Update: Upcoming Privatization Issues. October 7, 2013


1) National: American Federation of School Administrators regional vice president  Leonard Pugliese calls for stronger coalition-building to resist assaults on public education. “While many oppose these attacks, our defense often is fragmented, disjointed and in some cases counterproductive. If our public education system is to survive, the time has come for like-minded groups and individuals to unify and form strong, active coalitions.”


2) National: The Partnership for Public Service announces this year’s recipients of the “Sammie Awards” to nine federal workers who have shown excellence and leadership in their fields. Included are public employees who have stopped the spread of a deadly hospital-acquired infection, conducted sophisticated research that led to innovative ways to fight fires, made major breakthroughs in fuel efficiency, and led a global initiative to successfully eradicate polio in India.


3) National: The road privatization industry has declared that TIFIA, the federal loan program for surface transportation development, is “in crisis.” Public Works Financingcharges that too much money has been transferred to the states, and that project selection is politicized, pointing to likely loans for the public Chicago Transit Authority and Los Angeles Metro. Complains that we need a “change in the mindset” at the DOT’s credit council, which currently “sees its job as avoiding mistakes.” [Public Works Financing, September 2013; Sub required]


4) National: USDOT selects a pool of nine financial advisory firms for its TIFIA loans: Scully Capital Services, Infrastructure Management Group, Montague De Rose and Associates, Taylor DeJongh, Louis Berger Group, Deloitte, Greengate, Piper Jaffrey, and Project Finance Advisory Ltd. [Public Works Financing, September 2013; Sub required]


5) National: Capital pours in to private ed tech startups in Seattle.


6) Arizona: Department of Transportation has entered into a five year renewable concession agreement with Infrastructure Corporation of America to operate and maintain Arizona’s 14 highway rest stops. “Under the rest area contract, ADOT is guaranteed at least $1 million over the next 10 years from revenues generated from advertising and sponsorships. That money will go into the State Highway Fund for other transportation projects.”


7) California: The California Judicial Council, which assumed the state would pick up the subsidy costs for its Long Beach Courthouse “public private partnership,” sees the state decline to pay for them. “In reaction to these actions, the Judicial Council indefinitely delayed four large courthouses in Sacramento, Los Angeles, Fresno and Nevada.” [Public Works Financing, September 2013; Sub required]


8) Connecticut: Fairfield school board votes to outsource food service, jeopardizing the jobs of 72 employees. “The motion to outsource the program wasn’t on the school board’s agenda August 27, but the board voted 7-1 to add it to the agenda that night and then voted 6-2 to approve it after an eight-minute public discussion.”


9) Florida: Broward Bulldog criticizes the Department of Corrections for failing to ask questions about the records of Corizon and Wexford Health Services before privatizing prison health services. “‘What really troubles me about this is the fact that the department didn’t ask these very basic, elemental questions any system would ask,’ said Eric Balaban, a staff attorney for the National Prison Project of the American Civil Liberties Union. ‘These two vendors were taking over Florida’s massive health care system and you’d think they would have asked hard questions to determine if these companies can provide these services within constitutional requirements.’”


10) Georgia: Paulding County privatizes its airport’s terminal by stealth. Propeller Investment CEO Brett Smith tells the media “that Paulding County leaders approached him soon after his plan to privatize and expand Gwinnett County’s Briscoe Field got shot down last year, so last November he very quietly signed a 40-year lease with the Paulding County Airport Authority for the entire underused terminal building and a lot of the surrounding land. (…) ‘How did you keep this under the radar for as long as you did?’” a reporter asked. “I just kept my mouth shut. Loose lips sink ships,” Smith said.


11) Idaho: Corrections Corporation of America leaves the state “after more than a decade marked by scandal and lawsuits surrounding its operation of the state’s largest prison.” CCA’s contract with Idaho ends June 30, 2014. Spokesman Review columnist Shawn Vestal writes, “this moment provides Idaho’s political leaders an excellent opportunity to examine the assumptions that first brought Corrections Corporation of America to the state more than 10 years ago: the unshakeable faith in the privatization of public services. Might it have been a mistake, this presumption of excellence and efficiency? Should we expect, from the Idaho politicians who have collected such generous donations from CCA over the years, some soul-searching and rethinking?”


12) Illinois: Mayor Emanuel is determined to proceed with the privatization of the Port of Chicago after its exclusive bidder drops out. “Under the Broe Group’s plan, that could have amounted to 1,000 permanent jobs.” But the Chicago Tribune reports that “will be a herculean task due to the vast amount of investment needed at the neglected facility, according to transportation experts.” Mayoral spokesman Tom Alexander said in a statement that “Mayor Emanuel believes the port is a valuable asset and with strategic investment it can drive economic growth in our City. However, he has made it clear that he will not repeat the mistakes of the past by supporting a deal that does not protect taxpayers and the competitive future of the port.”


13) Illinois/Indiana: The widely criticized Illiana Expressway “public private partnership” survives its first approvals test. “By a vote of 10 to 7 but with 5 abstentions and 6 absentees the Illiana was supported at the Transportation Committee of the Chicago Metropolitan Agency for Planning (CMAP) Friday. The full CMAP board will consider it October 9 and the CMAP Planning Committee October 17 in what is the decisive vote on the project.”


14) Kentucky/Ohio: The two states release an HNTB study on possible procurement models for a bridge across the Ohio River connecting Covington and Cincinnati. Sets up a choice between an all-public design-build model and a subsidized “public private partnership.” For Kentucky to use the subsidized P3 model, “lawmakers also would need to revise state transportation laws and authorize the use of P3s. In July, the Kentucky Chamber of Commerce released a white paper recommending that the state enact legislation enabling the use of P3s on a wide range of infrastructure projects at all levels of government.” [Sub required]


15) Louisiana: Contractors are clamoring for providers even before the state makes a decision on privatizing long term care for the elderly, developmentally disabled and those with adult on-set disabilities. “State Health Secretary Kathy Kliebert tried to allay the fears of advisory panel members who met for the first time last week. She said no decisions have been made on the direction the privatization initiative would go, including the scope of services to be provided.”


16) Michigan: Department of Technology, Management and Budget finds that a private prison would cost taxpayers more than a Department of Corrections facility. Management and Training Corporation’s lowest bid was 56% higher than the cost to the DOC to run the prison; and Geo Group’s lowest bid was 44% higher than the cost to the DOC. The bids were rejected.


17) New York: Long Island Power Authority trustees approve takeover of the power system by PSE&G. “One activist at the meeting accused [Gov.] Cuomo of rushing the legislation into law and called the process ‘a disgrace.’ Peter Maniscalco, founder of a Long Island coalition that opposed the contract, accused Cuomo of making a false statement when the governor said the original intent for LIPA was to be a ‘holding company.’ Maniscalco is among those who want LIPA to be a fully public utility.”


18) New York: Town of Rye moves to outsource management of the town park. Will hire a consulting firm to attract bids.


19) Pennsylvania: DOT’s Office of Public Private Partnerships announces it is accepting unsolicited proposals for transportation projects from the private sector through October 31.


20) Pennsylvania: A staff member looks back on the “sad saga” of outsourcing support staff by the Quakertown Community School District. “I have walked to the podium at these meetings (as many of us have) in the hopes the school board would listen and reconsider its decision to outsource these invaluable people. I was cut short while speaking at these meetings, made to feel like what I had to say was not important or worth listening to,” writes Carolyn J. Budweg. “We either agreed to the many contract concessions or said goodbye to our jobs. We felt scared and bullied, and in the end, some lost jobs, took huge pay cuts, doubled their health premiums. All this taken from the people who have the least to give financially. I don’t think people truly realize what the support staff does on a day-to-day basis. I don’t think people truly realize the difference these people  make in children’s lives. They are special, and they are appreciated.”


21) Texas/Revolving Door News: Mark Smith to become head of the Texas State Library. Smith spent 14 years as vice president of Library Systems and Services, Inc. (LSSI), the leading public library privatization company in the country.


22) Wisconsin: Milwaukee County Executive Chris Abele calls for outsourcing the county’s worker compensation claims. A corrective action plan for the Risk Management Division is due October 14.


23) International: The Parkland Institute reports that plans to use a “public private partnership” to build a light rail system in Edmonton, Canada, will cost $421 million to $510 million more than public procurement. University of Manitoba economics professor John Loxley “said the bottom line is that construction through a P3 will be more expensive, largely because private financing comes with higher interest rates that public borrowing. Loxley said any savings the city might see will be from having a private consortium operate the LRT for 30 years, but this will come on the backs of transit workers.” [Wrong Turn: Is a P3 the best way to expand Edmonton’s LRT?]


24) International: The $14 billion Ontario Public Service Employees Union pension plan (OpTrust) opens an office in Sydney, looking for private investment opportunities in infrastructure and private equity investments across Asia.


25) Revolving Door News: Center for Responsive Politics spotlights David Venturella, the Geo Group’s executive vice president for corporate development. Venturella was previously the U.S. Immigration and Customs Enforcement’s assistant director for secure communities (2008-2012), and prior to that was vice president and director of business development for USIS (2004-2008), the private security screening company that is currently in the headlines over its role in the background checks on Edward Snowden and Aaron Alexis.


26) Think Tanks: Demos issues new report calculating “that the federal government is spending an estimated $20.8 to $23.9 billion a year to pay private contractors for the compensation of top executives.” But, the report says, “the contractor lobby has so far held back efforts to limit the extent to which taxpayers bankroll their pay. We propose not only a lower cap for highly-paid contractors but also a raise that would better enable the lowest-paid contract employees to support their families. As this analysis illustrates, it would be possible to pay the lowest wage contract workers fairly without costing taxpayers a dime.”


27) New Novel Delves into Prison Privatization: Patrick Flanery’s Fallen Landconjures up a fictional private prison multinational that wants to create “the largest body of slave labor since emancipation.” New York Times reviewer David Vann writes“this is resonant—and scary—because of the very real steps America has taken to privatize its corrections system: when a corporation controls law enforcement, incarceration, rehab and parole, what’s to stop it from making money at each stage by encouraging recidivism? [The fictional corporation] also intends full surveillance of the noncriminal class (another plan with obvious real-world parallels) and runs schools where children are fingerprinted, fined for nonconformist behavior, and held to strict routines and curriculums.”


Legislative Issues:


1) National: Competing bills for a national infrastructure bank/fund are expected to emerge in the Senate. Rep. John Delaney (D-MD) needs a Senate sponsor for his “American Infrastructure Fund” (HR 2084); and Sen. Mark Warner is expected to release a bill soon. Warner’s bill is expected to focus on providing guarantees for tax exempt municipal bonds. [Public Works Financing, September 2013; Sub required]


2) California: Lawmakers pass a bill  (AB 401) strengthening design-buildprocurement in the state. Gives design-build authority to regional transportation agencies. The bill was supported by the Professional Engineers in California Government and opposed by the Associated Builders and Contractors of California.


3) New York: Lawmakers announce new legislation to advance “public private partnerships” in road transportation infrastructure. “The public-private partnership legislation will help transfer the risks associated with building, financing, operating and maintaining public infrastructure projects from the taxpayers to the private sector.”Ball’s bill died in committee in June.


4) Pennsylvania: Despite summertime predictions that liquor store privatization would move ahead this legislative term, Gov. Corbett’s reworked proposal has not produced agreement. “I think we should leave wine and spirits to the next term,” Senate Minority Leader Jay Costa (D-Allegheny) says. “Let’s focus on transportation spending—without it being linked.”


5) Wisconsin: Legislature begins debate on a bill to expand the number of privately run public charter schools. Wisconsin Education Association Council president Betsy Kippers says “citizens blocked this idea of schools imposed on their communities when it was shoved into the state budget—and it was removed. This is a back-door maneuver by politicians who are beholden to campaign contributors to force privatization on our communities and citizens don’t want it. Wisconsin is a leader in the nation when it comes to publicly run charter schools—this bill dismantles a highly successful, nationally recognized model in charter schools that is built on local control.” [SB 76]

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