President Donald Trump delivers the Address to Congress on Tuesday, February 28, 2017, at the U.S. Capitol.  This is the President's first Address to Congress of his presidency.  Official White House Photo by Shealah Craighead
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Weekly Privatization Report 1-29-2018

1) National: Over the past three weeks, GEO Group has submitted its federal lobbying reports for the fourth quarter of 2017. The reports indicate that GEO spent $420,000 on federal lobbying last quarter. Lobbyists for GEO included Ballard Partners ($150,000 to lobby Jeff Sessions’ DOJ and the Trump White House), Navigators Global ($90,000), Capitol Counsel ($60,000), Bradley Arant Boult Cummings ($40,000), Lionel ‘Leo’ Aguirre($30,000), Mack Strategies ($30,000), and State Federal Strategies ($20,000).

GEO Group lobbied on “issues relating to deportation of federal prisoners,” “FY18 Commerce/Justice/Science Appropriations (H.R. 3267, S. 1662), S.1994, Federal government use of contract correctional facilities and Residential Reentry Centers; FY18 Homeland Security Appropriations (H.R. 3355), federal government use of contract correctional facilities; use of federal contract monitoring and supervision services,” and “monitoring tax reform in the House, Senate and Administration.”

For the last quarter of 2017, CoreCivic recently reported spending $60,000 for lobbying on its behalf by Akin Gump Strauss Hauer & Feld. The lobbying was for “issues pertaining to the construction and management of privately-operated prisons and detention facilities.” CoreCivic reported that on the first of this year it hired Miller Strategies LLC of Buda, Texas, to lobby for it on “issues pertaining to the construction and management of privately-operated prisons and detention facilities.”

The lobbying has apparently paid off
. Last week Government Executive published a leaked memo from the Bureau of Prisons stating that it was going to pursue a major increase in contracting with for-profit prison companies and slash 5,000-6,000 staff jobs. “The memo came just days after the bureau held a conference call with facility administrators, instructing them to prepare for a 12 percent to 14 percent reduction in their authorized staffing levels.” Among the designation criteria for transfer to for-profit prisons is that the inmate must be “a male, non-U.S. citizen.” On the news, stock prices spiked upward for GEO Group (+3%) and CoreCivic (+5.6%).

“This is how our corrupt political and campaign finance system works. Private prison companies invested hundreds of thousands of dollars in Donald Trump’s presidential campaign and today they got their reward,” Government Executive quoted Sen. Bernie Sanders as saying last year. “Sens. Cory Booker (D-NJ) and Chris Van Hollen (D-MD), wrote to Sessions last April to ask about the appearance of rewarding political donors and hindering ‘recent progress towards reforming our criminal justice system.’ They questioned Sessions on what evidence his department had that contract prisons would make people safer and lead to cost savings.” They never heard back.

2) National: Koch Industries general counsel Mark Holden said on Saturday that he is fully behind Trump’s “prison reform” initiative, which has the support of Attorney General Jefferson B. Sessions, who has “emphasized the need to crack down on violent crime.”

3) National: Donald Trump is expected to begin releasing details of his long-awaited 10-year infrastructure plan in tomorrow’s State of the Union speech. The plan is expected to include a substantially increased role for private finance in infrastructure and a sharp rise in tolls and user fees—especially if the ‘public private partnership’ model is used for projects. In addition to higher tolls, the plan is expected to result in fewer jobs as major cutbacks in other areas of federal transportation spending take hold. The U.S. Chamber of Commerce’s call for an increase in the federal gas tax will likely meet opposition in Congress. The $200 billion federal portion of the program will come from budget cuts, not new money, Trump infrastructure advisor and veteran privatization industry figure D.J. Gribbin told a gathering of the U.S. Conference of Mayors on Thursday.

Federal lawmakers, state governors and mayors are warning that the Trump plan would set off a “Hunger Games”-type scramble for infrastructure money and relies on increased funding and financing from budget-strapped local governments. Larry Willis, president of the AFL-CIO’s Transportation Trades Department, says “We have real concerns about further burdening states and localities with what should be a federal responsibility.” The danger is that many projects “are going to get left behind.”

The Trump infrastructure plan is also expected to gut environmental regulations and undermine diligent approval processes. “The administration’s legislative outline for infrastructure sacrifices clean air, water, the expertise of career agency staff and bedrock environmental laws,” National Parks Conservation Association President and CEO Theresa Pierno told the Washington Post. “In short, the proposal reveals that this administration is not serious about restoring America’s infrastructure.” In any event, the prospects for such a major piece of legislation depend on what happens in a gridlocked, fractious Congress.

4) National: K12 Inc., the national online for-profit education corporation, saw its stock price shoot upward on Friday (+7.66%) after posting a fiscal second quarter profit of $13.3 million on revenue of $217.2 million. Their just-released 10-Q also contains an interesting statement on labor relations in the for-profit education sector in California and beyond going forward (pp. 26-27): “As previously disclosed, the California Teachers Association (“CTA”) was recognized in June 2016 as the exclusive representative for the teachers employed by the California Virtual Academies (“CAVA”), and collective bargaining negotiations pursuant to a non-binding settlement process of the Public Employee Relations Board (“PERB”) remain ongoing. It is uncertain at this time if an agreement between the CAVA school boards and the teachers will be concluded during the current school year, whether and when the teachers may exercise their authorization to strike, the potential effect on CAVA enrollments should the PERB process be unsuccessful, or if the final terms of any CTA-CAVA agreement will materially impact the revenue we receive or our profit margins in providing management services for the CAVA schools commencing in FY 2019.”

5) National: Jeremy Mohler of In the Public Interest talks about the private prison industry, infrastructure, and immigration detention lockup quotas with Rick Smith. [Audio; at 18:30].

6) National/Indiana: In a major victory for the Coalition Against the Elkhart County Immigration Detention Center, CoreCivic pulls its plan to establish a for-profit immigration detention center in Elkhart. “‘It just feels like such a positive statement about who Goshen and Elkhart County (are),’ [Goshen City Council at-large member Julia King] said. ‘It demonstrates the power of grassroots organization in a big way … and to the power that ordinary people can have to shape their communities.’” In the Public Interest Executive Director Donald Cohen also sees the wider significance of such local victories: “Sometimes stopping the bad stuff helps build the sort of communities we want to live in. In fact, fighting the private prison industry is crucial to stopping Trump’s crackdown on immigrants, as a majority of detention centers are operated by CoreCivic and its main competitor, GEO Group.”

7) National: Chris Hedges conducted a powerful and disturbing interview on the history, practices and impact of solitary confinement in U.S. prisons with former inmate of New Jersey State Prison Ojore Lutalo and the coordinator of the American Friends Service Committee’s Prison Watch Project, Bonnie Kerness. The ACLU interviewed hundreds of immigrants detained in private, for-profit prisons for a 2014 report, and found that inmates were kept in solitary because of a shortage of general population beds and for frivolous reasons “ranging from filing a complaint to asking for new shoes.” These finding were confirmed by the DOJ inspector general in 2016.

8) National: In a move that may open a huge information window on litigation concerning privatization and outsourcing (e.g., regarding a contractor’s past behavior), a groundbreaking lawsuit has been filed that may take down “the most massive, illegal paywall in the world.” Michael Olenick, a research fellow at INSEAD , reports that “in 2016 Theodore D’Apuzzo, of Florida, filed a class action that PACER was improperly billing users, charging for documents that were free under the law. D’Apuzzo also found the government was overcharging in computing the per-page amount of data, counting more ‘pages’ than they should have. His case is progressing and his class has been certified. I’d write more about the case but the pleadings are tied up behind the PACER firewall.”

9) National: Despite the failure of two earlier efforts to privatize some IRS operations, conservative lawmakers tried it again—and it failed again. “The program was in effect during 2017.  It was not only Congress that thought the idea of private debt collection was a great idea. Treasury Secretary Steven Mnuchin, (whose name suggests his ancestors came from the land of Oz) was asked about the program during his confirmation hearing and said: ‘it seems like a very obvious thing to do.’  It may have been obvious. It was not successful. According to the IRS.’s taxpayer advocate, in 2017 the I.R.S. received $6.7 million in taxes collected by the PSAs whereas the PSAs received $20 million in commissions.”

10) National: IT contracts worth billions are not receiving proper oversight, GAO reports. POGO says “In FY 2017 alone the IT budget for federal agencies was $89 billion; such large-scale spending means that mismanagement of this spending will have serious repercussions for taxpayers.”

11) National: Doug Henwood and Liza Featherstone make a case that the pensions crisis requires a public (Social Security), not private (private equity-managed funds), solution. “In search of higher returns, pension fund managers have taken to what are known in the trade as ‘alternative investments,’ such as hedge funds and private equity. (…) So-called efficiency is often code for ‘screwing workers.’ An infamous example is what happened at Safeway stores in the 1980s.”

12) Colorado: Two new members of the Denver school board serve notice that they’re going to draw the line on new charter school contracts. “‘I’ve heard loudly and strongly from my constituents and many people in the community that they don’t want new charter schools in their communities,’ said board member Carrie Olson, a former Denver teacher who represents the east-central part of the city. The district needs to consider the impact of opening new charters in neighborhoods where the number of students is expected to decline, said Jennifer Bacon, who represents northeast Denver. A common criticism of charters is that they siphon students from traditional schools. ‘It’s time we start drawing lines in the sand around our charter schools,’ she said. Bacon and Olson, whose school board campaigns were backed by the Denver teachers union, made their comments before the board voted to approve the contracts of five new charter schools set to open this fall and renew the contracts of 14 existing schools.”

13) District of Columbia/Maryland: The Public Charter School Board is investigating one of its own senior employees for alleged Alt-Right links. “The accusations come after the all-girls Academy of the Holy Cross in Kensington, Maryland, announced that in October it fired substitute teacher Gregory Conte because of his ties to white nationalist leader Richard Spencer. But while Conte admitted his links to Spencer and the broader white nationalist movement, Goldman says he abhors any such views. Goldman is an employee of a city agency, and, under the First Amendment, he enjoys broader rights in expressing himself on personal and political matters—even if those opinions are seen as offensive by some.”

14) Georgia: A disgraced charter school founder in Atlanta “who a prosecutor said caused losses of at least $1.2 million by actions including stealing money he spent on strip clubs and luxury cars” has pleaded guilty. “Clemons pleaded guilty to 55 theft and forgery counts in two criminal cases linked to troubles from three charter schools he helped found. One of them, Latin Academy Charter School, was forced to close because of the financial mess he left it in.”

15) Louisiana: The Caddo Parish School Board has renewed the charter of a failing school, but has come under criticism. “‘I’m suggesting Caddo Parish look at Magnolia and put them on a year-to-year basis instead of a 3-year contract,’ said Lloyd Thompson, president of Shreveport’s NAACP chapter. ‘If we aren’t strong and say ‘hey, it’s wrong over there like it’s wrong everywhere else, then we’re doing an injustice to the young folks.’”

16) Missouri/Revolving Door News: A team has been selected by St. Louis officials to advise the city on privatizing Lambert International Airport. The advisory group will be paid only if the privatization deal goes through, giving them an obvious incentive to push it. The advisory group consists of Grow Missouri Inc., Moelis & Co. LLC, and McKenna & Associates LLC. “Grow Missouri is a nonprofit funded by billionaire conservative activist and former Mayor Francis Slay supporter Rex Sinquefield, and it helped Slay in launching the privatization initiative.” Two weeks ago Macquarie Capital, a privatization mega-firm that wants to take over the airport, hired former FAA administrator Michael Huerta as senior advisor. Macquarie operates the Macquarie Infrastructure Fund.

“Voting Friday in favor of picking the Grow Missouri-McKenna-Moelis team to handle the next stage of the process were three members of Mayor Lyda Krewson’s administration. They are Linda Martinez, the deputy mayor for development; City Counselor Julian Bush; and Deputy City Counselor Michael Garvin. An aide to Comptroller Darlene Green, James Garavaglia, abstained. Absent was the fifth member of the committee, Tom Shepard, an aide to Aldermanic President Lewis Reed.” [Sub required]. For background on the Sinquefield-driven privatization drive, listen to this CBS interview with Donald Cohen, executive director of In the Public Interest.

17) New York/New Jersey: The Trump administration’s infrastructure plan, expected to be part of Trump’s State the Union speech tomorrow, will do little to advance the crucial trans-Hudson Gateway Project because of cutbacks in federal funding. “It’s a direct repudiation of the federal role in building infrastructure,” said a person familiar with the Gateway project, referring to the funding guidelines acquired by Politico on Monday. Relying on private financing for such an enormous project (which could cost $15 billion) would require either substantial new federal funding, or a sharp spike in tolls. GW Bridge cash tolls are currently around $15 for cars at peak and $84 for four axle vehicles.

18) Ohio: The Cincinnati Retirement System Board of Trustees has voted against the City Council’s request that it divest from private, for-profit prison companies, maintaining that “the action is too costly as they would have to pay more for customized index funds. Not feasible to unravel the mutual funds. Taking this type of action is in violation of the Board’s fiduciary obligation to the plan.” [Board of Trustees minutes of January 4, 2018 meeting, p. 3]. Let’ see if the City Council agrees.

19) Ohio: More scrutiny is on the way for charter schools after the ECOT scandal, which cost the state over $50 million. And the charter school sector shouldn’t duck the issue, says Chad Aldis, vice president for Ohio Policy and Advocacy at the Washington, D.C.-based Thomas B. Fordham Institute. “The charter sector has to ‘own’ the issue when something like ECOT’s closure happens, Aldis said. It’s important to learn from it and to make sure students are actually learning.” The Columbus Dispatch reports that “the state also could seek to recoup money from ECOT founder William Lager and the two companies he owns, which were paid millions for management services and online curriculum.”

20) Puerto Rico/National: Fulfilling a longstanding desire of private investors, Gov. Ricardo Rosselló moves to privatize the island’s debt-laden, mismanaged, storm-devastated public power company. But many arefiercely opposing the move. “Among the most vehement opponents of privatization is Ángel Figueroa Jaramillo, president of the union of PREPA employees (Utier). ‘PREPA is a public good that belongs to the people and not to the politicians of the day. Energy is a human right and not a commodity,’ he said in a press conference in Spanish on Tuesday. While Utier is not currently planning to strike, Figeuroa said the union will engage in an island-wide outreach and activism effort. San Juan Mayor Carmen Yulín Cruz also expressed her opposition to the move, tweeting ‘the privatization of PREPA puts the economic development of the country in private hands. The authority will serve interests.’”

For a labor perspective on the privatizations of PREPA, schools, and water, tune in to WBAI’s Building Bridges program for an interview with representatives of public sector unions in Puerto Rico representing teachers and utility workers. Guests are Fredyson Martinez Estevez, Vice- President of the Irrigation & Electrical Workers Union, Unión de Trabajadores de la Industria Eléctrica y Riego, and Mercedes Martínez Padilla, President of the Teachers’ Federation of Puerto Rico/Federación de Maestros de Puerto Rico. Airs tonight from 7-8 EST. [On air; archived]

As the jockeying begins for Puerto Rico’s public assets and services, keep an eye on Wall Street’s DC-based lobbyists, influence peddlers and AstroTurf maestros. See, e.g., Zachary Mider and Ben Elgin’s  deep dive into “How Hedge Funds (Secretly) Get Their Way in Washington” in the current issue of Bloomberg Businessweek.

21) South Carolina: Republican gubernatorial candidates say the Republican governor’s veto of school busing funding shows the need to take school bus operations out of the hand of the state. “We need to either privatize or let the districts control our buses. But the children who are riding the bus now—we can’t risk their safety on this policy decision… the recent veto of the money going to fix our buses was a tremendous mistake.”

22) Texas/National: A Dallas charter school CEO is facing federal charges in a kickback scheme. She “is accused of taking at least $5,000 to steer a technology contract toward a specific provider under a federal program that’s been tangled up in other controversies. Federal authorities say that Donna Houston-Woods used her position as CEO of Nova Academy to award a bid worth about $478,000 to ADI Engineering Inc. The company was to provide services through the Federal Communications Commission’s E-Rate program that helps needy schools and libraries get affordable telecommunications, internet access and related upkeep.”

23) Utah: Following growing public outrage and an important story by National Public Radio about hidden information on jail deaths, Utah officials announced they will release jail standards kept secret because a consultant considers them proprietary information. “U.S. Bureau of Justice Statistics data shows Utah leads the country in jail deaths per capita, but the state has previously said they can’t release the guidelines because they belong to the private consultant who created them. Sheriffs’ Association Executive Director Aaron Kennard says the consultant, Gary DeLand, will now redact his trade secrets from the 600 jail standards. The documents will then be posted online, a process that could take several months. Kennard says he wants the standards to be transparent.” As the Standard-Examiner, which broke the story, writes, “It is impossible to hold sheriffs accountable for the safety of their prisoners when their prisoners die in secret.”

24) International: In the midst of a dangerous drought and water crisis in Cape Town, citizen activists are organizing to prevent the privatization of water services. Among their demands is a ban on private consulting on water issues.

25) International: Derek Royden of Nation of Change explains how the collapse of the major British outsourcing company Carillion shows “the limits of privatized government.” Royden writes, “The company’s sudden failure shows just how big a problem the outsourcing of government services in western economies has become over the past few decades. (…) This has become commonplace at all levels of government, especially in cash strapped municipalities.”

26) Think Tanks: The Center for America Progress held a discussion last Thursday on “How Trump’s Tax and Infrastructure Plans Hurt American Cities.” Guests included Mayors Steve Adler of Austin, Eric Garcetti of Los Angeles, and Bill Peduto of Pittsburgh. [Video, about an hour]

Legislative Issues

1) National: Senators are to restart negotiations on the future of the private care program of the Veterans Administration, Veterans Choice. “Sen. Jon Tester (D-MT), the ranking Democrat on the committee, pushed for [VA Secretary David Shulkin] to issue clear support for the Caring for Our Veterans Act to help build consensus. ‘There’s a certain amount of frustration from Senator Moran, the chairman, myself and other members of this committee that you’ve been silent,’ Tester said.”

2) Connecticut: As part of the next biennial budget, Gubernatorial candidate Oz Griebel, who is running as a petitioning candidate, wants to privatize social services and overhaul union contracts. “‘There’s going to have to be some privatization’ to government functions, along with changes to the state employee benefit packages, he said, adding that the legislature must use whatever legal means are available to restructure the long-term liabilities. ‘Everything has to be on the table,’ Griebel said, including repealing the anti-layoff provisions in the SEBAC agreement.”

 

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