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
- Private prison stocks are dropping after Bank of America says it will pull out of the industry.
- The politics of “school choice” will almost undoubtedly play a role in the 2020 elections.
- Download a new free e-book on best practices in public interest finance.
1) National: The Washington Post’s Laura Meckler reports that Democratic candidates for president are abandoning charter schools as the so-called reform agenda falls from favor. “If the candidates say anything about charter schools, it’s negative. Education initiatives boosted by the Bush and Obama administrations are nowhere to be found in candidate platforms. Instead, the Democratic candidates are pitching billions of dollars in new federal spending for schools and higher pay for teachers, with few of the strings attached that marked the Obama-era approach to education. It adds up to a sea change in Democratic thinking on education, back to a more traditional Democratic approach emphasizing funding for education and support for teachers and local schools.”
2) National: Writing in Salon, Jeff Bryant explains why many school districts are being set up for fiscal failure—the erosion of democratic governance. “When I first reported from St. Louis in 2017, I found a school system which had been designed to be the gem of the Midwest had instead been decimated. First, waves of policies from local, state, and federal governments imposed racial segregation on the system. Chronic underfunding hobbled progress. When the system eventually crashed, a wave of ‘reforms’—hiring consultants, cutting services, outsourcing to corporate contractors, and opening the system to privately operated charter schools—plundered what was left.” Bryant also has a few pertinent observations about the linkages between school privatization and other forms of privatization, such as for public airports (see item on Tony Messenger below). Rex Sinquefield is the poster child.
3) Florida: Kathleen Oropeza, co-founder of FundEducationNow.org, says “the politics of school ‘choice’ will play a role in the 2020 elections. Candidates and incumbents are starting to see that starving public schools to fund private religious options is getting hard to defend. In addition, more parents are realizing that taking a voucher for a private school does not mean they’ve made an informed choice. Private means the state is hands-off. Choice puts all the responsibility on the parent, absolving the state of any guilt or obligation when a student receives a subpar education. What would public education look like today if the state had just done its job and invested in equity and quality for every public school student?” FundEducationNow.org was established in 2009 by Florida moms Kathleen Oropeza, Linda Kobert, and Christine Bramuchi, in response to the state legislature’s aggressive public education funding cuts.
4) Idaho: Idaho Education News reports that the Idaho Public Charter School Commission has approved a new charter school in Caldwell, set to open in August of 2020.
5) Louisiana: The president of the nonprofit board that oversees Advantage Charter Academy in Baker “is telling the for-profit company that runs the school it needs to change direction soon or the board will start looking for another operator.” President Walter Morales told representatives of the Grand Rapids, Michigan-based National Heritage Academies, or NHA, that “you run schools the same way across the country and it’s not working for us anymore. We want radical transformation.” National Heritage Academies “operates more than 80 K-8 charter schools across the country, serving more than 59,000 students. Three of the schools are in Louisiana: Willow Charter Academy in Lafayette Parish and two in East Baton Rouge Parish, Inspire Charter Academy in Baton Rouge and Advantage in Baker.”
6) North Carolina: In an interesting piece on the power politics of ‘ed reform’ in North Carolina, caffeinatedrage weighs in on Privatization, a Petri Dish, And a Possible Patsy—A Look at North Carolina Public Education. “It makes one think though. What happens if there is a democrat who is elected state superintendent in 2019? Does Berger try and hold a special session to withdraw the powers extended to the office of the state super that came with HB 17? That’s not a rhetorical question. The elections for 2020 can not come soon enough because it’s time that this ‘experiment’ of dismantling public education in North Carolina stops.”
7) Think tanks: Matthew Di Carlo, a senior research fellow at the non-profit Albert Shanker Institute in Washington, D.C., has commented on a recent paper on teacher diversity in charter schools vs. traditional public schools in North Carolina. He concludes that beyond the raw statistics, the reason behind differences “is really the question that matters—it’s the why rather than the whether. It’s kind of odd to use comparisons of charter and regular public school teacher race and ethnicity distributions to argue that one type of school is somehow better than the other. If there are concrete policies and practices that are responsible for why charter or regular public schools do better, whether in terms of diversity, test scores, or most anything else, then we’ve reached actionable policy conclusions, and that would be good news for everyone.”
8) National: Chicago Teachers’ Pension Fund CIO Angela Miller-May is asking hard questions and making investment decisions partly based on the lack of diversity in infrastructure. “The CTPF has been one of the most vocal U.S. pension funds in calling for diversity in finance. Forty-two percent of its assets are committed to fund managers that can be classified as minority, women and disadvantaged business enterprises (MWDBEs). According to Miller-May, the trustees and staff go into due diligence prepared to ask fund managers tough and detailed questions about what they are doing to be inclusive of people from all walks of life, including people from ethnic minorities and people with disabilities.” [Sub required]
9) National/International: Christoph Burger and Jens Weinmann look at “the failure of privatization in the energy sector and why today’s consumers are reclaiming power.” Their op-ed excerpted and adapted from “Economic Perspectives on Recommunalization in the Energy Sector.”
10) National/International: In a comprehensive and richly detailed new free e-book edited by Lavinia Steinfort and Satoko Kishimoto, multiple authors analyze best practices in public interest finance. “A 2017 study by the Transnational Institute recorded 835 reclaimed public services by over 1,600 cities around the world. The report showed that privatized corporations neither guarantee better service quality nor lower prices and increased investments. When municipalities end privatization and re-municipalize a public service, such as water, energy or transportation, they usually prove to be better equipped to provide good services for all than a profit-making private provider.”
Public Finance For The Future We Want (pdf) is published by the Transnational Institute (TNI), The Democracy Collaborative, Change Finance, Focus on the Global South, New Economics Foundation, Fairfin, MOBA Housing Network, and Tellus Institute.
11) National/International: Climate Fund Managers CEO Andrew Johnstone says investing in climate change mitigation is a must. “‘Investing in climate shouldn’t be a discretionary thing, it should be an obligatory thing. It’s got to be done,’ he said. ‘Institutional investors recognize that, but many investors don’t necessarily recognize the scale of it.’ Johnstone said that efforts to mitigate the impact of global warming would require $480 billion of financing if they were to prove effective. ‘The impact we are having is proving it can be done,’ he said. ‘The next step is taking it supersized and convincing the market we need 500 Climate Investor Ones.’” [Sub required]
12) California: An industry-sponsored ‘public-private partnership’ one-day training conference is coming to Los Angeles on September 25.
13) Missouri: Must read: Tony Messenger’s twitter thread taking down National Rifle Association lobbyist and right-wing political consultant Andrew McKenna’s op-ed attempting to defend his role in the St. Louis Lambert International Airport privatization scheme. “Shorter Andrew McKenna: Yes, I am a pro-NRA, anti-labor zealot, but I have also worked on multiple failed privatization projects (in some, alleged but undocumented capacity) …”
14) Think tanks: The Donors Trust and Koch-funded Reason Foundation (David Koch is on their board) has released its Annual Privatization Report on transportation finance, covering infrastructure investment, asset recycling, and ‘public-private partnership’ projects.
CRIMINAL JUSTICE AND IMMIGRATION
15) National: As nationwide and international outrage grows over the federal government’s mistreatment of asylum seekers and immigrants, corporations profiting from abuses and mistreatment are coming under heavy criticism, along with demands for an end to the use of private prisons and detention centers. Private prison corporations such as GEO Group and CoreCivic are now becoming toxic to the big banks, which have been under sustained assault by activists for financing the system .
Among recent actions was a walkout by employees of the online distributor Wayfair, which has refused to stop supplying immigrant detention centers with furniture. One Wayfair worker said, “I was blown away by my coworkers’ passion and their intensity. And it was so great that we had so much support at the rally from Jobs with Justice, from DSA, and from the unions that showed up to support. It was amazing.” (See @wayfairwalkout).
16) National: Under the pressure of scandal and with for-profit prison and immigrant detention companies’ stock prices tanking (CoreCivic is down 7.2% over the past five days), banks have been moving away from financing them. The latest was Bank of America, which followed earlier pledges of divestment from JP Morgan Chase and Wells Fargo. It is unclear, however, whether Bank of America’s pledge applies to Caliburn, which owns the massive Homestead detention center in Florida. “The Miami Herald previously reported that Bank of America was a financier of Caliburn—which the newspaper said runs a facility called Homestead under a U.S. government contract. The Herald said the bank provided a $380 million loan to the company and a $75 million credit line. The paper indicated Homestead is not a prison, but ‘protesters say it functions as one. The minors held inside are not allowed to leave.’ Bank of America declined to comment Wednesday regarding the companies with which it had previously worked.”
The Washington Post says “in 2018, Bank of America reported profit of $28.1 billion—an all-time high and 56 percent higher than the $18 billion recorded the year before. Its chief executive, Brian Moynihan, made $26.5 million last year.”
17) National: Writing in the American Prospect, journalist Bryce Covert points to a critical loophole that private, for-profit prison and immigration detention companies might use if they faced banning: their status as Real Estate Investment Trusts (REITs).
“The original impetus for CoreCivic and GEO Group converting to REITs was “largely tax avoidance,” says Shahrzad Habibi, research and policy director at In the Public Interest, an organization that documents privatization efforts. In 2017 alone, GEO Group reported getting $44 million in tax benefits due to its new REIT status. However, the transformation could also keep private prison companies in business, in addition to the tax advantages.
“For example, Habibi says, what if the Trump administration decided to contract with CoreCivic or GEO Group to build new Immigration and Customs Enforcement facilities? ‘Those are long-term contracts,’ she points out. ‘Do we as a country foresee our immigration detention practices and policies changing in the future? I hope so.’ But the contract will long outlive the administration and even subsequent ones. It ‘embeds [GEO Group and CoreCivic] in the criminal justice system,’ she adds. ‘While they may not be operating, they are very much pulling the strings.’”
18) National: Bloomberg has published an investigative report on the “appalling” junk food served to families held in five detention centers operated by U.S. Customs and Border Protection in Texas. “On Thursday, the U.S. House passed a $4.6 billion emergency border-funding bill that will allot $1.1 billion to immigrant processing centers run by U.S. CBP—some of which will flow to contractors for the facilities, including food and beverage providers.”
Two of the contractors named in the Bloomberg report are Jesco (Jose Ernesto Salazar, LLC, dba Jesco) and Deployed Resources. “Contractors that serve the centers are seeing increased revenue this year. Jesco, which provides other services in addition to food and beverages, has done 26 transactions worth $5.1 million thus far in 2019, including janitorial services, preventive maintenance and fencing construction. Last year, the company had $4.2 million in government contracts; in 2017, it was $3.9 million. Another company, Deployed Resources, of Rome, New York, has 2019 contracts worth $52 million, up from $3.8 million last year and $26.3 million in 2017. In addition to feeding detainees, the company provides such services as equipment leasing, building installation and temporary housing. A co-owner of Deployed Resources hung up on a Bloomberg News reporter when reached by phone.” Deployed ResourcesLLC has also contracted with U.S. Customs and Border Protection to build migrant detention facilities in Texas.
19) National: Caliburn International’s description of risks to its business from a possible loss of U.S. government contracts stretched over four pages of an IPO filing submitted to the SEC (pp. 29-32) for an IPO in November—before it withdrew it after a Daily Beast report on “allegations of theft, security failures, animal abuse, and rigged security inspections.” Trump “adult” John Kelly joined its board shortly afterward, taking his place alongside retired General Anthony C. Zinni, Admiral James G. Stavridis and Rear Admiral Kathleen Martin. Millions of taxpayer dollars flow into Comprehensive Health Services, which operates Homestead.
20) National: Last Wednesday, Avant Bishop Washington & Black LLC registered to lobby on behalf of the GEO Group on “detention oversight.” The registered lobbyist for GEO is Lanier Avant, former “Chief of Staff, Rep. Bennie G. Thompson; Staff Director, House Committee on Homeland Security.” The lobbying disclosure form informs us that in response to the question “Have any of the lobbyists listed on this report been convicted in a Federal or State Court of an offense involving bribery, extortion, embezzlement, an illegal kickback, tax evasion, fraud, a conflict of interest, making a false statement, perjury, or money laundering?” Avant committed the offenses “2/5/2018, False statement” and “11/16/2016, Failure to timely file tax return.”
21) National: Which sectors of America’s immigrant detention system are run by private companies? Here is a detailed chart prepared by Programs Not Profits, a campaign of In the Public Interest.
22) National/Colorado: Rep. Joe Neguse (D-CO) wants a congressional investigation of the GEO Group, which runs the Aurora immigration detention facility. “The letter addresses reports of subpar medical care at the Aurora facility and issues over outdoor recreation, in-person visitation and the use of restraints on detainees in solitary confinement, all complaints that activists, lawyers and even Homeland Security’s own investigators have raised about the Aurora facility, which GEO Group runs through a contract with Immigration and Customs Enforcement. Neguse, who represents Colorado’s Second Congressional District, also points out that approximately 150 detainees are currently under infectious-disease quarantines, which has been a recurring issue at the facility this year.”
23) National: RAICES, Arent Fox LLP, and Aldea PJC filed suit in the US District Court for the Western District of Texas “on behalf of a group of 26 plaintiffs—13 noncitizen children and their 13 noncitizen fathers—who fled life-threatening violence in their home countries to seek asylum in the United States.” They claim that two months after a federal court injunction, “and in direct violation of that order, GEO sanctioned the unlawful re-separation of these thirteen children from their fathers. With no prior notice, GEO permitted armed men to forcibly remove the fathers from their rooms at the Karnes Detention Center by using bulletproof vests, shields, knee pads, boots, helmets, tear gas equipment and guns.”
24) National: Alex Kotch of Sludge reports that GEO Group donated to the Trump-tied right wing student organization Turning Point USA, “then got rave reviews.” Following the GEO Group Foundation donations, “multiple TPUSA leaders created social media content praising ICE and GEO Group. (…) According to USASpending.gov, the GEO Group has received over $143 million in ICE contracts for its Broward Transitional Center since 2009, with an annual record of nearly $35 million in obligations in 2018. So far this year, GEO Group has gotten $27.1 million worth of ICE contracts for the facility. Work from the center’s most recent contract, worth close to $11 million, began on June 13, 2019.”
25) National: Vanguard says it is “impractical” to divest from CoreCivic and the GEO Group. “It’s not yet clear if big investment firms will distance themselves from the prison industry, similar to what iShares and several other fund managers did with gun stocks American Outdoor Brands (formerly Smith & Wesson) and Sturm Ruger in the wake of a series of mass shootings in America during the past few years. Vanguard said in a statement to CNN Business that the prison stocks make up a ‘very modest’ portion of the company’s portfolios, adding that it would be impractical to eliminate all controversial stocks from funds. (…) State Street, Prudential and Fidelity were not immediately available for comment about their funds’ ownership of CoreCivic and GEO. But the controversy surrounding the migrant crisis is having a broad impact on the financial services industry.”
26) National: Pension funds are coming under criticism for investing in companies that lock up prisoners and immigrants for profit. “Educators for Migrant Justice, a nonprofit group that says on its website that it seeks to end family separation and “migrant abuse profiteering,” is stepping up pressure on California Public Employees’ Retirement Systems and State of Oregon Public Employees Retirement System to sell the two prison companies. The effort follows a successful campaign pushing California State Teachers’ Retirement System to do so, with CalSTRS saying in November that it would remove GEO and CoreCivic from its holdings.”
27) National: Ever see what an ICE contract with a for-profit prison company looks like? Here’s one, all 606 pages of it.
28) California: There will be a hearing tomorrow in the California Senate Judiciary Committee on amendments to AB32 in light of the federal government’s latest efforts to put more immigrant detention beds in the state. AB32, authored by Assemblymember Rob Bonta (D-Oakland), would prohibit the California Department of Corrections and Rehabilitation from entering into a contract or renewing a contract with a for-profit, private prison facility located in or outside of the state, on or after January 1, 2020, and completely phase-out their use by 2028. There will be an opportunity for public comment at the hearing.
29) California/National: Despite the City of Adelanto having cut its ties to an immigration detention center run for profit by the GEO Group for ICE, the facility will remain open. “A direct contract would allow ICE to expand the detention center, since California’s law doesn’t restrict contracts between ICE and private companies. As [Sophie Murguia] reported in May, a new contract between ICE and GEO could also prevent the city of Adelanto from establishing an oversight committee to inspect conditions at the detention center.” The maneuver is “the latest sign that the agency is finding ways to get around a state law restricting immigration detention, a trend that concerns immigration advocacy groups.”
30) Colorado/National: Writing in the Boulder Daily Camera, Kevin Sheffler says the GEO Group must be booted from the Aurora facility. “It is gravely important that the GEO Group be called out for blatant contradictions to its self-advertised values: respecting human dignity and rights and imparting a safe and secure environment,” Sheffler says. “It is merely superficial inclusivity when the company extends those values to only the people whom they deem worthy enough (i.e., their shareholders). Evidence points to the company’s self-interest in ballooning its profits while sacrificing the dignity and worth of those in its charge. Revenue has risen steadily as its CEO, George Zoley, has continued to rake in millions of dollars. It is becoming all the more apparent that the company’s only core value is greed.”
31) National: Florida Politics reports that former member of congress Jeff Miller is using funds left over from his campaign to support a lobbying effort to privatize the Veterans Administration. “Former Congressman Miller is talking regularly to the Trump administration about Department of Veterans Affairs (VA) reform. He’s doing it now on behalf of his new lobbying clients, who stand to make billions of dollars through the privatization of veterans’ care. To help subsidize his new lobbying career, Miller had tapped his old campaign war chest—about $180,000 in leftover funds from when he left the House in January 2017—to cut checks to powerful members of Congress. Miller also reported spending thousands of campaign dollars on meals, hotels, and undisclosed self-reimbursements in the months after he left Congress, as he was picking up new clients and starting to lobby the Trump administration.”
32) National: NPR’s Lulu Garcia-Navarro interviews Andrew Blum, author of The Weather Machine: A Journey Inside the Forecast, on the “major threat” that privatization poses to the international network of forecasting systems. “The alternative would be, you know, if you had a hurricane coming down in Florida, for example, and you had … private forecasting services that said: We can predict this with an extra day ahead of time, allowing for people to evacuate who have access to that information. And that information becomes a commodity rather than a public good.”
33) Kentucky: The study group on the potential privatization of child welfare services created by the legislature has issued its report. Its recommendations:
“1. Expanding privatization to all foster care services in Kentucky is not feasible at this time given the capacities that need to be built within both the public and private sector in order for this approach to be successful.
2. Any future efforts to expand privatization in Kentucky should include a readiness assessment, a cost study, and a legal review prior to implementation.
3. Significant investments of resources are needed within the child welfare system to effectively prepare it for large-scale privatization.
4. Should the necessary capacities be built within the public child welfare agency and the private sector, the Study Group suggests considering a modular approach to expanded privatization, a phased-in implementation plan, and preliminary consideration of specific dimensions of the child welfare continuum of care, including preventive services, recruitment and certification, and independent living services.”
34) Minnesota: Some years ago, the use of the word “privatization” was widespread in conservative ideological and corporate circles, until they began to realize that the word was becoming increasingly toxic in public discourse. Among the massaging that went on afterwards was the introduction of the spin-doctored term ‘public-private partnerships’ as a substitute. So now we have the National Council for Public-Private Partnerships instead of the Reagan/Bush-era Privatization Council. Much, though not all, of the media followed suit.
And the policing is still going on, as Aleezeh Hasan, a former columnist for the Minnesota Daily, recounts. “All mentions of the word ‘privatization’ were removed from my original piece per the MPHA’s request. Although the term has remained heavily debated, I included it in my piece based on how it had sometimes been used in other articles on the subject. However, it seems the words of Jeff Horwich, the director of policy and external affairs from the MPHA, were considered to be more truthful than my researched opinion, because the editors listened to his wishes.” MPHA, of course, prefers the term ‘public-private partnership.’
35) Tennessee: ProPublica, in collaboration with MLK50, a member of the ProPublica Local Reporting Network, reports that low-wage workers are being sued for unpaid medical bills by the tax exempt, nonprofit Christian hospital that employs them. “It’s surreal, she said, to be sued by the organization that pays her $12.25 an hour. ‘You know how much you pay me. And the money you’re paying, I can’t live on,’ said the housekeeper, who asked that her name not be used for fear that the hospital would fire her for talking to a reporter.” The housekeeper now owes Methodist more than $23,000, including around $5,800 in attorney’s fees. The organization, Methodist Le Bonheur Healthcare, has assets of over $1 billion.
36) National: John Buell, a political scientist and former associate editor of The Progressive, writes about how “Trump is deregulating the nation toward disaster.” Buell points out that “deregulating such domestic concerns as transportation, occupational health and safety, the environment is hardly new. At least since the Reagan Administration every Republican President has promised to remove regulations. What is unusual if not literally unique about the Trump presidency is the scope of the deregulatory initiatives, the willingness to expand federal power in behalf of its deregulatory agenda, and the explicit, emphasis on profits as the goal of deregulation.”
37) National: A scoop from Fox Business reporter Charlie Gasparino about Fannie Mae and Freddie MAC, the publicly-run home finance agencies: “@jpmorgan held private meeting Tuesday to discuss coming @WhiteHouse plans for $FNMA$FMCC including privatization, end of conservatorship & possible massive public offering. Meeting included bankers from @Moelis, top stock and bond holders. discussing now @FoxBusiness.”
38) National: The New York Times reports that the climate crisis is leading Miami-area private real estate developers to move in on poorer neighborhoods that are on higher ground. “Our basic thing is educating people,” Michael Clarkson, who helped found a collective that provides free cleanup and repairs to needy residents, said. “Developers and city officials have neglected Little Haiti over these years, and now it has become this hot spot, and people don’t know that it’s because of climate change. The name now is ‘climate change gentrification.’ We call it ‘climate change invasion.’”
40) National: The Senate has passed legal protections for military families in privatized housing as part of the national defense funding bill. The reforms were authored by Senators Dianne Feinstein (D-CA), Mark R. Warner (D-VA), Tim Kaine (D-VA), and Kamala D. Harris (D-CA). Among the reforms: “Withholding basic allowance for housing payments to private housing contractors if a service member and contractor are in dispute over housing conditions.”
41) National: Presidential candidate Elizabeth Warren (D-MA) is demanding answers following reports that military housing contractor Balfour Beatty falsified maintenance logs to boost its income. “Last week, Reuters and CBS reported how landlord Balfour Beatty Communities kept two sets of maintenance records at Oklahoma’s Tinker Air Force Base. An official set of electronic records, shown to the Air Force, listed prompt responses to maintenance requests. The other, a handwritten log not shared with the military, accurately showed the company consistently took much longer to finish jobs. The official entries made the company appear responsive to tenant complaints and unsafe conditions, helping it secure millions in ‘performance incentive fees’ for good service it otherwise often would not have qualified for.”
42) National: Writing in the Stanford Law Review, Kristen A. Carpenter and Angela R. Riley challenge the view of the Trump administration that the answer to widespread poverty in American Indian communities is the privatization of land. “Taking a different view, this article complicates and challenges the narrative of Indian poverty and land tenure advanced by privatization advocates.”
43) International: Philip Alston, the UN Special Rapporteur on extreme poverty and human rights, has produced a new report on climate change and poverty that has some pertinent observations on privatization. “Rather than helping the world adapt to climate change, privatizing basic services and social protection may be a form of maladaptation. When hurricane Sandy wreaked havoc in New York in 2012, stranding low-income and vulnerable New Yorkers without access to power and healthcare, the Goldman Sachs headquarters was protected by tens of thousands of its own sandbags and power from its generator. Private white-glove firefighters have been dispatched to save the mansions of high-end insurance customers from wildfires. An over-reliance on the private sector could lead to a climate apartheid scenario in which the wealthy pay to escape overheating, hunger, and conflict, while the rest of the world is left to suffer.”
44) Think tanks: The AFL-CIO has released a new report on CEO vs. median employees’ pay ratios. Some ratios for privatization-related companies: K12, Inc., 125 times median employee’s pay; CoreCivic, 112 times median employee’s pay; GEO Group, 186 times its median employee’s pay; Waste Management, 113 times its median employee’s pay; Aramark, 992 times median employee’s pay.