Weekly privatization report: Bay Area P3 is failing | Alabama looking to private prisons | and more

Here’s our weekly analysis of privatization in the news and in communities nationwide, in order by sector. Not a subscriber? Sign up here.

THIS WEEK’S HIGHLIGHTS

  • Results from California’s Presidio Parkway “public-private partnership” are in, and it’s being called a “fiasco from the beginning.”
  • Pro- and anti-charter school advocates showed up in forcelast week in Sacramento to engage lawmakers on new rules on oversight and expansion.
  • Alabama state officials are looking for private contractorsto build and operate three new prisons.

EDUCATION

1) National: Representative Susie Lee (D-NV) and Senator Chris Van Hollen (D-MD) have introduced the Keep Our Promise to America’s Children and Teachers (PACT) Act, “which would put Congress on a fiscally-responsible path to meet its obligation to fully fund Title I and the Individuals with Disabilities Education Act (IDEA) on a mandatory basis over the next 10 years.  (…) ‘The Keep Our PACT Act is a crucial down payment on 50 years of federal neglect, compounded by the last 30 years of starvation of schools and legalized theft from disadvantaged and special needs students through privatization,’ said Jitu Brown, Director of the Journey for Justice Alliance. ‘Fully funding Title I and IDEA can begin to turn the tide for our neediest students who we have failed to invest in for far too long. When will we have zero tolerance for inequity?’

2) NationalChris Savage of Eclectablog reminds us of Mitchell Robinson’s question, are charter schools the new private prisons? Robinson wrote, “teachers and those who have observed the impact of the corporate education reform agenda on public education over the last decade or so may notice some striking similarities between the findings of this Justice Department report and the explosion of the charter school industry in our country. As with the private prison scenario, the explosion of charter schools in the last decade has created parallel school systems–both allegedly public, but fighting for limited resources, and competing on an uneven playing field.”

3) CaliforniaPro- and anti-charter school advocates showed up in force last week in Sacramento to engage lawmakers on new rules on charter school oversight and expansion. “That the legislative panel passed Assembly Bills 15051506, and 1507on Wednesday wasn’t surprising—the authors of the trio of bills sponsored by the California Teachers Association made up two-thirds of the panel, which is chaired by a longtime public school teacher and former member of the CTA’s policymaking assembly.But the hearing, which featured more than five hours of impassioned debate and testimony from hundreds of people, offered a glimpse of just how consequential the charter proposals are to teachers unions and charter advocates. While the two sides have battled for decades—typically to a draw—the political momentum has shifted in favor of organized labor this session.”

4) California: Bill Raden and Eunice Park of Capital & Main report that “in a David vs. Goliath win, a coalition of East L.A. families, teachers and community groups announced last week that the City of L.A. has pulled the plug on a new ‘mega-KIPP’ charter school development. (…) Opponents had argued that building the massive charter school in an area already at overcapacity (and facing declining enrollment) would have been fatal for neighborhood public schools that are currently fighting for survival. ‘We united the community,’ said longtime Boyle Heights activist Carlos Montes. ‘We got the letter from the City of L.A. Planning Commission, terminating the project. So this is a victory. If you fight, you can win.’”

5) Colorado: Kevin Vick, a social studies teacher and vice president of the Colorado Education Association, tells the state board of education “about the serious concerns educators have on hiring external managers for turnaround schools and districts. Vick said the privatization of public schools, especially in communities of color and low income, have led to poor outcomes, unsound decisions, and even outright fraud. “Any company can come in with a fancy presentation and promises of making all the problems disappear. However, without any connection to the community or responsibility to the taxpayers, these companies frequently pick up and leave after they have made their money, and the school or district is left in worse shape than before.” Vick told board members to provide oversight of external managers and ensure communities are engaged in the school improvement process.” [Video, about three minutes]

6) Florida: The battle against efforts by the Hillsborough school board to privatize custodial services continues. Public education advocate Bill Person tells us that Hillsborough educator “Laurie Rodriguez sports these custom made earrings to support 1500 Hillsborough Schools’ custodians threatened by Hills. School Board members Cona and Stuart’s attempt at Privatization! Resist. We are Union Strong!”

7) Illinois: The Senate has approved a bill that would allow local school districts to approve charter schools. “This proposal is about local control and accountability for charter schools as they exist for public schools,” Senator Linda Holmes (D) said. “The existing commission has overturned local school boards and I believe those decisions belong in the community, not at the state level.” [SB 1226]

8) Louisiana: “The community public schools movement is here!” says Baton Rouge’s 771 alliance. “Help save BR schools from privatization and assure the experimentation with the future of children in Louisiana ENDS here. Monday at 6pm. Here.”

9) MinnesotaSt. Paul officials are debating ways to rein in growing charter schools. “The St. Paul Federation of Educators has quizzed school board and City Council candidates about whether they would back a moratorium on charter school growth pending a comprehensive look at the schools’ effects on the community. No such proposal has been drafted, but it’s generated strong support, including from council members with charter schools in their wards.”

10) Montana: Amanda Curtis, 2nd Vice President of the Montana Federation of Public Employees, provides an update on the 2019 Montana Legislature and focuses on “the reckless attempt to privatize Pre-K.” [Video, about two minutes]. MFPE has two national affiliates, AFT and NEA.

11) Nevada: Lawmakers passed an education bill after stripping out a provision that would have set a cap on the number of new charter schools. “The original bill sought to prevent school district officials and others from approving an application to form a charter school until 2021. Amendments to the bill removed that section. Instead, a change to the bill would require the State Public Charter School Authority to prepare a plan that includes the status of charter schools and a five-year projection on charter school growth.”

12) New Jersey: Facing a $27 million deficit, the school district in economically beleaguered Camden plans to shut two schools and an annex, relocate about 900 students, and cut several hundred jobs. Thomas Ultican says the bottom line is “privatization and segrenomics.” Diane Ravitch outlined plans for the privatization of the city’s schools back in 2015. 

13) Pennsylvania: Teachers at the Innovative Arts Academy Charter School are being prevented from speaking out about their experiences at the school by non-disparagement agreements. “The former employees told The Morning Call that as part of their severance agreements, they were forced to sign paperwork that includes a non-disparagement clause preventing them from speaking freely about the school. If it weren’t for the agreement, the former employees say they would share their concerns, triumphs and suggestions about the future of the school with Catasauqua Area School Board members during an upcoming hearing, now scheduled for May, to determine whether the school’s charter is renewed. (…) A flurry of controversies followed, including allegations the school was failing to adhere to special education law, a whistle-blower lawsuit and concerns about the school’s financial health. School leaders persuaded the Catasauqua School Board in 2017 that they would address the concerns and operate more transparently.”

14) Tennessee: Have a look at this amazing Tennessee and beyond school privatization map. h/t @1DanLawson.

15) Texas: A charter school superintendent who had been charged with embezzlement is among the top the 20 highest-paid charter school leaders in the Houston area.

INFRASTRUCTURE

16) National: Democratic lawmakers are expected to meet with Trump in the next few weeks on an infrastructure package, but hopes are not high for any solid result. “‘It’s better that they’re meeting than if they’re not meeting,’ said Ryan Abraham, a Principal at Washington Council EY, who spent 14 years serving on the Senate Finance Committee. He added it was a good sign that they can have a conversation. ‘But a lot more is going to have to happen, like having deeper conversations around offsets and size of the legislation,’ Abraham said. Conversations around pay-fors such as a gas tax could still cause disagreement, he said.” [Sub required]

17) National/Puerto Rico: Watch Dr. Marla D. Perez Lugo, Professor of Environmental Sociology at the University of Puerto Rico-Mayaguez introduce her testimony before the House Natural Resources Committee hearing on the rebuilding and privatization of the Puerto Rico Electric Power Authority (PREPA). [Video, about 2 minutes; full text]. “After sixty-five years of hierarchical, centralized, top down, and captured governance processes, how can a transition towards resilience and sustainability be enabled by a governance model that refuses to be transformed?” she asks. “This ‘legacy governance model’ has demonstrated high levels of resilience, to the point that not even hurricane Maria could shake it down. If political parties act on behalf of their contributors, which are private entities, how can privatization address this problem?” Food & Water Watch says “the proposed privatization of Puerto Rico’s power company would be a major obstacle to the Island’s goal of 100% renewable energy.”

18) California: When the Presidio parkway ‘public-private partnership’ was being developed, many warned that the P3 model was inappropriate and the cost and delivery estimates of boosters were misplaced. Well the results are in, and the project is being called “a fiasco from the beginning.” Wes Venteicher of the Sacramento Bee now reports that “the Presidio Parkway is more than two years late and $208 million over budget. When the commission approved another $34 million in delay-related spending last month, two commissioners who originally opposed the project lamented their predictions had come true. (…) Now the state is paying for the Parkway through 2043 from its general highway account. ‘That’s hundreds of projects that could be built in every part of the state that will not be built because they’re paying for a project in San Francisco that’s two to three times as much as it should have been,’ said Ted Toppin, Professional Engineers in California Government’s executive director. The union represents Caltrans engineers. (…) ‘We’ve done a terrible job. And it’s a reflection, unfortunately, on the future of doing (public-private partnerships) in California,’ [Transportation Commission member James Ghielmetti] said. ‘And I’m ashamed this thing got as far as it did, as messed up as it did.’” [See video in article, about 2 minutes]

19) Maine: Legislation has been introduced to create a state electricity distribution authority. In a letter to the editor of the Bangor Daily News, Larry Theye of Belfast says “Rep. Seth Berry’s bill to create the Maine Power Delivery Authority deserves serious consideration. I would suggest that this consideration include a close look at the Nebraska Public Power District, a consumer-owned public utility that has been operating successfully for decades. Compare the annual average electric rate in Nebraska, over 9 cents/kWh in Nebraska to 15.8 cents/kWh on my most recent electric bill in Maine. You will likely be hard pressed to find any Nebraskan who will argue for privatization of their electric system. The argument that the private sector can do anything better and more efficiently than government simply doesn’t hold up in this case.”

20) Maryland: The Department of Transportation has revealed its plans for widening I-270 and the Capital Beltway in a projected ‘public-private partnership’ and set out alternatives. Public hearings are scheduled for April 24, 25 and May 10. “The document says that now that alternatives have been chosen, the transportation department can proceed with environmental assessments, which would be complete by early winter 2020.” Brad German of Citizens Against Beltway Expansion, “said he’s concerned about the public/private partnership behind the toll proposal. German said the public isn’t being fully informed about how much money taxpayers will be expected to pay. ‘These projects really depend upon ongoing congestion. And ongoing taxpayer support to succeed financially. That’s not part of the picture that we’re getting,’ said German.”

21) Missouri: Senator Claire McCaskill (D-MO) says “something about this privatization of the airport smells.” MetroSTL.com’s Jaco Report presented a debate about the issue. [Video, about 20 minutes]. A request for qualifications for potential Lambert operators could soon be issued.

22) Tennessee: Nashville Mayor David Briley’s administration has revealed plans to privatize on street parking. “The winning bidder will get the right to operate, enforce and even expand the current street parking.” WTVF investigative reporter Ben Hall says “the number of parking meters could more than double in the next few years.” Metro Councilman Steve Glover is criticizing the plan. “‘A short term gain for the city and a long term loss for the taxpayers,’ said Glover. (…) Glover worries the city is desperate to get the upfront money to make next year’s budget work. He said it appears Metro wants the contract in place before the start of the next fiscal year in July.” 

23) International: “Can a ‘people’s vote’ stop Paris airports from going private?” asks France24. “French opposition lawmakers from left and right who banded together to trigger a public referendum on President Emmanuel Macron’s plans to privatise Paris airports have cleared a first hurdle in a complex process often regarded as nearly impossible. It seems French President Emmanuel Macron’s divisive proposal to privatize one of the French state’s ‘crown jewels,’ Aéroports de Paris (ADP), has succeeded in uniting both right and left against him.” Nevertheless, corporations are still circling the prey.

24) International: Duke University Prof. Kenneth Surrin has mapped out how foreign corporations moved in to scoop up public infrastructure and servicesafter Margaret Thatcher and Tony Blair’s privatization sprees. “So what actually happened to the ‘great British share-owning democracy’? The state bureaucrats so excoriated by Thatcher have been replaced by private bureaucrats, albeit ones paid astronomical salaries when compared to those received by their counterparts in the annihilated state sector. The newly privatized state enterprises were never going to be owned by the likes of Joe and Jill Normal, or even John and Jane Bull—instead large foreign corporations and foreign governments now own nearly all these companies.”

25) International: Feeling the heat from Labour leader Jeremy Corbyn’s promise to bring water services back into the public sector if he comes to power, British private water companies are slashing rates. “Britain’s three listed water companies have agreed to the largest cuts in customer bills since privatisation by Margaret Thatcher 30 years ago. (…) Critics of the regulatory regime, including MPs on both sides of the House of Commons, have argued that Ofwat has for too long allowed suppliers to put up prices without investing enough in, for instance, stopping leaks, which in some areas lead to 25 per cent of the treated water in the mains system going missing.” [Sub required]

CRIMINAL JUSTICE AND IMMIGRATION

26) National/International: “Outsourcing of prisons needs to be rethought,” says the Financial Times. “The UK governmentʼs decision to strip security contractor G4S of its contract to run Birmingham prison was inevitable. So acute was the crisis that staff lived in fear and inspectors described it as a ‘war zone.’ [An Idaho private prison was likewise once described as a “gladiator school”—ed.] As the first pre-existing, Victorian era prison handed to a private company for management, HMP Birmingham was in essence always an experiment. But its failure raises broader questions about the current model of prison outsourcing. In prisons, the government needs to shake off a single-minded focus on cost savings and unyielding faith in private sector efficiency.” [Sub required]. Struggling G4S is now the target of a takeover bidfrom Canada’s  Garda World Security.

27) National/Maryland: Johns Hopkins University (JHU) students protested their university’s relationship with ICE and its private police force. JHU, a private university, has sought permission from the state to arm its own police force. “‘Essentially, the same anti-democratic practices that led to Hopkins ramming this police force through are the same anti-democratic practices that allow Hopkins to continue against huge community opposition, huge faculty opposition, as well as, student opposition to continue ICE contracts,’ Conor Bean, a graduate student at the university and member of the Hopkins Coalition Against ICE, told Newsweek.” Students Against Private Police have been supported by the faculty. 

28) National: Fitch Ratings has affirmed the ratings of CoreCivic, including its Long-Term Issuer Default Rating (IDR) at ‘BB+’ and says the rating outlook is stable. A number of caveats: “CXW’s rating reflects strong credit metrics and some operational and geographic diversification. This is offset by a lack of alternative uses for the majority of the company’s owned assets, a lack of secured property-level financing to-date (a critical credit factor for equity REITs typically serving as a source of contingent liquidity), and asset concentration. The private prison industry contracts also offer significantly less cash flow stability as state and federal government entities have the ability to cancel agreements at-will. Over the last few years, CXW’s revenue growth has been muted due to a number of select large contract losses and renegotiations. Fitch expects that as the company expands its exposure to government-leased administrative properties and back-fills properties vacated by the Bureau of Prisons (BOP) and the State of California with Immigration and Customs Enforcement (ICE) contracts it will see modest EBITDA growth and stable margins over the next several years.” 

Fitch also notes CoreCivic “has lost several contracts in recent years, some by choice, and has been unable to recoup the occupancy losses even as an immigration crackdown has dramatically increased the level of detention by federal agencies under the Department of Homeland Security.”

29) Alabama: State officials are looking for private contractors to build and operate three new prisons. It would cost $80 million a year. Responses to the DOC’s request for expressions of interest are due Wednesday. “A recent U.S. Department of Justice report on Alabama men’s prisons detailed horrific conditions including rape and extortion. It said it was reasonable to believe the conditions violate the U.S. Constitution. The DOC says construction may cost about $900 million. Democratic Rep. Christopher England on Tuesday said the proposal effectively bypasses the legislature, which allocates agency money.”

30) Delaware: The long-awaited consultant’s report on whether Delaware should opt for a contract with a private prison company or bring prisons in-house has been released. Choices will have to be made, but the report undermined the goal of achieving a robust comparison of the public vs. private options. “Phoenix noted that GEO did not provide historical cost detail and corresponding payroll, healthcare data, litigation costs and other data they had sought. ‘GEO’s refusal to provide … has severely impaired our ability to develop a side-by-side analysis of the operating costs the prison would likely incur under county control relative to the current contracted costs with GEO,’ the report reads.” Any rigorous privatization decision requires an accurate public sector comparator. County Councilman Kevin Madden “questioned the procurement of Phoenix Management Services itself. ‘I’m concerned by what credibility it’s going to have, given how it was selected in the first place,’ he said, adding that it should have been through a request for proposal process in which the public had input rather than being selected by the prison board.”

31) Nebraska/NationalThe Economist looks at Nebraska’s struggle to lower its incarceration rate and points to sentencing. “Ultimately reducing prison overcrowding requires more than just building more cells; states have to make a concerted effort to send fewer people to prison for less time. Mike Lawlor, who helped engineer Connecticut’s sizeable decline in prison population and now teaches law at the University of New Haven, says it took a reassessment of risk. ‘We said, “Let’s figure out who the dangerous people are and reserve our incarceration for them.” Shorter sentences were a large part of the reform.” [Sub required]

PUBLIC SERVICES

32) NationalOn tax day, which is today, postal workers will “deliver two messages at more than 100 locations in nearly every state and through a national television advertisement: 1. It’s a myth that the U.S. Postal Service relies on tax dollars for its operations. 2. The threat of the White House selling off the USPS to private interests, leading to higher cost and less service for postal customers, is real.”

33) National: Sen. Joe Manchin (D-WV) says he is “concerned that the MISSION Act’s Community Care Program will open the door to VA privatization and lead to lower quality of care at VA facilities.” 

34) Illinois: Phineas Baxandall, a senior analyst at the Massachusetts Budget and Policy Center, says “privatization can hinder good urban planning. Chicago efforts to create dedicated bus lanes out of parking areas are hindered because private companies own the rights to the parking spots.” An obstacle to the city’s desire to create bus lanes “is the fact that because of the city’s 2008 parking meter deal, the city must compensate Chicago Parking Meters when it takes away metered parking spaces, either by paying for the loss in revenue or moving metered spots to other spaces.”

35) Iowa: Rep. Lisa Heddens (D-Ames) delivers a powerful denunciation of the Medicaid privatization mess in the Iowa House in the wake of UnitedHealthcare’s abandonment of the program. “Has the legislature turned a deaf ear to our constituents?” she asks. [Video, about 10 minutes]

36) Pennsylvania: Berks Heim nursing home employees represented by United Food & Commercial Workers Local 1776 and SEIU Healthcare PA have approved a new five-year contract agreement, heading off privatization. “Now the commissioners need to permanently end this privatization kick,” says @IndivisiblBerks.

37) International: Canadian Conservative politicians “have been caught holding a private, closed-door $250 strategy session on health care privatization. (…) If this isn’t selling access, we don’t know what is,” say Liberal MPs.

OTHER

38) National: The New York Times editorial board has come out against further deregulation of the pork industry, a form of privatization where inspections are shifted from government personnel to industry. The NYT cited Food & Water Watch’s FOIA request which found that self-inspected slaughterhouses had 7,169 regulatory violations over 4 years. The Times says “the Trump administration now says that expanding the pilot program to include a vast majority of the industry would significantly reduce episodes of salmonella poisoning. But outside experts point out that the administration simply assumes the testing methods that haven’t worked in the pilot program will begin to yield better results. The Trump administration also foresees considerable financial benefits…”

39) National: The possible privatization of federal housing credit agencies Fannie Mae and Freddie Mac has once again become a “hot topic,” American Banker reports. After the financial crash the agencies entered conservatorship. “But at least one investment bank thinks the prospects of privatization have improved enough that the equity in Fannie Mae has become sufficiently interesting to merit the attention of its analysts. (…) ‘While there are significant political impediments to privatization, the combination of the current presidential administration and FHFA leadership likely provides, in our opinion, the best chance at reform that we will see for a long time, and many believe that conservatorship is not sustainable long term,’ said analyst Randy Binner in his report. GSE reform proposals from Moelis & Co. and Senate Banking Committee Chairman Mike Crapo, R-Idaho, form the basis for Binner’s investment thesis.” [Sub required]

40) National:  Senators Todd Young (R-IN) and Catherine Cortez Masto (D-NV) have introduced the Public Buildings Renewal Act of 2019, “which incentivizes private financing to rebuild schools and public buildings through public-private partnerships.” Senators Tim Scott (R-SC) and Michael Bennet (D-CO) also joined as cosponsors of the bipartisan legislation that aims to spur needed infrastructure improvements.” The bill is now in the Senate Finance Committee. A companion bill, HR1251, has been introduced in the House by Rep. Earl Blumenauer (D-OR). The National Roofing Contractors Association is lobbying for the bill. A similar bill in the past has been lobbied for by the Associated Builders and Contractors

41) National: The New York Times reports on the privatization of mass surveillance. “The warrants, which draw on an enormous Google database employees call Sensorvault, turn the business of tracking cellphone users’ locations into a digital dragnet for law enforcement. In an era of ubiquitous data gathering by tech companies, it is just the latest example of how personal information—where you go, who your friends are, what you read, eat and watch, and when you do it—is being used for purposes many people never expected. As privacy concerns have mounted among consumers, policymakers and regulators, tech companies have come under intensifying scrutiny over their data collection practices.”

42) National: The International Association of Movers (IAM) is criticizing the Defense Department’s plan to privatize its household goods program to a single source contractor

43) Arkansas: Little Rock’s KARK reports on how mold concerns that are flooding into official at Little Rock Air Force Base are going unaddressed. “‘They scratched it off and painted over it and said ‘oh it’s fine,'” she said. She says it took going up the military command ranks to get Hunt Companies—which owns the privatized military housing on the Little Rock Air Force Base—to do anything. ‘They came out and they cut open a square of sheet rock and literally water just poured and it was full of mold and mildew,’ she said.” To address the scandal, the military branches have been dispatching commanders to visit nearly 300,000 housing units since February and document health and safety hazards.

44) CaliforniaDebate continues over the Cadiz water privatization scheme. Ileene Anderson of Center for Biological Diversity says “the Cadiz water privatization scheme will destroy an entire desert ecosystem to feed coastal urban sprawl while developers count their money. In his guest column, Steven Figueroa ignores the fact that the last review was paid for by Orange County’s Santa Margarita Water District—one of the water agencies that would benefit from the imported desert water. Figueroa fails to mention that SB 307 will provide the first impartial review of Cadiz’s private water scheme. It also could lead to protection of Mojave Trails National Monument’s springs, which new data shows could suffer irreparable harm from draining the life-giving springs from public water privatization interests.”

45) International: “Accountancy firms are set to be hit with large fines by the Financial Reporting Council as the regulator closes investigations before it is disbanded,” The London Times reports. “Deloitte will be fined over its audits of Serco, an outsourcing group that was accused of overcharging the government (…) The sector was badly damaged last year by the collapse of Carillion, the outsourcing group. Each of the Big Four was tied up in its failure and the government has decided to create a stronger regulator. The council is still running several large inquiries, including into KPMG’s audits of Carillion.” [Sub required]