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Weekly Privatization Report 4-30-2018

1) National: The American Prospect’s Gabrielle Gurley makes the case for strengthening the public sector’s role in ‘public private partnerships,’ and calls for building up the capacity and due diligence of public officials working on deals, achieving the best risk-sharing solutions, sharp and knowledgeable scrutiny of proposed projects, and well-vetted contracts. Donald Cohen of In the Public Interest points out how things can go wrong: “The advocates for privatizing the St. Louis airport are failing to heed important lessons from Chicago’s parking meter disaster. They aren’t doing a rigorous fiscal and financial analysis to compare public versus private options that cost Chicago $1 billion. And they aren’t thinking long-term about what decisions city leaders won’t be able to make because [those decisions could] hurt the private operator’s bottom line.”

2) National/Arizona/Colorado: As the wave of activism by teachers demanding the adequate funding of education—including for school support staff—continues, Arizona educators went out on strike Thursday. Polls show that a majority of Americans support teachers’ right to strike. The funding crisis has been exacerbated by Arizona’s “nearly boundless pursuit of school choice schemes—including school vouchers—that have helped steer money away from public school districts. In August, 2017, Gov. Ducey signed a massive expansion of the state’s voucher program into law, signaling his support for the use of public funds for private schools. Moves like this, critics allege, have helped land Arizona where it is today, with thousands of educators and their supporters donning red, the chosen color of their Red for Ed campaign, and rallying at the state capitol.” In Colorado thousands of teachers, including teachers from smaller and rural districts, walked out of their classrooms on Friday to demand higher and better education funding at a rally at the State Capitol building.

3) National: The withdrawal of poorly vetted Trump nominee Ronny Jackson’s name from consideration for Veterans Affairs secretary has reopened the question of where the next nominee will stand on the issue of privatization, which was expected to be the key issue before Jackson’s aborted Senate committee appearance last week. The White House may be considering former House Veterans’ Affairs Committee Chair Rep. Jeff Miller (R-FL), according to the Washington Examiner. Miller’s views on VA privatization haven’t been spelled out in detail yet, but AFGE says he is pro-privatization and “berated a committee member for an anti-privatization article” the member wrote last year. Miller’s former membership in the Koch-backed ALEC certainly raises questions, since Koch-backed Concerned Veterans for America, of which he is a “close ally” according to Politicoand ProPublica, is leading the charge for privatization. See also AFGE’s “Rep. Jeff Miller’s Plan to Break VA Employees.”

4) National: Communications Workers of America (CWA) alleges that a federal contractor underpaid workers who run help hotlines for public health insurance programs by as much as $100 million. CWA “alleges that General Dynamics Information Technology misclassified employees at call centers in Kentucky, Florida, Arizona and Texas to suppress their wages. The union, which does not represent the workers, said the contractor hired or promoted workers into roles that require special training but paid them below government-set rates for the jobs they performed. The complaint covers the period since 2013, when GDIT started a $4 billion, 10-year contract with the Centers for Medicare and Medicaid Services.”

Adrian Powe, a GDIT worker who earns $9.64 an hour and drives nearly three hours round trip every day for work, says “It’s a paradox. I love my job, and love helping customers get the help and peace of mind they need. I talk to as many as 60 callers every day. But the company doesn’t provide us with any peace of mind, because we’re being cheated out of our wages and have no job security.”

5) National: Jeremy Mohler of In the Public Interest stresses the lack of transparency in prison privatization deals. “The desperation to house inmates cheaply, he says, should not be the sole consideration in the decision to privatize. There are issues of transparency to consider. ‘A lot of times, it’s difficult to get un-redacted information—or information at all—from these private prison corporations,’ he says. ‘It’s already hard to get criminal justice information even in the public system… in our experience, this is exacerbated when a locality signs a contract with one of these corporations.’ This lack of communication is particularly troubling, Mohler says, when it comes to incidents like prisoner deaths, guard attacks, riots, and other violent episodes. ‘It’s very hard to get specific information about these situations,’ he adds.”

6) National: A major, data-rich comprehensive report on the private, for-profit corporations in the prison industrial complex has been issued by the Corrections Accountability Project at the Urban Justice Center. The Prison Industrial Complex: Mapping Private Sector Playersidentifies over 3,100 corporations across twelve sectors, ranging from construction to transportation and healthcare to telecom, that profit from the devastating mass incarceration of our nation’s marginalized communities. The report aggregates critical information about these corporations to help advocates, litigators, journalists, investors, and the public fight the commercialization of justice.”

7) National: In “Democratizing Water,” Food & Water Watch’s Mary Grant maps successful community-based resistance to efforts by private, for-profit companies to privatize public water systems. “With cities and towns moving to democratize their water systems, now more than ever, we need to stand up to the Trump administration’s efforts to grease the wheels of privatization and endanger our public water supplies.”

8) National: American Water will hold its annual general meeting on Friday, May 11, at the Camden, NJ, aquarium. There will be an audio webcast on the Investor Relations homepage at ir.amwater.com.

9) National: The GEO Group has reported its first quarter earnings and held an earnings call. Chairman and CEO George Zoley stressed the importance of GEO’s post-release business, telling investors that “GEO Continuum of Care gives us important competitive advantages [as] we continue to pursue quality growth opportunities across our diversified platform of real estate management and programmatic solutions.” Zoley says, “looking forward to the balance of 2018, we remain optimistic about our future growth prospects and we are currently pursuing several active procurements which total more than 12,000 beds. Several of these opportunities could result in the reactivation of a number of our idle or underutilized facilities, which total approximately 7,000 beds.” He emphasized GEO’s stock buyback program, noting that in the first quarter GEO had returned $40 million to investors. Zoley also told an analyst that he expects procurements to hold prisoners out-of-state for Idaho, Puerto Rico, and Vermont.

“With respect to pending federal procurements, the Bureau of Prisons has two active solicitations for the housing of criminal alien populations,” David Donahue of GEO Corrections & Detention said. “Under the CAR 18 solicitation, the BOP is rebidding the management contract for the government-owned 2,355-bed Taft, California facility. (…) Turning to ICE, during the first quarter we experienced a steady increase in the utilization rates across our ICE facilities. We are also awaiting an award decision on a pending procurement for the management of a government-owned 700-bed Florence, Arizona processing center. ICE also has a pending solicitation for secure transportation services in the San Antonio, Texas area, proposals were submitted last year and we are currently awaiting an award decision.”

10) National: As private water companies gobble each other up, who is protecting the public interest? “The frenzied bidding war is an illustration of how a merger announcement, even in a sleepy industry, can jolt other companies into action and kick off a wave of consolidation. A combined SJW-Connecticut Water would be the third-largest U.S. water and wastewater utility based on rate base and enterprise value.” [Sub required]

11) National: An anonymous author has produced a comparative analysis of labor market issues at private, for-profit waste management companies for investors. It covers outsourcing companies Republic Services, Waste Management, Waste Connections, Advanced Disposal Services, and Casella Waste Services.

12) National: Fans of the idea that there will be lots of idle foreign private capital waiting on the sidelines to finance public infrastructure have to face the reality that currency headwinds are steering investors away from U.S. assets. [Sub required]. And as interest rates creep up and money becomes more expensive, the public interest community should take Standard & Poor’s warning seriously vis-à-vis public infrastructure: “Leveraged Finance—Will The Worst Deals Be Done In The Best Of Times, Again?” Will federal and state policymakers encourage more leveraged loans in P3 deals as they hunt for private investors and try to come up with a plausible story on infrastructure investment?

13) National: Time.com spells out “5 Big Reasons Why People Are Protesting Amazon’s Second Headquarters.” Time reports that “in many places, there are organizers staging protests, holding town halls and creating sleek websites to oppose Amazon’s selection process and alert people to the consequences HQ2 could have on their local communities.” The five reasons: “The process is too sketchy; The contest is a rat race; Jobs probably won’t go to locals (and even if they do, they won’t be good ones); It could seriously impact infrastructure and housing; Nobody is paying attention.” But the Partnership for Working Families is paying attention. See “Local Communities Put Amazon On Notice: HQ2 Proposals Come With Demands From Us, Too,” by PWF’s Heather Appel.

14) California: Alison Collins and Arienne Adamcikova, who are teachers and parents, warn that outside interests are trying to drum up a charter school war in San Francisco. “Charter school chains from other states and cities are trying to increase their foothold in San Francisco. They want to open new charter schools, siphoning off funds that would otherwise go to public schools. They’ve started a public relations war aimed at sowing discontent among parents and convincing them to enroll their children in charters,” Collins and Adamcikova write. “The escalating coverage of the so-called ‘state of emergency’ in our district comes at a time when charter school chains from other states and cities are trying to increase their foothold in San Francisco. They want to open new charter schools, siphoning off funds that would otherwise go to public schools. They’ve started a public relations war aimed at sowing discontent among parents and convincing them to enroll their children in charters.”

15) California: The battle over California American Water’s proposed desalination project in Marina “has entered a new phase, and not only does litigation appear more certain than ever, the potential legal arguments of Marina Coast Water District—which opposes the project—are starting to crystallize.” Water bills could rise by as much as $177 a month, according to Keith Van Der Maaten, general manager for Marina Coast Water District. And the environmental effects could be serious. “Marina Coast’s contention, Van Der Maaten explained, is that ‘good’ water provides a bulwark against further seawater intrusion into deeper aquifers, and that Cal Am’s slant wells would essentially tear the walls down.” For more see Citizens for Just Water’s website.

16) California: New filings show that charter school money continues to pour into Antonio Villaraigosa’s gubernatorial bid. “This week philanthropist Eli Broad contributed another $1 million to a pro-Villaraigosa charter-sponsored independent expenditure committee, bringing his total contribution to $2.5 million over the past two weeks. A day later, Michael Bloomberg donated $1.5 million to the same committee. Both are multi-billionaires, with Bloomberg’s net worth is estimated to be $50.5 billion and Broad’s at $7.3 billion.”

17) Colorado: Moody’s warns that Denver Rapid Transit may terminate its contract with Denver Transit Partners, the private consortium contracted to build and operate the A, B, and G commuter rail lines, raising concerns that the project could be the first U.S. ‘public private partnership’ to fail. “The Moody’s report also offers a peek into the inner-workings of Denver Transit Partners. The credit rating agency says the consortium is highly leveraged — meaning it has more debt than equity—but also notes that is typical for a business of its type.” Project supporters and the operators remain confident that they can work through the difficulties.

18) Connecticut: The University of Connecticut Health Center is moving toward establishing a ‘public private partnership,’ UConn Health administrators have reported.

19) District of Columbia: A rare public battle between unionized charter school teachers and administrations has broken into the open, as teachers take to the streets “to press their case that the school is spending millions of dollars on consultants while cutting core classroom positions. The teachers at Chavez Prep Middle—the first D.C. charter school to unionize—say the administration’s spending is hurting students, who predominantly come from low-income, Hispanic families.” The teachers “have already scored a small victory: The National Labor Relations Board found merit in March to allegations that Chavez school administrators are making changes to the workplace without negotiating with the teachers. An administrative trial is set for this summer.”

20) District of Columbia: Major concrete and piling issues have surfaced in $2.7 Billion Silver Line Metro extension in Northern Virginia, once again highlighting the need for tough contract enforcement and oversight by public officials. “The largest worry at the moment has to do with concrete panels that serve as walls for the new Metro stations. In some cases, the water-to-cement ratio is off, the steel inside the panels is not covered by enough concrete and there are insufficient safeguards for water to expand and contract. In all of these cases, water could penetrate the panels, leading to cracking and rusting.” In addition, Charles Stark, executive director of the rail project, said “officials have found cracks in concrete support girders at nearly 110 areas along the 11.4-mile rail extension. He said the cracks are not the result of a manufacturing problem, but rather with how the girders were installed.” The U.S. Department of Transportation has contributed $900 million in funding, in addition to nearly $2 billion in federal loans, to the project.

21) Florida: Under public pressure, Jacksonville Mayor Lenny Curry pulls the plug on privatizing JEA, the city’s electricity and water utility. “JEA employees reacted angrily by wearing red ‘JEA is Ours’ shirts as they packed City Hall. Union leaders and some council members contended Curry was plotting behind the scenes to engineer the sale of JEA. Curry denied it. Former Mayor Jake Godbold wrote to Curry to say, ‘Your credibility is being damaged and your motives are being questioned.’ Council members said their constituents mostly opposed a sale, leaving few advocates to push for a highly complex transaction involving the nation’s eighth-largest municipal utility.”

22) Maryland: Questions have arisen about the process Montgomery County is using in its quest to land Amazon’s second headquarters. The former head of the county’s now-privatized economic development agency, Holly Sullivan, is now working for Amazon in the department selecting HQ2 sites. And Twitter warrior @samseabornagain writes, “in May, the MoCo Council will literally try and change zoning laws *exclusively* for Amazon. They want to cut in half time it would take to review Amazons HQ2 site development plan.” He also calls out the media for inadequately covering the issues: “Our local news is completely AWOL on this. @MoCo_DSA protests have been cut out of TV reports of public hearings, County Executive refuses to answer questions b/c he signed an NDA with Amazon(!) All outlets fawn over 50k jobs number (Gov Hogan just increased it 80k jobs!)”

23) Michigan: The Daily News has won their transparency battle to obtain public information about the head administrator of a local charter school. “After our editorial, Lewis contacted us, apologized and provided us with the requested information. He said SVSU as the authorizer had concerns regarding school performance and student enrollment at Flat River Academy. He said at both the elementary and secondary levels, Flat River’s performance scores are below those of neighboring Greenville Public Schools.”

24) New York: A civic group in Long Island’s Glen Head wants a public takeover of New York American Water’s water system for the town. Residents saw their water bills soar last summer. The company is blaming high property taxes it passed on to ratepayers. “A new water authority could buy New York American’s assets through a negotiated purchase or through condemnation, Nadel said, and raise the money for the takeover through the sale of bonds. Steven Warshaw, a realtor, urged members of the executive board to move quickly to form the water authority to demonstrate the group’s serious intention. ‘We’re not messing around,’ Warshaw said.” For more see North Shore Concerned Citizens.

25) Puerto Rico/National: Freddyson Martínez, vice president of UTIER, the PREPA utility workers union, says the federal government use of private contractors is posing future risks. “Wednesday’s blackout took place in the context of a concerted push from both the Puerto Rican government and the Washington-appointed Financial Oversight Management Board, or FOMB, to privatize PREPA, bringing its transmission and distribution capacity under private management and selling pieces of its generation capacity off to different bidders. With these contracts and more federal funding potentially up for grabs via privatization, Martínez predicted ‘there will be more Whitefishes and more Cobras—more animals of those species—lurking around trying to bite again.’”

26) South Carolina: In the wake of the deadly prison riot at the Lee Correctional Institution and the ruinous lack of contractor supervision at the failed Santee Cooper nuclear project (a ‘public private partnership’ that “committed the utility to investing billions of dollars into a construction project it did not control”), Cindi Ross Scoppe of The State points the finger where she thinks it most belongs: at the austerity-and-deregulation obsessed state legislature. “We don’t have enough correctional officers because we don’t pay enough or provide enough other incentives to entice people to accept the dangerous jobs we want them to perform. Just like we don’t have enough social workers because we don’t pay enough or provide enough other incentives to entice people to accept those high-stress jobs. Just like we don’t have enough teachers in some subjects and some schools because we don’t pay enough or provide enough other incentives to entice people to take those jobs.”

The Lee Correctional Institution riot is cited by prisoners who, Jailhouse Lawyers Speak reports, are planning a National Prisoners Strike from August 21 to September 9. Their statement reads, “Seven comrades lost their lives during a senseless uprising that could have been avoided had the prison not been so overcrowded from the greed wrought by mass incarceration, and a lack of respect for human life that is embedded in our nation’s penal ideology. These men and women are demanding humane living conditions, access to rehabilitation, sentencing reform and the end of modern day slavery.” Among their demands: “An immediate end to prison slavery. All persons imprisoned in any place of detention under United States jurisdiction must be paid the prevailing wage in their state or territory for their labor.”

27) Texas: Pastors for Texas Children (@pastors4txkids) says, “We are witnessing a rising tide of community support for public education all over America. We have seen and heard it all over our great land. It’s your time and we are listening. Let’s take back our schools from those who would starve/punish/privatize them. And let’s do it now.” Texas Educators Vote (@TxEdVote) responds, “Let your voices be heard at the state capitol and at the BALLOT BOX! Vote in primary runoffs May 22nd.”

28) Tennessee: Koch brothers-backed groups have spent big in Nashville to try and defeat tomorrow’s referendum that would fund a desperately-needed $5 billion upgrade of the city’s transit system, which is widely backed by public interest groups. “Nora Kern, director of Bike Walk Nashville, which is one of 130 groups backing the referendum, says the debate has definitely taken an ugly turn in the last few weeks. ‘The transit for Nashville side is trying to explain a really complicated infrastructure referendum,’ she said. ‘The opposition just needs to make people confused or scared and they win.’ But Kern thinks the optimistic message from the pro-transit coalition can carry the day. Supporters expect the vote to be close and the outcome to come down to turnout.”

29) International: As Ontario’s provincial government continues to push transit privatization, Keep Transit Public is campaigning to block the move by building pressure on elected officials. Although construction and 30-year maintenance contracts have been let to Aecon, Keep Transit Public says “there’s still time to stop them and Keep Transit Public!

31) Think Tanks: As conservative, industry-funded think tanks continue to push the outsourcing of public services to the private sector and the gutting of occupational safety laws and rules, the AFL-CIO has released a report showing the dismal record of the private, for-profit sector in occupational health and safety. Death on the Job, The Toll of Neglect, 2018, also contains state-by-state information on the number of state and local public employees not covered by the Occupational Safety and Health Act.

Legislative Issues

1) National: House Judiciary Committee Republicans have delayed to the week of May 7 a vote on a prison reform bill (HR 3356) supported by Trump’s son-in-law Jared Kushner. “The delay was concerning, said Timothy Heaphy, who served as a U.S. attorney during the Obama administration and attended two meetings Kushner hosted at the Capitol last week with bipartisan congressional leaders and advocates. (…) ‘I’m nervous, I think we could end up with nothing and that is a bad thing,’ Heaphy told Newsweek on Thursday. ‘We need sentencing reform and prison reform. I want to see both and I hope that that happens over time and I am absolutely worried that we won’t get anything.’” Numerous civil and human rights organization have come out strongly against the bill, saying “Any effort to pass prison reform (or ‘back-end’ reform) legislation without including sentencing reform (or ‘front-end reform) will not meaningfully improve the federal system.”

2) National: The National Business Aviation Association has been able to beat back an FAA reauthorization amendment by the big airlines to reverse their defeat on privatization by creating a bureaucratic Aerospace Management Advisory Council “to control the [air traffic control] system & agenda.”

3) Arizona: As the impasse continues between teachers and Gov. Ducey (R) and Republican lawmakers over where to find more money to boost education spending, a ballot initiative may be needed to force a solution. “The ballot initiative announced Friday, called Invest in Education, offers a way out. It would raise the income tax rates on Arizona residents making $250,000 per year or more to levels last seen in the 1990s. David Lujan, director of the Arizona Center for Economic Progress, predicted it would raise around $690 million per year. It is possible that leaders of the teachers’ movement will call off the strike in favor of pursuing this initiative.” The initiative “would designate 60% of its money for teacher salaries and 40% for district and charter school operation and maintenance expensesif organizers get enough signatures to qualify for the November ballot. It also would allow money to cover full-day kindergarten and pay raises for student-support personnel and would require that governing boards receive input from teachers and staff on how to spend the funds.”

4) North Carolina: State legislation (HB 514) that would allow the creation of municipal charters in two Charlotte suburbs, and thereby split public school districts, is raising concerns about resegregation. “A state legislative panel completed a report this year with no clear recommendations for how to divide school districts, although a lingering bill to clear municipal charters near Charlotte has the potential to bolster some of the resegregation concerns that has K-12 advocates up in arms, critics say. Quiet negotiations are flaring into a full-blown public relations war as the town of Matthews and Charlotte-Mecklenburg Schools take competing messages about town charter schools to taxpayers and families.”

In addition to possible municipal charter revisions, charter school interests such as the Fordham Institute are pushing hard to establish more charter schools in Charlotte. But even charter movement leaders in Charlotte are opposed. “Cheryl Turner, a longtime Charlotte charter school leader and member of the North Carolina Charter Schools Advisory Board, burst out laughing when told the study had labeled large parts of Charlotte as charter school deserts. ‘You’ve got to be kidding me!’ she said. ‘I think Charlotte may be oversaturated. There are charters everywhere.’”

 

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