Rauner and privatization
Friday, Dec 11, 2015 - Posted by Rich Miller
* The BGA has a very good story about the Rauner administration’s push to privatize some state services. Pros and cons are discussed, so I’d recommend a look at the whole thing…
The Department of Commerce and Economic Opportunity. Privatizing the business recruitment agency is a top priority for Rauner. This year, House Democrats largely gave Rauner what he wanted in a bill, but the governor said he couldn’t support a sunset provision to review the private contract in three years.
The Department of Corrections. State Sen. Dave Syverson (R-Rockford) says Illinois can save substantially by setting up a private nursing home for aging inmates. While corrections reform advocates say elderly prisoners should be housed in a central facility, neither they nor Democratic lawmakers interviewed support a private operator.
The Department of Central Management Services. Sen. Michael Connelly (R-Lisle) thinks the state’s central management services can be reformed to hand over functions to the private sector. Among the areas: property management, which can be better handled by a private company, he said. Sen. Syverson agrees, saying everything from landscaping to fleet vehicles should be examined.
State buildings. Durkin introduced legislation to help speed Rauner’s proposed sale of the James R. Thompson Center in Chicago. Assessing the value of state-owned properties is prudent and the Thompson Center is “the whitest of white elephants of state government,” Durkin said.
Thoughts?
- Daniel Plainview - Friday, Dec 11, 15 @ 1:22 pm:
Big dollar signs for real estate management firms looking to get a piece of the state inventory. Blago looked into it, even he couldn’t make the numbers work for those potential contributors.
- Sen. Dave Syverson (R-Rockford) says Illinois can save substantially by setting up a private nursing home for aging inmates. -
And I bet they’ve got just the shuttered mental health facility right there in Rockford to do it.
- My New Handle - Friday, Dec 11, 15 @ 1:22 pm:
CMS is using some outfit in Texas to vet eligibility for dependents on state insurance. I think that has happened just within the last year. Scary because what is the recourse for sensitive information being disclosed by this firm. Privatization of state functions always makes me nervous. Blago wanted to privatize the lottery, part of it has been put into private hands and that hasn’t worked so well.
- wordslinger - Friday, Dec 11, 15 @ 1:25 pm:
Let’s see the details on a case-by-case basis.
There have been plenty of clout-heavy boondoggles in privatization. Witness Chicago parking meters, and long-term state building leases in which the costs of the lease exceeded the value of the properties.
- Norseman - Friday, Dec 11, 15 @ 1:27 pm:
There’s a place for privatization, but decisions to privatize needs to be based on solid analysis of cost benefits.
- Huh? - Friday, Dec 11, 15 @ 1:28 pm:
I am not enamored with the idea of privatization. There are many thing that can go wrong. As an example, I would point at CMS. When blago came into office, he took all of the IT, building maintenance, etc away from the various departments and agencies. The thought was that a central organization would make things more efficient. Instead, just the opposite occurred. Rather than talking to the local janitor/custodian about fixing something, we would have to call some dimwitted person in Springfield to schedule the repairs. More often than not, the nitwit would over rule the local folks and deny the repairs.
History has not been kind to privatization schemes. It is a way to chop up the furniture to stay warm.
- Rufus - Friday, Dec 11, 15 @ 1:30 pm:
It will not save money, and probably service will get worse. Every time government tries to privatize, it ends bad.
- Honeybear - Friday, Dec 11, 15 @ 1:31 pm:
You can bet your sweet bippy that most folks at DCEO and CMS will lose their jobs to privatization. Although I have to admit that I wouldn’t mind the grading of promotional exams be privatized. CMS can’t even tell you if your exam or info was logged in. THERE IS NO LOG! My promotion was two months late and I had to send the info twice! I’ve heard that DCEO uses mostly consultants for projects now anyway. I wonder where they squirreled away the money to pay them? Privatization of government functions is just a bad idea on so many levels.
- LizPhairTax - Friday, Dec 11, 15 @ 1:35 pm:
Nursing Homes for elderly inmates has GTCR investment written all over it
- Truck Technician - Friday, Dec 11, 15 @ 1:35 pm:
I know for a fact that the private market can do 90% of CMS’s work for IDOT much cheaper. I have reviewed the invoices that were charged to specific trucks and there is no reason to charge an IDOT garage 2 to 3 times what a truck dealership would charge for the same work. Plus the fact that the individual garages are not supposed to do simple maintenance repairs (replace wiper blades)but are required to call CMS.
- Norseman - Friday, Dec 11, 15 @ 1:36 pm:
=== House Democrats largely gave Rauner what he wanted in a bill, but the governor said he couldn’t support a sunset provision to review the private contract in three years. ===
Prime example of what’s wrong with our shoot from the hip gov. Dems reasonably respond to examples of problems in other states with this model by asking for a sunset and whiner Rauner pulls the plug on everything.
- There is power in a union... - Friday, Dec 11, 15 @ 1:36 pm:
“Although I have to admit that I wouldn’t mind the grading of promotional exams be privatized.”
That unit in CMS is severely understaffed…
Every state worker who still thinks the governor has their back needs to read the above article. Twice…
- NixonHead - Friday, Dec 11, 15 @ 1:38 pm:
Should all come down to what costs less. It’s just not productive to be for or against privatization based on ideology. Let the numbers speak, the State needs to make good financial decisions based on the bottom line, not on how bad they feel about a small segment of employees that might be without jobs at the benefit of the entire State.
- wordslinger - Friday, Dec 11, 15 @ 1:47 pm:
Of course, given this administration’s track record, you’ll have to find private operators who are willing to go without being paid for months on end, as the state’s privatized social service providers are doing right now.
- AC - Friday, Dec 11, 15 @ 1:51 pm:
Privatization is a great way to bust state employee unions. I’ve never seen it come out cheaper, not with IT contacts anyway. $80 - $200/hr is typical for contractors chosen by low bid and minimum skillset necessary for the work. The people working for those organizations are lucky to get 1/2 of what their employers charge. Compared with $20 - $60/hr for state IT employees, it doesn’t seem worth it.
- walker - Friday, Dec 11, 15 @ 1:56 pm:
DCEO was the first Dem “give” to the Rauner administration in the Turnaround Agenda. Rather than treat it a good starting point for broad scale negotiation, he was in no mood at that time even to accept gifts. That was the signal that we were in for the long haul, with no negotiation yet allowed.
In general, Illinois has the fewest state government employees, but not the lowest budget, because we are already significantly privatized.
- Blue dog dem - Friday, Dec 11, 15 @ 2:00 pm:
My disdain for DCEO will only grow if it’s privatized. At least beaurocrats are supposed to be held accountable to elected officials in some capacity. Influence pedaling, good old boy(girl) networks, corporate board of directors….it’s frightening.
- Try-4-Truth - Friday, Dec 11, 15 @ 2:01 pm:
Social Services were privatized years ago, and now the state doesn’t pay them for their services.
- Anon221 - Friday, Dec 11, 15 @ 2:04 pm:
Durkin (from the article) “That’s how [Rauner] became successful. He gets the most out of his transactions for the beneficiaries he’s working for — …”
And Rauner’s beneficiaries were not the businesses he dismantled and remade or eliminated. Just as the State of Illinois and the People will be, based on most past to present privitization schemes, defrauded and defunded.
- Anonymous - Friday, Dec 11, 15 @ 2:05 pm:
Of course privatization is cheaper when you don’t pay the provider at all.
- steve schnorf - Friday, Dec 11, 15 @ 2:17 pm:
Syverson doesn’t usually comment on things like this without being fairly well versed
- Nick Name - Friday, Dec 11, 15 @ 2:17 pm:
On opening a privatized nursing home for aging inmates, federal CMMS did not approve certification for such a nursing home in another state.
- 47th Ward - Friday, Dec 11, 15 @ 2:20 pm:
From the BGA report:
“Privatizing the business recruitment agency is a top priority for Rauner. This year, House Democrats largely gave Rauner what he wanted in a bill, but the governor said he couldn’t support a sunset provision to review the private contract in three years.”
In other words, Rauner is blocking one of his own top priorities.
- Qui Tam - Friday, Dec 11, 15 @ 2:28 pm:
They could be on to something here. Rauner has more experience runnin’ nursing homes than governin’.
- Stones - Friday, Dec 11, 15 @ 2:29 pm:
Privatization may make sense in certain cases - others not. How’s that Skyway or Parking Meter privatization deal working out?
- JoanP - Friday, Dec 11, 15 @ 2:34 pm:
@NixonHead: “Should all come down to what costs less. ”
No, it shouldn’t. Yes, cost matters, but so do efficiency, accuracy, privacy and liability concerns, and a host of other factors.
Cheapest isn’t always best.
- Six Degrees of Separation - Friday, Dec 11, 15 @ 2:36 pm:
IDOT and the tollway are already largely privatized. If you walk around their offices (especially in Downers Grove and Schaumburg), you are as likely to bump into a consultant as an agency employee, and same thing on a construction project, where private engineering firms largely staff the inspection crews that oversee private contractors who are doing the construction work. Highway maintenance (snow plowing, etc.) was once the last frontier of all state or tollway crews, but even there, the larger scale maintenance projects like pavement patching are often contracted out.
- NoGifts - Friday, Dec 11, 15 @ 2:40 pm:
Lots of cautionary tales out there http://www.prwatch.org/news/2013/10/12264/profiting-poor-outsourcing-social-services-puts-most-vulnerable-risk
- Oswego Willy - Friday, Dec 11, 15 @ 2:44 pm:
To the Post,
You can’t have priorities you think are worthy, but are also worthy enough to be taken away when compromise should be the order of the day.
If these deals can be a part of “doing the doable”, I’d be for the premise of compromises through the idea of doing things better.
Wish these plans where the only things left on the plate.
- Beaner - Friday, Dec 11, 15 @ 2:45 pm:
From The Rascal’s Dictionary: “Privatization: Good sounding campaign euphemism for Insider Sweetheart Deals. syn. Corporate Cronyism, Investment Credits, Sales Tax Increment Zones, Investment Incentives, Kickback for Payoff scheme, Development Infrastructure Improvement Grants”
- Joe M - Friday, Dec 11, 15 @ 2:46 pm:
==Syverson doesn’t usually comment on things like this without being fairly well versed==
I was thinking just the opposite. Every comment I ever read from Syverson is taken from the GPO party line and handbook, no matter how nonfactual it is.
- Jack Stephens - Friday, Dec 11, 15 @ 2:52 pm:
@beaner;
Wealthy Welfare….add to list.
- Carhartt Representative - Friday, Dec 11, 15 @ 3:00 pm:
My thoughts of privatization go to CPS’s janitorial and food service deals which were disasters, the parking meter scheme, the skyway, and a bunch of prisons in other states that are full of abuse and conflict of interest.
- VanillaMan - Friday, Dec 11, 15 @ 3:02 pm:
Governments provide citizens service regardless of their ability to pay. Taxpayers pay not only for the service costs for themselves, they pay for the service costs for their neighbors who cannot pay. If it were a business, it would be as though you go to a store with a monopoly on shoes, and pay the price of the shoes - plus - the cost of providing shoes to people who cannot afford shoes. There is no inherent value, let alone a profit for the store.
To keep prices down and profits high, a business finds customers able to buy their products and services at a price that creates for them a profit. Governments can’t do that. Businesses can carve out a market from our existing community - but they are not tasked with providing for everyone in our community.
The profit businesses gets stems from their ability to not provide services and products to those who cannot pay. Governments cannot do that.
It is a lot of silly nonsense.
Private business does not want to provide goods and services to people who will not pay. Customers won’t pay the higher prices needed to provide the goods and services due to providing goods and services to citizens who cannot pay.
What we have are a bunch of businesses itching for a profitable monopolistic niche and see it with governments. Yet - once we’ve seen them get those niches - we all see them rediscover that they can’t do what the government did. These businesses are forced to squeeze out costs by providing poor service and goods in order to cover all the costs to all citizens.
This happens repeatedly.
Rauner naturally doesn’t understand this. He never had to run a business the way a government runs government services. He instead, imagines that government is wasteful and wrong. Based upon his business experience - sure - but then he never had to figure out how to provide for all citizens, even those who cannot be taxpayers or customers.
He wants to provide value to taxpayers? How can he do that when he has to provide the same goods and services to non-taxpayers as well? How can he provide a value to those who can pay, when everyone has to pay for those who cannot?
Governments historically do what businesses cannot do for a profit. That is still true. This is not about consumerism. It isn’t about value. It isn’t about being a taxpayer. It is about running an organization that has to go beyond providing to those who can pay. Governments do that.
Privatization is a nirvana. A pie in the sky for those who believe in business magic. Any government services sold to businesses will end up becoming worse. The more these services are regulated and overseen - the quicker the whole thing ends up folding.
Hate governments all you want, but on many things, it is the only “best way” to do things for ALL CITIZENS.
- wordslinger - Friday, Dec 11, 15 @ 3:05 pm:
One of my favorite privatization scams was Daley’s Hired Truck program.
You didn’t need a driver’s license, or even a truck, to get a contract.
If the numbers work after extensive due diligence, fine. But if it’s just ideological union-busting, forget it.
- sal-says - Friday, Dec 11, 15 @ 3:13 pm:
== This year, House Democrats largely gave Rauner what he wanted in a bill, but the governor said he couldn’t support a sunset provision to review the private contract in three years. ==
OK; raunner gets what he wanted and still whines and won’t give it a try. Brucie: Go try it & see what it does or DOESN’T save. Don’t forget all the wonderful things privatizing the Lottery was going to bring. LOL.
== State Sen. Dave Syverson (R-Rockford) says Illinois can save substantially… ==
== n. Michael Connelly (R-Lisle) thinks the state’s central management services can be reformed to hand over functions to the private sector. Among the areas: property management, which can be better handled by a private company, he said. Sen. Syverson agrees, saying everything from landscaping to fleet vehicles should be examined. ==
Davy & Mikey: Show us the NUMBERS! From an unbiased analysis. Easy to spew statements; put your actual savings numbers where your mouths are. Prove the savings.
- downstate commissioner - Friday, Dec 11, 15 @ 3:19 pm:
Vanilla man, thank you for the succinct review of why privatization is a bad idea for many aspects of governmental service. While some $ savings and/or time/expertise can be be beneficial, many jobs are best left up to governmental employees who serve the public, not stockholders….
- Smitty Irving - Friday, Dec 11, 15 @ 3:19 pm:
The federal experience is contractors generally are more expensive.
- Mama - Friday, Dec 11, 15 @ 3:30 pm:
==“Often, the actual process to approve such deals historically lacks transparency, oversight and protections to make sure the government doesn’t get hoodwinked, a Better Government Association analysis finds.”
And while Durkin said he believes every area of state government needs to be evaluated for privatization, he adds that oversight is key.
“Most people think they can sign a contract and walk away — you have to monitor,” Warner said. “There is no statistical support that privatization is cheaper. Why? The theory is competition leads to lower costs but there’s no competition. It’s still a monopoly and private actors maximize profit at the cost of quality.”==
Can Rauner be trusted to monitor the contracts?
- thoughts matter - Friday, Dec 11, 15 @ 3:35 pm:
== know for a fact that the private market can do 90% of CMS’s work for IDOT much cheaper. I have reviewed the invoices that were charged to specific trucks and there is no reason to charge an IDOT garage 2 to 3 times what a truck dealership would charge for the same work. Plus the fact that the individual garages are not supposed to do simple maintenance repairs (replace wiper blades)but are required to call CMS. ==
The difference is that money passed between agencies doesn’t leave the state coffers, regardless of what rate CMS ‘charges’. Privatizing means actual cash payments (except for when no budget to pay with) to private sector.
- Mama - Friday, Dec 11, 15 @ 3:39 pm:
A contractor will show a lower price at the beginning in order to win the contract. After they win the contract and their contract is up, the price goes up. The contractor cost will continue to increase.
- frisbee - Friday, Dec 11, 15 @ 3:48 pm:
If the prisons go private you can bet they will spend money to block any criminal justice reform measures that are badly needed in Illinois…
- Littleone - Friday, Dec 11, 15 @ 3:56 pm:
I’ve heard rumors that the Governor is going to privatize DCEO with an EO- would that even be possible?
- Honeybear - Friday, Dec 11, 15 @ 3:57 pm:
There is power in a union, I get it that the grading section is understaffed. I apologize I should have put the snark symbol behind my sentence. I don’t want any privatization. I do wish they’d get their act together.
- Pelonski - Friday, Dec 11, 15 @ 3:59 pm:
I don’t have any faith that Rauner can successfully implement privatization. He’s been governor for almost a year now and has done very little to identify areas where improvements can be made in state government. Most agencies could use a top to bottom review to identify best and worst practices, but most agencies operate today, the same way they did under Quinn. How can you know what functions are good candidates for privatization if you don’t know the problem areas?
- bwana63 - Friday, Dec 11, 15 @ 3:59 pm:
>- LizPhairTax - Friday, Dec 11, 15 @ 1:35 pm:
> Nursing Homes for elderly inmates has GTCR investment written
> all over it
+infinity
- Honeybear - Friday, Dec 11, 15 @ 4:03 pm:
Littleone, I’m pretty sure that’s not possible since a lot of functions are done by statute and cannot be changed except by legislative action. I think that’s the same for most Agencies but I’m NOT a lawyer. It’s just my understanding. Of course that doesn’t mean the Rauner administration won’t try it. It’s FIRE,READY,AIM with those folks.
- one of the 35 - Friday, Dec 11, 15 @ 4:03 pm:
Much could be learned about this subject by reviewing the situation for Charlotte/Mecklenberg County in North Carolina, where municipal departments can bid against private contractors for award of public service contracts. They have been doing this for several years with great success.
- crazybleedingheart - Friday, Dec 11, 15 @ 4:18 pm:
== While corrections reform advocates say elderly prisoners should be housed in a central facility ==
Oh? Which advocates say that? Names, please.
What I have heard advocates say is that people who don’t pose a danger to the public, including most elderly prisoners, should not be in prison.
That’s very different than “housed in a central facility.”
- Anonymous - Friday, Dec 11, 15 @ 4:22 pm:
Walker privatized Wisconsin’s Department of Commerce and Economic Opportunity. It has been nothing but an ongoing scandal. A lot of kickbacks and big $ give aways. Should go over really well with Illinois’ stellar corruption record!!!
- Runaground Agenda - Friday, Dec 11, 15 @ 4:34 pm:
Privatization aims to save money by sidestepping some of the red tape in government. But the red tape might exist for transparency or fairness, not just poor management. I’m thinking ok f the procurement code. Or the state employee hiring process.
How about instead of aiming to run govt like a business (which it isnt) we aim to manage govt well?
- Norseman - Friday, Dec 11, 15 @ 4:38 pm:
He can reorg DCEO and other agencies by EO if GA doesn’t disapprove within 60 days after officially received by GA. However, I wouldn’t say it’s possible if he wants to create public/private partnership. The Illinois constitution allows reorg of his agencies with GA review if laws affected. Creating a private sector link would go beyond that authority IMHO.
- Norseman - Friday, Dec 11, 15 @ 4:40 pm:
P.S. I wouldn’t give a Rauner EO an ice cube’s chance in Hades given the current environment.
- Just Me - Friday, Dec 11, 15 @ 4:46 pm:
I would advise the Governor that 3-years for the DCEO privatization plan is pretty reasonable, and such sunsets are very common with a lot of things in Springfield. Take the win and go home with a nice trophy.
- Cannon649 - Monday, Dec 14, 15 @ 10:10 am:
In Illinois we all have a rotten taste about selling a government assets. The Skyway and Parking Meters are fine examples. The Taxpayer pay more and several parties use the deal make out well.
If done professionally, they can work. Need to see the numbers and evaluate individually.