Out of Control Policy Blog

Friday Privatization News Highlights (7/29/2011 edition)

News articles on some of the more interesting developments on the privatization and public-private partnership (PPP) front over the last week include:

Federal

  • "Postal Service eyes thousands of post offices for privatization" (Central Valley Business Times): The U.S. Postal Service announced this week that it was considering closing over 3,600 largely rural post offices (representing slightly over 10% of the total post offices nationally) and outsourcing some of their basic functions to local businesses. More here from The New York Times.
  • "Lawmakers examine proposals to reduce federal government's real estate holdings" (The Hill): While it certainly makes sense for the Federal government to reduce its real property holdings—it spends $20 billion annually to operate a whopping 1.2 million buildings—it's definitely presents a political challenge. This interesting read discusses a recent House Oversight and Government Reform Committee hearing in which Obama administration and Congressional Budget Office officials offered contrasting views on the potential costs and savings associated with the administration's asset divestiture plan.

State Government

  • "Jindal administration announces firms for Medicaid privatization" (Times-Picayune): In major state Medicaid privatization news, the Jindal administration announced this week that it has selected five firms to provide state-subsidized health insurance policies to over 800,000 state Medicaid patients in Louisiana. Under the plan, the state will transition Medicaid recipients into “coordinated care networks,” where the state will pay the private insurance companies to cover Medicaid patients, and the insurers will manage patient benefits and reimburse providers for services rendered. Each firm will operate statewide, and Medicaid recipients will be able to choose from the plans offered by the competing providers.
  • "Kasich touts Ohio Turnpike privatization while in Toledo" (Toledo Blade): Ohio Gov. John Kasich touted the potential benefits of a long-term lease of the Ohio Turnpike at a Toledo press conference this week. The recently passed state budget authorized the administration to pursue a Turnpike PPP, and Kasich told reporters that a deal could potentially bring billions to the state to invest in needed transportation infrastructure, along with a share of annual toll revenues over the life of the lease.
  • "Bidding begins to privatize prisons in South Florida" (Miami Herald): This week, the Florida Department of Corrections issued the solicitation for the state's large-scale, 18-county corrections privatization initiative, which was authorized in the budget passed earlier this year (see this recent commentary for more details). According to the Herald, state corrections secretary Edwin Buss is expecting "some of the most competitive bidding the country has ever seen for private prisons." For more on Secretary Buss's take on the ambitious initiative, see this recent NorthEscambia.com article.
  • "State seeks private partner for two I-95 travel plazas" (Baltimore Sun): The Maryland Transportation Authority is taking a mulligan in its attempt to replace two aging travel plazas on I-95 via a PPP, issuing a new request for proposals this week. The agency is revamping its approach after vendors offered a tepid response to the original solicitation last year, which was so overly prescriptive that the request for proposals itself totaled over 700 pages.
  • "Workers comp is on the right track" (Charleston Daily Mail): While not a news article, this editorial highlights the ongoing benefits of West Virginia’s 2006 privatization of its state-run workers compensation insurance monopoly. Since privatization and the onset of competition—over 170 companies compete to provide this insurance today, versus one in 2006—workers comp insurance rates have dropped by over 40% in West Virginia. For more on this initiative, see my 2010 my June 2010 post on Governing’s “Better, Faster, Cheaper” blog.

Local Government

  • "LA is one step closer to privatizing zoo" (Los Angeles Times): Yesterday, a Los Angeles city council committee unanimously approved a proposal to enter into a PPP for the operations and management of the Los Angeles Zoo...with a catch. Under pressure from labor, the committee also asked city staff to prepare an analysis of what in-house changes the city might do on its own to lower zoo costs and avoid privatization (presumably to be released before the full council vote). As I wrote last week, the overwhelming majority of accredited urban zoos nationally (over 70%, according to some estimates) have already shifted to a PPP model as a means to increase private fundraising and reduce or eliminate government subsidies.
  • "Osceola looks at privatizing libraries, security officers" (Orlando Sentinel): Osceola County, FL officials are considering the privatization of county library operations and some security functions. According to the article, the county manager estimates that outsourcing the operation of the county's six libraries would save approximately $12 million over five years—the system is currently running a $3 million annual deficit. For more on recent moves in library privatization, see Reason Foundation’s Annual Privatization Report 2010: Local Government Update.
  • "Privatization—and Pushback—Proceed in Santa Clarita" (American Libraries): Speaking of library privatization, this article takes a look at Santa Clarita, California's recent shift to private library management. I should note that this is a remarkably balanced article, given that it was published by the American Library Association, which has taken a firm position against privatization.
  • "Ramsey Board of Public Works rejects bids for purchase of water and sewer system" (NorthJersey.com): Officials in Ramsey, NJ have rejected three private bids received on the potential privatization of the borough's water and wastewater systems, as they came in lower than officials had anticipated.

For more on privatization, see Reason Foundation's privatization research archive.

Leonard Gilroy is Director of Government Reform


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