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Weekly Privatization Report 8-14-2017

1) National: The Fair Arbitration Now coalition, consisting of dozens of public interest groups, submits its final comment on a federal rule proposed by Trump that would strip legal rights from vulnerable residents in long-term care facilities. The rule change is backed by the for-profit nursing home industry and other business groups, including the U.S. Chamber of Commerce. FAN says “this cruel proposed rule would repeal current Centers for Medicare & Medicaid Services (CMS) regulations, finalized less than a year ago, prohibiting nursing homes and other LTC facilities from forcing patients into signing pre-dispute arbitration clauses. Moreover, the new proposal would allow these facilities to require a signed forced arbitration agreement as a condition of residing there, which is expressly prohibited by the current rule. Placing a parent or loved one in a nursing home is already one of the most difficult things anyone will ever have to do in life. But forcing the patient or family member to then sign something that violates the resident’s legal rights should they suffer future abuse or serious neglect is a horrific thing to do to families. This proposed rule is a disturbing new direction for CMS, which should be protecting patients, not making it easier for facilities to harm them and cover it up.”

CMS stopped receiving public input on the rule last Monday. It has not said when it will make a final decision. In January, AARP Texas reported that the quality of nursing homes in the Lone Star State is “shamefully poor,” citing 454 violations of the highest severity level, meaning they put residents in “immediate jeopardy.”

2) National: Apparently Trump sidekick Steve Bannon has gotten major pushback from the Defense Department over his quest to privatize the war in Afghanistan.

3) National: Last week, American Federation of Teachers leader Randi Weingarten struck back at a Wall Street Journal editorial that said she was on a “racism rant” for pointing out that “decades ago, the term ‘choice’ was used to cloak overt racism by segregationist politicians like Harry Byrd, who launched the massive opposition to the Brown v. Board of Education Supreme Court decision.” She tells the WSJ “the campaign today to defund and privatize our schools is keeping the same children from getting the public education they need and deserve. The evidence is clear that the private-school vouchers being pushed by Education Secretary Betsy DeVos fail the students they are purportedly designed to help, drain money from public schools, increase racial and economic segregation, and allow discrimination. The Department of Education’s own analysis of the Washington, D.C., voucher program found it has a negative effect on student achievement.” [Sub required]

4) National/International: As Australian ambassador Joe Hockey tries to drum up business in the U.S. for private Australian infrastructure investors such as IFM and Macquarie, back home the bankers are having a tough time selling their “asset recycling” idea. “While Western Australia’s treasury and even the politicians are said to be keen to hear the ideas, ‘privatization’ remains a dirty word among voters and the government is understandably hesitant to enact any plans only months after a successful election pitch to retain the likes of Western Power. But the question is whether a looming $40 billion-odd debt pile, soft payroll tax, GST receipts and iron ore prices are enough to ease its stance.”

5) National: Despite its disappointing second quarter results, the GEO Group is banking on an ICE immigration crackdown to boost its bottom line. “Profits declined two percent, company officials said on an earnings call, blaming the decreased revenue on a drop in border crossings, but they are expect a rebound in revenue thanks to a ‘gradual increase in interior enforcement.’” The money math seems clear: “According to data from Immigration and Customs Enforcement, immigrants arrested along the border are detained for 27 days on average, compared to an average for 52 days for those arrested in the interior.”

6) National: Brian Lehrer of WNYC talks to William Herbert, distinguished lecturer at Hunter College, City University of New York, and executive director of the National Center for the Study of Collective Bargaining in Higher Education and the Professions, and Joshua Freeman, distinguished professor of history at Queens College and the Graduate Center, City University of New York, about 50 Years of Public Employee Organizing, including the Taylor Law, which grants public employees the right to unionize.

7) Arizona: A move to put the voucher expansion issue on the November 2018 ballot stops the plan in its tracks. “The program doesn’t do exactly what it says it does, the Republic found in an investigation: A Republic analysis found that counter to the program’s characterization as a benefit to lower-income students in poor-performing schools, students abandoning higher-performing districts in more-affluent areas are largely using the program. Democrats and moderate Republicans in the state have opposed voucher expansion, saying that supporters are trying to privatize public education and that children in traditional public school systems wind up getting hurt.”

8) California: Los Angeles World Airports has issued a final request for proposals to three shortlisted teams to develop a light rail ‘public private partnership’ project connecting parts of LAX. Bids are due in November. “Three consortiums have expressed interest in bidding on the project: Gateway Connectors (Kiewit, Meridiam and Skanska); LAX Connecting Alliance (OHL Infrastructure, Acciona Concesiones, Star America Fund, Aberdeen Global Infrastructure, Axium Infrastructure and Charles Pankow Builders); and LINXS (Fluor Enterprises, Balfour Beatty, Hochtief and ACS Infrastructure Development).” [Sub required]

9) California: Customer complaints roil the new, outsourced trash collection system in LA. Officials say the rollout, due to be finalized in February, has had some issues but is going smoothly. “Florist shop owner Lance Williams says the trash bin at his Playa del Rey store fills up fast. (…) ‘Currently I’m paying about $140 total including taxes and fees. According to the RecycLA brochure, gonna be paying $269 approximately,’ said Williams.”

10) California: A three-judge panel of the California 1st District Court of Appeals blocks a Silicon Valley billionaire’s ability to privatize access to a public beach and have private security guards throw citizens off the beach. “This is not simply a win for surfers in San Mateo County,” Surfrider Foundation legal director Angela Howe told The Washington Post. “This is a win for all of the beachgoing public that wish to enjoy California’s beautiful 1,100-mile coastline.”

11) Colorado: The future of ‘public private partnerships’ in Denver may hang on the outcome of a vote this evening in the City Council over a P3 project to construct a new terminal at Denver International Airport. Public control is a central concern. “Some members express misgivings about more such deals. Their skepticism already has paused a consulting contract that’s seen as crucial to setting up a city office dedicated to shepherding such projects in the future. A big concern in that camp is that early plans call for end[ing] the elected council’s default role as final arbiter over those public-private partnership contracts, also called P3s.”

12) Indiana: After a years-long legal battle, the State of Indiana has won its lawsuit against IBM for breaching its 2006 contract to modernize delivery of welfare services by the Family and Social Services Administration. “The Supreme Court sent the case back to the trial court to determine the amount of the state’s damages. The net result of today’s ruling, the statement said, is that IBM now owes the state more than $78 million, plus interest at 8 percent from the date of the judgment.” IBM says it will appeal the ruling. John Maley and Peter Rusthoven of Barnes & Thornburg, issued a joint statement saying “this has been a long, tough battle with a big corporation that refused all along to take responsibility for its poor performance.” The contract was signed under former Gov. Mitch Daniels, a longtime advocate for the supposed superior efficiency of privatized public services.

13) Kansas: Should streets be privatized to allow for weapons screening? A proposal will go before the Kansas City Plan Commission tomorrow for debate. “The plan calls for privatizing Pennsylvania Avenue from West 40th Street to Archibald Street, and Westport Road from Broadway to Mill Street on weekend nights, which would allow law enforcement to search for and keep weapons and firearms out of the district. Under Missouri law, they can screen for concealed weapons on private property but not on public streets.”

14) Louisiana: With New Orleans’ drainage system in a shambles after heavy rains, Mayor Landrieu looks to temporarily privatize its operations to Veolia. Efforts to privatize the system go back nearly twenty years, andwas voted down by the city council in 2002. On Saturday, former Vice President Al Gore linked the New Orleans crisis to climate change [Beginning at 1:20].

15) Massachusetts: The Boston Globe hosts an op-ed exchange between a proponent and opponent of privatizing bus maintenance garages. Greg Sullivan, research director at the Pioneer Institute, which is part of the Koch-funded State Policy Network, claims “two independent assessments have pegged annual savings from bus maintenance privatization at 30-40 percent, which would bring MBTA costs more in line with those national peers.” Nate Dubois, an MBTA mechanic at the Arborway garage, says “privatization cuts costs in the short term but allows long-term costs to rise, as we have seen with the mismanagement of commuter rail. The mechanics, fuelers, and technicians within the Machinists Union Local 264 that keep the buses safe and operational offered then MBTA acting general manager Brian Shortsleeve at least $29 million in annual savings that would increase over time. That’s more than the $21 million to $23 million savings target for bus maintenance set forth by the MBTA Fiscal and Management Control Board. I voted for Charlie Baker and I’m very disappointed that now he’s trying to take my job. I want the governor to keep his word not to privatize jobs at the MBTA.”

16) Missouri: Citing potential damage to the city’s credit rating and a drain on the budget for “nonessential services,” St. Louis Comptroller Darlene Green refuses to sign a funding agreement for the Scottrade Center ‘public private partnership.’ A lawsuit was filed on Friday to block the project.

17) New York: Provocative hedge fund billionaire Dan Loeb goes racial in his attack on charter school critics, who hit back. Diane Ravitch comments, “he is chairman of the board of Eva Moskowitz’s Success Academy Network of charter schools. In addition to the millions he has personally donated, he has raised millions more from his Wall Street friends. Will his racist comment spoil Eva’s big moment? Her memoir will be published this year, in which she projects herself as the new face of the privatization movement, once held by Michelle Rhee. Loeb’s closeness to the Trump administration is not a plus in NYC. Eva too has boldly defended Trump, to the dismay of her teachers and other charter leaders.” A Daily News editorial says “if Success Academy CEO Eva Moskowitz, who’s stood by Loeb to date, knows what’s good for her movement and her kids, she’ll advise him to slink away. He can continue to fund whatever causes he wishes—but as the face for a critical cause, he’s officially toast.”

18) New York/New Jersey/National: The Gateway Program Development Corp., which is being backed by the states of New York and New Jersey and Amtrak to build a new dual-track rail tunnel beneath the Hudson River, hires a French private banker to run its finance operation. Gateway interim director John D. Porcari said “that the P3 financing might be an attractive option for Gateway because the board was not sure the project would receive the needed funding under President Trump’s $1 trillion infrastructure renewal proposal, which is expected to be unveiled next month.” [Sub required]

19) New York: The state insources some of its IT help desk after agency users complain about poor service after outsourcing. “There had also been worries about the cost of the outsourcing. At least one retreat from the plan was made late last year. Now, OITS plans to return some of the help desk responsibilities to state workers. The agency said it will continue to work with its main outsourcing contractor, IBM, but state employees will provide on-site assistance at the various state agencies. The process will begin this month in the Capital Region.”

20) Ohio/New Jersey: The two states have approached officials in New Hampshire for advice on establishing rest stop ‘public private partnerships.’ Pointing to “the shortfall in funding at the state and federal level for all modes of transportation,” Rebecca Harris, director of the transportation advocacy organization Transport NH, says states are being driven to P3s. “The federal and state gas tax revenues have not been sufficient to maintain our roads and bridges for many years, let alone modernize our transportation system to include options that make our state attractive to businesses and skilled labor.” [Sub required]

21) Ohio: The superintendent of one of the country’s largest online charter schools, ECOT, is resigning in the midst of a legal battle with the state over $60 million in funding for which ECOT “didn’t provide documentation of student participation.”

22) Ohio: Two groups of public educators are in the trenches fighting ALEC’s school privatization agenda in the state. “Teachers in Ohio are having none of it. Jeanne Melvin is a grandmother of three, a former teacher of 36 years retired from Hilliard schools who is a founder and current president of Public Education Partners and a members of Ohio BATs. Melvin said Friday that she cannot stand by and watch profiteers destroy public school districts and the children and families that they serve.”

23) Oregon/National: The Kochs don’t only advocate outsourcing of public services, they apparently want to practice it in their own company, Georgia Pacific. “As part of GP’s proposal, current employees would receive GWI’s on average 1% per year, which is far less than the 2.5% industry average.  The company’s proposal contains language that allows for contracting out of all work, maintenance as well as production. The proposal replaces current health care plans with plans that reduce benefits and have high deductibles. This shifts the burden to the employees to cover their health care.” Koch Industries is currently locked in a battle with The Association of Western Pulp and Paper Workers (AWPPW) Local 5, who haven’t had a contract with GP since 2014. The union says, “in a Washington Post article dated February 18, 2016, Charles Koch speaks against a two-tier society in America.  His company, however, appears to be leading the way to creating its own two-tier society amongst its employees, reviving the term, ‘Indentured Servant.’”

24) Pennsylvania: The troubled Innovative Arts Academy Charter School is reportedly looking for a financial savior. “For help, the Innovative Arts’ board of trustees turned to Charter Solutions LLC, a company managed by developer Abe Atiyeh, who also is the manager of Catty School LLC, the company that leases the Howertown Road building to the charter school.”

25) Pennsylvania: Concerns are mounting over transparency and decision-making in Lancaster’s broadband ‘public private partnership.’ “It’s not the industry norm to put everyone behind a single IP.”

26) South Carolina: Republican Governor Henry McMaster is trying hard to sell the Santee Cooper public power utility but is finding it rough going. “Selling government-owned utilities has been a goal in states across the country but rarely have those efforts ended in success, said Dennis Pidherny, managing director of public finance at Fitch Ratings. Politicians find more than a few hurdles in privatizing even small power suppliers, much less one of the nation’s largest state-run electric providers like Santee Cooper.”

27) Tennessee: An attorney has asked local officials to look into problems with inmate healthcare at the CoreCivic-operated Metro-Davidson County Detention Facility in Nashville. “Blackburn said this memo had nothing to do with his 29 page class action lawsuit [about a scabies outbreak]. He has been wanting a general investigation done into the general conditions for jail inmates. “If you have an obligation to respond to sick call requests in 24 hours but routinely do not do that, then you’re not providing the medical services that you’ve agreed to do and… duties you’ve taken money to perform.” Blackburn said the level of mistreatment of inmates rises to the level of potential FBI investigation.”

28) Tennessee: State Rep. Dwayne Thompson, D-Cordova, urges campus leaders not to outsource to Jones Lang LaSalle (JLL). “Most state employees are paid well below the market rates for their jobs. Despite the lower pay, they are dedicated and reliable employees because of good benefits, stable employment, and the satisfaction of being state employees who serve the public good. Without these incentives, you increase your costs through loss of expertise, low morale, and higher turnover. The people of Tennessee don’t want to give up public accountability and control to an out-of-state company.”

29) Revolving Door News: Miller Canfield Paddock and Stone PLC has launched a public-private partnership consulting subsidiary. It will be headed by Steve Arwood, a former head of the  Michigan Economic Development Corp. “Miller Canfield has a deep bench of public finance and P3 attorneys and works on a wide swath of public projects, from highways and bridges to schools to stadiums. The firm ranked first among bond counsel in Michigan and ninth among bond counsel in the Midwest for the first half of the year, according to data from Thomson Reuters. Steve Arwood will lead the new division of Miller Canfield charged with helping “clients navigate the complex process of identifying and securing incentives, financing and other opportunities for public-private partnerships,” according to a news release.” [Sub required]

30) New Book: Valuing Bureaucracy: The Case for Professional Government, by Paul R. Verkuil (President Obama’s head of the Administrative Conference of the United States), examines the relationship between the public interest and the use of private contractors. “Viewing the turn to contractors and private sector solutions in ideological and functional terms, he acknowledges that the problem cannot be solved without meaningful civil service reforms that make it easier to hire, incent and, where necessary, fire career employees and officials. The indispensable goal is to revitalize bureaucracy so it can continue to competently deliver essential services. By highlighting the leadership that already exists in the career ranks, Verkuil senses a willingness, or even eagerness, to make government, like America, great again.”

Legislative Issues

1) National: Top Democrats on four House committees are demanding a new budget scoring of legislation that would privatize the national air traffic control system. “The letter sent Monday to CBO director Keith Hall said the House Rules Committee altered the bill to cut $1 billion of grants from the Federal Aviation Administration’s airport improvement program and to slash aviation excise taxes by $15 billion per year beginning in fiscal 2021 without any compensatory budgetary offsets. ‘In total, these changes to H.R. 2997 … likely would add tens of billions to the cost of the legislation and thus the budget deficit,’ the letter from the Democrats said. The authors are: Rep. Peter DeFazio, D-Ore., the ranking Democrat on the Transportation and Infrastructure Committee; Rep. Eddie Bernice Johnson, D-Texas, of the Committee on Space, Science and Technology; Rep. John Yarmouth, D-Ky., of the Budget Committee; and Rep. Richard Neal, D-Mass., of the Ways and Means Committee.” [Sub required]

2) National: Trump says he may not work with Democrats on infrastructure. But The Hill is reporting that Transportation Secretary Elaine Chao won’t quit over the McConnell-Trump feud. “Still, some say that if Trump’s warning shots turn into action—like mounting a campaign to prod McConnell into stepping down from his post—it’s possible that there could be more serious political repercussions. ‘I think there comes a breaking point. If he kept it up, and he started to do anything real, or if McConnell got word he was calling up senators, then I think Elaine has to make a real decision,’ said former Gov. Ed Rendell (D-Pa.), who is co-chair of Building America’s Future. ‘But I don’t think Elaine is at that point.’”

 

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