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Weekly Privatization Report 5-21-2018

1) National/International: Thirty years after Thatcher and Reagan declared “there is no such thing as society” and “government is the problem,” and launched their aggressive privatization drives, the tide is turning. “With the failures of privatization all too evident when it comes to public resources and services, there is a global upsurge of interest in running things differently.” See the, e.g., the water remunicipalisation tracker.

2) National: Jeremy Mohler of In the Public Interest points to the complete lack of transparency in the decision of Trump’s Bureau of Land Management (BLM) to allow a private, for-profit logging company to cut down 400-year-old trees on public land so it could cut a road to reach its timber—in the process endangering the habitat of the northern spotted owl. “I know, it’s depressing — but we have to remember: public lands are ours. Things we own in common — public resources, parks, public buildings — are a big part of what makes a society. If we can’t even find out what’s happening with them let alone have a say in the matter, then the very idea of ‘society’ comes into question. We have to keep up the fight to protect them.”

3) National: In the Public Interest and University of Oregon political scientist Prof. Gordon Lafer respond to a critique of Breaking Point: The Cost of Charter Schools for Public School Districts by the Center on Reinventing Public Education (which is funded by the pro-charter Bill & Melinda Gates, Laura and John Arnold, and Walton Family foundations) by insisting that the full costs of charter schools not be swept under the carpet by using methodologically flawed conclusions based solely on per-pupil funding. “To suggest that these costs be ignored—or that elected officials continue to be prohibited from taking them into account—is to act in bad faith toward students,” writes Lafer.

4) National: Azadeh Shahshahani of Project South asks “Why are for-profit US prisons subjecting detainees to forced labor?” She writes, “CoreCivic’s abuse and exploitation of detained immigrants’ labor as part of its profit-making schemes constitute a contemporary form of slavery as we detailed in a submission to the UN special rapporteur on the human rights of migrants. The International Covenant on Civil and Political Rights (which the US has ratified) states, ‘slavery … in all [its] forms shall be prohibited,’ and that no one, including detained immigrants, ‘shall be required to perform forced or compulsory labor.’”

5) National: Sharon Lerner and Leana Hosea of The Intercept dig deeply into the “Dire Consequences of Giving Private Companies Responsibility for Ailing Public Water Systems.” Alissa Weinman, national campaign organizer for Corporate Accountability, says “Veolia is preying on cities that aren’t getting the federal investment they need to upkeep their systems.” But Lerner and Hosea say “now, the Trump administration is trying to make it easier for private companies to control public water systems while also seeking to cut federal funding for water protection.”

6) National: LittleSis has created a useful guide to the corporations that are de-funding public education and opposing striking teachers, including billionaire school privatizers, regional corporate forces, and Koch-backed think tanks. “This article lays out some information about the corporations, banks, and billionaires that teachers in Oklahoma, Arizona, West Virginia, Kentucky, and Colorado are up against.”

7) National: Shareholders have defeated proposals for greater transparency by American Water proposed by Boston Common Asset Management and Trillium Asset Management. According to their most recent SEC 13F filings, the top five institutional shareholders of American Water Works are (rounded value of holdings on 3/31/18) Vanguard Group ($1.5 billion), Blackrock ($1.1 billion), T. Rowe Price ($838 million), State Street ($672 million),Pictet Asset Management ($350 million), and Bank of America ($330 million).

8) National: Private capital fundraising for infrastructure investment, which is supposed to be “leveraged” by $200 billion of federal money into $1.5 trillion under Trump’s moribund plan, is “well below recent Q1 figures,” according to Preqin. “The slow start to fundraising in 2018 belies reported investor interest in the asset class.” [Preqin Real Assets Spotlight, May 2018; sub required]

9) National: Journalist Patrick Sisson reminds us to “never forget how monumentally bad the Chicago Parking Meter privatization deal was—should be exhibit A, and a horror story, for every city for decades to come.” Aaron Renn says this “Slow-Motion Train Wreck Only Has 65 More Years to Go.”

10) National: The National Business Aviation Association (NBAA) and the Aircraft Owners and Pilots Association (AOPA) have countered a Washington Post editorial supporting air traffic control privatization. “The reason for such widespread opposition is simple: it would replace congressional oversight of the nation’s aviation system with a board, effectively dominated by the airlines, and unaccountable to Congress. The group would have authority to target resources toward the large airline hubs and make self-serving decisions. And your suggestion that the legislation would stifle general aviation and ‘make more room’ at airports for the airlines is way off base. General aviation makes up less than 1 percent of traffic at Hartsfield–Jackson Atlanta International Airport and O’Hare International Airport in Chicago and less than 2 percent at LaGuardia Airport in New York.”

11) National: The Intercept’s Rachel Cohen unpacks the issue of whether it’s proper and ethical for charter schools to offer material inducements to low-income families of prospective attendees. “In cash-strapped school districts, where traditional public schools and charters compete over funds, schools face acute financial pressure to attract and retain students.” Sarah Butler Jessen, an education professor at the University of Southern Maine’s Muskie School of Public Service and co-author of a new book, Selling School: The Marketing of Public Education, said “part of the reason this doesn’t surprise me is because there isn’t a lot of transparency with these activities. There is no requirement that schools report practices like this.”

12) National: Want to see Backpack Full of Cash, the film about school privatization narrated by Matt Damon? Here’s a list of upcoming screenings

13) Arizona: Tucson becomes the latest city to ban private jails and detention centers. “But while Tucson and Pima County are at the forefront of opposition to the privatization of municipal corrections and detention facilities in the state, we’re certainly not alone,” says AFSC Arizona researcher Joe Watson. “Tucson and Pima County get it. And if we in red-state, ‘tough-on-crime’ Arizona are motivated to end their reign—along with Seattle and Indianapolis and frustrated lawmakers in Mississippi—companies like CoreCivic, GEO Group and MTC can be assured that it’s only a matter of time before the rest of the country follows.”

14) California: Charter school backers have outpaced teachers unions in spending on the governor’s race. “Wealthy donors who support charter schools and education reform have poured more than $22 million into independent committees to support former Los Angeles mayor Antonio Villaraigosa for governor and former schools executive Marshall Tuck for state schools chief. Teachers unions have dropped about $4 million on committees to back Lt. Gov. Gavin Newsom for governor and Tony Thurmond for superintendent.”

New York magazine reports that a nationwide network of charter school billionaires raised $17 million for the Villaraigosa ad effort, including $7 million from Netflix CEO Reed Hastings; $2.5 million from former housing developer Eli Broad; and $2 million each from investment firm manager William Oberndorf and former New York City mayor Michael Bloomberg. And “it will all play out in just a short week-and-a-half. But if Antonio Villaraigosa does make the ‘top two,’ one of the big questions will be exactly how far some of the deepest pockets in the country are willing to dig to take their battle all the way to November—and whether their candidate pays a political price for their support.”

15) California: An audit is coming the way of a Concord charter school after its top officials abruptly depart. “The Clayton Valley Charter High School has been instructed to preserve all documents, including emails and financial documents, as the county’s Office of Education conducts an extensive financial audit.” East Bay Timesreports that “the county has also expressed concern over the school’s transparency policies, particularly in denying a public records request sent by a former teacher for the contract for Assistant Superintendent Ron Leone. The school district does not have a superintendent for Leone to assist.”

16) Florida: Clarence Washington, president of Transport Workers Union Local 291, says don’t privatize transit, just pay better wages. “Instead of finding a way to properly fund Miami-Dade Transit, Mayor Carlos Gimenez and some county officials are trying to balance the Miami-Dade Transit budget on the backs of the poor.” TWU says“we have gone more than three years without a contract. And the Board of Commissioners on Tuesday adopted Mayor Gimenez’s proposal to give six more public bus routes to a private company that provides shabby service—and pays its workers poverty wages of $11.60 and $13.60 an hour. That’s our work!”

17) Florida: An Ohio businessman was sentenced to over 4 years for helping to defraud Florida charter schools out of nearly $1 million in public funding. There will be another hearing this week to determine “whether Kunkemoeller should begin serving his sentence right away or be allowed out of custody on bond while courts in Ohio determine an appeal for a years-old bank embezzlement charge.” Meanwhile, charter school enrollment in the state is up, surpassing that of traditional schools.

18) Florida: Sarasota’s school board has denied the application for Pinecrest charter school. “‘It is going to destroy public education here in Sarasota because they are just going to set up more and more of these schools,’ Carol Lerner, chair of Protect Our Schools Manasota says. ‘Already 14% of the students are in charter schools. You get to 20% and the schools start to fall apart. You get to 50%, and they start collapsing, the traditional school system.”

19) Indiana: The Hoosier Lottery’s for-profit operator, IGT Indiana, is poised to earn its first incentive payment ($6.5 million) “if lottery income continues on course through the June 30 end of the state’s budget year.” Lottery revenue for the year is projected to hit $1.26 billion, a new record, and 4.1 percent greater than 2017.

20) Iowa: Lawmakers and advisors are shaking their heads at the latest development in Iowa’s Medicaid privatization fiasco. State officials have turned in a new estimate that triples the amount of money they say privatization has saved. “Thursday’s letter gives no explanation of how the department came up with the new figures. It also doesn’t give the basis for Bentrott’s contention that Iowa’s savings are in line with other states. (…) Highland said Randol was willing to explain the savings estimates to the [Des Moines Register] ‘on background.’ The Register declined, saying such a discussion should be on the record so it could be reported to the public.”

21) Maryland: The scramble is on for federal charter school money. The state “is set to give away millions of dollars to groups hoping to start or expand public charter schools. More than $17 million is coming to Maryland from the federal government. But, there are plenty of strings attached in order to cash in. The Monarch Global Academy in Laurel is one of five charter and contract schools run by the Children’s Guild serving students in Anne Arundel County. (…) Charter school operators and those hoping to start programs like Monarch Global Academy may qualify for one of five grants totaling, on average, $700,000. The money can be used to start up new schools, known as replication schools, or for school expansion.”

22) Missouri: The process to privatize Lambert International Airport in St. Louis has stalled out. “We can’t get started.” Aldermanic President Lewis Reed says “he won’t support a privatization deal that doesn’t bring in the funds to adequately allow the city to address issues like blight, debt and job creation. ‘If those things can’t happen, then it’s not something we should do. So it’s going to take a lot of work.’”

23) New Jersey/National: Vineland resident Wayne Kerschbaum describes an unsuccessful pitch last year by Library Systems & Services (LSSI) to take over operation of the public library. At the invitation of the Mayor, “representatives of Library Systems & Services made a pitch to manage our library. I attended this presentation and, candidly put, it didn’t add up. The savings figure stated was completely unsubstantiated, and anyone who critically considered it realized that the achievement of their financial goals would come at the expense of the library staff’s income and benefits package. The presentation was as intellectually insulting as it was patronizing. With the exception of exactly one person, everyone attending told the board, no. We care about the quality of our library and the well-being of its staff. They are our neighbors.”

24) North Carolina: The nationwide wave of public education protests has come to North Carolina, as “nearly 20,000 North Carolina teachers descended on Raleigh, the state capital, on Wednesday to ‘march for students and rally for respect.’ Wednesday’s event is ‘the beginning of a six-month stretch of time to hold our legislators accountable for prioritizing corporate tax cuts, instead of our classrooms,’ and work toward the ultimate goal of ‘electing more pro-public education leaders in North Carolina to return our state back to a beacon for public schools,’ the North Carolina Association of Educators (NCAE) said in a statement that laid out a list of expectations for lawmakers.” Kristin Beller, a member of the North Carolina Association of Educators, “raised the issue of charter schools, which she said have stripped funds from the state’s public schools. A paper co-authored by a Duke University professor last year found that charter schools are reducing the funding available for Durham’s public schools by $500 and $700 per student, The News & Observerreported.”

25) Ohio: The Cincinnati Enquirer’s Jessie Balmert takes a look at the potential impact the ECOT virtual charter school scandal will have on hotly contested state election races.  “For years, Republican leaders heaped praise on the Electronic Classroom of Tomorrow—billed as an online alternative to poorly performing public schools. Now, the GOP can’t put enough distance between its candidates and the failed, taxpayer-funded experiment. Democrats—hoping to capitalize on the scandal-ridden charter school to win elections in 2018—aren’t going to let this go. Expect your television set and social media feeds to be filled with ECOT for the next six months.” In the meantime, several more shoes may drop, including “How much money did ECOT donate to lawmakers and state leaders?”

26) Oklahoma: In what is surely not a good look for the charter school industry in the state, Langston Hughes Academy for Arts and Technology’s board members have obtained a restraining order from a judge against the president of the organization’s board, “after three fellow board members claimed she misled them regarding grade-tampering allegations at the charter school. Those grade-tampering allegations led to the suspension of Langston founder and superintendent Rodney Clark and three other staff members in April. The board plans to vote on whether it should reinstate the suspended staff at special board meeting [tonight].”

27) Puerto Rico/National: Municipal finance analyst Cate Long says it’s “important to note that the last utility privatization done in Puerto Rico (PRASA) was handled by the current governor’s father and was rushed & the deal fell apart twice. It’s almost a mirror image of the rushed PREPA privatization happening now.”

28) Washington: The State Supreme Court has again taken up the volatile issue of whether charter school funding violates the state constitution. “This is a very different creature—privately managed, publicly funded,” said Paul Lawrence, “who represents groups that include the Washington Association of School Administrators, the Washington Education Association, other unions and parents who have children in public schools. ‘You can’t create uniformity by saying, ‘We are the same, except …’” Former state Attorney General Rob McKenna “said it shouldn’t matter that charter schools aren’t under the control of the locally elected school board.”

29) International: The British parliament has issued a devastating autopsy on the collapse of Carillion, the large public services outsourcing company, that has led to thousands of job losses, abuse of subcontractorsand stresses on public services. The reportdelves into multiple issues, including the siphoning off of desperately needed revenues to support generous dividend payout to directors and shareholders, irresponsible pension management, incompetence and conflicts of interest on the part of big accounting companiessuch as KPMG, Deloitte and EY (the report says the competition regulator should consider breaking up the “big four”), and a shambolic and hopelessly inept system of government corporate and contracting oversight. Their conclusion, “Carillion could happen again, and soon.” Owen Jones of the Guardianwrites, “Until we have a government that rips up these contracts and brings all these public services back in-house, there will be many more Carillions to come.” [Full report].

30) International: The Prison Officers Association is demanding that all prison contracts in Britain be brought into the public sector. “Following Carillion’s collapse in January, the Ministry of Justice (MoJ) was forced to renationalize prison cleaning and building repair work. The MoJ had funded Carillion by almost £100 million over two years despite ministers having twice admitted that the firm was failing to deliver and prisoners were living in squalor.”

31) Think Tanks: Brookings reports that low income households spend a huge portion of their income on infrastructure. “If infrastructure is to function as a shared platform to promote economic prosperity,” Adie Tomer writes, “the price for these services should be readily affordable. In this case, that means every household can pay their water, energy, transportation, telephone, and internet bills—and still leave money left over to purchase other essential items like housing, food, clothing, and healthcare. In a country as wealthy as the United States, access to infrastructure is a necessity that should be available to everyone. Unfortunately, that’s far from the case.”

For details on how privatization increases inequality, see In the Public Interest’s reporton the subject. Last Tuesday, Brookings held an event to discuss how to build “inclusive infrastructure.” Government Executive’s Dave Nyczepir points out that “the Trump administration’s infrastructure plan does little to ensure the $200 billion in proposed federal investment will reach underserved communities, instead focusing on streamlining the permitting process for construction projects to within two years.”

32) Think Tanks: John F. Pfaff, a Fordham law professor, has written a piece suggesting that “perverse incentives” are far more important than “the seeming evil of the ‘profit motive’” in driving mass incarceration. Leaving aside that the private profit motive is itself a perverse incentive for human incarceration (an idea that is likely anathema to many conservative Law and Economics partisans such as Pfaff), we would certainly welcome his joining us in the fight against what he calls “bad contract incentives.” We could certainly use the help, what with the “over 3,100 corporations—including over 2,500 privately traded companies—that profit from the United States prison system.”  Perhaps he­ could explain the relative unimportance of the profit motive to them, and save them some money on lobbying and greasing politicians.

Legislative Issues

1) National: The American Federation of Government Employees (AFGE) denounces legislation that the House passed on May 8 to advance privatization of the veterans affairs department. “AFGE opposes the bill because it would: Give a VA Secretary the authority to privatize and dismantle broad swaths of the VA health care system through a permanent private sector health care program; Devastate veterans’ communities by closing vibrant VA medical centers that have become their communities, not just hospitals; Lead to deterioration of VA facilities and in-house skills as resources are moved to private sector program.”

2): National: On Friday, President Trump gave a speech at a “Prison Reform Summit” at the White House, and urged Congress to send him a bill he can sign. But The Hillreported that “despite the optimistic tone, the White House’s prison reform plan faces a tough road in the Senate. While the bill has passed the House Judiciary Committee, top senators on both sides of the aisle want to pair the prison reforms with changes to mandatory minimum sentences for certain drug offenses. That change would likely face opposition from the administration, particularly from Attorney General Jeff Sessions.” The bill is expected to be taken up by the full House this week, and will likely pass but seems unlikely to get enough Democratic support to pass the Senate.

Also on Friday Rep. Hakeem Jeffries (D-NY) circulated a scathing letter denouncing what he called the House bill’s opponents’ “Inflammatory Claims About Privatization.” He wrote, “The FIRST STEP Act permits the BOP to enter into partnerships with colleges and universities, non-profits and faith-based groups. For the record, the Senate bill championed by the authors of the opposition letter does the same thing. Apparently, this provision is cause for alarm in the House bill and a reason to celebrate the Senate bill. The hypocrisy of the opposition’s privatization argument is staggering.” But Democratic opponents of the House bill are mainly concerned with its lack of sentencing reform provisions.

Meanwhile, the nationalist far right, in the form of Breitbart, is taking shots at the libertarian Koch brothers for supporting prison reform legislation. “On one side are the White House, Senate Majority Whip John Cornyn (R-Texas), most House Republicans and a group of House Democrats who are eager to reform the nation’s crowded prisons. But serious pushback is coming from the powerful Senate Judiciary Committee chairman, Chuck Grassley (R-Iowa), as well as other House and Senate Democrats and powerful progressive activists who don’t want to see prison reform move without overhauling what they see as outmoded federal sentencing rules.”

3) National: The House Transportation and Infrastructure Committee has introduced its biennial water resources legislation, which may provide scope for some action on infrastructure at a time when the Trump plan is dead in the water. “Committee Chairman Bill Shuster (R-Pa.), ranking member Peter DeFazio (D-Ore.), and Reps. Garret Graves (R-La.) and Grace Napolitano (D-Calif.) unveiled the bipartisan Water Resources Development Act (WRDA) of 2018.” [But see the articlereferenced above by Sharon Lerner and Leana Hosea; and also DeFazio’s February address on infrastructure].

4) Arizona: Yesterday the Arizona Republicran a hard-hitting editorial denouncing the double standard in transparency that favors charter schools over public district schools. “Arizona’s charter school experiment cannot be sustained without public confidence in how public money is being spent. The Legislature took one positive step to increase confidence—and a giant leap to undermine it. Charter school supporters should be lining up to fix this. Why? Because more transparency and financial accountability are in the long-term best interest of charters.”

 

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