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Weekly Privatization Report 5-22-2017

1) National: Immigration and Customs Enforcement (ICE) boasts that it has produced a 40% spike in arrests since Trump signed his executive orders on immigration, from 31,000 for the same period last year to 41,000 now. Private, for-profit prison companies are banking on the continuation of such a surge to fill their prisons and jails with detainees. Despite Trump’s claims that he and Attorney General Sessions would focus on criminals, “roughly 11,000 of the immigrants arrested had no criminal convictions—up from about 4,200 at this time a year ago.” In addition, the “arrests are increasingly happening away from the border, in the country’s interior—and, as Human Rights Watch senior researcher Grace Meng tweeted, ‘interior arrests means lots more families being torn apart.’” When asked in their recent investor calls about their financial prospects, executives from the GEO Group and CoreCivic pointed to such a shift away from border apprehensions to interior raids.

2) National: State and local attorneys general and prosecutors push back on Attorney General Sessions’ call for federal prosecutors to restore harsh sentencing practices that have led to America’s mass incarceration crisis and driven up profits for the private prison and jail industry. “The increased use of mandatory minimum sentences will necessarily expand the federal prison population and inflate federal spending on incarceration,” the bipartisan group said in an open letter. “There is a human cost as well. Instead of providing people who commit low-level drug offenses or who are struggling with mental illness with treatment, support and rehabilitation programs, the policy will subject them to decades of incarceration. In essence, the Attorney General has reinvigorated the failed ‘war on drugs,’ which is why groups ranging from the American Civil Liberties Union to the Cato Institute to Right on Crime have all criticized the newly announced policy.”

3) National: The head of private equity giant Carlyle says that Trump will roll out the details and “principles” of his $1 trillion infrastructure plan in the next few weeks. Glenn Youngkin is “spearheading efforts to attract global money to public-private partnerships on infrastructure at Carlyle (watch video), which has $162 billion in assets under management.” Publicly-owned and controlled airports are a prime target “for investors looking to capitalize on the expected U.S. infrastructure boom, he said.”

Last week, the lobbying group for the private equity industry, the American Investment Council, issued a report saying its firms are “flush with capital” for investment in public infrastructure. Among the projects it holds out as an example of good practice is the Bayonne, N.J. water system privatization deal, which Donald Cohen of In the Public Interest and Wenonah Hauter of Food and Water Watch point to as a case of privatization being “a particularly bad idea when it comes to vital resources.” AIC’s board chair is former Bush campaign manager Ken Mehlman (he’s also a trustee of Teach for America).

Last week, which was National Infrastructure Week, the American Society of Civil Engineers released its 2017 infrastructure report card, which gave the U.S. a D+ rating. The report card contains a useful Infrastructure Super Map which allows readers to click on down through various sectors of infrastructure by state and contains grades and actionable information on real infrastructure needs, rather than just the boondoggle projects favored by the private finance and construction industries.

Wenonah Hauter of Food & Water Watch and Donald Cohen of In the Public Interest are warning lawmakers and the public not to sacrifice vitally important public control over our infrastructure as the U.S. moves to repair and build its roads, water systems and buildings. “All indications point to President Trump’s plan leading to the privatization of roads, water and other important infrastructure. Resources so vital need to managed as a public good—used and available to all, and most importantly—managed and controlled by the people, not corporations.”

4) National/International: Swiss investment firm Partners Group has warned investors of a bubble forming in several sectors, including infrastructure.

5) National: Are teachers’ pension and insurance funds financing the school-to-prison pipeline? Teachers Advisors LLC, a subsidiary of TIAA-CREF Asset Management Inc., which invests public teacher pension money,increased its investment stake in the private, for-profit prison company GEO Group. Other teachers’ funds that Nasdaq reports are invested in GEO include Texas Permanent School Fund, the Teachers Retirement System of the State of Kentucky, Teachers Insurance & Annuity Association of America, and the Teacher Retirement System of Texas. The State Board of Administration of the Florida Retirement System has boosted its investment in CoreCivic.

6) National: The Network for Public Education (NPE) publishes a State Report Card 2017, including a nationwide map and analysis, “to let the public know what school privatization programs exist in the 50 states and the District of Columbia. In addition, we rate the states and DC on the extent to which each state has laws and policies that further school privatization.” Carol Burris, the executive director of NPE and a former high school principal from New York, tells Alternet, “we want advocates to have facts at their fingertips. We want them to share those facts with the community at large. We also want them to use those fact sheets when they meet with public officials, many of whom do not understand the implications of school privatization. We are delighted that so many of our Grassroots Group members are actively using this Toolkit, which we will continue to promote.”

7) National: Last week the DOJ Bureau of Prisons issued bid solicitations for Community Treatment Services in Washington, DC, Las Cruces, New Mexico, and Duluth, Minnesota.

8) National: As “panic” spreads among many teachers, public defenders, Peace Corps workers, law enforcement officers and other public servants about the Trump administration’s plans to renege on government promises under the Public Service Loan Forgiveness Program, the Brookings Institution reports that “around 38 percent of these borrowers are employed at non-profit organizations, and the majority are employed at a government entity.” Daniel J. Crooks III, a government attorney who is expecting loan forgiveness from the public service program in six years, says “with student debt hanging over them, it might not be financially possible for recent grads to commit to public service careers.” Far from responding to the student debt crisis, the Trump administration is instead offering “an exclusive contract that will give one company the right to service billions of dollars of outstanding federal student loans now handled by four companies.”

9) California: In the Public Interest released a statement from Executive Director Donald Cohen on the California State Board of Education’s unanimous decision to close two Los Angeles charter schools managed by the Celerity Educational Group: “Celerity’s troubles highlight that the real victims of California’s runaway charter school industry are students. Every charter school that closes on a whim disrupts learning and leaves families scrambling to find a new school. It might be tempting to blame charter school scandals on a few bad apples, but the problems are much deeper. State education policy currently allows the private groups that operate charter schools to build new schools wherever they want and spend tax dollars with little accountability and oversight.” In April 2017, In the Public Interest released a report revealing that a substantial portion of the more than $2.5 billion in tax dollars or taxpayer subsidized financing spent on California charter school facilities in the past 15 years has been misspent.

10) California: Diane Ravitch writes, “Well, That Was Fast! Charter Founder in Los Angeles Charged with Fraud.” She reports that “the day after the election that handed control of the Los Angeles school board to charter promoters, the head of a now-closed Los Angeles charter school was charged with embezzling $200,000.” On Friday Peter Dreier wrote a post mortem on the money-soaked election. “Political pundits will spend the next few days and weeks analyzing the Los Angeles school board election, examining exit polls, spilling lots of ink over how different demographic groups—income, race, religious, union membership, gender, party affiliation, and others—voted on Tuesday. But the real winner in the race was not Nick Melvoin, but Big Money. And the real loser was not Steve Zimmer, but democracy–and LA’s children. Melvoin’s backers — particularly billionaires and multi-millionaires who donated directly to his campaign and to several front groups, especially the California Charter School Association (CCSA) — outspent Zimmer’s campaign by $6.6 million to $2.7 million. Melvoin got 30, 696 votes to Zimmer’s 22,766. In other words, Melvoin spent 71% of the money to get 57% of the vote.” Voter turnout was abysmal.

11) California: The Anaheim Elementary School District board has voted to take a “trigger law” case on converting a public elementary school to a charter school to the California Supreme Court. “District Superintendent Linda Wagner said school officials have been meeting with parents in recent weeks ‘and the message is clear: They want us to fight for the school. The notion that the district is not listening to parents is misinformed,’ Wagner said in an e-mail. ‘The vast majority of parents at Palm Lane want the school to stay exactly the way it is.”

12) California: The battle over a new charter school and the role of charters has bitterly divided Marin County. Bill Raden writes in Capital & Main, “Our state-elected and appointed officials are more than willing to discuss legislating children’s access to sugary soft drinks, yet they recklessly approve 3 out of 4 charter petitions that were previously denied for legitimately sound reasons at both the local and county levels … all because someone ‘feels’ this is the best course for public education.”

13) Georgia/National: In a reversal of what was once touted as the wave of the future by the privatization industry and its think tanks, nine Georgia towns that followed the “Sandy Springs model” are abandoning the outsourcing of municipal operations. “It wasn’t all that it promised to be,” former Brookhaven Mayor Rebecca Chase Williams said of the privatization model. “It was quite a learning experience. On paper, it seems like it’s cheaper to outsource rather than having your own employees. We learned that wasn’t necessarily the case.” And after a few years, Dunwoody’s senior managers who got their paychecks from outside companies but were working for the city “were struggling with having two masters.” Mike Davis, the former mayor, says workers struggled because “the boss wanted to maximize profit, and the city manager wanted additional service.” The Atlanta Journal-Constitution reports that “Evan McKenzie, a professor of political science at the University of Illinois at Chicago, calls the deep devotion to outsourcing ‘privatism’—a sort of religious adherence to the belief that the private sector can always do better than the public sector. Using outside companies to run a city, McKenzie said, is not a panacea. ‘It’s usually more cost-effective to deliver certain services through government,’ he said. ‘The worst thing a municipality can do is drink the privatization Kool-Aid.’”

14) Illinois: Passages charter school teachers have threatened to strike this Thursday. “‘None of us want to strike. We want to be in our classroom with our students and our bargaining team is committed to continuing [to] negotiate in good faith with AHS in hopes of reaching a fair contract, but if it takes a strike to force AHS to make changes that improve the education of passages students then we will be on the picket line until we achieve those improvements,’ [Third grade teacher Gina Mengarelli] said. In April 2016, 46 teachers, teacher assistants and paraprofessionals at the school joined ChiACTS Local 4343, which represents teachers at 32 schools in the city.” [Video report on Friday’s rally]

15) Massachusetts: Will investors grab the benefits of decades of public investment in Boston’s waterfront? “Through investment in the Big Dig and Boston Harbor cleanup, the public has already spent billions to improve the waterfront, said Peter Shelley, senior counsel to the Conservation Law Foundation, a nonprofit environmental advocacy group. To maximize their waterfront investment, the people have to be able to get to it. Instead, the city, in concert with the state, is looking to privatize the waterfront with high-end luxury developments—‘capturing the public value that has been created and not paying adequate compensation for that privilege,’ said Shelley. If the state gives the Chiofaro project the go-ahead, Shelly said the CLF will go to court to try to stop it.”

16) Ohio: Bill Lavezzi, a retired teacher and executive director of the Ohio Education Association-affiliated North Eastern Ohio Education Association, takes on the issue of funding equity for charter schools. “What characteristics might make funding equity worth considering?” asks Lavezzi. “3. The records of charter schools, including their financial records, should be subject to inspection by the public just as the records of public school systems are. 4. Charter school governance should operate under the same open-meeting rules as public boards of education. 5. As public employers, charter schools should be required to operate under the same labor rules as other public employers. Employees are capable of deciding freely whether to unionize or not, and employers shouldn’t be allowed to take reprisals against employees who want union representation.”

17) Oregon: A pro-public school candidate has won a hotly contested race for a spot on the Portland school board. “Privatizing education is not good for students or this city,” Rita Moore says. “I am completely opposed to it, as is the vast majority of voters and residents of Portland. Public education is a door that all kids have the right to walk through and which we as a society have the obligation to fully fund.”

18) Oregon: Gov. Kate Brown (D) might sell four state agencies, and possibly the TriMet transit system, to raise funding for the state’s pension plan. “TriMet’s union employees exert enormous power and would oppose a sale of any TriMet functions. ‘It would cause lots of problems for everybody,’ says Shirley Block, president of Amalgamated Transit Union Local 757, which represents TriMet employees. ‘Privatization is wrong, and we’ve seen that over and over.’” But Joe Baessler, political director of the Oregon AFSCME, was quoted as saying “we’re comfortable with the general idea. But it has to be a good deal for the state.”

19) Texas/National: An indictment links a state senator to a bribery scheme to ensure a private prison healthcare company [PNA] and its successors kept their contract at the scandal-plagued Reeves County immigration detention facility. “After Reeves County secured the [Federal Bureau of Prisons] contract in 2006, it was then up to county leaders to subcontract out the actual management of the prison to for-profit companies. That, according to federal prosecutors, is when Uresti got involved. The indictment unsealed this week claims that then Reeves County Judge Jimmy Galindo (no relation to Jesus Manuel) agreed to push the contract through commissioners court in exchange for kickbacks and the ‘promises of future payments’ from the company. The feds allege that PNA hired Uresti, then a decade-long member of the Texas House who was running for his first state Senate term, as a ‘consultant’ for ‘marketing services.’ The feds claim that in reality, Uresti became the middleman for bribe money flowing to Galindo.”

“The plan was to make Reeves into a so-called ‘Criminal Alien Requirement’ prison — the name for privately-run detention centers that contract with the feds to house low-risk immigrant inmates, most of whom, like [Jesus Manuel] Galindo, were simply caught crossing the border after having already been deported.”

20) International: As the Saudis prepare a massive effort to “privatize the education, health care, agriculture, mining and defense sectors and to sell off Saudi Aramco, perhaps the wealthiest company in the world,” they “expect the United States to be a key player,” CNN reports.

21) Revolving Door News/California: Tom Kness, who for six years was the City of Chicago’s Director of Public Private Partnerships—including when the city concluded its disastrous on-street parking privatization deal—has been hired by the global advisory firm Alvarez and Marsal to beef up its P3 team in Los Angeles. Kness was with the construction firm AECOM from 2011 until this year.

22) Think Tanks: With the private prison industry gearing up to build more prisons and jails, Jake Horowitz, the Pew Charitable Trusts’ director of research and policy for its public safety performance project, says there is a better way. He testified to Congress that “in several states, leaders from all three branches of government have worked together to improve their juvenile justice systems, dramatically reducing the number of youths sent to state custody while protecting public safety.” He says, “the bottom line is that states don’t need more correctional space to achieve less crime. In fact, they’ve protected public safety with dramatically lower levels of incarceration by aligning policies and resources with what the research indicates will produce the highest return on their juvenile justice investments.”

Legislative Issues

1) National: This week Trump is expected to roll out more details of his budget, including on some items with a direct bearing on privatization issues, such as prison and immigration enforcement funding, education spending, and possibly Medicare privatization.

2) National: Organizations on both the employee and managers’ sides are weighing in to try and block the privatization of the Federal Aviation Administration (FAA) air traffic control system. “AFGE is one of seven organizations representing FAA’s rank-and-file employees and managers that sent a joint letter to leaders from the House Transportation and Infrastructure Committee in opposition to privatization. (…) Joining AFGE in signing the letter were the American Federation of State, County and Municipal Employees; the FAA Managers Association, the National Association of Government Employees; the National Federation of Federal Employees; the Professional Association of Aeronautical Center Employees; and the Professional Aviation Safety Specialists.”

3) National: Senators Warner and Blount are taking another stab at establishing an infrastructure bank. “The measure from Blunt and Warner would ensure ‘unbiased project selection’ by requiring projects to show ‘clear public benefit, meet economic, technical and environmental standards, and be backed by a dedicated revenue stream,’ lawmakers said. It also would require the selection process to be transparent and publicly accessible.” The idea has received pushback from the some sectors of the privatization industry, who would prefer minimal public control and oversight of project selection. CG/LA CEO Norman Anderson told Infrastructure Investor last week that there is “no appetite for creating a new institution in Washington.” He also claimed that “you’re going to get a real move throughout the Trump administration toward private investment in infrastructure with very little or any new public monies,” [Sub required] a view that, if adopted by the Trump administration, would assure that Senate Democrats would try to sink any bill Trump promotes. Most observers agree that a bipartisan effort will be required to pass any infrastructure package.

4) National/Revolving Door News: As acquisition reform efforts get under way, the Project on Government Oversight (POGO) reports that the “revolving door keeps spinning with armed services committee staff.”

5) Florida: Diane Ravitch reports that some charter schools are drumming up efforts by parents to write to Gov. Scott to get him to sign legislation that will benefit charters and harm public schools. “At least two privately managed charter schools in Hialeah—Mater Academy Lakes High School and City of Hialeah Educational Academy—publicly advertised this week that they would give parents five hours’ credit toward their ‘encouraged’ volunteer hours at the school, so long as they wrote a letter or otherwise urged Gov. Rick Scott to sign HB 7069.” But “the nearly 10,000 phone calls, emails, letters and individual petition signatures received by Gov. Rick Scott were 3-to-1 against the bill, as of information provided Thursday evening. In contrast to the charters, there is no evidence that traditional public school advocates have offered incentives to boost support for their veto campaign.”

6) Louisiana: There will be a hearing tomorrow on a bill that would direct the Department of Public Safety and Corrections “to study the use of judicial referral agency residential facilities in work release programs and as an alternative to other incarceration programs.”

7) Maine: Democrats cry foul on Gov. LePage’s scheme to privatize the state’s psychiatric facility in Bangor without involving lawmakers in the bidding selection process. They oppose privatization. “‘We want to know what are the vendor qualifications, what is the scope of the treatment, what is the security,’ [Rep. Drew Gattine, D-Westbrook] said. ‘It’s been developed in a vacuum without input from stakeholders. I think that, really going back for over a century, it’s been a state function to take care of forensic patients. We have a great track record,’ he said. The governor’s office has pitched the new facility as the state’s best hope for recertification of Riverview Psychiatric Center in Augusta, which lost its federal accreditation in 2013 for overcrowding, inadequate staffing and for using handcuffs and stun guns to subdue violent patients. ‘This happens when the staff doesn’t get the support they need,’ Gattine said of the decertification. ‘If the state wants to go in a different direction, I think it’s the state’s responsibility to explain to us why,’ he added later.”

8) New Jersey: A bill was introduced to the Senate last Thursday that “modifies procedures for student enrollment in charter school[s] to require use of [a] lottery selection process; requires charter school admission policy to seek enrollment of student demographics of [the] charter school district of residence.” [S. 3207]

 

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