Here’s our weekly analysis of privatization in the news and in communities nationwide, in order by state. Not a subscriber? Sign up here.
This week’s highlights:
- Immigration detention, the majority of which is privatized, has taken center stagein federal government shutdown negotiations.
- More evidence that charter schools are pushing public educationto the breaking point.
- Amazon is threatening to pull the plugon a tax break deal with New York City for one of its HQ2 locations.
1) National: The issue of ICE detention beds has taken center stage in the negotiations over preventing another government shutdown. “An administration official told The Hill that in a leadership staff meeting Saturday Democrats said they wanted to reduce the number of beds Immigration and Customs Enforcement (ICE) has available for detained immigrants from 38,000 to 16,000.” Last week Rep. Henry Cuellar (D-TX) said “there are two remaining sticking points: detention beds and the wall.” A House Democratic aide told The Hill “a cap on detention beds associated with interior enforcement will rein in the Trump administration’s deportation agenda, prevent the Trump administration from shifting more funding to detention beds than Congress has agreed to, and restore immigration enforcement to the levels that were in place at the end of the Obama administration.”
ICE contracting is a profitable business. Last week the Denver Post reported that the private, for-profit GEO Group “added 432 new beds to the [Aurora] facility last month—and the majority of those spaces are expected to be filled by the end of the week.” In addition to the private prison companies, other for-profit major contractors have done consulting work for ICE, in some cases (McKinsey) leading to employee protests. Last July The New York Times reported that “at least three other consulting companies—Deloitte Consulting, PricewaterhouseCoopers and Booz Allen Hamilton—have also advised ICE, according to federal contracting records. James Fisher, a spokesperson for Booz Allen, said the company’s work with ICE involved ‘information systems, data integration and analytics,’ and did not involve ‘the separation of children from adults.’ Deloitte declined to comment, and PricewaterhouseCoopers did not respond.”
2) National: Jeff Bryant, chief correspondent and writing fellow of the Independent Media Institute’s Our Schools, says “charter schools are pushing public education to the breaking point.” He cites University of Connecticut professor Preston Green, who says “this is a matter of priorities. States should first provide sufficient funding to traditional public schools in urban areas. Once states have systems of traditional public schools that meet the educational needs of these students, then they can assess how much funding and resources to devote to charter schools.”
3) National: Journey 4 Justice’s new podcast “On the Ground” hosted by Jitu Brown airs today at 7pm Eastern/6 pm Central. Subscribe.
4) National: Not only are charter schools posing a serious threat to traditional community schools, their rapid expansion is creating charter school “bubbles” that may pop and take down many charter schools themselves, Larry Buhl of Capital & Main reports. University of Connecticut education Professor Preston Green III says “‘my concern is about charter school bubbles forming.’ This perception is gaining ground among some local educators. A 2018 op-ed written by a Los Angeles charter school teacher claimed that unregulated growth of charters is not only cannibalizing traditional public schools but other charter schools as well. ‘Between more charter schools being authorized and the impact of gentrification, we are finding it more and more difficult to meet our enrollment capacity with each passing year as the student population in the community declines,’ Sylvia Cabrera wrote.”
5) National: The American Federation of Teachers “is encouraging pensions to consider avoiding private equity investments in companies that profit from mass incarceration,” Bloomberg reports, citing AFT’s Private Prisons and Investment Risks Part Two: How Private Prison Companies Fuel Mass Incarceration—And How Public Pension Funds Are at Risk.
The AFT report says “while public and investor debate around the privatization of prisons, jails and detention facilities has largely focused on publicly traded companies such as CoreCivic and the GEO Group, the firms that provide phone services, commissary services, medical services, bail bonds and other corrections-related services are perhaps more ubiquitous, serving thousands of prison, jail and detention facilities around the country. These firms are largely owned by private equity firms, whose owners stand to profit from mass incarceration—especially recently, as the Trump administration has ramped up immigrant detention.”
7) National: A key passage of President Trump’s State of the Union speech asking Congress to pass his 2018 infrastructure proposal was deleted because he is opposed to its use of ‘public-private partnerships,’ the Wall Street Journal reports. “Mr. Trump has continued to tell aides and officials that he ‘hates’ central elements of the 2018 infrastructure plan, especially public-private partnerships, according to two people familiar with the speech drafts. The plan would have required cities and states to put up at least 80% of the cost of the plan, likely pushing local government into the arms of private financiers.” [Sub required; for more see Legislative Issues below]
8) National: Macquarie has settled a lawsuit showing the “cost of getting traffic forecasts wrong,” reports Infrastructure Investor. Macquarie was accused of “using inflated projections to secure a toll road acquisition.” The publication states that “Alinda, Macquarie and Syncora declined to comment for this story, but Infrastructure Investor spoke with six sources close to the case to discuss details of the dispute. While the transportation industry has sought to rein in optimistic forecasting by using more conservative financing and stress testing how traffic might perform in the next downturn, transportation deals are in low supply and high demand. That may tempt investors to dream big with their projections. As one traffic industry source put it: ‘You need big numbers to win big concessions.’ American Roads is a reminder of what can happen when you get those ‘big numbers’ wrong.”
9) National: Dag Detter, the former CEO of Stattum, the Swedish government holding company, has some advice on tightening up the federal accounting standards local governments use to compose the balance sheets reporting their debts and assets. This might make possible the creation of Urban Wealth Funds, for example. As might be expected in an environment where public “asset sales” and “asset recycling” are being pushed by the privatization industry, Detter calls for more accurate valuations of public assets so they could be used to finance needed infrastructure and services.
But on the debt side, Detter suggests that poor practices can lead to mistakes such as the disastrous Chicago parking meters privatization deal. Other critics—both in the bond market and in good government groups—have objected to leaving obligations that should be counted as debts off public balance sheets, thereby understating costs and risks to the public. Detter writes, “a focus on debt alone has also led to governments embracing much-criticized financial techniques such as Public Private Partnerships (PPP), resulting in an undue transfer of public wealth to the private sector. Where the main advantage was keeping debt off the government’s balance sheet.”
10) National: According to the Senate Lobbying Database, GEO Group spent $450,000 in the fourth quarter of 2018 on lobbying (top recipient, Ballard Partners at $150,000). CoreCivic spent $660,000 (including $390,000 on its own in-house lobbyists). For a rundown of the “broken” system of money in politics, see Alexandria Ocasio-Cortez’ five minutes with ethics experts in a committee hearing on HR 1.
11) National: GEO Group and CoreCivic have announced the dates of their conference calls. GEO’s is this Thursday, February 14, at 11 AM Eastern; CoreCivic’s is on February 20 at 11 AM Eastern.
12) Alaska: The state is going to privatize the operations of its psychiatric hospital. “The idea of privatizing operation of API has been debated for years. A 2017 study commissioned by the state warned against privatization, saying it would cost more and diminish the quality of service,” but some lawmakers from both major parties have been supportive. Others are more skeptical. “Bill Wielechowski, D-Anchorage, said he was concerned about introducing a profit motive into the state’s psychiatric health care system. He also questioned the administration’s decision to award a no-bid contract. The Disability Law Center, a nonprofit law firm that advocates for people with disabilities, released a statement questioning whether the state had the legal authority to sign a contract with Wellpath through its emergency procurement law.”
Beyond the question of the legality of the deal, concerns are being expressed about possible conflicts of interest. Wellpath is the result of a merger between a GEO Group spinoff and another company, and “the state budget director, Donna Arduin, has come under scrutiny by some lawmakers and a consumer-interest group, the Alaska Public Interest Group, for past connections to GEO.” Officials say Arduin had “no input” in the decision to contract with Wellpath.
13) Arizona: A state inmate has died “six weeks after he filed a court document claiming that he was ‘being killed due to inadequate medical care’” at the Arizona State Prison Complex in Florence. “Arizona currently contracts with Corizon, a private company, to provide its health-care services. Beginning on July 1, state prisons will switch to a different healthcare provider, Centurion, following whistleblower reports on KJZZ of shoddy record-keeping by Corizon.” Several weeks ago a whistleblower who worked at the Florence complex said Corizon health administrators directed him to cheat Arizona prison monitors.
The Appeal has just taken an in-depth look at Corizon, and says “the privately held company has been plagued by accusations of deadly medical neglect, as well as questions about its financial practices. For advocates, Corizon illustrates the dangers of an increasingly privatized and opaque correctional system.”
14) California: Time Community School is appealing the Montebello Unified school board’s October decision rejecting its application to open a charter school to the Los Angles County Board of Education. “Montebello officials rejected the charter school’s request based on four findings: Didn’t have a single location; Presented an unsound educational program; Didn’t include ‘reasonably comprehensive’ descriptions of 16 required elements, such as measuring student outcome, inadequate description of parental involvement, employee qualifications, health safety procedures and racial and ethnic balances; [and was] ‘Demonstrably’ unlikely to successfully implement the program.”
15) California: The San Diego Union Tribune editorial board is blowing a gasket over who will be appointed to the task force to evaluate the effects of charterson district finances that Gov. Gavin Newsom has requested state Superintendent of Public Instruction Tony Thurmond to form. “Thurmond has not yet said who will be on the panel, but the CTA union wants a seat at the table. The California Charter Schools Association should participate, too.”
16) California: The potential closure of the Nevada City Charter School has stunned parents. “According to several parents, the low test scores were due to the fact that many students chose not to take examinations. What those same people said they didn’t know, however, was that if students opted out of taking a test, their absence would impact the aggregated test scores of the school and lower their overall standing in comparison with other schools in the area.”
17) Colorado: The state board of education will hear an appeal this Thursday on whether a classical education charter network can move forward with plans to locate a school in Boulder Valley School District. “The Boulder Valley school board last month voted 5-2 to deny the application. Organizers applied to open the school in August in eastern Boulder County, replicating two existing Ascent charter schools—which would make it the district first charter school that’s part of a larger network.”
18) District of Columbia: David Koenig, a teacher at Washington Latin Public Charter School, pens a sharp op-ed demanding that DC’s charter schools become more public. “Although the charter schools are ‘public’ in a sense — they are open to residents of the District free of charge—they are governed by boards of directors that are anything but public. The several hundred men and women who make decisions regarding the budgets and operations of DC’s charter schools are not elected by anyone, and they are not accountable to students, families or employees of the school in any meaningful way. Not only are they unelected, but they are free to do their business — making fundamental decisions about the schools they govern — largely in private. This is because DC’s charters are not subject to basic transparency requirements that apply to charters in most states.”
19) Illinois: A teachers strike at a group of Chicago charter schools is poised to enter its second week. Negotiators are wrangling over pay and the Chicago Teachers Union reportedly plans “stepped-up militancy on the picket line.” Both the union and management “acknowledge that CICS [Chicago International Charter School] has offered pay raises and cost-of-living adjustments in each year of a potential four-year deal, though they offer divergent characterizations of how big those salary increases would be and whether they would bring teachers and classroom assistants on par with colleagues in traditional Chicago Public Schools.” Bob Morgenstern (@MorgyWV) says “CICS financial records show the charter organization holds roughly $36 million in budget reserves that could help finance a contract agreement. CICS is running out of excuses as to why students are not in school.” WBEZ’ Adriana Cardona-Maguigad asks “Is Charter School Unrest The New Normal In Chicago?”
20) Massachusetts: A proposal to open a charter school in Haverhill has been rejected. “This is a huge victory for the students who attend our public schools,” said Ted Kempinski, president of the Haverhill Education Association. “Our schools desperately need more funding. What we don’t need is another charter school that will drain money from the public schools that educate all students.”
21) Mississippi: Mother Jones has followed up on last month’s settlement between the state and private, for-profit prison corporations and service providers accused of funneling bribes and kickbacks to Christopher Epps, the former commissioner of the Mississippi Department of Corrections (MDOC). The picture is troubling. “Even as the scandal draws to a close, state officials appear to already be forgetting its lessons. A week before Hood announced the settlements, current MDOC commissioner Pelicia Hall asked the Mississippi Legislature to exempt her agency from parts of a government transparency law after she faced persistent questioning and requests for public records following a series of 16 deaths in her prisons last August. According to Mississippi’s Clarion-Ledger, Hall hopes to delay MDOC’s response to some records requests and block the disclosure of any documents the department deems a security threat to inmates or staff; lawmakers are currently considering her request. ‘There should be some limits on what you are transparent about,’ Hall said.”
22) New York: Governor Andrew Cuomo (D) calls for the implementation of design-build for all MTA infrastructure projects. “Design-build, which combines the design and construction services into single contracts, reduces the bureaucracy and costs of major infrastructure projects and shifts the responsibility to the private sector. The state uses design-build for all major projects. MTA construction projects rarely come in on time and they don’t use design-build; the state doesn’t do a major project that’s not design-build, Cuomo said.”
23) New York/National: In a major escalation of tensions between some New York residents and Amazon over its location of a second headquarters in the city, Amazon has threatened to pull the plug on the public-private deal and some local elected leaders are accusing the company of extortion. “New York State Sen. Mike Gianaris, who represents Queens and opposes the deal, characterized the report as extortion on Amazon’s part: ‘If they want to threaten that they won’t come here without it, that’s their decision. But we shouldn’t allow ourselves to be extorted,’ he told the Wall Street Journal. New York City council member Brad Lander took to Twitter on Saturday to air his stance on Friday’s ‘carefully-timed threats’ from Amazon and the company’s ‘constant monopolistic certainty that they have the right to make their own rules & dictate them to the rest of us.’” Lander alleged that Amazon’s leaders “view local democracy as a nuisance to be defeated.” Gov. Cuomo (D) denounced the state senators for engaging in “government malpractice,” reportedly saying “I’ve never seen a more absurd situation.” Mayor De Blasio is scheduled to testify in Albany today, and fireworks are expected between him and state senators.
24) Wisconsin: In an in-depth report, Bloomberg details why Wisconsin’s Foxconn deal, negotiated by former Governor Scott Walker (R) is a disaster. “In exchange for more than $4.5 billion in government incentives, Foxconn Technology Group had agreed to build a high-tech manufacturing hub on 3,000 acres of farmland south of Milwaukee and create as many as 13,000 good-paying jobs for ‘amazing Wisconsin workers’ as early as 2022. A huge tax break was supposed to create a manufacturing paradise, but interviews with 49 people familiar with the project depict a chaotic operation unlikely to ever employ 13,000 workers. Bloomberg’s Austin Carr has more on ‘Bloomberg Markets: What’d You Miss?’” Though Republican officials are churning out talking pointsthat subsidies won’t be paid if the deal falls through or doesn’t meet expectations, journalist Austin Carr spells out the many cases where they have already been paid for by taxpayers. (See video, about 3 minutes). And there’s more. “Even with Walker gone, Wisconsin is unlikely to get better terms. Shortly before Evers was sworn in, the Republican-controlled legislature passed a series of rules that make it difficult for the new governor to tear up the Foxconn deal.”
25) International: A series of bombshell document leaks in Canada has exposed the conservative government’s plan to privatize large swathes of Ontario’s public healthcare system. “The documents suggest the PCs plan to centralize control of the system, enabling them to farm out services to for-profit corporations, though Elliott [is] dismissing this as something the PCs would only do after priming the pump with reports about how the current system is failing, like the ones they are about to release.”
26) International: The UK public services union Unite has published an in-depth report on the collapse of the government outsourcing company Carillion. “Carillion’s approach to bidding for these contracts underlines the inherent problem with successive government’s mania for outsourcing. The company which provides the lowest bid is awarded the contract, creating a race to the bottom where all the quality is cut from a contract with the wages of staff and their conditions being seen as a prime area to chop. In many cases the low bid is a deliberate gamble as the company hopes to make healthy profits from additional services required by the client outside of the contract.”
1) National: Debate over what a federal infrastructure plan should look like, and what public and private elements it should contain, is coming to a head in Congress. Last week the Wall Street Journal reported that President Trump remains opposed to ‘public-private partnerships,’ which would “likely [push] local government into the arms of private financiers” (see above). But local officials have been pressing federal lawmakers for action, and some advocate the use of PPPs, the Bond Buyer reports. “An infrastructure package hasn’t passed yet because Congress hasn’t been able to agree on funding, said [former transportation secretary Ray LaHood], [who] urged the transportation and infrastructure committee to give a bold plan to the Ways and Means committee. He suggested rolling public-private partnerships, the gas tax and vehicle miles traveled into one plan. ‘You can’t fix America’s problems with infrastructure with just tolling, just VMT’s, with just public-private partnerships,’ LaHood said.” [Sub required].
House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-OR) expects talks with the administration to begin soon. “DeFazio said in a statement issued after Trump’s speech he plans on working on a bipartisan agreement for additional infrastructure investment, but added, ‘I can’t do it alone.’” [Sub required]. DeFazio will chair a committee hearing on the infrastructure this Thursday, which will hear testimony from Los Angeles Mayor Eric Garcetti, chair of the U.S. Conference of Mayors task force on infrastructure, and LaHood, co-chair of Building America’s Future. Larry I. Willis, president of the AFL-CIO’s Transportation Trades Department, will also give testimony.
The Senate Commerce, Science and Transportation Committee will hold an infrastructure hearing on Wednesday, at which the AFL-CIO’s Larry Willis, William Friedman of the Cleveland-Cuyahoga County Port Authority, Matthew Polka of the American Cable Association, and Chris Spear of the American Trucking Associations will testify.
2) National: Jay Brown, a managing director in the public sector unit of Alvarez and Marsal, a law firm that “has assisted the State of Louisiana and the Department of Defense Education Activity in assessing the feasibility of privatizing school facilities construction, operations, and maintenance,” has written an op-ed in the Bond Buyer advocating legislative changes at the state level to enable private capital to enter social infrastructure such as schools and courthouses. “As municipalities, state agencies, and educational institutions look for creative ways to fund needed capital improvements, leveraging the value of underutilized public real estate assets through commercial development is a viable strategy,” he argues. “There is concern as to whether this type of project constitutes a Public-Private Partnership (P3) and is authorized or prohibited under states’ P3 enabling legislation.”
3) National: The new Democratic leadership of the House veterans affairs committee announced on Friday that the committee will investigate “the influence exerted by three members of President Trump’s Florida beach club on the Department of Veterans Affairs. (…) Mr. Perlmutter is the former chief executive of Marvel Entertainment, Mr. Sherman is a lawyer and Dr. Moskowitz is a doctor. The three do not possess special expertise in veterans health care issues, but were reported to be influential over Trump administration policy, including its plans to push the department’s health care system toward private providers.”
4) Missouri: A new bill to expand the number of charter schools in the state is dividing opponents and supporters. Currently charter schools are limited to Kansas City and St. Louis. Superintendent Susan Johnson told the Hannibal Courier-Post that while there is considerable data on how Missouri’s 518 public school districts are performing, such is not the case when it comes to charter schools. “In the state of Missouri there are currently 36 charter schools, which we do not have data to make a determination on how they are performing,” she said. “Johnson said it is critical that legislation permitting charter schools contain accountability measures to ensure that students are receiving a quality education. (…) I hope that those who support school choice don’t end up causing greater damage to public schools by setting up a system that funnels money away from public schools to schools that do not have to be held accountable to provide data to prove that they are providing a quality education.”
5) New Mexico: Charter school supporters are criticizing a provision in a House bill that would effectively eliminate the small school size adjustment charters currently receive. “House Bill 5, which was approved by the House Education Committee, aims to revamp the state education system and bring it into compliance with a landmark court decision that found the state was not providing a sufficient education to some its high-risk students. House Bill 5 would, among other things, increase the minimum salaries for teachers and principals, create a new funding formula, and prohibit public schools from claiming funding for students over 21 years of age. The bill does, however, grandfather in older students currently attending public school. But it was the proposal to eliminate the small school size adjustment for charters and schools in large districts that garnered the most criticism.” However, “legislative staffers countered that the small school size adjustment was originally only intended to go to schools from small districts, and not to charter schools.”
6) West Virginia: A charter school bill that has passed the Senate is now being considered in the House of Delegates has drawn some public (overwhelmingly negative) comment in the Williamson Daily News. “Kevin Fletcher: ‘They didn’t work out very well here in Georgia.’ Shonn Daniels: ‘If you are smart you will vote no. We have them here in Knoxville and they drain the school systems surplus funds.’ Kathy Caudill Thompson: ‘Why would anyone want someone without a degree teaching their children/grandchildren?’” The bill apparently sets up a conflict between the two houses of the legislature. “The latest version of Senate Bill 451, one that is 125 pages long and was released around 8:30 p.m. Thursday, would limit the number of charter schools in the state to just two. The Senate’s version of the bill would have allowed a seemingly unlimited number of charter schools, as long as the schools got approval from county boards or from a charter school commission that would be created.”