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Weekly Privatization Report 12-18-2017

1) National/International: Philip Alston, the United Nations Special Rapporteur on Extreme Poverty and Human Rights, finds that privatization is contributing to extreme poverty and legal abuse in the United States. He reports that “solutions to major social challenges in the U.S. are increasingly seen to lie with privatization. While the firms concerned have profited handsomely, it is far from clear that optimum outcomes have been achieved for the relevant client populations. In particular, greater consideration needs to be given to the role of corporations in preventing rational policy-making and advocating against reforms in order to maintain their profits at the expense of the poorest members of society.”

“During my visit I was told of many examples. For example, bail bond corporations which exist in only one other country in the world, precisely because they distort justice, encourage excessive and often unnecessary levels of bail, and fuel and lobby for a system that by definition penalizes the poor. The rich can always pay, and can avoid the 10% or even more that bail bond companies demand as a non-refundable down-payment. I heard cases of individuals who paid thousands of dollars to post bail, and lost it all when charges were dropped a day later. If they were subsequently charged with a different offence, the whole process begins again and all previous payments are lost.  Other examples include the corporations running private for-profit prisons, as well as bounty-hunters.”

Alston also singled out computerized pre-trial risk assessment tools. “Risk assessment tools pose the same risks associated with privatizing public functions that currently plague the money bail system. I met with a Division Chief in the Public Defender’s Office of Los Angeles County who explained the pressure court systems are under to buy risk assessment tools ‘off the shelf’ from private vendors. As in other contexts, the inner workings of such tools [are] proprietary to the company that sells it, which leads to serious due process concerns that affect the civil rights of the poor in the criminal justice system.”

2) National/International: At the One Planet Summit in Paris, Bill Gates launched a major effort to promote ‘public private partnerships’ in the energy field. “The Gates-led Breakthrough Energy Coalition announced it will expand to include major global investors like General Electric, Total and BNP Paribas, and these members will be involved in piloting public-private collaborations with five governments: Canada, the European Commission, France, Mexico and the U.K.” The initiative has been publicized in the U.S. by the right wing American Council for Capital Formation, which has received funding from Exxon and the American Petroleum Institute. Gates has come under heavy criticism for his role promoting school privatization, both in the U.S. and internationally. He is also a significant beneficial owner of Waste Management, which privatizes public trash collection and is also a leading developer, operator and owner of landfill gas-to-energy facilities in the United States.

3) National: The DHS Inspector General has uncovered human rights violations in U.S. immigrant detention centers, including private contract detention facilities. The Project on Government Oversight says “a series of surprise inspections found immigrant detainees were subject to unnecessary strip searches, waited days for urgent medical care, and were placed in solitary confinement for minor infractions, among other issues, according to [the DHS OIG] report.” But “Mary Meg McCarthy, executive director of the National Immigrant Justice Center, called the report’s recommendations ‘incredibly insufficient.’ She said past efforts to rely on field office directors to inspect their operations for deficiencies had failed to generate meaningful change.”

4) National: Pro-privatization education secretary Betsy DeVos is being sued for failing to implement the federal loan forgiveness program created by Obama to protect students from fraudulent private, for-profit colleges. “On Thursday, California Attorney General Xavier Becerra (D) sued DeVos and the Education Department for failing to process more than 50,000 debt relief claims submitted by former Corinthian Colleges students. The case is similar to a lawsuit filed the same day by the attorneys general of Massachusetts, New York and Illinois alleging that the Trump administration is violating federal law by refusing to hand down decisions on pending claims. The Education Department can discharge federal student loans when a college uses illegal tactics to persuade students to borrow money.”

5) Arizona: The American Civil Liberties Union of Arizona has released a report saying that state-funded charter schools practice discrimination in their enrollment policies. The organization “said an investigation found numerous schools had admission requirements that seemed intent on deterring students with certain vulnerabilities. They include disabilities, English-learning needs and past disciplinary issues, the report said. ‘“School choice” means that families should be choosing schools, not the other way around,’ ACLU of Arizona executive director Alessandra Soler said in a statement.” The Arizona Charter Schools Association objected strenuously the report. “Arizona has 546 charter schools with about 180,000 students currently enrolled.” [ACLU AZ “Schools Choosing Students” report]

6) California: In a splendid and thoroughly-researched report in the Richmond Confidential, an online news service produced by the Graduate School of Journalism at UC Berkeley “for, and about, the people of Richmond,” Yutao Chen lays out who the money players were in the November 2016 West Contra Costa school board elections. Last month’s school board meeting was packed and filled with emotion. “The atmosphere was hostile. People wore T-shirts with ‘No Rocketship’ on them and held signs describing charter schools as ‘fake public schools’ and ‘redundant, unnecessary and destructive.’ Among the community members waiting in line to give public comments was Cecilia Valdez, the mayor of San Pablo. She stated firmly that her heart is with the local schools in the city, and that she doesn’t support the ‘privatization of public education.’”

7) California: A plan for independent charter schools in three Solano County cities “drew dozens of supporters and opponents Wednesday to a sometimes emotionally-charged Solano County Office of Education trustees meeting in Fairfield. The governing board made no up-or-down decision, but is expected to do so at its Jan. 10 meeting.” The Reporter says “the first several speakers assailed the petition, saying other school districts already provide the services and programs Bishop said her schools would. Additionally, some noted that California school districts receive per-student funding (aka ADA) and funding declines for traditional public schools when more students attend charters. (Citing VCUSD budget documents, the Vallejo Times-Herald, a sister newspaper of The Reporter, on Tuesday reported that the district, the second largest in Solano County, continues to lose students to charter schools operating in the city.)”

8) Georgia: A once highly-touted charter school has fallen on hard times. “Ivy Preparatory Academy, a middle school for girls in Gwinnett County, was a poster child for the 2012 constitutional amendment that empowered the state to authorize—and pay for—more charter schools. Now, poor academic performance and plummeting enrollment threaten its survival. Enrollment has dropped precipitously, and so has funding, which is based on head counts.”

9) Louisiana: Kristen Clarke, president and executive director of the Lawyers’ Committee for Civil Rights Under Law, says “We won! Court finds New Orleans debtors’ prison scheme unconstitutional because it fails to consider a poor person’s ability to pay debts, fines and fees before jailing them.”

10) Maryland: The Frederick Board of Education has given a charter school a 10-year charter. “The 10-year term for Maryland’s first public charter school is the longest term the board has granted a charter school. The board previously waived its policy of five-year terms to grant Frederick Classical Charter an eight-year term. While the board unanimously voted to renew the charter, one member, Liz Barrett, did not support a 10-year charter agreement.” Barrett said “as a policymaker for 40,000 kids in our school system, my immediate concern is not the mortgage rate you guys negotiate for your facility.”

11) Nevada: Tracking charter school enrollment has become “a nightmare” for the Clark County School District. “The [Nevada State Public Charter Authority Board’s] action at Friday’s meeting, which included giving American Leadership Academy the opportunity to open either in fall 2018 or fall 2019, depending on how quickly organizers can secure a location, demonstrates how variables can create a planning problem for district officials. ‘We’re trying our best, but some of it is hit and miss on what we can find and what we can calculate,’ said Rick Baldwin, CCSD’s director of demographics, zoning and geographic information systems.”

12) Oklahoma: Charter school parents demand that Oklahoma University Regent Kirk Humphreys immediately resign from their school’s board of directors. “‘What do we want our children to learn,’ said John Beedon, a parent with children enrolled at John Rex. ‘They’re at this school. We want them to learn to be citizens; thoughtful citizens. We want them to learn that their actions and their words have consequences.’” Humphreys is refusing to resign. “The real estate developer and former Oklahoma City mayor told The Associated Press in an email that it wasn’t his intention to compare homosexuality with pedophilia.”

13) Pennsylvania: The Philadelphia School Reform Commission voted on Thursday to revoke Khepera Charter School’s charter and non-renewed those at Olney Charter High School and John B. Stetson Charter School. “Khepera will remain open until the end of the school year. Stetson and Olney will have hearings before another vote is taken. The schools can appeal the decision to the State Charter Appeal Board. Following CAB’s judging, schools can further appeal to the Commonwealth Court and then to the Supreme Court.”

14) Puerto Rico: The Spanish-owned toll road operator Metropistas has announced it is increasing road tolls on January 1. This is the second toll increase this year by the company, which is the concessionaire of the PR-22 (Jose de Diego highway) and PR-5 ‘public private partnership’ toll roads, the busiest in the country. It was reported last year that the company’s “goal is to help traffic flow faster at rush hour by charging drivers higher tolls on certain lanes if they want to reach their destinations faster.” [Public Works Financing, April-May 2016, p. 28]. Do Puerto Ricans really need “Lexus lanes” and toll increases right now? If publically-operated, would there be more options? Have any hurricane-related “adverse action” or “compensation events” happened on the PPP roads, as provided for in the 2011 contract? It’s rather reminiscent of a private equity manager’s comment on infrastructure profits earlier this year at a Berlin conference, well before Hurricane Maria: “what you need is a good crisis.” [Sub required]

15) Rhode Island: The state is withholding some education funding from North Kingstown as the result of a tuition dispute between that school district and a charter school. “The dispute began after the town requested additional information on enrollment at the school, including applications, waiting lists and acceptance letters. Kingston Hill officials declined, accusing the district of trying to be an ‘arbiter’ of its admission process. The district says it wanted to avoid billing mistakes similar to those it had found with another charter school.”

16) Texas: Denton and Lake Dallas ISDs joined forces last week “to talk about a potential loss of funding as charter schools continue to grow in Texas.” Both districts “said they stand to lose millions in revenue if charter schools keep opening up. According to Bill Gumbert, the financial adviser for Denton and Lake Dallas ISDs, charter school enrollment is increasing an average of 13 percent each year. Data from the Texas Education Agency shows 14 charter schools currently situated in Denton County.”

17) Virginia/District of Columbia: Prices to travel on the new I-66 managed lanes ‘public private partnership’ spiked to $44 for a few minutes last week, stirring controversy. “Those high prices caused concerns for single drivers, and a Loudoun County, Virginia, lawmaker wants to put a cap on pricing as well as shrink the amount of time the tolls can be collected. ‘This is just way over the top,’ said Supervisor Ron Meyer, R-Loudoun County. ‘It’s only affordable for people who are mega millionaires, and it’s just not appropriate.’ Meyer is on the Northern Virginia Transportation Commission, the agency that receives the revenue generated by the I-66 tolls. He said the increased money would definitely help with other projects, but the costs are too high.”

18) International: In South Africa, NEHAWU provincial secretary Patrick Makhafane says “we have noted the unbridled corruption that is taking place in the public service under the disguise of outsourcing, public-private-partnerships and privatization. In response to this pandemic of corruption the union in the province will embark on a service delivery campaign. (…) As part of our service delivery campaign we will also embark on a provincial march against outsourcing, privatisation, and other forms of atypical work in both the public and private sectors.”

19) International: The Public Service Association of Australia says “Respect the Risk: No to Private Prisons,” and launches a series of videos of prison officers explaining their role and function and the risks that they go through on a daily basis. In the first video, an officer says prison staff  “just want to send a message out to the government that prisons aren’t for privatisation,” and “we say no to private prisons.”

20) International: Hospital privatization in Queen’s Park, Ontario, Canada, is diverting millions of dollars from frontline care. “The 2017 Auditor General’s report, released Wednesday, revealed that hospitals are diverting millions from operating budgets to pay for high privatized maintenance costs, which private contractors now argue are not included in the price of the public-private partnership (P3) contracts Liberal and Conservative governments signed.”

21) International: Regulators in Britain have landed a heavy blow against profiteering and rate gouging by private water companies by benchmarking their revenues strictly to their cost of capital. The water companies have been accused in a series of media and official reports of using their water subsidiaries as a kind of group financial turbocharging operation.

The Telegraph reports “OFWAT hit suppliers with the industry’s toughest price-control regime since privatization last week, by squeezing a key metric it uses to calculate their regulator-approved revenues and forcing household bills at least £15-£25 a year lower. Stripped of jargon, the so-called ‘weighted average cost of capital’ is simply OFWAT’S assumption on the cost water companies will incur in raising capital to fund investment in assets like pipelines and treatment works. The measure has plummeted from 3.6pc in the current regulatory cycle to 2.4pc from 2020-25, effectively flushing around £750m from the sector’s revenues as a whole. OFWAT is also upping the ante on its financial rewards and penalties scheme. To survive the ultra-low regulated returns, companies will have to work far harder to clinch lucrative financial rewards and take an even greater hit if they incur penalties.” How well do U.S. public regulators do in estimating the cost of capital of for-profit water companies when setting their rates?

22) International: Reuters reports that after the tragic fire at Grenfell Towers in London, the same contractors are being hired to replace the dangerous cladding that caused to fire. The Fire Brigades Union has called for one of the key experts appointed by the Grenfell Tower inquiry to resign, saying “the FBU wants this inquiry to consider the effect of deregulation, closures and cuts to the response on 14 June [at Grenfell Tower]. That’s part of the big question of how this happened in London. We say that Mr. McGuirk is conflicted in advising on this team. He has also been the principal adviser to local authorities on fire safety guidance.”

Legislative Issues

1) Useful resource: 2018 state legislature projected session dates.

2) National: The Hill is reporting that the long-anticipated Trump infrastructure legislative package will be released in a few weeks, but Democrats, whose support Trump wants, have no idea what’s in it. “‘Unfortunately, there hasn’t been much bipartisanship lately,’ said Sen. Bill Nelson (D-Fla.), ranking member on the Commerce, Science and Transportation Committee. ‘Few outside of the administration actually know what’s going to be in the president’s plan, whether they will include highly controversial provisions, or how it will be paid for.’ (…) Trump policy adviser D.J. Gribbin said at an infrastructure event this week that the wide-ranging package will be divided into four categories: incentives for cities and states that raise their own revenue streams, block grants for rural areas, money for transformational projects and infrastructure financing programs.” The White House is also still considering raising the gas tax to pay for the infrastructure package, though Republicans in Congress are likely to fight the idea.

3) National: It is unclear how or if the idea for ‘public private partnerships,’ once touted by Trump officials as a centerpiece of the infrastructure package, will end up in the legislation. But last week Trump adviser D.J. Gribbin reiterated that he wants to streamline the application process for infrastructure projects. “We want to get rid of this black box where you send applications to Washington and you win or you lose, but you’re never quite sure why,” Gribbin said at the Hudson Institute.

Also attending the Hudson panel discussion were Maryland Secretary of Transportation Peter Rahn (who is pushing a major P3 project in his state), WMATA CEO Paul J. Wiedefeld, and Los Angeles County Metropolitan Transit Authority CEO Phillip A. Washington. [Full video]

4) National: The final GOP tax bill unveiled Friday evening would retain Private Activity Bonds, which are widely used in public infrastructure projects including roads, hospitals and colleges.

5) Oklahoma: State Sen. Ron Sharpe (R-Shawnee) has filed a bill that would eliminate the ability for the state Department of Education to overrule a local school district when considering whether to install a charter school. “To date, all of the local school board rejections have been overturned by the State School Board, violating the wishes of local taxpayers who don’t want charter schools in their districts. We must give back local control on decisions concerning charter schools,” said Sharpe.

6) Pennsylvania/Think Tanks: Stephen Herzenberg, executive director of the Keystone Research Center, points to considerable research and experience that shows that outsourcing school support services doesn’t save money, can increase costs, reduces flexibility and public control, and can lower quality. “Given the evidence, it’s refreshing to find bipartisan lawmakers—Republican Rep. Aaron Kaufer from Luzerne County and Democratic Senator John Blake, also from northeast Pennsylvania—advancing companion bills (HB 1914 and SB 795) that would put the brakes on counterproductive outsourcing by school districts. Pennsylvania’s public school districts can’t afford to throw away resources in these financially constrained times. School districts also employ tens of thousands of support professionals—bus drivers, cafeteria workers, school custodians, secretaries, and others—whose livelihood is critical to their families and their communities.” [Summary of research]

 

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