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Weekly Privatization Report 11-20-2017

1) National: With Thanksgiving upon us, we should spare a moment to think of the turkey plant workers who have been subjected to privatized poultry inspection and a drastic speedup of inspection lines. In June, Food and Water Watch filed suit “against the USDA and its Food Safety Inspection Service (FSIS) for failing to release critical information that could shed light on the safety of its New Poultry Inspection System (NPIS).” If you have time on your hands this coming long weekend, check out Michael Lewis’ fantastic long read on the dedicated public servants at the USDA and what they’re going through as the Trump administration targets its scientists.

2) National: As the big tech companies and Trump administration move to end net neutrality and slow down internet content for other users, the public is pushing back. Donald Cohen of In the Public Interest points to another way of resisting private monopolization of internet services. “Comcast and the like are quaking in their boots about a public option, and they should be. Cities like Chattanooga, Tennessee, which became the first U.S. city to offer gigabit internet speed after going public, are outperforming private providers and even forcing them to innovate to play catch up. Why shouldn’t internet access be a public good? The web should be like the Postal Service, which, because it’s public, provides affordable mail service to everyone, rich or poor, in all areas of the country.”

3) National/California: The Network for Public Education has published a comprehensive report on charter schools, especially California charters. The report concludes with an across-the-board set of legislative recommendations (p. 48). “But simply saying charters are public schools does not make it true. There are strong arguments to be made that they are not. Democratically elected school boards govern most public schools. Nearly all charter boards are appointed and not accountable to parents or the community. Charters control the number of students they have, and they do not have to take students mid-year. The transparency laws, especially in spending, that public schools must follow can be ignored by charter schools. Many conflict of interest laws that regulate public schools can be skirted. And in some cases, when the school shuts down, the school building and property is not returned to the public who paid for them, but is retained by the charter owners themselves. And, by the way, charters can walk away and shut their doors whenever it suits them.”

4) National: Diane Ravitch shares a “wonderful graphic by a brilliant artist, Jo Byrne” on The War on Public Education.

5) National: Citizens groups are expressing concern about the direction a new advisory committee appointed by Interior Secretary Ryan Zinke will take. Paul Sanford, national director of recreation policy for the Wilderness Society, is wary and doesn’t want the committee “to be overpopulated with people who represent recreational vehicles and motorized recreation.” The RV lobby is powerful in DC. Sanford “said there is room for private-public partnerships when it comes to managing public land, and pointed to the Youth Conservation Corps as an example of non-governmental groups helping agencies with work backlogs, such as trail maintenance. But he is also leery of any attempts to lean too far in the direction of commercialization of public lands or steep user fees. Zinke has separately proposed dramatically raising entrance fees at some national parks. ‘We get nervous when we see excessive privatization of public land and transformation of public land into private enterprises that can price people out of them,’ he said. ‘That is when we start to push back.’”

6) National: Charter schools could face significantly higher capital costs if Congress ends the Private Activity Bonds exemption. “‘The recently proposed federal tax reform bill in its current form would be a huge blow to all public charter schools that depend on bond financing,’ said Lynn Norman-Teck, executive director of the Florida Charter School Alliance, referring to the House bill. ‘Without access to this low cost source of financing, public charter schools would need to turn to other sources of capital, which would be more expensive and restrictive,’ she said. ‘The additional costs of alternative capital would pull money out of the classroom where it is needed the most.’”

7) National: Public education advocate Jitu Brown urges people to attend the “#WeChoose National Town Hall hosted by Melissa Harris-Perry on Dec 12th @ 10am in DC! Join the Movement! @BadassTeachersA @adv_project.”

8) Alabama: Four teams have been selected to come up with design and financial plans for overhauling Interstate 10 from Mobile to the Eastern Shore in Baldwin County, Alabama’s first ‘public private partnership.’

9) Arizona: NATSO, the U.S. association of travel plazas and truck stops, is denouncing Arizona’s request to the Feds to allow the state to sell food and fuel at Interstate rest areas. “Congress effectively privatized highway services in 1960, when Congress prohibited states from offering commercial services at rest areas along the Interstate Highway System specifically so that private sector entities would grow and provide services to the traveling public. Today, hundreds of thousands of established businesses, including travel plazas, convenience stores, restaurants and hotels are meeting the needs of highway travelers. ‘This is not privatization, as the governor maintains. In fact, commercialization of rest areas uses government power to establish one business as a monopoly to the detriment of others operating in the free market,’ Mullings said. ‘Rather than privatizing a government function, this proposal would transfer sales away from the private sector to the government.’”

10) California: Eileen Appelbaum, Senior Economist at the Center for Economic and Policy Research, asks if CalPERS is lowering the bar in order to continue outsourcing its investments to private equity, and lowering standards to make themselves look good. “The CalPERS board is charged with overseeing the prudent investment of taxpayer dollars and protecting the retirement earnings of workers. It should reject the new benchmark and require an honest assessment of future prospects for private equity performance. And it should ask the staff for serious recommendations for how to address lower returns.” But Yves Smith of Naked Capitalism writes that there is an interesting backstory to the Sacramento Bee’s publication of Appelbaum’s important op-ed.

11) Florida: Martin County is going to pay big time for circumventing public records law. Last week the county agreed to a $12 million settlement with Lake Point. “A court-appointed arbitrator in February concluded the county ‘engaged in a pattern of violating the public records act” in an attempt to shield that they were using private email accounts to communicate with former Martin County Commissioner and environmental advocate Maggy Hurchalla. The court found that “certain commissioners failed to take public records requests seriously.’ The county agreed to pay more than $371,800 in attorneys’ fees at the time, and to establish a new policy for how to handle public business on private email accounts.”

12) Indiana: Citizens turn out to protest the possible siting of a CoreCivic-operated, for-profit immigration detention facility in Elkhart County. “Local Hispanic residents were joined at the rally by Caucasians and African-Americans from across Elkhart County and beyond. Local activist Bella Chavez urged those huddled under tents and umbrellas on the east side of the Elkhart County Courthouse to take action by signing petitions, joining networks or signing up for the new Goshen Resident ID card that was unveiled by the Center For Healing & Hope on Monday. A number of speakers urged those in attendance to contact Elkhart County Commissioners, who could vote on the potential prison, as well as other leaders.”

13) Iowa: Republican Gov. Kim Reynolds’ Department of Human Services has hired the former head of Kansas’ crisis-ridden privatized Medicaid program to run Iowa’s crisis-ridden privatized Medicaid program. “Sen. Joe Bolkcom, who is a leading critic of Iowa’s shift to private Medicaid management, said the state needs an administrator with experience, but not one with a Kansas track record. ‘We’re vying with Kansas to have the worst Medicaid privatization in the country,’ said Bolkcom, D-Iowa City. ‘…Kansas has been an absolute disaster.’ Bolkcom noted the cascade of complaints about service cuts in Kansas’ privatized Medicaid program, and a federal finding last January that Kansas’ program was ‘substantively out of compliance’ with laws and regulations.”

14) Iowa: The state’s privatized Medicaid system continues to face enormous problems “as over 200,000 Iowans are being forced to switch companies that manage their health care in less than 30 days. The huge change comes after AmeriHealth Caritas, one of the three for-profit companies managing Medicaid privatization, announced it was withdrawing from Iowa on December 1 after losing hundreds of millions in Iowa during the last year and a half. Currently, AmeriHealth manages the health care of nearly 215,000 Iowans.”

15) Kentucky: After abandoning private prisons in the wake of a number of scandals, state officials announced they will resume sending inmates to a for-profit prison run by CoreCivic. “Private, for-profit prisons have been plagued by controversy in Kentucky and elsewhere around the country, including a costly riot at the Lee County prison and sexual assaults of female inmates at a Floyd County prison owned by the same company, Nashville-based CoreCivic. Critics have accused CoreCivic, formerly known as Corrections Corporation of America, of cutting corners on staffing to boost profits, not providing good medical care and failing to properly protect inmates. A recent audit in Tennessee found understaffing at a prison the company runs and a lack of adequate state oversight.” The contractgoes into effect today.

16) MassachusettsThe Boston Business Journal says that fiscal strains on local government may lead to pressure for privatization. “Signs of severe budget stress already abound. For instance, roughly a third of Fall River’s 232-person fire department is supported by a federal grant that city officials concede is temporary. The city is considering other measures to possibly privatize or increase fees for a slew of services such as trash collection and school-related activities. Police staffing has fallen by 17 percent, or roughly 40 positions, to 216 law enforcement officers since 2008.” [Sub required]

17) New York: Defeated Westchester County Executive Rob Astorino has included $30 million in his proposed budget from the county airport privatization that hasn’t been approved yet. [Video]

18) Ohio: Republican Gov. John Kasich’s Department of Education used Electronic Classroom of Tomorrow’s own attendance records to settle a dispute over student attendance at the charter operator. “When the Ohio Department of Education audited ECOT’s attendance for a second school year last summer, the embattled online charter’s verified attendance went up more than 80 percent, and the amount it was forced to repay was $19.2 million, down from $60 million the previous year.” The Columbus Dispatch reports “less than 24 percent of ECOT students spent enough time logged onto classes or participated in enough offline work that they received a full 920 hours of instruction, equal to a year of school.”

19) Pennsylvania: Nine new charter schools filed applications to open in Philadelphia. If approved in February, they would open up more than 7,000 new charter seats. “The nine applications represent a spike from last year, when just four schools asked for a charter—and only one was approved. Philadelphia’s School Reform Commission has final say over application approval, but this is likely the commission’s last year before it’s replaced by a local school board.”

20) Pennsylvania: Last week in Philadelphia, teachers and parents cheered news that the School Reform Commission has voted itself out of existence. “Jubilation was the dominant emotion in the audience, but there was also anger. Parent Kendra Brooks did not mince words. ‘Dysfunction starts from the head,’ said Brooks, who fought a district attempt to hand her children’s school over to a charter company, ‘and today, we celebrate the decapitation.’ In advance of the meeting, about 200 people gathered outside School District headquarters, chanting ‘SRC you later’ and ‘SRC, goodbye,’ and waving signs. ‘What did the SRC bring us? The SRC brought us the privatization of our schools,’ said Jerry Jordan, president of the Philadelphia Federation of Teachers, faulting the commission for ‘massive layoffs,’ budget deficits, and cancellation of the teachers’ contract. Randi Weingarten, president of the national teachers’ union the American Federation of Teachers, also was in attendance, declaring the end of the SRC ‘a huge victory for the people of Philadelphia.’”

21) Pennsylvania: Robert Haeusler of Akron, PA, calls for county commissioners to take a stand against private prisons. “It is time for the Berks County commissioners to open their eyes to how poorly run and managed these facilities are and how private profits paid by tax dollars are put before their contracted job. They should state on the record that GEO and CoreCivic are not viable options to own and operate Berks County Prison.”

22) Pennsylvania: Republican House Speaker Mike Turzai (R) says he wants to run for governor on a platform stressing liquor privatization and the promotion of charter schools “in struggling school districts.”

23) Puerto Rico/National: As the director of the commonwealth’s bankrupt power agency resigns in the wake of a contracting scandal and continuing power blackouts, the Project on Government Oversight says the problem of government contract oversight goes well beyond Puerto Rico. “The ‘commercial item’ contracts on which the federal government spends billions of dollars each year operate the same way. Allow us to explain.”

24) Tennessee: A Hamilton County judge is urging CoreCivic to improve its health services. “Tom Greenholtz, has heard allegations from inmates that the prison takes several weeks to verify new inmates’ prescriptions. Prison officials at Silverdale Detention Facilities say they are working on a new procedure that would cut the wait time to 48 hours. Greenholtz began looking into poor medical management allegations in August after a local inmate wrote that Silverdale wasn’t treating his bone cancer or broken shoulder.”

25) Texas/National: Protestors in Austin demand adequate funding for Veterans Administration staffing, not privatization. “‘I came out today because I know that veterans need services, and the active-duty soldiers I worked with in the alcohol clinic needed services when they got out,’ said Karen Miller, 72, who used to work with soldiers dealing with substance abuse. Terry Lendo, AFGE Local 1745 president in Austin, said most of the vacant positions are for doctors, nurses and other health-care professionals. ‘We want Congress to staff the VA properly,’ Lendo said. ‘We all feel that if the VA is staffed properly it will succeed, thus negating the (need) of privatization.’”

26) International: Michael West investigates the consultant gravy train driving the New South Wales (Australia) privatization process. “Here are a few of the rippers. The ‘Disability and Customer Care Services Transfer,’ read flogging of the state rights to care for disabled people, and an $830 million property portfolio, demonstrates EY suffers no disability when it comes to fee-charging. It picked up $5.5 million, then a further $4.5 million, while mining investment bankers Ironstone Capital Advisory raked in $3.9 million and $3.2 million. That deal is ongoing. The biggie was the sale of the NSW electricity transmission and distribution assets, some of which went off to the Cayman Islands. This one is dubbed ‘Electricity Generation Assets Project.’ Goldman Sachs, which can’t even file a proper set of financial statements in this country, got $4.6 million for financial advice, KPMG $4.4 million for tax and accounting advice and Baker & McKenzie $5.9 million for lawyering.”

27) Think Tanks: Steven Singer, an 8th grade Language Arts teacher in western Pennsylvania and Director of the Research and Blogging Committee for the Badass Teachers Association, has published a book: The Gadfly on the Wall: A Public School Teacher Speaks Out on Racism and Reform. Denisha Jones, Professor of Curriculum Theory, Pre-school Education and Teacher Education at Trinity Washington University, says “as a teacher educator I have been searching for a book written by a teacher that exposes the privatization of public education and pushes back against racist school policies and practices. I look forward to having my students learn from Steven Singer and I am sure this will be one required text they enjoy!”

Legislative Issues

1) National: Municipal bond stakeholders, including public finance officials, are making a last ditch effort to save Private Activity Bonds, advance refundings and state and local tax deductions. At this point, the Senate bill eliminates advance refundings while preserving the exemption for PABs, while the House bill would eliminate both advance refundings and PABs. “Muni market groups said they will now focus their fight on the Senate and any negotiations between the two chambers over a final bill. The bill in the Senate would save PABs and also enhance them by eliminating the alternative minimum tax. However, it would also completely repeal the SALT decision and stop advance refundings after this year. ‘We have only just begun the process of a battle that we have come prepared to fight,’ said Emily Brock, director of the Government Finance Officers Association’s federal liaison center. She said the House vote was not unexpected but ‘represents a vote on legislation that untangles a century-long federal-state-local partnership and places significant burdens on state and local governments’ revenues which provide public services.’ The House bill ‘could have calamitous effects on infrastructure and local economies across the country,’ Brock said. ‘Clearly the time is now to help the Senate understand the potential impacts to public infrastructure that these provisions wield.’”

Awareness of the danger posed to local government services by the tax bill is spreading nationally
. Alishia Topper, a member of the Washington State Housing Finance Commission and a Vancouver city councilor says “unfortunately, they chose to eliminate private-activity bonds—which would wipe out half of its production starting Jan. 1 and have devastating effects on the preservation and construction of affordable housing. That means nationwide and here in Washington state, thousands of affordable apartments will not be built if the House tax plan becomes law. Private-activity bonds work hand-in-hand with the Low-Income Housing Tax Credit to raise equity and reduce interest rates for affordable apartment projects. In Clark County alone, more than 3,700 apartments have been created through this program—among almost 55,000 statewide.” Tax expert David Cay Johnston has called the Republican House tax bill “an all-out attack on the future prosperity of America.”

2) National: Shrinking the municipal debt market will leave the private corporate market much larger, says John Hallacy of the Bond Buyer. “Taking healthcare, housing, college & university, development, transportation and other more specialized bonds out of supply will significantly reduce the size of the municipal market. Assuming the newly configured market is approximately $250 billion, we will be significantly smaller than the corporate market, which has over $1 trillion of issuance in a year. (…) In a post-tax reform world, conservative states and localities may resort to selling even fewer bonds than they do now. More progressive states and localities are likely to continue to issue but the outcome will be at greater cost. The taxable market will find ways to accomplish the financings, but the transactions will not be accomplished on the terms that states and localities have become accustomed to in recent years. Underwriting spreads and fees have never been tighter than now in the municipal market. The taxable market does not adhere to the same practices.”

Overall, this is a shift of tax breaks from the public sector to the private sector. Democrats have warned “that the projected increase in federal debt will be a drag on economic growth and the biggest tax breaks will go to businesses and the wealthy. They predicted the higher earnings corporations would get from lower tax rates would be used for stock buybacks and executive bonuses rather than raising the wages of average workers.”

3) National: Veterans groups and lawmakers are warning about a Trump administration plan to merge the Veterans Administration’s private care program with the Pentagon’s privatized TRICARE private health care program, fearing this could lead to rocket-propelled privatization of the VA system. “‘Today, we see evidence that the Trump administration is quietly planning to dismantle veterans’ health care,’ said House Minority Leader Nancy Pelosi, D-Calif. ‘House Democrats will fight tooth and nail against any efforts to diminish or destroy VA’s irreplaceable role as the chief coordinator, advocate and manager of care for veterans.’ Health care experts also expressed surprise that VA would consider a TRICARE merger to provide private care for millions of active-duty troops, military retirees and veterans. The two departments generally serve very different patient groups—older, sicker veterans treated by VA and generally healthier service members, retirees and their families covered by TRICARE.”

4) National: CoreCivic, the private, for-profit prison company, announces it is launching a legislative initiative to “advocate for a range of government policies, including ‘Ban the Box’ legislation, that will help former inmates successfully reenter society and stay out of prison.” [CoreCivic position paper on Ban the Box]. The ACLU’s Carl Takei says “the company’s new lobbying strategy supports some laudable initiatives like ‘Ban the Box’ legislation. But it also continues to promote several harmful policies that would directly benefit its bottom line, as shown in the company policy statement that CCA/CoreCivic issued last week. This statement, for instance, calls for ‘[i]ncreased funding for inmate work programs.’ Such work programs raise troubling issues: They can be exploitative, and they often deny prisoners a fair wage. They also risk distorting criminal justice policy to ensure a captive labor force.”