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Weekly Privatization Report 12-4-2017

1) National: The Republican tax cut legislation now likely going to a House-Senate conference committee has made some significant changes related to privatization issues, including an expansion of tax breaks for passive investors in mortgages on properties held by Real Estate Investment Trusts (REITs) such as the GEO Group and CoreCivic. (See GEO’s, p. 177 right column). “One of the new tax bill’s biggest windfalls for the wealthy—cutting taxes on income received through so-called pass-through entities like partnerships, popular with real estate developers—grew even more generous,” reports the New York Times.

The Senate also passed an amendment “to allow people to use up to $10,000 a year from tax-advantaged 529 savings accounts for private and religious schools and some home schooling. Under current law, 529 accounts can be used only for higher education.” Longtime religious right activist Mike Pence cast the deciding vote on this in the middle of the night.

The fate of Private Activity Bonds, which were eliminated in the House bill, is left up to the conference committee. House Ways and Means Committee Chairman Kevin Brady said Thursday “that he might agree to preserve private activity bonds, while pushing for limits on their uses in upcoming negotiations over a final tax bill with the Senate. ‘I think over time that’s an area that has drifted in its mission from infrastructure projects that have regional or national significance that should be supported by every taxpayer in America into a wide range of issues.’” [Sub required]. The Government Finance Officers Association is calling for an all-out effort to save PABs, which support “a variety of public services such as hospitals, airports, utilities, transit and education facilities.”

Writing in The Bond Buyer, Steve Benjamin, the mayor of Columbia, South Carolina, says that the Senate bill would “minimize community control and stymie infrastructure investments.”

2) National: A new spreadsheet analysis by Detention Watch Network and the Center for Constitutional Rights “is raising concerns about inadequate standards, contracting practices, and limited accountability” at 201 ICE-contracted immigration detention facilities around the U.S. It took four years of litigation against the government, especially DHS and ICE, and GEO Group and CoreCivic, to get them to disgorge the data.

“The experts said that the findings suggest an ‘irresponsible’ ICE agency, which requested increased congressional funding this year in part on claims of a cost increase in detainees’ chronic health care needs, while at the same time, lowering levels of detention standards. Advocates previously alleged that lowered detention standards contributed to repeated violations of ICE’s own standards of care. That meant detainees routinely received unsanitary food and substandard health and mental care. What’s more, the spreadsheet outlined 159 out of the 201 detention centers that do not have a contract expiration date, drawing attention to the process of renewing a contract that would require facilities to undergo reviews that address chronic problems at facilities.”

3) National: A report by National Public Radio says “big money” is being made through forced labor “as private immigrant jails boom.” Correctional News reportsthat with apprehensions on the southern border reportedly surging, “ICE has requested five additional privately run immigrant detention centers. The prospective facilities will hold ‘criminal aliens’ and other immigration violators in support of a public safety mission under the authority of the Immigration and Nationality Act (INA). There are also provisions to ensure inmate safety, which are detailed in the RFI available from FedBizOpps.gov.” [RFI; ICE Performance-Based National Detention Standards]

4) NationalThe New York Times reports that there was a somewhat resentful mood at the annual meeting of Jeb Bush’s pro-school privatization Foundation for Excellence in Education last week. “Despite two standing ovations for Ms. DeVos’s impassioned calls to abandon systems that she said kept students trapped in unfit or misfit schools, it was not lost on audience members that their highest-profile surrogate had returned to her constituency empty-handed. Her promised actions have gone nowhere.” Their scapegoat? President Trump.

5) National: Former Reagan administration official Bruce Bartlett tweets, “It amazes me that so many people who lived through George W. Bush’s effort to literally abolish Social Security through privatization seem to think that Republicans have dropped this idea. It’s just been on hold, will reappear once they finish decimating the tax system.”

6) National: In an excerpt from her forthcoming book, Sarah Tantillo, a former teacher at North Star Academy Charter School of Newark and leader of the New Jersey Charter Schools Association, discusses some problems of being a charter school authorizer. “As Bob Bellafiore, the former head of the SUNY Charter School Institute (an authorizer in New York), put it, ‘You can let a thousand flowers bloom, but weeding is hard work.’”

7) National: Jake Jacobs, a New York parent and teacher whose writing has appeared in the Washington Post, Diane Ravitch’s website, and the blog of the Badass Teachers Association, writes on AlterNet about efforts by the school privatization movement to influence the policy positions of the Democratic Party in the 2016 election.

8) California: The City of Escondido is being sued for privatizing its library to Library Systems and Services, which is owned by Argosy Private Equity. See thisvideo of the march to file the suit. KPBS reports, “In a complaint filed on behalf of plaintiffs Roy and Mary Garrett, lawyer Alan Geraci wrote that the state education code requires a public library to be managed by a board of trustees. They are supporters of a group called Save Our Escondido Library Coalition, who wants to keep the library’s employees on the city’s payroll. In this case, the Escondido City Council voted 4-1 in October to enter into a management contract with Maryland-based Library System and Services LLC even though the library’s trustees rejected the idea, according to the attorney. ‘The city of Escondido has broken the law,’ Geraci said. ‘By forcing privatization of our library, the City Council failed the community, failed the library workers and failed to follow the law.’”

9) California: Gubernatorial candidates square off in San Diego in a debate on charter schools. “A question that asked each candidate whether he or she supported for-profit charter schools broke neatly along party lines with Democrats tending to be more firm in their stances that profit had no place in education.”

10) California: A charter school in Chico, the Blue Oak Charter School, was the subject of a fraud investigation by California Fiscal Crisis & Management Assistance Team. “In the findings of the audit, the audit team said that, ‘The charter school’s culture has been to use charter school assets for purposes that appear to have a personal benefit and/or for the benefit of friends, family and community relations.’ The majority of the problems were reported as coming from two ranking members of the school’s staff. ‘The charter school superintendent/executive director and business manager failed to demonstrate in practice an understanding of the foundational elements of fiscal management,’ reported the audit team.”

11) California: The Willits Unified School Board will review the annual reports of three charter school this Wednesday. “Per a memorandum of agreement between the district and the three schools, the charters must make an annual report to the board using various criteria specifically highlighting college and career indicators, profiling academic strengths, and tracking academic progress.”

12) District of Columbia: Newly unionized teachers at the Chavez Prep Middle School walked the picket line to demand that school administrators negotiate a contract with them in good faith. “‘By law after our vote, any changes to our working conditions have to be negotiated with us,’ said Christian Herr, a science teacher who headed the organizing effort. ‘Our board continues to make significant changes—adding job duties without additional compensation, things like that—without bargaining with us.’ About 25 teachers—nearly the whole teaching staff—walked down the street with protest signs during their lunch break on Friday. The union filed charges with the National Labor Relations Board over the summer, but claims the employer continues to make employment decisions without collectively bargaining.”

13) District of Columbia: The leaders of a charter school have been forced out after a teacher sex-abuse case. “In a five-page letter sent to parents this week, the school’s board disclosed that LAMB’s principal, Cristina Encinas, and student psychologist, Rosario Paredes, will leave their posts Dec. 15. The school’s executive director, Diane Cottman, will leave her job at the end of the school year, according to the letter. ‘We believe that the administrators in charge failed to respond appropriately,’ the board’s letter to parents said.”

14) Michigan: Wayne County is abandoning plans to build a bond-financed jail and is instead moving toward a deal with Rock Ventures to build a criminal justice center. “Wayne County Executive Warren Evans said Friday morning that he is confident the county can finalize agreement. Evans said that negotiations with the developer tentatively have Rock Ventures footing a $500,000 stipend to Walsh Construction, which had been the lone bidder offering to complete the unfinished jail at the Gratiot Avenue site in downtown Detroit. ‘The stipend ensured we received a proposal so we could fully evaluate finishing the jail at Gratiot,’ Evans said in a statement. ‘As we dug into the project with an actual proposal, the more we recognized it had too much inherent risk for the county at too high a price. We’re negotiating a deal with Rock that caps the county’s costs and creates the best solution available to our jail problem.’”

15) Mississippi: A company that provides ankle bracelets for inmates has reached a settlement over its role in the Epps bribery case, but is allowed to continue contracting with the state. Attorney General Jim Hood announced “that Sentinel Offender Services LLC, which provides inmate electronic monitoring, has settled the case for $1.3 million. Hood said his office has now collected $5.8 million for taxpayers involving one of the largest corruption case in the state’s history. ‘As a company that continues to contract with the state, Sentinel Offender Services agreed to cooperate and settle the case for $1.3 million on a $2 million contract,’ Hood said in a statement. ‘We successfully disgorged them of their ill-gotten profit and then some.’”

16) New Jersey: The Paterson Board of Education says no new charter schools. “At core of the battle is the state funding that the financially-strapped Paterson district must pass along to the six charter schools that operate in the city. Under this year’s budget, the district is sending $46 million to the charter schools, about a 35-percent increase over 2016-17. The funding is based on a per-pupil rate and a new charter school opened in Paterson in September.”

17) New York: Bethany Bump of the Albany Times-Union pushes back against the idea that racially segregated charter schools are necessarily bad for children of color. “Many say that’s not a bad thing so long as they produce results,” Bump writes. “Integration has long led to better outcomes for students, but charters say that’s not always the case. The issue of neighborhood underlies much of the debate around re-segregation. Segregated schools are often the result of segregated neighborhoods, which are the result of longstanding housing and economic practices. It’s unfair, educators say, to place the burden entirely on schools to fix such a deep-rooted problem.” For other viewpoints, see Michael Gorelik, “Charter Schools and the Resurgence of ‘Separate But Equal,’” and an interview with Cutting School author Noliwe Rooks, “Keeping U.S. Education Segregated Is a Highly Profitable Business for Some.”

18) Pennsylvania: Last Tuesday, the family of Janene Wallace, who committed suicide after being held in solitary confinement in a GEO Group-run facility for 52 days, “appeared before County Council, hoping to make sure what happened to her never happens again. They asked Council for an independent review of the operations at the county prison, in particular the way those with mental health issues are treated. “My hope is that this doesn’t happen again,” said Susanne Wallace, Janene’s mother. “My hope is that they oversee the prison so that the policies and procedures that are in place are actually followed.” Attorney David K. Inscho, representing the Wallace family, presented County Council with three specific areas of concern that he had discovered in preparing the lawsuit against the facility.” Council Chairman Mario Civera “noted part of the problem stems from a change in state law in 1985 that moved many of the mentally ill out of state hospitals and into community settings that are not adequately funded. The result too often is that they end up in prison.”

19) PennsylvaniaThe Wilkes-Barre Times Leader pushes back against the methodology used in a Brookings Institution study that says Luzerne County schools are increasingly segregated. “In Luzerne County, the two largest districts—Hazleton Area and Wilkes-Barre Area—had a combined total of 13 schools designated as outliers, six in Wilkes-Barre Area and seven in Hazleton Area. Two schools in Hanover Area were also designated as outliers, as was Bear Creek Community Charter School.”

20) Puerto Rico: Subjected to severe austerity, the University of Puerto Rico is facing the danger of privatization. “‘They’re taking advantage of the tragic moment the country is going through to neutralize any possible opposition to their anti-academic measures that intend to convert UPR into a training center for technical jobs,’ Jorge Schmidt, professor at UPR-Mayagüez, remarks regarding the decision of UPR’s Governing Board, a resolution that would transform UPR’s role as a leading academic and research center; that implies the reduction of faculty and spending on teaching/research-based resources; that privileges profit over academic excellence; a clear tell-tale of privatization. To make matters worse, primary and secondary public education in Puerto Rico are under threat of privatization as well, Julia Keleher, the Secretary of Education of Puerto Rico, and her team using the hurricanes as an excuse to execute this transition, looking to New Orleans post-Katrina as a model.”

21) South Carolina: The South Carolina Public Charter School Board has turned down a request by four charter schools to transfer to a new sponsor. “The three virtual schools—the Cyber Academy of South Carolina, the S.C. Virtual Charter School and Odyssey Online Learning—all contract with the for-profit, publicly traded K12 Inc. for services ranging from day-to-day operations and instruction to curriculum. The fourth, Midlands STEM Institute, is a technology-focused ‘bricks-and-mortar’ public charter school located near the city of Columbia.” The new sponsor they wanted to transfer to in order to continue receiving taxpayer dollars? The newly formed Charter Institute at Erskine College, a private Christian school.

22) Think Tanks: The longstanding thorny issue of state action and privatization (e.g., if a private contractor hired by the government commits a tort or crime, is the government responsible? Does this constitute state action?) is the subject of a new law review article by controversial Yale Law Professor Jeb Rubenfeld on campus sexual assault.

Legislative Issues

1) National: As the tax reform battle comes to a head, private prison companies like GEO Group and CoreCivic—and their investors—are likely keeping a close eye on how the House and Senate bills treat Real Estate Investment Trusts (REITs). For those interested in getting into the weeds on this, start here. “The good news for REITs is that both proposals will treat ordinary REIT dividends as pass-through income subject to the new lower rates. This treatment means that REITs will not lose ground from a tax economics perspective when compared with other pass-through formats. (…) The most that can be said with complete confidence is that the tax code will either stay the same or it will change. If it does change, though, the broad outlines seem to be that REITs will benefit from a pass-through rate reduction, but will otherwise be largely insulated from the big changes that will affect other taxpayers.”

Rep. Gregory Meeks (D-N.Y.) has consistently denounced these tax breaks, and has introduced legislation to end them
. “As REITS, these prison companies are exempt from paying federal corporate income taxes. This atrocious misdeed led me to introduce the Ending Tax Breaks for Private Prisons Act, in coordination with Sen. Ron Wyden who introduced the same bill in the Senate.  Our bill would prevent private prison corporations from receiving tax breaks on the American worker’s dime. This is exactly the type of loophole that we should close. This is also exactly the type of glaring loophole that Republicans will leave propped open.”

2) Kansas: A joint legislative committee has refused to endorse a plan to have CoreCivic build a new 2,400-bed prison in Lansing. “When legislators approved the project as part of the budget earlier this year, they gave the department an alternative for financing the project by authorizing up to $155 million in bonds. Now, lawmakers in both parties are upset the department didn’t use it, disagreeing with corrections officials that a lease-purchase agreement would be less expensive over time. The joint legislative committee that reviews building projects would not endorse the plan Thursday. It’s a bad omen for the department ahead of a potential vote later this month by legislative leaders and Republican Gov. Sam Brownback on whether the project goes forward.” [Legislative auditor report on lease vs. bond options, July 2017 ]

3) Michigan: Democratic lawmakers have introduced a package of bills to make charter school management more transparent. “The large package, which includes House Bills 5286-5294 and companion Senate Bills 674-682, is known as the School FACT act. The package would require education management organizations (EMOs) to produce annual audited financial statements, authorizers to account for fees collected to oversee charter schools and charter schools to publish their contracts with an EMO and that EMO’s financial statements on its website, and to account for its student recruiting costs. The School FACT Act would also address charter school authorization. The bills would require the state superintendent to suspend authorizers that fail to provide adequate oversight, provide an appeals and rehabilitation processes for these authorizers and creates an authorizer’s duty to report a financially failing EMO to other charter schools under its oversight contracted with the same EMO.”

 

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