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Weekly Privatization Report 7-3-2017

1) National: Craig Becker, the general counsel of the AFL-CIO and a former NLRB member, warns that the Supreme Court, at Trump’s urging, could be poised to privatize national labor law enforcement. “If the Trump administration persuades the Supreme Court to uphold the forced waiver of employee rights through mandatory arbitration agreements, it will spell the end of class-action employment litigation. No well-counseled employer will forgo the opportunity to both privatize and atomize enforcement of its legal duties. Already, employers across industries—such as United Health Care, AT&T Mobility, Ernst & Young and Hooters — have imposed such contracts stopping workers from cooperating to protect their rights. (…) Workplace arbitration is not simply a privatized alternative to adjudication in the courts. Recent research reveals that it can enable employers to erode enforcement of legal protections and minimum standards when its terms prohibit employees from joining together to challenge violations.”

2) National: Addressing the 96th NEA representative assembly in Boston, NEA president Lily Eskelsen Garcia denounces Trump’s proposed budget, telling members “what did they increase using the money cut from children? A brand new shiny private school voucher program for schools that are allowed to discriminate and over-promise and under-deliver and not be held accountable for the public dollars they take away from public schools.”

3) NationalThe Financial Times’ well-sourced markets and finance columnist and U.S. managing editor Gillian Tett investigates widely circulating stories that Saudi money funneled through the Blackstone private equity group will help pay for Trump’s $1 trillion infrastructure plan, which so far has yet to take shape. A little over a week ago, Blackstone’s Stephen Schwartzman announced plans to create a $40bn infrastructure fund, using $20bn from Saudi Arabia’s biggest sovereign wealth fund. But Tett is skeptical: “Maybe this will materialize. One sensible, overdue step would be to raise the petrol tax to pay for infrastructure; another would be to use proceeds from repatriated overseas corporate cash. But these ideas were notably not mentioned in this week’s White House budget plans and therein lies the hole. Until this is fixed, Mr. Trump’s infrastructure vision is likely to remain something of a mirage—even with Mr. Schwarzman and the Saudi government dancing as 21st-century genies.” [Sub required]

4) National: Education secretary Betsy DeVos is reopening the door to predatory colleges, The New York Times reports. “But a close analysis of the more than 500 failing programs that haven’t appealed their status reveals something interesting: A substantial majority of them, 300 or so, have already been shut down — even though colleges are not yet required to do so. The gainful employment test turns out to be an accurate way of identifying programs that for-profit colleges themselves don’t think are worth saving, as well as identifying programs run by colleges that are on the brink of bankruptcy and dissolution.”

5) NationalTruthout’s Candice Bernd reports on the Koch-backed effort to privatize the Veterans Health Administration. “By making [private-sector care programs] mandatory, [VA officials] will be then pulling money out of other VA programs to fulfill the obligation of [private-sector care programs] being mandatory—thus turning the VA into a slush fund for hospital executives and privatized care,” said Will Fischer, a Marine Corp veteran who deployed to Iraq in 2004, and who is director of government relations for Vote Vets.

6) National: A Koch-backed academic, Chapman University’s Vernon L. Smith, calls on President Trump to privatize the federal interstate highway system, which has been a dream of the privatization industry and its Koch-funded think tanks for decades. Smith implores Trump to “please consider a major expansion in your thinking.” [Sub required]

The Center for Media and Democracy has the backstory: “The Charles G. Koch Charitable Foundation gave a $3 million grant to help move Smith and his economics research team from the University of Arizona to the Interdisciplinary Center for Economic Science at GMU in 2001. About the move, the Mercatus Center website states, ‘Once again, support from the Charles G. Koch Charitable Foundation provided the critical funding for this formative move.’ According to Quantitative Finance, ‘The move was based on the Center’s proximity to Washington DC and the desire to make ripples in public policy circles.’ Smith also joined the Board of Directors of the Koch-funded Mercatus Center. The Charles G. Koch Foundation began donating money to Chapman University in 2008, the year Smith moved there. The Foundation has reported $107,000 in donations to Chapman University between 2009 and 2012, the most recent year for which data is available.”

7) National: K12 Inc., the for-profit online school company, has seen its stock increase by 49.1% for the year ended June 29, 2017. Its CEO, Stuart Udell, has been paid $4,540,698 for his efforts. [News Bites—People in Business, June 30, 2017; sub required]

8) National: A federal prosecutor has left her position after admitting that she listened in on inmates’ phone calls at the CoreCivic-run Leavenworth Detention Center.

9) National: Elden Rosenthal, a Southern Poverty Law Center board member and attorney, recounts his weeklong working visit to ICE’s Stewart Detention Center outside Lumpkin, Georgia, for the Southern Poverty Law Center’s new Southeast Immigrant Freedom Initiative.  “The facility, owned and operated by the for-profit corporation CoreCivic, holds men that Immigration and Customs Enforcement (ICE) is seeking to deport. (…) The work was intense. It was also deeply disturbing. All the detainees I had contact with were attempting to escape from violence and poverty in Central America. None had a criminal record. All were under the age of 30. One man had been shot in the abdomen by a drug dealer. Another had two cousins murdered by a narcotics gang. All the men I interviewed had family members in the United States who were willing to take them in and be responsible for them.”

10) AlaskaThe increase in drug-related emergencies is spurring calls for emergency medical services privatization. “Last year, the Berkowitz administration and fire officials brought two ambulances out of reserve to meet the demand for emergency medical calls. The union agreed to reduce staffing on fire engines for a year to avoid running up overtime expenses, an agreement that expired in April but would take effect again in July with a new contract. Dozens of overdoses of the synthetic drug Spice nearly two years ago cast the problem in sharp relief, [Fire Chief Denis LeBlanc] said. ‘We realized the Spice event became a triggering event,’ LeBlanc said. ‘It brought attention to the creep that had occurred.’ The city’s Budget Advisory Commission recently passed a resolution to explore whether it’s possible to privatize ambulance services in Anchorage, though the idea has been greeted with serious doubt by LeBlanc and other officials.”

11) California: After an investigation into its waste management authority, the Humboldt County Civil Grand Jury “recommends that, given its current lack of storage and on-site recycling capability, HWMA staff perform a cost analysis for contracting out its recycling versus acquiring more space for this purpose.”

12) Colorado: Courtney Pankrat, a writer who works at the Denver Public Library, lists “Five Ways the Denver Public Library Supports the City’s Homeless Population.” Pankrat writes, “All these programs have been highly successful in helping homeless people meet their immediate needs and find resources that could change their lives in the long term.” Would a privatized library operation do the same?

13) FloridaManatee County may have to fork over 10% of its capital budget to charters schools next year under HB 7069, a controversial bill signed by Gov. Rick Scott that became law on Saturday. “Manatee superintendent Diana Greene said Friday that the new law would not impact the district’s plans to build three new schools — a new high school and elementary school in Parrish and a new middle school in Lakewood Ranch — but it would force them to re-evaluate smaller projects. ‘Carpeting, painting, projects that our capital budget can pay for,’ Greene said, explaining what type of projects would need to be evaluated in light of the new law. ‘Things like technology, security—it really depends on the priority and what is the project and how this new change in legislation will impact those projects.’”

14) IllinoisTeamsters win pay raises for First Student drivers and staff. “The drivers and aides are members of Teamsters Local 777, which fought to secure higher starting wages for workers and give First Student employees raises across the board. Under the new Teamster contracts in Elk Grove Village and Villa Park, starting drivers will earn $17 an hour. Starting drivers in Glen Ellyn will see wages increase to $18 an hour. Other First Student Teamsters will see overall wages improve by up to $2 per hour, while more than half of the drivers across the three bargaining units will earn no less than $20 an hour.” Local 777 First Student Steward Regina Washington said “this is the best contract we’ve ever had. I know the Teamsters have secured the highest wages and benefits for privatized bus drivers in Illinois right now.”

15) Louisiana: GEO Group is ending its contract to operate the Allen Correctional Center in Louisiana due to state budgetary problems. “The possibility of the facility’s closure was raised early in 2016 when it was reported that that the state was exploring ways to trim $14.1 million in costs to close a budget deficit of $940 million. The Louisiana Department of Corrections had proposed to lower the rate it pays per prisoner to a daily rate of $24.39 from the current rate of $31.52.” At its LaSalle federal prison in Jena, GEO charges DHS/ICE $76.94 for each of the first 1,170 detainees per day and $28.38 per day for each one after that threshold is met.

16) MichiganEastern Michigan University is considering privatizing its parking system, and using Ohio State University as an example. Last June, the Columbus Dispatch published a letter to the editor from Prof. Emeritus Bruce Weide setting out the broken promises of university trustees about Ohio State’s privatization of its parking facilities. “So, where has all that extra money actually been going? Sorry to report there isn’t any extra money. Claims of new academic-program spending from this source are a shell game. Each year since the deal, I have documented how OSU has actually lost millions of dollars compared with what it would have had if it had not privatized parking.”

17) Puerto Rico/National: Faced with a disastrous fiscal and debt crisis, and under the control of an unelected supervisory body, Puerto Rico is “looking to sell itself off in pieces,” says the Wall Street Journal. “The troubled U.S. territory is preparing to seek bids in coming months from private companies willing to operate or improve seaports, regional airports, water meters, student housing, traffic-fine collections, parking spaces and a passenger ferry, according to a government presentation reviewed by The Wall Street Journal. The goal is to attract more than $500 million in investment starting this summer, according to a spokesman for the Puerto Rico Public-Private Partnerships Authority. Future possibilities include the island’s power utility, water-and-sewer system and waste management, according to presentations made in April to private investors.” But the WSJ notes that “Critics of the partnerships say governments are pledging away revenues they need to fund core services in exchange for infrastructure improvements that could cost less if publicly financed.” [Sub required]

But as The Nation’s Michelle Chen reported last month, “the commonwealth’s financial woes didn’t happen by accident—they were the result of decades of public immiseration and private gain.” Last Wednesday Bloomberg’s muni market analyst Joe Mysak discussed the crisis. Federal Judge Barbara Houser, who is leading a team of mediators in Puerto Rico’s bankruptcy, set an initial meeting with the U.S. territory and its creditors for July 12 in New York. [Case materials]. Faced with a stark choice of whether to protect its citizens or creditors, last week the Puerto Rico legislature passed a budget without debt service, and another version of the budget was then passed by the oversight board.

18) Tennessee: In a victory for open government advocates and taxpayers, the Tennessee Coalition for Open Government wins a ruling from Davidson County Chancellor Bill Young that government records requested by the Nashville Scene regarding the privatization of Fall Creek Falls State Park should be released and are not covered by an exemption in the Tennessee Public Records Act. “Under the exemption, proposals for professional services and related records are open for public inspection only after the state has finished evaluating the proposals. However, in this case, no proposals were received by the state’s May 1 deadline from businesses who wanted to operate the state park. The state argued that this meant any government records related to its request for privatization proposals would never have to be made public. But Nashville Scene attorney John Williams argued that the evaluation period for the request for proposals (RFP) was complete and any related records should be made public, including any email communications between businesses and government staff regarding the RFP. Williams said there is a clear public interest in the privatization of Fall Creek Falls State Park and such correspondence could offer insight into why no proposals were ultimately submitted.”

19) Tennessee: Nashville Mayor Megan Barry (D) is looking at the possibility of privatizing the operations of the Nashville International Airport. “The mayor’s office confirmed hearing a presentation in May from representatives of Oaktree Capital Management, a California-based investment firm that has also made bids to run government-owned airports in other cities.” But as is often the case with P3s, the deal is proceeding in the dark. “Airport Authority board chairman Bobby Joslin said the board has not been involved in the talks and predicted privatization would not ultimately happen. ‘I am still in the dark, which means the whole board is in the dark,’ Joslin said. ‘From what I understand, this is nothing but a conversation piece. They are looking at all available means in regards to funding mass transit. Whether this would sit well with the community, I don’t know.’”

In perhaps the quote of the week, Michael Boyd, president of Colorado-based aviation consulting firm Boyd Group International, referred to public service jobs as a “cookie jar” that would be taken away. “That also means job losses for some, an unavoidable result of privatization, Boyd said. ‘It does take a cookie jar away from some people if you do that,’ he said.” Jobs, a cookie jar? 

Critics of the proposed deal weighed in too. “Todd Litman, executive director of Canada-based Victoria Transport Policy Institute, said in a phone conversation he does not encourage privatization as a way to fund mass transit for two reasons: It often comes in the form of one-time money, and it is harder to rationalize to residents why that money must be solely dedicated to mass transit. ‘I know people are looking for some magic revenue source that won’t hurt anybody, but it’s kind of hard to find that,’ Litman said. ‘Governments provide a range of services to people and it gets back to this question of whether public transit should have priority over other options.’” [Sub required]

20) International: In the wake of the Grenfell apartment building fire, Britain’s regulator tells public housing officials that contracting out of services by public authorities does not mean they have contracted out responsibility. “Meeting health and safety obligations is a primary responsibility for registered providers. Boards and councilors must ensure that they have proper oversight of all health and safety issues (including gas safety, fire safety, asbestos and legionella). Contracting out delivery of services does not contract out responsibility to meet the requirements of legislation or standards, so providers need systems to give boards assurance of compliance.”

21) International: The Northern Pathways consortium has reached financial close for the $1.99 billion New Grafton Correctional Centre PPP project in New South Wales, Australia, which will be the largest privately-run facility of its kind in the country. “The consortium—comprising the UK’s Serco and John Laing, as well as John Holland and Macquarie Capital from Australia—will design, construct, operate and maintain the new facility on behalf of the state government for 20 years.” [Sub required]

22) Think Tanks: The Amsterdam-based Transnational Institute has co-published a comprehensive, 237-page report on reclaiming public services, detailing how citizens are fighting back against privatization. Co-publishing organizations include the Multinationals Observatory, European Federation of Public Service Unions, Public Services International, Public Services International Research Unit, and Canadian Union of Public Employees. The report has chapters on remunicipalization and the fight against public services privatization in France, Latin America, Norway, Germany, Austria, India, the UK, and Catalan municipalities. It also has chapters on trade and investment agreements, “the dangerous illusion” of ‘public private partnerships’, and energy remunicipalization.

Key findings of the book include:

•    There are better solutions than privatization
•    Remunicipalization is far more common than presumed, and it works
•    Remunicipalization is a local response to austerity
•    Remunicipalization is a key strategy for energy transition and energy democracy
•    Bringing services back in-house is ultimately cheaper for local authorities
•    Remunicipalization drives better, more democratic public services
•    Remunicipalization presents 835 more reasons to fight trade and investment deals
•    Lessons learned: Don’t privatize in the first place
•    Remunicipalization provides opportunities for new, diversified, democratic public ownership
•    Remunicipalizing cities and citizens groups are working together and building networks

23) Revolving Door News: Matt Smith and Lance Williams of Reveal News report that in a few weeks Mike Baird, the ex-premier of the Australian state of New South Wales, will be joined in the U.S. by an executive with the Australian investment firm IFM, “to boast about Australia’s record privatizing facilities such as ports and roads.” Baird, who provoked angry opposition during his term as premier for his privatization drives, left office to a chorus of jeers. Smith and Williams point out that “a month after Baird stepped down he joined National Australia Bank, which has pledged $100 billion in Australian infrastructure financing during the next seven years. Next month Baird will be in the U.S. along with an IFM executive touting Australian deals where the sale of government assets would be used to finance future infrastructure.” It will be interesting to see how willing these two will be to discuss the Indiana Toll Road ‘public private partnership’ fiasco on their road show.

Legislative Issues

1) National: Lawmakers are expressing concern that private debt collection corporations working for the IRS may be engaged in illegal collection practices, POGO reports. “Last week, a group of Democratic Senators led by Elizabeth Warren (D-MA) sent a letter to Pioneer and its parent company, Navient, expressing concern that Pioneer’s employees may be using illegal and abusive collection tactics in the IRS program. The Senators obtained the call scripts Pioneer is using when it contacts delinquent taxpayers and found “several instances of troubling language” that may violate the law, IRS policies, or the terms of Pioneer’s contract.” The IRS is supposed to report back to Treasury Secretary Steve Mnuchin on the program later this year.

2) West Virginia: Gov. Jim Justice (D) says he will veto a bill to authorize the sale of Jackie Withrow Hospital in Beckley, but only so he can push through a statewide hospital privatization measure. “In a statement released through his spokeswoman, [Department of Health and Human Resources Secretary Bill Crouch] said he will be working with legislators throughout the year to build a policy plan to sell off all the states hospitals.” Hospital workers have protested the proposed sale. Larshella Creasy, a health services worker at the hospital, said “she’s not just worried about her children and paying the bills, but she thinks the patients could suffer from a sale. ‘A lot of these residents here aren’t just disabled, but they’re mentally incapable,’ she said. ‘They’re putting other nursing home facilities in danger because our residents are not able to just go to a normal nursing home.’”

 

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