Fannie, Freddie shares dive after U.S. appeals court ruling

Source: Nathan Layne and Svea Herbst-Bayliss, Reuters, February 21, 2017

Shares of Fannie Mae and Freddie Mac tumbled more than 30 percent on Tuesday after a U.S. appeals court shut down efforts by hedge funds and other investors to pursue numerous legal claims accusing the U.S. government of seizing their profits following taxpayer bailouts. By a 2-1 vote, the U.S. Circuit Court of Appeals for the District of Columbia said a lower court had correctly barred claims that the government overstepped its authority in 2012 by eliminating dividend payouts to various shareholders and requiring the companies to pay the U.S. Treasury an amount equal to their quarterly net worth. … Both stocks are still up by about two-thirds since Donald Trump won the U.S. presidential election on Nov. 8. Investors said part of that rally stemmed from comments that month by then-Treasury Secretary-nominee Steve Mnuchin that both companies should be privatized. Mnuchin, however, said in January he was against such a plan. … Both companies have since become profitable under the conservatorship of the Federal Housing Finance Agency. According to court papers, they have returned roughly $68 billion more to the government than they drew down during the financial crisis. … Analysts said the ruling was consistent with others on FHFA’s guardianship of Fannie and Freddie, making it less likely the Supreme Court would take the case. …


The Time Is Ripe: MBA Introduces GSE Reform Proposal
Source: Patrick Barnard, MortgageOrb, February 1, 2017

With government-sponsored enterprise (GSE) reform highly likely under the new administration, the Mortgage Bankers Association (MBA) is wasting no time and yesterday introduced its own proposal for what should happen to Fannie Mae and Freddie Mac. Similar to previous proposals that have been floated about during the past several years by various groups (including the association), the MBA’s plan calls for the GSEs to be “congressionally re-chartered” – in other words, re-privatized – and, importantly, calls for an “explicit guarantee” on the mortgage-backed securities they issue. The MBA’s plan, as outlined in a soon-to-be-released paper, calls for the establishment of a “new, durable foundation for the secondary mortgage market,” the MBA says in a release. … Consistent with the MBA’s previous recommendation, the paper calls for an “end-state that would encourage multiple guarantors” that “would be organized as privately owned utilities with a regulated rate of return.” …

Source: Builder Online, December 12, 2016

Steve Mnuchin, President-elect Donald Trump’s choice for Treasury secretary, said recently that “getting Fannie and Freddie out of government ownership” is one of the Trump administration’s top 10 priorities. But according to Moody’s Investor Services, privatizing Fannie Mae and Freddie Mac is unlikely to happen in the near future and doing so would be cost prohibitive, reports HousingWire staffer Ben Lane. If the GSEs were to continue to support the mortgage market as they do today, in order for privatization to work, each would need a strong capital base that likely totals in the “hundreds of billions of dollars,” Moody’s says in its report. …

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Del Paso Heights adult charter school under investigation for allegedly overcharging state

Source: Diana Lambert, Sacramento Bee, February 18, 2017

Highlands Community Charter School is under investigation for allegedly enrolling adult students in primary grades, double-charging the state and claiming a full year of funding for students who attended for a shorter period of time. The Sacramento County Office of Education began investigating the Del Paso Heights school after the California Department of Education raised red flags about Highlands’ reimbursement practices. The adult charter school serves about 1,500 students from a variety of backgrounds, according to Executive Director Murdock Smith. Highlands offers high school completion, English classes, citizenship courses and vocational training. The school opened in 2014 to initially focus on ex-offenders. The county’s investigation became public after Sacramento County schools chief David Gordon distributed a memo to local school districts recommending the audit. … The county office is responsible for providing oversight of school finances and took action after the state Department of Education inquired about potential improprieties. State officials questioned why Highlands only had students enrolled in grades not subject to standardized testing, according to the memo. …

Iowa’s private Medicaid insurers to lose $450 million in first year

Source: Chelsea Keenan, The Gazette, February 22, 2017

The three private insurers managing the state’s nearly $5 billion Medicaid program expect their one-year losses cumulatively to reach $450 million, they told legislators on Wednesday morning during a joint Senate and House Health and Human Services Appropriations Subcommittee meeting. Pressed by lawmakers to give “ballpark” figures as to what the state can expect to see in end-of-year reports, AmeriHealth Caritas Iowa said it anticipates to have lost upward of $200 million; Amerigroup Iowa will have lost $150 million; and UnitedHealthcare of the River Valley said it expects to have lost around $100 million. Financial reports detailing the information will be filed with the Iowa Insurance Division on March 1. … The state of the managed-care organizations’ financial health has dominated headlines in recent months. … Starting in April, the state and insurers will begin negotiating capitation rates that will begin July 1. … But legislators of both parties remained concerned, peppering the MCO officials with questions about rates, losses and provider payments. …


Hospitals’ legal challenge to Medicaid privatization tossed
Source: The Associated Press, January 24, 2017

A district court judge has dismissed a lawsuit challenging privatization of the Iowa Medicaid program filed by a group representing hospitals across the state. The Iowa Hospital Association sued in November 2015 seeking to reverse Gov. Terry Branstad’s plan to privatize the Medicaid program claiming it violated state law because it diverted money hospitals have historically been paid to the three health care corporations the state hired. The state contends the hospitals will continue to be paid. By law about $34 million a year is paid into a trust fund by the hospitals and matched by federal funds. It’s used to reimburse hospitals providing Medicaid services. Judge Robert Hanson says if the hospitals don’t get the money, they can sue for financial damages.

In Iowa, financial pain follows Trump-style Medicaid reforms
Source: David Steen Martin, STAT, January 24, 2017

When President Donald Trump tapped policy consultant Seema Verma to run Medicaid and Medicare in his administration, he called her part of a health care “dream team.” But the health policy changes she helped design in Iowa have felt more like a nightmare to providers serving poor and disabled residents across the state. Verma has helped several states revamp Medicaid, including Kentucky and Indiana. Here in Iowa, she worked on an aggressive effort to privatize the program, which provides health care to about 600,000 adults and children. … Even so, complaints poured in when the new program went live on April 1, 2016, shifting all Medicaid recipients at once to managed care. Nearly a year later, the complaints are still coming: Hospitals, nursing homes, and clinics that provide care to Medicaid patients say they’ve lost hundreds of thousands of dollars in expected reimbursements — and have had to spend untold hours chasing down payments. The three for-profit managed care organizations running the program aren’t happy either, saying they are hemorrhaging money and accusing the state of vastly underfunding Iowa’s $4.2 billion Medicaid program. … If confirmed, Verma is expected to give states even more flexibility to design new Medicaid programs — including more privatization.

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McComb Mayor Won’t Try to Privatize Public Works

Source: Associated Press, February 20, 2017

Pike County’s largest city won’t try to privatize its public works department. McComb Mayor Whitney Rawlings tells the Enterprise-Journal that he felt department heads weren’t ready to take the move. … An Alabama company, ClearWater solutions, pitched the idea to the city in January. The company runs public works departments and government utilities in several southern states. Some McComb officials said they were worried about whether employees would see cuts to retirement and other benefits if they became employees of ClearWater. …

Teachers At A D.C. Charter School Want To Try Something New: Unionizing

Source: Martin Austermuhle, WAMU, February 22, 2017
Advocates for public charter schools often argue they’re a better alternative to traditional public schools because charters aren’t weighed down by a central administration, school boards and a unionized workforce. But teachers at one D.C. charter school are now looking to do something that’s commonplace among their colleagues in D.C. Public Schools: form a union.  Teachers at Paul Public Charter School in the Brightwood neighborhood of Northwest D.C. have submitted a petition to the school’s management asking that they be permitted to create a union, the District of Columbia Alliance of Charter Teachers and Staff. It would be associated with the American Federation of Teachers, which represents teachers and staff at 229 charter schools in 15 states. If they succeed, it would become the first union in D.C.’s charter sector, which educates close to half of the city’s 90,000 students. Paul converted from a traditional public school to a charter school in 1999. … But any move towards unionization could face a number of challenges, both political and philosophical. Though charter schools are publicly funded, they are exempt from the D.C. law requiring the government to enter collective bargaining agreements with public employees. An organizing effort in 2012 by the Washington Teachers’ Union — which represents teachers in DCPS — fizzled due to legal and political obstacles. A decision last year from the National Labor Relations Board means the teachers’ attempt to unionize will come under the federal law that applies to private sector workers. That gives the school’s management two choices: willingly recognize the teachers’ request for a union, or call an election in which staff would have to vote on whether to unionize. …

Private Prison Group Rejects Push for Independent Audits

Source: The Associated Press, February 17, 2017

The largest U.S. private prison operator has rejected a shareholder resolution seeking independent audits of its detention facilities. The Human Rights Defense Center criticized CoreCivic, formerly Corrections Corporation of America, for the rejection. Center associate director, Alex Friedmann, filed the resolution. He owns just enough CoreCivic stock to attend shareholder meetings and file resolutions. Audits would’ve tracked categories in an August 2016 Justice Department inspector general report, including violence rates and use of force, disciplinary and grievance systems, contraband, lockdowns and positive drug tests. The resolution mentions that in the report, CoreCivic exceeded other private prison groups on prisoner-on-prisoner assaults, sexual assaults on staff, fights, suicide attempts and self-mutilation. In response, Nashville-based CoreCivic noted the audits currently conducted. CoreCivic says the resolution overlooks positive statistics and omits contract prisons serve a different population, often non-U.S. citizens.

Proposed bill could merge colleges and universities

Source: Natalie Pate, Statesman Journal, February 18, 2017

… Oregon Senate President Peter Courtney, D-Salem, wants a stronger connection between community colleges and universities to improve student performance. Senate Bill 8 would allow community colleges and public universities to merge into one institution. … Courtney said the bill would provide more options for students at a lower cost. … Should the bill pass, community colleges and public universities interested in merging would submit a proposal to Higher Education Coordinating Commission for approval. If the commission approves the merger, the commission would submit a report on the merger to the Legislature. The institutions submitting a proposal for the merger would have to explain how the combined institution would address things such as financial and legal procedures, the transfer of employees, combining a budget, and what academic programs would be offered. … Similar mergers have happened across the country, such as the merger between Georgia State University, one of the state’s four research institutions, and Georgia Perimeter College, a two-year institution. However, Cannon said, to his knowledge, this would be unprecedented in Oregon. …

A new study suggests that school vouchers could actually hurt organized religion

Source: Matthew Rosza, Salon, February 15, 2017

Although school vouchers may be a boondoggle to churches, a new study from The National Bureau of Economic Research finds that “they offer financial stability for congregations while at the same time diminishing their religious activities.” The National Bureau of Economic Research found that more than 80 percent of private school students in the 2011/2012 school year attended a religiously-affiliated school, with Catholicism being the most common religious affiliation. The authors studied 71 Catholic parishes in Milwaukee from 1999 to 2013. … Whether this is a good or bad thing depends on whether one believes that religious institutions should focus on religion or on making money by supplanting public schools. … “Our numbers suggest that, within our sample alone, the Milwaukee voucher program has led over time to a decline in non-educational church revenue of $60 million. These large effects are driven by the large size of the voucher program itself,” the authors wrote. …


More Graduates, Less Criminals? The Economic Impacts of the Milwaukee Parental Choice Program
Source: Will Flanders and Corey A. DeAngelis, University of Arkansas Department of Education Reform Working Paper, February 3, 2017

Although an abundance of research indicates that private schooling can benefit individual children through higher test scores, the effects on society are less clear. We monetize and forecast the social impacts of the Milwaukee Parental Choice Program (MPCP) in the United States. We use existing literature on the impacts of the MPCP on criminal activity and graduation rates. Between 2016 and 2035, students who use a voucher in the MPCP will generate additional economic benefits of $473 million associated with higher graduation rates, and $26 million associated with fewer felonies and misdemeanors, relative to their traditional public school peers.

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The School Choice Voucher: A ‘Get Out of Jail’ Card?
Source: Corey DeAngelis & Patrick Wolf, University of Arkansas – Department of Education Reform, March 8, 2016

In this report we examine crime rates for young adults who experienced Milwaukee’s citywide voucher program as high school students and a comparable group of their peers who had been public school students. Using unique data collected as part of a longitudinal evaluation of the program, we consider criminal activity by youth initially exposed to voucher schools and those in public schools at the same time. We also consider subsequent criminal activity by the students that stayed in the voucher program through 12th grade compared to those who were in public schools for the same period. We show that the mere exposure to private schooling through a voucher is associated with lower rates of criminal activity but the relationship is not robust to different analytic samples or measures of crime. We find a more consistent statistically significant negative relationship between students that stayed in the voucher program through 12th grade and criminal activity (meaning persistent voucher students commit fewer crimes). These results are apparent when controlling for a robust set of student demographics, test scores, and parental characteristics. We conclude that merely being exposed to private schooling for a short time through a voucher program may not have a significant impact on criminal activity, though persistently attending a private school through a voucher program can decrease subsequent criminal activity, especially for males.

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Senate panel OKs far-ranging privatization of Texas CPS workers’ duties

Source: Robert T. Garrett, Dallas Morning News, February 22, 2017

A Senate panel has endorsed a sweeping child welfare privatization measure that in future years could outsource most of what Child Protective Services does beyond initial investigations of child-maltreatment reports. Under the bill, Texas would embrace a new “community-based care” method for procuring beds and therapies for abused and neglected kids. It differs in at least two key respects from the “foster care redesign” approach that has produced some good initial results after more than two years of effort in Tarrant and six nearby counties:

  • Employees of a private, nonprofit entity would take over the job duties of CPS “conservatorship caseworkers.” Currently, the CPS employees work with foster children and their birth families and report on their progress to judges.
  • The nonprofit picked to run community-based care in a region also would do what CPS “kinship care” workers do — track children who’ve been removed from their homes and placed with relatives or family friends, not in foster care.

Other parts of the bill would require two regional pilots testing whether work done by a third cadre of CPS employees — “family-based safety services” caseworkers — also can successfully be privatized.

Senate GOP leaders have downplayed the scope of the privatization. … Still, if Schwertner’s bill becomes law, it potentially could threaten about 3,200 CPS caseworker jobs, according to a Dallas Morning News analysis. That’s nearly 55 percent of the approximately 5,800 caseworkers for whom agency leaders successfully sought big pay raises late last year. The various privatization pushes would have to extend statewide for so many to lose their jobs — something Senate GOP leaders have said is by no means a sure thing. In a brief description of his newly revised bill Wednesday, Schwertner made no mention of state workers’ job security. As was true in previous versions, though, his measure would require lead contractors for community-based care to give preference in hiring to CPS workers who lost their jobs because of the case management outsourcing. … Schwertner’s bill also would require local plans to be developed for increasing the foster-care system’s capacity. The state has been losing a class-action lawsuit over long-term foster care. … In his State of the State speech last month, Abbott made child protection issues one of four emergency items.


Judges, foster care providers clash over privatizing supervision of abused Texas kids
Source: Robert T. Garrett, Dallas News, February 2, 2017

Texas family court judges clashed with foster care providers Thursday over a top senator’s proposal to further outsource abused children’s care. … At issue is whether Texas should let private contractors — which already provide 90 percent of foster care in the state — take over virtually all supervision of abused and neglected children after Child Protective Services completes its investigation and removes kids from homes. … As part of a larger push to inspire local communities to volunteer as foster parents and change state purchasing practices to achieve better results, bill author Sen. Charles Schwertner wants to outsource “case management.” Under his proposal, as more areas of the state move into a program called foster care redesign, the private providers’ social workers would take over the duties of CPS workers. The private workers — not state employees — would coordinate foster kids’ therapies, visit with birth families, write court reports and appear before judges. … McCown and Byrne said it would lead to huge cost overruns as the state — having dissolved its public workforce — would be at the mercy of private contractors who knew it couldn’t regroup quickly and would take advantage by jacking up prices. … Schwertner inserted into his bill quality assurance reviews and additional financial penalties to be imposed if vendors fail the children. He said he would keep massaging it, though he hopes his panel will vote to send it to the Senate floor in the next two weeks.

State Stumbles Forward with Foster Care Privatization
Source:Beth Cortez-Neavel, Observer, September 9, 2014

Is the state agency charged with guarding Texas’ abused kids trying to privatize services needlessly? The Department of Family and Protective Services continues to push forward on a plan to bring on more private companies—despite evidence that its effort to overhaul the state’s foster care system is faltering. Many advocates think recent turmoil with Providence Services Corporation, the first contractor tapped by the state to oversee a portion of the foster care system, suggests the experiment is already a failure. …. In 2011, the Texas Legislature passed a bill allowing DFPS to shift the administration of its more than 300 privately owned child placement agencies—responsible for recruiting and monitoring foster placements—to lead companies, like Providence. …. In June, the Texas Sunset Commission, which looks into the efficacy of state agencies, released an excoriating report on DFPS. The report noted that foster care redesign is a “risky endeavor” that has no long-term comprehensive plan. …

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Trump’s infrastructure tax credits—Lasting legacy or private sector giveaway?

Source: Elaine Buckberg, Bloomberg Government, February 22, 2017
President Trump appears determined to make good on campaign promises, and in his inaugural address he committed to “transform America’s crumbling infrastructure.”  The need to invest in our nation’s infrastructure is a rare area of bipartisan agreement.  Will President Trump, like Presidents Franklin Delano Roosevelt and Dwight D. Eisenhower, leave a legacy of infrastructure investments that transform our economy?  The infrastructure plan authored by Trump’s nominee for Commerce Secretary, Wilbur Ross, and White House National Trade Council head, Peter Navarro, calls for $137 billion in tax credits for private-equity investments in infrastructure.  The Trump proposal provides no upfront cash, just a tax benefit for private investors—departing from longstanding federal policy of giving states and municipalities money to build infrastructure.  Yet the authors argue that the tax credits would stimulate $1 trillion in infrastructure investment. Beyond those provisions, the plan provides few details. Whether the Trump tax credits will leave a legacy of economically important projects or simply subsidize private investments with little public benefit at taxpayer expense will depend on the answers to some critical questions. … If the Trump Administration funds infrastructure with tax credits, allocating them wisely for the public benefit is the best way to ensure that the Trump era will leave behind a meaningful legacy of infrastructure investments. Failing to do so would instead let taxpayers subsidize $1 trillion in private energy and construction projects with little public benefit.


Tapping Private Sector for Roads and Bridges Poses Hurdles for Trump
Source: Mark Niquette and David Carey, Bloomberg, February 13, 2017

…But even as President Trump vows to steer more private money toward improving U.S. roads, bridges and airports, familiar impediments may hinder investors. … Fund executives say they hope for more U.S. investment opportunities. But problems that dogged former President Barack Obama’s attempt to jumpstart infrastructure spending haven’t vanished: Lengthy planning and permitting processes limit the projects that are ready for investment, fund managers say. Also, many lack a ready stream of revenue, like tolls, to make them work as investments. At the same time, there’s little existing framework for deals with states and municipalities, which own much of the infrastructure and approve projects. Only 38 states, the District of Columbia and Puerto Rico have enacted legislation facilitating public-private partnerships for some infrastructure projects, according to the National Conference of State Legislatures. That means the federal government needs to step in with incentives for governments to work with the private sector and for arrangements such as “asset recycling,” in which a public facility is privatized and the proceeds are used for other projects that lack funding, said Tom Osborne, executive director at IFM Investors in New York. … But asset recycling has detractors. Canada’s largest union for public employees has warned the employees could see wages cut. In the U.S., some cities and states have balked at the prospect of losing public control of infrastructure. …

Senate Panel Told P3s Won’t Work for Rural Areas, Tax-Exempts Are Key
Source: Lynn Hume, Bond Buyer, February 8, 2017

Municipal bonds are a “crucial component” of any infrastructure plan and their tax-exempt status must be preserved, a county official from Oklahoma representing the National Association of Counties told members of a Senate committee on Wednesday. Transportation officials from rural states said during the hearing held by the Senate Environment and Public Works Committee that public-private partnerships won’t work for them. The hearing was on “Modernizing our Nation’s Infrastructure.”… She pointed out that two thirds of the nation’s 3,069 counties are considered rural with a combined population of 60 million and face challenges such as declining populations and a limited ability to raise revenue for capital projects. Among her recommendations were that Congress should make federal highway dollars available for locally owned infrastructure. Local governments own 78% of the nation’s road miles, including 43% of federal-aid highways and 50% of the National Bridge Inventory, she said. … P3s would be unlikely to attract investors even with tax credits, he said. Part of the problem is that roads in rural states tend to have relatively low traffic volumes, he said. …

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