171018-F-FH950-0396C
SHARETweet about this on TwitterShare on FacebookEmail to someonePrint this page

Weekly Privatization Report 10-30-2017

1) National/Puerto Rico: The widely criticized contract between Puerto Rico’s electrical authority and an obscure Montana company with links to Interior Secretary Ryan Zinke and a private equity donor to Donald Trump, will be cancelled. Amid widespread concern that the devastation caused by Hurricane Maria will lead to the massive privatization of public services and irresponsible contracting for recovery, a scandal erupted over the past few days over the contract granted by PREPA to Whitefish Energy. The contract, which will take at least 30 days to terminate and requires compensation, contains language asserting that neither PREPA, the Commonwealth, FEMA, or U.S. Comptroller or their representatives “have the right to audit or review the cost and profit elements of the labor rates specified herein” (Article 59). FEMA has denied that it approved the contract or that it is required to reimburse PREPA for it. The governor had demanded that the contract be cancelled, and federal lawmakers from both major parties have called for an investigation.

The federal judge overseeing the restructuring/bankruptcy process, Laura Taylor Swain, may have the final wordover possible remaining disputes. In any event, the scandal shows why careful vetting and active oversight of contracts, including on labor rates, is essential, why “no audit” provisions should be scrapped, and why all public-private contracts should be made available online.

2) National: At its just-concluded convention, the AFL-CIO has vowed to fight Veterans Affairs privatization. “This is a deliberate strategy: Establish the basics of a privatization plan—they call it Choice—and they keep throwing more and more money at it and encourage veterans to use it instead of the VA,” AFGE National President J. David Cox Sr. said in his AFL-CIO address. [AFL-CIO anti-privatization resolution]

3) National: Dark money from school privatization crusaders is pouring into school board races across the countryThe Washington Post has published “a detailed post explaining the flow of dark money—funds donated to nonprofit organizations that spend the money to influence elections but do not have to disclose where they got it—by looking at the Denver school board race. There are four open seats on the seven-seat board and a total of 10 candidates. The [post] was written by Darcie Cimarusti, a  New Jersey public school activist who blogs at Mother Crusader and is communications director at the Network for Public Education; and Carol Burris, a former award-winning New York high school principal who is executive director of the Network for Public Education, a nonprofit advocacy group.” The bottom line: “Raising Colorado is not a grass-roots organization, but rather part of a New York-based, billionaire-supported effort to support four candidates in their school board race. If contributions are hidden, voters should ask why. The public must demand some sunshine.”

4) National: Betsy DeVos, who has faced criticism for advancing her school privatization agenda from atop the U.S. Department of Education, has been meeting frequently with “religious leaders, leading national advocates of vouchers and charter schools, and players involved in challenging state laws that limit the distribution of government funds to support religious or alternative schools.”

5) National: Education deans and the National Education Policy Center call on Americans “to Resist Washington’s Dangerous Vision for U.S. Education.” They say, “research is clear that a move to privatize and deregulate public education will only widen system disparities and disconnect schools from the communities they serve. For example, school-choice programs have been shown to increase racial segregation, and voucher programs have been shown to divert funds to private and religious schools that are not required to accept and serve all students (including students with disabilities) and leave struggling schools with even less financial and community resources than before. Research on academic outcomes shows that, on average, students using voucher programs or attending charter schools do not perform better academically, and in some areas perform worse, than their counterparts in traditional public schools.”

6) National: The Trump administration is laying the groundwork for privatizing services in the national parks and massively expanding oil and gas leasing to private companies. Last week the administration announced that hefty increases of entrance fees will be imposed, pricing out lower income visitors. Also, the Interior Department has released a report saying it plans “to ease the leasing of federal lands to fossil fuel companies for mining and drilling—namely by reducing environmental oversight and limiting public input.” In a characteristically transactional move, Trump also told Utah Senator Orrin Hatch (R) that he will be shrinking two Utah parks for him.

7) National: K12 Inc. has reported a loss of $8.1 million in its fiscal first quarter. It has had “high attrition rates, low test scores, and low graduation rates,” and just hired Kevin Chavous the former chairman of the board of the right wing-funded (Bradley, DeVos, Walton) Black Alliance for Educational Options, which is closing its doors.  

8) National: The GEO Group spent $400,000 for federal lobbying in the third quarter, according to the Senate Lobbying Database. Issues GEO lobbied on included “federal government use of contract correctional facilities and Residential Reentry Centers; federal contract monitoring and supervision services,” “issues relating to alternatives to detention within ICE,” and “location monitoring services.” GEO’s spending is ahead of last year’s pace.

CoreCivic reported spending $390,000 in the third quarter for issues including DHS “appropriations – provisions related to privately-operated ICE detention facilities,” and “Issues pertaining to the construction and management of privately-operated prisons and detention facilities.”

9) National/California: California State Teachers Retirement System increased its investment in the GEO Group by 35.4% in the second quarter of this year. Vanguard Group Inc. increased its holdings in GEO by 59.9% and now owns 22,564,533 shares worth $667,233,000. BlackRock Inc. now owns 13,705,096 shares of the real estate investment trust’s stock worth $405,261,000.

10) National: The GEO Group is going all in on Trump, reports The Washington Post. “The company has already secured significant business with the federal government this year. In April, it won the Trump administration’s first immigration detention contract, a 10-year deal first proposed during President Barack Obama’s term to build and run a 1,000-bed facility in Conroe, Tex. GEO has said the project is expected to generate $44 million a year. The company also has renewed contracts for Bureau of Prisons facilities such as the Big Spring complex in Texas, where GEO has said it expects about $664 million in combined revenue over a 10-year term.”

11) California: Sacramento officials are looking at building a new courthouse complex using a ‘public private partnership.’ Mayor Darrell Steinberg says “he’s looking for a public-private partnership that would help the city make a significant local contribution toward the building’s construction. That could involve selling public land elsewhere to jump start development and push the courthouse along.” Plans for the new courthouse will be presented to the subcommittee of the Judicial Council on December 7.

12) California/National: As the movement to end cash bail gains influence and momentum, the industry is fighting back. “Jeff Clayton, executive director of the bail industry trade group, the American Bail Coalition, said states that have tried similar measures have seen defendants commit new crimes.” He was responding to California’s top judge, Justice Tani Cantil-Sakauye, who last week said she wanted to see an end to the practice. “‘I support the conclusion that California’s current pretrial system unnecessarily compromises victim and public safety,’ she said in a statement. The proposal is likely to face opposition from the bail industry. Similar bail reform measures approved in New Jersey and New Mexico have faced lawsuits.”

13) Colorado: A sharp debate is taking place over a ballot initiative on the construction of a new jail and treatment center in Pueblo County. One citizen says it would be a “reckless” expense. A supporter of the initiative says a new facility “would make a great drug treatment center.” A ReMax real estate broker says the facility would be a good idea, noting “the treatment center would be leased and staffed by a private entity through a public-private partnership.”

14) Michigan: An unmarked school bus that raised suspicion was found to be driving a route for a charter school, Ypsilanti Township police said. “As previously reported, a school bus that was believed to have a school district’s name covered by spray paint was trying to pick up students at a bus stop. When a parent who was waiting there with the students wouldn’t let them board, the driver reportedly sped off. Two similar sightings were reported soon after. However, on Thursday afternoon, deputies located the bus and confirmed that it belongs to a transportation company, according to a Nixle alert from the Washtenaw County Sheriff’s Office. (Police had received a tip to that effect, MLive reports.) The Sheriff’s Office also confirmed in the alert that the route and timing of the bus arriving at stops was consistent with the job it was contracted to perform.”

15) Oklahoma: An application for a charter school in Ardmore has been rejected again. “‘I think competition is good, and I think charter schools have a place. I’m just not sure they have a place in Ardmore,’ A.C.S Superintendent Kim Holland said. ‘We already have three or four private schools, we have five public schools within a 10 mile radius, so our kids and parents have a lot of choice.’ (…) But the Academy says they won’t be deterred, planning to appeal to the State Board of Education.”

16) Pennsylvania: The state’s ‘public private partnership’ project bundling together 558 bridges for repair, much touted by the P3 industry as a new model, is running behind schedule, and even Infrastructure Investor says it may be a boondoggle. “The goal of completing all 558 bridges by the end of this year proved overly optimistic, as the timeline has been pushed back to the end of 2018. While 295 bridges are finished, the original proposal expected 500 completed by the end of October. A reworked contract added $43.5 million to PennDOT’s price tag, with Plenary Walsh Keystone Partners also seeing ‘significant additional costs.’” [Sub required]

17) Pennsylvania: The Philadelphia Board of Pensions has voted to divest from private prison companies GEO Group, G4S, and CoreCivic. “‘There have been documented instances of bureaucratic and judicial corruption, dangerous and unhealthy living conditions, and human rights violations in many of these facilities,’ the resolution added. The board believes that ‘the well-documented practices in private prisons create reputational, regulatory and legal risks that may pose harm to investors and are at odds with the betterment and rehabilitation of incarcerated citizens.’”

18) Tennessee: The University of Tennessee’s Board of Trustees will discuss campus facilities outsourcing at its next meeting on November 2-3. “Meanwhile, Rep. Darren Jernigan and other members of the State Democratic Caucus are planning a press conference Friday in Nashville to discuss the need for an investigation into the subcontractors used by companies the state outsources for building management. The faculty senate voted last week to oppose outsourcing. The group questions how outsourcing contractor Jones Lang LaSalle would accomplish the promised savings. The company released estimates earlier this month that it could save $5 million or more per year. It is up to each campus to decide whether to use the outsourcing contract.” [Read JLL’s proposal]

19) International: The Canadian Union of Public Employees set out its strategic plan for 2017-2019 at its national convention, held in early October. “CUPE plays a leading role in fighting for high quality public services and publicly-owned infrastructure, and against privatization through new arrangements like ‘social financing,’ ‘asset recycling,’ ‘leveraging’ through selling off public utilities, and public-private partnerships. We are committed to keeping our members’ pension funds from investing in or profiting from P3s in Canada and anywhere in the world. We will continue to oppose all privatization plans, including the Canada Infrastructure Bank, an institution that will funnel millions in subsidies to corporations banking on large private profits from public infrastructure projects.”

20) International: The People’s Inquiry into Privatisation has launched a new report on the effects of privatization on communities, and is calling for a moratorium on privatization “until greater regulatory mechanisms and proper policy frameworks are implemented around the delivery of public services.” Taking Back Control reports back on an innovative and inclusive months-long process of public hearings on how privatization is affecting Australians and what they would like to do about it. Among the recommendations: “There must be NO commercial-in-confidence provisions when taking public money.”

Among other things, Taking Back Control gives details on the harm produced by the privatization of New South Wales public disability services. “The aim of the inquiry, chaired by David Hetherington, is to begin a conversation about the issue of privatisation in all its forms—including outsourcing, social impact bonds, user-pays, vouchers, commissioning, etc.—and build consensus around an alternative vision for our public services. We need to put forward our vision for the role of government in service delivery, what kind of public services our community needs, and ultimately, what kind of society we want to live in.”

Sponsoring organizations for the report include Public Services International, NSW Nurses and Midwives Association, the Community and Public Sector Union, Australian Services Union, the Electrical Trades Union, ActionAid, and the progressive Australian think tank Per Capita.

21) International: An eye-popping number from Moody’s new report on China’s market for “public-private partnerships.” It has grown by RMB2.9 trillion, or $437 billion in the first half of this year.” [Sub required]

Legislative Issues

1) National: As the Koch-Norquist community turns up the heat on Congress to urgently scrap inheritance taxes, UBS and PricewaterhouseCoopers (PwC) have given us a hint about the hurry. In their new Billionaires Insights 2017report, the companies point out that ultra wealthy billionaires are currently facing a serious demographic crunch point in transferring their cosmic private wealth to their offspring. An end of estate taxes in the U.S. would sure come in handy. “The individuals on our database are getting older and wealthier. Over the coming 20 years, we estimate that those who are 70 years old or more will transfer $2.4 trillion, up by 16% on the previous year. This is not only a huge windfall for their heirs but also for charities.” It’s doubtful the Republicans are aiming to help the charities, since, as Ruth Messinger points out, it is the estate tax itself that “creates a strong incentive for the wealthy to give to charity rather than pay the tax. Removing that incentive will cause a substantial decline in very large gifts: the kind that can be truly transformational for charities, colleges, hospitals and the arts.” This seems to leave only what UBS and PwC call “a huge windfall for their heirs,” rather than funding for public schools, infrastructure, healthcare, etc., etc. But sure, it’s all about the family farmers and small business owners.

2) National: Veterans are speaking out against Republican plans to privatize the VA.

3) National: Infrastructure is still dead in the water in Congress, and is likely to stay there. “As of right now, there is zero conversation happening about linking tax reform and infrastructure,” says Bobby Andres, a tax and economic policy advisor to the Senate Finance Committee. “If you think that Congress is going to do a $5 trillion tax cut bill and then turn around in January and do an infrastructure bill of any substance … that’s just not going to happen. And then what’s left is sort of the other regulatory changes, which would probably struggle in the Senate to get 60 votes.”

4) Iowa: Two Democratic legislatures are calling for an end to Iowa’s privatized Medicaid system and a return to “a fee-for-service state program in a cost-saving move they say would fund a new public health insurance option for Iowans facing skyrocketing premiums. (…) The proposal would require major changes in Iowa’s Medicaid system—at best, an uphill climb in the Republican-controlled Legislature—and federal approval of the changes, which they conceded could take until mid-2018 or early 2019. Up to 72,000 Iowans face the prospect of spiraling insurance costs when they purchase plans under the Affordable Care Act. With open enrollment beginning Wednesday, Gov. Kim Reynolds’ administration last week withdrew a proposal to rewrite the rules of Obamacare for Iowa in an attempt to temper rates.

5) Louisiana: Medicaid managed-care contracts, which have received little scrutiny since Gov. Bibby Jindal (R) privatized the system five years ago, have become a fiscal burden. “A task force created by lawmakers is searching for signs of waste in Medicaid spending. Audits raising questions about dollars paid improperly in both the Jindal and Edwards eras have raised concern. No one seems to want to scrap the insurance-model system, but the Edwards administration can expect continued inspection of contracts that are among the largest in state government, amid concern that too few people are tracking the money. Lawmakers this month postponed a decision on whether to extend the lucrative contracts for the managed-care companies, saying they wanted more time to study the deals.”

6) Massachusetts: The Senate Committee on Post Audit and Oversight will be holding a hearing today on the potential privatization of MBTA bus maintenance facilities in Lynn, Quincy, and Arborway. “The MBTA Fiscal and Management Control Board has directed the MBTA to identify savings to improve the efficiency of bus maintenance operations, according to a release from [committee chair Sen. Kathleen O’Connor Ives’] office. The board set a target of $21 million in annual savings. In response, Machinists Union Local 264 Boston, the union for the bus maintenance workers, proposed a package of $29 million in potential annual savings. In July, the MBTA issued a request for proposals for vendors to privately operate the garages. The MBTA could take action on the request for proposals as soon as this fall. ‘The Senate Committee on Post Audit and Oversight is holding a hearing in order to understand why the privatization of these three bus maintenance facilities is being considered at this juncture as a prudent and appropriate step to achieve cost efficiencies and service improvements,’ said O’Connor Ives.”

7) Michigan: A petition opposing the privatization of police forces by the state legislature is nearing its goal of 35,000 signatures. A former police chief says the private police bills would bring “mercenary policing” to Michigan communities. The bills are currently in the Senate government operations committee. [SJ 75/SB0594, SB0595]

 

Want our weekly privatization report in your inbox every Monday? Sign up here.