PRIVATIZATION TALKING POINTS
1. Privatization Does Not Necessarily Save Money.
Contractors frequently low-ball or underbid to win a contract, raising rates after they get established and agencies have contracted with them.
District officials rarely consider "hidden costs" including the cost of converting public services to private providers and the cost of monitoring and enforcing the agreement, which the federal government estimates adds at least 4% annually to the total contracting out cost to taxpayers.
Contractors often pad their profits by selling their own equipment, supplies or additional services to the district or agency at a high markup.
2. Private Contractors Are Less Accountable To The Public And Elected Officials.
When in-house expertise and equipment are eliminated, the district loses its' capacity to provide certain public services and becomes dependent on the private contractor. Termination clauses are rarely invoked by district officials because of their financial and political cost.
Private contractors are not required to open their records or decisionmaking process to the public, and are not covered by open meetings laws or freedom of information acts.
Contracting-out increases opportunities for corruption, allowing school officials to award contracts to political cronies or family members.
Lax screening requirements can put the public at risk.
3. Privatization Hurts Local And State Economies.
Contracting-out exports taxpayer dollars from employees and communities to big corporations, often headquartered out of state.
Communities lose public sector jobs with family-supporting wages and benefits, leading to increased social service costs.
Local companies that provide supplies, services or equipment to government agencies lose out when a large contractor wins a bid and their contracts are canceled.
4. There Is An Alternative: Improve Delivery Of Public Services Through Partnership With Front Line Workers.
School districts have saved money and improved services by relying on the ideas, experience and commitment of experienced workers, actively involving them in restructuring through joint efforts.
If competitive bidding is established, allow employees the opportunity to bid on providing services, and even allow "contracting-in".
The Ten Warning Signs of Privatization
Watch out for these signs that privatization or contracting out is a threat in your school district or work place
1. Politicians, school board members or top administrators express strong support for privatization or contracting out of schoolor other public services.
2. Local media highlight criticism of school or other public employees and the services they deliver.
3. Administrators conduct performance audits, "efficiency" or cost comparison studies of school or government services.
4. Neighboring communities or districts privatize or attempt to privatize schools or services.
5. District or agency establishes a commission or task force, frequently with business and community representatives, to examine ways to cut costs or improve service delivery.
6. Administration proposes to reorganize your school, department or agency and change its' responsibilities.
7. Your school district or department plans to use temporary, part-time or "workfare" personnel.
8. Maintenance, upgrading or investing in more modern equipment at your school or work place is cut back or deferred.
9. School district, agency or state faces an impending budget crisis.
10. Your district or agency experiences turnover in top administrators or elected leadership.
Fighting Privatization: Talking Points for School Employees
1. Student Achievement Has Generally Declined Under Vouchers Or Private Management Of Public Schools.
* Milwaukee's voucher program has failed to improve student achievement compared to similar students in public schools, according to UW-Madison professor John Witte in his fourth annual evaluation.
* In Baltimore, two-year test results (1992-93 and 1993-94) show a widening gap between students in elementary schools run by Education Alternatives, Inc. (EAI) and other city schools. Student test scores are lower in EAI schools than they were before EAI arrived, while scores in other Baltimore City schools have improved steadily. In addition, attendance in EAI-run schools has lagged behind the average in other city schools.
* At the EAI-run South Pointe Elementary School in Miami Beach, student test scores over three years are comparable to those of similar public schools. The EAI program "has yet to show that it can produce educational outcomes superior to those achieved by the regular education program of DCPS," according to Dade County's evaluation.
2. Privatization Does Not Necessarily Save Money.
* Private management firms, such as EAI, have track record in Baltimore of demanding at least the district's average per pupil expenditure, while increasing their profits by shorting services to special education students and Chapter 1 students.
* School administrators and board members often don't consider the "hidden costs" of privatizing. They rarely factor in additional costs to the taxpayer of contract administration, monitoring and insuring compliance with the agreement, which the federal government estimates at 4%. Management costs often increase, not decrease, with contracting out, adding a layer of private sector managers to the public sector managers charged with contract administration.
* Conversion costs can add at least 10% to privatization of public services, according to the Office of Management and Budget (1979), including the cost of severance and retirement for dismissed employees.
3. Private Contractors Are Less Accountable To The Public and Elected Officials.
* Private contractors are not required to open their records or decisionmaking process to the public, and are usually not covered by open meeting laws or freedom of information acts. Private schools have no obligation to release student test scores, drop out rates or financial audits. Private management firms such as EAI have only released unfavorable test score data or financial information under pressure.
* Many outside contractors attempt to reduce labor costs by hiring minimum wage workers, on a temporary or part-time basis, leading to a decline in quality of services. Low wages and lax employee screening by security vendors and bus vendors have led to numerous reported incidents in which children are put at risk in school buses and schools. EAI's practice of replacing experienced classroom paraprofessionals with low paid temporary interns has led to increased turnover in the classroom and a loss of continuity for students.
* EAI, the Edison Project and other private contractors claim that "90 day termination clauses" make them more accountable. Yet termination clauses are rarely invoked, due to the financial and political costs of termination , and most contracts have few intermediate sanctions or alternative methods of resolve disputes.
4. There Is An Alternative: High Standards With Real Stakes For Students.
* In spite of a growing movement for private school vouchers in many states, the public overwhelmingly supports the public schools. Clear, tough academic standards combined with a system of real incentives and sanctions for students will enable us to take advantage of this support and preserve public education, the cornerstone of American democracy.
* Every industrialized country with a record of widespread success in student achievement has adopted high academic standards; none have raised achievement through a broad-based system of private school vouchers.
Frequently Asked Questions About Contracting Out (or issues that should be raised with community decision makers)
1. Why do school Boards want to contract out?
* Privatization is often looked at as a "miracle cure" to a district's budget deficit. Supporters of privatization claim that it reduces costs and increases efficiency. Most of the time, employees are laid off and the quality of services suffer.
2. What about accountability?
* When public money is sent out of the community and the state, citizens rarely have recourse when a company fails to perform.
3. What are the "hidden costs?"
* Administrators and Board members rarely take into account all of the costs of contracting out.
* Contractors "low ball" bids in order to get a foot in the door.
* Contracts often provide free office space and utilities to profit-making companies as part of their contract.
* The cost of converting public services to private providers and the cost of monitoring a contractor to insure that they are living up to the agreement are estimated by the office of Management and Budget (OMB) to be about 14% on top of the total contract price.
* School districts often become dependent on contractors making it difficult and expensive to bring a service back in-house.
4. Why is this such a bad idea? The company says no one will lose their jobs.
* Through attrition, jobs are often reduced or part-time positions are created.
* There are lots of cases where contracting has promised not to lay off employees and went back on their word as soon as the contract was signed.
5. The contractor says they're going to save the District money. What's so bad about that?
* Contractors almost always save money by reducing staff and cutting services. Everyone suffers.
* Contractors are in business to make money. The cost of profit has to be written into a contract.
* Many contractors make money because they also often sell materials (food, chemicals or buses). This is an incentive to prescribe increased purchasing of products that the school or facility may not need.
* Contract monitoring, a substantial cost is rarely written into the fee.
Questions for Decision Makers
* Why do you want to contract this work out?
* What effect will the contract have on the community and local businesses?
* What is the proposed length of the contract?
* How can you guarantee competition?
* Does the contractor have to post bid, performance and payment bonds?
* Can the contractor or jurisdiction renegotiate price and terms of the contract before it expires?
* Are there financial penalties against the company for unsatisfactory performance?
* Does the contract indemnify the jurisdiction against liability and property damage caused by the contractor?
* Has the company provided a list of current and past contracts to perform similar contracts with other jurisdictions?
* Is there a provision in the contract regarding resolution of disputes over the quality of service delivery?
* Are there provisions in the contract for intermediate remedies, short of termination, if you are dissatisfied with the contractor's performance?
* Does the plan comply with all federal, state and local laws governing bidding procedures and employment policies?
* If employees are to be replaced or displaced, will they be fired, transferred or reduced by attrition? How will this affect employee morale and performance?
* As part of your cost analysis, have you computed the impact on the public budget of reduced employee health coverage?
* Have you determined a means of administering the contract and monitoring performance and cost? What will be the cost of contract administration?
* What is your fall back position if this arrangement fails?
* If there were a way to achieve budgetary and service delivery goals without contracting out, would you pursue those remedies?