From the Dispatch

Wage Theft by Employers Surging in Wake of Arizona’s Anti-Immigrant Law, Even as Judge Blocks Implementation of Key Provisions

Suman Raghunathan — Thu, 29 Jul 2010 15:44:07 +0000

The Arizona Interfaith Alliance for Worker Justice, a worker center in Phoenix, has seen a “huge spike” in wage theft -- violations of minimum wage laws -- since the passage of SB 1070, Arizona’s anti-immigrant law. "Employers are even more brazen in their mistreatment of workers," said Executive Director Trina Zelle in an interview with In These Times. "Increasingly, 'Go ahead, try and make me pay you' is the response workers hear when they confront their employers over unpaid wages."

Workers' rights organizers report that the law's passage in April has already begun to drive immigrant workers even further underground, effectively silencing them in the face of rampant workplace rights violations. The irony is that this makes undocumented immigrants an even more attractive workforce for unscrupulous employers, who know they can illegally underpay them without fear of those employees reporting them or taking them to court. “If we ever hope to bring immigrant workers out of the shadows in which they’ve been laboring,” says Kim Bobo, Executive Director of Interfaith Worker Justice, “we need to forcefully oppose anti-immigrant legislation and stand up for both comprehensive immigration reform and vigorous enforcement of the nation’s labor laws.”

Progressive States Network's model legislation for wage law enforcement outlines how wage enforcement campaigns can counter anti-immigrant rhetoric by raising wage standards for all workers and uniting native and immigrant communities to oppose unscrupulous employers.

Judge Strikes Down Worst Provisions of SB 1070: Yesterday, a federal judge struck down key provisions of SB 1070 as likely violating federal law or being unconstitutional, reinvigorating hope among immigrant communities that state anti-immigrant laws will fail to gain traction. Key provisions that were blocked include:

Requiring police officers to investigate the immigration status of individuals they stop who they suspect are undocumented;
Mandatory detention of individuals who are arrested if they cannot verify they are authorized to be in the U.S.;
Imposing state criminal penalties on non-citizens who fail to register with the Department of Homeland Security or failing to carry registration documents;
Warrantless arrests of individuals who are deemed by state or local police officers to be "removable" from the U.S.; and,
State statutes that make it a crime for alleged undocumented immigrants to work.

The initial court injunction will be followed by a full hearing to determine whether these provisions, as well as the law's other troubling components, will be permanently struck down. The ruling echoes numerous other legal decisions that struck down broad state anti-immigrant laws - and should serve as a warning to other states that enacting copycat legislation similar to Arizona's will lead to costly legal proceedings and, as discussed above, only serve to empower unscrupulous employers to violate wage laws.

Resources:
Working In These Times - ‘Go Ahead, Try and Make Me Pay You’: Wage Theft and SB 1070
Progressive States Network - Promoting Wage Law Enforcement Policies in 2010
Interfaith Worker Justice - Thou Shalt Not Steal - A Toolkit on Wage Theft
American Civil Liberties Union (ACLU) - Court Blocks Implementation of Key Sections of Arizona's Racial Profiling Law
National Employment Law Project (NELP) - Enforcement of Workplace Standards

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Wal-Mart Deal for Higher Wages in Chicago Highlights Need for Industry-Specific Wage Legislation

Tim Judson — Thu, 01 Jul 2010 15:42:31 +0000

For the first time in the nation, Wal-Mart has agreed to a higher wage standard at a new store to be built in Chicago, Illinois. The retail giant’s commitment was part of an agreement to assure City Council support for zoning approvals, on which the Council voted Wednesday. The deal also concludes a six-year fight over what will be only Wal-Mart’s second store in the Windy City. As we reported previously, Wal-Mart reached a stalemate with labor unions in 2006, after the City Council passed an industry-specific wage standard for big box retailers, which was later vetoed by Mayor Richard M. Daley.

Under the new agreement, Wal-Mart commits to a starting wage of $8.75, $0.50 per hour higher than the minimum wage for new employees. After one year of employment, Wal-Mart will raise workers’ wages by $0.60 to $9.35 per hour. Wal-Mart also agreed to pay prevailing wage, use union contractors to build the store and to provide $20 million to local non-profits over five years. The company claims the deal paves the way for it to move forward with plans to open two-dozen more stores in Chicago by 2015, although the agreement does not cover any other stores.

Legislation Needed to Lock-in Higher Wage Standards: Despite conventional assumptions about the economy, the Wal-Mart case shows that state and local governments still have good opportunities to raise wage and labor standards, particularly on an industry-specific basis. Still, this is a an agreement for only one store, rather than the city-wide policy embodied in the original ordinance approved by the City Council. Wal-Mart was able to negotiate its compromise by fragmenting the opposition with promises of temporary benefits to the building trades and non-profits and avoiding broader legislation. If Chicago enacted its 2006 wage ordinance, the local economy would have benefited from thousands of workers throughout the city’s big-box retail sector being lifted out of poverty and depending less on public services.

While the deal represents a first for Wal-Mart, it falls short of other actions cities and states are taking to set higher industry-specific wage and labor standards. For instance, in 2008 Los Angeles passed a law that sets a living wage standard at all hotels near the LAX airport; and in 2009, New York state passed a law requiring labor peace agreements for all hotels developed or financed by the state through its public benefit corporations. New York is also considering a bill that would set a prevailing wage standard for building service workers employed by public utilities.

A similar fight is looming over Wal-Mart’s plans to build its first store in New York City, where the City Council in December stood strong by rejecting another retail project because the developer would not agree to a living wage standard. According to City Council Speaker Christine Quinn, the question for elected officials is not about creating jobs or not creating jobs, but about what kind of jobs the city should be creating: “We don't want companies that have led the nation in law suits being brought against them by workers,” she said. “We don't want companies that have the largest class-action in history brought against them. We don't want companies where women are, over and over, paid less than men and not promoted.”

Resources
National Employment Law Project - The Road to Responsible Contracting
Good Jobs First - High Road or Low Road? Job Quality in the New Green Economy
Good Jobs First - Making the Connection: Transit-Oriented Jobs and Development
Economic Policy Institute - The Employment Impact of a Comprehensive Living Wage Law, Evidence from California

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Workplace Standards for Domestic Workers: Breakthrough NY Legislation Approved

Tim Judson — Thu, 10 Jun 2010 20:59:00 +0000

On June 1, the New York Senate put the state in position to be first in the nation to enact a Domestic Workers' Rights law (S2311) by a vote of 33-28. The New York Assembly led the way in June 2009 when it passed its own version of the bill (A1470). This groundbreaking legislation will extend core labor rights, from fair labor standards to paid sick days, to creating a framework for collective bargaining, to domestic workers. This will include those employed to work in a private home to perform housekeeping and/or to care for children, the infirm, or the elderly.

The two versions of the law must be reconciled, as the Senate bill goes much farther in extending basic labor standards, but Gov. David Paterson pledged last year that he would sign the bill. A campaign to pass similar domestic workers legislation is also active in California.

Justice Seventy Years Delayed: Seventy years after passage of the Fair Labor Standards Act (FLSA), domestic workers like agricultural workers are still denied many basic labor protections under federal law such as overtime pay and the ability to join a union. That omission was an extension of the country's entrenched history of discrimination, particularly in the pre-Civil Rights Act era: both farm and domestic workforces had long been dominated by African Americans.

In the 21^st Century, domestic workers remain one of the most exploited segments of the workforce, being comprised almost entirely of immigrant women: according to Domestic Workers' United, 99% are foreign born, 95% are people of color, and 93% are women. Until 1974, when the FLSA was amended to extend minimum wage coverage to them, domestic workers were not protected by any major federal labor law.

As California showed by passing the Agricultural Labor Relations Act in 1975, states can play a leading role in providing basic labor standards for workers abandoned by federal labor law. Just as the United Farm Workers elevated the plight of farmworkers to national attention beginning in the 1960s - and which resulted in passage of the California law - groups such as Domestic Workers United and the National Domestic Workers Alliance have just begun in the last decade to bring similar attention to promoting state and federal reforms on behalf of domestic workers.

Precedent-Setting Standards: Because of the challenging employer-employee relationship involved in domestic employment, the Senate law seeks to create a standard contract for all domestic workers specifying benefits that they are owed. The New York Assembly version has more limited but important benefits - guaranteeing a minimum wage law, prohibiting mandatory overtime, overtime pay, guaranteeing one day of rest per week, and directing the state's Labor Department to investigate a framework for providing employer-provided healthcare and collective bargaining - while the Senate version also provides for:

Paid time off, including six paid holidays, five vacation days, and seven paid sick days (with provision for holiday pay and increased overtime rate on holidays)
Two-weeks, written notice of termination, with violations subject to back-pay
Criminal penalties for violations, including misdemeanor penalties of up to $20,000 and one year in prison for first violations, and similar felony penalties for subsequent offenses
Enforcement either through civil action or prosecution by the Labor Department or Attorney General, with willful violations subject to fines equal to 25% of unpaid wages

A National Breakthrough on Paid Sick Days: Should the paid time off provisions of the Senate bill be included in the final version of the law, New York will be the first state in the country to establish paid time off as a basic labor standard, not just for domestic workers, but for any private-sector employees -- advancing basic labor standards that are common throughout the rest of the world but sorely lacking in the United States. The new law is especially significant for the movement to enact paid sick leave legislation, since it would also be the first time an entire industrial sector has acquired the right to take paid sick time off from work. The Domestic Workers' Rights bill has not met with organized opposition thus far, primarily because of the informal nature of domestic employment.

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Public Employees Earn Substantially Less than Private Sector Counterparts

Altaf Rahamatulla — Thu, 29 Apr 2010 16:24:45 +0000

Refuting right-wing attacks on state workers, a new report by the National Institute for Retirement Security (NIRS) and the Council on State and Local Government Excellence (CSGE), Out of Balance? Comparing Public and Private Sector Compensation Over 20 Years, demonstrates that state and local employees earn an average of 11 and 12 percent less, respectively, than comparable private sector workers.

In the past year, 42 states have either slashed public employee wages, required furloughs, imposed hiring freezes, or cut state workforce positions. The Center on Budget and Policy Priorities (CBPP) reports that since August 2008, state and local governments have eliminated approximately 192,000 jobs. These types of actions not only diminish the quality of public service provision, but additionally hurt working families.

With the economic downturn fostering a renewed interest in public employee compensation and privatization schemes, this report serves as a critical resource to push back against some of the misguided claims that target state workers' wages as a primary cause of budget shortfalls. Some of the most significant findings include:

On average, public sector jobs demand higher education levels compared to the private sector. State and local government workers are twice as likely to have a college or advanced degree.
Although pensions make up a larger share of public employees overall compensation, state and local workers' total compensation is 6.8 and 7.4 percent lower than comparable private sector workers.
The public-private wage gap has only widened in the last 20 years. As the graph below illustrates, state public employees of comparable skill levels were almost reaching wage parity with private sector counterparts in the late 1980s, but their relative pay fell sharply during the 1990s.

The report also analyzes states with large populations -- California, Texas, New York, Illinois, Michigan, Pennsylvania, and Florida -- and finds that this general wage dynamic exists across the country. As the authors point out, "[t]his recession calls for equal sacrifice, but long-term patterns indicate that the average compensation of state and local employees is not excessive. Indeed, if the goal is to compensate public and private workforces in a comparable manner, then the data do not call for reductions in average state and local wages and benefits."

Resources:
Center on Budget and Policy Priorities - An Update on State Budget Cuts
National Institute for Retirement Security and the Council on State and Local Government Excellence - Out of Balance? Comparing Public and Private Sector Compensation Over 20 Years

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Washington State Latest to Sign Bill Against Wage Theft

Suman Raghunathan — Thu, 18 Mar 2010 16:47:12 +0000

Washington state Governor Christine Gregoire signed a bill to combat wage theft this week, adding Washington to a growing number of states and counties, including Miami-Dade County, cracking down on employers who underpay workers (many of them undocumented immigrants) and violate minimum wage and overtime rules. Progressive States Network highlighted many of the key provisions, model legislation and resources available for wage theft and enforcement policies back in December.

Many workers' rights advocates cite wage theft as the number one complaint heard from workers in recent months - a trend echoed by researchers In fact recent studies have found wage theft is endemic among low-wage workers: according to a 2009 National Employment Law Project study, an overwhelming 68 percent of low-wage workers surveyed throughout the nation reported wage theft in 2008, regardless of their citizenship status.

Washington's law provides the State's Department of Labor and Industries with new tools to combat wage theft, including imposing penalties on businesses that repeatedly violate wage laws and allows the Department to require wage bonds of businesses that habitually fail to pay wages owed to their workers. Wage theft continues to multiply, preventing many workers from making a fair wage and often preventing state and local governments form collecting thousands of dollars in state and local income and employer taxes. On top of other bills introduced earlier in the session in other states, wage theft bills were introduced in Illinois (SB 3568) and New York state (S 07050) just in the last ten days.

Resources:
National Employment Law Project - Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America's Cities
Interfaith Worker Justice - Thou Shalt Not Steal: A Toolkit on Wage Theft
Progressive States Network - Promoting Wage Law Enforcement Policies in 2010
Talking Points Memo - Sunlight and Enforcement Are the Best Disinfectants (Against Wage Theft)
Kim Bobo, Interfaith Worker Justice -Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid - And What We Can Do About It (The New Press, 2009)

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Corporate Transparency in State Budgets

Altaf Rahamatulla — Mon, 30 Nov 2009 20:38:38 +0000

As part of the Progressive States Network’s 2010 Shared Multi-State Agenda, we are advancing a corporate transparency initiative in coordination with key allies and experts. Demand for transparency in government is rising, but most states still do not collect even the most basic, critical data from recipients of state grants, state contracts or tax breaks.

In this Dispatch, we will examine the need for corporate transparency, recent cases relating to the subject, and how the policy will benefit states dealing with massive deficits.

Our policy staff are also available to answer questions and supply information not on the website. Legislators and advocates can contact us about supporting the Corporate Transparency in the State Budget Process campaign through our website or by emailing corporatetransparency@progressivestates.org.

Table of Contents:

- Summary of Corporate Transparency in State Budgets Policies and Why They Matter

- Messaging on Corporate Transparency

- Building a Campaign

- Legislative Momentum Around Corporate Transparency Initiatives

- PSN Support in Your States

Summary of Corporate Transparency in State Budgets Policies and Why They Matter

The lingering effects of the recession have forced state lawmakers to take extraordinary measures to alleviate fiscal crisis. Two reports released this month, the Pew Center for the States' Beyond California: States in Fiscal Peril and the National Governors Association and the National Association of State Budget Officers' joint publication, Fiscal Survey of States, highlight burgeoning budget gaps, precarious economic circumstances, enormous declines in tax revenue, and generally reveal a poor fiscal outlook for states in the upcoming years. Several states have resorted to making huge cuts to vital services, like education and health care, even as they still dole out millions of taxpayer dollars to corporations.

At the same time, voter outrage over corporate abuses in the financial and other sectors is increasing demand for greater transparency to explicitly reveal how public policy directs money to the economically privileged. Several high profile instances of these problems highlight the need for more transparency, including the closure of a Dell plant in North Carolina just a few years after it received a promise of up to $300 million in grants in 2004, an amount more than twice the cost of building the plant, and Indiana's cancellation of a $1.34 billion contract with IBM after chronic errors in implementing a welfare privatization contract were found and thousands qualifying for help were cut off by the system.

States are beginning to take action. In 2008, the Ohio legislature passed legislation that requires the state attorney general to review economic development awards received by entities. Attorney General Richard Codray's office began the process this past October by informing over 3,000 entities that they must provide his office with information, such as actual jobs created, efforts to attract minority or disadvantaged workers, and wage law compliance. Codray remarked, "Our goal...is to ensure that tax dollars are being used as intended in these awards. Promises were made by businesses and organization to create and save jobs in Ohio and those promises must be kept."

Why Corporate Transparency Matters: At the basic level, people deserve to know how businesses that benefit from public contracts, subsidies, or tax expenditures are spending tax dollars. Lawmakers must make sure that these businesses are creating jobs, saving the state money, and best serving the public interest. To foster a more targeted budget process, increase efficiency, and allow for future savings, states must adopt more stringent corporate disclosure and transparency legislation.

Problems due to lack of transparency in subsidy distribution, contract allocation, and hidden tax breaks are well-documented. Almost every week there is a story relating to states distributing subsidies with little to nothing to show for it, failing to save money from utilizing contractor services rather than state employees, and providing huge tax breaks to large corporations that often do not reflect the greater public interest. As well, states have been losing millions of dollars from declining corporate tax revenue. As a percentage of total state tax revenue, the corporate income tax has dropped significantly. The Center on Budget and Policy Priorities (CBPP) finds that in 1979, the corporate income tax accounted for 10.2 percent of total state tax revenue. In 2005, the figure dropped to 6.5 percent.

Dealing with the aftermath of the steepest economic contraction since the Great Depression, declining tax revenues and massive budget gaps, states cannot afford to hand out enormous subsidies or award lavish contracts with nothing to show in return. States must enact transparency to garner a more comprehensive understanding of spending and trends in corporate income taxation.

To that end, PSN has worked with allies to produce the following model corporate transparency bill based on best practices from around the country.

Bill Summary: Corporate Transparency in the State Budget	Model Legislation: Corporate Transparency in the State Budget

Key provisions include:

Applicant and Recipient Corporation Disclosure: The legislation would establish public transparency on subsidy awards that exceed $25,000. For each applicant and subsidy, a description of the subsidy, number of anticipated jobs creates, wages and health benefits, expected tax revenue the granting agency will accrue, description of the project site, projected cost and value of the subsidy, and key events in the allocation of the subsidy would be reported publicly. Similarly, agencies would make information on contracts more than $25,000 publicly available, including the contact information of the contractor, subcontractor and corporate parent, anticipated savings to the agency, total cost of the contract, wage, hours, compensation and health benefit information, description of the contract service, number of people required to fulfill the service required by the contract, schedule of key events, and other relevant information.
Reports on Subsidies and Contracts: An agency that grants a subsidy, in coordination with the recipient, would produce an annual and bi-annual report that includes a description of the subsidy, number of employees, their location, wage and health benefits, tax revenue the granting agency accrued, description of the project site, cost and value of the subsidy, and key events in the allocation of the subsidy. A contracting agency, in coordination with the contractor, would complete an annual and bi-annual report on contracts exceeding $25,000. The reports would detail savings to the agency, total cost of the contract, wage, hours, compensation and health benefits the contractor provides, description of the contract service, number of people required to fulfill the service required by the contract, schedule of key events, and other relevant information.
Unified Reporting on Corporate Tax Expenditures, Contracts and Subsidies: The legislation calls for a state's budget department to compile unified report of tax expenditures, contracts, and property tax reductions and abatements to submit to the Governor and Legislature annually. The information would be available to the public in both written and electronic format.
Corporate Income Tax Disclosure: The legislation also makes public information on corporate tax payments to state governments. Specifically, the bill would give the public access to information on the total taxable income, taxes paid, tax owed, tax before credits, total receipts, apportionment data, net operating loss, employment figures, and alternative minimum tax if applicable for each company.

Messaging on Corporate Transparency

The public overwhelmingly favors transparency: Not only is corporate transparency a smart policy, it is also popular politically.

For example, a recent survey conducted by Lake Research Partners, in collaboration with Topos Partnership, found substantial support for stimulus transparency and oversight. 76 percent of voters thought "a national website where citizens can see what companies and government agencies are getting the funds, for what purposes, and the number and quality of jobs being created or saved” would have an important impact on the success of the stimulus.
Similarly, 76 percent of voters believe state websites to track the stimulus were important and 34 percent believed this initiative was "very important."
Knowing that representatives and government officials are being responsible stewards of public funds overwhelmingly resonates with voters across the political spectrum. The survey on stimulus transparency found that, "Republicans, Independents, and Democrats alike strongly support the inclusion of tracking and reporting requirements to ensure...money is effectively spent and has a positive impact on the economy."

Corporate transparency is needed to address the fiscal crisis and budget gaps: One of the most critical components of messaging around this campaign will involve the national fiscal crisis and state deficits. CBPP estimates that in in 2010 and 2011, states will face a combined budget deficit of $350 billion. State revenue collections have also decreased dramatically.

Transparency supports better budgeting with minimal to no dollar impact on the budget: The corporate transparency bill will allow for more focused and fairer review of state spending going to private corporations. Lawmakers and the public will be able to see where exactly taxpayer dollars are going and judge if tax expenditures, subsidies, spending on contracts, or corporate tax breaks are benefiting the state.
Transparency will permit greater equity in state spending: Monitoring tax expenditures, subsidies, contracts, and tax breaks will allow lawmakers to properly assess whether or not those dollars are being spent efficiently. With this knowledge, legislators can make more informed spending decisions, provide funding where it is truly needed, and appropriately invest in long-term growth.
Transparency will create future budget savings: More precise analysis of state spending will undoubtedly reveal some areas of wasteful spending. This will empower lawmakers to make better budget decisions in the future and increase savings for the state. For instance, states often pay for services or subsidies to companies that do not deliver on their promises. By tracking the performance of state subsidies, Minnesota and Illinois have both been able to recapture money from numerous projects that failed to deliver promised results.

Corporate transparency can help economic recovery by identifying which programs are delivering good quality jobs and which are not: By requiring subsidy recipients and government contractors to report the number of jobs created, the wages paid, their location and other key economic information, transparency will help policymakers redirect funds to alternative programs delivering high quality, high-wage jobs in their states.

Transparency can expose corporate outsourcing that is ineffective: As states grapple with the recession and search for the best methods to alleviate economic and budgetary pressures, some government officials continue to propose privatization as an effective policy. In the past decade, some states have scrambled to increase outsourcing and privatization of services, even without tangible evidence demonstrating efficiency. Many privatization efforts have cost taxpayers hundreds of millions of dollars, botched services for the public, and even led to charges of corruption.
Transparency can strengthen workers' rights: By requiring that corporate recipients of state funds disclose how many jobs are being created, what type of wages they pay, what type of health care is offered, and other information related to the quality of workers lives,transparency can provide information needed to hold companies accountable for workers rights abuses. The same information can be utilized to identify programs that actually do provide significant economic development and good jobs for the community.

Corporate transparency will address voter anger over corporate abuses: A Pew Research Center survey highlighted the public's anger earlier this year, revealing that 77% of Americans believe "there is too much power concentrated in the hands of a few big companies." The public outcry over Wall Street greed and the financial bailout demonstrates the potency of the issue.

Transparency will reveal corporate abuses undermining the public interest: States across the country continuously deal with problems related to subsidies, contracts, and corporate tax breaks. Placing an emphasis on a deal gone awry, an agency losing money by using private contractors, or a company making enormous financial gains while receiving taxpayer dollars during an economic downturn will elevate the issue and increase public awareness.
Transparency will highlight that corporations are paying less and less taxes: Lawmakers should additionally stress that as a result of changes in the corporate tax structure, several corporations have an extremely reduced tax burden. For example,The Iowa Fiscal Partnership reported that approximately half of Iowa corporations with at least $1 million of sales in state pay no corporate income tax. Similarly, the Oklahoma Tax Commission revealed that only 35 percent of corporations filing tax returns in 2000 reported positive taxable income—almost an anomaly considering the economy experienced substantial gains that year.
Transparency will identify which corporations are not paying their fair share: In a time of economic hardship, it is important that lawmakers determine that everyone is paying their fair share in taxes. As CBPP points out, "[b]ecause of the large number of variables that affect a corporation’s tax liability, it is quite difficult for non-experts to understand the impact of states’ tax policy choices. Concrete examples of how these policies actually affect the tax liability of identifiable corporations could be invaluable in enabling policymakers and citizens to understand the effectiveness and fairness of a state’s corporate tax policies."

Building a Campaign

Advocates and Resources: Several allies and affiliated organizations have done extensive work on these issues. Of particular note, the following groups have provided the intellectual framework for this initiative and produced extremely insightful and comprehensive resources on the subject.

Polling: The following polls provide insight on voters' opinions of transparency, legislators, political representation, and government in general.

Lake Research Partners and Topos Partnership - New National Poll finds Strong, Bipartisan Demand for Transparency in Economic Recovery Package
DEMOS - By, or for, the people?: A Meta-analysis of Public Opinion of Government
The Pew Research Center - Independents Take Center State in the Obama Era: Trends in Political Values and Core Attitudes: 1987-2009

Reports: There are several key studies that examine the need for corporate transparency.

On subsidy transparency, see Good Jobs First's The State of State Disclosure and Drum Major Institute for Public Policy (DMI)'s Accounting for Economic Development Subsidies
On contracting transparency, see AFSCME's Legislative Approaches to Responsible Contracting, NELP's Road to Responsible Contracting, PSN's Privatizing in the Dark and Center on Policy Initiatives' Good Government: The Pitfalls of Privatization
On tax expenditure transparency, see CBPP's Promoting State Budget Accountability Through Tax Expenditure Reporting and Citizens for Tax Justice's Judging Tax Expenditures
On corporate income tax transparency, see CBPP's State Corporate Tax Disclosure, CALPIRG's Sunshine for California: Shining Light On Corporate Tax Secrecy For Healthier State Budgets, Investments and Markets, and Oregon Center for Public Policy's Corporate Tax Dodge: The Decline of the Oregon Corporate Income Tax and the Shift to Individual Taxpayers

For state comparisons of online disclosure, see CALPIRG's California Budget Transparency 2.0, which gives a good nationwide review of best current practices on online disclosure, while Good Jobs First's The State of State Disclosure provides a comprehensive analysis of state disclosure practices as they relate to economic development subsidies, contracts, and lobbying activities.

Tracking Transparency and Privatization: Allied organizations are consistently analyzing corporate transparency. The following websites provide case studies about subsidies, contracts, and corporate tax breaks.

AFSCME - Privatization Update
DMI - DMI Blog
Good Jobs First - Clawback and Corporate Subsidy Watch
U.S. PIRG - Consumer Watch

PSN has also done research around these issues. The following Dispatch pieces highlight complications arising from misuse of state funds in subsidy allocation, contract distribution, and unnecessary tax breaks.

Legislative Momentum Around Corporate Transparency Initiatives

There has been substantial momentum across the country around corporate transparency. Just in the past year, several states have either implemented or proposed legislation with similar objectives. Though the bills cited below do not completely mirror PSN's model bill, they are demonstrative of significant legislative movement and support for transparency, disclosure, and much-needed reform.

Oregon: This year, the Oregon Legislature took up two significant bills to strengthen the rules regarding contracting and disclose more information about contracts and actual savings accrued to the state. HB2037 would require that the Department of Administrative Services and the local contracting agency keep records regarding contracts and submit reports to the Governor and Legislature on such information. Rep. Chuck Riley offered his insights on the importance of these efforts, "[t]hese bills seek to make this degree of transparency and accountability part of every major public contract all across Oregon. Over the years state and local governments have relied on contractors to provide public services, yet many of our laws regarding transparency and accountability have not kept up.. it is time for the state to increase the availability of information and to ensure that taxpayers are getting what they are paying for." While HB 2037 did not pass this session, the state did enact HB2867 to requires the contracting agency to establish measurable standards to assess the quality of contractors' performance, permit the Secretary of State and contracting agency to audit a public contact, mandate that an agency prove that they are not capable of performing the service or would incur less cost by procuring services rather than performing them in house, and provides other guidelines for contract services.
New York: This month, the New York Assembly passed A40012 during a special session that drastically expands oversight of state public authorities by increasing reporting requirements, allowing the state Comptroller to pre-approve state authority contracts valued at over $1 million that are not competitively bid and contracts that are paid with the state funds appropriated to the authority, and creation of finance committees to review debt issuance proposals. Asm. Richard Brodsky, who has consistently championed transparency and public authorities reform stated, “[t]his is a fundamental reform of government authorities that will benefit the public. What had been rogue institutions will be forced to operate with more transparency and accountability."

PSN Support in Your States

PSN has already begun working with legislators and advocates to provide support for them as they introduce corporate transparency legislation around the country. We'd like to work with many more! Our policy staff are available to answer questions and supply information not on the website. Legislators and advocates can contact us about supporting Corporate Transparency in the State Budget Process campaign through our website or by emailing corporatetransparency@progressivestates.org.

As bills are introduced and sessions begin, PSN will provide ongoing resources and updates on contract transparency legislation, as well as help coordinate strategy and information sharing with our partners among sponsors and advocates.

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Assuring Accountability and Equity in Recovery Spending

Nathan Newman — Mon, 01 Jun 2009 16:20:48 +0000

In January, Progressive States Network highlighted the many reasons Why States Need to be a Focus for Any Economic Recovery Plan. Without help, states would catastrophically slash both spending and payrolls, deepening the economic crisis in communities across the nation, while undermining the investments needed to revive the economy in the long-term.

But we have also emphasized that any stimulus spending has to be tied to increased accountability and transparency in spending decisions, especially by government contractors who often operate like a shadow government with little oversight. One key reality, as this Dispatch will highlight, is that those most in need often don't receive help from government spending without transparency and accountability measures built into the rules. While the recent federal recovery plan made real strides in expanding such accountability, additional measures are still needed if the recovery plan is going to deliver real equity in our economic recovery.

- Assuring Recovery Funds Address Immediate Crisis

- The Link Between Accountability and Equity

- Demanding Transparency and Accountability in the States

- Conclusion

Assuring Recovery Funds Address Immediate Crisis

As the Center for Budget and Policy Priorities outlined in a recent report, federal aid is covering roughly 30-40 percent of state budget shortfalls. Virginia, for example, has been able keep open three mental health facilities, reverse a planned cut in Medicaid payments, lessen reduction in universities aid, avoid a major education budget cut, and avoid laying off an estimated 310 deputy sheriff positions.

For the economy, some of the most immediate money flowing into states is via the expansion of food stamps benefits in the recovery plan: 32.5 million people in April got a 13.6 percent monthly increase in benefits, averaging about $20 per person. Since the federal government pays 100% of food stamp benefits, states that vigorously sign up people who qualify can stave off some need to use other benefits directly funded by the states. While many states are stepping up outreach efforts, only 60 percent of eligible Americans received food stamps in 2004, the most recent year data are available. Signing up more people is a direct way to expand federal stimulus spending in states.

Assuring States Maintain Spending to Fuel Consumer Demand: While the federal government is dramatically expanding support for programs like education, food stamps, and Medicaid for state governments, the key caveat is that states can't use the funds just to paper over state cuts for the programs. In using state fiscal stabilization funds, states must assure that in fiscal years 2009, 2010, and 2011, they will maintain state support for elementary, secondary and public higher education institutions at fiscal year 2006 levels. The goal is to assure that the federal stimulus to expand the economy is not just undermined by state governments cutting spending -- avoiding what economist Paul Krugman calls "fifty Herbert Hoovers" promoting austerity economics and deepening the economic downturn.

"States Rights" versus Accountability: Some state leaders like Texas Governor Rick Perry have tried to argue that any conditions on federal money is a violation of states rights; Perry even supported a resolution asserting "sovereignty" for the state of Texas and arguing all federal legislation that "requires states to pass legislation or lose federal funding be prohibited or repealed." It is a bit strange to see some conservative leaders -- who usually argue that government spending should be tied to reciprocal responsibility by recipients -- suddenly demand that federal dollars be a blank check with no accountability for states receiving it. Of course, even most conservative leaders have agreed to the accountability measures required to qualify for funding under the federal recovery act. Ironically, South Carolina Governor Mark Sanford -- who is seeking to reject $700 million in education spending approved by his own state legislature -- has argued that federal courts, rather than state courts which are not seen as sympathetic to his position, should decide whether the governor can prevent the state from spending the money.

Fight over Unemployment Funds: That the strongest resistance to federal funds has come over funding unemployment insurance for many of the poorest unemployed workers is evidence that the fight over "states rights" is actually a fig leaf for ideological attacks on those most in need. As the National Employment Law Project has documented, incentives in the recovery act to encourage states to extend unemployment benefits to poor and part-time workers often excluded from unemployment systems, has been a major success of the recovery plan, with states across the country reforming their laws to improve equity in their systems. While both Republican and Democratic leaders in many states have readily expanded such benefits, it is a few ideologues on the right, such as Perry in Texas or Gov. Bobby Jindal in Louisiana, that have used the unemployed as whipping boys for their rhetoric. Even as many families continue to suffer post-Katrina in the state, Jindal chose to forego $100 million in federal unemployment dollars, as legislators have labored to override his opposition to unemployment insurance modernization. As Dan Lavoie of Policy Link argues, "This is a looming disaster for folks who’ve had too much disaster in their lives already."

Resources:
ProPublica - Stimulus Infrastructure Funding Short-Changes States With High Unemployment
Center for Budget and Policy Priorities - Federal Fiscal Relief for States Is Working As Intended: The Cases of New York and Virginia
U.S. Department of Education - Guidance on the Maintenance-of-Effort Requirements in the State Fiscal Stabilization Fund Program
National Employment Law Project - Modernizing Unemployment Insurance--The American Recovery and Reinvestment Act
Policy Link - Thousands to Protest Jindal Stimulus Rejection

The Link Between Accountability and Equity

The exclusion of many of the working poor from unemployment insurance systems is just part of the broader problem of equity in in state spending and assuring that the federal recovery plan is directed to reviving communities hardest hit by the global economic downturn. Unfortunately, state-by-state analysis of federal transportation recovery funds by the independent research organization ProPublica finds that "the higher a state’s unemployment, the less money it gets." States with the most people out-of-work are seeing fewer job openings on transportation projects.

Within states, the same phenomena seems to be happening. By basing dollars spent on transportation money on whether a community has "shovel ready" construction projects, the law has bypassed some communities with the highest unemployment. In Indiana:

An analysis of Indiana's per-capita transportation stimulus dollars committed through this month shows that of the state's 10 counties with the highest unemployment rates, three have received no funding, and four have received less than $37 per person, the median amount given to counties that did receive funding.

Building Equity into Transportation Budgets: Richer communities often already had more money in the pipeline for new projects, so they had "shovel-ready" projects ready to be funded. As a report by Policy Link and Transit Equity Network argues, "There is serious concern that the timeline for spending recovery dollars will reinforce historic inequities by concentrating funds on ex-urban highway projects versus maximizing low-income community benefits through investment in transit, pedestrian, and bicycle infrastructure." As report co-author Radhika Fox, an Associate Director at Policy Link argues:

Historically, the deck has been stacked against transportation projects that can improve the lives of low-income people and people of color. To ensure that the federal recovery package does not continue this imbalance, advocates and community leaders must be ready and prepared to fight to ensure their communities get a fair share of the recovery dollars.

“Accountability in government spending is job number one when it comes to the stimulus,” said Laura Barrett, national policy director for the Transportation Equity Network. “The nation's governors must make sure that all stimulus-spending targets distressed communities and brings jobs to low-income people, women and minorities. The public needs to know who got the jobs and who can be held accountable."

Lack of Data Has Held Up Addressing Inadequate Teaching in Poor Schools: Transparency in spending decisions is also the key to actually making sure poor schools receive the help they have usually been denied in the past. The stimulus measure’s provision on equitable distribution of teachers is identical to language in the federal No Child Left Behind Act that requires states to put plans in place to ensure that poor and minority students aren’t taught disproportionately by out-of-field, inexperienced, or unqualified teachers. Not much momentum on this goal was made under President George W. Bush, some experts say, in part because of states' archaic recordkeeping, a former Bush administration official indicated. “It was difficult to move the needle on teacher-quality efforts in the states at the time,” said M. René Islas, who oversaw the issue at the Education Department between 2002 and 2006. “They lacked the data systems and the incentive.”

Greater accountability and greater transparency in data for the recovery plan is a necessary step in making it possible for low-income and minority communities to be able to demand equity in the distribution of funds.

Resources:
Policy Link and Transportation Equity Network - An Engine of Opportunity: A User’s Guide to Advocate for Transportation Equity in the 2009 Recovery Act
Education Week - Stimulus Bill Spurs Focus on Teachers: Language on Fair Distribution, Effectiveness Offers Policy Clues

Demanding Transparency and Accountability in the States

Recognizing the need for broader accountability in the federal recovery plan, advocates have formed States for an Accountable and Transparent Recovery. In this effort, Progressive States Network has joined with a number of key allies -- including the Apollo Alliance, Center for Community Change, Common Cause, Consumer Federation of America, Good Jobs First, National Employment Law Project, National People's Action, OMB Watch, Partnership for Working Families, Policy Matters Ohio, Right to the City, Smart Growth America, Transportation Equity Network, U.S. PIRG, and Wider Opportunites for Women -- to work for both greater equity and accountability as the recovery plan is implemented in states across the country.

Limits of Federal Transparency Rules: The ARRA includes a wide range of accountability provisions and created a Recovery Accountability and Transparency Board. President Obama has announced that Vice President Joe Biden will “oversee the Administration’s implementation of the Recovery Act’s provisions." The Vice President issued his first quarterly ARRA progress report on May 13.

President Obama has made a broad commitment to create transparency for federal spending, but the problem is that as funds move from federal government to state to local government to hired contractors, the data to assure accountability starts to disappear. As the Washington Post highlighted in a recent article:

The Office of Management and Budget requires stimulus spending to be reported by primary and secondary recipients, but in many cases, this means the reporting will stop short of the contractors and subcontractors that are hired to do the work. For instance, if a state allocates transportation money to a local authority, such as Metro, that authority would not necessarily have to disclose what contractors were hired.

Earl E. Devaney, the Interior Department Inspector General who has been placed in charge of stimulus oversight, admits, "The law doesn't require [recipients] to go to the depth that people imagine it does."

State Accountability Sites: The States for a Transparent and Accountability Recovery site has a state-by-state review of accountability practices in each state, including overviews of state-level recovery act websites and other government-run accountability sites, how coordination and oversight for the recovery plan is being administered in each state, the in-state policy debates on the recovery plan, as well as a list of state watchdog groups and other resources. Some states are providing greater transparency than others, yet almost none yet provide the level of detail needed to monitor either the overall equity in distribution of funds or what contractors are really doing with the funds they receive.

Expanding Transparency and Accountability in the States: As PSN outlined in February, there are a number of models for state leaders seeking to expand transparency in their recovery and state contracting systems. These included:

Good Jobs First's model language for economic subsidy data collection
Contractor and subcontractor data collection language from Oregon's proposed HB 3366
Online transparency language from Massachusetts' proposed Act Relative to Transparency in State Revenues and Expenditures

As we emphasized, not only do such accountability measures assure that money goes where intended, they can actually save states money by streamlining spending decisions and eliminating spending abuses that thrive in secrecy.

Funding Transparency: One area where the federal government can step up is in making funding of state accountability systems a greater priority. An April Government Accountability Office report found that state funding for oversight was a problem:

Officials in most of the states and the District expressed concerns regarding the lack of Recovery Act funding provided for accountability and oversight. Due to fiscal constraints, many states reported significant declines in the number of oversight staff—limiting the ability to ensure proper implementation and management of Recovery Act funds.

If the feds are going to spend hundreds of billions of dollars on the recovery plan, providing the funds to protect and expand the capacity of states to build better accountability systems would be money well spent.

Resources:
Progressive States Network - Transparency and Economic Recovery: What States Are Required To Do and Why They Should Do It
States for an Accountable and Transparent Recovery
Coalition for an Accountable Recovery
Education Week - Initial Aid Is Puzzle to Track: Transparency Proves Elusive as Stimulus Funds Flow
ProPublica - Tracking States' Spending Sites

Conclusion

Accountability and transparency are not just "good government" issues. Without such measures, money inevitably flows to those who already have political and economic power. Only with clear accountability rules -- and data collected to assure such rules are being implemented -- will we see recovery funds go to those most in need and the money used to address the real problems of economic inequality in communities across our country.

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New Mexico Enacts Wage Law Enforcement, Joins National Trend

Caroline Fan — Thu, 09 Apr 2009 16:09:48 +0000

New Mexico Governor Bill Richardson recently signed a wage enforcement bill (H 489) to allow underpaid workers to collect their back wages plus twice that amount in damages. The bill was backed by community groups and labor unions as well as the New Mexico Department of Workforce Solutions. New Mexico now becomes the eighth state that allows workers to collect treble damages against employers violating the minimum wage — a key deterrent to employers to ensure compliance with the minimum wage.

Other states are moving forward on additional wage enforcement measures:

Iowa: Gov. Culver signed HF 618 which increases penalties against employers who take advantage of child labor laws. The bill had previously passed both houses unamimously. The new law establishes penalties of up to a year in jail for violating child labor laws, a state fine up to $10,000 for each child labor violation (to be determined by the Labor Commissioner) and hikes the penalty for businesses who fail to pay employees their rightfully-earned wages to $500 from $100 per pay period. Furthermore the bill changes the standard from "willful" liability to "negligence." Labor penalties had been untouched since 1975. The bill is largely the result of last year's raid of the Agriprocessors poultry factory in Postville, Iowa which found 9300 instances of child labor abuses. Additionally, SB 413 has been favorably recommended out of committee and would increase transparency of employee wages and prevent employer retaliation against workers.
California: S 9b was signed by the Governor and establishes a State Public Works Enforcement Fund in the State Treasury. The law continuously appropriates monies to the Fund for the enforcement of prevailing wage requirements applicable to public works projects and labor compliance enforcement.
Maryland: SB 406 was adopted and expands rights and remedies for private enforcement suits under the state prevailing wage law and authorizes employees to seek compensation and additional remedies. SB 451 would increase criminal penalties for violations of certain wage and hour laws and would allow each week to constitute a separate violation. The fine for the first week would be $2500 and $5000 for subsequent violations.
North Carolina: H 87 would establish additional positions for the state to enforce wage and hour laws, as well as occupational health and safety standards. Rhode Island: S 643 would create a private right of action against employers for misclassifying an employee as an independent contractor.

Progressive States Network has been promoting wage enforcement strategies as a fair and progressive model for dealing with the problems of the underground economy and the exploitation of all workers, including native and immigrant workers. Recently the GAO conducted a study finding that wage theft was not being properly investigated by the Department of Labor's Wage and Hour division. Now, federal priorities under the new administration are moving towards increased wage enforcement, following the lead of states like New York and California.

States can better address the underground economy by enforcing and strengthening wage and hour laws to protect all workers from unscrupulous employers who deliberately under pay or withhold wages. Here is a short rundown of model policies that states can implement to recover workers' wages and ensure better compliance with the existing minimum wage.

Resources:
Progressive States Network- Promoting Wage Enforcement Laws as an Alternative to Anti-Immigrant Proposals
Government Accountability Office- Wage and Hour Division’s Complaint Intake and Investigative Processes Leave Low Wage Workers Vulnerable to Wage Theft
National Employment Law Project - Enforcement of Workplace Standards

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Privatization Update: Schools, Prisons, Mental Health -- and What States are Doing to Hold Contractors Accountable

Nathan Newman — Mon, 30 Mar 2009 16:24:25 +0000

Privatization Update: Schools, Prisons, Mental Health -- and What States are Doing to Hold Contractors Accountable

Given the central role of private contractors in delivering public services, this Dispatch continues our series of Privatization Updates (see November's edition). Today we focus on current privatization debates in the education, prison and mental health sectors -- and what states are doing to increase accountability for contractors.

Table of contents

- Education Privatization

- Prison Privatization

- Georgia's Proposed Privatization of Mental Health Services

- Chicago Privatizes Parking Meters

- Privatization Not Delivering Savings

- States Taking Action on Privatization Abuses

Education Privatization

Even as the right wing has been losing in the polls on promoting school vouchers, privatization has still been penetrating school systems through charter programs and support services. However, both teachers and governments have increasingly spotlighted problems and the failed promises of many school privatization contractors.

Rejection of School Vouchers: When Utah voters didn't support a school voucher ballot initiative in November 2007, it was the eleventh state referendum -- all defeated -- on various proposals for publicly-funded school voucher programs since 1972. After the state legislature approved a voucher program earlier in the year, opponents took the issue to the ballot where it was rejected by more than 60% of the vote.

Based on a few pilot projects, the number of students using vouchers has increased to 61,700 in the current school year, up 9% from last year, and nearly double the level in 2002 when the U.S. Supreme Court upheld the use of vouchers in religious schools. But the Utah defeat is just one part of broader legislative and administrative changes likely to reverse those trends:

Congress in March voted to stop funding a voucher program for the District of Columbia.
Two other prominent voucher programs -- in Milwaukee and Cleveland -- are facing statehouse efforts to impose rules that could prompt some private schools to stop taking voucher students. In both states, the governors have proposed requiring private schools to administer state achievement tests to all of their student.
The stimulus bill Obama signed in February bars its funds from being used to provide financial aid to students attending private schools.
And the Arizona Supreme Court has ruled that two state voucher programs for foster children and disabled students violate Arizona's constitution.

Debate on Charter Schools: As voucher systems are failing or being scaled back across the nation, charter schools sited within public schools continue to make gains. On March 10, President Obama called on states to lift charter school caps, a move that could usher in a large number of charter school openings if states follow the President's recommendation. Currently, 26 states and the District of Columbia now have caps. States began to respond immediately, as was reflected in a bill filed in the North Carolina House to lift the state's cap of 100 schools. "

Yet even as President Obama called for expanding the number of charter schools, he also recognized the problem of charter schools that are not delivering on their promises of higher student achievement. In states across the country, from Wisconsin to Texas, failing charter schools have been closed. On the other hand, in Louisiana, public schools are increasingly being turned over to private groups. Six of eight identified failing schools in the East Baton Rouge parish will become charter schools.

Increasingly, teachers at the charter schools themselves are identifying serious problems and demanding more of a voice, both in their own treatment and that of the students. The recent unionization of the KIPP AMP school in Brooklyn by the United Federation of Teachers (UFT) is only one example. Currently, 18 of New York's 115 charter schools have their own unions and similar schools, such as Green Dot in Los Angeles, are also unionized. Founders of the charter school movement have often been vocal opponents of teachers’ freedom to form unions, underlined by teacher complaints that KIPP administrators were intimidating teachers interested in unionizing. Teachers of the KIPP AMP School express confidence that unionization will lead to greater teacher retention, benefiting students by maintaining institutional knowledge.

Failures and Costs of School Support Contracts: The large, multi-state companies that schools most frequently employ to provide bus, school lunch, and custodial services dominate the market by buying out smaller businesses. Yet most communities are seeing few economic benefits and often just end up the losing party in bad contracts negotiated by these multi-state players.

For instance, the acquisition of Laidlaw Education Services by FirstGroup ensured that FirstGroup is now responsible for operating 12% of school buses in the US and Canada. The anti-trust implications of the FirstGroup takeover were so clear that the company was forced into an anti-trust consent decree in 2007 after lawsuits by eleven states gave states some options to take over leases and separate ownership of bus depots from the bus service contracts. One particularly questionable trend in school privatization is the responsibility of the state to purchase replacement equipment that, by contract, the contractor will own. Often, after fleets are sold to the contractor, the firm quickly requests new bus purchases, even when the old buses still meet thorough state inspection requirements. In Oregon, the Lake Oswego district was contractually bound to buy new buses requested by Laidlaw Transit (now FirstGroup), which led to no savings for the state and debts owed to the contractor. Similarly, a Minnesota report found that school districts pay an average of 10 percent more per student to outsource student transportation — and those higher prices come with higher rates of driver turnover, less experienced drivers, more accidents and a less reliable service.

For food service, Aramark has what is often seen as the worst record in serving public schools. The company provided such poor services in Pennsylvania, Michigan, and Connecticut that all three states canceled their contracts with the corporation. In New Haven, CT Aramark employees alleged dangerous and hostile work environments, poor menus, and Aramark’s purchasing of low quality, even dangerous, equipment. School officials, students, and parents have agreed with charges of unhealthy and unappetizing food. One parent commented, "Our kids think the food comes from vending machines, and are calling it green eggs and ham." Aramark has also received publicized complaints in Illinois, New Jersey, and Maryland.

Resources
NEA - School Vouchers
Edwize - Charter Schools
Labor Education and Research Center: University of Oregon - All Costs Considered: A New Analysis on the Contracting Out of School Support Services School Support Services in Oregon
SEIU Local 284 -Safe, from Home to School: The need for student transportation reform in Minnesota

Prison Privatization

The national spotlight has focused recently on privatized prisons after two judges in Pennsylvania pled guilty to receiving kickbacks for finding young offenders guilty of minor charges. They accepted $2.6 million to send an estimated 5,000 juvenile offenders to privately owned prisons. The two judges held high ranking positions in overseeing the juvenile court system, which allowed them to work in tandem to convince the state to send youth to new detention centers owned and operated by the private prison firms PA Child Care and partner Western PA Child Care. The judges' ill deeds clearly demonstrated that private profits can drive injustice and costly inmate expansions, and how the lack of state oversight allowed the problem to persist for years.

Rising Inmate Populations, Rising Profits: Private prisons hold 7.4% of the country's 1.59 million incarcerated adults. California has shipped more than 5,100 inmates to private prisons in other states since late 2006.While prison privatization sometimes appears to save states money, there is question as to whether company profits lead to costs down the road. Judy Greene, policy specialist at Justice Strategies argues, "Profit is still a motive and it's structured into the way these prisons are operated. Just because the system has expanded doesn't mean there is evidence that conditions have improved." And private prisons are, indeed, making a good deal of profit. Corpwatch reported that in February, GEO Group reported a $20 million quarterly profit with an annual 2008 profit of $61 million, a $23 million increase from 2007.

Cost Cutting at the Expense of Quality and Inmate Safety: Profits appear to come through cost cutting such as low quality or rotten food. Similarly, there have also been complaints of poor quality health care at detention centers operated by Corrections Corporation of America (CCA) and GEO Corporation. In 2008, state officials discovered that a mentally ill CCA inmate had not left his cell for a shower or recreation for nine months. CCA commented that they did not believe that showers were related to health care. Later in the year, a man died of pneumonia after receiving inadequate treatment from a CCA doctor he had seen the prior day. In February, prisoners rioted at a federal prison run by GEO to protest poor health care and an earlier report found that another GEO facility violated international and domestic laws, denying inmates food, due process, and humane treatment. As Deborah Golden, an attorney with the DC Prisoners Project observes, "When you try to run prisons as money makers what you do is cut back on the most expensive thing you can, which is medication and medical care."

Leaving States in the Lurch: Private companies operate to make a profit and when they find that they are not meeting projections, they break contracts. Contractors sometimes end a relationship with a state with little warning, leaving states scrambling to find new providers. In the autumn of 2008, GEO and Aramark broke contracts with prisons in Pennsylvania and Florida respectively. This was particularly problematic for the Florida system, which had only 120 days to find a new food provider for their 92,000 inmates, the third largest prison population in the nation. Furthermore, breaking contracts is not usually an option for dissatisfied states.

Resources
CorpWatch - GEO Group, Inc.: Despite a Crashing Economy, Private Prison Firm Turns a Handsome Profit
OneAmerica - Voices from Detention: A Report on Human Rights Violations at the Northwest Detention Center in Tacoma Washington
AFSCME - Prison Privatization Resources

Georgia's Proposed Privatization of Mental Health Services

Georgia's Department of Human Resources (DHR) is considering privatizing much or all of its public mental health hospital network and closing its mental health facilities in cities like Savannah and Augusta. State officials say that no final decisions have been made, but DHR is considering privatization as a solution to problems that have plagued state-run hospitals and that led to a U.S. Department of Justice investigation of the quality of care provided. DHR provided advocates and providers with an outline of its plan to consolidate the seven mental health hospitals into two and to rely more heavily on community-based services.

The only concrete step the state has taken toward enacting this plan has been to issue a request for proposals (RFP) to potential contractors to take over a unit at the mental hospital currently located in Savannah. Dena Smith, a spokesperson for the DHR, said, "If through that RFP process, it's found that it's not the best way to move forward, then it won't happen." However, the outline of the agency's plan indicates that the state is moving rapidly to close down its institutions and to switch to private providers. By the end of June 2009, the state intends to issue RFPs for new hospitals in Atlanta and South Georgia, both scheduled to open by the end of 2011, and will close the Savannah hospital. The mental health hospital in Columbus would close by July 2011, and by the end of the following fiscal year, public facilities in five other cities would likely close down.

Doubts about Cost Savings: Mental health advocates, state legislators, and members of Gov. Sonny Perdue's mental health commission have expressed concerns over the possibility of privatization, emphasizing that there is little evidence that having private companies take over state hospitals will save taxpayers money or improve the quality of patient care. They believe that more public participation in the DHR's privatization plans is necessary. Furthermore, they question the viability of turning state mental health hospitals over to for-profit companies. Most patients who end up in state institutions have exhausted all private insurance coverage, and there is no way to cost-shift the burden of caring for uninsured patients by treating insured patients. Given these limitations, private companies may resort to reducing staff and services in order to make a profit.

Problems in Other States fromPartial Mental Health Privatization: No other state has privatized its entire psychiatric hospital network, and states that have privatized some of their mental health services have not realized their intended results. In Florida, private facilities operate at only a slightly less expensive rate than state institutions, and they have not been able to demonstrate improvements in patient outcomes. In North Carolina, auditors found that the state wasted $400 million by allowing unqualified private companies to provide many mental health services. In a Texas private mental health clinic, poor staffing led to patients violently assaulting others, inadequate cleaning, and incorrect doses of medicine dispensed to patients.

Resources:

State board looks at privatizing mental hospitals

Don't rush to privatize mental health services

Mental health plan is big shift to privatization

Chicago Privatizes Parking Meters

On Thursday, December 4th, the Chicago City Council approved (by a 40-5 vote) Mayor Richard Daley's proposal to privatize Chicago's parking meters for the next 75 years. The city will receive $1.16 billion upfront from a Morgan-Stanley backed group in exchange for the rights to manage its parking-meter system. The city plans to use $325 million from the deal to balance the budget through 2012 and to set aside $400 million for the long-term. $100 million will be spent on social programs, and the rest will be used to stabilize the city's financial situation until the economy improves.

Rates are expected to increase each year over the next five years. By 2013, it will cost $6.50 an hour to park in the Loop (currently $3.00 an hour), $4.00 to park downtown (currently $1.00 an hour), and $2.00 to park in the neighborhoods outside the downtown area (currently $0.25 to $0.75 an hour). Many critics worry that the agreement was approved without appropriate transparency and government oversight measures in place, and as a result, taxpayers will not get a fair deal in the long run. The arrangement may alleviate current budget shortfalls, but at the expense of future revenue that could be used for essential public services. Chicago has a history of privatizing public assets for short-term gains. The city received nearly $5 billion upfront for leasing the Chicago Skyway, and it is in the process of privatizing Midway Airport.

Resources:

It's official: Chicago parking meters will be private, pricier

Chicago Banks on Private Parking

Meter Mania: 1 Hour Parking = 26 Quarters By 2013

Progressive States Network - Privatization Update: Recent News from Across the Country (11/25/08)

Privatization Not Delivering Savings

On Monday, November 24th, the Government Accountability Office released a report which revealed that the Labor Department understated the expense of contracting out its employees' work to private firms in the numbers it has previously provided to Congress. "DOL's savings reports are not reliable: a sample of three reports contained inaccuracies, and others used projections when actual numbers were available, which sometimes resulted in overstated savings," the GAO report said. "Because of these and other weaknesses, DOL is hindered in its ability to determine if services are being provided more efficiently as a result of competitive sourcing." The full report is available here.

On Monday, December 8th, Virginia's Joint Legislative Audit and Review Commission (JLARC) released a report stating that Virginia's $2 billion transition to privately run information technology services has been slow and difficult and has not yet saved the taxpayers money. In 2005, Virginia agreed to a 10-year deal with Northrop Grumman to oversee the purchase and upkeep of computers, software, Internet access, and other IT needs. JLARC and Northrop Grumman dispute the extent to which the private firm has upheld the terms of the contract. This report comes on the heels of recent the high-profile IT privatization failures in Texas and Indiana that were profiled in our last Privatization Update.

Resources

GAO: Labor Dept. Misled Congress

Department of Labor: Better Cost Assessments and Departmentwide Tracking Are Needed to Effectively Manage Competitive Outsourcing Program

IT deal no money saver yet for state

States Taking Action on Privatization Abuses

States are increasingly getting tough with contractors found to have ripped off the public purse:

Terminating Contracts: In 2008, a Texas elder care program under the direction of UnitedHealth Group that served 74,000 senior citizens was fined more than $1 million by the state for delayed or refused medical care. In March 2009 the Texas Health and Human Services Commission terminated the contract, citing late treatment and 1,300 complaints filed against the company in 2008.
Taking on Private Prisons: Recognizing problems with CCA prison staffing, the Oklahoma Department of Corrections denied $589,000 in payments to CCA until their private prisons were fully staffed, particularly in health services. Officials decided to fine CCA after reading the findings of an audit requested by the state legislature. However, the auditors noted that oversight is expensive and takes time, saying that "[the process is] somewhat cumbersome in that it requires multiple levels of consideration by executive staffs." This indicates that any purported savings from private prisons may just be disguising the hidden costs of oversight not budgeted in most contracts.
Putting Welfare Privatization on Hold: In Indiana, after listening to months of complaints from constituents and health care providers, two committees of state lawmakers - the Medicaid Oversight Commission and the Health Finance Commission - called for a temporary halt in the privatization of social services until problems are resolved. Representative Suzanne Crouch and Senator Vaneta Becker (both Republicans) drafted HB 1691 to prevent Indiana's Family and Social Services Administration from extending the welfare privatization into the remaining 33 counties until a complete review of existing services is conducted. The Indiana House in February passed the bill and the Senate is now considering it.

Putting in Place Systemic Contracting Reforms: Ultimately, these piecemeal approaches to punishing privatization failures after the fact are not enough. A few states have enacted some individual reforms to better evaluate contracts before they are issued and put in place accountability measures However, a number of national organizations, including Progressive States Network, have highlighted model bills being proposed in Oregon, HB 2037 and HB 2867, which would establish unparalleled transparency and responsible contracting rules for state and local contractors in the state. Together, the policies in the bills would:

Require agencies to post information online regarding bidding processes, costs of contracts, amendments, wages paid and the number of jobs created under each contract.
Create standards of quality expectations for contracts.
Eliminate the practice of contracting the oversight of primary contractors to other contractors.
Prevent "revolving-door" conflicts of interest by barring public employees who work with a contracting firm from joining the firm within a year of leaving the public service.
Mandate a cost analysis of contracts over $25,000 to ascertain whether the same work could not be done as efficiently and effectively in house.
Expand responsible bidder guidelines to include a bidder's poor performance in prior contracts using such yardsticks as cost overruns and delays.
Require that agencies review the credentials of contractors on its prequalification list at least every three years.

Progressive States Network's Nathan Newman testified in Oregon earlier this month on behalf of these proposals. Putting contracting reform in the context of national recovery spending across the country, Newman argued, "Every state needs this data so that they can take money away from contractors who aren’t serving the public interest and give it to programs that are. It’s the best way to ensure that the recovery funds go into the hands of working families who have been hit the hardest by the recession.”

Resources

Oregon HB 2037 and HB 2867

Progressive States Network - National Experts Visit Oregon to Testify in SUpport of Precedent-Setting Transparency Legislation

AFSCME - Stop Bad Contracts and Protect Public Jobs: Sample Legislative Language

Partnership for Working Families - Policies & Tools

Center on Policy Initiatives - Good Government: Do It Right

oregongovernmentaccountability.com

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Montana Defeats Attack on Minimum Wage, Cost-of-Living Increases for Working Families

Caroline Fan — Thu, 12 Feb 2009 17:25:07 +0000

Recently conservatives in Montana sought to roll back the annual cost-of-living wage increases for minimum wage workers that voters overwhelmingly approved in 2006 by 73-27%. Montana is one of twenty-seven states (plus the District of Columbia) that has a minimum wage higher than the federal minimum wage, and one of eleven states that index the minimum wage to the consumer price index. Montana progressives successfully fought a conservative push by the restaurant industry to keep wages stagnant.

A bipartisan coalition in the Republican-led state Senate prevented the restaurant lobby from gutting future indexing of wages to inflation and freezing the minimum wage for tipped workers at $6.15/hour despite an increase to $6.90/hour which took effect on January 1, per the passage of the 2006 initiative. That proposed change would have cost minimum wage workers $1560 a year, far more than such workers would receive under the $400/person tax cuts from the federal stimulus bill. Fortunately, the general cost-of-living adjustment (COLA) was maintained in committee.

This action was then followed by a full Senate vote to defeat a bill (29 to 21) that would have essentially frozen wages for tipped employees by allowing employers to include tips in calculating the minimum wage they pay their workers. The wage freeze and tip inclusion in the minimum wage both would have placed tipped employees, such as restaurant servers, at a precarious disadvantage since tips can vary from day to day, and are even harder to rely on in an uncertain economy during which fewer people go out to eat. The failure of a conservative-led Senate in Montana to pass a minimum wage freeze is yet another demonstration of the.political unpopularity of efforts to cut away at the minimum wage.

Resources

National Employment Law Project, Montana Senate Rejects Minimum Wage Attacks
Progressive States: Indexing Minimum Wage
Economic Policy Institute - Securing the wage floor: Indexing would maintain the minimum wage's value and provide predictability to employers
US Department of Labor, Minimum Wage in the States

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