Update: Upcoming Outsourcing Issues. January 12, 2015


1) National: As Jeb Bush moves closer to throwing his hat into the 2016 presidential election ring, the Washington Post looks at his role promoting education privatization. “How did FEE, Bush’s foundation, move their agenda in other states? Their work, characterized as ‘ALEC-like’ by the group In the Public Interest, is exposed through email exchanges between FEE employees and state education officials.” Republican strategist Karl Rove says Bush’s support for the controversial “common core” program is “the biggest challenge he faces.”

2) NationalBeryl Lipton creates an online interactive map at MuckRock to tell you if your state has a deal with the private prison industry. “The contracts that make this happen are invaluable means of finding out what kind of deals governments are making with the incarceration industry. For example, In the Public Interest, a research group interested in the privatization of public services, first reported on the ‘lockup quotas’ that require governments to keep facilities full, which they discovered via these contracts. MuckRock has submitted requests for nearly every contract currently maintained between a government agency and CCA and plotted them by facility on the map below.”

3) NationalThe New York Times, citing the dramatic fall of global oil prices, calls for a increase in the gas tax to fund investment in infrastructure. The national Highway Trust Fund is expected to run out of money in May. At the state level, Tennessee, Michigan, New Jersey, Kentucky and South Carolina are considering measures to boost funding for transportation due to the oil price decline and anticipated lower federal transportation funding.

Last week Well Fargo Securities issued a report saying that states will have to find new ways to fund transportation. “The market for public-private transportation partnerships will grow incrementally in 2015 as states look for new ways to finance projects, Wells Fargo analysts said in the outlook. (…) More use of availability payments in P3s is expected because they reduce the exposure of the private partner if projected traffic loads don’t meet expectations.” [Sub required]

4) National: Lauren Landry looks at where the venture capital dollars are going in the ed tech sector. “Just last month, local ed-tech startup Gradeable unveiled features to make it easier for educators to adhere to the Common Core.”

5) California: The Orange County Water District is entering into negotiations over a potential $900 million deal with Poseidon Water to build a desalination plant in Huntington Beach. A key issue in the negotiations is over the allocation of risk between the public and private sectors. “In Huntington Beach, under Poseidon’s proposal, two sets of bonds totaling $732 million would be issued through a conduit issuer such as the California Pollution Control Financing Authority.” [Sub required]

6) ConnecticutSarah Darer Littman looks into the FUSE/Jumoke investigation report, which revealed “financial mismanagement, nepotism, and misuse of public funds by a charter operator lauded by the Malloy administration.” Darer Littman writes “the most disturbing part of this whole affair is that it reveals how millions of our taxpayer dollars are being handed out to private entities with little or no due diligence based on the recommendation of a closed, closely entwined loop of foundations, political allies, and corporate beneficiaries.”

7) GeorgiaSavannah bus drivers working for First Student vote down proposed agreement. “Many of the bus drivers with the 728 Union were upset when leaving the meeting on Sunday and questioned how they would be able to survive on what they deem to be very little money. Officials with the Teamsters Local 728 Union say they may plan to strike in the near future.”

8) GeorgiaA private probation company, South Georgia Probation Inc., will be audited by McIntosh County and Darien. “A compliance officer found that [company president] Smith and her staff, among other things, overcharged probationers, collected fees for drug tests never performed, threatened probationers with arrest warrants for nonpayment of fees and collected supervision fees before applying any portion of probationers’ payments to court-ordered fines or restitution. The company also let probationers buy their way out of community service without the permission of the courts, the compliance review said.” Lawmakers may take up the issue of private probation in their coming session. “Some legislators want to change the law to allow [for extending sentences for nonpayment] while others oppose giving that authority to profit-seeking firms.”

9) Idaho: The Caldwell Public Schools have decided not to outsource their custodial employees’ jobs. “Trustee Leif Skyving praised the public outcry from the community over the issue. He said he was impressed by how passionate the people in the district were about their school board and custodians. Trustee Sandra Dodson said the issue of outsourcing custodial services has been the issue to cause the most public input since she’s been a trustee.”

10) IndianaConstruction contractors warn that they are being shut out of planning for the proposed Indianapolis criminal justice complex, which is being developed as a “public private partnership.” They warn that “the city and taxpayers risk getting a building that is expensive and problematic to operate in the long term,” and that “only 30 percent of the selection criteria for the winning bid related to design and systems. The players making the major decisions—accountants, lawyers and security personnel—seem mostly worried about finances. Local architects and construction personnel who could warn them away from problems with materials and structural design have largely been locked out.” City Council members have cautioned about a “rushed” process.

11) Kansas: Aramark is involved in yet another food safety controversy as violations are found in multiple state prisons. “The term ‘filthy’ shows up in 11 inspections, ‘dirty’ in 54 and ‘bugs’ in 46, with most of those instances referring to insects filling light fixtures.”

12) KentuckyMacquarie Capital wins the “public private partnership” contract to design, develop and operate Kentucky’s fiber backbone infrastructure for high speed internet for the next 30 years. “The design and firmer cost estimates are due by the end of February.” [Sub required]

13) Louisiana/National: In the January issue of The ProgressiveKristen Buras analyzes the role of charter schools in New Orleans. “People are making a lot of money on the backs of poor black children in New Orleans,” students protested. “We want resources for our schools. We do not want to line the pockets of other people.”

14) Massachusetts: The Massachusetts Bay Transportation Authority completes all-public funding for the new Green Line light rail project in Boston. The funding includes near $1 billion of Federal money and “$996.1 million of Massachusetts general obligation bonds and $305.4 million of operating funds.” [Sub required]

15) New Jersey: John Heilner of Princeton demands that school food service workers have their paid sick leave reinstated. “Meanwhile, when the school district outsourced food service to Nutri-Serve Food Management, it did not require the latter to retain the benefits that our school food service workers had enjoyed for many years—including earned sick days. This means that food handlers who are serving our kids are expected to go to work sick or not get paid. On Dec. 11 they went on strike to protest these cuts in benefits.”

16) New JerseyThe Home News Tribune warns in an editorial against Gov. Christie’s “stealth” plan to privatize Liberty State Park. “The reason for all the skullduggery isn’t hard to figure out; Christie undoubtedly knew the public would hate the idea, as did those legislators who are playing along. (…) The Christie administration has earned the public’s distrust time and time again, so we’re not buying any claims of innocence here. Those worried about the park’s future have good reason for their concerns.”

17) North Carolina: The Department of Public Instruction is expanding the list of approved American history course materials to nearly a dozen sources, “not just those provided by a group backed by the politically influential, conservative Koch family.”

18) OhioKnow Your Charter takes a look at the numbers behind the academic failures of the Electronic Classroom of Tomorrow (ECOT), part of the widely criticized online learning industry. “ECOT received significant tax dollars originally meant for districts in Ohio’s 32 Appalachian counties. The chart below shows what each Appalachian county had to transfer to ECOT during the 2012-2013 school year – a total of nearly $15 million. It was in Appalachia that the Ohio Supreme Court found that the state didn’t provide enough resources to Ohio’s schools.”

19) Oklahoma: Gov. Fallin recently celebrated her new term with a series of inaugural events. This year’s top sponsors included the Geo Group, the Florida-based private prison company which operates a private prison in Lawton.

20) Rhode IslandDiane Ravitch urges Rhode Islanders to be on guard for an education privatization wave. Incoming governor “Gina Raimondo’s husband Andy Moffitt was Cory Booker’s roommate. Moffitt is a member Stand for Children Board of Directors. Moffit is a Senior Practice Expert and member of core leadership team for McKinsey & Company’s Global Education Practice. Since co-founding the Global Education Practice in 2005, Andy has worked with multiple large urban districts, state education departments and charter management organizations to markedly improve system performance and close achievement gaps.”

21) Virginia: As Transurban’s new I-95 express toll lanes open for business, the company faces charges that it is massively over-fining toll violators on its I-495 Express lanes. “Luis Viera used to take the Express Lanes from Clinton, Md., to his job in Tysons Corner. His E-ZPass was automatically deducting tolls from his credit card. Then one day, Luis was slapped with a summons to Fairfax County Court. Transurban was suing him for $4,500 in fees and fines for exactly $7.70 in missed tolls.”  Fox 5 “analyzed Fairfax County Court records and found that Transurban filed a jaw-dropping 26,000 lawsuits against drivers in 2014 alone. With 26,000 cases for just one year of 495 Express Lanes, the cases could double with the opening of the 95 Express Lanes.”

22) Virginia: The Department of Transportation has issued a request for proposals for consulting firms for its design-build and “public private partnership” projects. “The consultant and its team members may not be allowed to participate in ANY subsequent contracts (design and/or construction) that are authorized or developed under this contract.” Expressions of Interest are due January 29.

23) International: The British Columbia Ministry of Finance produces a surprisingly critical report on Partnerships BC, the agency in charge of  “public private partnerships.” British Columbia has been among the most favorably disposed Canadian provinces when it comes to P3s, and Partnerships BC is often held up as a model to American audiences. Among the biggest issues in the report are conflict of interest, inadequate project documentation, and flawed methodology for assessing the comparative costs of public procurement. [Report]. Last month Ontario’s Auditor General released a report highly critical of that province’s P3 program.

24) InternationalThe slump in oil prices is affecting the market for “public private partnership” projects as some governments are experiencing a decline in energy revenues used to support their share of these projects, e.g. in Canada. [Sub required]

25) Revolving Door News: POGO writes that Ashton Carter, President Obama’s new nominee for defense secretary, takes the revolving door to a higher level. “Carter is hardly alone. Federal ethics laws allow scores of advisers at the Pentagon and other agencies to serve in these influential positions while keeping close ties to big businesses overseen by the government.”

26) Revolving Door NewsCalifornia State Treasurer John Chiang names veteran municipal bond expert Tim Schaefer to be deputy treasurer. “Prior to working as a financial advisor, Schaefer managed the national municipal trading desk at Chemical Bank in New York City and the public finance division of Bank of America in San Francisco. He began his career as a municipal bond salesman, syndicate manager, and secondary market trader.” New California Controller Betty Yee named another muni industry veteran, Lynn Paquin, as senior financial advisor. [Sub required]

27) Revolving Door News: Vicky Tsilas, the Treasury Department’s leading expert on tax exempt bonds, revolves back to Ballard Spahr.

28) Upcoming Meeting: This week the Transportation Research Board’s annual meeting takes place Washington, DC. One focus will be state transportation policy.


Legislative Issues:

1) NationalCongress begins to consider transportation funding legislation. Sen. James Inhofe, chair of the Senate Environment and Works Committee, seems open to raising the gas tax, as does House Minority Leader Nancy Pelosi. “[Sen. Barbara] Boxer, who announced Thursday that she will not seek reelection in 2016, said she favors funding transportation with a tax on crude oil at the refinery rather than a gasoline tax increase.” [Sub required]

2) National: Govs. Gary Herbert (Utah) and John Hickenlooper (Colorado), vice chair and chair of the National Governors Association, urge Congress to preserve the tax exemption of municipal bonds. “While a long-term transportation reauthorization bill should give states the flexibility to use non-traditional financing methods like P3s, these mechanisms cannot replace federal investment, Herbert said.” [Sub required]

3) National: Rep. John Delaney’s bill to fund infrastructure by granting large tax breaks to companies that repatriate their overseas profits gets Senate companion legislation.

4) California: The Los Angeles City Council has asked city attorneys to draft a law banning digital media applications “that identify available parking on city streets and charge fees to reserve the spots.”

5) Florida: A Republican lawmaker has introduced legislation to shield some “public private partnerships” from the state’s Sunshine Law. “House Bill 65 would exempt such [unsolicited] proposals relating to public infrastructure or facilities from open records and meetings requirements under certain circumstances, according to the text of the bill.” Greg Steube also introduced a bill to create a Division of Public-Private Partnerships.

6) FloridaA Senate committee has launched an inquiry into the state’s prison system. “The Department of Corrections is grappling with investigations into inmate deaths at the hands of prison guards, lawsuits from whistleblowers who claim they faced retaliation for exposing cover-ups of inmate abuse and questions about inmate health care after the state’s privatization of health services began more than a year ago.”

7) Georgia: In its roundup of how to influence legislators, the Atlanta Journal Constitution takes note of the powerhouse lobbying firm Troutman Sanders Public Affairs Group. “The group represents a long list of big names, including … private-prisons giant Corrections Corporation of America.” [AJC, January 11, 2015, sub required]

8) North CarolinaRepublican lawmakers meet behind closed doors to discuss education policy. “Included on the speakers list are Mary Laura Bragg of the Foundation for Excellence in Education, an organization founded by former Florida Gov. Jeb Bush, Terry Stoops of the John Locke Foundation in Raleigh and Julia Freeland of the Clayton Christensen Institute for Disruptive Innovation in California.”

9) TexasLawmaker asks the state auditor to look into the Health and Human Services Commission’s contracting practices as HHS moves to privatize Terrell State Hospital. “‘I believe that if we are considering privatization of one of our state hospitals, we need to be able to show that it will not only save money for the state, but that better services will be provided,’ said Senator [Robert] Nichols. ‘I hope that through this review some of our questions will be answered, and we will be able to determine the best next step forward in this process.’”

10) Wisconsin/Missouri: The owner of the Milwaukee Bucks has called for public financing for a new multipurpose arena. The arena is expected to cost $400-500 million. Lawmakers will consider the issue this term as they wrestle with a $2.2 billion deficit. In Missouri, state lawmakers are pushing back against public funding to keep the Rams in St. Louis. Progressive sports journalist Dave Zirin says “the building of publicly funded stadiums has become a substitute for anything resembling an urban policy.

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