Update: Upcoming Outsourcing Issues. October 27, 2014


1) National: Experts, including In the Public Interest’s Donald Cohen, debate the pros and cons of privately tolled roads on the Diane Rehm show. Robert Puentes of Brookings says “we’ve got to make sure that’s more of a—it’s a reciprocal relationship, that we’re getting public policy goals we want to achieve, that we’re not completely ignoring what’s happening to the general public, but that you can actually find projects and investments that are appropriate to both public policy goals and to private investments.” [Transcript]


2) NationalTime magazine cover story attacking teacher tenure stirs outrage. Education blogger Jersey Jazzman has targeted the “deeply flawed” story. “So here’s the first problem: if these stories are ‘countless,’ why didn’t Haley Sweetland Edwards, author of this story, include at least a few more? This is the only example in the entire four-page spread of how hard it allegedly is to fire a teacher with tenure.” 50,000 people have signed a petition demanding that the magazine apologize to teachers.


3) National: A class action suit has been filed by civil immigration detainees against the Geo Group for minimum wage and forced labor violations and unjust enrichment. The plaintiffs are seeking compensatory and punitive damages and other relief. [Complaint]


4) NationalHeadhunter firm establishes “public private partnership” practice. “‘There is a strong increase in private equity-funded ventures that have complex, but unaddressed unique human capital requirements,’ Scott Kingdom, president of industrial markets at Korn Ferry, said. ‘Our new specialty melds the firm’s strong credentials in private equity, real estate, infrastructure and construction, energy and logistics with our global talent capabilities, to create the first group of this type,’ he added.”


5) NationalLong Island Press reports on the recent Public Education Nation conference. “The speakers all echoed the theory put forth by Ravitch that public education is being undermined as part of a plan to eventually become privatized by corporate investors. The standardized tests, on which the Common Core depend to function, is a measure by which to find such deep fault within public education that, one by one, they will be forced to close. In their place, charters, funded by wealthy benefactors with their own regimes, and private schools will reign. This model appears to be playing out in such urban areas as Chicago and Philadelphia.”


6) National: The conviction of four Blackwater employees for murder and criminal manslaughter renews controversy over the use of private contractors in U.S. military and security operations. The trial “has raised as many questions as it answered. How many independent contractors, from what are known as PMSCs (Private Military and Security Companies) now supplement America’s official fighting forces and national security personnel? What is their legal status? How much do they cost—and why are these modern-day equivalents of mercenaries needed at all?”


7) NationalAnalyst brags about his role in promoting for-profit prison companies. Brian Rittenbur of CRT Capital Group says “I became the prison king.” He tells Institutional Investor “we did tons of banking deals for the prisons. We held specific prison conferences and toured prisons with money managers. In the 1990s prisons were red hot.” Rittenbur is now excited about prison REITs, saying “immigration issues are driving detention bids to way over capacity.”


8) California: As voters head to the polls to decide on a $7 billion state initiative for water bonds, questions remain about how the proposed $900 million Huntington Beach desalination plant should be financed, and what mix of public and private financing is best. “So the [private] bondholders would not be asked to take the credit risk, they would look to the OCWD’s triple-A rating and say: ‘I don’t care if the project works or not, it’s not our risk,’ [Clean Energy Capital CEO David] Moore said.” [Sub required]


9) CaliforniaPalo Alto rejects two “public-private partnership” proposals to build parking garages on public land. “I think this is something that we can kind of do ourselves,” said Councilman Marc Berman.


10) CaliforniaLos Angeles Mayor Garcetti calls for more “public private partnerships“ to reduce traffic congestion. Garcetti “noted that the failure of Chicago’s privatization of parking meters, which locked taxpayers into a 75-year lease that the city ultimately lost money on, is instructive in that it teaches other public agencies that it is important to frame and design these deals properly.”


11) FloridaUntraceable outside money flows into school board races. “Not only are the people behind Phoenix Media LLC being shielded, but that company is also avoiding state campaign finance laws that bar donors from giving more than $1,000 to a candidate. By giving to Robinson’s committee and not to Ziegler directly, Phoenix Media LLC was able to give tens of thousands of dollars that could then be used to aid her campaign.”


12) FloridaJudge rules in the Florida toll agency corruption scandal. Judge Tanya Davis Wilson dismisses the charge against a lobbyist accused of discussing public business in private because enforcing it would violate the lobbyist’s free speech rights.


13) Florida: State appeals court rules that private companies operating red-light cameras have no right to send out tickets. “The City is not authorized to delegate police power by entering into a contract that allows a private vendor to screen data and decide whether a violation has occurred before sending that data to a traffic infraction enforcement officer to use as the basis for authorizing a citation.” Legal concerns recently prompted Palm Beach to stop using red light cameras.


14) Florida: A St. Augustine resident says she is “glad we gave charter school the boot.” Karen White writes “however, if the charter school fails and shuts its doors, then the land and building do NOT revert to the school district; but, instead the land and buildings become the private property of the entity that owns the charter school. (…) Thank you to Joyner and the school board for their due diligence in calling out these hucksters.”


15) Georgia: The Amalgamated Transit Union and MARTA, Atlanta’s transit authority, are at loggerheads over MARTA’s plan to privatize paratransit services. “But privatized paratransit here has failed before, and has a track record of lower-grade performance than in-house versions, says the Amalgamated Transit Union’s Atlanta chapter.”


16) Idaho: The FBI took over an investigation of whether fraud or other crimes were committed by Corrections Corporation of America at Idaho’s largest prison after it determined state police might have a conflict of interest. The CCA scandal has become a major issue in the current gubernatorial race. Gov. Otter’s former chief of staff, Jason Kreizenbeck, is now a lobbyist for CCA.


17) Illinois: The Chicago Infrastructure Trust launches an initiative to obtain private  financing for heat and power generation in some public buildings. The trust has also drafted an ordinance that would enable private investors to leverage “the city’s existing property tax collections mechanisms.” Current law only allows local governments to do so. If potential investors show an interest, the trust will forward the ordinance to the City Council.


18) Illinois: The Chicago Public Schools will be issuing a request for proposals for a new high school to be located at the current site of Dyett High School. “CPS will only consider proposals for open enrollment neighborhood high schools, and charter proposals will not be eligible for the Dyett site.”


19) Indiana: A judge will hear the bankruptcy plan of the Indiana Toll Road’s concessionaire tomorrow in Chicago. “The plan envisions a sale process that will help it pay off its multibillion-dollar debt load or, if such bids can’t be found, will issue new debt and equity to its lenders.”


20) Indiana: East Chicago and the state of Indiana reach a legal settlement “over the Second Century public-private partnership that officials said enriched its principals and their associates but did little for the city.” Previous court rulings required Second Century to disclose its financial records. 


21) Kentucky/Indiana: Ohio River Bridges board orders a do-over on the selection of a tolling company after it finds a potential conflict of interest between a subsidiary of the announced bidder and a subsidiary of a company advising the board on the project.


22) Kentucky: Henderson resident says privatizing Red Banks Park, which one candidate for the city commission has put forth, is a bad idea. “He might want to take a stroll along the riverfront and develop a greater appreciation for our precious green space.” [Sub required]


23) Maryland: As hundreds are expected to demonstrate today, Baltimore officials again deny they intend to privatize the city’s water system. “Labor organizers and advocacy groups, including the nonprofit Corporate Accountability International, have been closely watching to see which company wins a $500,000 consultant’s study that was requested to evaluate the system’s operations and maintenance.” Many expect Veolia to get the contract.


24) Michigan: The number of school districts that contract out services to for-profit companies stayed more or less flat, the right wing Mackinac Center admits. “It’s possible that school privatization is starting to plateau. There may come a time when all of the districts that will contract out for quality services while simultaneously saving money already have.”


25) New York: Controversial speed cameras in Nassau County are projected to raise more than $80 million over the course of the year rather than the $30 million originally estimated. “School speed cameras were approved unanimously by the Legislature, but one legislator who voted for the program says it has gone horribly wrong.”


26) North CarolinaToll roads become an issue in the Senate race between Sen. Kay Hagan and Thom Tillis. “In ‘Map,’ viewers see Tillis’ name and face on a highway sign next to another sign for Interstate 77 saying ‘TOLL AHEAD.’ The ads suggest Tillis used his pull as state House speaker to get ‘a toll-lane’ bill through the North Carolina General Assembly and signed into law.”


27) Pennsylvania: PennDOT selects a winning bidder on a $1.8 billion, 25 year deal to privatize the repair/reconstruction and maintenance of 558 bridges. “Plenary Walsh Keystone Partners will manage the bridges’ design, construction and maintenance under the contract. The team is responsible for financing the effort and PennDOT will make performance-based payments based on the contractor’s adherence to the contract terms.” Financial close is expected in March.


28) Pennsylvania: Voters in Reading will go the polls next week to vote on a referendum mandating that any sale or lease of major city assets must be put to the voters. “We have to understand, particularly the amount of money issued on these proposals, that at some point or another, you need to allow the public to weigh in on those discussions,” the mayor says.


29) TennesseeEast Nashville parents “try to overcome” charter schools. “While Metro Nashville Public Schools Director Jesse Register has recently discussed closing low-performing schools and adding charter school operators to run others, some parents hope a grassroots plan might convince more parents to enroll their children in the schools, despite their priority school standing. ‘It’s to compete as much as possible with the marketing of charters,’ said Jai Sanders.”


30) TexasThe state moves to privatize the operation of Terrell State Hospital to Correct Care Solutions, formerly known as Geo Care. “But mental health advocates are protesting the move, saying state officials have refused to answer their questions regarding the push to privatize the facility. (…) Mental health advocates say they were blindsided by the privatization move, but Goodman said there are limits to what the agency can say during an open procurement process and the state won’t know the answers to many of advocates’ questions until it goes through the negotiation process.” [Sub required]


31) TexasParents who once supported the creation of a charter school now regret the loss of public control over their children’s education. “Board Chair Friedmann thanked Franks for her email but distanced the board from the parents’ concerns. ‘Ultimately it is [Dr. Buck’s] decision as the administrator of the school to set the schedules,’ replied Friedmann. ‘You are welcome to attend the board meeting and make comment.’”


32) Texas: The proposed all-private bullet train between Houston and Dallas marches ahead, as station ideas for Dallas were presented last week. The line will, as presently conceived, not require federal or state funding or subsidies. The private company, Texas Central Railway, “said its market studies show that the traffic load will support trains departing from both cities every 30 minutes around the clock, seven days a week.” [Sub required]


33) TexasVoters prepare to go to the polls next week to vote on an initiative that would direct half of oil and gas production taxes going to the state’s “rainy day fund” to be channeled to road projects. “Proposition 1, which specifies that the money cannot be used to develop toll roads, has faced token and largely unorganized opposition. But some critics question whether TxDOT would follow through and not use any of the funding on toll roads.”


34) Texas/NationalThe Wall Street Journal reports on a growing political backlash against toll roads. “‘A large segment of our party believes in having free access to transportation,’ said Steve Munisteri, chairman of the Republican Party of Texas. Texas lawmakers are reacting to criticism in areas such as Collin County, north of Dallas. There, the proposal to convert lanes on U.S. Highway 75 to tolls sparked a firestorm from residents who noted that Plano, Texas, would be nearly surrounded by toll roads.”


35) UtahThe private prison option seems to be off the table for the $450 million replacement of the state prison. Rollin Cook, executive director of the Utah Department of Corrections, said “little time was spent discussing a privately run prison or using a private finance company. The state should have the bonding capacity to borrow money at a lower rate,” Rep. Brad Wilson (R-Kaysville) said.


36) VirginiaPrivatization of social security becomes an issue in the Virginia senate race between Ed Gillespie and Mark Warner. “While serving as an advisor to President George W. Bush, Republican Senate hopeful Ed Gillespie voiced his support for privatizing Social Security, a stance that Democratic incumbent senator Mark Warner has heavily criticized in debates and attack ads during this election season.” The president of University Democrats says “privatizing [Social Security] and tying it to the stock market, as some have proposed, would make it risky.”


37) InternationalDockworkers in Costa Rica strike over port privatization plans. “Union leaders described the strike as ‘indefinite.’ The union, which represents workers working at terminal overseen by the Atlantic Port Authority (JAPDEVA), had threatened a strike for several days after Costa Rican courts green lit a 33-year concession agreement between the government and APMT for the construction of a new container terminal in Moin.”


38) InternationalBritain’s public mapping data heads for privatization. “The controversial plan contradicts official claims that the UK is committed to turning its most valuable public data sets into open data. Such data is already being sold for profit by quasi-public bodies—called Trading Funds—set up under the privatization programmes of consecutive Conservative governments over the last 40 years. The govco plan continues that effort.”


39) Revolving Door News: Chicago treasurer Stephanie Neely announces she is stepping down and heading back to the private sector. Replacing her will be Kurt Summers, currently a senior vice-president at Grosvenor Capital Management. [Sub required]



Legislative Issues


1) National: As tax reforms comes back on the agenda after the elections, one expert thinks it is more likely that Congress will eliminate the exemption for private activity bonds rather than impose a surtax on public municipal bonds. 


2) Illinois: At budget hearings, Chicago lawmakers question the speed camera ticketing system introduced this year by Mayor Emanuel. “‘We are all faced with our communities coming to us, (saying) that we want speed humps in our neighborhood to control traffic, we want to slow down traffic in our neighborhoods,’ [Ald. Willie] Cochran said. ‘But on the other hand, we have a community that also is irate about the speed cameras in the communities, and with where they are placed.’”


3) Indiana: Indianapolis Public Schools try to block Charter Schools USA from expanding to include elementary school students. They are developing a legislative lobbying strategy to rein in state takeovers of schools.


4) West Virginia: Department of Corrections commissioner tells lawmakers that the plan to send state inmates out of state to a for-profit prison run by Corrections Corporation of America “has now ‘been put way back on the back burner‘ because of the current decrease that his agency has been seeing ‘within the total (inmate) population.’”

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