Update: Upcoming Outsourcing Issues. February 2, 2015


1) NationalWriting in New Labor Forum, Leo Casey looks at how charter schools are harming democracy. The charter school movement has been quick to declare itself “public” for the purpose of seeking support, but when it comes to, e.g., fighting unionization in court, they have no problem declaring themselves “private.” As the issue becomes more complex, Casey calls on us to sharpen our understanding of what distinguishes public vs. private.


2) National: Chris Maisano of Jacobin magazine takes a detailed critical look at Social Impact Bonds, which involve private investment by for-profit corporations in social service provision. These programs have become popular on Wall Street and in some sectors of the foundation world. “Public-sector unions are increasingly aware of the threat SIBs pose and have begun to rally against state-level legislation that would expand their use. AFSCME Council 94 in Rhode Island has been outspoken in its opposition to a bill that would allow the state to implement a $25 million SIB program.”


3) NationalThe NewSchools Venture Fund, a nonprofit seed fund for charters and other education ventures, will wind down and yield to a new for-profit operation. “One of the biggest factors driving creation of the new, for-profit seed fund is that it will be able to raise money from a broad range of ‘mission-driven’ private individuals and organizations that are also seeking returns, said [NSVF CEO] Childress. ‘It’s a different pool of potential investors,’ Childress said in an interview. ‘It does open up the potential for a much larger fund.’”


4) National: Laurie Levy spells out five facts you won’t hear from the sponsors of “National School Choice Week.” She writes, “School Choice Week is basically a giant commercial, paid for by a huge list of corporate sponsors. It’s pushing a product. Like all ads, I know it is a misrepresentation designed to make me want it. But just because I can buy it, doesn’t make it worth having. And I’m not buying.”


5) National/Colorado: Denver International Airport has issued a Request for Qualifications from companies interested in moving TSA passenger security screening operations out of the Great Hall in Jeppesen Terminal. “The airport plans to use a public-private partnership to do the work. Under the plan, the private sector’s investment could be repaid with concessions revenue, with DIA potentially sharing the additional revenue realized from revitalized restaurants and retail operations in the revamped Great Hall.”


6) National: Corrections Corporation of America will hold its earnings conference call on February 12.


7) NationalGeo Group has announced the reactivation of its 400-bed Mesa Verde facility in California, which will house immigration detainees. “The Facility will house immigration detainees under an intergovernmental service agreement between the City of McFarland and U.S. Immigration Customs and Enforcement.”


8) National: Nobel laureate Joseph Stiglitz says this is the right time for a major commitment to public infrastructure investment, but that conservative politics stands in the way. “We have an ample choice of public investments that would yield high returns—far higher than the real cost of capital—and that would strengthen the balance sheets of the countries undertaking them.”


9) NationalThe American Prospect reports that over the past five years, “more than 30,000 school bus drivers around the country have gained bargaining rights in First Student, the nation’s biggest private school bus contractor.” First Student was forced to concede to its Savannah-Chatham public schools Teamsters drivers’ demand for summertime pay after they took a strike vote. The two sides recentlyagreed a contract.


10) National: The GAO has issued a report on federal construction subcontracting. “GAO was not able to determine if bid shopping occurs or does not occur when prime contractors select subcontractors on federal construction projects, but found that the selection process could lead to subcontractors’ perceptions of bid shopping. (…) Many of the construction contractors that GAO spoke with said that bid shopping occurs, but could not furnish evidence of specific instances. Negotiation procedures between prime contractors and subcontractors may create the impression of bid shopping among subcontractors that submit bids”


11) National: K12 Inc., the private online education corporation that has experienced corporate turmoil and a sharply slumping stock price, is trying to make a comeback.


12) Arkansas: The state board of education voted last week to take over the Little Rock schools. Controversy and tension has marked the relationship between the two school authorities for years, involving litigation and charges that the state was slowing racial integration. Meanwhile, the Walton Foundation and the Boston Consulting Group have called a series of meeting at Little Rock schools, and concern is mounting that they are planning a push for privatization. “The Walton-funded Arkansans for Education Reform and Arkansas Learns have produced a steady barrage of criticism of the school district even as they have worked to create charter schools that have drained thousands of students from the district. (…) An open question about the push to take over the Little Rock district was whether the corporate supporters of the plan were pushing a hidden Walton-financed agenda to privatize the school. Such an experiment is underway in New Orleans, with, at best, mixed results.”


13) FloridaCharter Schools USA expands and relocates its corporate headquarters in Fort Lauderdale. CEO Jon Hage told the Florida Venture Capital Conference on Friday that his company is partnering with Kaplan to create an “ed-tech accelerator” in the city.


14) FloridaCorizon is fined for nonperformance of its prison healthcare contract obligations. “DOC spokesman McKinley Lewis said the request for ‘liquidated damages’ was the result of an auditing process designed to make sure the company met standards upheld by its contract with DOC, which carries the largest budget of the state’s 32 executive agencies.”


15) New York: United Federation of Teachers head Michael Mulgrew is “furious” that Gov. Cuomo wants to lift the cap on the number of charter schools permitted. “‘And he talks about an anti-creaming legislation. So what I heard as a teacher sitting there, was that the governor just said, ‘Look they haven’t followed the law that we passed in 2010 and let’s reward them by giving them more schools,’ Mulgrew said. Mulgrew said before the cap is raised, charters must be forced to serve more needy children, to explain extravagant suspension rates and empty charter school seats but be placed under the control of local superintendents.”


16) New York: Columnist Michael Fitzgerald takes aim at the secrecy and obscurity surrounding supposedly public meetings. “It doesn’t have to be complicated. Government websites should be comprehensive and up-to-date. Public agencies should create a simple email list and send out alerts about upcoming meetings. Agendas, minutes and matters of civic concern could be blasted out to the community. Meetings (and workshops) should be advertised in local media—not just referenced on a sheet of paper stuck on a bulletin board with a thumbtack. Most of all, officials should explain in meetings their thinking before they cast votes.”


17) OhioGov. Kasich is going to release his budget proposal today, and he is reportedly threatening privatization unless county commissioners slash services for the poor, mentally ill, and disabled. “‘We are going to take every dime of TANF money out of that county and give it to a county that wants to do it, or we will privatize those services, or we will take it at the state level,’ he said, ‘because we are going to fix this system.’”


18) PennsylvaniaAs the York public schools face wholesale charterizationThe Patriot-News’ Daniel Simmons-Ritchie takes a close look at lessons learned from New Orleans (union busting) and Michigan. “Pennsylvania’s newly elected governor, Tom Wolf, has openly blasted the plan, which was initiated under his predecessor Tom Corbett. While it remains unclear what power Wolf may exercise to stop the proposal, and an appeal have been launched to stop the state from implementing it, the situation is being closely watched by scores of academics, teachers, and school officials across the country.”


19) Pennsylvania: Three months after blocking the privatization of the Philadelphia Gas Works, the city council is considering alternative options. Last Thursday it voted to set up a committee to examine options, “including partnership opportunities.”


20) Texas/NationalGeo Group acquires LCS Corrections, expanding their reach in Texas. The acquisition will add eight facilities and 6,500 beds to Geo’s 79,000 bed capacity. “GEO is looking forward to an estimated $75-80 million extra in annual revenue. On LCS’s end, the deal will bail them out of nearly $302 million in debt. The deal will reportedly be finalized by the end of this February.” [More on LCS].


21) International: Greece’s new government halts public asset sales, fires the head of the privatization agency. The new finance minister, economist Yanis Varoufakis, says his Syriza party is not opposed to private investment in infrastructure, but opposes “a fire sale” of public assets. Greece has hired Lazard to advise it on upcoming negotiations with international lenders, according to the Financial Times.


22) International: Britain’s National Audit Office is looking into the taxpayer risks of a program set up in 2012 to guarantee payments to private investors in infrastructure. The program shifts risk onto the public. [Infrastructure Investor, January 28, 2015; Sub required]


23) Revolving Door News: The number of former government financial regulators who went to private banks they formerly oversaw has spiked sharply in recent years. Also, Sen. Elizabeth Warren says “we can’t build a strong reliable bank oversight system so long as the revolving door keeps putting bank executives in the role of temporary cops. We gotta worry about this revolving door both ways.”


24) Think TanksThe right wing Friedman Foundation publishes the 124-page 2015 edition of The ABCs of School Choice, a “comprehensive guide to every private

school choice program in America.” The Friedman Foundation has received lavish funding from the Walton, Reams, Bradley, Scaife and Donald Rumsfeld foundations.



Legislative Issues:


1) NationalDemocrats warn against Republican efforts to privatize Social Security. Republicans “were clear that they wanted to force a debate, with conservative wonks hoping they would use it to change Social Security as a whole, as Democrats have also warned they might. So Democrats almost immediately started to use the ‘P’ word, which is a powerful political tool.”


2) NationalLawmakers introduce legislation to lift the state volume caps on “private activity bonds” that go to finance water infrastructure. [HR 499]  Food & Water Watch has denounced any such expansion of private financing for water: “These fundraising strategies all facilitate privatization of publicly-owned water utilities. From California to Georgia, privatization has proven to raise the cost of drinking water and sewage services and lower the quality of customer service. Considering the track record of the private sector in providing water utility services, we believe that the gap between public infrastructure needs and public funding should not be used as a pretext to shift control of water resources and infrastructure from the public to private sector.”


3) National: The Senate HELP committee is accepting comment on the reauthorization of No Child Left Behind until the end of February.


4) NationalSen. John Tester (D-MT) met with incoming Postmaster General Megan Brennan last week to discuss strengthening the USPS and improving rural services. Tester “has been critical of the previous Postmaster General for taking steps to privatize the agency and opposed the committee’s postal reform bill because it did not preserve strong enough mail delivery standards in rural America or adequately support postal workers.”


5) Arkansas: A bill is introduced in the Assembly to regulate “public private partnerships.” The bill calls for a cost-benefit analysis, “an assessment of the opportunity cost,” and “criteria for allowing the responsible public entity to accelerate the selection, review, and documentation timelines for proposals involving a qualifying project that the responsible public entity considers to be a priority.” It also creates a 20-member Legislative Task Force on the Partnership for Public Facilities and Infrastructure. [HB 1111].


6) FloridaThe Tampa Bay Times calls on the legislature and governor to support the new Department of Corrections Secretary Julie Jones. “The governor and the Legislature should give her the help she needs, and they should revisit the decision to privatize medical care. Prisoners may not garner much public sympathy, but the state that incarcerates them has a duty to treat them fairly and humanely.”


7) GeorgiaA “public private partnership” bill has been reintroduced in the state Senate. The bill, SB 59, would expand P3s to other state and local facilities beyond highway tolls and colleges, which are currently permitted. The bill would create a P3 oversight committee, and puts some restrictions on unsolicited projects. Similar legislation was passed in Florida under Gov. Rick Scott.


8) HawaiiA judge has ordered Honolulu to continue collecting garbage at a private condo. “The United Public Workers union filed for a temporary restraining order. The union’s suing the city, claiming canceling the trash collection will privatize a city service. (…) The city will appeal the judge’s decision. The TRO is in place pending the outcome of the UPW’s lawsuit.”


9) Indiana: Republican lawmakers are trying to curb the power of the newly elected state education superintendent, Glenda Ritz, who has taken on charter schools and education “reformers” and is the top Democratic officeholder in the state. Dave Bangert of the Lafayette Journal & Courier calls the GOP “snark” an “attack on Indiana voters.”


10) Louisiana: A Baton Rouge council member has challenged the mayor’s plan to increase taxes to fund a new prison by instead proposing privatization. “The other reason officials say the East Baton Rouge Parish Prison costs more is because it offers more ‘self-help’ programs aimed at rehabilitating prisoners. ‘These other prisons, they warehouse prisoners,’ said William Daniel, chief administrative officer for the mayor’s office.”


11) MississippiThe education privatization industry is launching a massive lobbying offensive in the legislature and beyond. “The privatization lobbyists have been working overtime, and an incredible number of bills contain privatization language. Even bills that, overall, have a good purpose, like the Senate’s Districts of Innovation bill, have language sneaked into them that allows for virtual schools. (The House Districts of Innovation bill does not.) In other states that allow this, the privatization lobbyists have poured money into local school board elections to support pro-privatization candidates who, if elected, would vote to put for-profit virtual schools in the school district.”


12) Mississippi: Lawmakers will soon begin debating a bill to give vouchers for private schools to special education students. “Opponents, though, say vouchers will simply send disabled students to ill-equipped, unregulated schools and ultimately absolve the state of responsibility for some 54,000 students with disabilities.” But Gov. Phil Bryant (R), who supports the bill, says “these children and their families don’t need more education bureaucracy, they need real options now.”


13) New Jersey: Sam Pesin, president of Friends of Liberty State Park, says privatization of the park would “commercialize this inspiring free and green urban waterfront state park, dishonoring this priceless New Jersey treasure, a sacred park as it is scarce urban open space and sacred as it is the neighbor of Lady Liberty and Ellis Island.” He urges supporters of the park to call Gov. Christie and request he “conditionally veto” the bill until the language is removed. [AB 3969 (p. 26)]


14) New Mexico: The Associated General Contractors of New Mexico is backing “right to work” legislation alongside legislation that would weaken procurement rules governing “public private partnerships.” “Mike Puelle, the director of public policy and government relations for AGC, said the bill would create guidelines outside of the RFP process for partnerships.”


15) Wisconsin: Senate Democratic Leader Jennifer Shilling warns against Gov. Walker’s proposal to “privatize and defund” the public University of Wisconsin system. “As a mother of two young boys, I want my children to have the same great higher education opportunities that I had. Unfortunately, Gov. Walker’s cuts will put those opportunities further out of reach for many working families and future students.”

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