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This Week’s Outsourcing Scan 8-15-2016

1) National: Donna Murch, associate professor of history at Rutgers, discusses her new Boston Review article, “Paying for Punishment: The New Debtors’ Prison,” on how private industry is cashing in on mass incarceration, the criminal justice system, and indebtedness. [Audio]. She writes, “opposition to mass incarceration and the war on drugs has lately become fashionable. The Koch brothers, Grover Norquist, and Newt Gingrich are lining up with the NAACP, ACLU, and Van Jones to support criminal justice reform. Many assume that budget savings are driving this newfound consensus. But understanding decarceration only through the lens of cost cutting has a major blind spot. America’s contemporary system of policing, courts, imprisonment, and parole doesn’t just absorb money. It also makes money through asset forfeiture, lucrative public contracts from private service providers, and by directly extracting revenue and unpaid labor from populations of color and the poor.”

See also In the Public Interest’s new fact sheet on how “Private Prison Companies Encourage Mass Incarceration by Owning Facilities,” and ITPI’s infographic on how “Private Companies Profit from Almost Every Function of America’s Criminal Justice System.” And follow ITPI’s Programs Not Profits, a multi-year campaign that promotes replacing private profits that hurt incarcerated people, correctional officers, and taxpayers, with publicly funded and managed programs that provide job training, mental health care, and substance abuse treatment. On youth incarceration see the Burns Institute’s “Stemming The Rising Tide: Racial and Ethnic Disparities in Youth Incarceration and Strategies for Change.”

2) National/Revolving Door NewsCorrections Corporation of America has appointed Stacia A. Hylton, the former head of the U.S. Marshals Service—a major contractor with CCA—to its board of directors. “Hylton, age 56, retired in 2015 as Director of the U.S. Marshals Service (“USMS”), which with more than 5,600 employees, is responsible for judiciary security, fugitive operations, asset forfeitures, prisoner operations and transport and witness security. She was nominated for the leadership position of USMS by President Barack Obama and was confirmed by the United States Senate in 2010. Previously, she was President of Hylton, Kirk and Associates, a Virginia-based private consulting firm, and served under President Bush as the Attorney General’s Federal Detention Trustee in the United States Department of Justice. From 1980 to 2004, Hylton served in progressively senior leadership positions within USMS.”

3) National: A damning new report from the Justice Department’s Inspector General finds that private contract prisons run by Corrections Corporation of America, the GEO Group, and Management and Training Corporation are more dangerous than those managed by the Bureau of Prisons. “Low risk” inmates at contract prisons were nine times more likely to be placed on lockdown and put in solitary confinement than others in the federal system. The IG report calls for more oversight, but the ACLU’s Carl Takei says “that’s not enough,” and that the IG’s recommendations “avoid confronting the larger question of whether it makes sense to continue the federal government’s multi-decade experiment with prison privatization.” [DOJ IG Report]

4) National: The GEO Group for-profit prison REIT has been downgraded to a “strong sell” by Zacks Investment Research. But “California Public Employees Retirement System boosted its stake in Geo Group by 0.6% in the fourth quarter. California Public Employees Retirement System now owns 190,200 shares of the real estate investment trust’s stock worth $5,499,000 after buying an additional 1,100 shares in the last quarter.” Vanguard Group, which owns around $343 million of GEO stock, boosted its stake by 5.6% in the last quarter. Also, the state of Tennessee Treasury Department bought a new stake in Geo Group during the fourth quarter worth about $1,667,000.

5) National/International: Education historian Diane Ravitch warns that corporate school privatization is spreading across the globe. “These developments are by no means limited to the U.S. (…) In the U.K., the Conservative Party government wants to turn all public schools into private academies, funded by taxpayers. The British multinational corporation Pearson has ambitions to open for-profit schools using its products in many nations across the world. In Africa, a corporation called Bridge International Academies (BIA) is opening for-profit schools in poor countries that cost $1 a week. Liberia is considering outsourcing its entire elementary program to BIA, which is funded by American billionaires Bill Gates, Mark Zuckerberg and others from Wall Street.” 

Ravitch says “the question for the coming decade is whether privatization will undermine and enfeeble public education in the U.S. and elsewhere.” Last month the U.N. Human Rights Council passed an historic resolution urging states to “address any negative impacts of the commercialization of education.”

6) National: On Thursday, the U.S. Department of Education denied a request by a Utah-based college operator, the Center for Excellence in Higher Education, to convert to nonprofit status for financial aid purposes, “warning other for-profit schools against trying to skirt regulations by doing the same.” DOE said in a letter to company officials that “board chairman Carl Barney, not the public, is the main financial beneficiary of its operations, and for educational purposes it cannot be considered a nonprofit.” The Wall Street Journal reported that, “as a for-profit college chain, the school group faces stricter oversight than required of nonprofit institutions, including having to report student loan 
repayment and other data to prove it prepares students for gainful employment in a recognized occupation. It also cannot derive more than 90% of its revenue from Title IV federal student-aid funds; topping that level could put its access to any such funds at risk.” [Sub required]

7) National: The Bill and Melinda Gates foundation doubles down on its commitment to corporate ‘school reform,’ despite widespread criticism. Recently both the NAACP and the Movement for Black Lives have called for a moratorium on privately run charter schools. [See the Black Agenda Report’s Glen Ford’s commentary on their stands]. The Movement for Black Lives has adopted a platform saying that school privatization “strips Black people of the right to self­determine the kind of education their children receive,” and “charging ‘this systematic attack’ is ‘bankrolled by billionaire philanthropists such as Bill and Melinda Gates, the Walton Family, and Eli and Edythe Broad, and aided by the departments of Education at the federal, state, and local level.’”

8) National: Donald E. Heller, the provost and vice president of academic affairs of the University of San Francisco. warns that Donald Trump’s plan to privatize the student loan program, which is part of the Republican platform, would be a disaster and could lock poor students out of college. He writes that the plan would “exacerbate the large gaps in college enrollment and degree attainment that already exist in this country. It would lead to even higher rates of income inequality across income and racial groups.”

9) National: As Anthony Marx, the head of the New York Public Library, implores us to do a better job of providing public broadband to the low income kids who are camping out on the steps of his libraries to cadge some bandwidth so they can do their homework, cable and telecom corporations score a huge win in their war against public municipal broadband, courtesy of the Sixth Circuit.

10) National/North Dakota/Minnesota: The long-planned Red River flood diversion project, which has a ‘public private partnership’ (DBFOM) component, will issue a Request for Proposals to four developers who submit responses to a Request for Qualifications due September 7. Risk-shifting is an issue. “A key concern of bidders is the availability and cost of private flood insurance during the six year construction period for the P3 components, and whether FEMA would pay for any flood repairs. Both questions will be addressed in the RFP.” [Public Works Financing, July/August 2016; sub required]

11) National/International/Michigan: The multibillion dollar Gordie Howe Bridge ‘public private partnership’ project linking Detroit and Windsor has hit a roadblock, even though three consortia have already been shortlisted and project participants were hopeful of a financial closing by next March. The problems? The new Liberal Trudeau government in Canada is looking into risks associated with the project, including the possibility that “a win by Donald Trump could doom NAFTA, pulling down the Canadian economy and bridge plans with it.” [Public Works Financing, July/August 2016; sub required]

12) FloridaGEO Group gets political. The company “has steered at least $288,000 to the political enterprises of Martin County School Board member Rebecca Negron (R), and her husband, state Sen. Joe Negron (R). (…) For Rebecca Negron, “the contributions comprise a significant chunk of the $224,844 her campaign has reported to have raised in the five-way Republican primary.”

13) Hawaii: Gov. Ige announced on Friday that the United Public Workers and the state have come to an agreement over the privatization of three Maui County hospitals. The current union contract will be honored until it expires in 2017. “UPW employees will work under Kaiser and be covered by UPW agreements until they expire on June 30 2017. Kaiser will then offer to hire UPW employees for a period of 6 months starting July 1, 2017.”

14) Iowa: In a letter to the editor of the Cedar Rapids Gazette, Mary Kemen says Medicaid privatization is proving disastrous. “When they are paid, it is at a rate much below the contracted amount. Due to this, medical entities in rural areas are taking out loans, working unpaid hours and being forced out of business. What The Gazette article did not mention was the remainder of the survey results. Forty-six percent of providers plan to reduce services to Medicaid patients. Sixty-one percent find privatization has reduced the quality of service they can provide. Medicaid patients are once again the losers. What sort of governor does this to his own constituents?”

The Gazette’s own business reporter says, “I continue to marvel at the governor’s seeming myopic lack of concern not only for Iowa’s 560,000 Medicaid recipients and their families, but also—again, keeping to my business side of the fence—his disregard for health care providers, large and especially small.”

15) KansasCitizens fear a budget cut may lead to privatization of the Lawrence Arts Center. “‘The city is taking steps toward privatizing the Lawrence Arts Center, which is not a part of our vision and not a part of our plan,’ said Arts Center CEO Susan Tate. ‘Public funding is very important to keeping an entity open to the public, and we hope that the city reverses course.’”

16) Michigan: Waste Management has taken over operations at Ann Arbor’s recycling plant for six weeks, sparking concern that it might be privatized permanently. “They argue Waste Management views recycling as a threat to landfill profits and isn’t the right partner for a city that wants to significantly increase recycling.” The city dumped its previous contractor and will be issuing an RFP for a replacement, claiming the RFP will be open to all bidders. 

Waste Management is currently suing the City of San Francisco to block it from steering a $130 million waste disposal contract to Recology Inc. “At San Francisco-based Recology, Eric Potashner vice president of strategic affairs, says in an interview response to the suit: ‘We bid around $30 a ton, Waste Management bid $65. Largely based on that, the city chose us. Every step of this process Waste Management has tried to litigate themselves back into the bidding process. We stand by our numbers and we stand by the city’s process.’”

17) NebraskaHamilton County commissioners are exploring the possibility of privatizing the ambulance service. A public hearing will be held today. “Brent Dethlefs and Phil Thomas said they felt blindsided. Dethlefs is union president for the Hamilton County EMS officers and a paramedic captain. Thomas is president of the Grand Island firefighters union. (…) Dethlefs said the way the commissioners presented the possibility of privatization caught him off guard. He only learned they were exploring the option on July 29, a few days before the meeting. He said it seemed as though the commissioners’ minds were already made up. (…) Dethlefs said he worries that it would affect the caliber of services. (…) ‘We asked them (the commissioners at the meeting) if we were a service or a business. They said, “Both,”’ Dethlefs said.”

18) New Hampshire: Gov. Maggie Hassan (D) is reportedly considering using a ‘public private partnership’ procurement model for a rail link between Nashua and Boston. The project would be brought in under New Hampshire’s new P3 law, which takes effect today. It would require approval by the P3 transportation infrastructure commission established by the law, as well as approval by the governor and executive council. [Public Works Financing, July/August 2016; sub required]

19) OregonA law firm advises Coos Bay officials against turning over its wastewater facilities to private ownership. “As an owner, the city will be able to exert a greater amount of control to ensure that the interests of its citizens and businesses are protected,” Farella Braun and Martell concluded in its report. “Spaulding wrote that Farella Braun and Martel was only able to find two other cities in the United States that had privately owned wastewater treatment plants, with the most recent assumption of private ownership dating back to the mid-90s. Spaulding said it was far more common, and a growing trend in general, to see privatization in the form of [Design, Build, Operate] or [Design, Build, Finance, Operate].”

20) Pennsylvania: That didn’t take long. Public and private “partners” in the Pennsylvania Rapid Bridges Replacement Project have entered into a dispute resolution process over permitting delays. “At issue are some of the 90 ‘half baked’ bridge replacement projects put on a fast track by PennDOT to build political support for the $899 million P3.” PennDOT “hopes that the local contractors who will rebuild the bridges will become more efficient under private management.” PennDOT has outsourced the NEPA documentation to private contractors. [Public Works Financing, July/August 2016; sub required]

21) TennesseeCritics are warning of risks as some Tennessee public utility boards look to privatize. “Opponents of privatization say it could raise electric rates and limit public access to information. Consultant Joel Yudken, who has studied the ramifications of privatizing utilities, says it’s important for any city to understand the full picture of what separating from a utility will mean for customers.” In a paper he authored for the Economic Policy Institute last year, Yudken laid out the case for resisting privatization of the TVA: “The old cliché is appropriate here: ‘If it ain’t broke, don’t fix it.’”

22) International: Chile’s privatized social security system, long beloved by U.S. conservatives, is falling apart. “The Chilean program was promoted relentlessly by its creator, Jose Pinera, who got himself a sinecure at the Cato Institute out of the deal. From there he fed American conservatives’ fantasies of ‘an obvious free market solution that works,’ he wrote for a Cato audience in 1997.”

23) International: This Friday, Britain’s Communications Workers Union is expected to announce the results of a membership ballot of thousands of public postal workers “over post office closures, job cuts and pensions. About 3,500 of CWU members in Crown offices, those directly managed by the Post Office, supply chain depots and administration sites across the UK have been balloted over whether to launch a campaign of industrial action, in the first time workers from the different parts of the business have been balloted together. The union said the ballot was in protest at the company’s plans for ‘wholesale privatization’ of the Crown network, job losses and the closure of the defined benefit pension scheme.” [Sub required]

Legislative Issues

1) National: Lawmakers and unions warns that a House Republican plan to radically cut back the Social Security Administration’s administrative budget is designed to promote privatization. “Calling the House reductions mind-boggling,’ Rep. Rosa DeLauro (CT), the top Democrat on the House Appropriations labor, health and human services, education subcommittee, said ‘these cuts would be a disaster and the American people will suffer.’ (…) The union representing many agency employees views the cuts as a precursor to privatizing Social Security. ‘Cutting staff when SSA is processing historically high claims is irresponsible and a sign that the Republicans who voted for this cut are not interested in providing taxpayers with good service regarding SSA,’ said Witold Skwierczynski, president of the American Federation of Government Employees SSA Council. ‘Instead they appear to be creating a scenario that insures the collapse of the program and will enhance the push to privatize it. If the public loses trust and faith that the federal government can administer SSA, they will look to privatization proposals as an alternative.’”

2) National: A bill (S. 3177) has been introduced in the Senate to allocate $5 billion in tax-exempt Private Activity Bonds to back private development and operation of public buildings. The bill “closely follows language drafted by the Performance Based Building Coalition for House Bill 5361.” [Public Works Financing, July/August 2016; sub required. Emphasis added]. PricewaterhouseCoopers is lobbying for PBBC.

3) Maine: A 21-bed forensic unit at the Riverview Psychiatric Center “would be privately operated, raising concerns among lawmakers who have debated several bills to address chronic staffing and safety problems at the Augusta hospital.” Rep. Drew Gattine, D-Westbrook, the chair of the House Health and Human Services Committee, “said the state’s plan to have a private company operate the 21-bed center also raises red flags. ‘Are we going to be privatizing an existing state function without any oversight or even any interaction from the Legislature?’ he said. ‘A lot of the problems at Riverview were uncovered because we had inspectors using their licensing authority to go in there and see these problems.’”

4) OhioState Auditor Dave Yost proposes a new formula for paying online charter schools. “Ohio’s e-schools should be funded based on what their students learn rather than attendance or time spent online.” He says tax dollars should pay for what the state is trying to buy: “A citizen who can read and write and do the math and, most of all, who can think, and that can’t be produced just by time in chair.” Yost has asked the GOP-controlled legislature to take up the issue when lawmakers return statehouse this fall.

 

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