June 11, 2014


Washington’s Cold Shoulder for Defrauded Students and Soldiers. . .$880 million is a lot more than the $80 million fine that will be shared by Navient’s shareholders and the shareholders of Sallie Mae. That’s right: we said “shareholders.” Sallie Mae has been a private corporation for quite some time. Navient, its loan servicing arm, was spun off when this for-profit corporation became a bank. It’s publicly traded too. . . . We’ve also learned that privatization, that bipartisan scourge of government at all levels, often allows greed to corrupt well-intentioned government activity. In 2010 we detailed some of the degradation in Sallie Mae’s mission, along with some of its executives’ self-serving lobbying, in a piece called “Sallie Mae’s Jets.” (Yes, they had two of them, for executive use.) Back then we said that Sallie Mae was “the poster child for the moral and operational bankruptcy of the … privatization craze.” It still is. Huffington Post (blog)

CA: California teachers unions lose big in court. A court ruling on Tuesday striking down job protections for teachers in California deals a sharp blow to unions — and will likely fuel political movements across the nation to eliminate teacher tenure. . . . Reformers also plan to take the fight to other states, hoping the strong language of the ruling will prompt Democrats elsewhere to reconsider ties to teachers unions. They’re considering similar lawsuits in Connecticut, New Jersey, New Mexico, New York, Oregon and elsewhere. And they plan a relentless public relations campaign, backed by millions of dollars from reform-minded philanthropists, to bring moms, dads and voters of both parties to their side.  Politico

OH: Ohio Supreme Court shoots down JobsOhio legal challenge. In a split opinion published Tuesday, the Ohio Supreme Court denied that Columbus-based left-leaning think tank ProgressOhio and two state legislators lack the standing to challenge the private economic development organization. The court voted 5-2 that ProgressOhio, state Sen. Michael Skindell (D-Cleveland) and state Rep. Dennis Murray (D-Sandusky) failed to establish the grounds to challenge the constitutionality of the group, founded by Republican Gov. John Kasich in 2011 to privatize job growth efforts. Dayton Business Journal

OH: FBI agents in Cleveland examining Illinois business that runs charter schools. Federal authorities in Cleveland are examining an Illinois company that manages the local Horizon Science Academy schools and several others in the Midwest, and they have seized documents from several locations in the past week, including here in Ohio. . .  Vicki Anderson, an FBI agent in Cleveland, said the search warrants involved “a white-collar matter,” but she would not specify. The search warrants are sealed. . .  The Indianapolis Business Journal quoted a spokeswoman from an Indianapolis school, who said agents requested documents that were part of an audit the U.S. Department of Education was conducting of federal “e-rate” grant programs. The Plain Dealer      

NC: House proposal for Commerce privatization better than Senate’s… barely. Privatizing job creation efforts is hardly a new idea, although it’s proven to generate more scandals than results in the sixteen states that have experimented with this approach. According to the General Assembly’s own Fiscal Research Division, the kinds of economic development public private partnerships envisioned in the House and Senate bills haven’t proven themselves any more effective at boosting job creation in the states that adopted them than in those states that simply kept their job recruiting efforts inside agencies of state government.   At the same time, FRD and other researchers have found that these privatization schemes have been marked by financial mismanagement (Wisconsin), conflicts of interest and pay-to-play incentive-granting (Texas and Florida), and the inability to raise private funds, leaving taxpayers on the hook (Missouri). The Senate bill largely ignores many of these problems. It allows partnership staff, officers, and board members to operate outside the ethics requirements of the State Ethics Act, simply requiring the new partnership to develop its own code of ethics. Thanks to a range of amendments offered during floor debate, the House version corrects this problem by covering the new partnership under the state ethics act, but is unclear whether this important provision will remain after both chambers negotiate during a conference committee.  Progressive Pulse

LA: State work force down 8000. More than 8,000 classified state employees have lost their jobs since Gov. Bobby Jindal took office, according to a state Civil Service report issued Tuesday. The bulk of the 8,278 employees were laid off as a result of Jindal administration initiatives that turned traditional state functions over to private companies. Most of the layoffs have occurred in the past two state fiscal years with privatization of the LSU hospital system.  The Advocate

LA: Letter: Where has the money gone?. . . This group of state workers — teachers and retirees — paid premiums to build up a $500 million health care trust fund. According to Legislative Auditor Daryl Pupera, this same trust fund will be gone by 2015. . . .After privatization of the Office of Group Benefits, health benefits are being cut, premiums are being raised and the $500 million trust fund has been raided. They gave a 1.5 percent pay increase to retirees that starts in July and the same month a 5 percent rate increase on insurance premiums for a loss of 3.5 percent for the year. The Jindal administration should be held accountable as to where the $500 million trust fund went. Workers worked so hard to build this up and it’s nearly gone after two years with higher rates and fewer benefits to the 250,000 families insured. This is a shame and someone needs to be held accountable. Monroe News Star