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Thirty Years of Private Prisons: Nothing to Celebrate!

Louisa — Fri, 03 May 2013 17:57:11 +0000

PRESS CONFERENCE & RALLY FOR AN END TO FOR-PROFIT PRISONS

Tuesday, May 7, 11:30 – 1 p.m.
Outside CCA’s Correctional Treatment Facility
19th Street S.E. between Burke and C Streets, Washington DC

CCA is the oldest for-profit prison company in the nation. JOIN US to tell CCA that 30 years of profiting from human misery is nothing to celebrate!

The Public Safety and Justice Campaign along with civil rights leaders, people of faith, criminal justice reform groups and immigrant rights organizations will protest outside CCA’s Correctional Treatment Facility to say it’s time to end not celebrate for profit incarceration & immigrant detention in the United States.

Boeing's Dreamliner – A Cautionary Tale for Government Outsourcers

Louisa — Tue, 30 Apr 2013 19:42:57 +0000

The Boeing Dreamliner 787 will resume flights at the end of this month after being grounded by the FAA in January when the plane’s lithium-ion battery caught fire. Regulators and Boeing are still investigating the source of the problem, looking for a fix and hoping to get the newly designed planes back in the air.

It seems one of the causes may have been outsourcing and the case is a cautionary tale for government agencies that see outsourcing as a solution to their problems. The new airplane experienced delays, cost overruns and service failures – the same things that governments face when they contract out services.

Following the merger with McDonnell Douglas in 1997, Boeing decided to adopt a new manufacturing model to distribute risk among subcontractors that would be given responsibility for designing and manufacturing some of the new plane's major components. The Dreamliner was Boeing’s pioneering new attempt with the new regime. More than 70% of the jets’ individual components were outsourced to some 900 subcontractors all over the world.

According to New Yorker reporter, James Surowiecki, "the more complex a supply chain, the more chances there are for something to go wrong, and Boeing had far less control than it would have if more of the operation had been in-house."

The outsourced production did go wrong, resulting in the Dreamliner's rollout being delayed for three years and coming in billions of dollars over budget. All of which increased the pressure to finalize the design and get production underway.

LA Times Columnist Michael Hiltzik in 2011 described the practical day-to-day problems of Boeing’s outsourced production.

a. It made production more complex and cumbersome:

Some of the pieces manufactured by far-flung suppliers didn't fit together. Some subcontractors couldn't meet their output quotas, creating huge production logjams when critical parts weren't available in the necessary sequence.

b. They outsourced planning:

Rather than follow its old model of providing parts subcontractors with detailed blueprints created at home, Boeing gave suppliers less detailed specifications and required them to create their own blueprints.

c. They lost management and supervisorial control:

Some then farmed out their engineering to their own subcontractors. That further reduced Boeing's ability to supervise design and manufacture. At least one major supplier didn't even have an engineering department when it won its contract.

Boeing executives now they didn't recognize that sending so much work abroad would demand more intensive management from the home plant, not less.

d. It cost more:

"We gave work to people that had never really done this kind of technology before, and then we didn't provide the oversight that was necessary," Jim Albaugh, the company's commercial aviation chief, told business students at Seattle University last month. "In hindsight, we spent a lot more money in trying to recover than we ever would have spent if we tried to keep many of the key technologies closer to Boeing.”

The outsourced manufacturing model is complicating the investigation of the Dreamliner’s failed power system. Investigators have to deal with a complicated network of global companies and technologies just to figure out how the Dreamliners’ power system was supposed to work in the first place, much less how it ended up broken. The auxiliary power unit alone contains parts from Japan’s GS Yuasa Corporation, France’s Thales Group and North Carolina-based UTC Aerospace Systems, a subsidiary of Connecticut’s United Technologie s.

Policy makers across the country often say they want to run governments more like a business. The Dreamliners that are still on the ground should tell them something about what that really means: there’s no substitute for good management and strong oversight to deliver quality services at reasonable costs.

http://www.huffingtonpost.com/donald-cohen/boeing-dreamliner-outsourcing_b_3196445.html

Corporate Prison Leaders Tell the Truth About Themselves

Louisa — Thu, 21 Mar 2013 15:09:48 +0000

FORM 10-K IS A TREASURE TROVE OF INFORMATION

Maggie Hassan made it pretty clear during her successful campaign for governor that she has no interest in turning over control of New Hampshire’s prisons to for-profit corporations. The majority of Executive Councilors elected in November feel the same. While the State is still formally reviewing proposals from four private companies to build and operate its prisons, the chance that a contract for prison operation would be drawn up in the next two years is about as close to zero as it can get. So why did at least two of the companies (CCA and MTC) bother to invest in lobbying services to defeat HB 443, a bill which would ban private prisons in New Hampshire?

For insight into this and other questions, the companies’ Form 10-Ks, filed annually with the Securities and Exchange Commission (SEC), are worth a read.

According to the SEC, “the 10-K offers a detailed picture of a company’s business, the risks it faces, and the operating and financial results for the fiscal year. Company management also discusses its perspective on the business results and what is driving them.”

Unlike the glossy Annual Reports for stockholders, Form 10-K comes without photos and with a more straightforward writing style. The SEC says, “Laws and regulations prohibit companies from making materially false or misleading statements in their 10-Ks. Likewise, companies are prohibited from omitting material information that is needed to make the disclosure not misleading.” In other words, they have to tell the truth, including reporting on what the SEC calls “risk factors.”

Efforts to ban private prisons, even in states that don’t have them and aren’t about to get them, are a risk to the business model of private prison companies.

Corrections Corporation of America

The Form 10-K for the Corrections Corporation of America says, “We are the nation’s largest owner of privatized correctional and detention facilities and one of the largest prison operators in the United States behind only the federal government and three states,” but acknowledges, “As the owner and operator of correctional and detention facilities, we are subject to certain risks and uncertainties associated with, among other things, the corrections and detention industry and pending or threatened litigation in which we are involved.”

Among the risks they face: “The operation of correctional and detention facilities by private entities has not achieved complete acceptance by either governments or the public.”

How’s that for understatement?

In fact, CCA states, “the movement toward privatization of correctional and detention facilities has also encountered resistance from certain groups, such as labor unions and others that believe that correctional and detention facilities should only be operated by governmental agencies.”

The GEO Group

The GEO Group, the industry’s #2, agrees. In its Form 10-K, GEO says, “Public resistance to privatization of correctional, detention, mental health and residential facilities could result in our inability to obtain new contracts or the loss of existing contracts, which could have a material adverse effect on our business, financial condition and results of operations.”

“The movement toward privatization of such facilities has encountered resistance from groups, such as labor unions, that believe that correctional, detention, mental health, and residential facilities should only be operated by governmental agencies… Increased public resistance to the privatization of correctional, detention, mental health and residential facilities in any of the markets in which we operate, as a result of these or other factors, could have a material adverse effect on our business, financial condition and results of operations,” GEO adds.

“Immigration reform laws are currently a focus for legislators”

CCA gets pretty specific about the “factors we cannot control” which consitute risks to their business:

“The demand for our facilities and services could be adversely affected by the relaxation of enforcement efforts, leniency in conviction or parole standards and sentencing practices or through the decriminalization of certain activities that are currently proscribed by criminal laws. For instance, any changes with respect to drugs and controlled substances or illegal immigration could affect the number of persons arrested, convicted, and sentenced, thereby potentially reducing demand for correctional facilities to house them. Immigration reform laws are currently a focus for legislators and politicians at the federal, state, and local level. Legislation has also been proposed in numerous jurisdictions that could lower minimum sentences for some non-violent crimes and make more inmates eligible for early release based on good behavior. Also, sentencing alternatives under consideration could put some offenders on probation with electronic monitoring who would otherwise be incarcerated. Similarly, reductions in crime rates or resources dedicated to prevent and enforce crime could lead to reductions in arrests, convictions and sentences requiring incarceration at correctional facilities.”

This interest in a continued and growing supply of prisoners explains the industry’s interest in immigration reform. CNN reports, “Big tech firms and private prisons represent two industries vigorously lobbying to influence the scope of legislation aimed at overhauling U.S. immigration policy, a political priority in Washington.”

While CCA’s 10-K states, “Our policy prohibits us from engaging in lobbying or advocacy efforts that would influence enforcement efforts, parole standards, criminal laws, and sentencing policies,” CNN notes “Corrections Corporation of America, which builds detention facilities to house illegal immigrants, [has] contributed heavily to the campaigns of lawmakers who take tough stances on the issue.”

CNN also reports, “Sen. John McCain has changed his views on immigration over the years. For instance, the Arizona Republican first supported and later opposed a path to citizenship for illegal immigrants. He is also the fourth-highest recipient of campaign donations from Corrections Corporation of America.” Maybe it’s just a coincidence. Maybe not.

If corporate persons can be said to have a corporate conscience and a corporate mind, we can say that private prison companies are morally flawed. But we shouldn’t discredit their brains. They know how their bread is buttered, and they are acutely aware that we can cut off the butter by changing immigration laws, reducing sentences, and de-criminalizing offenses like possession of marijuana. We can take away the whole loaf by banning private prisons, as HB 443 proposes to do in New Hampshire.

HB 443 states that incarceration is an “inherently governmental” function and cannot be outsourced to for-profit companies like CCA, GEO, and the Management & Training Corporation (MTC). An amendment approved by the House Criminal Justice and Public Safety Committee would allow the Commissioner of Corrections to transfer prisoners to privately operated prisons on a temporary basis in the event of an emergency, such as a fire. With that amendment and a bi-partisan 13 to 5 “ought to pass as amended” recommendation from the committee, the bill is heading for a vote by the full House this week. Illinois and New York already have similar laws on their books. Since passage of HB 443 would have an “adverse effect” on their business model, we can expect the private prison companies to step up lobbying efforts in the Senate if the measure clears the House.

GEO makes another interesting point in its 10-K (page 31 if you want to look it up): “State budgetary constraints may have a material adverse impact on us,” they say. This is a curious observation given the fact that the private prison companies insist they save money for taxpayers. Yet, GEO says, “budgetary constraints in states that are not our current customers could prevent those states from outsourcing correctional, detention or community based service opportunities that we otherwise could have pursued.” In other words, GEO appears to acknowledge that private prisons aren’t less expensive after all.

There’s plenty of other data in these reports. There are lists of their prison facilities. CCA reports that only 785 of its 17,000 employees are unionized, while GEO says 21% of its workforce is covered by collective bargaining agreements. Both companies see union organizing as a risk. Both companies provide extensive details about their creation of Real Estate Investment Trusts. Enjoy your reading, with awareness that if you are working for immigration reform, reduced incarceration, and the shut-down of the private prison industry, someone in GEO’s and CCA’s corporate offices sees you as an element of their risk profile.

If anyone has the Form 10-K for the Management & Training Corporation, please pass it along.

Written by Arnie Alpert, reprinted with permission from http://inzanetimes.wordpress.com/.

Privatization Limits Access to Public Information

Louisa — Wed, 20 Mar 2013 14:47:18 +0000

Companies looking to take control of public services are winning government contracts for a wide array of services ranging from state prisons to local water systems to public schools, and often without much public oversight.

Private contractors are circumventing open records and sunshine laws as state and local governments push to privatize public services. For example, for-profit prison contractors are escaping scrutiny about prison conditions, financial information about government services that was once public such as management salaries and employee wage rates becomes “proprietary information” exempt from disclosure and even the names of corporations bidding to take control of public services are kept from the public. In Allentown, Pennsylania, the Mayor refused to release the identities of potential contractors that responded to his proposal to privatize the water system.

A 2012 report by In the Public Interest, demonstrates the real world consequences of privatization on government transparency. Recent examples show that some states are taking steps to strengthen their open records laws, while others are failing to protect public information.

For example:

In both New Jersey and Pennsylvania, the governors’ efforts to privatize the states’ lottery systems have been rushed, top-down approaches occurring outside of the public’s view. In Pennsylvania, Governor Corbett went so far as to award the operations contract to the sole bidder, Camelot Global Services, without full input from the Pennsylvania Gaming Control Board and the General Assembly. Ultimately, the proposal was rejected by the state’s attorney general.

As companies continue to evade transparency laws, demands for transparency are increasing. Recent court rulings across the country have ruled in favor of increased transparency of government contracting.

For example:

The Tennessee Court of Appeals ruled that the for-profit prison giant, Corrections Corporation of America, must make public certain documents that they previously refused to disclose, including reports and audits in which they had been found in violation of their contracts and lawsuit settlements where the company had to pay damages.

The Florida circuit court ruled that Aramark, the company that took control of housekeeping and maintenance services at the Florida State Hospital in Chattahoochee, must divulge information regarding the number of formerly public employees that were offered positions with the company following the privatization effort.

Stronger open records laws and more transparency would render these court cases unnecessary.

Several states are taking action to protect access to information and public input in the contracting process. Virginia recently passed a bill that requires contractors engaging in public-private partnerships for transportation services to make their proposals readily available to the public. New Mexico legislators are advancing legislation that would require large government contractors to disclose their political contributions and post them on the state’s Sunshine Portal.

Federal and state-based open records and sunshine laws are essential accountability protections and help ensure that public services operate in our best interests. The more we privatize, the less we know and the less control we have over our public services. Stronger open records laws are the right step towards maintaining that control.

By Louisa Abada, Researcher, In the Public Interest, a non-profit resource center on privatization and responsible contracting

Sunshine Week: New Action Needed to Get Government Contractors Out of the Shadows

Louisa — Wed, 13 Mar 2013 21:06:52 +0000

As a part of Sunshine Week, a national initiative to promote open government and the freedom of information, In the Public Interest is calling for increased transparency in government contracting and privatization deals.

Last year we released a report about the real world consequences of privatization on government transparency and the public’s access to contractor information, Floodlights Instead of Flashlights: Sunshine Laws out of Step with Government Contracting Leave Public and Lawmakers in the Dark. The issues addressed in the report remain relevant today and many of the proposed recommendations to improve transparency continue to apply. Many state sunshine laws don’t adequately address what happens to public information when private companies take over public services or projects. In many situations, this lack of transparency enables contractors to evade public oversight and accountability. Enormous amounts of taxpayer dollars go to private companies at all levels of government and we have a right to know exactly how that money is spent.

Public Kept in the Dark

The lack of transparency in recent privatization initiatives continues to allow government contractors to operate in the shadows, circumventing state sunshine laws

In New Jersey and Pennsylvania, rush attempts at privatizing the states’ lottery systems have avoided typical channels for the process that would allow for oversight by lawmakers and the public to ensure the plans are in the public’s best interest.
Despite public records and open meeting laws in Ohio, private organizations that receive public money have been allowed to keep their operations shrouded in secrecy.
Allentown, Pennsylvania’s push towards privatization of the water system is plagued by transparency issues. The city has refused to release information about potential contractors to the community, conducted business behind closed doors, and misled the public about the public costs of the possible long-term concession contract.

Ruling in Favor of Transparency

Demands for transparency are increasing. Recent court rulings in Minnesota, Florida, Wisconsin, and Tennessee have ruled in favor of increased transparency of government contracting. For example:

The Florida circuit court ruled that Aramark, the company that took control of housekeeping and maintenance services at the Florida State Hospital in Chattahoochee, must divulge information regarding the number of formerly public employees that were offered positions with the company following the privatization effort.
In Tennessee, the Court of Appeals ruled against the for-profit prison giant, Corrections Corporation of America, affirming that in their position as a government contractor, they must make public certain documents that they previously refused to disclose including reports and audits in which they had been found in violation of their contracts and lawsuit settlements where the company had to pay damages.

Protecting the Public’s Right-to-Know

There are also pro-active steps being taken to protect the public’s right-to-know how their money is being spent.

New York City’s online portal Checkbook NYC 2.0 provides easily accessible, clear information on the city’s spending practices with a section explicitly devoted to spending on government contracting.

State legislators are taking action:

Virginia recently passed a bill that requires contractors engaging in public-private partnerships for transportation services to make their proposals readily available to the public.
New Mexico is pushing forward legislation that would require large government contractors to disclose their political contributions and post them on the state’s Sunshine Portal.

Lack of transparency is ultimately an issue of lack of accountability. Efforts to encourage contractor transparency help to ensure that public services answer to the stakeholders of our democracy, not corporate shareholders.

Keeping Education Accountable

Louisa — Thu, 28 Feb 2013 17:31:10 +0000

The public education system sustains American democracy. It is one of the most distinct examples of how we come together as a society to encourage diversity, promote social progress and new ideas, and create productive members of our communities. It is based on our fundamental values to be accountable to all Americans and create opportunity for all of our children, regardless of race or religion and without limitations based on family status or economic situation.

The privatization of education threatens to weaken public accountability. In the Public Interest released thousands of emails, obtained through public records requests, between the Foundation for Excellence in Education (FEE) and state education officials that show where corporations’ interests seem to be given priority over those of the public. These emails reveal the foundation’s influence over education laws and regulations that could benefit its corporate funders. Many policies proposed by FEE, including changes in laws that would advance charter schools, virtual schools, and vouchers, would re-direct taxpayer money to private companies accountable to investors and shareholders.

Responses to our release of these emails show that we’re not the only people worried. Various local and national media outlets, including Reuters, The Washington Post, The Nation, and many more, have covered the topic. Colin Woodward, a Maine Sunday Telegram reporter was awarded the prestigious 2012 George Polk Award for Education Reporting for his comprehensive investigative reporting on the profit motive behind virtual schools in Maine that relied on emails we obtained.

We are strong supporters of good ideas to improve our education system. We believe that public control and public interests are best served when free of competing private goals. Privatization masquerading as “reform” distracts from the important role of education to foster a dynamic and democratic society characterized by opportunity.

Written by Louisa Abada, In the Public Interest

Bush's Education Nonprofit and Corporate Profits

Shar — Thu, 31 Jan 2013 01:05:19 +0000

Emails between the Foundation for Excellence in Education (FEE), founded and chaired by former Florida Gov. Jeb Bush, and conservative state education officials show that the foundation is writing state education laws and regulations in ways that could benefit its corporate funders.

The emails seem to describe a project similar to the American Legislative Exchange’s (ALEC) pay-for-play operation. Corporate donors rub shoulders with state education policy makers while FEE moves the corporate-friendly policy agenda.

The emails, obtained through public records requests, reveal that the organization, sometimes working through its Chiefs For Change affiliate, wrote and edited laws, regulations and executive orders, often in ways that improved profit opportunities for the organization’s financial backers. Bush has been referred to as the “godfather” of Chiefs for Change, an alliance of conservative state superintendents and education department directors with significant authority over purchasing and policy in their states.

Education has the potential to be an enormous business opportunity and corporate America is looking for a way in. In 2010 Rupert Murdoch, who now has a growing education division called Amplify, said recently that "[w]hen it comes to K through 12 education, we see a $500 billion sector in the U.S.” Amplify is one of FEE’s corporate donors.

The emails conclusively reveal that FEE staff acted to promote their corporate funders’ priorities, and demonstrate the dangerous role that corporate money plays in shaping our education policy. Correspondence in Florida, New Mexico, Maine, Oklahoma, Rhode Island, and Louisiana paint a graphic picture of corporate money distorting democracy.

The Portland Press-Herald has reported, the emails were evidence of “a partnership formed between Maine’s top education official and a foundation entangled with the very companies that stand to make millions of dollars from the policies it advocates.”

The emails paint a cozy picture of influence and, in some cases, actually outsourced policy making that could significantly expand markets for a new generation of for-profit education companies. Rick Ogston, the founder of for-profit online education company E2020, told Reuters last year that they go to FEE and say “these policies are in the way, and it would be great if you could change them.”

In New Mexico, FEE acted as a broker to organize one-on-one meetings between their corporate donors and individual Chiefs. A draft agenda for the Excellence in Action 2011 Summit blocked off two hours for “Chiefs for Change donor meetings” Another draft agenda for the meeting allocated nearly three hours to “Chiefs for Change donor meetings” The donors for the summit included The Walton Family Foundation, Bradley Foundation, GlobalScholar, Target, Houghton Mifflin Harcourt, Microsoft, State Farm, IQity, McGraw-Hill Education,, Intel, Pearson Foundation, Apex Learning, ETS, Electronic Arts, Koret Foundation, SMART Technologies, K12, Charter Schools USA, and Connections Academy. Demand for donor time was so high that Patricia Levesque wrote that she had to turn down opportunities for the chiefs to meet other representatives from companies.

Maine Governor LePage proposed FEE written legislation and executive orders that would remove current barriers to creating online K-12 schools and in some cases would require online classes. The so-called barriers included eliminating class size caps and student-teacher ratios, allowing public dollars to flow to online schools and classes and eliminating the ability of local school districts to limit access to virtual schools.

The Foundation for Educational Excellence also acted as a conduit for ALEC model legislation and policies. LePage’s order originated at ALEC, was tailored for Maine by the FEE and sent to Education Commissioner Stephen Bowen, who subsequently forwarded it to LePage to release unchanged. “Resolution adopting the 10 Elements of High Quality Digital Learning” is a model bill introduced by Arizona Sen. Rich Crandall at the 2011 ALEC Annual Conference. LePage’s executive order originated with the Digital Learning Council, a group co-chaired by Bush and funded by FEE donors K12 Inc, the Pearson Foundation, and McGraw-Hill.
In Florida, FEE helped write legislation that would increase the use of the FCAT, a proprietary test currently under contract to global publishing giant Pearson, an FEE donor.

In February 2012, FEE CEO Patricia Levesque urged state officials to introduce SendHub, a communications tool, into their state's schools. News reports indicate that Jeb Bush was an investor in the start-up by the fall of 2012. Levesque’s income actually comes from her lobbying firm, Meridian Strategies, not FEE. Meridian has several clients that are also FEE donors including I-quity, an online education company and The College Board testing company.

“These emails show a troubling link between Jeb Bush's effort to lobby for ‘reforms’ through his statewide Foundation for Florida's Future, his national Foundation for Excellence in Education, and the powerful corporations who want access to billions of our tax dollars by reshaping public education policies just to create markets for themselves - none of which is in the best interest of our children,” said Kathleen Oropeza, a Florida parent.

To read the emails, please visit: http://www.inthepublicinterest.org/node/2747

New Report: Profiting from Public Dollars

Shar — Wed, 12 Sep 2012 02:51:06 +0000

For years, corporations have joined the American Legislative Exchange Council (ALEC) for the opportunity to develop legislation that diverts public dollars into their corporate coffers. A new report by In the Public Interest, "Profiting from Public Dollars: How ALEC and Its Members Promote Privatization of Government Services and Assets," exposes ALEC's extensive privatization agenda. The report details how private prison corporations, online education companies, health care corporations, and major industry players pay large membership fees to ALEC in exchange for valuable and unfettered access to state legislators. Corporations are able to work with ALEC lawmakers to craft bills that allow private control of public functions, and guarantee a steady stream of tax dollars to enhance profits.

Corporate and legislative ALEC members work together to jointly develop pro-privatization model bills, and then legislators introduce and push these bills in their state legislatures. These bills make it easier to create virtual public schools, encourage states to privatize vital health programs that help vulnerable populations, force state governments to sell public prisons to prison corporations, and help other industries take control of public assets and services.

In 2011 and 2012, ALEC model bills that sought to privatize core public functions were introduced in states across the country, including Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Maine, Maryland, Massachusetts, Montana, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, and Utah. Many ALEC bills fail their first time, but examples of success expose their real goal: enhancing corporate pocketbooks with lucrative government contracts.

Virtual Public Schools: The K-12 online learning industry is profitable - estimates predict that this market will grow by 43% between 2010 and 2015, with revenues expected to reach $24.4 billion. K12 Inc. and Connections Academy, companies that have both served as corporate chairs of ALEC's education task force, used ALEC to move legislation authorizing virtual public schools. In 2011, HB 1030/SB 874, which is almost an exact copy of ALEC's Virtual Public School Act, passed in Tennessee. Shortly after, K12 Inc. won a no-bid contract from Union County School District to create the Tennessee Virtual School Academy.

Private Prisons: In 2011, Ohio passed HB 153, which contains similar provisions as ALEC's Private Correctional Facilities Act. Specifically, HB 153 allows corporations to purchase state correctional facilities, which was one of the defining features of the ALEC model bill. Shortly after this bill passed, Ohio became the first state to actually sell a correctional facility to a private company. The Lake Erie Correctional Institution was sold to Corrections Corporation of America (CCA), a long-time corporate member of ALEC.

It's evident that corporations use ALEC and its vast network of state lawmakers to push for privatization. By increasing the number of government functions that are contracted out, these corporations can grow their profits with taxpayer dollars. And the effects of this ALEC-sponsored legislation are clear - we stand to lose control over public services and assets and, ultimately, we risk a weakened democracy.

The new study underlines how corporations use ALEC to promote private interests and goals that trump the public interest. For a complete list of ALEC model legislation, please visit www.ALECexposed. To download a copy of In The Public Interest's report, "Profiting from Public Dollars," and learn more about ALEC's privatization agenda in the past and what we can expect to see in upcoming legislative sessions, click here.

Open the Competition: Insourcing Is the New Outsourcing

Shar — Wed, 08 Aug 2012 20:35:41 +0000

By Clare Crawford, Center on Policy Initiatives

Four times, the city of San Diego has pitted city workers against private companies in a competition for the continued responsibility to provide an essential city service. All four times, the city workers have proved that they as U-T San Diego put it last week provide taxpayers with the best bang for their buck.

The evidence is in. Given the chance, city staff can figure out how to do their work at a lower cost than private, for-profit companies can.

Its time for the city administration to set aside assumptions that privatization saves money and find out whether more savings are possible by allowing city staff to compete for work that is now contracted out.

A significant share of the citys general fund budget $176 million in the past year goes to pay private contractors and consultants.

In fact, the next service on Mayor Jerry Sanders managed competition auction block street and sidewalk maintenance is already substantially outsourced. The citys fiscal year 2012 budget shows $43.6 million spent on contracts in the transportation and stormwater department, compared to $38.4 million for employee wages and benefits. Much of that contract expense is for major street resurfacing projects.

San Diego taxpayers deserve to have all options evaluated for saving money on at least some of those projects.

And insourcing may also improve the quality of services, which can be substandard under private contractors seeking to maximize profits. Even residents of the mayors own neighborhood of Kensington have suffered, when a contractor two years ago left streets torn up for months and left equipment in the gutters that caused a rash of tire punctures.

While privatization consultants continue their drumbeat of promises, a repeated pattern of service failures and cost escalation has prompted many cities and states to insource services previously privatized. Mildred Warner, a Cornell University expert on privatization, says the reversal began in 1997, when contracting out public services peaked in the United States.

The privatization experience of the late 20th century has taught us that managing markets for public services is both challenging and costly, Warner wrote in 2008. That experiment has failed to deliver adequately on efficiency, equity or voice criteria.

The top two reasons city managers bring privatized work back in-house, according to a survey by the International City/County Management Association, are unsatisfactory service quality (61 percent) and insufficient cost savings (52 percent). For example:

Evansville, Ind., took back control of its water and sewer system from a private operator in 2010, for an estimated savings of $14 million over five years.
Atlanta dissolved its water system contract 16 years early because of mismanagement and poor service under a private company.
A Pennsylvania study this March found the state could save $78 million by insourcing school bus services.
Locally, the San Diego Unified School District has saved $1 million a year since bringing bus services in-house in 2010.
The San Diego Community College District has saved at least $900,000 a year by insourcing its IT management.

San Diego uses a managed competition process similar to that used by the federal government, requiring contractors to save at least 10 percent over the employees proposal to account for the citys costs in transitioning to private service delivery. City workers won the landfill competition without applying that differential.

But outsourcing also frequently carries many more hidden costs for taxpayers such as environmental violations, the loss of local jobs and a lack of transparent and accessible public records.

Besides saving $2.7 million a year, keeping city workers on the job at Miramar Landfill means we all can breathe easier about the continued safe and efficient handling of more than a million tons of waste each year, hazardous materials and closed landfill sites.

As Councilmember Todd Gloria tweeted following the landfill announcement Friday: No one delivers services better than city staff.

Since managed competition is intended to save money, it only makes sense to include city staff in a full competition for important services that are now outsourced.

Crawford is executive director of the Center on Policy Initiatives (CPI), a local nonprofit that advocates for workers.

Fired Lifeguards: The Assault on Public Purpose

Shar — Tue, 10 Jul 2012 17:27:15 +0000

By Donald Cohen

The young lifeguard, Tomas Lopez, who was fired recently for saving a life, is now being honored by the South Florida city of Hallendale Beach as a hero. He's been interviewed on CNN, Fox and Friends and is a YouTube celebrity. This week, he was given the key to the city.

Lopez was the employee of Jeff Ellis Management, LLC, the private company the city contracts with to provide lifeguard services on a stretch of public beach. He ran to rescue a swimmer and was fired because he left the beach zone the company was paid to protect. Six of Lopez's co-workers said they would have done the same and were fired also. It has been a public relations disaster for the company and has put the small city of Hallendale Beach into the national spotlight.

But, in some respects, the firing was a logical, if unwise, conclusion to a flawed idea.

First, it's important to clarify that Lopez wasn't violating a government regulation like some conservative pundits have claimed. According to the company, he was in violation of a company rule that lifeguards should call an ambulance when they see someone drowning on a different part of the beach.

The clarification is important. Public contracts need ultra-clear specifications (deliverables, in contract-speak) so the public knows exactly what it gets for its money and the contractor knows exactly what is expected of them. The lifeguard contract specified the number of hours, the minimum staffing needed to protect the beach and a clear definition of the area of beach the contractor was paid to protect. They certainly can't be expected to protect the entire Florida coastline for $334,000 per year?

Hallendale Beach handed daily control of its beach over to a private company that had its own set of interests to protect. The company fired Lopez because of concerns about liability if the lifeguard had failed to save the swimmer or if another life was lost in the zone they were paid to monitor while he was off saving a life in part of the beach outside of the contractor's area of responsibility. The company's legal exposure certainly is a legitimate issue that could have significant impact on health of the business. Unfortunately, it gets in the way of the public's mission to save lives.

The real issue in Hallendale Beach is that outsourcing of public services creates barriers to protecting and advancing the public interest.

The process of contracting for public services is full of landmines and potential problems. The success of any contract -- whether an outsourced public service, a contract between two private companies or with a contractor hired to paint a family kitchen - depends on several crucial steps in the contracting process. First, the contracting party (in this case the city of Hallendale Beach) must accurately, completely and clearly describe the quality and quantity of services they expect from the contractor. Second, they have to anticipate potential pitfalls, problems and worst case scenarios.

Hallendale Beach failed to anticipate the scenario that got Lopez fired, but the company apparently did anticipate the potential for a lifeguard to see a drowning swimmer outside the boundaries of their contract. It's hard to imagine, though, how they believed that their instructions to call an ambulance to save a drowning swimmer was an appropriate balance between protecting the company from legal exposure while still saving lives. Imagine: find a phone, call 911, wait for ambulance... while the swimmer waits. The rule is perhaps the clearest evidence of how private interests trumps public purpose -- and, in this case, common sense.

It's clear that Hallendale Beach should eliminate the outsourced contract if it wants make public safety its clear priority. But if, for some reason, they don't, they will undoubtedly consider additional contract language in the next contract that addresses the "Tomas Lopez Scenario" -- what to do when a lifeguard sees a life that needs saving but is outside of the contracted beach zone.

But, if outsourcing means a lifeguard will be fired for saving a life, then what else could go wrong?

Arizona’s Corporate-Run Agency Gives Taxpayer Subsidies to Other Corporations but Little Information to the Public

Shar — Mon, 21 May 2012 14:32:53 +0000

Reading this title, you might think it can't possibly be true. But it's worse.

C'mon, you say. Does Arizona really have an agency run by corporations? Last year the state's Department of Commerce was replaced by the public-private Arizona Commerce Authority (ACA), steered by a board of mostly corporate representatives. The ACA's website picture shows the board of directors as Governor Jan Brewer with 18 corporate titans. The bottom of the page mentions a smaller number of "ex-officio" public officials associated with the board who aren't named or pictured.

Though not listed on the website, the ACA also depends on corporate donations for its office space, its corporate-sized CEO salary, and much of its operating budget. The arrangement would pose unsettling conflict-of-interest problems for any authority that performs a public function.

But this isn't just any agency. Its task is to try boosting the state economy by handing out taxpayer-financed subsidies to individual companies of its choosing. A new report by Arizona Public Interest Research Group Education Fund tallies up over $41 million in subsidies so far dispensed by 13 subsidy programs at the ACA. The annual amount could reach over $150 million next year, plus other publicly-financed loans and technical assistance. Arizona residents foot the bill for these goodies through their taxes and through cutbacks to other programs.

Arizona's subsidy programs have multiplied in recent years despite serious budget shortfalls. Two years ago, lawmakers were so desperate that they sold off legislative and administrative buildings for short-term cash and rented them back. More recently, Arizona has closed parks and imposed billions in other cutbacks, including ceasing reimbursements to Medicaid patients for organ transplants.

The downside of diverting such limited state resources to individual businesses' balance sheets makes it all the more important that any subsidy expenditures be clearly justified by broader benefits they can be shown to generate for Arizona. Other businesses that didn't receive subsidies also need to know why they must compete on an uneven playing field against state-subsidized rivals.

Complete transparency and public accountability are crucial, moreover, because the ACA's corporate leaders have their own agendas about how to spend taxpayer subsidies. They have their own narrow interests for which industries, subsidiaries and land parcels should be chosen as winners or losers.

The authority's website proclaims that "The ACA takes seriously its commitment to remain accountable and transparent to the state, its citizens and to those looking at doing business in Arizona." In recent years, the state has greatly improved online transparency and become a leader in making information publicly accessible about other forms of state spending.

How much has the ACA done for public disclosure and other safeguards to protect against favoritism, to demonstrate measurable benefits for each subsidy, and to reclaim funds when subsidy recipients fail to deliver?

Not much. According to this week's report, only two of the 13 incentive programs even track how many jobs or other benefits they generate - and none disclose that information publicly. For all its business-savvy rhetoric, the ACA can't demonstrate performance if it doesn't track results. Only one program publicly discloses what companies promise to deliver for their subsidies. Worse still, only 4 of the 13 programs even disclose which companies received subsidies or how much. And when companies that receive subsidies fail to deliver on promised economic development benefits, the ACA can reclaim taxpayer subsidies for only one program, and there is no way for the public to see if this ever happens.

The report, Shining a Light on the Arizona Commerce Authority is a sobering read, especially given the troubling trend among some other states privatizing their economic development process, as documented by Good Jobs First. No amount of smiling CEOs can take the place of strong transparency and public accountability mechanisms. If a public-private authority can't meet those high standards, it shouldn't be spending public dollars.

Questions remain on infrastructure trust

Tue, 01 May 2012 14:56:54 +0000

By Celeste Meiffren April 27, 2012

A few days ago, the City Council passed an ordinance to establish the Chicago Infrastructure Trust - a nonprofit that will leverage private, for-profit investment for public infrastructure projects. Much of the recent attention has been on the lack of strong public protections to make the trust transparent and accountable to citizens. But there is a more fundamental question: Do we really need it?

No one will dispute that Chicago's infrastructure is aging, that our state and federal governments face tight operating budgets, or that we need to put people to work. But a strong case was never made for why the city can't use the traditional municipal bond market. It is the cheapest way to raise capital and involves minimum fees for special consultants and lawyers.

Instead of creating projects through the infrastructure trust, the city could create wholly public special-purpose entities, like a toll road or transit agency, with independent bonding power to make use of low-cost public capital and charge lower fees than a private company would. Because they would be special-purpose entities, their borrowing would not affect the credit of or count as debt for the city. And the city would face no additional demands for "compensation" - like the parade of lawsuits we've seen from the parking deal - when public policies indirectly affect the revenue streams of private investors.

So why would doing it through the infrastructure trust be better for taxpayers?

This question was never answered, so the public is left wondering. According to the mayor's office, five investment firms, J.P. Morgan Asset Management Infrastructure Group, Ullico, Citibank N.A., Citi Infrastructure Investors, Macquarie Infrastructure and Real Assets Inc., are interested in investing in more than $1.7 billion worth of projects through the trust.

The mayor's office has stuck to the talking point that the only project that has been looked at is "Retrofit Chicago," a $250 million project to make city buildings more energy-efficient. So, where did the $1.7 billion figure come from? Did these companies really say they were interested in investing such specific amounts of additional money without seeing any of the proposals? And what was promised to these companies that makes them so confident they will get a healthy profit off of Chicagoans' user fees?

Given Chicago's history with private companies buying our public assets at a discount with agreements that lack transparency and curtail public decision-making, Mayor Rahm Emanuel and city aldermen should have been willing to build in basic protections and to make sure that the trust would be better than other forms of financing. Instead, we are left with many unanswered questions, no guarantee that taxpayers will receive a fair value and a mayor who simply asks us to trust him.

Celeste Meiffren is field director of Illinois PIRG.

This piece was originally posted here.

ALEC and the Privatization of Education

Shar — Fri, 27 Apr 2012 18:39:17 +0000

The American Legislative Exchange (ALEC) is a business-supported organization whose corporate members, along with the legislator members of its task forces, craft model bills on a variety of issues. They recently announced that they were shutting down their task force on public safety and elections in the wake of controversy over its model legislation on voter ID intended to suppress voter turnout among students, people of color and seniors as well as the so-called "Castle Doctrine" also known as the "shoot first" law.

Their education task force aims to privatize education from beginning to end - vouchers in K through 12 and expanding for-profit colleges -- across the country. That's particularly troubling because they appear to do this behind closed doors, and until recently the model bills were not readily available to the public

In the Public Interest recently received, as a result of a Freedom of Information Act request, a set of documents that included an ALEC Education Task Force list from July 22, 2011. It reveals the depth to which both education corporations, particularly in technology, along with right wing think tanks are involved - as equal partners with state legislators - in the creation of ALEC policy. The list includes corporate members and legislative members of the Task Force.

A Republic Report expose describes how higher education corporations are using ALEC to propose state legislation. The Report noted that Kaplan Higher Education had chosen not to renew their membership as public scrutiny of ALEC's increases since last year's release by the Center for Media and Democracy of 800 model ALEC bills on its ALEC Exposed website. Last week Common Cause filed a whistleblower suit charging ALEC with violating its non-profit status.

Fool Us Twice?

Mon, 23 Apr 2012 14:30:19 +0000

Fool us twice? Think again, Chicago.

By Donald Cohen

Chicago Mayor Rahm Emanuel is proposing a bold new plan to rebuild the city's aging infrastructure. He has lined up financing giants including Citibank NA, Citi Infrastructure Investors, Macquarie Infrastructure and Real Assets Inc. and JPMorgan Asset Management Infrastructure Group willing to invest $1.7 billion in Public Private Partnerships with the city.

Chicago knows how partnerships can sour. Former Mayor Richard Daley's sale of the city's parking meters is now widely recognized as a poorly negotiated partnership that locked the city into a bad deal (for the city, not the investor partners) for 75 years.

Dozens of websites and tons of business literature warn about the perils of partnerships. They all say pay attention to the details now or pay the price later in litigation over ambiguities, poorly drafted language or an unanticipated and unpredictable future; make sure you really trust your new partner shares your interests and vision; and above all don't rush into it until you are absolutely certain.

The Daley administration's parking meter deal is a case study in what not to do. Daley rushed the City Council to vote giving them only a few days to understand the complex deal. The public was shut out entirely.

The Morgan Stanley-led parking consortium negotiated circles around the Daley administration. The city made promises to the consortium that hurt the city - for 75 years. They promised to pay the parking consortium when the city needed its streets for street fairs or traffic management. They have to pay for lost revenue from drivers who use disability license plates and placards to park for free in metered spots. And they promised it wouldn't allow any parking facilities to open nearby.

Now, Chicago is battling a $200 million dispute over demands for compensation to privatized garages because it allowed new parking to be built in other nearby buildings. Chicago is also fighting a $13 million charge by the private parking operator that it has been too lenient in dispensing disabled parking permits (which allow free parking in metered spots).

The City Council is pushing back and the vote has been delayed at least a week but Emanuel claims he won't modify the current proposal and is offering to write several executive orders - that don't have the legal force of a city ordinance - to fix some of the current flaws. That's a warning sign that the deal is another rush job that Chicago will regret. It's better to get it right now with a few simple fixes. Illinois PIRG just released their recommended changes to the plan. Here's some additional thoughts.

First, make sure every deal is analyzed by the Inspectors General long before the ink is dry. Had the IG looked at the parking meter deal before it was finalized, the city would have been in a much stronger negotiating position, and might not have entered into the agreement at all.

Second, don't give up public control of public assets. The city council needs to evaluate - in open public session - and ultimately decide if a specific deal advances, or hurts, the public interest over the long run.

Finally, public actions and decisions should be transparent to the public with rigorous open meetings and freedom of information rules.

The parking meter deal was the "fool me once" moment. The Mayor and City Council should make sure this proposal isn't a "fool me twice" decision.

Privatization threatens open government

Tue, 20 Mar 2012 18:20:23 +0000

By Donald Cohen

On July 4, 1966, President Lyndon Johnson signed the Freedom of Information Act (FOIA) into law, establishing the public's right to access to government information. Surprisingly, Republican Congressman Donald Rumsfeld helped deliver Republican votes to pass the groundbreaking law.

Since then, state governments followed suit and began passing open government laws across the country to ensure the public would have "sunshine" and access to information about the way public services and tax dollars are managed.

But the laws are out of date and need an overhaul. The explosion in the use of government contractors at every level of government -- from local trash services to security contractors in Iraq - has exposed weaknesses in sunshine and open record laws.

In some cases, conservative governors are even trying to weaken existing transparency requirements to make it easier to privatize. Florida Governor Rick Scott's failed proposal to privatize prisons in eighteen counties included a provision to eliminate the requirement for a cost-benefit analysis before moving ahead with the deal. Coincidentally, Florida-based GEO Corporation, one of the largest private prison companies, is a major contributor to GOP campaigns in the state.

Under existing law private contractors in states throughout the country are evading oversight by exploiting loopholes in transparency protections. Most existing state laws don't pierce the corporate veil and now policy makers, journalists and advocates no longer have access to basic financial, performance and workforce information that is essential to government accountability.

For example:

In South Carolina, the Jenkinsville Water Company, a private utility, refused to comply with requests for information after they had failed to pay state employee payroll taxes, lost millions of gallons of water, and could not account for tens of thousands of dollars.

In Oklahoma, a private emergency service contractor, Paramedics Plus, refused to disclose the driving records of ambulance drivers after one who had caused a fatal car accident was found to havebeen convicted of criminal driving charges.

The Immigrations and Customs Enforcement (ICE) was "unable to locate or identify any responsive records" about personnel at an immigration detention facility operated by Cornell Corrections after allegations of misconduct surfaced.

In all these cases, current open records laws would have produced the information if government agencies had been providing the services or operating the facilities.

A few states are leading the way. Connecticut law now require large contracts to be covered by the state's freedom of information act. Minnesota requires contractors to makes public any government data that the contractor"creates, collects, receives, stores, uses, maintains, or disseminates."

Most states have not yet followed their lead. In an era of government by contract, federal, state and local governments should strengthen existing open records laws to expand the reach to government contractors.At a minimum,a complete list of contracts and contractors should be online. Handing over control of public services to private contractors shouldn't mean giving up the public's right to know.

For more information on the effects of government contracting and privatization on our access to public information, check out our new report "Floodlights Instead of Flashlights: Sunshine Laws Out of Step with Government Contracting Leaves Public and Lawmakers in the Dark".

New Report: "Floodlights Instead of Flashlights"

Wed, 14 Mar 2012 14:06:15 +0000

Today, In The Public Interest releases a groundbreaking report exposing the ways in which government contracting and privatization limit our access to public information. Part of a larger national initiative dedicated to promoting the importance of open government and the freedom of information, the report looks at how current open records laws fail to address and govern private contractors, outlining the information that is lost or hidden from public scrutiny. Weak open record laws prevent the public, journalists, advocates, and lawmakers from providing effective oversight and accountability of public resources and services. To address this, Floodlights Instead of Flashlights includes an explicit set of recommendations for lawmakers, media and advocates.

For a copy of the full report, click here.

For a copy of the executive summary, click here.

We Can Improve Our Water Systems Without Tripling Household Bills

Thu, 01 Mar 2012 17:52:12 +0000

By Mary Grant, Food and Water Watch

If you're a regular denizen of a U.S. city, water infrastructure is probably out of sight and out of mind - that is until you have to boil your water before drinking it, or your water bill skyrockets, or a clogged sewer pipe swamps your lawn or a broken water main floods the road stopping traffic.

While it isn't always obvious, our nation's water infrastructure is facing a funding crisis. The American Society of Civil Engineers recently estimated that we're falling $55 billion short each year on funding the improvements necessary to ensure safe and sound water and sewer service. Without greater investment, that gap will reach $84 billion by 2020. The American Water Works Association estimates that renovating our aging utilities will cause water bills to triple in some places.

So, how do we address this shortfall and protect consumers from high bills?

Some water industry players, politicos and liberal policy wonks think the answer lies in a national infrastructure bank that encourages private investment through public-private partnerships - deals that privatize the operation of a system while the public retains ownership and ultimate responsibility.

The Obama administration has called for such a bank, and earlier this month, the Center for American Progress endorsed the concept in a new report. While well intentioned, their plan relies too heavily on private investment to really get the job done right.

Theirs is not a solution; it's a red herring. In the water sector, public-private partnerships rarely involve leveraging private financing from a water company because it tends to be much more expensive than municipal bond funding. For the vast majority of these deals, a private company simply takes over the operation of a system while the local government continues to finance improvements.

Not only do public-private partnerships fail to address the funding issue, but they frequently lead to degraded service and higher costs for the public.

Public-public partnerships, on the other hand, are uniquely suited to help address our water funding needs and mitigate rate increases. Food & Water Watch released a report today about this innovative model.

A public-public partnership is a collaboration between two or more public entities to improve public services on a not-for-profit basis. By bringing together two or more public entities to pool resources, buying power and technical expertise, these partnerships can leverage the capacity of public utilities to improve service and control costs. What's more, recent studies have found that these public-public partnerships outperform public-private partnerships in terms of efficacy, efficiency and equity.

In short, public-public partnerships are a practical way to strengthen and develop public water and sewer services. Along with responsible public operation and a renewed federal commitment to our essential infrastructure systems we can help ensure safe and affordable water service for all.

To view the original post, click here.

The Private Prison Industry: Resistance isn't Futile

Wed, 29 Feb 2012 16:17:03 +0000

By Eric Lotke, SEIU

The private prison industry is on the march. In recent months the industry moved to take over 24 state prisons in southern Florida and buy five prisons in Ohio. Now it's making moves in Michigan.

But the industry doesn't always win. Resistance isn't futile.

The industry wanted to buy five prisons in Ohio but had to settle for one. Community members pushed back and corrections professionals raised doubts about cost savings and program effectiveness. Policy Matters Ohio demonstrated that selling the prison will likely cost more money than it produces. Yes, the state gets $73 million immediately for the sale - but the lease commits the state to pay $4 million annually for 20 years. So depending how cost estimates are done, the sale will end up costing the state anywhere from $8 million to $15 million more than traditional corrections.

Florida shows that the prison industry can't make an honest case for the product it sells. The move to privatize 24 prisons was slipped into the annual budget bill, and opponents were literally eliminated. The Corrections chief, Edwin Buss, was forced to resign after expressing doubt that a proper "business case" for cost savings could be made. Senator Paula Dockery (R-Lakeland), an outspoken critic of privatization, was stripped of her seat on the Criminal Justice Committee, where such legislation is ordinarily heard. Senator Mike Fasano (R-New Port Richey) was stripped of his chairmanship of the Committee on Criminal Justice Appropriations when he questioned the accelerated process, compressed hearing schedule, and absence of opposing experts.

The legislation institutionalizes secrecy. SB 2036 exempts prisons from the "applicable cost benefit analyses, business case analyses, performance contracting procedures, service comparisons, and impacts on performance standards" used in every other procurement. No such analysis would be done until after the contract has been executed.

SB 2036 turns procurement into a joke. First, buy my car. Then, after you buy it, you can check my car's condition, compare it to your own car or see if you need a new car at all.

A truly heroic effort killed the bill. A lawsuit by the Police Benevolent Association enforced the state law requiring that such action be in separate legislation not buried in general appropriations. Organized labor, faith groups and local leaders rose up in opposition. The privatization failed in a 21-19 Senate vote on Valentines Day.

Now Michigan. Michigan is interesting because it holds a bleeding wound. The North Lake Correctional Center in Baldwin was private from the beginning, built by Wackenhut now known as the GEO Group. The prison opened in 1999, closed in 2005, and had nothing but problems in between.

The North Lake prison was more expensive than 33 out of 37 other Michigan prisons. The state was paying $75.81 per person per day for confinement that cost $64.89 per day in sufficiently secure state facilities - even though the contractor was failing to provide counseling programs or contractually required levels of staff. At the same time, North Lake was three times more violent than Michigan's other maximum-security prisons. In the first five months of operation North Lake reported 110 critical incidents, including 46 assaults and 12 attempted suicides.

The state didn't even need the secure space it thought it might - so it did the right thing. It served notice and closed the facility.

GEO sued to keep the prison open or compel the state to continue making lease payments anyway. But GEO lost the lawsuit and the facility sat empty for years. GEO spent $60 million renovating it from 500 juveniles to 1,700 adults and landed some inmates from California for a few months in 2011 - but the contract didn't last and the facility again sits empty. GEO is paying capital costs and a skeleton crew for no reason.

Michigan's new privatization proposal bails GEO out. Even though Michigan has been reducing its prison population (from 51,515 in 2006 to 44,113 in 2010) and may not need all of its present secure capacity, the new proposal adds North Lake to the roster.

Moves are also being made to privatize food service and medical care - but this, too doesn't withstand scrutiny. Michigan has a history of trouble contracting for health care in prisons, and privatizing food service leads to myriad hidden costs. In 2007, the Department of Corrections found that using outside food service staff required adding at least one state corrections officer during operations - even though the time shows up as department costs not vendor costs.

But resistance isn't futile. A coalition of working people is coming together to oppose the plans. The Michigan Corrections Organization (MCO), acting in alliance with four different labor unions, published a scathing report that itemizes the false promises and real pitfalls of private prison contracting. The report also includes twenty questions that any legislator considering such privatization needs to be able to answer in advance (eg. How are cost comparisons made? Will the prison contractor reimburse the host city for the local police cost of tracking down escapees?)

Mel Grieshaber, Executive Director of MCO: "Privatization is tempting because corporations make all kinds of promises, but they don't deliver on the cost savings and they don't run their facilities safely.... Taxpayers should question why the Legislature is rushing to approve a plan that will give more profits to a corporation that already failed here."

Even as the union report crunched the numbers and questioned the costs and benefits, faith leaders came together to express opposition to the practice of incarcerating people as a means of generating corporate profit. Coalition partners walked the hallways of the statehouse, talking with legislators, distributing copies of the report and making sure people know about the 20 questions. The faith community is circulating a petition, in the spirit of the Methodist church, which has divested its pension funds from private prison companies.

It's only beginning. We don't know how it will end. But the facts are on our side ... and resistance isn't futile.

---------------------
This note was originally published at SEIU. To view original post, click here.

The 99% Plan: The privatization trap

Mon, 13 Feb 2012 17:42:01 +0000

By Mike Konczal, Fellow at the Roosevelt Institute

Privatizing the government is one of the most active projects of the early 21st century.

Everything we once expected the government to do - from education to regulatory rule-writing to military operations to healthcare services to prison management - it now does less of, preferring to support markets in which these services are done through independent, profit-maximizing agents. Tools such as contracting out, vouchering and the selling-off of state assets have been used to remake the government during our market-worshipping era.

Privatization is one of the few political projects that enjoys bipartisan support: Conservatives cheer the rollback of the state, and liberals like to claim that the virtues of the free market are being used towards the egalitarian ends of public policy. The fraud and waste that often come with outsourcing these services has been well-documented. The private management in Iraq and the aftermath of Hurricane Katrina, and the lobbying efforts of corporate prisons have all provided horror stories of what happens when cronyism guides decision-making on behalf of the state. But privatization as standard government practice has problems that go far beyond the abuses of any single incident.

Rather than solving problems with government, privatization often amplifies those issues to new extremes. Instead of unleashing market innovation, it often introduces new parasitic partners into the decision-making process. Instead of providing a check on the power of the government, it allows the state to circumvent constitutional and democratic accountability measures by merging with the private sector. And ultimately, the practice replaces the set of choices and constraints found in democracy, with another set found in the marketplace. Today's political conversation is blind to these problems out of a mistaken faith in the efficiency and fundamental equality of markets, contrasted to the ineffectiveness and corruptibility of the state.

What advocates miss is that the logic of markets creates private-sector coalitions capable of extracting just as much from taxpayers as the state. Corporations, lobbyists and other market actors can have just as much political agency as the government, and privatization can mobilize businesses to rewrite market practices.

This political process plays out in the quality of the services provided and the structure of the companies providing them. Privatization has sometimes meant that the most lucrative and easiest parts of these government obligations go into private hands, creating private profit, while the most difficult and dangerous parts remain with the public. This can range from the "privatizing the gains, socializing the losses" of various parts of the financial sector to the "cream-skimming" that goes on in many other industries.

If privatization is meant to put a check on the size and power of the state it often backfires, as the practice can be used to circumvent normal mechanisms that exist to hold the state accountable. A whole array of transparency laws and constitutional checks don't carry over when the government outsources its responsibilities and activities to independent businesses.

Privatization as a way of avoiding constraints and accountability measures has two particularly troubling consequences. First, the government can use independent agents to do things that they themselves cannot do, betraying the whole point of keeping government in check. Especially in the world of surveillance, this practice can act as a way to get around constitutional protections enjoyed by citizens.

Second, accountability measures that have evolved through decades of public law are jettisoned when a service leaves the public sector, allowing companies to do the government's work in a network of secrecy. Ways the public keeps a check on the government, from the Freedom of Information Act to the Administrative Procedure Act to whole regimes of other transparency laws, do not bind outside businesses.

The Constitution prohibits the delegation of significant state powers, but the Supreme Court currently puts few constraints on the government to outsource many of its important duties. What today's discourse ignores is an understanding of the liberal conception of what public and democracy itself is good for - as a way to check private and government power, and promote accountability and responsiveness.

These blur into dark scenarios where private-public relationships give public agents maximum discretion in exchange for giving private agents advantages over their competition. For example, after FedEx's CEO announced that his company would be cooperating with the government following the Sept. 11 terrorist attacks, the firm received a number of rewards. Ranging from special access to security databases, to a prize seat on a regional terrorism task force (the only private company represented) and special state licenses, these benefits amplified the firm's power in the marketplace over noncooperative competitors like UPS, all in exchange for amplifying the power and reach of the state.

Defenders of privatization also argue that the marketplace creates innovation. Competition, the profit motive and the "creative destruction" of the market system can be deployed to increase the efficiency and effectiveness of government services. But what this outsourcing really does is move constraints from one space to another. It transforms the strengths and weaknesses, the limits and the constraints, from government to the market.

Privatization replaces the democratic role of citizens finding solutions to collective problems and transforms it into consumers trucking and bargaining in a marketplace. Finding solutions in a public space emphasizes accountability, voice, transparency, rules and claims through reasoning that goes beyond the self. The market emphasizes cost-benefit thinking, profit-seeking strategies, bargaining and the satiation of individuals' wants; good things in many circumstances, but not necessarily when it comes to the powers of the state.

A regime of privatization shifts the debate away from the functions of government towards the allocation of those functions. For all the talk about innovation by outside contractors, what privatization largely does is preserve the scope of government services while looking for efficiency gains. And since the scope of what the government does is held constant, the real gains come from minimizing costs.

Take prisons, for example. With the addition of privately run prisons, the debate narrowly focuses on how much to spend on prisoners. Minimizing costs here will often be the result of simply providing less of a good at a worse quality, and the debate will focus on the optimal extent of these privatization contracts. Meanwhile, the greater question of when the state should imprison people fades to the background.

What's actually public about these responsibilities disappears from the conversation. Privatization assumes that cost quantifying solutions are more fundamental to government than any discussion of ethics or values. The move away from democratic accountability is particularly worrisome because in many of these fields, the ultimate motivator of private markets, the profit motive, is in direct conflict with the public administration. The basic values, concepts and institutions of liberal democracy - political participation, elections, equal distribution of individual liberties, checks on concentrated power - do not work towards economic competitiveness.

The ideology that the government is just one among many providers of goods and services is a seductive one in this age of markets. But the government isn't simply just another agent in the market, and firms that are empowered to carry out the role of the state can be as abusive as the worst bureaucracy.

We need new arguments for the government, with all its strengths and weaknesses, to be allowed to do its jobs knowing that it won't always be perfect. The alternative is government by cronyism, delegated marketplace winners exploiting what works about markets with none of the normal checks we expect on a functioning democracy. There are no doubt weaknesses in the current functions of government, but for those who resist privatization, that is a call to political reform rather than one of abandoning the public arena altogether.

The 99 Percent Plan is a joint Roosevelt Institute-Salon series that explores how progressives can shape a new vision for the economy. This is the first essay in the series. This article was originally published in the Salon. For original post, see here.

The Privatization of Public Services, State by State

Thu, 02 Feb 2012 19:13:11 +0000

It seems there's no public service or piece of property that private companies are not eyeing as potential revenue streams. While funding anti-government think tanks like the American Legislative Exchange Council (ALEC), companies like Corrections Corporation of America, Waste Management, Maximus, Intuit, Laidlaw, Northrup Grumman, Koch Companies, Macquarie Capital Advisers, Pinnacle West, and UnitedHealthcare are hoping to use government as their candy store.

They want to take over our roads, bridges, parking lots, water systems, college dorms, and prisons. And they want to deliver public services like transit systems, school cafeterias, trash and recycling pick up, mental health services and many others. The following is a quick scan of just some of the proposals.

Water

The Emergency manager of Flint, Mich., is considering selling off its water and sewer systems to the highest bidder. The systems are currently generating revenues for the city.

Long Island's Nassau County Executive Edward Mangano's proposal is proposing to privatize the county's sewage treatment system. Mangano also announced the privatization of Long Island Bus company to Veolia Transportation.

The Texas Lower Colorado River Authority is selling 18 retail water and wastewater systems in the Hill Country and in its southeast service area to [Canada-based] Corix Infrastructure.

Schools

School districts across the country are planning to contract out custodial, clerical, cafeteria and bus services. In Michigan, home to the right-wing, privatization think tank, the Mackinac Center, lots of
school districts are moving forward with plans including Muskegon Heights, West Branch-Rose City, Rochester districts.

The real estate industry, seeing potential profits from the growth in charter schools, wants in. One company, Entertainment Properties, a real estate investment trust, primarily a movie theater landlord, now owns 34 charter-school properties and sees "a huge capacity to grow."

Prisons

The Florida Senate failed to vote on a controversial proposal to private prisons in South Florida. A labor community coalition including AFSCME, Teamsters, the Justice Policy Center, Grassroots Leaders and the Police Benevolent Association mobilized members and press opposition. Perhaps the Gainesville businessmen who were sentenced to federal prison for paying kickbacks to the former secretary of the state department of corrections official after the prison canteens system was privatized had an impact.

Liquor

The liquor industry is pushing hard to take control of state systems that now generate funds for cash-strapped governments. Ohio Gov. John Kasich is privatizing the state's liquor distribution system in a $1.4 billion dollar deal. The Idaho Federation of Reagan Republicans submitted a citizen's initiative to the secretary of state's office that would privatize liquor sales in Idaho and eliminate the state Liquor Division.

Michigan Gov. Snider is proposing to deregulate the state's alcohol distribution system. The Michigan Liquor Control Commission generates an estimated $330 million for the state's general fund. Snider's Liquor Control Rules Advisory Committee is stacked with representatives from sectors that profit from alcohol sales.

It's not all bad news. Record profits at state-owned liquor stores in Virginia "may have sounded the final death knell for Gov. Bob McDonnell's proposal to privatize" them.