Category Archives: Cataloged

Letter: The other cost of privatizing liquor outlets

Source: Joyce Neufeld, Estavan Mercury, August 17, 2016

The Sask. Party government privatization plans for 40 liquor stores include 36 in rural communities. They generated $32.63M in revenue in 2014. This is a profit that will now go to the private sector and which we, the taxpayers, will have to make up.  What the Wall government does not want made clear are the financial and human costs to our rural communities.  We are told that about 150 employees earning about $6M in total wages, are losing their government jobs. How many will be exercising their seniority and move away from small towns already reeling from the loss of grain elevators, banks, post offices, school and hospital closures? … While most of these communities will, no doubt, lose at least some families, the smaller ones will also end up with abandoned store buildings. There are no guarantees the privateers will use the existing government buildings. Abandoned buildings mean lost property taxes for communities already facing shrinking tax bases. …

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Government booze stores cheaper, safer
Source: Michelle Gawronsky, Winnipeg Free Press, August 10, 2015

Studies of privatization in Alberta have shown privatization has led to higher prices as small businesses are being bought out by large corporations that charge more. Further, there has been a decrease in consumer choice (specialty products that don’t sell in high volumes don’t get shelf space), and an increase in social and policing costs — sales first, safety later. David Campanella and Greg Flanagan’s 2012 study: The economic and social consequences of liquor privatization in Western Canada, takes a closer look at these comparators for British Columbia, Alberta and Saskatchewan. In a price survey of common types and brands of liquor in these jurisdictions, they found B.C.’s private stores consistently averaged the highest price out of all, with private stores in Alberta “close behind.” Publicly owned stores in B.C. had the lowest prices for the items measured, followed by the Saskatchewan Liquor and Gaming Authority. A 2014 Global News study found beer in Alberta’s private stores was significantly more expensive than it was in Manitoba. And a 2014 Beer Store report, Convenience Store Alcohol Would Drive Prices Up, Government Revenue Down, found deregulated alcohol sales in Ontario “would drive up prices, harm communities and lead to hundreds of millions of dollars in lost tax revenue.” What did it say about selection? “There would be no benefit to offset the risks of deregulation. Not on price, or selection.” Ontario’s Beer Stores stock up to 330 brands, while the selection in Alberta is less than half that number.

Alcohol Retailing Deregulation: Implications for Ontario
Source: The Beer Store, February 10, 2014

The issue of alcohol sales in corner stores and gas stations is once again in the news in Ontario. Proponents of deregulated alcohol sales claim that deregulation will lower consumer prices, increase product choice, generate higher government revenues while at the same time improving responsible sales practices. While such claims may sound enticing, a review of the deregulation experiences of other North American jurisdictions shows that this combination of outcomes has never been realized anywhere in practice. In fact, increased availability of alcohol in jurisdictions that have deregulated liquor retailing has been accompanied by significant increases in consumer prices, a general reduction in product selection and lower government alcohol tax revenues. The following paper compares the performance of Ontario’s existing beverage alcohol retail system across a variety of factors to liquor retailing systems that have undergone varying degrees of retail deregulation with a particular focus on Alberta and British Columbia given the robustness of available data on those markets. Factors examined include expected impacts on consumer prices, government revenues, product selection, availability of liquor and responsible sales practices.

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Impaired Judgement: The Economic and Social Consequences of Liquor Privatization in Western Canada
Source: David Campanella and David Flanagan, Canadian Centre for Policy Alternatives, 2012

In Alberta and British Columbia, liquor retail privatization has meant higher liquor prices but lower government revenue. Moreover, the increased availability of alcohol brought on by privatization and its lax regulation contravene recognized methods for protecting public health. In light of Premier Brad Wall’s recent decision to move Saskatchewan towards a hybrid private/public model along the lines of British Columbia, these social and economic consequences of liquor privatization must be front and centre in any debate over the future of public liquor delivery in Saskatchewan.

View the Full Report Here.

Lawmakers meet to discuss Medicaid backlog

Source: Gabriella Dunn, Wichita Eagle, August 4, 2016

Lawmakers say they have received a flood of phone calls from residents who are fed up with how long it’s taking the state to process applications for Medicaid, the insurance program for people with low incomes or who are disabled. … Mounting problems with the state’s backlog of Medicaid applications prompted Thursday’s meeting of the KanCare Oversight Committee. State officials told lawmakers Thursday that 3,587 applicants have been waiting 45 days or longer. That’s down from the 10,961 who had been waiting for that amount of time in mid-May. Hawkins said one of his family members submitted the same document three or four times and received notice from the state each time that the application clearinghouse had not received the documentation. … The backlog was caused in part by the state switching its computer system that processes Medicaid applications about a year ago. The problem worsened in January, when the state switched the agency that oversees some of the applications. Then in mid-May the state found out that backlog had been inaccurately reported by its third-party contractor, Accenture, and was four times larger than previously thought. …

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‘It’s a pretty epic screw up’: Kansas contractors’ miscue misses 12,000 on Medicaid waiting list
Source: Tim Carpenter, Topeka Capital-Journal, June 17, 2016

An error by a contractor working for the Kansas Department of Health and Environment dramatically underrepresented — by 12,000 people — the scope of Kansas’ backlog of applications for Medicaid eligibility, officials said Friday. Susan Mosier, secretary of KDHE and the state’s Medicaid director, sent a letter to federal officials in early June disclosing a contractor relied upon a flawed method of reporting the Medicaid processing. The correction pushed the waiting list from 3,500 people on May 8 to 15,400 on May 22. … Shifting of processing oversight from the Kansas Department for Children and Families to KDHE in January escalated the bottleneck for people seeking to enroll in KanCare, the state’s Medicaid program. In February, more than 18,200 applications for Medicaid were awaiting action by the state. Of that total, 7,750 applications had been sitting in the queue for more than the federal limit of 45 days. Documents submitted by KDHE to the Centers for Medicare and Medicaid Services, which required updates on progress addressing the backlog, indicated the state narrowed the application blockade to 15,800 in March and 7,700 in April. The number exceeding the 45-day limit also appeared to have been reduced to 2,000 on May 8. However, the corrected report showed that on May 22 the number of stalled applications jumped to 15,400 and the portion on hand more than 45 days amounted to 10,900. …

Kansas Medicaid Applicants Face Delays After Rollout Of New Computer System
Source: Andy Marso, KCUR, December 14, 2015

The Kansas Legislature’s auditors say that the rollout of the computer system the state now uses to process Medicaid applications was long delayed in part because the contractor’s software required numerous modifications. State officials say the system is improving and ultimately will make applying for Medicaid and social services a much more efficient process. But documents obtained by KHI News Service show that state workers must learn dozens of “workarounds” to process applications. And some service providers who help clients get Medicaid coverage are reporting much longer processing times since the system went live in July and the state deals with a backlog of applications. Kansas signed a contract with Accenture to build the Kansas Eligibility Enforcement System, or KEES, in 2011. The system originally was slated to be complete by the end of 2013, , but considerable delays caused lawmakers to seek an audit in March. The audit report published Thursday said the KEES timeline was unrealistic from the beginning. The system had to be adjusted because of state and federal changes to Medicaid, some due to the Affordable Care Act. But there also were problems with Accenture’s “out-of-the-box” software.

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Arizona’s House Democrats claim governor wants to increase private prison salaries

Source: Anthony Cave, PolitiFact, June 29, 2016

Arizona House Democrats are questioning the priorities of their Republican counterparts, balking at a Department of Corrections plan to buy a $137 million privately run prison in Kingman. The Democrats say the plan, which was developed by the governor’s office, the corrections department and the Department of Administration, is bad for taxpayers. … While the state wants to purchase the prison, they want a private company — GEO Group — to continue to manage it. Does the sale include a raise for the private corrections workers? … If the purchase goes through as expected, the state would officially own the prison, but it would still be managed by the GEO Group. As part of the plan, the state would offer $2 million to increase the salaries of the GEO Group workers. Keely Varvel, chief of staff for the Arizona House Democrats, pointed us to page 18 of the proposed purchase plan, which says that $2 million is intended “to increase starting salaries for correctional officers and improve retention.” But there’s a big caveat: The $2 million in annual expenses would be offset by the $8 million in annual savings the state would incur for buying the prison. …

Our Ruling

Arizona House Democrats said, “Gov. Ducey wants to use public, taxpayer dollars to increase the salaries of private prison guards.” That’s literally accurate. The state contracts with GEO Group to manage the Kingman prison in question, but GEO pays its correctional officers. And if the state purchases Kingman, it would use $2 million for raises for the prison staff. The major caveat is those raises would be more-than-offset by money the state says it will save with the purchase of the Kingman facility. We rate the claim Mostly True.

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State panel approves purchase of private Kingman prison
Source: Mary Katherine Wildeman, Arizona Republic, June 16, 2016

An Arizona Department of Corrections plan for the state to buy a private Kingman prison by refinancing the building debt was approved Thursday despite concerns that the agreement will return roughly $2 million in savings to the operator. The operator, GEO Group, will be required to use the savings to increase pay for correctional officers at the Kingman facility. … It should save the state $8.7 million annually, $1.9 million of which has not yet been allocated for any specific use. The heart of the proposal met little opposition, but two legislators complained of giving state money to a private operator to pay its own correctional officers. GEO Group in late April reported a profit of $32.4 million for the first quarter of 2016, a 12.5 percent increase from the year before. … The $2 million allocated to GEO Group from the refinancing would increase correctional officers’ average pay to $33,300. By comparison, state correctional officers’ average pay is $36,800. The Bureau of Labor Statistics reported a national average salary of $45,320 for correctional officers and jailers as of May 2015.

State may buy Kingman prison
Source: Doug McMurdo, Daily Miner, June 14, 2016

Officials with the Arizona Department of Corrections on Thursday will ask a legislative committee to approve the state’s purchase of Arizona State Prison-Kingman. The Arizona Republic reports the purchase from GEO Group, would be for more than $137 million. The state would save about $8 million a year in interest by refinancing and owning the long-troubled prison. … The reason for the request is to free up about $2 million for GEO to use to boost salaries in the notoriously underpaid private prison industry. According to the Republic, the GEO Group, which operates a number of prisons globally, made more than $32 million in profit the first quarter of 2016, a 12.5 percent increase over the same quarter a year earlier. The total compensation for CEO George Zoley was $6.6 million for 2015 – a 53 percent increase over the previous year. … It’s a fight that could grow bitter. Gov. Doug Ducey has made it clear he will attempt to expand the private prison industry in Arizona, saying they are more cost-effective than state-run prisons. Lawmakers, however have refused to commission studies on the subject despite widespread opposition that claims just the opposite. Currently, according to the Republic, 17 percent of the state’s nearly 43,000 inmates are in private prisons like the one in Golden Valley.

New Kingman prison operator: ‘We will not cut corners’
Source: Doug McMurdo, Havasu News, November 4, 2015

When private prison operator GEO Group officially takes over Arizona State Prison-Kingman on Dec. 1, nearly all of the roughly 500 employees currently on the payroll at the Golden Valley facility will stay on. … There will be a new warden and other managers, but the rank and file will keep their jobs, for the most part. And while wages will remain the same as what former operator Management and Training Corporation paid, they will not go down – and could increase once the company reviews the issue of pay, which is among the lowest in the state for prison employees. … For now, the company is up against the tightest deadline it has ever faced when taking over a prison. Usually, such conversions require two to three months to complete, but there were just 27 days left on Tuesday before GEO Group takes over Dec. 1.
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Valuation of Strategic Options in Public-Private Partnerships

Source: Gabriel J. Power, Mark Burris, Sharada Vadali, Dmitry Vedenov, Real Options, 2013

Abstract:
This paper investigates the feasibility of and develops an economic valuation model for buyout options in Comprehensive Development Agreements (CDAs). A CDA is a form of public-private partnership whereby the right to price and collect revenues from toll roads is leased to a private entity for a finite but lengthy period of time in exchange for providing local and state governments with a quick influx of cash and/or additional infrastructure. Uncertainty associated with such long-term leases is of substantial public concern. In particular, there is a sentiment that the state and/or municipal governments may not be sufficiently compensated for the forfeited development opportunities and a possibility of lost revenue due to higher-than-expected future growth during the lifetime of the lease. An under-studied aspect of the problem is the feasibility and economic value of an option for the government to buy back the leased infrastructure at a future date prior to lease expiration. Such an option would give the public sector additional control over the future use of leased facilities and address potential concerns regarding long-run uncertainty and possible unforeseen windfalls for the private sector. The buyout option valuation model developed in the paper could help transportation policymakers in decisions on leasing public infrastructure. The paper’s contributions include the analysis and feasibility assessment of buyout and revenue-sharing options, an economic consumer demand-based revenue model for purposes of simulation, and the numerical evaluation of the strategic options. The main conclusion is that buyout and revenue-sharing options tend to have a high cost relative to the value of the lease. It is therefore understandable that private sector developers are hesitant to allow such clauses to be included without significant compensation.

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The Private Prison Primer: Inmate 2*3*9*’s shoes and the Kingman riots, Part 2

Source: Beryl Lipton, MuckRock, June 16, 2016

Nearly every U.S. state Department of Corrections has implemented its own grievance procedures – for the most part, these apply in the same way to the prisons, both public and private, being operated under the jurisdiction of that DOC. The hope of the majority of these is to handle inmate problems at the lowest level possible, within the unit or the prison first, before moving the complaint further up the line; sexual assault issues are allowed a more direct process care of the Prison Rape Elimination Act (PREA), and other types of complaints may have their own specific grievance or appeal procedures. But, for the most part, grievances start as close to the unit as possible, and this can present a problematic state of affairs at privately-operated prisons, where successful grievances can suggest inadequacies worthy of criticism and retributions, financial and otherwise. … With summer upon us, it’s important to consider that the riots always seem, in retrospect, to be expected. Just last year it was ASP-Kingman, Willacy County Correctional Institution, Cimarron Correctional Facility. In none of these cases were the displeasures of inmates unknown. So why didn’t the grievance process, meant as an outlet for such tension, treat some of the problems? …

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The Private Prison Primer: Inside the black hole of inmate grievances, Part 1
Source: Beryl Lipton, MuckRock, June 14, 2016

During the years it was operated by the private Management and Training Corporation, the “property” grievance was the most common type filed at Arizona State Prison – Kingman. Over a third of the 3500-person facility’s 1600 grievances fell into this category, followed by healthcare (~450) and staff (~80) complaints; many more “Category 16” complaints would arrive after a “disturbance” last July. Case #M59-110-0**, initially filed three years ago this week, was among the seemingly more benign complaints filed in the time before riots shook the prison and management was changed. … Public and private prisons across America receive thousands and thousands of grievances, formal and informal, each year. And it’s only once all administrative grievance procedures have finally been exhausted that an inmate can take a case to court, a measure implemented in the mid-nineties via the Prison Litigation Reform Act, effectively meant to keep their complaints getting too much play. … Just as it can be frustrating to get a grievance submitted, for journalists and researchers on the outside, access to a meaningful understanding of prison complaints is also a challenge. With so many complaints kept in so many different files, access to copies is quickly cost prohibitive, even if one can narrow the search to a particular subset. By policy, most grievances are handled internally, at the most local, informal level, if possible, with a formal grievance and appeals process available, meaning that in many cases, accountability is conducted and correlated by the accused parties themselves. …

The Private Prison Primer: A tale of two prison towns, Part 2
Source: Beryl Lipton, MuckRock, May 12, 2016

With combined revenues of over $3 billion dollars, it’s easy enough to point to GEO Group and CCA as fueling the private incarceration industry. But between their prisons, jails, immigrant detention centers, youth residential centers, and community corrections facilities, there are now 151 communities complicit across the country, including places like Florence or Sayre, where local cooperation has been necessary to the expansion of private prisons. … Firstly, the creation of new jobs can be particularly attractive to a depressed area. It’s not uncommon to see agreements to fill X percent of jobs with local hires – in Sayre, for example, their unemployment rate dropped to practically negligible. As important as that can be for an area, however, it also reveals a bit of the underbelly of that success: an obvious lack of other jobs and seeming dependency on a single entity. … Taxes and fees that towns and counties receive can form an important part of the municipal budget. Beyond the costs of providing water and sewage, construction fees and other permits generate extra dough. Property taxes, too, can provide a huge, reliable source of revenue, even if the prison is closed. For many towns, there is also the added benefit of a flat fee or per inmate commission for the prison enrollment, one of the clearest ways that a company can ensure that the city’s interests are aligning with their own. …
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Development and Management of State Contracts in Virginia

Source: Commonwealth of Virginia, Joint Legislative Audit and Review Commission, Report no. 482, June 13, 2016

From the summary:
Report on the state contracting process, from procurement through contract administration, with a focus on maximizing value and minimizing risk to the state. …

WHY WE DID THIS STUDY
In 2014 the Joint Legislative Audit and Review Commission (JLARC) directed its staff to review the development and management of state contracts. Interest in this topic was prompted by problems that arose from several recent high-profile contracts. Staff were directed to evaluate whether the state’s policies ensure that contracts provide good value to the state and mitigate the risks to agencies and the public.

ABOUT STATE CONTRACTING
State entities in Virginia spent more than $6 billion through contracts in fiscal year 2015, mostly for goods and services related to transportation, construction, and information technology. Several laws and policies govern how agencies procure and use contracts, but the most prominent is the Virginia Public Procurement Act. The contracting process is decentralized, as most contracts are procured, developed, and managed by individual agencies.

WHAT WE FOUND
Some contracts deviated from original expectations Approximately 10 percent of contracts analyzed for this study—12 contracts valued at $1.8 billion—fell significantly short of meeting agencies’ original expectations. Some less significant deviation from original expectations is to be expected, especially with complex contracts. Almost two-thirds of the contracts were at least slightly behind schedule, over budget, or did not meet agencies’ needs. These contracts were procured under different state statutes and therefore the authority of different oversight agencies. In some cases, the public was negatively impacted. Most performance problems appear to be within the control of agencies or vendors and may therefore be preventable through more robust contracting processes.

Some policies can limit agencies’ ability to make quality purchases at reasonable cost ……
Risk management is not sufficiently emphasized to adequately protect the state ……
Many contracts do not contain provisions to allow for contract enforcement ……
Lack of focus on contract administration policies undermines adequate contract monitoring and enforcement ……
Vendors are generally satisfied with state contracting but have difficulties filing complaints when warranted ……
Centralized oversight of state agency contracting is too limited ……
Comprehensive information on contract performance is lacking ……

WHAT WE RECOMMEND
• Legislative action Develop criteria for identifying high-risk contracts and implement a process to oversee them.
• Direct DGS and VITA to develop a centralized approach to tracking contract performance.
• Direct DGS and VITA to develop a comprehensive training program on effective contract administration.
• Executive action Develop tools and policies that allow agencies to balance cost with the quality of goods and services purchased.
• Develop mandatory training on effective risk management.
• Develop guidelines for assigning staff to administer contracts, particularly those that are high risk or high value.
• Develop guidelines for monitoring vendor performance, reporting performance problems, and using enforcement measures.
• Improve awareness of the vendor complaint process and make it easier to use.
Related:
Procurement study finds risks in state contracting and oversight
Source: Michael Martz, Richmond Times-Dispatch, June 13, 2016

…A new study by the Joint Legislative Audit and Review Commission found that the state’s decentralized procurement system allows agencies to agree to high-risk contracts in many cases without including penalties, incentives, and performance measures to ensure the state gets its money’s worth from the deals, or a termination clause to get out of them. The 152-page report, based on a 15-month investigation that ended in March, also found that few agencies seek legal advice from the Office of the Attorney General, even for contracts that include provisions that are not standard state practice, and when they do, they rarely go beyond the legality of the contract to its protections against risks to the state….

Problems with Virginia contracting system
Source: Associated Press, June 13, 2016

Virginia’s $6 billion-a-year contracting system has serious flaws — including multi-million dollar contracts managed by untrained staff and contracts that are prepared without legal review, according to a new state report issued Monday. The General Assembly’s watchdog agency, the Joint Legislative Audit and Review Commission, said in a report that the state’s procurement system sometimes leads to the state overpaying for services or receiving poor quality goods and services. JLARC said some public funds have been wasted because some state contracts don’t have sufficient built-in legal protections. The report identified one unnamed agency that paid $25,000 for materials and work that were never used and another agency that paid $325,000 for “faulty equipment.” The report said many agencies do a poor job of managing a contract once procured by the state. JLARC found that “many agency staff have no prior contract administration experience or training,” including on some contracts worth $50 million or more…..

Sen. Warren Slams For-profit College Accreditor for ‘Appalling Record of Failure’

Source: Annie Waldman, ProPublica, June 10, 2016

Sen. Elizabeth Warren, D-Mass., released a report today slamming an accreditor of for-profit colleges for its “appalling record of failure.” “Students and taxpayers have paid the price” for the failures of the Accrediting Council for Independent Colleges and Schools, she wrote in an accompanying letter to the U.S. Secretary of Education. Warren urged the Department of Education to take “strong, aggressive action to hold ACICS accountable.” … Because of ACICS’ continued accreditation, the Department of Education doled out billions of dollars in federal loans to Corinthian students, despite ongoing lawsuits and investigations by the Securities and Exchange Commission, the Consumer Financial Protection Bureau and nearly two dozen state attorneys general. The accreditor’s failings have persisted even after the fall of Corinthian. Warren pointed to sixteen other colleges that have kept their accreditation amid ongoing government investigations. …

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How the Government Lets For-Profit Colleges Rip Off Students and Taxpayers
Source: Elizabeth Baylor and Robert Shireman, Time, April 28, 2016

Why did the federal bureaucrat tell the for-profit college it should try to sell more shampoo? The question sounds like the opening line of a joke, but there’s no punchline here. Instead, the answer is part of the story of how predatory for-profit colleges continue to be rewarded with billions of dollars of federal taxpayer money despite repeated evidence that they provide a low-quality education at inflated prices. We discovered the strange shampoo advice while reading government documents for a new report that examines the audits and inquiries that the federal government uses to monitor colleges’ use of federal financial aid dollars. In this particular case, a school in Colorado was perilously close to violating a requirement that prohibits a school from getting 90% of its money from federal aid. When faced with this problem, the Department of Education’s official response was to suggest that the school sell more shampoo and other paraphernalia as part of its cosmetology training program to boost the percentage of revenue not coming from federal aid. …

Who Keeps Billions of Taxpayer Dollars Flowing to For-Profit Colleges? These Guys
Source: Annie Waldman, ProPublica, November 3, 2015

Accreditors are supposed to make sure that schools provide students with a quality education. They are not government agencies, but wield enormous power: Schools need accreditors’ stamps of approval to maintain access to the government’s annual $170 billion in federal student aid. … But accreditors rarely crack down, even when students are struggling. One of the areas where students at for-profits face extra burden is debt: While only one-tenth of college students attend for-profit schools, they account for nearly half of all students’ defaults. What role are accreditors playing? Using recently released federal data, ProPublica analyzed how students are faring under the various accreditors that oversee many for-profit schools. One accreditor stands out: The Accrediting Council for Independent Colleges and Schools, also known as ACICS. It oversees hundreds of mainly for-profit schools where students struggle at remarkably high rates. Just 35 percent of students at a typical ACICS-accredited four-year college graduate, the lowest rate for any accreditor. Nationally, the graduation rate at four-year schools is around 59 percent.

Learning from Experience: A Guide to Social Impact Bond Investing

Source: Gordon Berlin, MRDC, March 2016

From the introduction:
The social sector’s hottest “impact investing” product — the social impact bond (SIB) — has generated a range of reactions, from excitement to angst. Indeed, SIB enthusiasts often promote an ideal, while critics rail at the prospect of private investors profiting from social ills. Yet in the simplest terms, a SIB uses private funds to pay for a social, educational, or health program, and the government repays investors (plus a return) only if the program achieves prespecified results. Not surprisingly, as early adopters gain real-world operating experience, reality is turning out to be more nuanced than either proponents or detractors have promised.

In July, the intervention financed by the first social impact bond in the United States — the Adolescent Behavioral Learning Experience program at Rikers Island jail in New York City — was discontinued after three years when results from an independent evaluation demonstrated that it was not meeting its goal of reducing recidivism among 16- to 18-year-olds (that is, reducing the rate at which they committed new crimes or were reincarcerated). As president of the organization that was the “intermediary” at the center of the Rikers deal, I think it is important that the field not learn the wrong lessons from our experience. Instead, emerging lessons from the Rikers deal and others reveal both SIBs’ value to government entities and also the reality that this value will only be realized if the tensions inherent in structuring the terms of a SIB deal can be addressed squarely. These include:
– The balance of risk and reward. The returns governments are willing to pay may not be proportional to the risks some lenders are able to take.
– The focus on government savings. Many deals still depend on the possibility of government savings. But insisting on government savings can unnecessarily rule out projects that might otherwise offer valuable social returns.
– The tyranny of SIB metrics. For SIB-funded programs to meet the expectations of all parties, it is not enough for them to have the desired effect on participants. To meet a deal’s savings targets they must also serve a prespecified number of people and do so in a fixed span of time. These expectations are codified in relatively inflexible lending agreements. Yet to be successful, social interventions must be able to adapt to unforeseen developments.
– The role of evidence. SIBs reduce risk for government entities by promising that they will have to pay only for successful interventions. To fulfill that promise, a SIB must include independent, rigorous evaluation of a program’s effectiveness over the status quo — a requirement that poses a new form of investor risk. Unfortunately, efforts to mitigate that risk have driven some SIB deals to rely instead on simple outcome measures, which may misleadingly provide only the illusion of benefits and savings to government entities.

In short, at the core of the continuing dispute about the potential role of SIBs in helping to address America’s social needs lies a failure to appreciate the essential ways that SIBs differ from more traditional social lending — namely, that repayment depends on a social program’s actual effects on participants, a feature that fundamentally alters the risk calculus for investors.

WEDC To Address Recouping Money From Businesses Caught Outsourcing

Source: Laurel White, Wisconsin Public Radion, May 3, 2016

Wisconsin’s jobs agency will meet this summer to discuss efforts to recover money from businesses that have accepted state funds, despite outsourcing jobs.  Wisconsin Economic Development Corp. Secretary and CEO Mark Hogan agreed to discuss the policies at the agency’s July board meeting, according to a letter sent to Sen. Julie Lassa and Assembly Minority Leader Peter Barca on Monday.   Lassa and Barca, who both serve on WEDC’s board, requested the topic of discussion in a letter to Hogan earlier this week. … WEDC made headlines last week, after Madison’s WKOW-TV reported that W.W. Grainger, a Janesville company, outsourced jobs to Panama after collecting $50,000 in job creation tax credits. … The agency, a centerpiece of Gov. Scott Walker’s jobs creation agenda has been plagued by allegations of mismanagement and questions over its efficacy. …

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Outsourcing loses Wisconsin money, jobs, state leaders work to recover losses
Source: Emily Hamer, Badger Herald, May 3, 2016

Sen. Julie Lassa, D-Stevens Point, and Rep. Peter Barca, D-Kenosha, sent a letter to Mark Hogan, secretary and chief executive officer designee of the Wisconsin Economic Development Corporation. WEDC is the organization that provides businesses with monetary assistance to help stimulate the economy. The two Democrats, who both serve on the WEDC board of directors, requested a report from WEDC on its efforts to recover money that was given to companies that outsourced jobs. … In the letter, Hogan said W.W. Grainger, one of the companies in question, earned $50,000 in tax credits from the Department of Commerce. W.W. Grainger did not maintain the jobs required in order to keep the credit, so WEDC revoked the $50,000, Hogan said. All of the credits will be paid back, he added. …

Wisconsin Democrats seek answers on WEDC outsourcing clawbacks
Source: Jessie Opioen, The Cap Times, May 2, 2016

The two Democratic lawmakers on the board of the state’s jobs agency are asking the Wisconsin Economic Development Corporation to explain what it’s doing to recover state funds from companies that have outsourced jobs. Sen. Julie Lassa, D-Stevens Point, and Rep. Peter Barca, D-Kenosha, sent a letter to WEDC Secretary and CEO Mark Hogan on Monday requesting a report on the agency’s “clawback” efforts for incentives given to companies that later outsourced positions or violated otherwise violated their agreements. … Their letter comes after a report from WKOW-TV last week that Grainger Industrial Supply had outsourced six jobs to Panama from its Janesville facility after receiving $50,000 in WEDC tax credits. Grainger is the third company reported to have shipped jobs from Wisconsin after receiving state funds from WEDC. The state hasn’t yet recovered any of those funds, although Gov. Scott Walker has called for clawbacks.

“It’s Wrong.” Democrats Propose Bill Against Outsourcing Jobs
Source: Alex Hagan, NBC 26, August 10, 2015

In an effort to keep jobs in Wisconsin, there is new legislation just being introduced to make companies ineligible to receive grants or loans from a state agency for up to five years if they outsource jobs. This bill is in response to reports corporations received state aid through the WEDC  that had laid off Wisconsin workers to outsource jobs. “It doesn’t pay for us to be contributing to companies that take our jobs in Wisconsin and then send them overseas. So the goal here is to say it’s totally wrong,” says Sen. Dave Hansen.
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Immigrants Are Dying In Detention While ICE Ignores Its Own Medical Standards

Source: Raul Grijalva, The Nation, April 25, 2016

In three-quarters of deaths attributed to substandard medical care, the victims were held in for-profit prisons. Their deaths are tragic proof that profit motives have perverse and harmful effects on our judicial system. Corporations have built a business model out of detaining as many people as they can for as long as possible. … As Seth Freed Wessler documented in The Nation earlier this year, medical neglect was also likely a factor in many deaths at the privately run facilities the Bureau of Prisons uses to house immigrants caught crossing the border after deportation. In the saddest of ironies, these impoverished and meager asylum seekers form the basis for lavish and lucrative contracts. Corrections Corporation of America (CCA)—the company that runs the Eloy facility where José de Jesús Deniz-Sahagún perished last year—saw a $49 million increase in their second-quarter earnings in 2015 as compared to the same time period in 2014. Just one of their facilities, in Dilley, Texas, generated $100 million in the first half of 2015 alone. CCA and others like it maximize profits by minimizing concern for the people they ensnare. For considerations of food, clothing, medical and dental needs, education, and amenities, every dollar they spend is a dollar off their bottom line. Is it any wonder, then, that so many fatalities from medical neglect are taking place in for-profit facilities?

Related:

Family Sues Private-Prison Operator Over Deaths at Immigrant-Only Facilities
Source: Seth Freed Wessler, The Nation, March 14, 2016

… Geo Group and CCS said they would not comment on pending litigation. But Big Spring’s own mortality review faulted both the LVN and the PA for failing to alert the clinical director when Garay’s condition did not improve. The review found that the PA “did not respond correctly to the initial report from nursing describing new onset of presumed seizure of a previously healthy 41 year old male.” It also found that neither diagnosis nor treatment was “appropriate and timely.” … Garay is one of at least 137 men who have died while incarcerated in privately run Bureau of Prisons facilities. Medical records obtained through a federal open records lawsuit revealed systemic shortcomings in their medical care. Doctors who reviewed 103 of the medical files agreed that in 25 cases, including Garay’s, substandard medical care likely contributed to prisoners’ premature deaths. The reviewers repeatedly found evidence that the private contractors who operate these facilities—Geo Group, Corrections Corporation of America, and Management and Training Corporation—and medical subcontractors have used low-trained medical workers like LVNs to fill positions that in Bureau of Prison-operated facilities would be staffed by more highly trained registered nurses. The prison contractors are not bound by BOP staffing plans.

Death by privatization in US prisons
Source: Mary Turck, Aljazeera America, February 24, 2016

Reports show a pervasive pattern of inadequate medical care at privately run immigrant prisons in the United States. A Jan. 28 report by Seth Freed Wessler, a senior fellow at the Schuster Institute for Investigative Journalism, analyzed medical records of 103 immigrant prisoners who died in private prisons from 1998 to 2014. It concluded that in at least 25 of those cases, subpar care “likely contributed to the premature deaths of the prisoners.” … But the lack of medical care at these immigrant-only private prisons receives less scrutiny than any public or other private prisons. Families of immigrant inmates often live outside the United States. This limits their ability to fully advocate for imprisoned family members. They have little access to visit or maintain phone contact with prisoners. They don’t have access to U.S. courts for medical malpractice or wrongful death lawsuits. They cannot vote and are not represented in Congress.
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