Update: Upcoming Outsourcing Issues. April 28, 2014

1) National: The Atlantic reports on the growing national backlash against the irresponsible privatization of public services and assets. “In states and cities across the country, lawmakers are expressing new skepticism about privatization, imposing new conditions on government contracting, and demanding more oversight. Laws to rein in contractors have been introduced in 18 states this year, and three—Maryland, Oregon, and Nebraska—have passed legislation, according to In the Public Interest, a group that advocates what it calls ‘responsible contracting.’ ‘We’re not against contracting, but it needs to be done right,’ said the group’s executive director,” Donald Cohen.


2) National: Postal workers rally in 56 locations to protest “the piecemeal outsourcing of postal work to the low-wage retailer Staples.” Mark Dimondstein, president of the American Postal Workers Union, says “we’re willing to try some of these programs, but not when it transfers decent-paying, living-wage jobs to non-living wage jobs at Staples.” The APWU recently pointed to an internal memo by USPS saying the move would cut costs by using lower-paid “retail partner” employees. (See also Legislative Issues below)

3) National/Wisconsin: The Economic Policy Institute releases a report by Prof. Gordon Lafer on school privatization proposals in Milwaukee. The report “evaluates the ‘blended learning’ model of education exemplified by Rocketship and seeks to understand how the ‘school accountability’ legislation debated during the most recent legislative session would likely affect Milwaukee schools.” It also “explains how such proposals might fit within the broader economic agenda of both local and national corporate lobbies. Above all, the report questions why an educational model deemed substandard for more privileged suburban children is being so vigorously promoted—perhaps even forced—on poor children in Milwaukee.” Lafer connects the privatization drive to corporate lobbies and the right wing infrastructure, including Wisconsin Manufacturers and Commerce, Americans for Prosperity, and the Metropolitan Milwaukee Association of Commerce. Lafer reports that “Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce, sits on Rocketship’s board, and the association raised $2.5 million in private contributions to help make Rocketship the first national charter chain operating in the city.” The report was also released in Milwaukee last Thursday by the Institute for Wisconsin’s Future, with Lafer on hand for the press conference.


4) National: The New York Times reports on the Walton family’s promotion of privately run, publicly funded charter schools. The Walton Family Foundation has pumped more than $1 billion into the effort since 2000. “In addition to giving grants to right-leaning think tanks like the Thomas B. Fordham Institute and the American Enterprise Institute for Public Policy Research, the Walton foundation hired an education program officer who had worked at the American Legislative Exchange Council, a conservative business-backed group.”


5) National: Chris Farrell, a contributing editor for Bloomberg Businessweek, warns against privatizing retirement security, and calls for a new look at the risks of 401(k) plans. “Question is, in light of the current turmoil in the financial markets, should Wall Street manage any of our long-term retirement savings funds? Is the 401(k) plan, which has become the main retirement savings vehicle for the American worker over the past three decades, a mistake? The case for rethinking the 401(k) as a pillar of retirement savings is compelling.”


6) National: The American Federation of Teachers calls on Pearson to stop its “gag order” preventing teachers from talking about tests. “Exactly who insisted on the ‘gag order’ in the contract—the state or Pearson—is unclear. But Pearson contracts with other states to develop standardized tests have included the same sort of ‘gag orders.’” AFT delivered the letter to Pearson shareholders in London on Friday. [AFT letter]


7) National: AFGE president J. David Cox Sr. denounces the privatization of poultry inspection. “A plan proposed by the U.S. Department of Agriculture would replace 40 percent of USDA inspectors with employees who work for the poultry processing plants, essentially allowing operators of chicken and turkey slaughterhouses to inspect their own operations. As Donald Cohen of In the Public Interest recently put it, the fox is literally guarding the henhouse.”


8) National: ColorofChange reports that “three major corporations have announced the divestment of a combined total of nearly $60,000,000 from Corrections Corporation of America (CCA) and GEO Group (GEO).” Rashad Robinson, executive director of ColorofChange.org, said “these divestment victories further marginalize corporate executives like Larry Zimpleman of Principal Financial Group, who continues to argue his hands are tied to divest his company from the industry. In fact, corporations have the power and moral responsibility to divest..”


9) National: Slate presents “The Privatization of Our Public Colleges (in Two Charts).”


10) California: The Democratic primary race for state superintendent is turning into a battle over “school reform.” “Former charter school executive Marshall Tuck said on Friday he planned to unleash campaign ads and social media outreach next week to unseat incumbent state Superintendent of Public Instruction Tom Torlakson, a former lawmaker and teacher who has the backing of unions and the state party organization.” The primary is on June 3.


11) Connecticut: Commenters warn that a plan to create a separate school within New Haven’s Hillhouse High poses the risk of eventual privatization. “This is a recipe for failure and will create just the conditions to provide a well financed private education conglomerate to be brought in to privatize. While having innovative curriculum and a personalized learning environment is a worthy goal, shouldn’t effective and full time leadership be equally important?”


12) Florida: The DOT selects I-4 Mobility Partners to design, build, finance, operate and maintain the $2.3 billion I-4 Ultimate road project. I-4 Mobility includes Skanska, John Laing, a construction joint venture (Skanska, Granite and Lane), a design joint venture (HDR and Jacobs) and, to operate the road, Infrastructure Corporation of America. It is a 40 year “public private partnership” financed by debt, equity and a federal TIFIA loan. Construction begins next year. [Sub required]


13) Florida: Miami Dade County is considering Florida’s first water treatment “public private partnership.” Private investors may design, build, finance, operate and maintain the facility. The Miami Dade water and sewer department “will meet with its bond counsel on April 28 to determine whether financing will be part of the solicitation after 11 respondents expressed preference for a financing component.” [Sub required]


14) Georgia: Barrow County News looks at the mixed record of the town of Milton with outsourcing municipal services to a for-profit company. Barrow County leaders are considering a similar move. “In 2008 the economy led to Milton officials renegotiating their contracts in order to save money. The city now has 144 employees and only contracts out a few departments. ‘What they figured out was that by ending the contract with CH2M Hill, and going with a more traditional model for most departments, Milton saved $1.2 million in 2010 and another $1 million in 2011,’ said Milton Communications Manager Jason Wright.”


15) Indiana: Former charter school board chair and steel industrialist Reid Litwack is pushing for the charterization of the entire Gary school system. He will hold a meeting this Thursday. Litwack calls for the school board “to convert all 16 schools to independent schools within four to six years.”


16) Kansas: The FBI is reportedly looking into possible illegality in Gov. Brownback’s privatization of the state’s $3 billion Medicaid program, according to the Topeka Capital-Journal. “The Topeka Capital-Journal learned the months-long inquiry involves Parallel Strategies, a rapidly expanding Topeka consulting and lobbying firm created in 2013 by a trio of veteran Brownback employees who left government service to work in an environment where coziness with former colleagues could pay dividends. The governor’s branding of KanCare handed to three for-profit insurance companies exclusive contracts to provide Medicaid services to 380,000 of Kansas’ disabled and poor.”

The Koch brothers and Koch industries have backed Brownback for nearly two decades. According to the Washington Post, the Kochs have weighed in to shore up Brownback’s legislative position. “With the governor’s blessing, two groups backed by the billionaire libertarian Koch brothers—Americans for Prosperity and the local Chamber of Commerce—spent hundreds of thousands of dollars backing conservative challengers to the upper chamber’s moderates.”


17) Kansas: Topeka Capital-Journal calls for the outsourcing of sheriff’s deputies’ jobs at the courthouse, and for the deputies to be deployed elsewhere. “Security at the courthouse, involving armed deputies and electronic scanners, initially was put in place at the urging of court officials, and they and the district attorney probably would like to be heard on the issue.”


18) Michigan: Detroit chief financial officer John Hill tells The Bond Buyer that any deal to privatize the city’s water system would have to be completed before Emergency Manager Kevyn Orr leaves office at the end of September “because it would probably depend on powers that only an emergency manager has.” [Sub required]


19) Michigan: Department of Public Works Director Ron Brundidge issues a statement saying that some Detroit employees are skipping trash collections as privatization draws closer. As a result, he is bringing in workers from a contractor. Rizzo Environmental Services and Advanced Disposal Services are scheduled take over trash collection in June.


20) New York: Lockport Mayor Anne E. McCaffrey “she will recommend that the city hire a streets chief and privatize as much of the engineering work as possible.”


21) New York: Washington County legislator has concerns about the impact of the county’s massive wave of privatization over the past few years, which has radically reduced public worker positions. “‘I don’t think that means those people weren’t needed. I’m not a big fan of privatization because I don’t think when you’re doing service work for people you can always deal with what the bottom line is,’ Greenwich Supervisor Sara Idleman said of the county’s reduction of positions. ‘I don’t know how we determine if that’s been successful. If people think we were successful because we cut our staff, that’s one way to measure. But I don’t think that’s the only way.’”

22) Ohio: The right wing Koch brothers’ Americans for Prosperity is weighing into local ballot issues to promote privatization. They have involved themselves in a tax referendum in Columbus that would raise money for the city’s zoo, saying the city “should pursue the possibility of private investment rather than rely on a ‘big government’ solution.”


23) Oregon: State Supreme Court deals setback to liquor privatization ballot initiative. “The court’s decision was a victory of sorts for privatization supporters, who initially submitted their proposed ballot with no mention of taxes.” The state attorney general must now decide on alternative language. “‘Today the Supreme Court confirmed that liquor privatization will impose a new tax—regardless of what it is called,’ said Anna Richter Taylor, spokeswoman for a coalition of groups opposed to the measure. ‘Oregon’s system works well. We don’t need to fix something that’s not broken.’” The July 3 deadline to turn in signatures is fast approaching.


24) Texas: Lawsuit due to be heard in December is looming over the state foster care system. “Also planned is an effort to privatize foster care.”



Legislative Issues:


1) National: House Oversight and Government Reform Committee chair Darrell Issa (R-CA) “released this week a discussion draft for a new postal reform bill, this time largely drawing from an Obama administration proposal. [APWU President Mark Dimondstein] said APWU would not support any bill that mirrors the White House’s plan.” Issa may schedule a markup of the bill as Congress returns from its two week recess today.


2) National: The Network for Public Education and the Institute for America’s Futurecall for Congressional hearings on testing. “We created a Twitter Storm that sent out over 20K tweets and reached 400K people via social media while trending #1. We flooded the offices of Congress with phone calls from concerned constituents. We continue to bring attention to the plague of over-testing and the media has taken notice!”


3) Colorado: Lawmakers ask for an audit of the controversial U.S. 36 “public private partnership” deal. “The letter requests that the audit examines how and when public input was sought and whether all financial details of the deal were disclosed. ‘The procedure that was followed this time has implications for the future,’ [Rep. Mike Foote, D-Boulder] said. ‘If we’re going to do these kinds of deals in the future, then I think we should do them right. The public should have a very substantial say if you’re doing a 50-year deal.’ Foote is also sponsoring a piece of legislation introduced last week that calls for greater transparency on public-private partnerships.” [SB 197]


Among other provisions, the bill contains a measure “to increase public notice of and participation in, and legislative oversight of, any public-private partnership (PPP) involving” the Colorado High Performance Enterprise Board, which was criticized for rushing through the U.S. 36 road privatization project.


4) Florida: House passes a bill setting priorities for Florida’s transportation system. The bill authorizes the state to finance “strategic airport investment projects” with private partners that promote international trade. It “puts a heavy emphasis on private money,” e.g. by allowing commercial displays to be put up on state trails. The bill now goes to the Senate. [HB 7175]. It also provides for “expanded uses of electronic toll collection system; authority of department to collect tolls, fares, and fees for private and public entities”; and enables the Metropolitan Planning Organization Advisory Council to enter into contracts with private corporations and “accept funds, grants, assistance, gifts, or bequests” from private sources (line 1164).


5) Florida: A legislative battle over in-state tuition for students brought into the country illegally by their parents may involve payback over the past defeat of prison privatization and charter schools legislation. “Latvala and Negron are battling for the powerful post of Senate president in 2016. Much is at stake in the competition: The leader of the Senate picks the majority party’s floor leader, chooses which senators sit on which committees and who chairs those panels, and influences which bills the committees will hear.”


6) Florida: Tampa Bay Times columnist John Romano denounces the Florida House for passing legislation making it easier to open charter schools. “Charters are also failing rapidly. Florida had the second-most school closings in the nation last year. In Pinellas and Hillsborough counties alone, nearly 30 charters have opened and closed in recent years.” But instead of tightening up charter applications or continuing with the present policy, the House said “Yippee!” and made it even easier to open charters. “Before growing too alarmed, I should tell you the bill is still a long shot to survive. If all goes well, the Senate will kill it the same way it killed the so-called parent trigger bills that also promoted pedal-to-the-metal charter growth the past two years.”


7) Ohio: Lawmaker calls on the Ohio Department of Rehabilitation and Corrections to end its prison food services contract with Aramark, which has been fined for not meetings the terms of the contract. “The system was working well before. Once you privatize something, it’s all about profit and not about the quality of services,” State Rep. Matt Lundy (D-Elyria) says. “The DRC’s report indicates that facilities, including Grafton Correctional Institution and Lorain Correctional Institution, have been suffering from understaffing and ‘unstable’ food services.” Aramark’s $110 million contract runs through June 2015.


8) Idaho/National: State lawmaker calls for Idaho to take over all federal public lands. “But critics say the federal government has done a fine job of managing those lands for years and there’s no reason to change that. Also, many are worried that if the state controlled those lands they could just sell it and privatize land that was in the hands of the people.”


9) Pennsylvania: The United Food and Commercial Workers Local 1776 releases an ad warning of the dangers of liquor privatization. “The union spent $300,000 to buy airtime on television and radio stations around the state on ads running for 10 days, starting today, that speaks of North Carolina’s experience where its privatized system is blamed for contributing to one child per week, on average, last year dying in underage drinking-related accidents.” [Ad] As the Pennsylvania legislature returns today for a two week session, a new privatization plan has been proposed. The plan “would expand wine sales into grocery stores, restaurants and beer distributors but leave state liquor stores with the exclusive right to sell spirits such as whiskey, gin and vodka. (…) The fight to stop the latest plan has already started.”

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