Here’s our weekly analysis of privatization (of schools, water, and other public goods) in the news and communities nationwide. Not a subscriber? Sign up.
- Much of the testing has already been outsourced to Quest and LabCorp, with results being described as a “nightmare.”
- The former executive director of a California charter school organization has pleaded guilty to embezzling more than $3 million and using it for personal expenses.
- Maryland’s Purple Line light rail public-private partnership has faced troubles from the beginning.
1) National: “The same people saying that Social Security will not survive, are those who are proposing cutting benefits and privatizing the system” said the late longtime civil rights leader Rep. John Lewis (D-GA). “Social Security is a guaranteed benefit earned over a lifetime of hard work that should never be subject to the whims of Wall Street, which cost millions of Americans their retirement savings during the Bush financial meltdown. Social Security is more important than ever.”
2) National: Oregon’s governor and attorney general, and Portland’s mayor, are standing up for the rights of protesters in the face of federal interference. Ken Klippenstein, a reporter at The Nation, says “as unmarked feds snatch protesters off the streets in Portland, [a] memo leaked to me shows they’ll be deployed indefinitely and in undisclosed locations, with drones ‘on standby to assist as needed.’” Read his article on how The Border Patrol Was Responsible for an Arrest in Portland. Crucial information on this important story and Oregon’s history has been provided regularly by a public outlet, Oregon Public Broadcasting.
3) California: Route 50 reports on how El Cajon went virtual in 30 days. “‘New housing was considered essential for us, so a lot of our projects did not stop,’ said Sara Diaz, the city’s IT director. ‘We haven’t stopped building, and we considered that important for our city in terms of keeping our economy up and running, which was given highest priority. Due to those concerns, we were able to get all of our permits online by the end of March.’”
4) Connecticut: The state joined a multistate lawsuit seeking to prevent the federal government from implementing a new policy that would have required international students to take college courses in person or be forced to return to their home countries. The massive opposition from public officials across the country, many with public universities, led Trump to beat a hasty retreat on the issue.
5) Indiana: “I think the role of government is to serve the common good and I am happy to undergo the inconvenience of wearing a mask to protect the life of others,” Andre Stoner tells the Saint Joseph County Board of Health
6) Pennsylvania: Legislation to allow localized minimum wages to be set in Pennsylvania was recently introduced in the state House. “The legislation is meant to repeal minimum wage preemption laws in the state, which prevent local municipalities from setting their own minimum rate. It was introduced by Representative Kevin Boyle, and has been sponsored by more than approximately 40 House members. The Partnership for Working Families, Pennsylvania United, POWER and more are a part of a coalition that is driving efforts to repeal preemption laws.”
7) Virginia: Virginia becomes the first state to issue work safety standards for coronavirus, drafted under the direction of Gov. Ralph Northam (D). “The rules come in the absence of a federal standard. The Occupational Safety and Health Administration (OSHA) has declined to impose a nationwide COVID-19 work safety standard, despite calls to do so from unions, Democrats and worker advocates. ‘Workers should not have to sacrifice their health and safety to earn a living, especially during an ongoing global pandemic,’ Northam said in a press release on Wednesday. ‘In the face of federal inaction, Virginia has stepped up to protect workers from COVID-19, creating the nation’s first enforceable workplace safety requirements.’”
8) California: The former executive director of a Southern California charter school organization has pleaded guilty to “embezzling more than $3 million and using it for personal expenses, including private school tuition for her children and nearly $221,000 for Disney cruises and theme park admissions.” Janis Bucknor “ran the Community Preparatory Academy, a for-profit operation that ran two schools in South Los Angeles and suburban Carson. (…) A 2018 audit found unauthorized payments from some academy accounts to ‘Disney, Louis Vuitton, Girl Scouts, Ticketmaster, Uber, Baby Teeth Children’s Dentistry, Williams Sonoma, National American Miss pageants and Forest Lawn Mortuaries,’ according to the plea agreement.”
9) California: The push to reopen Orange County schools has been tied to charter school backers. “The resultant white paper was drafted by Will Swaim, former founding editor of the OC Weekly and president of the California Policy Center, a conservative think tank that frequently criticizes the power of employee unions and advocates for school choice. Swaim also moderated the June 24 forum. Swaim also co-hosts the ‘Radio Free California’ podcast for the conservative outlet National Review.”
10) California: A civil grand jury has concluded that charter schools need better oversight to ensure consistency. “Their report, which was released June 18, was based on interviews with staff from the Ventura County Office of Education and five districts overseeing charter schools: Oxnard Union, Mesa Union, Moorpark Unified, Ojai Unified and Pleasant Valley school districts.”
11) California: Future plans to move Bullis Charter School have been put on hold as California schools move toward reopening. “The decision on where to put the charter school has been an ongoing challenge for more than a decade, made even more difficult as the school’s enrollment swells beyond 1,000 students. A possible solution is closing Egan Junior High and giving the campus to Bullis, which has been deeply controversial and sparked a major opposition campaign last year.”
12) California: A charter high school is moving into a former bowling alley building in Arcata. “‘I absolutely love the fact that it used to be a bowling alley,’ Little said. Building owner Tom Perrett refurbished the old bowling pin-shaped Arcata Bowl sign that used to hang outside the building. ‘That’s definitely staying,’ Little said. ‘We love that.’”
13) Illinois: Chicago’s largest charter school chain, serving more than 12,000 students, is preparing for online classes this fall. “Noble’s 18 campuses aren’t unionized, but this move comes amid an ongoing push by the Chicago Teachers Union for the school district to open in the fall with remote learning only. The union wants a uniform plan for all schools, including all 125 charter school campuses in Chicago. ‘I think it is very dangerous in the city to have a Wild West approach in which lots of publicly funded schools are doing lots of different things,’ said CTU President Jesse Sharkey.”
14) Ohio: The agency overseeing Ohio’s virtual schools has joined the legal battle to pry free some of Epic Charter Schools’ financial records. “With a 4-0 vote, the Statewide Virtual Charter School Board on Tuesday approved filing an amicus brief to side with the State Auditor and Inspector in its case against Epic’s management company, Epic Youth Services. An amicus brief is a legal document from a third party that provides information relevant to the case. At issue is more than $69 million in state funds that Epic has spent since 2015 through its “learning fund,” which is intended to purchase technology, curriculum, supplemental items and extracurricular activities that students request.”
15) Pennsylvania: More than $500,000 is missing from an elementary charter school. “According to a 14-page fraud audit report given to 69 News by a source, an alleged fraudulent 1099 tax form from 2018 was issued to subcontractor PenTeleData, the schools internet and communications provider for more than $570,000 about 10% of the school’s revenue for 2018. The report states the fraud examiner contacted the company and was told the school paid PenTeleData just under $20,000 in 2018 and not $570,000 as the tax form states and that the form is most likely fraudulent and that it is possible school funds were being embezzled.”
16) Texas: Private religious schools have been exempted from reopening guidelines by the state. “The health & safety of students, teachers & parents is the top priority,” Republican Gov. Greg Abbott tweeted on Friday.
17) Wisconsin: A proposed charter school in Beloit has sparked a debate over education and billionaire philanthropy. “The Lincoln Academy charter school, funded by billionaire Diane Hendricks, is on track to open next year in Beloit. It has residents debating whether diverting money from public schools is a good idea for students. We find out what people in Beloit are saying about the issue, and the value of having a wealthy hometown philanthropist.” A Wisconsin Public Radio report. (Audio, about 9 minutes).
18) National: Madeline Janis, executive director of Jobs to Move America, points us to an “excellent piece on the racist history of federal infrastructure policy and why a new community-centered infrastructure policy can be a game-changer.”
Writing in Governing, Janis’ colleague Christy Veeder says “supporting federal policies like Sen. Kirsten Gillibrand and Rep. Karen Bass’ Buil d Local, Hire Local Act that would give states and communities the full range of tools for this kind of innovation is an ideal next step. Accelerator for America’s New Partnership on Infrastructure also provides policy recommendations for empowering municipalities to spur job creation and small-business growth. And most recently, the House passed the Moving Forward Act, which would reauthorize the local-hiring pilot program launched during the second Obama administration but prematurely canceled by President Trump in 2017. We have begun to understand the compassion, equity and teamwork that we need as we weather the present moment. Let’s not miss the chance to enact infrastructure policies that can continue to deliver these values for our communities as we rebuild our economic strength in the months and years to come.”
19) National: Trump and Biden laid out starkly different plans for the nation’s infrastructure last week, with Biden’s plan emphasizing pro-environmental action and Trump’s focusing on weakening environmental permitting. “Mr. Biden’s plan would spend $2 trillion over four years to put the United States on an ‘irreversible path’ to net-zero emissions of planet-warming gases before 2050, meaning that carbon dioxide and other pollutants would be completely eliminated or offset by removal technology. To do that, he called for clean energy standards that would achieve a carbon-free power sector by 2035; the energy efficiency upgrade of four million buildings in four years; and the construction of 500,000 electric vehicle charging stations. He also vowed to bring the United States back into the Paris Agreement, reinstate climate regulations that Mr. Trump has repealed and put more restrictions on things like emissions from vehicle tailpipes.”
20) National: A television ad against TVA outsourcing has attracted Trump’s ire. “A workers group campaigning against the outsourcing of information technology jobs by the Tennessee Valley Authority in a new television commercial succeeded in drawing the attention of President Trump to their concerns this week. In a tweet, the president called the commercial a ‘strange ad’ and denounced the commercial as ‘Fake T.V. Ads.’ U.S. Tech Workers, a nonprofit formed to fight the growth of H1-B1 visas to foreign workers employed in U.S. data jobs, appealed to Trump to fire TVA’s CEO for laying off U.S. workers and replacing them with contractors hiring foreign workers. In a 30-second ad airing on local cable TV outlets, the group sought to provoke Trump into action by publicizing points Trump has made at other times.”
21) Maryland: Adding toll lanes to I-270 and the Capital Beltway could require a taxpayer subsidy “of $482 million to $1 billion even as state officials have said the highway expansion would come at ‘no net cost’ to taxpayers, according to a study of the proposal released [a week ago] Friday.” The Washington Post reports that “whether the state would have to pay that subsidy depends on how toll revenue stacks up against construction and borrowing costs, as well as the costs of operating and maintaining the lanes.” Considering the plunge in traffic during the pandemic and the uncertain outlook for recovery, any toll revenue projections are iffy at best and run the risk of saddling the public with massive subsidies using scarce funds that are desperately needed elsewhere. Two in-person public hearings and four virtual public hearings on the toll lane idea are scheduled for late August and early September.
“The whole promise we’ve heard was that no taxpayer subsidy would be needed, and that keeps getting walked back,” said Ben Ross, chair of the Maryland Transit Opportunities Coalition. MTOC says “3 out of 4 Lexus Lane P3 proposals share key weakness of Purple Line P3 contract: Prime contractor is supposed to oversee construction subcontractor on behalf of state, but prime & subcontractor are parts of same company #MDpolitics.” The Hogan administration’s choice of a low-price bidder over better-thought-through proposals has been blamed for cost overruns that are paralyzing the Purple Line light rail “public-private partnership.”
22) Maryland: The Washington Post ran an in-depth article yesterday on the long history of troubles that the Purple Line light rail “public-private partnership” has faced from the beginning. “Nearly halfway through construction, Maryland’s $2 billion Purple Line project has teetered on the verge of collapse since May. Unless an agreement on who will pay $755 million in cost overruns is reached with the state by Aug. 22, both the construction contractor and the consortium of companies managing the 16-mile light-rail project have said they will quit. (…) A rail project once touted as a national model of how governments could partner with the private sector to build expensive infrastructure has instead ended up at risk of being abandoned mid-construction and becoming a cautionary tale. Any lessons learned will come as public-private partnerships have gained popularity with cash-strapped governments, and as Maryland pursues new agreements to add up to $10 billion worth of toll lanes to the Capital Beltway and Interstate 270.”
Perhaps one of the biggest casualties of the Purple Line disaster is the ideological nostrum that private companies manage the construction phase better than public structures do because of the supposed virtues of the free market. “The Purple Line’s public-private partnership was supposed to reduce the chances of cost overruns,” The Washington Post says. “It would do so by assigning to the private sector some of the construction risks—such as the potential for flawed designs or escalating labor costs—that it was considered best equipped to handle. ‘Such risk transfer results in a lower overall risk of schedule delays and, as a re sult, a lower risk to [the state] of cost overruns,’ the MTA wrote to the General Assembly in a 2016 report.’” It’s time for an end to such PPP marketing hubris.
23) Missouri: A legislative proposal to privatize St. Louis Lambert International Airport has been put on hold probably until September 18 after a legal opinion cast doubt on its propriety last week, setting off a political scramble. The convoluted story is calmly spelled out by Tony Messenger. “Bush’s letter is significant in a couple of ways. First, it gave momentum to Spencer and the other aldermen who have been opposed to the secretive nature of the airport privatization process, and the clear attempt by the group of lobbyists tied to Sinquefield to make sure that Team Rex gets reimbursed about $44 million for the money it spent on consultants during the first round of the privatization effort, the one that fell apart when Krewson pulled the plug.”
24) Oregon: The Oregon Metro Council has voted unanimously to refer a roughly $5 billion transportation bond measure to the November ballot. “In the almost 30 years that I have lived here, people in this region have been talking about the need to invest in this transportation system,” Metro Council President Lynn Peterson said Thursday. “With this measure, we took that mold which we have been using for the last 70 to 80 years and we just broke it, and in its place we relied on public engagement and a transparent process to create a measure based on the shared values and shared needs of this entire region.”
25) International: Three experts from DLA Piper have weighed in at Infrastructure Investor with some tough talk for service and infrastructure companies hoping to recover from the rubble of the Private Finance Initiative collapse and the Carillion bankruptcy disaster. “Investors can expect that when procurements come, proposals will have to lead with environmental, social and governance credentials – moral capital is as important as cash in the bank. By taking participants to task, government can manage political risks related to events like Carillion’s collapse. Oversight proposals are important, since a badly timed corporate misstep can harm governments where it really matters to them: at the ballot box. Infrastructure providers will need to be politically savvy. Where government provides support, it will expect visible proof of responsible behavior.” [Sub required]
Criminal Justice and Immigration
26) National: Draft legislation to bar employees, consumers and others from the courthouse if they wish to sue businesses, schools, churches, and other institutions over their COVID-19 practices except in cases of “gross negligence and intentional misconduct” has been proposed by Senate Majority Leader Mitch McConnell (R-KY) and John Cornyn (R-TX). “Robert Weissman, president of consumer advocacy group Public Citizen, said in a statementFriday that ‘the Senate’s rabid desire to shield corporations from accountability when they jeopardize the health and wellness of their employees will only result in more people feeling—and being—less safe and less protected from COVID-19.’”
27) National: U.S. Customs and Border Protection (CBP) “has fired four employees and suspended dozens of others as part of an investigation into their participation in Facebook groups full of racist and sexist content. (…) News of the investigation winding down comes as the CBP is under new scrutiny for actions in Portland, Ore., after its officers, many of whom were unidentified and driving unmarked vehicles, carried out a series of arrests in the city Thursday night.”
28) National: The report that led CalPERS, the California public pension system, to divest from the private, for-profit prison industry has been published by the ESG Transparency Initiative. “Systemic human rights abuses pose material risks for investors, and divesting from companies with a history of egregious human rights abuses is an important risk-mitigation strategy to protect market- rate returns,” the report says. “As the largest for-profit prison companies in the U.S., CoreCivic and GEO Group’s business model poses material risks to investors, as it creates a financial incentive for both companies to incarcerate as many people as possible, relying on deliberate understaffing, medical neglect, and forced labor to cut corners for profitability. These practices have contributed to the deaths of numerous detainees and placed both companies at the center of dozens of lawsuits that have led to costly payouts, reduced profitability, damage to their public reputation, and numerous contract cancellations.
“Human rights abuses aren’t just a moral issue; they create legal, reputational, and financial risks that have adversely impacted both companies’ bottom line. CoreCivic and GEO Group’s financial performance continues to decline as a result, and both companies have dramatically underperformed the market in recent years despite soaring demand. Divesting from both CoreCivic and GEO Group due to the risk both companies’ business practices pose to their bottom lines is therefore consistent with CalPERS’ fiduciary duty.”
29) National: Last Monday the House Subcommittee on Border Security, Facilitation, & Operations held a hearing on the Oversight of ICE Detention Facilities: Examining ICE Contractors’ Response to COVID-19. Witnesses included Damon Hininger, President and CEO of CoreCivic; George Zoley, Chairman and CEO of the GEO Group; Scott Marquardt, President and CEO of Management & Training Corporation (MTC); and Rodney Cooper, Executive Director of LaSalle Corrections. Read the opening statements of Chairwoman Kathleen Rice (D-NY) and Chairman Bennie G. Thompson (D-MS). The hearing video is about three hours.
30) National: The GEO Group has added an investment banker with experience in mergers and acquisitions to its board. Can something big be afoot at the corporate level? Duane Helkowski “has over 30 years of experience in advising companies with respect to lending and capital markets transactions. Since July 2019, Mr. Helkowski has been serving as a strategic advisor to several small and mid-size businesses with respect to the debt capital markets and mergers and acquisitions. Mr. Helkowski was an investment banker with BNP Paribas from March 1995 until he retired on July 1, 2019, including serving most recently as the Sector Industry Head for REITS, Gaming/Leisure and Homebuilders from 2002-2019.”
31) National: Democracy Now! had a first hand report on migrant families facing separation as COVID-19 spreads through ICE jails. ““Release is the only way to save the lives of people in custody,” says reporter Jacob Soboroff, who went inside these ICE jails and first witnessed kids in cages in 2018, which he writes about in his new book, ‘Separated: Inside an American Tragedy.’” [Video, about a half hour]
32) National: Gamaliel religious and community leaders are sounding the alarm about an ominous new ICE program that seems to contain the potential for promoting vigilantism. “ICE’s plan for a Citizens Academy in Chicago is spreading alarm among civil liberties and immigrant-rights orgs, who question why the agency is devoting resources to providing civilians with ‘firearms familiarization’ and instruction in ‘targeted arrests.’”
In an email message, Gamaliel says “according to the ICE Chicago Field Office Director Robert Guadian, the citizens academy in Chicago is a pilot for nationwide implementation, which means taxpayer dollars are being used—and yet, according to Congressman Jesús ‘Chuy’ García (IL-04), Congress has not been briefed on the program’s rollout. Now is not the time for ICE to launch this initiative—an initiative which smacks of white supremacy and state-supported vigilantism. ICE has more important issues to address, not the least of which is its role in spreading the coronavirus in the U.S. and globally.”
33) National: The U.S. prison population has dropped 8 percent since the start of the coronavirus pandemic, according to an analysis published by The Marshall Project and The Associated Press. “Many prisons are not accepting new inmates as a way to help cut down on COVID-19 transmissions. Additionally, court closures have resulted in fewer felons receiving sentences. Parole officers are also sending fewer people back to prison for low-level offenses.”
34) Florida: Union officials are warning of a dire situation in South Florida federal prisons as the coronavirus spreads. Kareen Troitino, the FCI Miami corrections officer union president [AFGE], “said there was an ‘enormous spike’ in three of the units at the facility. ‘Inmates complaining of extreme fatigue. Cold like symptoms. Strange headaches, they’ve never experienced a very strong, vomiting, diarrhea, but no one is showing a fever, and the administration decided to do a 21-day lockdown,’ he said.”
35) Oklahoma: The small town of Cushing is preparing for the economic impact of the closure of a prison run by CoreCivic. “Cimarron Correctional Facility, a private prison located about three miles southwest of Cushing will be closing in September and the community is reeling from the announcement. The Oklahoma Department of Corrections issued a statement Thursday saying it would be vacating the prison to compensate for a $24.4 million budget decrease in fiscal year 2021. People in Cushing are worried about a replay of what happened to Watonga when Diamondback Correctional Facility, another CoreCivic property, closed in 2010. The situations are strikingly similar; Both are small towns with the prisons that serve as major employers and whose impacts are felt throughout the local economy. (…) After decades of growth, revenues are dropping for players in the private prison industry as states eye how much they’re spending on corrections and move to adopt sentencing reform.”
36) Clarification: Last week we listed GEO Group as a recipient of Paycheck Protection Program funds. This was a translation company, not the private prison company.
37) National: The privatization of the chaotic U.S. national effort to contain the coronavirus pandemic is proceeding apace. Much of the testing has already been outsourced to Quest and LabCorp (with results being described as a “nightmare”) after an initial effort by the CDC itself collapsed when it delivered contaminated test kits (because a CDC lab wanted to “remain competitive with an outside private firm”). Quest and LabCorp are struggling to keep up.
Now the Trump administration has awarded a contract to a private, for-profit company to run a database collecting hospital data on the spread of the disease, removing the function from the CDC and potentially compromising its transparency. “The new HHS database is run by a private contractor called TeleTracking, which was awarded a $10 million contract in April. [The company has also received $5-10 million in PPP funds from the government—ed.] Sen. Patty Murray (Wash.), the top Democrat on the Senate Health Committee, has raised questions about the firm and the process by which it secured the contract. In June, she asked the CDC for information about the ‘noncompetitive, multimillion-dollar contract’ awarded for a ‘duplicative health data system.’ On Wednesday, Murray said the timing of the new decision is also suspect.” The public is alarmed and is wondering whether accurate information will disappear from public view.
The production and distribution of eventual vaccines has similarly been privatized. As usual, Dean Baker, who has followed the issue of the inefficiency and cost to society of private patents for years, has some pertinent questions about this.
38) National: The Health and Human Services Department’s Inspector General has found that Center for Medicare and Medicaid Services (CMS) head Seema Verma “broke federal contracting rules by using more than $5 million in taxpayer money to pay politically connected contractors and subcontractors.” The Washington Post reports “CMS allowed a subcontractor individual to perform inherently governmental functions, such as making managerial decisions and directing CMS employees,” the inspector general wrote in the 70-page report. “CMS’s administration of these contracts put the Government at increased risk for waste and abuse.” [Read the IG report].
Interestingly, the IG recommends a thorough review to determine “whether any HHS contractors or subcontractors are performing inherently governmental functions and whether any active CMS service contracts or task orders are being administered as personal services contracts, and take action to correct their administration.” (p. 4) Perhaps a de-privatization initiative across all government departments is in order?
9) National: Common Dreams reports that “postal workers and their allies in Congress are vowing to fight back after the new head of the U.S. Postal Service—a major donor to President Donald Trump and the Republican Party—moved this week to impose sweeping changes to the popular government agency as it faces a financial crisis manufactured by lawmakers and exacerbated by the Covid-19 pandemic. (…) With the USPS at risk of completely running out of cash by the end of September without an infusion of emergency funding, postal workers and members of Congress have warned that the Trump administration could attempt to exploit the agency’s financial struggles to advance the longstanding right-wing goal of privatizing USPS.”
40) National: Two former Federal Reserve chairs, Janet Yellen and Ben Bernanke, have weighed in with dire warnings about the need for massive federal support for state and local governments. “Yellen referenced a study from the Center on Budget and Policy that suggests the shortfall for just states was $555 billion through 2022. There will also be shortfalls at the local level, she added. (…) States and local governments are first-line providers of financial health services, health and education, Bernanke said.”