision to halt jail privatization. “The decision not to consider putting the jail in private hands is good policy for two reasons. First, the county’s previous experiment with private jail operations was a fiasco. We should learn from that experience that it won’t work. Second, it’s fundamentally wrong to put for-profit companies in charge of the jailing of people who are still innocent until proven guilty. Incarceration is an extraordinary power and it should not be subcontracted to those whose bottom line is the bottom line.”

26) Think Tanks: Michael Henderson of Brookings looks at Democratic and Republican approaches to “school reform” and asks “how far apart?” they are. “This murky ground of confusion is unlikely to make a solid foundation for consensus.”

27) Upcoming Meeting: The industry-dominated National Council for Public Private Partnerships and Performance Based Building Coalition will be holding a meeting on “P3s for Public Buildings.” October 22-23 in DC.

Legislative Issues:

1) National: Senate Democrats ask the chamber’s Rules and Administration Committee leadership “to consider the treatment and pay of Senate cafeteria and catering workers when negotiating a new contract with a private food service company.” The move was led by Sen. Sherrod Brown (D-OH), “an outspoken critic of the Senate’s original decision to privatize its building food service in 2008.” [Bloomberg BNA, August 6, 2015; sub required]

2) California: The state legislature will return in special session next Monday to consider transportation issues. Conservatives are taking aim at Caltrans.

3) California: The Los Angeles Times calls for a rewrite of the “sloppy” parent trigger law, which is now five years old. Says it must be tightened up. “A new trigger law should create stricter guidelines to target truly low-performing schools, and should prohibit school closures through petition. Trigger petitions must be made public, with all parents informed, and the larger community given a chance to be involved. When a petition prevails and parents are considering proposals for changing management of the school, all parents should have a voice and a vote in the decision, not just those who signed the petition.”

4) North Carolina: State lawmakers wrangle over competing visions of the Medicaid system. “The House solution envisions a system similar to the one currently in place. It would put providers, essentially doctors and hospitals, at the center of the process. But the Senate version would privatize the process in favor of outside managed care organizations.”