Monday, October 31, 2011

A Special Type of Incremental Privatization: Public Universities

Nice story from the Chicago Tribune: IU, Purdue expect state aid to continue falling 

Interesting - some major state universities are now getting only 20% of their funding from the state government.  At what point is the school functionally privatized, considering the fact that even private schools often receive minor aid in the form of grants?  When the state contribution is low enough for the school to survive even if the funding dropped to zero, that seems functionally privatized.  Even then, however, the schools are unlikely to want to change their public status, because of the name branding (a mid-level state school has much better name recognition than an obscure private school), and because there's a chance the legislature would rescue the school if it were about to shut down.  On the other hand, students and professors at public schools have a somewhat different roster of legal rights and responsibilities than their counterparts at private institutions.

RELATED UPDATES: interesting privatization going on at UMASS Boston, see story here.

Study about the increasing costs of tuition for students as states pull their funding here

Sunday, October 30, 2011

Report: Privatization in Redding, CA Wasteful & Unnecessary

Check out this article describing the consultants' reports about the wastefulness of contemplated privatization of municipal services.

Favorite quotes from the article:

But contract administration costs and a private firm's need to show a profit likely would offset any savings from less generous benefits, the report said.  The city pays $25,000 annually for pensions for each water and sewer worker on average while private-sector benefits would cost $4,000 . . . Outsourcing city planning and building would cost the city far more than it would save, Zucker Systems said in its report. The firm pegged those added costs at $424,738 to $777,578. Private consultants would charge the city an hourly rate of $110. City planners, building inspectors and other development service employees average $70 an hour, including benefits, the report said.  Private firms told Zucker they could do the same work in 20 percent less time, saving the city money.  But contract administration costs largely would offset those savings, Zucker said. And out-of-town planners would not know the city as well.

Saturday, October 29, 2011

Problems with Privatized Traffic Cameras and the Contract Terms

Article here: Does Privatizing Traffic Cameras Hurt Public Safety?

The study is here: Caution---Red-Light-Cameras-Ahead

Very interesting discussion of the hazards of "fee-for-service" contracts, plus an attempted rebuttal from the private-firm trade association, who naturally like these contracts.

Summary from the article:

A new study found that contracts between the companies responsible for red-light and speed cameras and municipalities can include payment incentives that put profit above traffic safety. Some of the contracts also limit the ability of governments to set and enforce traffic regulations, the U.S. Public Interest Research Group (PIRG) said. The report . . . said that red-light violation mitigation techniques such as lengthening the duration of yellow lights potentially could lead to financial penalties in some jurisdictions...
The findings also revealed that some contracts include language that could also penalize municipalities if they don’t approve enough traffic tickets that come from camera systems. For example, the report notes that in Walnut, Calif., the city has a contract with the vendor Redflex that has a possibility of a financial penalty if the city waives more than 10 percent of violations from the cameras.

Latest Ruling in the Litigation over Privatized Immigrant Detention Centers

Raher v. Federal Bureau of Prisons, Slip Copy, 2011 WL 4832574, No. 03:09–cv–00526–ST (D.Or. Oct. 12, 2011), is a case regarding the contracts for privatized immigrant detention centers.  This ruling was confined to a motion for Rule 11 sanctions against the defendants; the court denied the motions, but previously ruled in favor of the plaintiff on a motion for summary judgment.  Here is the court's introductory overview:

In November 2008, Raher submitted a FOIA request to BOP for five categories of records pertaining to the solicitation, evaluation, and award of contracts by BOP to provide, maintain, and operate private detention facilities for foreign nationals serving criminal sentences imposed by the federal courts. Some of those records were submitted to BOP by Reeves County, Texas.
In July 2009, BOP provided Raher with 17 documents comprising 1,764 pages of contracts awarded by BOP under various solicitations referred to as Criminal Alien Requirement (“CAR”) Phases 1, 2, 5 and 6. BOP redacted information from these documents and provided Raher with an initial Vaughn Index stating various FOIA exemptions for withheld information. In November 2009, after conducting another search, BOP provided Raher with 2,056 additional pages, many of which were redacted, and withheld approximately 6,000 pages. That production was accompanied by a Supplemental Vaughn Index (“First SVI”) stating the basis for withholding 65 documents relating to CAR Phases 5 and 6.
On March 28, 2010, BOP and Raher filed motions for summary judgment. This court denied BOP's motion, deferred Raher's motion, and ordered BOP to submit additional evidence and explanations for withholding responsive documents by November 5, 2010 (docket # 48). On November 3, 2010, this court allowed The GEO Group, Inc. (“GEO”) to intervene (docket # 60).
On November 5, 2010, BOP produced heavily redacted documents and an accompanying Second Supplemental Vaughn Index (“Second SVI”) (docket # 65–1) and Third Supplemental Vaughn Index (“Third SVI”) (docket # 65–2). All parties filed supplemental memoranda and declarations addressing the adequacy of the Second SVI and Third SVI. Among other arguments, BOP and GEO asserted that several documents were exempt under 5 USC § 552(b)(4) (“Exemption 4”) because they contained confidential information, including pricing information.  
On May 24, 2011, the court granted in part Raher's partial motion for summary judgment. Opinion and Order (“May 2011 O & O”) (docket # 130).

Wednesday, October 26, 2011

Sixth Circuit Upholds FAA's Privatization of Air Traffic Control Towers

In National Air Traffic Controllers Ass'n v. Secretary of Dept. of Transp., 654 F.3d 654 (6th Cir. 2011), the Sixth Circuit upheld a district court's dismissal of an action to block the privatization of air traffic control towers.  Plaintiffs were the air traffic controllers themselves; the litigation has been going on for seventeen years, according to the court.  The case was dismissed because the plaintiffs no longer had standing.

Tuesday, October 25, 2011

Billions of Taxpayer Dollars Wasted on Hiring Contractors

From the Project On Government Oversight:

Service contract award dollars have dramatically increased in recent years based on the assumption that shifting work to the private sector saves taxpayer dollars. POGO’s report compares total annual compensation for federal and private sector employees with federal contractor billing rates in order to determine whether the current costs of federal service contracting serves the public interest. Previous analyses have only focused on employee salaries and compensation and not federal contractor billing rates. POGO’s study shows that the federal government approves service contract billing rates that, on average, pay contractors 1.83 times more than the government pays federal employees in total compensation, and more than 2 times the full compensation paid in the private sector for comparable services. Given that one-quarter of all discretionary spending now goes to service contractors, a reassessment of the total federal work force, with a focus on contractor billing rates, could save taxpayers billions of dollars annually.
Download the disturbing comprehensive report here:

Obama OPPOSES Ban on Fed Contracts with Tax-delinquent Contractors

Obama opposes ban on contracts with tax-delinquent contractors


The Delegated Welfare State: Medicare, Markets, and the Governance of Social Policy

I've been reading this new book about privatization of health care - the authors are Kimberly J. Morgan and Andrea Louise Campbell.  It is an excellent academic monograph (Oxford University Press).

This is a terrific contribution to the literature about privatization of government services - thorough and clear historical narrative about various government health care programs and legislation.  The book has an appropriately critical slant but is not argumentative.  The empirical sections (surveys) are fairly compelling.  For those interested in Obamacare, it receives less attention (due to the date of writing) than the Bush-era prescription drug benefit.

The central thesis is that voters want contradictory things from the government - wraparound services but also small government. Legislators turn to privatization as an attempt to meet these contradictory goals, providing a service without hiring more civil servants to run the programs.  The results are mixed at best, the authors conclude, but the impetus is primarily political.  I highly recommend this book.