Weekly privatization report: VA sell-off | Federal contractors suffer | and more

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

1) National: The New York Times reports that after months of denials and obfuscation, the Trump administration is preparing to release proposed guidelines to substantially privatize veterans’ healthcare services. “Under proposed guidelines, it would be easier for veterans to receive care in privately run hospitals and have the government pay for it. Veterans would also be allowed access to a system of proposed walk-in clinics, which would serve as a bridge between V.A. emergency rooms and private providers, and would require co-pays for treatment.” If put into effect the rules “would be a win for the once-obscure Concerned Veterans for America, an advocacy group funded by the network founded by the billionaire industrialists Charles G. and David H. Koch, which has long championed increasing the use of private sector health care for veterans.” Veterans’ services organizations “have largely opposed large-scale changes to the health program, concerned that the growing costs of outside doctors’ bills would cannibalize the veterans’ hospital system.”

The scheme is being marketed by the Trump administration and the Koch-backed organizations by employing the rhetoric of “choice,” as do advocates of privately-operated, publically funded charter schools (see below re: Los Angeles, and Jeff Bryant on how “choice” has become an excuse to discriminate). For how this works see In the Public Interest’s Jeremy Mohler on The “Choice” Bait and Switch in Jacobin. “Likewise, corporate leaders, the wealthy, and conservatives peddle choice as an end in itself. The word ‘choice’ is used thirty-three times in former House Speaker Paul Ryan’s most recent proposal to cut and privatize Medicaid and Medicare.” 

2) National: Writing in the Juneau Empire, John Spitzberg calls for public action to stop VA privatization under rules set to take effect in June. “Study after study shows that care in the VA is equal to or superior to care in the private sector. Read this articlefor more information. In addition, it costs less to treat a veteran in the VA than it does in the private sector—in part because there is no effort to make a profit.” 

3) NationalThe $465 billion federal government private contracting sector is being hammered by the government shutdown. “‘You are talking about a big slice of the work force,’ said Paul Light, a professor at New York University who studies federal workers. ‘I can’t imagine a worse time to have a shutdown, as some think we are headed toward a recession.’ Mr. Light estimates there are 4.1 million federal contractors and grant recipients, not all of whom have been affected by the shutdown. The majority—about 2.8 million—are in service jobs, from health aides to computer programmers.” This week Senator Sherrod Brown (D-OH) is planning to introduce a bill that would secure back pay for furloughed contract workers.

4) National: Who owns private, for-profit prisons GEO Group? Its top three institutional investors are the Vanguard Group ($348.8 million), Blackrock Inc. ($291.56 million) and Mewhinney & Strauss LLC ($167.18 million). In its most recent 13F filing, GEO reported that 42 hedge funds bought into it for the first time.

5) National: Responding to a slew of articles in the mainstream media suggesting that prisoners are living high on the hog while staffers suffer under the shutdown, Daniel McGowan, a former federal prisoner now with the ACLU’s Criminal Law Reform Project, explains What the Government Shutdown Really Means for Federal Prisoners. “Then there’s the mental health aspect to the shutdown. A significant number of people in federal prison also require mental health treatment, which will not happen while the government is shut down. A little-known fact is that all staff at a federal prison can be assigned security details, in my personal experience, and the shutdown will likely increase this. If the psychology staff is required to operate as guards, then there is no staff to run the mental health programs.” 

6) NationalClimate change is affecting the municipal debt market. “Kevin White, a lawyer at the law firm of Butler Snow, said he has noticed more disclosure around climate change in Virginia when it comes to sea level rise and its effect on utility, water and sewer and storm water bonds. White represents financial institutions, hospital and healthcare organizations, and higher education institutions, among others. He sees issuers disclose climate change information in general obligation bond statements and governmental enterprise bonds, but says it’s lacking in private activity bonds.” [Sub required]

7) National: The Treasury Department has released final rules relating to the public approval requirements for private activity bonds. “Recognizing that the Internet is probably more than just a fad and that the public has increasingly relied on the Internet as its ‘go to’ source for information, the Final Regulations permit the public notice requirement to be fulfilled by making an electronic posting.”

8) Arizona: In a new 61-page report, the Grand Canyon Institute finds that Arizona’s charter schools are in shaky financial shape and more than 100 are in danger of closing. “Ten percent of charter sites are in significant financial distress with closure a near certainty due to excessive debt and poor underlying financials. Another 10 percent are at risk of closure. Charter school sudden closures during the school year from FY 2016 through the Fall of 2018 have resulted from financial issues related to charter long-term, lease-adjusted debt on those properties. Unfortunately, many charter operators were allowed to borrow based on projected student enrollment growth, i.e., using future educational revenues from students as a guarantee for their bond debts.

Increasingly, charter schools appear to be competing amongst themselves for students as the charter industry is consolidating.” 

9) Arizona: Two former employees of a now-closed charter school in Goodyear, a Phoenix suburb, were indicted for fraud in a $2.2 million case involving fake students last week, months after the former director pleaded guilty to conspiracy and theft. “According to the Arizona Attorney General’s Office, 191 of the 652 reportedly enrolled students for the 2016-17 school year were fake. For the next school year, 453 of 528 were fake.

The move increased money from the Arizona Department of Education, the U.S. Department of Education and the U.S. Department of Agriculture, resulting in approximately $2.2 million of fraudulently obtained funding.”

10) ArkansasThe Arkansas Times’ Max Brantley sings the praises of an intrepid researcher and blogger, Elizabeth Lyon-Ballay, who digs into how charter schools are performing and operating. “Lyon-Ballay turns in her latest post to a subject that has drawn attention from the state Board of Education in the past—whether Haas Hall has run a straight blind lottery system for admissions. That is, does it truly have open enrollment or does it engage in practices that guarantee a quality student body ? Multiple complaints in the past led to expressions of concern by the Board and a move to an open lottery process. Lyon-Ballay has dug into public records and found evidence of a whistle-blower with concerns about Haas Hall practices.” Her post, “How They Are Getting Away With It,” is a must read.

11) CaliforniaSanta Ynez Valley Union High School District may be driven into insolvency because it is being forced by the state to pay for a charter school. SYHVUHS Superintendent Scott Cory said “this decision by the Department of Education could be crippling, and the ripple effects will be massive. We are already facing a $750,000 structural deficit this year, so adding an additional $700,000 with potentially more in the coming years will ruin us.” The district “twice denied a petition from Olive Grove to operate a charter school within its boundaries, but Olive Grove’s appeal to the California Department of Education (CDE) was approved in July.”

12) California: Los Angeles teachers are due to go on strike today to fight back against efforts to undermine the public education system through the charter school “portfolio model” and secure needed public financial support. Danny Feingold of Capital & Main says “it will be a meta-strike with extremely high stakes not only for teachers, students and parents in L.A., but for public education across the U.S. The stalemated negotiations over wages, class size, staffing and other issues matter—but they are proxies for an epic fight that has been playing out in American school districts for more than a decade.” United Teachers Los Angeles (UTLA) says, “We have a non-educator investment banker as superintendent who is starving our schools and accelerating privatization. Now is the moment for action to push back on this threat. We have district, city, and state leaders often acknowledge how important public education and school funding are. Now is the moment for action to ensure the acknowledgements become reality at schools. There has been no more urgent moment to use our power to push back on the threats—and no better moment to use our power to win real improvements.” For updates check out UTLA’s media advisory and @UTLAnow

13) California: The state board of education has approved the charter petition of a school that was twice rejected by Pajaro Valley Unified School District and Santa Cruz County. “”According to district Superintendent Michelle Rodriguez, the new school in its first year will serve 180 students, at an annual cost of $10,000 per student. By the 2023-24 school year, Watsonville Prep will be drawing an estimated $4.2 million annually from the district’s general fund. In addition to guaranteed ADA state funding, WPS also has reported several start-up grants, including $2.1 million from the Charter School Growth Fund, “up to” $800,000 from the Silicon Schools Fund and $325,000 from the Walton Family Foundation.”

14) Colorado: The state board of education is forcing the Cherry Creek School District to reconsider an application from the would-be space-focused charter school Colorado Skies Academy. “During the hearing, Cherry Creek schools Superintendent Scott Siegfried said Colorado Skies would not be able to fully fill its schools with students, resulting in a monetary drain on the school district. That sentiment was echoed by Melissa Scully, a parent of two students enrolled in Cherry Creek schools. She called the state board’s decision ‘frustrating.’ She said that, if opened, the school would exacerbate low funding in Cherry Creek schools by forcing the district to pick up the tab and re-place students if the school failed.”

15) District of ColumbiaGentrification is forcing a public charter school to relocate across the river. “For parents, many who work in the area, this 155-student school is a gem. ‘We chose this school for my daughter because it’s so close to where I work in Navy Yard,’ said parent Aaron Lentner. ‘We’re disappointed. We want to stay here and no matter how you look at it, it is wrong to push families out,’ said Alex Cournol.”

16) Florida: Steve Cona, a new member of the Hillsborough County (Tampa) school board says he has some ideas on “big-ticket cost savings items.” He wants to “outsource services such as janitorial and maintenance work, use self-insurance for employee health plans, and consider whether the district needs to keep its downtown headquarters, given that building’s potential value.”

17) Florida: The financially troubled Saint Augustine Public Montessori School has been placed on a corrective action programby St. Johns County School District. “Since 1998, 373 charter schools have closed across the state. According to a recent report published by Integrity Florida, a Tallahassee-based research group, 160 of those charter schools failed between 2012 and 2017, with 35 closing during the 2015-2016 school year.” Problems at the school included “high rental costs for the property owned by Historic Tours of America, staff raises, the costly implementation of healthcare coverage for employees, a new Early Childhood program that cost more than expected and missed student enrollment projections.” The St. Augustine Record rep[orts that “despite issues across the state, charter schools keep opening at an increasing rate in Florida with no signs of slowing down.”

18) Indiana: Mind Trust, a nonprofit dedicated to pushing charter school expansion, has received a $24 million grant from City Fund to “partner” with charter operators in Indianapolis. For more see Diane Ravitch’s What Is the Mind Trust

19) Indiana: Two charter schools in Gary and Merrillville are facing significant financial challenges with each racking up deficits ranging from $450,000 to $1 million, private auditors have found. “The auditors warned that future viability of the schools is at stake if such financial trends continue.” The schools are run by Indianapolis-based Phalen Leadership Academies, which attracted attention last summer for starting a high school  at the same time Indianapolis Public Schools is closing campuses.

20) Kansas: Privatization and austerity have had disastrous effects on Kansas, a solid red state, so public attitudes are shifting. The privatization of the state’s nursing homes has run into trouble. “The state outsourced the eligibility determination process about three years go. The result of that, and privatization, has led to long waits. And it has hurt nursing homes. Whether or not the high number of homes being taken over by the state is an anomaly or a trend awaits to be seen. But make no mistake, the number is a direct result of what has happened in Medicaid. It was what Rep. Tim Hodge (D-North Newton) calls a ‘disastrous choice’ by the legislature.” 

The anti-tax, anti-government fervor that propelled Republican governor Brownback’s agenda is eroding in Kansas. As In the Public Interest’s Jeremy Mohler writes, “The communications firm Topos studied public opinion about what’s known as ‘the Kansas Experiment,’ former Governor Sam Brownback’s 2012 all-in bet on ‘trickle-down economics,’ and came to complicated, but promising conclusions. Lowering and even eliminating some taxes on corporations and the wealthy quickly backfired, forcing spending cuts to infrastructure, school budgets, worker pensions, and Medicaid. In the aftermath, Topos found that Kansans, like most Americans, may not like taxes, but they are now more able to recognize that they are necessary.”

21) Louisiana: Questions are being raised about the level of oversight New Orleans charter school receive after a charter school hired a principal with a criminal past, then fired him for sexual harassment. “What’s more, WWL-TV found that another charter organization, New Orleans College Prep, hired Green as a principal right after he was fired by Algiers Charter for sexual harassment. New Orleans College Prep’s excuse: Green simply left his experience at Algiers Charter off his resume and acted like he hadn’t been principal at Fischer at all.” The federal trial of Stanley Roy Green begins today. “Charter schools do not have to comply with state Education Department requirements for teachers and administrators to hold certain certificates.”

22) Maryland: Writing for Fairness & Accuracy in Reporting, Pete Tucker analyzes the climate effects of Gov. Hogan’s (R) proposed $9 billion ‘public-private partnership’ project to add toll lanes to Maryland congested highways. “But the science is clear: Heading off climate disaster necessitates rapid changes, including getting cars off the road. Meanwhile, the [Washington] Post is advocating for the opposite—suicidal—approach. The newspaper’s message seems to be, Let the good times roll, at least for those in the Lexus lanes.”

23) Massachusetts: The chair of a Dorchester charter school’s board “has resigned after state investigations of a controversial, [$380,000] payout to an outgoing administrator.” In the most recent review of its request to renew its state charter, the Davis Academy “was placed on probation, ordered to establish an escrow account and given a Dec. 2019 deadline to demonstrate ‘sustained academic improvement’ in math, English and science.” Its student body “was 86 percent African-American and 19 percent Hispanic. Almost 30 percent of students received special education services.” 

24) Missouri: Questions about the possible privatization of St. Louis Lambert International Airport went unanswered at a Thursday meeting of the Transportation and Commerce Committee meeting in City Hall. “We’ve been left in the dark,” said John Collins-Muhammad, D-21st Ward. “This update is the most confusing document in the world.” STL Not for Sale has called on all elected officials and candidates in the upcoming March elections to sign their pledge to vote against the privatization of Lambert airport.

25) Missouri: Edmund O. Brown II asks some pertinent questions about Missouri American Water’s plans to create a new reservoir in a letter to the Joplin Globe

26) New Mexico: The future of the state’s charter school system remains uncertain after Gov. Michelle Lujan Grisham promised to “impose a moratorium on opening new charter schools until state leaders had time to review how those in place were performing. (…) Proponents of charters argue that they give parents and students a chance to thrive with programs that can be more experimental or creative than traditional public schools. But critics cite national studies showing charter school students generally don’t outperform their counterparts in other public schools and complain they draw much-needed funding away from traditional schools. Some say that’s because the schools operate under their own governing boards, with reduced oversight by the state and school districts.”

27) New Mexico: School officials are expected to file an appeal against the state’s decision to close a school named after Dolores Huerta, co-founder of the United Farm Workers of America with Cesar Chavez in 1962.The Public Education Department, cited “declining student achievement, including three consecutive F grades under the state’s grading system.”

28) New York: The hot button issue of outsourcing school transportation will continue to affect the Pocono Mountain School District this year. “At meetings, community members voiced concerns over the futures of the 185 members of the transportation staff. At a public hearing, which more than 600 residents attended, First Student gave a presentation on their potential plan to take over transportation services for the district.

29) New York: ROC Achieve Charter School in northeast Rochester is to close at the end of the school year, “ending an up-and-down five years of existence.” The school “first opened in 2014 as PUC Achieve Charter School, the first New York outpost of the California-based Partnership to Uplift Communities (PUC) charter school network. That organization soon ran into controversy over mismanagement and financial fraud and the Rochester school withdrew last year to become an independent entity.” Despite efforts to correct poor performance, especially in English language arts, the school “did not meet the high expectations we set out to achieve,” said Board President Karen Podsiadly.

30) Puerto Rico: LittleSis has produced an excellent guide on how Wall Street is closing in on 40 years of profit at Puerto Rico’s expense. “Hedge fund billionaires are on the verge of pulling off what seemed unthinkable in the wake of Hurricane Maria: a massive payday, at the direct expense of the Puerto Rican people, on debt that was trading for pennies on the dollar in the months following the hurricane. As a result of debt restructuring agreements like the COFINA plan, an island reeling from economic and climate-induced crisis will be paying for billionaire yachts and vacation homes instead of basic necessities and a just recovery. But more is coming: in 2019, another major adjustment plan concerning the commonwealth’s debt will need to be developed by the oversight board and approved by creditors.”

31) InternationalExperts are questioning a Canadian “social impact bond” program in Manitoba to match expectant mothers with doulas. The government is trying to raise $3 million in private money to finance it. “Why is the government essentially privatizing these services? Why aren’t they just funding the program itself?” asks Louis-Philippe Rochon, a professor of economics at Laurentian University in Ontario. Neil McArthur, a director at the Centre for Applied Ethics at the University of Manitoba, says “we should worry a lot about a two-tier system developing anytime you’re talking about privatized health care of any kind or privatized services of any kind. That’s always going to be a big concern.” Jesse Hajer of the University of Manitoba said “I think the most important question that has yet to be answered about social impact bonds is whether they provide any sort of value for money for government.” 

32) International: Despite substantial controversies surrounding its performance on government contracts, the international security company Serco has secured its biggest contract ever to support the UK government’s asylum support program, worth a potential £1.9bn over 10 years.

33) Think Tanks: On the move and short of sit-down time? Listen to Noliwe Rooks’ Cutting School: Privatization, Segregation, and the End of Public Educationas an audiobook.

34) Revolving Door News: After steering the World Bank’s aggressive promotion of infrastructure ‘public-private partnerships’ from the top, Jim Yong Kim has abruptly quit his post as head of the bank to take up a position at Global Infrastructure Partners (GIP), one of the leading private finance companies for infrastructure.’ Will the revolving door spin again and place Ivanka Trump at the head of the bank?

Legislative Issues

1) Georgia/Think Tanks: The school privatization wars in the state may be about to heat up. Harold J. “Jay” Bowen, head of an Atlanta-based investment advisory firm and a trustee of the Koch and Donors Trust-backed Foundation for Economic Education, has an agenda for the coming term. “A comprehensive overhaul of the state’s primary and secondary government-run school system is embarrassingly overdue,” he writes in the Atlanta Business Chronicle. “The next logical step is a full-blown voucher system, including education scholarship accounts, which would give parents maximum flexibility in terms of school choice and product, allowing them to break out of the current doctrinaire, government-run model. Privatization and competition have done wonders when applied to a variety of industries on both the cost and quality fronts, and it is time for the public school monopoly to face this music next.”

2) Iowa: Rep. Todd Prichard, the House Democratic leader, says one of his party’s priorities is to fix the state’s privatized Medicaid system, which “left a lot of chaos.” The state government “continues to pour money into the $5 billion health care program for disabled and poor Iowans. When Gov. Terry Branstad in 2016 placed the program under the control of for-profit companies, he argued the state would save millions of dollars, but it’s unclear if those promises have panned out. Lawmakers will consider putting another $140 million for the current fiscal year into the program. Besides the issue of state savings, critics have said hospitals and other health care providers aren’t getting paid and patients have complained of inadequate care.”

3) Kansas: As the legislative session begins today, lawmakers and the incoming Democratic Governor, Laura Kelly, are keen to take action on the disastrously dysfunctional Department for Children and Families, which “lost track of dozens of foster care children and allowed contractors to let kids sleep in office buildings. It escalated to horror when abused or neglected children within the state’s grasp ended up dead. (…) Senate Minority Leader Anthony Hensley, D-Topeka, said the state made a mistake decades ago by privatizing foster care. It undermined accountability by putting distance between children and elected officials responsible for public policy, he said. ‘Foster care is a major issue,’ said Hensley, who doesn’t expect lawmakers to reverse privatization. ‘It’s been proven we’ve got some serious problems.’”