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Pay to Prey: Governors Facilitate the Predatory Outsourcing of America’s Public Services

October 22, 2014 Comments off

Pay to Prey: Governors Facilitate the Predatory Outsourcing of America’s Public Services
Source: Center for Media and Democracy

Maggots, drug smuggling, sex with inmates. As if the news were not already bad enough, shocking new allegations of a murder-for-hire plot are emerging from Michigan as the media digs deeper into that state’s failed outsourcing of prison services.

In 2013, Governor Rick Snyder invited the Philadelphia- based for-profit company Aramark to take over food services in the state’s prisons. The action was a 180-degree change in course, as the administration previously rejected all such bids on the grounds that none of the proposals would save the state money. The $570,000 Aramark spent on lobbying surely helped the company persuade the administration to change its mind.

Since Aramark took over Michigan’s $145 million food service contract – eviscerating the stable middle class jobs of some 370 public workers – one stomach churning scandal followed another. The state fined Aramark $98,000 in March for food shortages, “unauthorized menu substitutions” and sexual relations between kitchen workers and inmates, and another $200,000 in August after problems persisted.

All the while, the Snyder administration has stood behind the company and the state prison director secretly waived the $98,000 fine soon after it was imposed. Perhaps Snyder will reconsider this position given new allegations that an Aramark worker has asked a prisoner to assist him with the murder of another inmate.

While Aramark’s failed outsourcing of prison food services is a dramatic example of the harms that can arise from the America’s public services and assets, this report, Pay to Prey: Governors Facilitate the Predatory Outsourcing of America’s Public Services, contains many other cases of outsourcing run amok generating worse outcomes for the public, often higher costs, lawsuits and scorching headlines.

While large corporations are the winners in this scenario, all too often taxpayers are the losers when transparency, accountability and the public interest are sold out to for-profit firms.

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The Dead Hand of Socialism: State Ownership in the Arab World

September 12, 2014 Comments off

The Dead Hand of Socialism: State Ownership in the Arab World
Source: Cato Institute

Extensive government ownership in the economy is a source of inefficiency and a barrier to economic development. Although precise measures of government ownership across the Middle East and North Africa (MENA) are hard to come by, the governments of Algeria, Egypt, Libya, Syria, and Yemen all operate sizeable segments of their economies—in some cases accounting for more than two-thirds of the GDP.

International experience suggests that private ownership tends to outperform public ownership. Yet MENA countries have made only modest progress toward reducing the share of government ownership in their economies and are seen as unlikely candidates for wholesale privatization in the near future.

MENA countries need to implement privatization in order to sustain their transitions toward more representative political systems and inclusive economic institutions. Three main lessons emerge from the experience of countries that have undergone large privatization programs in the past. First, the form of privatization matters for its economic outcomes and for popular acceptance of the reform. Transparent privatization, using open and competitive bidding, produces significantly better results than privatization by insiders, without public scrutiny. Second, private ownership and governance of the financial sector is crucial to the success of restructuring. Third, privatization needs to be a part of a broader reform package that would liberalize and open MENA economies to competition.

The Resurgence of Religion in America’s Prisons

August 28, 2014 Comments off

The Resurgence of Religion in America’s Prisons
Source: Religions

This article discusses the growing prominence of “faith-based” programs in American corrections and the historical context of penal regime change during periods of economic crisis. The article traces areas of overlap and divergence in recent discussions of penal reform in the U.S. The article suggests a new American penitentiary movement is emerging, noting central tenets of faith-based programs have salience for both conservatives and liberals: on the one hand, faith-based programs are largely paid for by church congregations and volunteers, which appeals to conservatives’ desire to shrink government and get taxpayers out of the business of community building; on the other, faith-based programs demonstrate a recommitment to having at least some level of programming in prisons, which satisfies the left’s view that community building and social capital ultimately lower recidivism. The paper documents several prominent faith-based correctional programs while articulating an agenda for research.

Warehoused and Forgotten: Immigrants Trapped in Our Shadow Private Prison System

June 24, 2014 Comments off

Warehoused and Forgotten: Immigrants Trapped in Our Shadow Private Prison System
Source: American Civil Liberties Union

In rural Texas, 3,000 men are locked inside a “tent city,” sleeping in bunk beds spaced only a few feet apart. The tents are crawling with insects and the smell of broken, overflowing toilets. This is Willacy County Correctional Center: a physical symbol of everything that is wrong with enriching the private prison industry and criminalizing immigration.

More than 25,000 low-security non-U.S. citizens languish at thirteen private prisons like Willacy under Criminal Alien Requirement (CAR) contracts. For years, these for-profit prisons have been able to operate in the shadows, effectively free from public scrutiny. That ends now.

CRS — Airport Privatization: Issues and Options for Congress

May 19, 2014 Comments off

Airport Privatization: Issues and Options for Congress (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

In 1996, Congress established the Airport Privatization Pilot Program (APPP; 49 U.S.C. §47134; Section 149 of the Federal Aviation Reauthorization Act of 1996, P.L. 104-264) to increase access to sources of private capital for airport development and to make airports more efficient, competitive, and financially viable. Participation in the program has been very limited, in good part because major stakeholders have different, if not contradictory, objectives and interests.

Only two U.S. commercial service airports have completed the privatization process established under the APPP. One of those, Stewart International Airport in New York State, subsequently reverted to public ownership. Luis Muñoz Marín International Airport in San Juan, Puerto Rico, is now the only airport with a private operator under the provisions of the APPP.

Increasing interest in airport privatization is likely to require a number of significant policy changes, including the following:
• Making privatization more attractive to public-sector owners by facilitating the use of privatization revenue for non-airport purposes.
• Providing similar tax treatment to bonds issued by public-sector and privatesector airport operators, as public-sector operators now have access to less costly long-term finance than private operators.
• Easing requirements for private owners to comply with assurances previously made by public-sector owners to obtain federal Airport Improvement Program (AIP) grants.
• Accelerating the application and approval procedures for the APPP.

Annual Privatization Report 2014

May 9, 2014 Comments off

Annual Privatization Report 2014
Reason Foundation

Now in its 27th year of publication, Reason Foundation’s Annual Privatization Report is the world’s longest running and most comprehensive report on privatization news, developments and trends.

Annual Privatization Report 2014 details the latest on privatization and government reform initiatives at all levels of government.

Offshore Outsourcing of Administrative Functions by State Medicaid Agencies

April 18, 2014 Comments off

Offshore Outsourcing of Administrative Functions by State Medicaid Agencies
Source: U.S. Department of Health and Human Services, Office of Inspector General

WHY WE DID THIS STUDY
Outsourcing occurs when State Medicaid agencies enter into agreements with contractors to perform administrative functions. Outsourcing can occur inside the United States (domestic outsourcing) or outside (offshore outsourcing) and can be direct (when a Medicaid agency contracts with an offshore contractor) or indirect (when a Medicaid agency’s contractor subcontracts to an offshore contractor). There are no Federal regulations that prohibit the offshore outsourcing of Medicaid administrative functions. However, the Health Insurance Portability and Accountability Act (HIPAA) requires covered entities to have business associate agreements (BAAs) to protect personal health information (PHI).

HOW WE DID THIS STUDY
We conducted a survey of 56 Medicaid agencies, including those of the District of Columbia and the U.S. territories. We asked Medicaid agencies (1) whether they had any policies, Executive Orders, State laws, or contract requirements (collectively, “requirements”) addressing the outsourcing of administrative functions offshore and (2) whether they directly or indirectly outsourced administrative functions offshore. For Medicaid agencies with outsourcing requirements, we asked whether these requirements address PHI and whether the Medicaid agencies monitor contractors’ compliance with the requirements. We reviewed the Medicaid agencies’ requirements and BAAs. For the Medicaid agencies that outsource offshore, we asked what types of administrative functions are outsourced offshore.

WHAT WE FOUND
Only 15 of 56 Medicaid agencies have some form of State-specific requirement that addresses the outsourcing of administrative functions offshore. The remaining 41 Medicaid agencies reported no offshore outsourcing requirements and do not outsource administrative functions offshore. Among the 15 Medicaid agencies with requirements, 4 Medicaid agencies prohibit the outsourcing of administrative functions offshore and 11 Medicaid agencies allow it. The 11 Medicaid agencies that allow offshore outsourcing of administrative functions each maintain BAAs with contractors, which is a requirement under HIPAA. Among other things, BAAs are intended to safeguard PHI. These 11 Medicaid agencies do not have additional State requirements that specifically address safeguarding PHI. Seven of the eleven Medicaid agencies reported outsourcing offshore through subcontractors, but none reported sending PHI offshore. If Medicaid agencies engage in offshore outsourcing of administrative functions that involve PHI, it could present potential vulnerabilities. For example, Medicaid agencies or domestic contractors that send PHI offshore may have limited means of enforcing provisions of BAAs that are intended to safeguard PHI. Although some countries may have privacy protections greater than those in the United States, other countries may have limited or no privacy protections.

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