State and Local Workers Fight Privatization

When the New York City Department of Health sought an editor for its monthly newsletter, the department bypassed its nearly 6,000 employees and instead turned to the private sector—in New Delhi, India.

	“For workers, privatization threatens job security, pay and benefits, working conditions and career opportunities. For the public, it means less quality, less access and less accountability.” —AFSCME President Gerald McEntee

In San Diego, the county is in its fourth year of a $644 million, seven-year contract that privatized all the jobs in the county’s information technology (IT) system. After the first year when the contractor, Pennant Alliance, a consortium of info-tech companies led by Computer Sciences Corp., missed deadlines and services goals, the county fined it $2 million, reported Washington Technology, a national IT newspaper. In 2002, the county found the alliance in default—because of more missed deadlines, service failures and flaws—and withheld a $44 million payment, according to the newspaper North County Times.

Recently, says Mary Grillo, executive Director of SEIU Local 2028, which represents 13,000 county employees, the alliance threatened to move the jobs to Texas.

“It’s been a disaster,” she says.

With nearly 100 schools under contract nationwide, Edison Schools Inc. is the largest private operator of public schools. When the company pitches its services to school districts, cities and counties, Edison claims a track record of low-cost student improvements in reading, math skills, testing and other achievements.

But a 2003 AFT study, Update on Student Achievement for Edison Schools, shows that “in 14 out of 20 states where the company operates, Edison schools performed below average compared to public schools....The company has lost contracts to operate 30 of the 64 schools in districts that contracted with Edison in the company’s first four years.” Overall, 54 schools have dropped contracts with Edison.

Despite these and other privatization failures around the country, “This coordinated campaign to privatize government at every level far exceeds anything we’ve seen in the past,” says Gerald McEntee, president of AFSCME, which represents 1.4 million mostly public employees.

“For workers, privatization threatens job security, pay and benefits, working conditions and career opportunities. For the public, it means less quality, less access and less accountability. For local economies, because the privatizers are often nonunion, it means fewer good jobs and a reduced tax base,” he says.

The growing budget crises in the states are helping fuel the privatization rush. But while a slowed economy has contributed to dwindling state coffers, much of the drain on state and local resources is a result of the policies of President George W. Bush.

	Up to the past decade or so, most states did not allow wholesale privatization of public services and jobs at the state and local levels. But state lawmakers, lobbied hard and financed heavily by corporations and groups such as the American Legislative Exchange Council (ALEC), have passed new laws and approved new regulations in recent years that opened the privatization flood gates. Privatization has been driven by “corporations and the right wing,” says John Osolnick, SEIU’s director of strategic campaigns for the union’s 800,000-member public-service division. “The clearinghouse for so much of this is ALEC.” The Public Trust Partnership (PTP), an alliance of progressive public-interest groups recently founded to monitor right-wing legislative action, says ALEC was “founded by one of the most radical right-wing activists in the country, Paul Weyrich,” and works through a network of “ideological extremists in state legislatures across the country” to advance its agenda. ALEC and its corporate members have developed model bills to privatize state information technology services, public schools, local and state water systems and public transportation. For more information on ALEC, see the July 2002 America@work.

In addition, Bush has refused to fully fund his new federal mandates, such as the No Child Left Behind Act, which requires states to achieve specific education goals but does not provide adequate funds to enable them to do so. The Bush administration also has failed to provide state and local governments homeland security funding to meet additional security needs, leaving states and localities to come up with funding for essential police, firefighters and other first responders.

Privatizing government services means big profits for Big Business. In New York state alone, the New York State Public Employees Federation/AFT/SEIU (PEF) estimates the state spends more than $250 million a year hiring outside contractors to do the work of PEF union members. Funneling lucrative government contracts to the private sector radically changes the fundamental role of government, which is to serve the taxpayers who fund the services. Instead, a profit-oriented corporate bottom line often is fed at the expense of the public. In fact, the need for profits disproves the oft-stated corporate rationalization for contracting out government services: to provide better services at lower cost to the public.

“Simple logic should tell us it’s impossible for the private sector to deliver the same service for less and make a profit as well,” says Ellen J. Dannin, a law professor at the California Western School of Law, in her study, A White Paper on Privatization. “It’s a popular myth that the private sector can feed the multitudes with a few loaves and fish. In fact, there’s less of miracles done with loaves and fishes and more magic done with smoke and mirrors.”

As the unions in New York and California confront state and local moves to privatize jobs and public services, they can look to the successful efforts by unions and their members—such as Connecticut state employees, Cohoes, N.Y., city employees and Philadelphia public school teachers—who have revealed to lawmakers and the public the corporate smoke and mirrors involved when government contracts out public services.

Connecticut: Exposing the costs of privatization

Exposing the real costs of privatization enabled the 600 SEIU Local 2001 and 200 AFSCME Council 4 members to beat back a plan by Connecticut Gov. John Rowland (R) to privatize the state’s information technology (IT) services, says Robert Rinker, Local 2001 executive director.

Rinker says the multifaceted campaign involved unions taking part in the bidding process. With IBM, EDS and Computer Sciences Corp. also competing for the multibillion dollar, seven-year contract, the unions highlighted how those same corporations had failed in handling smaller public-service projects the state contracted out to them.

“We showed where IBM failed to produce in the Department of Labor [and] EDS in the Department of Social Services. If they couldn’t perform with these little contracts, how in the world could they handle this multibillion dollar project? We started and kept up a huge drumbeat,” Rinker says.

The union also successfully countered the companies’ claim that the state’s IT employees would join the new private firms to keep their jobs, providing a seamless transition in services. In a statement of solidarity, 90 percent of the workers signed pledges indicating they wanted to remain in the public sector and would not work for any of the private companies.

In 2000, after a three-year battle, “Rowland saw he couldn’t win votes or public support and just pulled the plug,” Rinker says.

Cohoes, N.Y.: Political action and public education

	“Growing numbers of communities discover that privatizers tend to do less but cost more.” —AFT President Sandra Feldman

Although the mayor of the upstate New York mill town, Robert Signoracci, told members of the Civil Service Employees Association/AFSCME Local 1000 the city had no plans to privatize the system, he soon revealed a privatization plan that involved laying off half of the city’s waterworks employees.

“We called a membership meeting to let members know what was going on. We did phone banks and called every CSEA member in Cohoes. At an informational picket, hundreds of people came: CSEA members, Teamsters, Fire Fighters. It wasn’t just us against them,” says Bill Kane, shop steward for Local 801, the waterworks division of Local 1000.

From among 14,000 residents in Cohoes, Local 1000 members gathered 5,000 signatures on an anti-privatization petition and built such massive public support the mayor dropped the plan. The workers then dropped the mayor—they endorsed and mobilized for another candidate who won the next election.

But for communities throughout the nation, the threat of privatizing public water systems is far from over. The U.S. Congress is considering legislation that would require communities to consider privatizing their water systems as a condition of receiving part of the $20 billion in federal funding to repair and rebuild their water systems. H.R. 1560 has been approved by committee and is awaiting House floor action.

Philadelphia: Shining a light on Edison

In 2000, with the blessing of then-Gov. Mark Schweiker (R), Edison Schools won a $2.7 million contract to study Philadelphia’s school system and make recommendations for improvement. In late 2001, the state took over the city’s schools and issued a plan based on Edison’s recommendations. The plan included privatizing at least 70 schools—and giving Edison the contracts to run them.

The AFT report, which details the below-average educational achievement in Edison schools and the company’s lack of accountability to taxpayers (see Resources, below), says parents, school districts and the public must have a full picture of Edison’s track record. The Philadelphia Federation of Teachers (PFT)/AFT provided just that.

PFT joined with parents, community groups, civil rights activists and others to form the Coalition to Keep Our Schools Public to lead the fight for public schools. In pubic meetings, rallies and court actions, the group focused on Edison’s shortcomings—including below-average student achievement in math and reading for the majority of Edison schools in California, Delaware, Florida, Georgia, Illinois, Kansas, Maryland, Michigan, Missouri, New Jersey, New York, North Carolina, Pennsylvania and Wisconsin. The coalition also highlighted the lack of taxpayer control over the proposed “reforms.” The group fought for the “interests of Philadelphia’s school children and not the interests of big corporations,” says PFT President Ted Kirsch.

After months of high-profile actions, the state drastically scaled back its experiment in privatizing schools, reducing to 20 the number of schools run by Edison. In addition, the state provided some $21 million for 21 restructured schools to remain public as part of a special program to achieve student academic improvements without corporate control. After a year, tests showed student achievement improved more in the 21 public- run schools than in the privatized schools.

“Privatizers have worked hard to create the impression that ‘private’ is better, cheaper, faster or in some way superior to public services. But that myth has been exposed, as growing numbers of communities discover that privatizers tend to do less but cost more,” says AFT President Sandra Feldman. @