AFSCME Council 31 – Chicago Newstips by Community Media Workshop http://www.newstips.org Chicago Community Stories Mon, 14 Jul 2014 17:31:05 +0000 en-US hourly 1 https://wordpress.org/?v=4.4.13 Medicaid privatization deal called expensive, inefficient http://www.newstips.org/2013/07/medicaid-privatization-deal-called-expensive-inefficient/ http://www.newstips.org/2013/07/medicaid-privatization-deal-called-expensive-inefficient/#comments Thu, 25 Jul 2013 21:12:39 +0000 http://www.newstips.org/?p=7574 The debate over privatization is currently playing out in a dispute over a contract with a private firm to “scrub” the state’s Medicaid rolls.

In fact, contrary to the privatizers’ claims, it looks like the deal is a huge waste of money.

Last month an arbitrator ordered a $76 million, two-year contract with Maximus Inc. cancelled by the end of the year, finding that it violated subcontracting provisions in state welfare workers’ union contract.  Maximus uses data-mining technology to identify ineligible Medicaid recipients.

Last week, the Alliance for Community Services called on the state to immediately cancel the contract, arguing it has resulted in unjustified disqualification of Medicaid recipients.

The editorial board of the Chicago Tribune, meanwhile, has called on Governor Quinn to appeal the arbitratrator’s ruling — or for the General Assembly to enact a legislative fix — saying the privatization deal is the best way to cut Medicaid costs.

But is it?

***

In a June 20 ruling, arbitrator Edwin A. Benn found that the Maximus deal violated provisions in the state’s contract with AFSCME restricting the contracting out of bargaining unit work unless there’s a clear advantage in terms of economy and efficiency.  The state hadn’t demonstrated that, he said.

The state had argued it was required by recent Medicaid reform legislation, called the SMART Act, to contract out Medicaid redeterminations to a private firm; Benn writes that the act allows, but does not require, contracting out.  And though that particular question would have to be settled in court, he says, under AFCME’s contract the state can’t override contractual provisions by passing new laws.

In a June 28 editorial, the Tribune argues that “it would be a huge mistake to dump this contract and try to start over with state employees,” saying “state officials argue that the fastest and most effective way to do this work is through Maximus.”

But in arbitration hearings, state officials didn’t argue that.  They argued that their hands were bound by the SMART Act.

Benn quotes the deputy director for planning of the Department of Healthc and Family Services testifying:

“What I would have preferred is that they held off and let us implement the IES [the Integrated Eligibility System, a new computer system to do just what Maximus is doing, scheduled to roll out over the next few months], which is the long-term solution, rather than having to do [the Maximus] redetermination project on top of this, which has really complicated getting the IES in place.”

Just a week before an earlier Trib editorial with glowing claims for Maximus’s accomplishments, the planning director was testifying that without “a huge increment in productivity” on Maximus’s part, “we’ll have a serious problem.”

***

Benn also notes the state failed to refute the union’s contention moving the work Maximus is doing in-house would save $18 million a year.

Over the two years of the $76 million contract, that’s a savings of $36 million — nearly 50 percent.

You’d think the deficit hawks at the Tribune — arguing that Maximus is needed because “Illinois doesn’t have money to waste” — would take this into account.  They don’t even mention it.

The state has had to hire 200 additional caseworkers to review Maximus’s recommendations for terminating Medicaid clients, according to Anne Irving of AFSCME Council 31.

That’s because federal regulations require decisions about eligibility be made by civil service-protected employees.  (Maximus’s error rate — along with the seriousness of denying someone health care — seems to validate the wisdom of that rule.)

With an additional 100 caseworkers on top of the 200 already on this task, the state could do the whole job itself, AFSCME demonstrated during arbitration.

Maximus has brought less value to the table than state officials might have expected from its sales pitch, Irving said.  The company touted its sophisticated computer algorithms that would mine data to identify ineligible Medicaid beneficiaries.

It turned out that nearly all the data the Maximus used was already available to the state.  In some cases, Irving said, when the company requested birth certificates or citizenship papers, clients turned to their caseworkers, who had the documents on file.

Then, of course, every recommendation from Maximus to cancel, reduce, or maintain Medicaid benefits had to be reviewed by state workers.  That means the redetermination assessment had to be done not once but twice.  In “a substantial number of cases,” Maximus’s recommendations were found to be in error, Irving said.

***

According to year-to-date numbers reported by the state through mid-June, Maximus recommendations were rejected in 25 percent of cases where they found recipients ineligible; in cases where they recommended changes in benefit levels, fully 50 percent were found to be in error.

(The Tribune was wrong when it wrote in June that Illinois has removed 60,000 people from its Medicaid rolls this year.  That was the number of terminations Maximus had recommended; the number of terminations finalized is significantly lower.)

Many of Maximus’s errors resulted when the company requested irrelevant or unavailable information and then cancelled benefits when it wasn’t provided, Irving said.  In a good number of cases, Maximus recommended cancelling children’s medical cards when their grandparents or other caregivers didn’t provide their own income data — though that’s entirely irrelevant to the children’s eligibility.

Sometimes Maximus recommended cancelling cases because it hadn’t received information that turned out to be in state files, she said.

Many errors reflected the complexity of the state’s human services system — and the importance of professionally-trained caseworkers making judgments with serious impact on people’s lives, said Diane Stokes, a caseworker who is president of AFSCME Local 2858.

Job postings for Maximus workers for the project required a high school diploma, according to documents provided during arbitration  The company’s call center reps on the project earn $12.25 an hour.

According to Fran Tobin of ACS, Maximus is recommending cancellation of benefits when they encounter disconnected phone numbers.  “Having a working telephone is not a requirement for Medicaid eligibility,” he said.

“There are all kinds of reasons we’re seeing for Maximus to recommend cancellations that aren’t legitimate, that don’t demonstrate ineligibility,” he said. “They’re just looking for technicalities to kick people off.”

The Tribune notes with a tone of shock — as evidence of Medicaid “waste” — that 75 percent of terminations recommended by Maximus occurred when “the recipients just did not respond” to requests for information.

Many of those cases are people who may have moved, lost phone service, or live in circumstances where mail delivery is problematic.  Many of them will reapply as soon as they need to see a doctor or end up in a hospital.

Tobin argues people’s health coverage should not be placed at the mercy of a company whose profits depend on slashing the caseload.

***

The Tribune is convinced that “hundreds of millions of dollars” in Medicaid “waste, fraud, and abuse” is at stake if the state doesn’t stick with Maximus.  It’s not clear that’s actually the case.

The great bulk of Medicaid expenditures go to a fairly small number of people with very serious health problems, Irving points out.  They’re probably least likely to get a job or move out of state.

They could have their phone cut off — but if their benefits are cut off on that basis, they’ll be sure to reapply very quickly.

And, of course, people who move out of state aren’t very likely to be using their Illinois medical card.

The state has estimated that “scrubbing” the Medicaid rolls will save $350 million in the first year.  But “no one has ever been able to say where that number comes from or what it’s based on,” Irving said.

***

The Trib has repeatedly marvelled at the state’s inability to police its Medicaid rolls.  In March the editorial board asked, “If Illinois officials knew, or suspected, that thousands of people were improperly receiving Medicaid coverage, why didn’t they act years ago to save hundreds of millions of taxpayer dollars??”

In an editorial just this week — warning of the costs of expanding Medicaid under Obamacare — it charges that “Illinois has never made much of an effort to check if people getting benefits continued to qualify for them.”

That’s not exactly true.

“Maximus isn’t doing anything we weren’t doing for decades,” says Steve Edwards, a retired caseworker who’s active with ACS.

“The caseworkers’ month revolved around the cutoff date,” said Edwards. “We’d put a notice in the mail, and if they didn’t respond the case was cancelled.”

It wasn’t the best system, he says.  It created a lot of “churn” — people being tossed off the rolls, sometimes due to something as simple as misdelivered mail, and forced to reapply when they needed care. (There’s likely to be a good bit of churn in the numbers highlighted by the Tribune.)

Churn creates inconvenience and anxiety for clients, and it creates administrative inefficiencies when caseworkers have to help people reapply.

In any case, for many years annual redeterminations of eligibility proceeded apace.  But then the state started cutting caseworkers, even as demand for public benefits grew dramatically, with Medicaid expansion early in the last decade, and then the Great Recession.

Caseloads grew to three or four times the size of previous decades, said Stokes.  “When I started I had a caseload of 450,” she says.  “Now it’s 1,700.”

So the backlog in redeterminations of Medicaid eligibility was due to extreme staff shortages.

“The problem was created by the state when it failed to have enough workers,” said Edwards.  “They created this crisis, and now they say there’s no way out except to pay a private company $75 million.”

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Human services in the Age of Austerity http://www.newstips.org/2013/07/human-services-in-the-age-of-austerity/ Sun, 07 Jul 2013 20:05:10 +0000 http://www.newstips.org/?p=7557 Clients and welfare workers from the state’s human services system will discuss attacks on public services coming under the guise of austerity — including a privatization contract that an artbitrator recently ordered shut down — at a public meeting Monday.

The Alliance for Community Services is sponsoring the meeting on health care and human services at 6:30 p.m, Monday, July 8, at Teamster City, 300 S. Ashland.

Ralph Martire of the Center for Tax and Budget Accountability will discuss the state’s fiscal crisis.

“The reality is, we’re not broke,” said Fran Tobin of Northside Action For Justice, one of the initiators of the alliance.  “There’s lots of wealth in the state, but our regressive revenue system is failing to tap into it.”

Human service clients and welfare workers will tell stories of difficulties caused by a chronically understaffed system, said Steve Edwards, a retired union activist.

One source of problems is a new DHS pilot program — poised for expansion — that shifts from case-based to task-based organization of office work.  Under the program, caseworkers have been shifted to “teams” devoted to specific tasks.

“You have former caseworkers — who have college degrees in specific fields and a year of additional training — spending all day opening mail,” he said.  Everyone’s work goes into a single pile, with no one responsible for the ultimate disposition of particular cases.  It means clients no longer have a caseworker who they can call to address problems.

“They’ve blown up accountability,” Edwards said.  “It looks to me like sabotage.”

“Under the rhetoric of increasing efficiency, they’re clearly making things worse,” Tobin said.  “It’s insane.”

AFSCME Council 31, which represents state human service workers, has filed a grievance charging DHS with eroding job titles, said Edwards, a former AFSCME local president.

AFCME recently won an arbitration charging that a contract with a private firm to review Medicaid recipients’ eligibility violated contract language on contracting out.  An arbitrator ordered the state to cancel its contract with the consulting firm Maximus at the end of the year, according to the union.

Edwards estimated that for the cost of the $75 million contract, the state could have hired 1,500 additional caseworkers, increasing the workforce by something like 50 percent.

He said some caseworkers currently have caseloads of more than 2,000 individuals or families — far above the recommended caseload of 400 to 500.

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Patients ‘disappeared’ in mental health closings http://www.newstips.org/2012/10/patients-disappeared-in-mental-health-clinic-closings/ http://www.newstips.org/2012/10/patients-disappeared-in-mental-health-clinic-closings/#comments Wed, 31 Oct 2012 23:17:59 +0000 http://www.newstips.org/?p=6735 Last year’s closing of six of the city’s twelve mental health clinics – for a reported savings of just $3 million – was “characterized by poor planning, mismanagement, inaccurate information, and profound insensitivity to clients,” according to a new report from the Mental Health Movement and AFSCME Council 31.

That meant a rocky transition for many clients, while the Chicago Department of Public Health seems to have lost track of as many as two thousand clients whose transition it had pledged to monitor.

According to the report, “Abandoning the Most Vulnerable,” the city listed 5,337 clients in October 2011 when the clinic closings were announced, but its report on the transition this July gave the total as 2,798.

Asked about this, the city told researchers that a March review found only 3,282 “active” cases.  The difference includes clients who weren’t currently seeing a therapist but expected to be able to if necessary – and in any case, between March and July, nearly 500 clients “disappeared” entirely, according to the report.

One problem was that therapists who were being transferred from closing clinics weren’t informed of their new assignments until the very last minute, making it impossible to keep their clients in the loop, said Jo Patton of AFSCME.

The failure to monitor all the city’s clients “represents a signficant lapse at the top echelons” of CDPH, while “the attempt to cover up that failure by simply revising the total number of clients raises serious ethical concerns,” the report charges.

No comprehensive effort

“There was not a comprehensive effort to reach each client and provide them with the information they needed to continue to receive services,” according to the report.

Nor was the transition smooth – as shown by a spike in the rate of psychiatric hospitalizations of CDPH clients in April, the year of the closing. In that month, hospitalizations were nearly twice as high as the average over the previous year and a half.

There were other problems, according to the report.  Two private agencies to which clients were referred closed their doors in the two months following the closings.  Only 43 percent of clients transferred to private agencies were reported by CDPH as receiving services from them.

Meanwhile, with half of CDPH therapists laid off but 85 percent of clients continuing to attend the remaining clinics, caseloads and waiting times increased dramatically.

This all takes place at a time when national and state surveys have revealed increasing demand for mental health services and huge gaps in the capacity to provide services.

Needs assessment

The report calls for reopening the six clinics closed in April and adequately staffing the remaining six clinics, rehiring African-American and bilingual therapists to ensure culturally competent care, and implementing an outreach program to let people in need know about CDPH services.

At a budget hearing held by the Progressive Caucus of the City Council in South Shore on Tuesday, mental health advocate Badonna Reingold said she’s “very, very concerned about  a dramatic turnback of care for people with mental illness” on the part of the state and the city.

While the city has promised to provide care for people without insurance, it is only planning for 2,000 clients, she said, at a time when and increased unemployment and violence are certainly adding stress to the lives of many more people.

She called on the City Council’s health committee to hold a hearing and sponsor a full-scale needs assessment.

Margaret Sullivan of the Mental Health Movement criticized the aldermen for voting for last year’s budget after 28 council members signed a letter opposing the mental health cuts.

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Library cuts called ‘devastating’ — and confusing http://www.newstips.org/2011/10/library-cuts-called-devastating-and-confusing/ http://www.newstips.org/2011/10/library-cuts-called-devastating-and-confusing/#comments Sun, 30 Oct 2011 20:10:08 +0000 http://www.newstips.org/?p=4879 Librarians and library supporters are planning to stage the popular “story time” program at City Hall on Monday morning to protest budget cuts.

But they’re scratching their heads over a budget proposal that cuts hours and staff to reduce the library budget by $10 million, while increasing the budget for capital improvements at libraries by $11 million.

Librarians will read to children, and librarians and library supporters will talk about why they love their libraries at Story Time at City Hall outside the Mayor’s office at 10:45 a.m. on Monday, October 31.  They’ll also deliver petitions with thousands of signatures opposing the proposed cuts.

Mayor Emanuel has proposed laying off about a third of the library system’s staff, which supporters say is already strained since staff reductions in 2009.

According to AFSCME Council 31, which represents library staff, the cuts would lay off at least 24 librarians, 112 library clerks, and all 146 pages from 78 branch libraries.

It could mean the loss of all children’s programming, including early childhood literacy programs, supporters say.

Library supporters around the city are mobilizing to contact aldermen oppose the cuts.

This is  not just a minor reduction of hours, said Kang Chiu of Friends of Rogers Park Library in an e-mail to supporters: “It will gut our city’s major learning resource.”

Elimination of clerks and pages “would be devastating” for the library’s hold system, which makes all of CPL’s 5.7 million books and its entire DVD holdings available at any branch, said Brenda Sawyer of Friends of Blackstone Library.

The system, which moves 750,000 items between branches each month, is “a little gem of a tool,” Sawyer said, but huge backlogs developed when pages were laid off in 2009, forcing a reduction of hours the next year.  Without pages, “it won’t work,” Sawyer said.

She adds that when hours were reduced last year, they were staggered so that if one branch was closed, a nearby one was open.  It was “a maze” but at least “it gave you an option.”  Now all branches will be closed on Monday and Friday mornings.

Monday mornings are particularly busy at the Near North Branch Library, said Gail Shiner, who’s active with the Friends group there.

“It’s a safe haven for people who don’t have a place to be,” Shiner said.  “I feel for the homeless people who come to the library, and for the seniors.  There are people who come from shelters and want to know about computers.”

“Many of our people don’t have computers,” she said, pointing out that many jobs can only be applied for online.  “A lot of children don’t’ have a computer in their home.  And now the schools send everything out by computer.  If you’re a parent and you don’t have a computer, you’ve got to go to the library.”

Parents United for Responsible Education points out that one in four CPS elementary schools and 51 high schools have no school libraries, and branch libraries are the only source of computer access —  and actual books – for students in many communities.

So far inexplicable is a new $11 million appropriation in the proposed corporate budget “to improve library services by renovating and constructing libraries.”  Union researchers can’t figure it out, and library officials were reportedly unable to account for it in a City Council budget committee hearing.

Aside from the corporate budget, the proposed capital budget lists three library projects:  a new branch library in Edgewater, an addition for the Humboldt Park branch, and renovations at the Albany Park branch.  These total $8.5 million, but most of that is covered by TIF funds.  “It’s extremely confusing,” said one budget analyst.

Does it mean the city is prioritizing jobs for contractors (who may or may not live in the city) over solid jobs for city workers?

Or could it be an example of what Emanuel said in NYT columnist Thomas Friedman’s paean to the mayor’s “progressive agenda on a Tea Party allowance?” The Times’s quirky prophet of globalization wrote: “Emanuel simply calls his philosophy ‘cut and invest.'”

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Protest threat of city health clinic privatization http://www.newstips.org/2011/08/protest-threat-of-city-health-clinic-privatization/ Mon, 15 Aug 2011 21:48:25 +0000 http://www.newstips.org/?p=4683 City clinic clients and community supporters will protest Tuesday against the threat of privatization at an event where Mayor Emanuel and Health Commissioner Bechara Choucair are speaking on “Transforming Healthcare in Chicago.”

Southside Together Organizing for Power and others – who stopped city efforts to close mental health clinics two years ago – will rally at 10 a.m., Tuesday, August 16, at the University Clulb, 76 E. Monroe.

Emanuel is said to be set to unveil a plan for the city’s health services next week [correction: it’s being released Tuesday, August 16].  In July he said he’d identified millions of dollars of savings by ordering city health clinics to partner with federally-qualified health centers, private nonprofits that operate clinics under federal grants and guidelines.

No details on how those savings would be accomplished have yet been forthcoming.

But last month, the city’s labor relations director wrote AFSCME Council 31 saying the city is considering contracting out services provided by its community health centers – and that job losses for union members could be expected.

In addition to a range of specialized public health services, the city provides primary health care for 30,000 residents at seven community health centers. City clinics largely serve the working poor, who don’t have insurance but don’t qualify for Medicaid.

One possible model for cost savings could be Cook County’s recent effort to close Women Infant and Children programs at 11 community sites.  The 20,000 women and children who receive nutritional assistance, prenatal care, and screenings and referrals each year were to be sent to federally-qualified health centers.

That plan was reversed by the county following an intensive grassroots lobbying effort by AFSCME and WIC clients, who argued that it would limit access to the program and reduce its effectiveness.

One concern is that, while city clinics are free to those who can’t pay, FQHCs charge on a sliding scale, said Linda DeLaforgue of Citizen Action Illinois.

The area’s largest FQHC, Access Community Health Network, generated some controversy a couple years ago when it raised its self-pay scale in the midst of the recession.

“If the city closes clinics, it walks away from a core mission and puts vulnerable people at risk,” said Anders Lindal of AFSCME.  “You’re breaking up long-term relationships” between doctors and patients and raising barriers to access care, he said.

And if the goal is saving money by driving down wages and benefits for clinic staff, that undercuts living standards for Chicago residents, he said.

“We worry when they talk about ‘transforming’ health care,” said Matt Ginsburg-Jaeckle of STOP.  “We think of public housing, which they ‘transformed’ by destroying it.”

STOP is demanding that clinic patients and community be included in planning for the health care system.

Ginsburg-Jaeckle said that Commissioner Couchair backed out of a huge mental health town hall meeting earlier this month at the last minute, after confirming his attendance several times.  “What’s he afraid of?” he asked.  “What’s he hiding?”

On Tuesday morning, DeLaforgue will be at a hearing of the state’s health facilities planning board, where Cook County will try a second time to get approval for closing Oak Forest Hospital.

Resistance to that move by Oak Forest patients so far has won some concessions from the county, including a 24-hour emergency room. But uninsured residents of the South Suburbs will face huge travel times to Stroger Hospital if Oak Forest is dismantled, DeLaforgue said.

“Everybody is trying to get out of providing health care right now,” she said.  “But if we don’t have a system for public health care in such a major urban area, we really are a third-world country.”

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Mental health groups oppose cuts, privatization http://www.newstips.org/2011/08/mental-health-groups-oppose-cuts-privatization/ Thu, 04 Aug 2011 19:14:55 +0000 http://www.newstips.org/?p=4657 Mental health activists concerned about potential service cuts and privatization will hold a town hall meeting Friday with Chicago Health Commissioner Bechara Choucair.

Mental health providers and consumers will join Choucair on a panel, Friday, August 5, 5:30 p.m., in the Joyce Auditorium of Mercy Hospital, 2525 S. Michigan, 2nd floor.

The groups are demanding to be included in a task force on city-county collaboration formed by Mayor Emanuel and County President Preckwinkle.

Discussion of merging city and county health services in June report from the task force included “language that seems to be a coded way of saying we need to look at privatization,” said Matt Ginsberg-Jaeckle of Southside Together Organizing for Power.  Along with the Community Mental Health Board of Chicago and AFSCME Council 31, STOP is sponsoring the town hall.

“We don’t think a merger is the answer,” said Ginsberg-Jaeckle, arguing it could lead to service reductions and pave the way to privatization.

With privatization, “there would be no accountability, no one to complain to, no guarantee that the same services would be provided,” he said.

When North Carolina privatized community-based mental health services, “it was a disaster,” he said.  “The lines exploded, the number of mental health patients who were incarcerated went way up, and there were big cost overruns.”

They’re also concerned that the city’s 2012 budget will include service cuts.  “The total money spent on mental health clinics is miniscule, it’s  .03 percent of the city budget,” said Ginsberg-Jaeckle.  The city currently spends $6 million on mental health clinics; advocates estimate it would take $15 million to have a fully-funded operation.

The city and county won’t end up saving money if the cuts mean that more people end up in emergency rooms, in jails, or in morgues, Ginsberg-Jaeckle said.  (See the Mental Health Movement’s letter to Emanuel.)

When former Mayor Daley proposed closing four South Side mental health clinics two years ago, STOP members sat in at his office and forced him to reverse the plan.

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Chicago water for sale? http://www.newstips.org/2009/10/chicago-water-for-sale/ Tue, 20 Oct 2009 21:47:11 +0000 http://communitymediaworkshop.org/newstips/?p=803 With Chicago facing a half-billion-dollar shortfall – and Mayor Daley ruling out increases in taxes, fees, and fines – could the city which has pioneered the leasing of major public assets be looking into a long-term lease of its water system?

“The City of Chicago Department of Water Management is said to be considering a lease of its water and wastewater system,” reported the Public Works Financing newsletter in April.

A water department spokesman didn’t confirm or deny the report, but was dismissive. “I hear these rumors periodically, but so far there hasn’t been anything to it,” said Tom LaPorte.

Such a move wouldn’t come without opposition – first of all from the union representing rank-and-file workers in the water department.

“In general privatization is a bad idea,” said Anders Lindall of AFSCME Council 31. “It places a middleman between taxpayers and the government that serves them, a private-sector middleman whose concern isn’t good quality public services but profit.”

Using upfront payments from the sale or lease of assets to pay for operational costs “is the road to fiscal ruin,” he said. “It’s like burning your furniture to heat your house.”

Akron, Milwaukee say ‘no’

Other cities in the region, contending with their own fiscal crises, have recently struggled with the issue. In Akron last November, voters defeated a ballot initiative to approve the long-term lease of the city’s water system by a two-to-one margin. By a similar margin they passed another initiative requiring voter approval for any future sale, lease or transfer of a public asset.

In a city hard-hit by the foreclosure crisis, “people are already so stretched, and the prospect of having to pay higher rates for water and sewer services hit home pretty strongly,” said Greg Coleridge of Northeast Ohio AFSC. He worked with labor and community groups to organize the Citizens to Save Our Sewers and Water, which educated residents about the costs of water privatization and passed petitions to get the issue on the ballot.

Coleridge said early education was crucial — including community screenings of a number of documentaries on water privatization — “so when the big p.r. machine comes along, people already have a deeper understanding, and they won’t be so easily fooled.”

In Milwaukee, the Common Council voted in June to put on hold the hiring of consultants to solicit bids for a 99-year lease of the city’s water system, after a coalition of labor, community, and environmental groups came together to oppose the proposal.

Keep Public Our Water “came together really fast,” said organizer Corinne Rosen. People were concerned about water rates going up and water quality going down, as well as fiscal responsibility and the secrecy of the decision-making process, she said. And while the idea is down it may not be out; KPOW is keeping an eye on things — and pushing for a council resolution against privatizing the city’s water works.

Private operation of municipal water systems often means frequent rate hikes, with private utilities charging as much as 80 more than municipalities for water, as well as lower quality service, with deferred maintenance and backlogged service requests, according to a recent report from Food and Water Watch. The group opposes corporate control of food and water resources, and assists local organizing efforts around the world (including those in Akron and Milwaukee) to keep water in public hands.

The report deals with two types of privatization, explains FWW organizer Jon Keesecker, management and operation contracts, where cities hire private companies, and leases or sales, where companies pay municipalities so they can collect user fees themselves.

People’s first concern about such deals is often rate hikes, he said, along with water and service quality. Beyond that, though, “with something as essential as water, people really want the accountability of public control,” he said.

Indianapolis considers sale, Fort Wayne buys back

In Indianapolis, a private company has operated the water system since 2002; the deal included a five-year rate freeze. Five years later, rates went up 29 percent, and this April they went up an additional 12 percent (after the water company requested a 17 percent hike). In September another rate hike request was submitted – this time for 35 percent. Also in September, Mayor Greg Ballard proposed selling off the water and sewer utilities to outside operators; part of his argument is that it could bring rates down.

Meanwhile, state and federal authorities are investigating environmental violations by the Indianapolis water company, and residents sued last year charging the company systematically overbilled 250,000 customers. (A judge ruled they lacked standing; the city is the company’s only customer.)

This month the Illinois Commerce Commission is holding hearings on a request for rate hikes ranging from 28 to 50 percent by Illinois American Water Company, which serves 317,000 customers from Chicago’s southwest and western suburbs to southern Illinois. It’s the latest of a steady string of rate hikes. (American Water bought up local private water utilities in the area starting in the 1980s.)

In Homer Glen and Orland Hills, where water rates are dramatically higher than in neighboring towns that draw the same Lake Michigan water through municipally-owned systems, officials are considering using eminent domain to take back their water systems, according to the Southtown Star. Other municipalities, including Peoria and Pekin, have mounted similar efforts over the years, but American Water has beaten them back.

Sometimes cities win. After a six-year legal battle, Fort Wayne, Indiana, last year won control of water services that had belonged to a Aqua America. According to FWW, a typical household’s bill dropped by over a third, while water quality and service improved significantly. “It’s been quite successful,” said Keesecker.

Paris says ‘non’

If Chicago were to consider water privatization, one prime prospective buyer would be Veolia Water, part of the North American subsidiary of the French multinational Veolia Environnement, the largest private water company in the world. Veolia Environnement NA moved its headquarters to the Aon building in August 2008. At the time, chief executive Michele Gourvennec noted that “the city of Chicago’s many environmental initiatives mirror…our interest in providing leading-edge environmental programs for our municipal, industrial, and commercial customers.”

Veolia operates the Indianapolis water system (now called Veolia Water Indianapolis) under a 20-year, $1.5 billion contract. In 2008 Veolia took over a $400 million contract to operate the Metropolitan Milwaukee Sewerage District, and it was listed as one of three multinationals that would have the capacity to bid on a water system takeover there.

Veolia’s “vision” is of “a future where the entire planet’s increasingly scarce supply of water fit for human consumption is controlled as a commodity to be bought, sold, traded, marketed, managed and priced for the highest possible corporate profit,” according to a 2005 corporate profile by Public Citizen. (The group argues that as a “natural monopoly,” water resources are best kept in public hands.)

Public Citizen charges that “corruption appears to be part of their corporate culture,” noting bribery convictions of company executives in New Orleans as well as France and Italy, and the jailing of mayors in Bridgeport, Connecticut, and Angoulene, France, for taking bribes from company representatives. (In New Orleans in 2002, after faith, labor, community and environmental groups organized against privatization, bids were rejected by the water and sewer board — and a referendum was passed requiring voter approval of any privatization contract.)

Reviewing the corporation’s operations in Africa, Asia, Europe, and Latin America, Public Citizen charges that Veolia has “a global track record of corruption, broken promises, environmental degradation, price-gouging, obfuscation, misdirection, and secrecy.” Nonetheless, “the world’s largest water company continues to enjoy substantial support within powerful pockets of financial and political circles.”

Founded in 1853 as Compagnie Generale des Eaux (by decree of Napolean III), Veolia took over the water system of Paris in 1861. Last year Paris decided it will not renew Veolia’s contract for water services in the city, which expires on December 31, Inter Press Service reports.

“We want to offer better service, at a better price,” said Paris Mayor Bertrand Delanoe.

A new model for Chicago

Chicago has led the nation in putting major public assets up for long-term lease. Its 2005 Skyway lease to a European consortium was the first such deal for an existing tollroad in the U.S.; its attempt to privatize Midway Airport (which could be revived if economic conditions improve) would have been the first of its kind too.

A recent Illinois PIRG report looks at all of Chicago’s privatization deals, including downtown parking garages and the city’s parking meters, and finds that all include contract terms limiting concessionaire’s risk. In the parking meter deal, the city is barred from issuing permits for parking facilities that charge less than three times nearby meter rates, which would seem to remove any competitive pressure to keep rates down.

In no case has there been any independent financial analysis of asset value or public interest impacts, Illinois PIRG found; the deals are developed and cut in secret, with no opportunity for public input; huge fees for lawyers and financial consultants cut into the value of deals, and sometimes raise conflict-of-interest concerns; and multigenerational leases limit options for cancelling deals and saddle future generations with rising costs and limited options.

The longer the timeframe, the harder it is to accurately gauge an asset’s value, said Brian Imus of Illinois PIRG, and it’s virtually impossible to predict changes in technology and demographics in the long run.

The report was issued in conjunction with an ordinance sponsored by Alderman Scott Waguespack, who called the parking meter debacle “a wake-up call for the City Council to strengthen the tools they have to make sound fiscal and policy decisions.”

The ordinance would require notification of aldermen whenever a public asset lease was under consideration; a public hearing at least a month before a council vote on putting out a bid; independent third-party review of asset values, public-interest concerns (which are particularly relevant in core operations like parking meters), consideration of other options; and a 30-year limit on leases of assets worth over $1 million.

“There need to be policies in place to protect the interests of the public and taxpayers,” said Imus. “We don’t have that in Chicago.”

He expects a push for hearings on the ordinance next month. A previous council effort to impose a 30-day “waiting period” was whittled down to 15 days under administration pressure. It’s not the time period itself but the independent review it provides for that’s important, says Paul Sajovek, Waguespack’s chief of staff. (In Akron voters won a 90-day review period — and the requirement that voters approve any lease of public assets.)

Imus believes it’s possible that some privatization deals could benefit the public. And while some would agree with Lindall that privatization is a bad idea generally, it’s likely many would agree with Keesecker that water services should be kept public.

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