Conservative state government isn’t only about who pays taxes. It’s also about who those taxes pay. Specifically, private business owners. (More)

State Changes, Part II: Who Gets Paid?

This week Morning Feature looks at state and local government. Yesterday we examined the regressive nature of state and local taxes, and a proposal to make Florida taxes even more regressive. Today we see how state and local taxes increasingly go to private contractors who operate schools, prisons, and other formerly-public agencies. Tomorrow we’ll conclude with how these state and local efforts are part of a coordinated, nationwide plan.

The Google Test

If you can find a good service on the Internet, then the federal government probably doesn’t need to be doing it,” former Minnesota Governor Tim Pawlenty argued back in June.

A Republican presidential hopeful at the time, Pawlenty had only slightly updated a long-standing theme from the right. A 2009 report by Pennsylvania’s Commonwealth Foundation and the Cato Institute’s Reason Foundation called it the “Yellow Pages Test,” as did Indianapolis Mayor Steven Goldsmith in the 1990s. The theory is simple. Private businesses must compete for customers, so they must offer a better product or service at an equal or lesser price. Government, by contrast, does not face competition and thus will provide inferior products and services at greater cost to taxpayers. Thus, if a private business already provides or can provide the product or service, government should hire the private business to do it.

Note: We discussed privatization at length last March, with a two-part debate in Evening Focus, a HEMMED In column on privatizing public libraries, a three-part series in Morning Feature, and an Evening Focus summarizing the issues and progressive responses.

Attractive stories … and facts

The Private Business Must Compete So They Do It Better And Cheaper narrative is a coherent story of cause and effect. And as we saw in December, most of us find those kinds of stories very attractive, and we tend to accept them without asking for evidence. And that’s a problem … because many coherent and attractive stories of cause and effect are false.

For example, earlier this month Republican presidential candidate Mitt Romney criticized federal social welfare programs, saying “You have massive overhead, with government bureaucrats in Washington administering all these programs, [with] very little of the money that’s actually needed by those that really need help, those that can’t care for themselves, actually reaches them.” That story feels like it should be true. Federal, state, and local governments combined employ over half of the U.S. work force. We spend lots of money on social welfare programs, yet we still have poverty. Obviously, the answer is that most of those tax dollars disappear in government overhead, and government should get out of the way and let more efficient private charities take care of the needy.

But the Center for Budget and Policy Priorities fact-checked Romney’s story and found that 91-99% of total federal spending on these programs reaches beneficiaries in the form of benefits or services, as does 90-99% of combined federal and state spending for these programs. By comparison, the Charity Navigator found that only seven of ten charities “spend at least 75% of their budget on the programs and services they exist to provide.” That is, the government’s overhead is far less than most private charities.

That’s not as surprising as it seems to conservative ideologues, because competition is only one part of the picture. There are also economies of scale, where government programs can and often do make up the difference … and then some.

Florida’s rush to privatize:

And yet the Florida Legislature are considering Senate Bill 7170, titled Outsourcing or Privatizing of Agency Functions:

Providing that certain information relating to the outsourcing or privatization of an agency function that is expressly required by law is not required to be included in the agency’s legislative budget request until after the contract for such functions is executed; providing that procurements for outsourcing or privatizing agency functions that are expressly required by law are exempt from the requirement that they be evaluated for feasibility, cost-effectiveness, and efficiency, etc.

Translated from Legislativese, this bill would allow agencies to sign contracts for outsourcing or privatizing services before submitting their funding requests, and without conducting feasibility, cost-effectiveness, or efficiency studies. As Tampa Bay Online reported, this would allow privatization to be done in secret.

The bill responds to a court decision that blocked a prison privatization plan because it was buried in the annual budget rather than debated independently. One of the bill’s supporters, Republican state senator JD Alexander, says agencies would still have to show that privatization would save money. When asked how that could happen in secret, without evaluations for feasibility, cost-effectiveness, or efficiency, he replied: “I didn’t draft the bill. I haven’t looked at all the language.”

But the bill would also make it easier to privatize schools, and if a county school board doesn’t jump on the privatization bandwagon, the Parent Empowerment Act would encourage and allow parents to force the issue:

And if that doesn’t get enough taxpayer money into private education coffers, the proposed Amendment 7 – the Florida Religious Freedom Amendment – would replace this language in the Florida Constitution …

No revenue of the state or any political subdivision or agency thereof shall ever be taken from the public treasury directly or indirectly in aid of any church, sect, or religious denomination or in aid of any sectarian institution.

… with this:

No individual or entity may be discriminated against or barred from receiving funding on the basis of religious identity or belief.

That would enable religious schools to get taxpayer funds.

More attractive stories … and facts….

Again, the stated rationale is “giving parents more choices” on the theory that competition will increase school quality. If parents can choose the schools that offer the best education, the story goes, all schools will try to offer better education. It’s another attractive, coherent story of cause-and-effect.

Except for the part about facts. A 2006 study by the National Center for the Study of Privatization in Education focusing on mathematics scores among public and private school students found:

Without controlling for student background differences, private schools scored higher than noncharter public schools, as would be expected. However, this study examines these patterns further, determining whether they are due simply to the fact that higher proportions of disadvantaged students are enrolled in public schools, and the extent to which the gaps persist after controlling for potential student- and school-level confounding variables, including measures of socioeconomic status, race/ethnicity, gender, disability, limited English proficiency, and school location. Overall, the study demonstrates that demographic differences between students in public and private schools more than account for the relatively high raw scores of private schools. Indeed, after controlling for these differences, the presumably advantageous “private school effect” disappears, and even reverses in most cases.

The study focused on mathematics because “math is more heavily influenced by school than home experiences, so studying math achievement provides clearer insights into the relative performance of different types of schools.” And what they found is … private schools are no better. But private schools are very lucrative for investors, as the Miami Herald reported:

But while charter schools have grown into a $400-million-a-year business in South Florida, receiving about $6,000 in taxpayer dollars for every student enrolled, they continue to operate with little public oversight. Even when charter schools have been caught violating state laws, school districts have few tools to demand compliance.

Charter schools have become a parallel school system unto themselves, a system controlled largely by for-profit management companies and private landlords – one and the same, in many cases – and rife with insider deals and potential conflicts of interest.

Maybe that’s why the Florida Legislature wants to enable privatization in secret. When there’s money to be made, who needs facts?


Happy Friday!