Here’s our weekly analysis of privatization in the news and in communities nationwide. Not a subscriber? Sign up.
This week’s highlights
- New York City’s teachers union, UFT, is honoring the teachers lost so far during the coronavirus pandemic.
- Maryland’s Purple Line, a much-touted light rail “public-private partnership,” is in financial trouble.
- Internal ICE investigations have found inadequate care for inmates suffering from COVID-19, sparking fears about the whole system.
Governing for the Common Good
1) National: The United Federation of Teachers and all of us honor lost cherished members during the coronavirus pandemic. “They dedicated their working lives to serving our city in its schools and hospitals. We honor their memory and vow to carry on their legacy.” Here’s to all of our public service workers fighting for the common good with the courageous support of their families and friends.
2) National/Think Tanks: Trickle-down economics, austerity, neoliberalism—whatever you want to call it—has made this crisis worse than it should’ve been. Let’s not make that mistake again, says In the Public Interest’s Jeremy Mohler. “As the crisis plays out, what should we be arguing for instead? Simply put: raise taxes on those who can afford it. As the Institute on Taxation and Economic Policy put it in a new report, “For states facing catastrophic revenue declines, asking more of taxpayers with a clear ability to pay is far preferable to cutting state budgets, which would lead to mass layoffs, steep cuts in public services, and a downward spiral in the economy.” That means raising tax rates on upper-income earners, implementing “excess” profits taxes, and repealing corporate tax giveaways—to name a few ideas in the report.”
3) National: As millions of people are stripped of health coverage amid the COVID-19 pandemic, House Democrats have unveiled a bill for the emergency expansion of Medicare and Medicaid. “Jayapal and Kennedy’s new bill would “dramatically expand” Medicare and Medicaid eligibility, cap out-of-pocket costs for Medicare enrollees, and require all public and private health insurers to fully cover care related to Covid-19—including for patients who display symptoms but test negative for the disease. Further, the legislation would bar healthcare providers from billing uninsured patients for Covid-19 care.”
4) National: Democrats and progressive groups are planning for a massive rollback of Trump-era regulations and promulgation of new regulations if Joe Biden is elected and Democrats take control of Congress. “The plans center around the Congressional Review Act, a 1996 law that allows Congress to revoke new regulations within 60 legislative days of their completion,” The Wall Street Journal reports. This put the last date at which new regulations could be put into place without triggering the CRA at around May 19. “Consumer watchdog Public Citizen is building a website to track all rules that could be rescinded by a potential Democratic-controlled government. The organization’s Amit Narang said he believed the Trump administration wasn’t pausing work on certain rules during the pandemic “in part due to concerns about potential CRA challenges under a new president.” Gregg Gelzinis of the Center for American Progress said he would begin planning a CRA strategy for financial regulations with Democratic congressional offices starting this summer.” [Sub required]
5) National/Pennsylvania: Protesters in Pittsburgh and across the nation called on city, county, state, and federal officials to support freezing rent and mortgage payments for the month of May. “The protesters were demanding rent and mortgage freezes in Allegheny County and Pennsylvania, as well as supplying rent forgiveness funds, during the pandemic and for at least 90 days after stay-at-home orders are lifted. They also want the federal government to zero out rent and mortgage payments nationwide, pass a nationwide eviction and foreclosure moratorium, ban utility shut-offs across the country, and provide a minimum of $2,000 in cash assistance to all American residents.”
6) National: Economist Barry Ritholtz calls for a major role for government in partnership with the private sector for a forward-looking recovery. “Grover Norquist once said his goal for government was ‘to get it down to the size where we can drown it in the bathtub,’ Ritholtz writes. “It’s a great punchline, right up until you need the government to fight the Nazis—or to control a global pandemic that threatens to kill millions and destroy the economy. Time will tell if this White House and Congress are up to this enormous task. The public gets to grade the response and rescue plan in about six months—on Nov. 3. This is no time for thinking small. America, confronted with the biggest crises, has always stepped up. We face yet another historic crisis. Once again it is time for America to go big.”
7) National: Under the pressure of the pandemic, some conservatives are abandoning their movement’s longstanding anti-government ideology, The Economist reports. “Led by some of the most interesting conservative thinkers, including Yuval Levin and Oren Cass, plus a handful of senators, it rejects Mr. Massie’s market fundamentalism and takes a more flexible and positive view of government than most Republicans have since the 1970s. Its members, who include Trump-style populists and the remnants of a reform conservative movement that began in the doldrums of George W. Bush’s presidency, want to turn the party’s attention from economic freedom to socioeconomic outcomes, from corporations to workers.”
8) National/International: Civil society groups have scored an important victory over private equity to keep them from taking over the .org url suffix used by many charities and nonprofits. “The decision by the Internet Corporation for Assigned Names and Numbers (ICANN) board to reject the $1.1 billion deal, announced in November 2019, came ahead of a May 4 deadline and followed months of mounting concerns that the takeover could lead to censorship from corporate interests, increased costs, and service issues.”
9) California: The City of Santa Barbara Fire Department’s bilingual outreach coordinator and the executive manager of Listos, the statewide disaster-readiness program for Spanish speakers, are bridging the linguistic divide. “Though an additional factor that could contribute to the disparity is language, it isn’t as simple as translating the English messages and delivering them through mass public service announcements. It has to take into account the invisible separation across cultural lines.”
10) California: In a letter to the editor of the Los Angeles Times, Roger Lowenstein says “if there is anything good to come out of this health crisis, it will be a reconsideration of the proper role of government. A fully functioning government safety net may be required by our Constitution. Wouldn’t that be a pleasing antidote to our current leadership vacuum?”
11) Louisiana: A library worker takes us inside the fight of his colleagues to shut down New Orleans libraries during the pandemic and organize member-driven union branches. He places this is the context of the wholesale privatization of the city’s schools after Hurricane Katrina and the firing of its unionized workforce—majority black and female career education professionals. And in the context of the turning over of public housing to “public-private partnerships” and the dismantling of the public health system. “Already, we have heard the mayor warn that possible furloughs and layoffs await city government, including the library system, due to falling tax revenue. To keep the libraries in New Orleans a public resource, library workers will have to be organized to fight privatization.”
12) Michigan: Gov. Gretchen Whitmer (D) wants to provide free tuition to essential workers. “The “Futures for Frontliners” plan is based on the federal GI bill, which provided free education to soldiers returning from World War II. It would provide a “tuition-free pathway to college or a technical certificate” to essential workers without a college degree. Eligible workers include a wide range of people working jobs outside their homes, such as people helping manufacture PPE, first responders and truck drivers who deliver supplies.”
13) Minnesota: Derek Larsen of the St. Cloud Times writers group says once the coronavirus crisis is over, “the new normal will have to address the abject failures of the systems designed to keep us safe and the underlying disparities that have made the impact of the pandemic even worse than it might have been for millions. Once this is over—or even while it continues—we must have serious conversations about the role of government in protecting our citizens, not just from public health threats, but in all aspects of our lives.”
14) International: Brazil’s “Chicago Boys” are seeing their project of austerity and privatization collapse around their ears, the Financial Times reports. “I think he is a bit depressed. Everything in what he believes is sinking,” said one official who met privatization champion Paulo Guedes recently. [Sub required]
15) National: Carol Burris of the Network for Public Education (NPE) has launched a letter campaign to tell Congress to stop Secretary of Education Betsy DeVos from using emergency funds to promote privatization. “Betsy DeVos took $180 million in federal coronavirus relief funds and is using the money to create a competition for states to get millions for voucher-like grants and to expand virtual, online education. Send your letter and tell Congress to direct DeVos to stop using CARES Act funding to advance her privatization agenda. Let’s send the money to public schools that need support in the states hardest hit by COVID, which was the intent of Congress.”
16) National: Education Secretary Betsy DeVos “is being sued by student advocacy organizations for continuing to garnish wages of student borrowers amid the coronavirus pandemic despite provisions against the practice in Congress’s coronavirus relief package,” The Hill Reports. “‘Right now, low-wage workers hit hardest by the economic impact of the pandemic need their paychecks to keep food on the table and a roof over their heads,’ Persis Yu, director of the NCLC, said in a statement. ‘By continuing to use its harsh collection tools during this public health and economic crisis, the Department of Education is placing the health, safety, and well-being of vulnerable student loan borrowers in peril.’”
17) National: “Let’s talk about the upside of the pandemic on our business,” the CEO of K12, Inc., the large private, for profit online education corporation, tells investors and analysts. “I think the biggest opportunity for us and for anybody, if, in fact, schools are not open and kids can’t go back-to-school is going to be in the institutional business,” Nathaniel Davis says. “I think if kids don’t go back-to-school in the fall, you’re goin g to see a tremendous focus on all the schools, putting those kinds of programs in place.” Another company official said the situation with the coronavirus and school shutdowns is “a structural tailwind for us. We’re actually not just for going to next year, but for many years to come.”
In this environment, In the Public Interest believes that while technology can and will be used creatively to enhance public education, policy decisions must be guided by educators and a commitment to democratic control of universal public education for all. Too often policy debates are fueled by outlandish claims, emotionally charged language, clever marketing, and vague promises. See our resource list.
18) National: Dora Taylor, creator of the blog Seattle Education, warns that “in the coming months, numerous contracts—such as requests for additional computer software and online testing—will pass over the superintendent’s desk, options that are normally debated in public at school board meetings. Though board meetings are being held online, Juneau can approve any and all contracts as she sees fit.”
19) National/International: A just-released industry report on the E-learning market has a useful list of the key corporate players. Look under “Prominent Vendors” and “Other Prominent Vendors.” The first mentioned end-user is, not surprisingly, K-12. The report itself, available in e-format, is $2,800.
20) Arizona: Beginning on July 1, Globe Unified School District and Bicentennial Union High School District will outsource their information technology to K12itc, a managed technology services company.
21) Think Tanks: The Network for Public Education (NPE) has released its new newsletter. NPE’s national conference has been rescheduled to November 21 and 22nd. NPE “is currently conducting virtual conversations with NPE President Diane Ravitch and her special guests every Wednesday evening.”
22) National: Republican Senate Majority Leader Mitch McConnell told Republican lawmakers on a private call that he “doesn’t support including an infrastructure package in a coronavirus relief bill, according to people familiar with the call, despite President Trump’s push for infrastructure investment. (…) ‘We need to keep the White House in the box,’ Mr. McConnell said, referring to any infrastructure package. ‘The Democrats and the White House need to get the message.’” [Sub required]
23) National: Public Works Financing, the leading industry advocate for American “public-private partnerships,” has reappeared after a hiatus when its longtime editor Bill Reinhardt retired. Its new editor is Michael Bennon, who teaches project finance at Stanford and is a West Point graduate and U.S. Army Corps of Engineers veteran.
PWF kicks off its reboot issue with hopes for a COVID-19 sparked federal infrastructure stimulus program, and while acknowledging that there have been many false dawns on infrastructure initiatives is still hopeful the COVID-19 crisis will “break the logjam.”
The new issue of PWF has an article comparing “public-private partnership” approaches to traditional models for school procurement, rather surprisingly drawing on a paper that finds “no strong evidence to support the claim that PPP delivers infrastructure faster than traditional procurement. Unlike previous studies, the paper covers the entire period between contract notice (advertisement) and the completion of construction.” But the author does note “there is still a distinct scarcity of studies that compare the performance of PPP relative to more traditional forms of public procurement.”
PWF also has articles celebrating the Long Beach Civic Center PPP as a success; optimism about Maryland Gov. Larry Hogan’s controversial multibillion dollar managed toll lanes “public private partnership”; and a progress report on LAX’s People Mover. [Public Works Financing, April 2020; sub required]
24) National: Municipal bond market participants applauded the Federal Reserve’s expansion of the criteria for states and cities to qualify for its short term muni debt support program. “The changes announced Monday now allow the program to cover counties of 500,000 or more and cities of 250,000 or more. ‘Broadening the universe of issuers who may access the program directly, lengthening the maximum maturity, and extending the termination date will all make the program more accessible and successful,’ Bond Dealers of America said in a statement.” [Sub required]. More details on the changes can be found on the Fed’s press release; its term sheet; FAQs; and useful list of all the states and cities that qualify under the program.
Writing in The Bond Buyer, Michael Decker of Bond Dealers of America says, “While some states are prepared and eager to serve the role of conduit to the Fed, others are legally or constitutio nally prohibited from serving that role. To ensure the facility’s success, the Fed should rethink the terms of the program with respect to local borrowers. 20,000 may be too many issuers for the Fed to manage, but 75 is too few to stand up the market. Congress has begun to weigh on issues surrounding the Fed facility. Last week House Financial Services Committee Chair Maxine Waters (D-CA) wrote to Federal Reserve Chair Jerome Powell about the municipal facility. Chair Waters said ‘Congress made no distinction regarding the size of a municipality that should directly benefit from’ the Fed program. She concluded that ‘the facility can be immediately improved by, among other things, including territories and dramatically lowering if not eliminating the arbitrary thresholds set for eligible municipalities.’ Most important is the question of who bears the credit risk for the “downstream” local government borrowers who access the Fed facility indirectly through a state.” [Su required]
25) Maryland: The Purple Line, a much-touted light rail “public-private partnership” that encountered public opposition during its approval and planning stages, is in trouble as its builder is threatening to walk away from the project over cost overruns if the state doesn’t pay for them. “PLTC’s exit would represent a stunning blow to a massive transit initiative considered critical to the long-term economic success of Montgomery and Prince George’s counties. It is unclear how long it would take for the larger consortium behind the project, Purple Line Transit Partners, to replace the Fluor, Lane and Traylor work crews.”
26) Michigan: An administrative law judge has ruled in Nestlé’s favor in a suit seeking to block the giant company from extracting water from the Michigan aquifer. “Peggy Case, president of the MCWC—which has opposed Nestle groundwater withdrawals in Michigan dating back to 2000—said the group is reviewing its options for next steps. It is possible MCWC or the tribe could file a complaint in circuit court or appeal to a new state environmental permit review panel created by the Republican legislature to oversee EGLE decisions. In his decision, Pulter indicated the review panel would not have authority to review the contested case and any appeal would go to EGLE director Liesl Clark. Case said her group has tried unsuccessfully to meet with Michigan Attorney General Dana Nessel and director Clark to discuss why Gov. Gretchen Whitmer’s administration is defending the Snyder-era decision. Nessel’s office defended EGLE’s permitting decision in written and oral arguments. Nestle was an intervening defendant in the case.”
27) Texas: Conservative anti-toll groups are applauding Gov. Abbott’s move to fund the first critical segment of the Interstate-35 expansion through downtown Austin without tolls. But veteran PPP and toll opponent Terri Hall says that Keep Texas Moving will use this as an excuse to toll everything else, given the tight budget—“Since the I-35 project will consume all of TxDOT’s discretionary funds for a number of years, their backers will claim no other projects can move forward without making it a toll project, specifically a public private partnership (P3) or Comprehensive Development Agreement (CDA). Cintra, one of the primary private toll operators in Texas just happens to sit on the board of Texas Association of Business. Cozy, right?”
28) Ohio: St. Clairsville is still considering whether to privatize its water supply in light of the state EPA’s findings that repairs to the water system are needed. “The debate over privatization vs. local control was important during the 2019 mayoral election, with prior mayor Terry Pugh in favor of privatization and Thalman winning on a platform of exploring options for maintaining local control. (…) Thalman said she is continuing discussions with Aqua Ohio. The May 4 deadline to accept or reject the contract is no longer feasible, since it specified Aqua would make capital improvements to the water plant, us of which will be discontinued, and numerous repairs since made by the city. Vaughn’s study concluded that maintaining water service locally is an affordable option. (…) More information will be put before City Council during a teleconference meeting at 7:30 p.m. [today]. The public can call 740-232-9309 to listen. The access number is 6493.”
Criminal Justice and Immigration
29) National: More than 70% of the inmates tested in federal prisons have coronavirus, The Wall Street Journal reports. “When I hear numbers like that, my thoughts are there is massive under-testing, there are probably thousands of additional people who are infected that they may not have captured yet, and it really feels like a public health crisis in the making,” said Dr. Ashish Jha, director of Harvard’s Global Health Institute. [Sub required]
Ohio Senator Sherrod Brown (D) has echoed a call from correctional officers for Congress to pass immediate state and local aid for front-line workers. “The crisis reveals why the next stimulus bill in Congress should recognize the service of these courageous, everyday heroes and ensure that public services, and the dedicated workers who provide them, are protected and kept on the job. State and local governments are struggling to stay open and need urgent assistance from Congress and the president to cope with rapidly decreasing revenues. They are being forced to consider dangerous layoffs at a time when the demand for services is soaring. Public service workers – including health care workers, correctional officers, sanitation workers and custodians who maintain our schools and keep them disinfected – are essential to fighting this pandemic and reopening our economy. We can do neither if we lay them off.”
30) National: Internal ICE investigations have found inadequate care for inmates suffering from COVID-19, sparking fears about the whole system. The Hudson County Correctional Facility in New Jersey was described as “broken” by Katherine Hawkins, a senior legal analyst at the Project On Government Oversight, or POGO, in Washington, D.C. “And unfortunately, ICE has not been responding with urgency.” The other facility under review is the LaSalle ICE Processing Center in Louisiana. “A spokesman for the GEO Group, which operates the LaSalle detention center, says in a written statement that health care services at the facility are provided by ICE, not GEO.”
31) National: Reuters reports that “two guards at a private immigration detention center in San Diego have sued private prison operator CoreCivic Inc., claiming they were forced to quit because they feared for their safety as the company failed to take even basic steps to protect staff and inmates from the coronavirus.”
32) National: GEO Group has reported its first quarter 2020 results, revealing a decline in revenue year-over-year. The company reports “the spread of COVID-19 has negatively impacted a number of our facilities and programs and is expected to result in lower full-year 2020 revenues, primarily for our ICE Processing Centers and U.S. Marshals Service facilities and our GEO Reentry Services business.” The company’s long-term debt declined slightly to $2,370,890,000.
Analyst Joe Gomes of Noble Capital posed a sharp question during the conference call following the results report: “If you look at ICE, average daily populations, at the end of the year, for the month of December, they were at 42,000. Last—I think it was last week or two weeks ago, they were at 30,000 as an average daily population for the week or roughly a 26% decline from the beginning of the year. And you guys are talking about an 8% decline in your revenue from ICE year-over-year. And I’m just wondering maybe if you could give a little color to that as to how you square it with such a sharp drop in the ICE population since the beginning of the year?”
The answer? Because of GEO’s fixed price contract. Brian Evans, Senior Vice President & Chief Financial Officer “But as we’ve mentioned and I think we mentioned in the call, the majority of our contracts with ICE have a fixed-price component, a significant fixed-price component to cover the high level of fixed cost that it takes to operate a facility. So even though the occupancy levels are lower, it’s not a proportionate impact to our revenues from the lower occupancy level.”
33) National/California: The State of California has pushed back against the ACLU over who is responsible for reducing the number of detainees in federal ICE facilities. ACLU has argued the state should move to reduce the numbers during the pandemic, and the state says ACLU should take it up with the feds. “Becerra’s office further argued that the ACLU is already suing ICE in federal court to achieve the same end, which is the proper recourse. But, according to the ACLU, the state does have the power to correct unsafe inmate conditions if they are in violation of the U.S. Constitution. Confined quarters, unsanitary conditions and poor medical care are turning jails, prisons, juvenile and ICE detention and facilities into ‘COVID-19 hotspots,’ the ACLU maintains.”
34) Louisiana: Noah Lanard of Mother Jones reports that “two guards at Louisiana’s Richwood Correctional Center, where at least 45 people in Immigration and Customs Enforcement custody have tested positive for COVID-19, have died in recent days, according to the local coroner’s office and colleagues’ posts on Facebook. (…) LaSalle Corrections, the private prison company that runs Richwood, has not responded to multiple requests for comment.”
35) Tennessee: Gov. Bill Lee (R), who has drawn widespread criticism for what many see as his early opening up of the state during the pandemic, has ordered a mass testing of people in CoreCivic’s Trousdale Turner Correctional Center after 1,300 COVID-19 infections were reported.
36) National: With an unprecedented number of public service workers facing unemployment, House Speaker Nancy Pelosi says about $1 trillion in federal aid is needed to prop up vital state and local public services. “Pelosi’s comments set up an intense clash with Senate Republicans as Congress begins to debate its next steps in responding to the pandemic. Senate Majority Leader Mitch McConnell (R-Ky.) has said repeatedly in recent days that he will not agree to additional spending for state and local governments unless Congress also passes liability protecti ons for businesses and health-care workers—an idea Pelosi has rejected. President Trump, meanwhile, has suggested he will not approve more funding for states and cities unless they change their immigration policies to eliminate protections for unauthorized immigrants.”
Private Activity Binds and Build America Bonds would be part of the Democratic proposal. Politico reports that state and local governments “are hemorrhaging tax revenue, damaging their budgets, and their leaders are warning of layoffs and cuts to services they provide such as policing, other emergency response services and education as a result.” Already in California, thousands of healthcare workers have been laid off in the middle of a pandemic.
37) National: OSHA inspectors are key to re-opening factories and other workplaces. Their ranks are at a 45-year low. “The Occupational Safety and Health Administration had only 862 inspectors at the start of the year, the smallest number since 1975, according to a report by the pro-labor, nonprofit National Employment Law Project. The total was down from 952 in 2016 and a historic high of 1,469 in 1980. ‘They cannot return people to work until they protect workers on the job, and they can’t protect workers on the job with voluntary guidelines,’ the report’s author Deborah Berkowitz, who served as OSHA chief of staff under President Barack Obama, said in an interview.”
38) National: “If the coronavirus kills the Postal Service,” says The New Yorker, “its death will have been hastened by an underlying condition: for the past 40 years, Republicans have been seeking to starve, strangle, and sabotage it.” Casey Cep tells the story. For more see Democracy Now!’s interview with Mark Dimondstein, head of the American Postal Workers Union. “They have an agenda. They would like to sell the public Postal Service off to private corporations, privatize it and turn what’s a service of the people into—and everybody has the same equal access to—turn it into a profit-making entity, where whether people get mail service or not, and at what cost and what kind of surcharges, would depend on whether somebody can make a quick dollar.”
39) National: A thread by Christian Christensen, a professor at Stockholm University, on “how privatization of elderly care sector laid the groundwork for the disastrous impact on the elderly in Sweden.”
40) Ohio/National: Members of Teamsters Local 377 are demanding that Republic Services, the private, for-profit hauler that contracts with many municipalities, provides personal protective equipment and better workplace conditions during the coronavirus pandemic, including revised attendance and paid sick leave policies. “To drive home the message, workers from the three Republic Services locations in the Youngstown area held a protest Friday morning, joining protests in Massachusetts, Georgia, Los Angeles and the Bay Area. Some 800 workers in total protested in those areas, says Chuck Stiles, director of the Teamsters Solid Waste Division, which represents about 32,000 members.”
41) National: Federal inspectors are fearful and angry about Trump’s order to reopen outbreak-stricken private, for-profit meat plants. “Employees, however, said they have received no details on how the department will keep that promise. [USDA Food Safety and Inspection Service] is still not providing personal protective equipment—including masks—to its inspectors, instead offering a one-time $50 stipend for employees to procure their own. On Wednesday, FSIS held telephonic town halls with employees, as it has done each week during the pandemic. For the first time, however, FSIS took no questions from employees, citing ‘inappropriate’ leaks to the media and privacy concerns. ‘We’re pretty angry about it,’ one inspector said of the one-sided town hall he listened to. ‘They said they would answer the most frequently asked questions but they’re not doing that.’” More than 10,000 federal employees have contracted COVID-19.
42) National: Andrew Rush, the CEO of Made in Space, a space manufacturing company, and chair of a key NASA advisory committee, wants to expand “public-private partnerships.” Politico reports “one of his top priorities is continuing to push NASA to contract for more commercial services—like the Commercial Orbital Transportation Services program, in which NASA pays private companies to deliver cargo to the International Space Station, and the Commercial Crew program, in which NASA will buy rides to o rbit on commercial spacecraft built by SpaceX and Boeing.”
43) National: Are corporate arbitration agreements on shaky legal ground? Here’s an interesting question from DLA Piper to their corporate clients: “Is there an unexpected consequence lurking in your arbitration agreement’s poison pill provision?” Maybe yes, they suggest: “Several decisions, including one from the Ninth Circuit Court of Appeals, demonstrate that including a poison pill provision with a class action waiver that waives the right to seek public injunctive relief could render the entire arbitration agreement unenforceable.”