Here’s our weekly analysis of privatization in the news and in communities nationwide. Not a subscriber? Sign up.
This week’s highlights
- Bombshell documents released about Jacksonville’s failed utility privatization show potential buyers saw low-income residents as a captive audience.
- Wall Street is moving in on the construction and long-term maintenance of public school buildings, most recently in Maryland and Connecticut.
- Corizon, the private, for-profit prison healthcare company, is defying a court order to release information about allegations of poor care.
1) National/International/Connecticut: In the Public Interest’s Jeremy Mohler reports on how Wall Street is moving in on the construction and long-term maintenance of public school buildings, most recently in Maryland and Connecticut. “Private equity firms and Wall Street banks say public-private partnerships are cheaper, which is flat-out wrong. State and local governments can borrow money using low-cost municipal bonds. Why should they pay extra to make private investors rich?” Mohler says “the underlying math, or at least the little that’s been publicly released so far, appears shady. But regardless, a public-private partnership isn’t the answer. Not only will it be more expensive, but it could also hand over public control to private contractors.” Activists in Canada successfully challenged similar efforts in Manitoba (see their backgrounder), and are currently fighting to turn them back in Alberta.
Yesterday Diane Lutz (D-14), chair of the Board of Representatives’ Education Committee, weighed in with an op-ed urging caution over using a “public-private partnership” model to fix and maintain Stamford’s schools. “I sympathize with the Stamford Asset Management Group’s (SAMG) mammoth task to fix this problem and I commend their exploration of a different path forward,” Lutz writes. “But PPPs come with far reaching implications and significant risk. Therefore, a PPP should be considered with eyes wide open. Giving up public ownership of public assets is an extreme answer to our situation here in Stamford and should only be considered when all other possible alternatives have been considered simultaneously and with great due diligence.”
Meanwhile, appointed and elected officials in Stamford are putting the brakes on an effort by top city and education administrators to fast track “a plan to turn over five public schools to a private company to rebuild by 2024, move some schools temporarily and others permanently, and relinquish maintenance of the new buildings for 45 years.” The Stamford Advocate reports that the board’s Fiscal Committee is set to take the issue up at 7 p.m. today. “The meetings are not public hearings, so citizens will not be allowed to speak. But they may listen to the concerns of representatives, who last week voted overwhelmingly to hold off on appropriating the money requested by Director of Administration Michael Handler and Superintendent of Schools Tamu Lucero. Rep. Megan Cottrell, vice chair of the Education Committee, Monday summarized some of the questions representatives have about the plan. ‘It’s really light on information,’ Cottrell said. ‘There are many problems I foresee with this plan—a bunch of places where it could potentially fall apart. I’d like to know exactly how the numbers are derived, but we haven’t been given that information.” [Sub required]
2) National: Paraeducators across the country are increasingly joining with classroom teachers to challenge low pay and poor working conditions. “Paraeducators assist individual students with a range of learning issues, including physical disabilities, problems focusing, and difficulties managing emotions. They aid classroom teachers and are often called on to provide support in managing the day-to-day of school life for these students. Their work is essential to students’ success, but they are often paid poverty wages, get no paid vacation, and have no say in the decisions that affect the students they work with.”
3) National: Steven Singer calls our attention to an important Supreme Court case going to oral arguments this week, Espinoza v. Montana Department of Revenue. “Three women are suing the state of Montana for refusing to pay for their kids to attend religious schools through a defunct voucher program. Backing the effort are far right figures and groups like The Cato Institute, The Council for American Private Education, Billy Graham Evangelistic Association, former Wisconsin Governor Scott Walker and the Center for Education Reform – all of which have filed Amici Curiae briefs arguing that prohibiting religious schools from getting public money is somehow a violation of the First Amendment. If successful, the case would open the door to publicly-funded private religious education across the country—not to mention siphoning much-needed money away from the public schools.
4) Arkansas: The state board of education is allowing a struggling charter school to stay open until the end of the school year. “The school will have to report back to the board in March to determine if they’ve made enough improvements to stay open next year. (…) The school is only in its second year. It earned an F grade from the state–showing more than half the students need reading support. And last year the school didn’t provide any special education to students.” The Arkansas Charter Authorizing Panel “recommended in November that Southeast Arkansas Preparatory’s state-issued charter to operate be revoked.”
5) California: Bullis Charter School has abandoned its enrollment preference for wealthy parents “while stunting the charter school’s enrollment of underserved students,” Mountain View Voice reports. “The Los Altos School District’s board of trustees pointed to the hills preference as just one part of a broader strategy by Bullis to allegedly discriminate against low-income students, English language learners and other underrepresented student groups. It claims students with disabilities who require significant resources, including those with autism, orthopedic impairments, intellectual disabilities and emotional disturbances, are discouraged from enrolling at Bullis and routed to the school district.”
6) Colorado: A Commerce City charter school, Victory Preparatory Academy, has finally released figures on how much it paid in damages for violating the first amendment rights of students—$425,000. “Parents and students sued the school over a 2017 incident when students refused to recite the school pledge at a morning assembly. (…) Some students said they were expelled or pressured to withdraw after they posted negative comments on social media sites critical of the school and its CEO, Ron Jajdelski. Two parents of a Victory Prep student said they were banned from campus after reporting on the student protest. (…) The school says 93% of its students are Latino or Hispanic and 86% qualify for free or reduced lunch.”
7) New Jersey: Newark is attempting to claw back needed buildings that were given over to charter schools. “In a bid to reclaim district buildings so he can expand the school system, Newark’s superintendent wants to boot a charter school from its rented space and potentially to take back properties that his predecessor sold. The district plans to eject People’s Prep Charter School from the public school building where it rents space, which would allow a district magnet school in that building to grow, León said last month in a letter to the state. The district is also reviewing its leases with other charter schools that rent district space, a spokesperson confirmed—a move that could have other charters packing in the future.”
8) Oklahoma: Republican state representative Derrel Fincher has introduced two bills, one that would put virtual charter schools on the same allocation schedule as traditional brick-and-mortar public schools; and another that aimed at addressing the issue of students transferring between traditional school districts and virtual charters.
9) Pennsylvania: More staff and legal turmoil has hit Easton Arts Academy charter school. “Bostian’s lawsuit accused school officials of changing grades, revising employee evaluations and not providing services to special education students.”
10) Rhode Island: Teamsters Local 251 has reached a tentative agreement with the company that provides bus services to East Providence and Barrington, averting a strike. Local 251 business agent Nick Williams said “said East Providence bus drivers were being paid significantly less than bus drivers in Warren, South Kingstown, and other school districts that contract Ocean State Transit for their transportation. He feared bus drivers would leave to work in other communities and add to the shortage of workers. ‘It’s going to keep bus drivers coming in to East Providence,’ he said. Williams said the East Providence bus yard holds roughly 90 buses that serve the city and 12 buses that serve Barrington.”
11) Utah: Lawmakers will repeal major changes to the state’s tax code they pushed through just last month. Among the criticisms that had been directed at the measure, for example by James Tobler, president of the Salt Lake Teacher Education Association, was that it could spur school privatization.
12) National: The National Association of Bond Layers is urging Congress to consider expanding tax-exempt bonds in any infrastructure legislation it undertakes this year. “NABL’s No. 1 hope is to increase to $30 million the amount of tax-exempt bonds that individual local governments or nonprofits can sell to banks under favorable terms as bank-qualified. Bank qualified debt, also known as BQ debt and bank eligible, allows banks to deduct the carrying cost of that debt as a business cost.” The current cap, set in 1986, is $10 million. [Sub required]
13) California: In a filing in bankruptcy court, Gov. Gavin Newsom (D) has told PG&E it cannot participate in a $21 billion public bond fund to help utilities deal with wildfire liabilities, leaving a public takeover of the utility giant on the table. “‘It seems clear that rather than amend the debtors plan to incorporate the necessary changes, the debtors instead intend to try to leverage the Chapter 11 process to force the California Public Utilities Commission to approve—and the state of California to accept—a sub-optimal plan,” the filing states. The governor urged the judge not to accept the exit financing commitments saying it would only further ‘embolden the debtor’s strategy.’ The filing says the proposed $1 billion financing would ‘leave the reorganized entity with insufficient financial flexibility to m ake billions of dollars in critically needed safety investments.’” [Sub required]
14) Florida: The Jacksonville utility privatization train wreck continues to make headlines. On Friday Rory Diamond, a Jacksonville City Councilman and former federal prosecutor who is leading an investigation into JEA, told all employees at the city-owned utility to “cease the destruction” of records. Jacksonville City Council President Scott Wilson announced last Monday that Diamond will be the chairman of a special City Council committee being formed to investigate JEA. “Diamond told News4Jax he wants City Council to investigate the city-owned utility—even while a federal investigation is ongoing—because a City Council investigation will all be out in the open. He said the council committee’s goal will be to answer the question of who knew what was going on and when as it relates to the proposed sale of JEA and a controversial bonus plan that has now been canceled.”
Nate Monroe of the Florida Times-Union reports (let’s hear it for good City Hall reporters everywhere) that even potential JEA buyers couldn’t make sense of utility’s talking points. The potential bidders “were struggling to understand starkly different financial projections utility executives had given to regulators, the board of directors and the public, numbers which—depending on the audience—either predicted higher sales by the end of the next decade or a decline.” A council auditor’s report released on Thursday pushed back on claims by JEA executives that the utility was in a death spiral and therefore needed to be privatized. “Billy said JEA presented data in varying time periods, which ‘can give the appearance that the presenter is choosing the time period that makes the best case for what the presenter is trying to show.’”
More from Nate Monroe’s twitter feed:
“Keep in mind: All these JEA documents and corporate records shedding light on the now-canceled sale effort would have remained secret until—at the earliest—after negotiators had struck a deal behind closed doors and it was on its way to City Council approval.”
“Nelson Mullins, one of the law firms that interviewed—but was not selected—to help advise the Jacksonville City Council on JEA released its due diligence review on the privatization process. It’s fascinating and not flattering. More later.”
Monroe says the JEA brass is still at it: “JEA executives are *still* trying to spin—this is an internal newsletter on the City Council Auditor’s recent report noting problems with numbers JEA presented last year justifying privatization.”
Another interesting tidbit from social media on the Jacksonville utility privatization fiasco:
@ndrichardson, a University of South Carolina law professor, writes, “Private utilities bidding to buy muni JEA saw its 40% low-income ratepayer base as a positive. Why? Because they couldn’t afford/didn’t have access to energy efficiency improvements.”
Those interested in the vast paper trail for the deal can find many documents on the website of the city council auditor.
15) Maryland: Writing in Maryland Matters, Rockville resident Arthur Katz debunks MDOT’s claim that Gov. Larry Hogan (R)’s massive toll lanes “public-private partnership” will save driving commuters significant time. “Although the Hogan administration has claimed such time savings over the last couple of years, the Maryland Department of Transportation (MDOT) has never detailed the models and data used to produce these estimates. Without that information, no one can independently verify those assertions. (…) So MDOT’s average yearly savings estimate hides the truth that there would be no meaningful benefits for the vast majority of commuters who do not, or cannot, use what some call luxury toll lanes, every day.
Citizens Against Beltway Expansion say “its not entirely surprising that politicians in both counties (and some in Frederick county) are echoing their constituents’ concerns about the proposal’s impacts on taxpayers, commutes, and communities. Unlike some who want to believe the Governor’s hype, others of us believe the public and its representatives are stakeholders with the same right as any bank or investor to independently analyze the financial and environmental risks first. A limited benefit for non-toll drivers is key and built in the plan. If you had both a certain and significant time savings for non-toll lane drivers every day, the motivation to pay any toll would be reduced, and that could be a financial disaster for the toll lanes builder.”
16) New Jersey: Writing in the Asbury Park Press, Jocelyn Sawyer, the South Jersey organizer for Food & Water Action, says corporate interests are plotting sneaky sewer system takeovers. “The story in Egg Harbor City is typical,” Sawyer writes. “Financially strapped municipalities face big bills to upgrade aging infrastructure, and privatizers offer a raw deal made to sound too good to be true: Let us buy your system and pay for the repairs ourselves. But these corporations are no better at fixing infrastructure than public agencies; the repair work costs more because of the cost of private financing, while the companies raise rates in order to make a profit. That money comes from residents, often for decades to come.”
17) International: Brazil’s Privatization Secretary Salim Mattar told Bloomberg that the privatization of Eletrobras will go ahead this year. But previous attempts to get this off the ground have failed because of opposition in the legislature.
18) International: Montreal councillors are shocked at the sloppiness and defectiveness of SNC-Lavalin’s bid on the extension contract for the city’s rail line extension. “Some Ottawa city councillors are calling for answers in the wake of revelations the city’s technical evaluation team wanted SNC-Lavalin thrown out of the bidding process for the second stage of Ottawa’s north-south rail line. Instead, the company was eventually awarded the $1.6-billion contract for Stage 2 of the Trillium Line. ‘I was absolutely shocked with how poor the proposal was,’ said Coun. Carol Anne Meehan. ‘I was blown away that they really didn’t have a clue what they were actually bidding on and that their bid contained so many gaps in what was essential.’”
Criminal Justice and Immigration
19) National: Both CoreCivic and GEO Group have announced their recommended tax treatments of 2019 dividends paid out to shareholders.
20) California: It was a packed house at the McFarland planning committee meeting last week where the possible establishment of a GEO Group-operated ICE facility was discussed. “The GEO Group asked the commission to consider approving modifications to its community Golden State and Central Valley correctional facilities so that both facilities can be re-purposed to house federal inmates and detainees. (…) Some residents and representatives of immigrant advocacy groups strongly oppose the proposed modifications. “McFarland cannot depend on revenue from detaining and incarcerating people, many of whom are likely to be Kern County community members and employees who help sustain the local economy,” a representative for ACLU said. Expressing growing concerns that turning these correctional facilities into immigration detention centers will only attract a heavier ICE presence to the city of McFarland.”
Alex Gonzalez, a community organizer with Faith in the Valley, a regional group promoting racial justice and health equity, said “these public hearings have to happen to get input from the community, and if you have the community really being in opposition to this, knowing that there’s going to be fear of ICE presence in McFarland, hopefully we can change their minds.”
21) New Mexico: Corizon Health, the private, for-profit prison healthcare company, is defying a court order to release information on “settlements it made with prisoners who sued the company alleging poor care. (…) The Santa Fe New Mexican, the Albuquerque Journal and the New Mexico Foundation for Open Government sued the company over its refusal to release the settlements in 2016, contending the company and the state Corrections Department couldn’t dodge New Mexico’s public records law through contract provisions. State District Judge Raymond Ortiz agreed and ordered the company to release the settlements. Corizon appealed his ruling to the state Court of Appeals, and when the appellate court upheld Ortiz’s ruling in October, Corizon asked the state Supreme Court to review it. The Supreme Court declined, but the company is still refusing to produce the records.” Foundation for Open Government President Susan Boe said “I am disappointed that the New Mexico Department of Corrections has taken no responsibility for its vendor’s lack of compliance with a court-ordered mandate.”
22) Pennsylvania: The Philadelphia Inquirer says the state needs to do a better job providing treatment for addicted people behind bars. “On Christmas Day, five women incarcerated in Delaware County’s George W. Hill Correctional Facility overdosed on heroin, one fatally. According to The Inquirer, the teenage son of one of the women brought the heroin with him to holiday visitation hours. The GEO Group that operates the facility—the only privately operated county jail in Pennsylvania—said in a statement that the jail provides ‘rigorous treatment programs’ to treat addiction.” But the Record says “one of the greatest challenges of the opioid use disorder is to engage people in treatment. For some addicted individuals, the only contact they have with formal systems is through incarceration. Jails and prisons can provide a critical role by initiating effective treatment—it is also the pragmatic thing to do to reduce the demand for smuggled drugs.”
23) National: The Center for Food Safety (CFS), Food & Water Watch (FWW), and two supporting members have filed an action against the U.S. Department of Agriculture for issuing New Swine Inspection System (NSIS) rules that undermine pork-safety inspection in slaughter plants. “The NSIS rules are a draconian reversal to the swine slaughter inspection system that has existed in the United States since 1906. Prior federal law required that meat inspectors critically examine each and every animal for conditions (a s dangerous as septicemia and salmonella) before and after slaughter. The new rules prevent such inspection and hand over these responsibilities to the slaughter companies themselves. They also surrender federal control over removing contamination from carcasses to slaughter companies without any minimum training requirements for slaughter-plant employees.”
24) California: San Diego has become ensnared in a bidding dispute between two private, for-profit companies vying for the contract to operate the city’s ambulance service. Lawsuits may be on the way. “The city apparently has ended the discussions and said it plans to start the bidding process over.”
25) Think Tanks: Writing in JAMA Psychiatry, Neil Krishan Aggarwa looks at the complications that the Mission Act, which opened up access by VA beneficiaries to outside private service providers, can create for suicide prevention and mental health therapy. There have been more than 6,000 suicides annually from 2008 to 2016, a 25.9% jump in suicides from 2005 to 2016. “How could expanding access to non-VA clinicians affect communication and care coordination? In 2003, before today’s more than 2.5 million veterans returned from overseas wars, the nonprofit organization National Committee for Quality Assurance praised the VA for “systemized care.” (…) After the passage of S 2372, National Committee for Quality Assurance warned that treatment variability among VA and non-VA clinicians could lower quality. It recommended 2-way communication exchanges, since nearly half of referring physicians do not know if patients see specialists and specialists receive less than 40% of referral information.” Moreover, “non-VA clinicians cannot yet share their records.” [Sub required]
26) National: As discussion continues over the possible privatization of Fannie Mae and Freddie Mac, the government-sponsored housing finance entities that went into government conservatorship after the financial crash, Asset Securitization Report sets out some of the alternatives, risks, and jockeying between different sized players. “An ongoing concern for our members and all smaller lenders is that g-fee parity policies stay in place, so that we don’t have volume discounts, which could still occur, depending on how GSE reform is done,” said Scott Olson, executive director of the Community Home Lenders Association. “CHLA has been one of the most vocal opponents of chartering new GSEs on the grounds that they could act as securitization conduits, and that could open it up to Wall Street banks blurring the lines between the primary and the secondary markets.” [Sub required]
27) California: University of California administrators have reached a tentative agreement with 8,000 service workers in a long-running dispute centered primarily around job outsourcing. “The contract, which must still be approved by a vote of the American Federation of State and County Municipal Employees Local 3299’s membership, includes wage increases and benefit protections as well as enforceable limits on the school’s ability to outsource service jobs to lower-paid private contractors. Union members throughout California are expected to ratify the agreement by Jan. 30.”
28) International: The Chinese online giant Taobao has warned private sellers using its platform not to profit from the deadly coronavirus outbreak by raising prices.
29) International: In a further privatization of development finance, JP Morgan Chase is starting a development finance group to ostensibly help meet UN goals.
30) International: The privatization industry is still pushing its idea that “charter cities” are the answer for the United Nations as it tries to reach its “Sustainable Development Goals.” Readers of the Weekly Privatization Report will recall a brief snippet from this past June: “As the exodus of migrants and asylum seekers from crisis-ridden Honduras has created an emergency on the U.S.-Mexico border and threatened to disrupt economic relations between the two countries, the libertarians have revived one of their old hobbyhorses, now with a Trumpian twist: the idea of entirely privatized “charter cities” to “make Honduras great.” The treasurer (Dan Grossman) of the small think tank which produced this gem is the former chair of the board of the Koch-funded Atlas Network. The reception has not been warm: “The rightwing, hyper-libertarian policies of the narco/coup-regimes since 2009 are a big reason *why* people are fleeing Honduras today…” Closer to home, of course, the charter cities model has collapsed in failure.” Dan is still there, of course.
Governing for the Common Good
31) National/New York: Lisa W. Foderaro of the New York Times reports on joint efforts by government agencies, non-profit organizations and citizen activists to remove obsolete dams, some dating to the 1700s, and let fish recolonize inland waterways they have not roamed for generations. “With help and financing from the state’s Department of Environmental Conservation, which has committed $5 million in recent years to dam removal, Riverkeeper will oversee the dismantling this summer of the first dam on the Quassaick. Soon after, the city of Newburgh plans to raze a second dam as part of a larger infrastructure project. And Dr. Jackman has commitments from at least one other dam owner to greenlight its removal. ‘There’s something unnatural about a straightened, channelized river,’ said Dr. Jackman, who earned a doctorate in biology after retiring from the police force.”
32) New Jersey: For the first time, a state is taking action to provide workers with more protection in the face of mass layoffs. “Gov. Phil Murphy signed the Worker Adjustment and Retraining Notification, or WARN Act, into law this week, which makes the state the first in the nation to mandate severance pay for mass layoffs. The law also increases the notice time employers must give their workers before mass layoffs. The legislation only applies to businesses with 100 or more full time employees who plan to layoff 50 or more employees at once. Under the new law, which goes into effect in July, businesses will have to give their worker at least 90 days notice before a mass layoff and provide them with severance pay equal to one week for each year of service. If the state concludes that a business didn’t follow the law, the company will be required to add an extra month’s worth of pay to employees’ severance packages.”