Commentary

Abby Scher: Rethink role of for-profits in state public service

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SOMERVILLE - The fight over raising the charter school cap is part of a big wave in Massachusetts pushing the private provision of vital public services. What's going on?

The uproar over big money from wealthy out-of-state hedge fund managers and billionaires flowing into the state to pass Ballot Question 2 lifting the charter school cap gives us some clue.

Consistently supporting the drive to privatize public services are well-funded conservative think tanks and business lobbyists who push the practice even though the record shows it often involves cronyism and generally falls short of promises to improve cost and quality.

We see such cronyism exposed in a recent Boston Globe investigation: Gov. Charlie Baker Jr.'s office still works closely with his former campaign manager, whose firm represents companies pursuing government contracts and the private transportation company currently running Boston's commuter rail, Keolis. It's no surprise the MBTA quietly forgave $839,000 in fines levied against Keolis for poor performance and is exploring even more privatization options.

Massachusetts also has its own right-leaning think tank papering over the challenges of privatization, the Pioneer Institute for Public Policy Research. Pioneer seems to have its fingers everywhere these days-from the failed effort to lift the charter cap to the MBTA Fiscal and Management Control Board, whose vice chairman is a former Pioneer research director. You find Pioneer people, past and present, as regulars on Boston public radio shows, writing op-eds for daily newspapers, and even leading the state as governor.

Yes, Massachusetts Gov. Charlie Baker is a former executive director of Pioneer. So is Education Secretary James Peyser. But unless you are a policy insider, you might not know much about the group.

For decades Pioneer has promoted the idea that good government is privatized government. It claims that businesses, not public institutions, serve our communities best by bringing "competition" and private sector experience to public services including education, mental health, and transit. Accountability supposedly comes not from elected officials or community members, but from market forces.

It's a model apparently embraced by the governor and his advisors. But does it really work?

In the competition for government contracts, insider bids and influence peddling happen all the time - even here in the commonwealth. In 2010 Pioneer's own expert on municipal outsourcing, Stephen Lisaukas, paid a $3,000 settlement for violating the state's conflict of interest law while leading the Springfield Financial Control Board. He promoted a friend to handle millions in city investments and lied about the relationship. Merrill Lynch ultimately repaid $13 million lost when that friend steered city money into high risk funds barred by law.

Hidden costs to workers

The conservative think tanks and lobbyists supporting privatization also ignore the hidden cost to communities when workers aren't paid well by contractors. Communities prosper when workers have stable wages and can support local businesses. But if its track record elsewhere is anything to go by, Brinks will pay workers less than $15 an hour in fulfilling its new MBTA contract managing the counting room.

Indeed, privatization's allies regularly cite "research" about the seemingly magical power of bringing market principles to the public sector. In a RadioBoston discussion about charter schools earlier this year, Pioneer Fellow Charlie Chieppo claimed research shows "having competition (from charters) has produced better results for the kids left in those (public schools)." But that is simply not born out by most reputable research. A University of Chicago research consortium found that city's improving graduation rate came from regular neighborhood high schools that offered tougher courses, kept better track of students, and rebuilt trust among staff and with students.

Even Margaret Raymond, head of the charter-oriented Center for Research on Education Outcomes at Stanford University, says charter competition has failed to make schools better. She concedes that in education, "the market mechanism just doesn't work."

Even worse, charters shortchange public accountability because they are overseen by private boards, not by elected residents. A Brown University study found 31 percent of the board members of Massachusetts' charters were from the financial or corporate sectors, and few were parents or students. It is a trend that diminishes democratic oversight even as it reduces educational outcomes and drains resources away from existing public schools.

Pittsfield's public schools alone are projected to lose more than $2 million in the current fiscal year, according to the state Department of Elementary and Secondary Education.

Other states learned the hard way about privatization's dangers. Last year, Texas passed contracting reform after scandals. Similar scandals here in Massachusetts led to our own Pacheco Law setting strong standards for privatizing public services. But last year, Gov. Baker's allies won a three-year exemption for public transit from the law. Where Texas takes steps forward, Massachusetts seems to be moving back.

It's not too late to stop privatizing the commonwealth. Massachusetts deserves better.

Abby Scher is a sociologist, and research fellow at Political Research Associates in Somerville.


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