PRIVATIZATION

A Fight Back Handbook

 

 

Identifying the Signs of Privatization

Public officials of state and local governments continually seek alternative ways of providing public services in response to limited revenues and public resistance to tax increases. In New York, as in many states, officials have adopted various techniques to change the way government operates. Among them is privatizing or contracting out public services.

Privatization has become widespread at all levels of government and nearly every type of government service has seen some exposure to contracting out. Privatization, seen as injecting competition into service delivery and turning physical assets into financial assets, has emerged as the key ingredient in efforts to "right size" the fiscal problems faced by policy makers.

State policy makers give credence to the idea that to obtain full value from privatization, they need to design comprehensive, forward looking privatization programs that incorporate a variety of privatization techniques and identify numerous privatization opportunities. It seems that in many instances, they design and systematically implement privatization programs with little fanfare or resistance primarily because recognition of the impact of the privatization came "too little, too late."

Public employees need to be aware and be able to identify privatization techniques and opportunities early on in order to begin preventing or fighting privatization. Understanding these methods used to shift services and assets to the private sector will assist you in your fight back efforts.

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Methods of Privatization

There are several methods used by government to privatize services. They include:

 

Contracting Out/Outsourcing

This is when the state enters into an agreement with a private for-profit or not-for-profit company to provide goods and/or manage services. This also can be when the state funds the private provision of public services.

 

Grants and Subsidies

The state provides partial subsidies to a variety of private and quasi-public entities that provide public services identical or similar to the services provided by state workers.

 

Service Shedding

The state drastically reduces the level of a service or stops providing a service so that private sector companies can assume the function.

 

Asset Sales

This is when a government sells its assets to private companies or individuals in order to raise revenue.

 

Deregulation

This is when the state removes its regulations from services previously provided exclusively by public employees in favor of allowing private provision of services and creating competition against government agencies.

 

Managed Competition

This occurs when the state creates a contracting process which allows government workers to bid along with private contractors to provide a public service. This sometimes happens as a direct result of deregulation.

 

Public-Private Partnerships

This occurs when the state participates in projects in cooperation with private companies, relying solely on private dollars rather than tax dollars to fund the project.

 

Franchising

This is when the state furnishes a monopoly to one company to provide a particular public service in a given geographic area.

 

Private Donations

This is when the state relies on private sector resources for assistance in providing public services. Private companies may loan personnel, equipment and/or facilities to the state by donation with no financial obligation to the state.

 

Volunteerism

This is when the state relies on volunteers, such as church groups and other volunteer groups, to provide services which in the past have been staffed by government workers.

 

Vouchers

Vouchers are instruments paid for with public funds but used by clients and consumers to obtain services from private providers.

Early Warning Signs

Before governments begin to privatize services, and long before bids are submitted, public employees should be watchful and attentive to indicators that these actions may occur. It is important for the public sector not to be caught by surprise. This means that public employees need to be involved in early detection by: 1) being alert to changes that managers are discussing; 2) being proactive by anticipating additional work current contractors may seek; 3) monitoring documents such as agency mission statements, 5 year plans, pending executive orders, etc.; 4) and recognizing buzzwords such as "downsizing," "restructuring," and "re-engineering."

Recognizing and being aware of the early warning signs that government is contemplating privatization is extremely important. Some of these warning signs include the following:

 

  • The Governor issues an executive order (New York already has an executive order)creating a taskforce on privatization and contracting out
  • legislature establishes legislative initiatives that promote privatizing services
  • The announcement of a looming budget crisis 
  • The development of an employee attrition plan which includes things like early retirement incentives, hiring freezes, and no strategy for refilling positions
  • State agencies initiate or hire consultants to conduct "efficiency" or "cost comparison" studies of public services or operations
  • "Shadow agencies," trusts, or not-for-profit organizations and authorities are created
  • The state initiates the reorganization and consolidation of services into one central agency which makes it easier to privatize
  • The state agency begins utilizing temporary, part-time, or "workfare" personnel to provide public services
  • State agencies ask public employees to respond to bids from private corporations
  • Neighboring states or communities begin privatizing services
  • Services are: Introduced, changed, or restructured