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Weekly Privatization Report 10-16-2017


1) National: The Network for Public Education and NPE Action held their 4th annual conference in Oakland over the weekend. [Videos; Diane Ravitch’s greeting and statement, at 40:00, priorities at 58:00]. Ravitch says “We are not defenders of the status quo. The status quo is unacceptable. Our first goal has to be to stop privatization because privatization will end public education. We want to stop the assault on communities of color, and the deliberate policy on the part of the privatizers of stripping communities of color from the democratic governance of their schools. (…) The Koch brothers are not civil rights leaders. The Waltons are not civil rights leaders.”

2) National: Trump’s comment that the ‘public private partnership’ model “doesn’t work” has upended the debate on infrastructure investment. “I was actually very encouraged to hear that,” said Rep. Peter DeFazio of Oregon, the top Democrat on the House Transportation and Infrastructure Committee. “I guess he is a businessman and can see through that concept as a false promise. Hopefully, he sees infrastructure as capital expenditures as opposed to operating costs and is willing to get innovative on how we are going to finance it.”

3) National: The Sunlight Foundation is warning that the Trump administration is busy disappearing scientific data from public access. “The Web resources and information that the government has long provided to help inform us about climate change, the social cost of carbon, and the Clean Power Plan itself have been disappearing from federal websites. For members of the public looking to learn about the science and the policy analyses that underlie years of rulemaking and debate, the sources have become harder to find. We’ve found and reported on a number of examples of these types of removals through our work monitoring federal websites at the Environmental Data & Governance Initiative.”

4) National: Author and political scientist Lester Spence links privatization and the cutback of public services to inequalities in black communities. “‘I don’t know how much Durham spends on [parks and recreation], but I know that that cage y’all got somewhere around is [one of the] dopest basketball courts I’ve ever seen,’ Spence said, referring to the YMCA at the American Tobacco Campus, which is available only to paying members. ‘That should be a public good that we, in fact, privatized,’ he said. ‘The public basketball courts in Durham should look like that. That’s what an integrated Durham would look like.’ Spence said this could change, but only through voter participation.”

5) National:  Writing in The American Prospect, Kalena Thomhave looks into how some government officials and the private phone industry are ripping off families and isolating prisoners. “According to an Ella Baker Center for Human Rights report, one third of the families the center surveyed went into debt from covering the costs of communicating with a relative behind bars. One formerly incarcerated individual told the Ella Baker Center, ‘I didn’t call very much because I know it cost my family a lot of money.’”

6) National: CoreCivic, the private, for-profit prison company, is raising $250,000,000 to pay off debts and for working capital. “BofA Merrill Lynch, J.P. Morgan Securities LLC, SunTrust Robinson Humphrey, Inc., PNC Capital Markets LLC and Regions Securities LLC are acting as joint book running managers for the offering. Citizens Capital Markets, Inc. and FTN Financial Securities Corp. are acting as co-managers for the offering.”

7) National: Network for Public Education board member Julian Vasquez debates DFER President Shavar Jeffries on “Chartering, Race and Class.” [Video]

8) National: Suzanne Gordon of CWA/NewsGuild and Ian Hoffman of AFGE discuss labor’s fight to save veterans’ health care. “In its critique of privatization, Fighting for Veterans Healthcare, a San Francisco-based advocacy group, notes that VHA hospital budgets are already stretched thin because of chronic underfunding. As the financial burden of paying for more costly private care increases, the group argues, in-house staff shortages will worsen, specialized research and treatment programs will be cut, demoralized employees will leave, and ‘the VA will become a shell of itself.’”

9) National: U.S. Immigration and Customs Enforcement (ICE) detainees across the country are being coerced into performing work without proper compensation, reports Michelle Chen in The Nation. “According to [The Project on Government Oversight], although prison labor routinely occurs in both government-run and privately contracted facilities, a key difference is that federal prison authorities report extensively to the public on conditions of detention. But prison contractors, as private businesses, have relatively little oversight and operate opaquely (even as they profit massively from government contracts).”

10) National: Attorney Eric Guster speaks out against private campaign funding for attorney general elections. “Theprivate prison lobbyists, MADD & other ‘send them to prison for life for jaywalking’ groups would get their candidates in. NO.” Former U.S. Attorney Preet Bharara weighs in to support Guster: “It should be public funding. There should be no private campaign donations for district attorneys. Period.”

11) National: The Trump administration is cutting back on halfway houses used by federal prisoners. “Thousands of people move throughout halfway houses each year, which are run by both for-profit prison companies as well as government agencies or non-profit organizations. They are designed to help inmates assimilate back into society, find a job and get their lives on the right track, Reuters reported.”

12) National: Should government sell stock in itself to private investors? One financial analyst thinks so. “When the government earned a profit or had a surplus, the shareholders would be entitled to a dividend.”

13) National: From earlier this year, but useful: ConstructConnect lists “Twenty Major Upcoming Courthouse and Jail and Prison Construction Projects” in the U.S.

14) National: The Congressional Research Service has published a report on “Privatization and the Constitution: Selected Legal Issues.” The report notes, “While the federal government employs various forms of privatization, Congress’s authority to delegate governmental functions and services to other entities has its constitutional limits. Constitutional principles, such as the nondelegation doctrine, the Due Process Clause, and the Appointments Clause, may constrain Congress’s authority to delegate federal authority to private, governmental, or quasi-governmental entities. Courts have defined these constitutional limits when reviewing Congress’s efforts to privatize public services or functions.”

15) National: Some colleges are opting to outsource campus rape investigations. “Laura Dunn, executive director of SurvJustice, a victim advocacy group, said she’s had concerns about this approach. One institution, for instance, hired an ex-prosecutor who inquired into sexual history, which the Obama-era rules prohibits.”

16) California/National: Diane Ravitch comments on Eli Broad’s intention to retire. “We can only hope that he steps away from his hyperactive efforts to privatize public schools in Los Angeles and elsewhere. (…) He has been a destructive force in the world of education. His love of disruption produced nothing but disruption.”

17) Colorado: Sam Weaver, a candidate for re-election to the Boulder City Council, supports separating the municipality from Xcel’s grid system. “Because of the way electricity is regulated in Colorado, being a part of the Xcel system greatly limits what choices are available. With a muni, existing limits to the deployment of customer-sited solar and storage could be removed, and local businesses could sell excess energy from their solar system to their neighbors. Perverse incentives that cause private utilities to oppose widespread behind-the-meter energy generation and storage would disappear. Creating a municipal electrical system would be a great benefit to future Boulder generations.”

This is part of a global trend. Cities “from Germany to the U.S, are buying back these networks to accelerate investment. This is called re-municipalization because it is the cities, not states, which are buying the networks back. [U.K.] Labour’s manifesto says it will legislate to ‘permit publicly owned local companies to purchase the regional grid infrastructure, and to ensure that national and regional grid infrastructure is brought into public ownership over time.’”

18) District of Columbia/Revolving Door News: Former District of Columbia Department of Transportation (DDOT) director Leif Dormsjo has been appointed senior vice president for infrastructure asset management in Louis Berger’s DC office.

19) Kansas: Topeka Unified School District 501 may be terminating its agreement with Durham School Services for its school bus contract. “District spokeswoman Misty Kruger said USD 501 has opened up the requests for proposals, or RFPs, on Wednesday in order to receive bids from private bus companies, one day before a Durham bus driver ran a stop sign and drove into a home near N.W. 1st and Franklin with 24 students from Meadows Elementary on board.”

20) Massachusetts: Following a report that “more commuter rail trains broke down on the MBTA last year than any other transit system in the country,” the Massachusetts Democratic Party issued a statement saying “our privatized commuter rail service is now ranked the worst in the nation, but Governor Baker’s only plan for the T is more privatization, more high-priced consultants, and more excuses. Whether it’s the failing commuter rail system or a private subcontractor stealing thousands of dollars in parts, Baker and his team are unwilling to step back and diagnose the problem.”

21) Michigan: Crain’s Detroit Business reports that “a group of 18 behavioral health providers based in metro Detroit are banding together to create a more unified voice amid a leadership shakeup at Detroit Wayne Mental Health Authority and a push to privatize [Medicaid-funded] behavioral health in Michigan.”

22) New Mexico: State auditor Tim Keller voices concern over “lavish work trips using money from the school’s nonprofit foundation” by the top two administrators at an Albuquerque charter school. “Keller’s latest concerns follow previous criticisms that the husband-and-wife administrative team was earning a combined $300,000 a year—the highest charter school salaries in the state. A charter school administrator receives $87,000 a year on average.”

23) Ohio: Cleveland wants to block a low-performing charter authorizer, but the state says no. “Though Cleveland has some of the strongest charter schools in Ohio, it also has some of the weakest. So Mayor Frank Jackson and other city leaders have wanted to force some of the weakest operators and oversight organizations for the privately-run, tax-funded public schools to do a better job. Making that happen has been a challenge. (…) ‘We are very disappointed by ODE’s decision,’ van Lier said. ‘We reviewed St. Aloysius’s application thoroughly and found no evidence that the sponsor is focused on providing a quality education for all Cleveland children.’”

24) Oregon: A new 162-page report from the University of Oregon says the answer to the critical shortage of parking for truckers is ‘public private partnerships.’ “Upon identifying supply and demand of safe truck parking, this research will provide ODOT with recommendations for potential solutions for the development of safe and economically viable truck parking. This study will also provide a platform for ODOT to identify public-private partnership opportunities. With the anticipated growth in truck movements, the shortages in parking spaces for trucks will be exacerbated unless public and private sectors respond to address this need.”

25) Tennessee: Jones Lang Lasalle claims it can save the University of Tennessee system $6.8 million for outsourcing maintenance. “About 1,100 university employees could be impacted by the proposal, which is opposed by the union representing state university employees. State officials have proposed all state universities outsource their maintenance and facilities jobs to save money. So far, just one state university has done so. Others are still considering it. East Tennessee State University says it will not participate.”

26) Texas: Fort Worth school cafeteria workers are worried their jobs will be outsourced. “The district has 1,046 cafeteria/nutrition workers. Dozens of them showed up Tuesday night even though trustees were not taking a vote. Many carried signs with slogans such as ‘Help Save Our Jobs’ and ‘United For Respect.’ ‘We want to stop’ the request for proposals, said Cindy Lowman, a cafeteria worker with Fort Worth schools for 30 years. ‘We don’t want them to even start looking for a company.’ About 20 people spoke on the issue Tuesday, the majority of them cafeteria workers and their allies. Some described hearing of lower pay and lost retirement from fellow cafeteria workers at nearby districts that have outsourced nutrition.”

27) Texas: Bonds for a ‘public private partnership’ student housing project at Texas A&M have been sent to junk by Moody’s. “The downgrade was attributed to leasing levels that are ‘significantly below expectations with limited prospects for recovery of occupancy to meet originally projected debt service coverage levels for fiscal 2018.’” [Sub required]

28) Virginia: Chesterfield County is considering an end to outsourcing custodial work. “In a recent statement, the school said they are considering hiring custodians to work in the schools again due to a drop in the quality of services since they began outsourcing the jobs. The school has gone through two companies since they began outsourcing custodial work four years ago at eight schools through a company called GCA.”

29) Washington/National: Education Secretary Betsy DeVos gives a speech supporting “school choice” to the right-wingWashington Policy Center, drawing protests. “Outside, speakers railed against DeVos and her ideas. Elected leaders, including Washington Attorney General Bob Ferguson, King County Executive Dow Constantine and Bellevue Mayor John Stokes, told protesters that DeVos’ policies aren’t welcome in this state. ‘Being a billionaire, right-wing donor should not give you license to take a sledgehammer to the foundation of equal opportunity,’ said Constantine. ‘No, it should not, but here she is,’ he said, referring to DeVos. The crowd responded with boos.” DeVos has compared schools to food trucks.

30) International: “Fake infra”? Singapore-based EDHEC Infrastructure Institute has created a stir by appealing to European and American financial regulatory authorities to take a look at listed infrastructure (publicly traded securities issued by companies that own and/or operate infrastructure assets). “EDHECinfra upped the ante by announcing it has written open letters to the chairmen of the European Securities and Markets Authority and the Securities and Exchange Commission asking them to ‘take measures against the risk of investment in so-called “listed infrastructure.”’ In short, EDHECinfra argues there’s enough ‘misselling’ and ‘false claims’ around listed infrastructure to warrant regulatory intervention.” [Sub required]

For more on secondary market stock trading in infrastructure and services ‘public private partnerships’ see Dexter Whitfield’s just-released “PPP Profiteering and Offshoring: New Evidence.” Whitfield says, “Funds listed on stock exchanges are ultimately accountable to their shareholders. Unlisted funds are private equity funds or partnerships accountable to their investors. In both cases the chain of accountability is considerably extended and weakened in each link. The sale of equity is not subject to democratic accountability and public bodies have no control over which PPP assets are sold, when or who acquires them. The scale of profiteering invalidates the original value for money assessment. Most PPP projects would not have proceeded had this been taken into account.”

31) International: “Political risk” is spooking investors in Australian ‘public private partnerships.’ Appetite for South Australia, e.g., has tumbled by 80 percent to just 4 percent after the state moved to “frustrate its health PPP contract in the face of a deterioration in public finances, as well as a ‘surprise’ tax policy imposed on banks by the Commonwealth and the state.” [Sub required]

32) International: The GEO Group is reportedly set to be kicked out as operator of the scandal-ridden Parklea Jail in Australia. “Documents obtained by The Daily Telegraph reveal the new operators must ‘maximize service outcomes, including monitoring and continuous improvement of performance.’ And they must also ‘deliver value for money through competition and innovation’ and ‘increase accountability in the delivery of services.’” [Sub required]. It’s “being run like the Stallone movie ‘Lock Up’,” said an anonymous law enforcement official.

33) Revolving Door News: Trump has appointed one of the leading advocates for privatizing parts of the National Weather Service to head NOAA—the National Weather Service’s parent agency. “The AccuWeather CEO’s nomination to head [NOAA] is stirring criticism from people who worry he would hobble the weather service, which provoked an industry backlash more than a decade ago by making hour-by-hour forecasts, cellphone alerts and other consumer-friendly data widely available online. A bill that [Barry Myers] supported 12 years ago, sponsored by then-Sen. Rick Santorum, would have prohibited the agency from competing with private providers in most circumstances. (…) ‘I fear that he’ll do irreparable harm to an agency whose primary mission is to save lives,’ said Daniel Sobien, the president of the National Weather Service Employees Organization, which strongly opposes Myers’ nomination. ‘There seems to be a huge conflict of interest considering his business background and belief system.’”

34) Think Tanks: An item on the ‘political’ science underlying Trump’s climate policy should be giving second thoughts to those willing to wave through ‘public private partnerships’ as long as they are accompanies by “Value for Money” analyses. VfMs, along with other types of cost-benefit analysis, are only as good as their methodologies, data, and integrity. In a piece in the New York Times, Richard L. Revesz and Jack Lienke of NYU law school take apart the cost-benefit analysis Trump’s EPA used to justify its potential Clean Power Plan repeal. “But the Trump administration had no interest in conducting a good-faith update of the E.P.A.’s original estimates. Instead, it relied on accounting gimmicks to greatly inflate the Clean Power Plan’s projected costs and slash its expected benefits. The rule’s transformation from boon to boondoggle, as laid out in a draft of Mr. Pruitt’s plan to repeal it, is thus pure illusion.” Is this what’s going to happen to shortcut NEPA approvals for ‘public private partnerships’.

Legislative Issues

1) National: Some lawmakers have launched a bipartisan infrastructure caucus to try and move along a federal infrastructure funding package in the face of inaction by the Trump administration. Rep. Elizabeth Esty (D-CT) says “we’ll be working to get our colleagues from all different committees, not just this [T&I] committee, because the revenue aspects are incredibly important.”

2) National: Witnesses tell lawmakers to protect municipal bond tax exemption and other forms of infrastructure finance. “Those witnesses told committee members that state and local spending is important but doesn’t substitute for federal spending. Patrick McKenna, director of the Missouri Department of Transportation, representing the American Association of State Highway and Transportation Officials, told lawmakers that AASHTO supports federal grant programs over expanded financing options. The group denies that merely incentivizing local investment or public-private partnerships, as the Trump administration has proposed, will be enough to deliver on the country’s infrastructure needs, he said.”

3) National: The RV industry is lobbying to privatize public lands. “As Interior Secretary Ryan Zinke has begun steering the department that oversees our national parks, the RV and parks-hospitality industries appear to have their hands on the wheel. This July, Zinke announced the creation of the Made in America Recreation Advisory Committee. The group, made up primarily of representatives from the concession and RV industries, will advise Zinke and Interior staff on the expansion of public-private partnerships in national parks and recreation areas. Its members are already pushing for more privately run lodges and campgrounds, as well as additional internet and cellphone coverage.”

4) Idaho: Aviation stakeholders tell the Idaho Congressional delegation not to privatize air traffic control. “For all the reasons set forth by respected government research organizations, aviation heroes, leading conservative groups, passenger rights organizations, business leaders, the Idaho aviation community, and a majority of Americans, we are asking you, as our elected representatives to represent our views in Congress and vote no on H.R. 2997.”

 

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