Volume , Number 0
There are no articles.Commentary
There are no articles.Culture
There are no articles.Features
Life & Debt in Jamaica
W. michael byrd and linda a. Clayton
Law & Order
Targets of Hatred: Anti-Abortion Terrorism
Native Challenges to Mining and â€¦
Iraqi Sanctions: Myth and Fact
Nuggets From A Nuthouse
Race and Class
You Can Beat the Privatizers
Consequences Of Empire
An Interview With Miriam Ching â€¦
The War In Afghanistan: 40 â€¦
Stephen R. Shalom
There are no articles.
NOTE: Z Magazine subscribers and sustainers have access to all Z Magazine articles here and in the archive. The latest Z Magazine articles available to everyone are listed in the Free Articles box at the top of the table of contents, and are starred in the list below. Questions? e-mail Z Magazine Online.
You Can Beat the Privatizers
Creating a national climate in which privatizers are put on the defensive is not going to be easy. But they have to be put on the defensive if a turn is to be taken toward strengthening needed social services. The right climate is being created in cities like Bloomington, Indiana.
In early February, a request for proposals for wastewater management went out from the City of Bloomington Utilities (CBU) department to three private firms and to the wastewater workers themselves. In mid July, the proposals received from the private firms were rejected in favor of that of the workers. Both the private firms and the city officials backing privatization were surprised by the public outcry. Once the threat of privatization came to light, a public mobilization coalesced quickly. The Bloomington mayor, John Fernandez, and the director of CBU, Mike Phillips, were faced with the fact that accepting a proposal from any of the private firms would lose the city administration a lot of good will.
The mayor, who in his last campaign for office had promised no privatization, denied that privatizing wastewater management would be a privatization. The privatization movement of the last 20 years has, though, shown that privatization is not just about ownership. It can also be about management and other tasks such as accounting. For the point of privatization is to make public resources privately profitable. This can be done not just by owning public facilities, but also by using public money. A private outfit can push its way in to take an ever-greater share of public money through taking on more tasks. Avoiding ownership is actually viewed as a plus by many private firms since selling skills for public money avoids the headaches of ownership. For one thing, the expectation of profit from a property investment is less sure than that of income from a management contract.
What surprised the companies and the new Democrats in the city administration was that the League of Women Voters, the White River Central Labor Council (AFL-CIO), several members of the City Council, United Students Against Sweatshops, IBEW Local 2249 at GE, the Sierra Club, South Central Indiana Jobs with Justice, and the Monroe County Green Party all came out to debate the issue of public wastewater treatment. The biweekly meeting of the Utilities Service Board became the arena for citizen action, with local media reporting what happened. Wastewater workers also participated, along with officials of AFSCME Council 62, the relevant regional body with offices in Indianapolis, and AFSCME Local 2487, a city workers' local in Bloomington to which its 34 wastewater workers belong. Heightened participation roused the Board from the slumbers that had left it incapable of answering the fundamental question: Why even consider privatization? The board, the director, and the mayor understood that any attempt to push a contract through rapidly with one of the private management companies would provoke an even wider mobilization. Instead, to allow time for the wastewater workers to draft their own proposal and for a task force called for by the public to deliberate, the date for starting work under whatever proposal might be accepted kept being shoved into the future.
A key part of the background for the Bloomington response was the massive 1992-1998 privatization in nearby Indianapolis under Mayor Stephen Goldsmith. The Indianapolis city workforce was cut by over 2,000. The savings in salaries and benefits were, though, dwarfed by the costs of privatizing. Private consultants, contractors, and managers were paid $290 million in order to save—in the name of reinventing government—$149 million in salaries and benefits. In a forum in May on privatization organized by Bloom- ington's community radio station, Jack Miller, current president of the Hoosier Environmental Council, exposed the Goldsmith myth for Bloomington activists.
One of the proposals for managing Bloomington's wastewater came from United Water (UW), which has managed Indianapolis's wastewater since the mid-1990s. UW is fully owned by the French multinational Suez Lyonnaise des Eaux, the world's largest manager of water and wastewater systems, with yearly revenues of $32 billion flowing from 100 countries. Fears arose among workers at the Bloomington facilities when they learned that wastewater employment in Indianapolis had fallen from over 300 to around 100 after privatization. In an unscheduled visit by several Bloomington workers to the Belmont facility in Indianapolis, they found workers there demoralized by tight discipline, a rundown plant, and a gainsharing plan netting them nothing.
The reason given by the director of CBU for sending out a request for proposals to private management firms was the landslide of grievances under a past manager at Bloomington's Dillman facility. The other facility, Blucher-Poole, had had no such problem. Despite the grievances at Dillman, records at both facilities proved they were doing a fine job of meeting EPA and Indiana Department of Environmental Management (IDEM) standards for treated wastewater. So some reason was needed for going private in 2001 other than grievances under a plant manager sacked in 2000.
The CBU director played the efficiency card. A manager supplied by a private firm would, he thought, enable the city to tap into the firm's rich fund of expertise. This expertise could modernize the Bloomington facilities, providing a procedures manual for operations and maintenance, a new program for a computerized management system, and programs for both maintenance management and laboratory information management. In some of the proposals, the companies promised that they would also save the city money by better and cheaper chemicals for treating wastewater. UW had saved Indianapolis money by switching from an ozone and oxygen based treatment process to one based on chlorine. But the product suffered. IDEM found that the chlorine process contributed to killing half a million fish in two by-passes in 1994, a fact UW concealed in its proposal for Bloomington.
The Bloomington public took no time to respond to this appeal to efficiency. New software and a new treatment process could, if needed, be developed under short- term contracts with consultants. There would be no need to let a large management firm get its nose under the public tent. Moreover, if a manager for the system couldn't be found inside, a search could be made outside for someone who would then become a public employee. Ultimately, these were the ideas that won the day. Existing and near-future needs did not call for a private management firm, except in the minds of those for whom only private entrepreneurship can work.
At the board meetings, the specter of the old spoils system was raised. A private company would be free to fill the pockets of politicians both to obtain and to renew a contract. This worry deepened as time went on. The Environmental Management Corporation (EMC), with 50 contracts in the U.S. and affiliated with Anglian Water in Britain, wanted to add Bloomington to the list of Indiana towns for which it manages wastewater. Phone inquiries indicated that both city and union officials in Terre Haute hoped to dump EMC when its contract expired. Yet the same officials were full of praise when EMC asked them for statements that would help EMC get the Bloomington contract. A letter signed by 35 wastewater workers of Richmond, Indiana, and sent to their counterparts in Bloomington indicated that under EMC management their plant had been cited by Indiana OSHA for health and safety violations and that EMC's treatment of them had led them to join AFSCME. Nonetheless, the Richmond mayor praised EMC for its splendid job.
The drift toward privatization started a year earlier in April 2000. A decision was made to hire a manager from EMC for Dillman for May through July and one from UW for Dillman for August through October. In September, a Dillman employees' proposal was accepted for an interim manager from their ranks for November through January. Within this context of interim contracts, work started on a request for proposals for long-term management. It dealt only with the management of Dillman, whose workers decided they would leave the field to responses from private firms. In December 2000, and January 2001, this changed in two ways. First, the manager called for in the request for proposals would be over both facilities, rather than Dillman alone. Second, the workers at Blucher Poole, once it was included in the request, wanted there to be a proposal from workers in both plants in response to the request. So, somewhat late and without the resources of the private firms, drafting a workers' proposal got underway.
The fundamental part of their proposal called for a Labor/Management Committee (LMC) that would cover day-to-day operating decisions and also determine benchmarks, best practices, and cost-saving design. Internal union matters would be off-limits for the LMC. According to their proposal, the eight members of the LMC would include four appointed by the union, the superintendents of the two plants, the new wastewater system manager, and a representative of CBU administration.
Nothing quite like the Bloom- ington LMC emerged in Indianapolis. The Goldsmith revolution involved two types of contract, one with outside vendors and another with employees. Both are for delivering services to the city at a contracted price. In the one case the vendor is a for-profit firm; in the other it is a group of employees, or their union, acting as an independent entrepreneur. In Bloomington, however, it will not be the employees but the LMC, or a sub-committee of it, that will “take the lead” in acquiring specified deliverables. Only a small portion of the Indianapolis budget was committed to contracts with employees, letting large items like wastewater treatment go to private management. Small as it was, it was enough to enable Goldsmith to get AFSCME Council 62 to go along with his revolution.
This contributed to a lingering doubt about where Council 62 and Local 2487 really stood in the Bloomington struggle. After all, Council 62 had become a supporter of Goldsmith's reinventing government, though initially opposing it. That support has abetted private firms elsewhere in their efforts to get contracts with government and then weaken unions.
How strongly, then, would AFSCME officials oppose privatization in Bloomington? There was ambiguity in their instructions. They were saying that their members should work against privatization, but at the same time be prepared to retreat to privatization. Hardly an all-out call to victory. Having been unable to stop Goldsmith in Indianapolis, AFSCME didn't want to go all out in yet one more failed anti-privatization drive. It showed little faith in the public mobilization, and put little effort into working with it. Instead, it got caught up in the game of speculating about which of the private firms would be best to work with.
None of this did anything to change the pro-privatization sentiment among those Dillman workers who had been impressed by the UW interim manager in 2000. Without a determined union effort, UW was emboldened, on March 1, to send Tim Erwin, president of Local 2487, a letter, addressed to itself and for him to sign, endorsing UW for the Bloomington job. The letter did not get signed, but the union did organize a vote on whether to endorse UW if there were to be a private management. An endorsement was narrowly defeated in the vote.
Despite this ambiguity, AFSCME played a key role in defeating privatization through publications and advisors. Evaluating Privatization: A Guide for Labor and Community Activists written for AFSCME by Roland Zullo of the Industrial Relations Research Institute in Madison, Wisconsin, was widely used in answering arguments about the savings of privatization. Dennis Houllihan, a labor economist with AFSCME, gave the employees in Bloom- ington encouragement in the initial stages of thinking about their own proposal. AFSCME recommended Lee Balliet, a former director of Labor Studies at Indiana University, to CBU as a person to call upon to help draft the employees' proposal. In contrast with the self-serving verbiage of the private firms' proposals, his idea of a labor/management committee, which he had used in various other places, gave substance to the notion of shared day-to-day decision making.
There was another factor that loomed large in defeating privatization. It was the formation of an advisory task force. After the public and the Board had listened to the presentations from the competing firms, after the community radio forum, which the private firms boycotted, had alerted more people, and after all the arguments against privatization had been made in the Board meetings, it was still not clear where the Board stood and, even more importantly since he would make the final decision, where the director of CBU stood.
What was there to do next? It was learned that Fort Wayne had defeated privatization in water and wastewater in the late 1990s after an advisory task force had looked at the issue. Since in Bloomington privatization was, as city councilman Andy Ruff put it, a solution in search of a problem, a task force might well advise that the problem couldn't be found.
A local citizen, Stacy Ream, proposed a task force to the Board, which approved its formation on April 23. It soon became clear from the task force's discussions that a majority of its members could not find a sufficient reason to recommend an outside vendor of management services. Instead of letting the task force end its deliberations and make a public report, the Mayor and the Director wanted to move to an immediate decision so that the utilities part of the city budget could be put in place in time to propose the budget. In a press release on July 13, the city announced the decision to hire a wastewater manager rather than a management firm and to accept the workers proposal.
Dealing with a public body made it less difficult to win this struggle. After all, where a major decision affecting a public body is to be made, everyone can claim standing in discussing it. Private firms can and do deny standing to outsiders. The practical difference is simply that public officials ignore citizens at their own risk and can thus often be held to a higher standard of accountability. Mayor Goldsmith had made sure that private firms working with public funds would, instead, be less accountable. Thanks to his lobbying, Indiana law now exempts private firms contracting with municipalities from state laws regulating public bodies.
Those firms can cut private deals, avoid competitive bidding, and treat the public funds they receive as private. Had the mobilization in Bloomington been one against the abuses of a private management firm already hired by the city, all doors to that firm's decision-makers would have been closed to the public. The lesson for those opposed to corporate domination is: Don't wait for privatization to happen to start fighting. Z