Update: Upcoming Outsourcing Issues. November 17, 2014


1) NationalThe Obama administration is exploring ways of insourcing the collection of student debt. “Private debt collectors working for the Education Department have been paid billions of dollars over the last few years, while racking up complaints that they routinely violated the law and mistreated borrowers who had defaulted on federal student loans.”


2) National: Mayer Brown, the pro-privatization law firm, holds a conference call to discuss the impact of the midterm elections on the prospect for more “public private partnerships.” “As for the use of P3s as a means to deliver infrastructure projects, the partisan shift resulting from these elections is not expected to have a negative impact. While the two political parties may have differing views on the types and level of federal funding ‘everybody has recognized it’s never going to be enough; it’s not even close to being enough, therefore we ought to be supporting public-private partnerships,’ [John Schmidt, a Mayer Brown P3 partner] said.” [Sub required]


3) National: Veterans Affairs Secretary Robert McDonald, who took over in July following revelations of excessive wait times and secret waiting lists, announces a major restructuring of the agency. “As McDonald pointed out, the VA faces a number of steep internal struggles to improving care and restoring public trust. At the same time, it also will face challenges from those who want to use the scandal to push for more privatization in the VA health care system.”


4) National: The GAO issues a report on alternatives to detention for ICE detainees. GAO reports that the number of “aliens” monitored by private contractors increased by 60% from only FY2011-FY2013. GAO calls for more data. 


5) National: Leaders of postal unions continue to be concerned about the possible privatization of the U.S. Postal Service. Michael Plaskon, Executive Vice President of the National Association of Letter Carriers, says “right now, the leadership of the postal service is taking measures that will end with the privatization of the postal service. There’s plans to close processing plants at the beginning of this year.”


6) National: The Thurgood Marshall College Fund has struck a deal with the for-profit University of Phoenix so “students at historically black colleges and universities (HBCUs) will be able to take online courses from the for-profit chain to supplement their on-campus studies.” Walmart, Boeing, Wells Fargo, AT&T Services, Merrill Lynch Wealth Management, Booz Allen Hamilton, Republic Services, and MillerCoors are on the board of directors of TMCF.


7) NationalOnly 6% of federal highway funding obligations went into new roads and bridges, according to The Transportation Weekly. “The publication is produced by editor Jeff Davis, who is scheduled to appear on a panel at the AASHTO annual meeting in Charlotte, N.C., on Nov. 23. That session will consider ‘Outside-the-Box Approaches to Fund Transportation.’” [Agenda]. The conference will also have an industry-heavy panel on “Optimizing Risk in Public–Private Partnerships: Examination and Outlook on Availability Payments.”


8) National: Vice President Biden pushes for increased investment in U.S. ports, and the use of “public private partnerships.” He noted that P3s “are not new to ports, [and] are also opportunities for increasing freight capacity.” [Sub required]


9) NationalFederal contract workers rally at the Capitol to demand a wage raise and unionization. “The one-day strike by federal contract workers was the 10th organized by the Good Jobs Nation campaign for better pay and benefits since May 2013. ‘For the first time in history, workers are on strike at the United States Capitol,’ rally organizer Joseph Geervarghese told the cheering crowd.”


10) National: U.K.-based Stratus Infrastructure launches a “public private partnership” transaction and asset management service in the U.S. “The foray into the US comes alongside the appointment of John Small as its U.S. associate and recognizes the fact that 34 states out of 50 have now passed P3 legislation in order to open up future funding options for infrastructure.” [Sub required]


11) National: The infrastructure portfolio of the California Public Employees Retirement System (CalPERS) “has outperformed policy benchmarks for the past one-, three- and five-year periods, achieving an internal rate of return (IRR) of 17.1 percent since the program’s inception in 2009.” [Sub required]


12) Arizona/Georgia/AlabamaPrison nurse blows the whistle on Corizon. Brandon Lee, an investigative journalist, reports that “3TV asked ‘Julie’ if she was saying that some of those patients are being delayed care. ‘Julie’ responded: ‘Absolutely.’ ‘Julie’ says Corizon is cutting costs, cutting corners, and ultimately cutting short the lives of patients.” Lee writes, “we spent months gathering internal reports written by nurses, and ultimately found that Corizon patients, according to nurses, needed urgent medical care, but the nurses claim the prisons are understaffed and the nurses also say they never receive any proper medical training once they are hired.” In Georgia, former workers at Chatham County jail say “Corizon fired them for bringing up their medical malpractice concerns to the sheriff.” The Southern Poverty Law Center is currently suing the state of Alabama for prison healthcare provided by Corizon and MHM Correctional Services.


13) GeorgiaUniversity System of Georgia begins privatized student housing program to Corvias. “Some worry that the privatization is not in the University System’s best long-term interest. ‘I just recognize that the private sector is very smart and they’re not going to lose money in the deal and if they’re going to make money then they’re going to protect themselves against the very worst risks that exist out there,’ [Sen. Mike Crane (R-Newnan)] said. “I don’t know how the taxpayers of Georgia and eventually the students who are paying for housing are going be protected in this transaction.’”


14) Florida: Hialeah politicians want to privatize the municipal garbage service, and are looking to “garbage industry giants.” “Some who follow the Hialeah political soap opera believe the neglect was an intentional political move. Critics of privatization believe inefficiency creates an ideal environment for privatization and the potential to fuel corruption through under-the-table financial dealings.” Outsourcing advocates want to complete the deal by March 1.


15) IndianaSeveral northwest Indiana counties are looking to bid on a 75-year lease for the bankrupt Indiana Toll Road, using funds from a possible $4 billion tax exempt bond issue. “The asset is generating a lot of interest in the private market, according to one source with knowledge of the situation who asked to remain anonymous. ‘There’s not a lot of infrastructure assets out there of this scope and size,’ the source said. ‘There are almost irrational equity levels being discussed.’ Private equity bids are expected to come in as high as $5 billion, according to various reports. One of the interested bidders is Cintra, the current operator, partnered with the Canadian Pension Plan Investment Board, according to Piper Jaffray.” [Sub required]


16) Indiana: State looks to privatize the management of its parking garages around Indianapolis. It plans to select an operator next month and have them take over on January 1. Six firms are interested: “Denison Parking, Hederick Partnerships and Newpoint Parking, all from Indianapolis; and LAZ Parking of Hartford, Connecticut; Republic Parking of Tennessee; and ABM Parking of New York City.”


17) Louisiana/Tennessee: NPR looks at the fallout from an inaccurate but influential report by the Cowen Institute for Public Education Initiatives on the supposed success of New Orleans charter schools. “The report attempted to use an approach called value-added modeling. And value-added is currently the golden fleece for anyone questing after what’s really working in education.” Another proponent of VAM, Kevin Huffman, the state education commissioner of Tennessee, also resigned. Audrey Amrein-Beardsley, one of the nation’s expert researchers on teacher evaluation, looks at the two resignations as evidence that the VAM-mania is failing and claiming victims.


18) Maryland: Prince George’s county issues a request for qualifications to potential bidders for a waste processing and waste to energy “public private partnership.”


19) Maryland: The Washington Post reports that “taxpayer backlash” is threatening the Purple Line “public private partnership.” The surprise election of Republican Larry Hogan “has triggered a guessing game about which of three major state transit projects, if any, would survive the budget ax he has promised to wield. Under the pro-transit incumbent, Gov. Martin O’Malley (D), the state planned to build the Purple Line linking Montgomery and Prince George’s counties, the Red Line in Baltimore and the Corridor Cities Transitway in northern Montgomery County.”


20) New Jersey: As controversy breaks out over the recommendation by an advisory commission appointed by Gov. Christie that Atlantic City may need an emergency manager, à la Detroit, the Philadelphia Inquirer reports that the city’s mayor, Don Guardian (R), “meets with the Governor’s Office weekly” to discuss the privatization of public services. The commission report recommends the creation of a public-private corporation to promote development, deferring pension payments for up to three years, slashing per-student costs, and firing a number of full time police officers and firefighters. [Report]


21) New JerseyProtests greet the controversial, pro-charter Newark schools superintendent Cami Anderson as she travels to DC to give a talk at the right wing American Enterprise Institute. “The AEI staff asked the crowd to leave, fearing things might get rowdy—but the students refused to budge. So AEI abruptly cancelled the event.” AEI later posted a video of Anderson being interviewed by its education specialist. Newark’s new mayor, Ras Baraka, has demanded that the city’s schools be returned to local control


22) New YorkBuffalo residents turn out to support the city’s public schools. “‘What we’re against is really this elitism approach of looking at charter schools as the answer, then throwing it all on the shoulders of the teachers for the faults and the blames of the schools,’ said Patrick Foster, Lafayette High School Social Studies Teacher.” A rally is planned for downtown on Wednesday.


23) New YorkThe privatization of New York City’s public Southbridge Towers, which was part of the city’s Mitchell Lama public housing program, raises questions about the future of affordable housing. “Privatizing assumes financial risk, particularly for the type of tenant the program was designed to serve—someone who can barely afford the current costs. No longer eligible for tax abatements, Southbridge would have to pay at least $8.1 million a year in real estate taxes, significantly more than the $1.64 million it now pays. The development could also be on the hook for a $27.77 million transfer tax if the New York State Court of Appeals rules in favor of the city in an ongoing case involving a former Mitchell-Lama development in Coney Island that privatized in 2007.”


24) Pennsylvania: Michael Morrill of Keystone Progress and Donald Cohen of In the Public Interest call on Gov.-elect Tom Wolf to adopt the Taxpayer Empowerment Agenda when he takes office. “Taxpayers expect him to make smart investments in the state so that we can improve, not sell off, the public services citizens rely on. We urge him to stand up for citizen control of their tax dollars and public services by advocating for policies designed to promote responsible contracting.”


25) Pennsylvania: Gov.-elect Tom Wolf bans no-bid private legal work for the state.


26) Tennessee: An assisted living center in Nashville that was privatized just last year is already experiencing major problems. “Employees said paychecks have bounced and their health insurance isn’t being honored. Channel 4 has also learned the company is behind on its electric bill. (…) Employees said towels are being cut in half so they’ll have enough for residents. They have also run out of adult diapers.” 


27) TexasCharter school network goes rogue, refuses to accept revocation of its charter by the state. “In a Nov. 10 letter to Mr. Dodd and the Honors board chairman, Michelle Metzger, [State Education Commissioner Michael] Williams wrote that Honors Academy was inflicting ‘imminent and substantial harm’ on students by ‘falsely holding itself out as a public charter school.’ As a result, he wrote, the state would be forced to appoint a board of managers to take over the schools and finish the business of shutting them down.”


28) Virginia: Transportation Board adopts new rules to tighten oversight of “public private partnerships.” A steering panel of board members and lawmakers will review P3 proposals, and the board will take a more hands on approach to monitoring the progress of projects. “The reformed P3 rules will also increase transparency and competition in the process for selecting a private partner for a project, [Transportation Secretary Aubrey Layne] said.”


29) International: Canada’s National Union of Public and General Employees (NUPGE) and Public Services Foundation hold an International Conference on New Forms of Privatization. [Agendaspeaker presentations].


30) InternationalThe G20 is launching a Global Infrastructure Hub. “The G20 approved the launch of the initiative in September, and a pilot phase to ‘road test new models to deliver complex public-private infrastructure in low and middle income countries’ is due to start by the end of the year, the World Bank said last month. The G20 Global Infrastructure Initiative is part of plans to shift from economic policies largely reliant on public spending towards growth models involving a significant private sector component.” [Sub required]


31) InternationalSecondary investment activity in “public private partnerships” is reportedly strong. A primary focus is attracting investment from pension funds. [Sub required]


32) Revolving Door News: Patricia Doersch, a former Majority Counsel for the U.S. House Transportation and Infrastructure Committee and the Highways and Transit Subcommittee, has joined Squire Patton Boggs. “Immediately prior to joining Squire Patton Boggs, Ms. Doersch served as Legislative Counsel for the American Public Transportation Association.”



Legislative Issues:


1) National: Rep. John Delaney (D-MD), an ardent supporter of “public private partnerships,” is back in the House after a close electoral scrape. “Delaney, who had a career as a financier and entrepreneur before winning his seat, said Wednesday there’s now more momentum for P3 ideas. ‘A lot of people are talking about repatriation [of U.S. corporate profits] and increasing infrastructure as a concept, which is our bill [the Partnership to Build America Act], as you know. So we think there’s a lot of momentum,’ he said.”


2) Illinois: The Chicago Metropolitan Agency for Planning will push for legislation creating a quarter-cent sales tax to support infrastructure. “While this program is not intended to solve all of the region’s anticipated needs, the funds would move a significant number of important projects toward completion while leveraging private and public funding sources.” The planning agency recognizes that a tax increase “is politically challenging for legislators.” [Sub required; CMAP Proposal]


3) New JerseyLawmakers fast track the process for privatizing municipal water systems. “The bill does not at all protect the ratepayers who support the water infrastructure. In fact, the bill almost guarantees unnecessarily high rates for water and wastewater service by allowing public systems to be privatized before the public and regulators have sufficient opportunity to study the impacts,” the Landis Sewerage Authority says. [S2412]


4) PennsylvaniaThe right wing is pushing for radical action in the Pennsylvania legislature before the new Democratic governor, Tom Wolf, takes over on January 20. “There are still raw feelings among numerous conservatives over Republicans’ failure under Corbett to advance major legislation to scale back public pension benefits, privatize the sale of liquor and wine or limit the ability of labor unions to collect member dues or political action committee contributions.” The legislature is currently adjourned, but could be called back.


5) Pennsylvania: Democrats blame the GOP’s ousting of the Republican Senate floor leader on York County Sen. Scott Wagner, “a trash-hauling magnate.” Wagner is a longstanding hero of the right wing.


6) Pennsylvania: Newly elected GOP House Speaker Mike Turzai says he won’t consider taxing natural gas drilling unless lawmakers “take another look” at his plan to privatize liquor stores. But “Senate Minority Leader Jay Costa, D-Forest Hills, foresees a gas tax passing the Legislature without any consideration of selling liquor stores, despite Republicans’ widening their majority in the chamber to 30 of the 50 seats.”

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