Gov. Snyder – The Nation’s Poster Child for Privatization Gone Wrong

As News of Another Aramark Scandal Breaks, A New Report Nails Snyder Over his Failed Privatization Policies

When it comes to monetizing the public sector, Michigan’s governor is the worst of the worst. In a recent Source Watch report from the Center for Media and Democracy, titled Pay to Prey: Governors Facilitate the Predatory Outsourcing of America’s Public Services, Gov. Rick Snyder was singled-out of the group of seven privatization-minded governors, and held-up as a template for how to get it all wrong.

The report describes the 2010 “electoral landslide” of corporate-sponsored governors bent on pushing the “envelope of outsourcing and privatization, selling public services to for profit firms.” The privatization debacles of each of the seven governors are detailed in the report, but Snyder received top-billing with his misdeeds consuming the bulk of the report’s introduction. Michigan’s failed Aramark prison food contract, along with ALEC-based legislation the governor signed into law expanding the destructive growth of cyber schools, earned Snyder the notoriety.

Snyder fooled many into thinking privatization, much like Right-to-work, wasn’t on his radar. He achieved this policy hoax through semantic chicanery. The governor initially said “I don’t believe in privatization. I believe in being competitive.” He carried the deception further with: “Simply privatizing a prison is not on my agenda.” For all his claims of not being a politician, the governor certainly understood that the label “privatization” needed some rebranding — in the form of a free market definition makeover.

The competitive bidding process was how Snyder justified signing onto the Aramark contract, although ironically, recent reports indicate the governor does seem to enjoy his fair share of private sector favoritism through a series of no-bid contracts.

The Aramark deal was ushered along by Tea Party lawmaker, Rep. Greg MacMaster (R-105), the chair of the House Department of Corrections subcommittee. He pushed hard for privatization, claiming a potential savings of $100 million for the state. privatization mag

The genesis of widespread privatization in Michigan, particularly in the corrections sector, has roots that go back decades. The conservative group, Mackinac Center for Public Policy, spearheaded the movement with a publication on the topic targeting elected leaders over the course of many years.

The Michigan Privatization Report, a quarterly magazine, abruptly disappeared with its final issue five years ago — at about the same time the term “privatization” took on an ominous connotation with the public — coinciding with the devastation of the middle-class as the Great Recession brought a deep distrust of corporate America.

Issue after issue of the magazine touted the benefits and savings to be had through privatizing Michigan’s public sector services and assets. Not just the usual suspects — prisons, utilities, and public safety — the list included parks, civic centers, zoos, airports, lighthouses, teacher certification, museums, road systems, bridges, dormitories, ice arenas, fair grounds, animal shelters, cultural arts, ports and marinas. If the public owned it, there was a profit-center to be tapped by the private sector.

Mackinac Center celebrated its first real inroad into privatizing prisons in its March 1997 issue when legislation was passed allowing private companies to open prisons in Michigan. At the time, they predicted 10 to 15 percent in taxpayer savings. Subsequent issues regularly peppered their readership with promises of vast savings — always citing multi-million dollar estimates.

One article assured public officials that the free market would keep private vendors in check, claiming the stock market would demand accountability. By way of example, they referenced a major prison break at an Ohio facility in 1998 under the watch of the private vendor, Corrections Corporation of America. The market spanked the company with a 25 percent drop in stock value, and a downgrade from PaineWeber.

Fast forward to 2014 — not so Aramark.

Post Great Recession investors simply don’t care about accountability. They know there are no real consequences to be had for corporate corruption and incompetence. Indeed, in the case of Aramark — they reward it. A recent glowing market analysis of Aramark, earned the company a “Bull of the Day” rating. Aramark CEO, Eric J. Floss, effused with this statement:

“I am pleased to report another quarter of strong business results achieved within a challenging consumer and economic environment. Our performance reflects solid execution against a sound strategy and was broad-based across the segments and geographies of our portfolio. Based upon this strength and our overall business momentum, we are increasing our full-year 2014 earnings outlook.”

Yet, hardly a day goes by where the private food vendor isn’t in the news over some form of scandal — incompetence, corruption, quality of service, breach of contract, among other illegal activities.

Today, another story of Aramark mismanagement in Michigan’s prisons is making the news. The Detroit Free Press reports a former employee of the company has filed an OSHA complaint against Aramark, claiming:

“[She] was harassed and retaliated against for complaining about a lack of temperature monitoring in cooking; the serving of raw or undercooked meat; falsified records related to dishwater temperature and cleaning solution quality; the serving of meat that had been dropped on the floor; changing the dates on stored leftover food so it could be served after its throw-away date; suspected inflating of the count of meals served.”

It’s not just prisons, though.

Schools are suffering under Aramark contracts. Just this week, students at prestigious American University in Washington DC launched a protest over Aramark’s abusive and inappropriate treatment of student workers in campus cafeterias. Referring to it as a “culture of disrespect”, a student group hand-delivered a letter to Aramark outlining their grievances. From the AU student paper, The Eagle:

“The letter detailed workers’ complaints about potential mistreatment at AU’s dining facilities. The Student Worker Alliance was informed by one or more dining facility employees that managers were saying homophobic and racial slurs to workers. There were also incidents of managers yelling at employees in front of other employees, according to Sean Reilly-Wood, a senior in CAS who participated in the demonstration.”

Aramark handles food contracts at schools and universities across the world, including Chicago Public Schools, where earlier this year they failed to adequately respond to a Freedom of Information Act request. A local radio station inquired about the ingredients in their chicken patties, to which the response was: “chicken patty, and bun.”

Last month, Mayor Rahm Emanuel told Aramark to clean-up their act in Chicago Public Schools where they also hold a $260 million janitorial contract. Citing reports of  “filthy conditions, including dead rodents and bugs, and mouse droppings”, the Sun Times quotes the mayor:

“Aramark’s job is to clean the schools, so our principals and teachers can focus on their fundamental responsibility: education. They will either live up to that contract and clean up the schools or they can clean out their desks and get out.”

In Michigan though, Aramark has been mostly getting a pass from Gov. Snyder, who wishing to avoid a public policy failure so close to an election has referred to troubles with the private vendor as mere “hiccups.”

Even a dusty 1997 issue of Mackinac Center’s magazine advised public officials that they should know when to fold’em on a failed contract. From the article:

“Contracting out by government to private companies carries the same risks and benefits that private businesses assume when subcontracting to outside firms. For example, a private company might contract with a janitorial service because it believes the service can clean at less cost and higher quality than the company’s in-house janitors. The company in essence transfers to the janitorial service payroll costs including wages, Social Security, unemployment insurance, Medicaid, and benefits. If the janitorial service fails to properly clean the building or if the company fails to pay the negotiated price, the contract may be breached and become a matter of litigation.”

There are some Michigan leaders who, in the face of the negative reports on Aramark, are putting the brakes on privatization contracts. Oakland University’s custodial service contract is on hold after board member, Ronald Robinson, expressed concern over recent reports about the vendor:

“As a trustee, one of the factors in deciding how I will vote on a controversial matter is assessing the university’s reputational risk associated with my vote. Two reputational risk factors associated with the vote are the impact on our employee relations and the implication of inviting an outside contractor to campus to be a part of the university community after the contractor has been associated with serious and controversial problems.”

Mr. Robinson appears to possess more basic business acumen than the self-described accountant and nerd who wishes to again earn Michigan’s vote for four more years at the helm.

DSCN0444Amy Kerr Hardin

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One Response to Gov. Snyder – The Nation’s Poster Child for Privatization Gone Wrong

  1. dkmich says:

    Snyder has to go. I don’t know if Snyder or the people that own him are worse. Kochs, DeVos and Addleson are evil little men with evil little minds. They have to be stopped.

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