Headlines
Towns Cut Costs by Sending Work Next Door
For-Profit College At Risk Of Losing Accreditation And Access To Federal Student Aid
NJ: Focus on Halfway Houses at a State Senate Hearing
IN: Daniels: State Will Appeal IBM Ruling
MI: State is taking bids to privatize prison health care

Towns Cut Costs by Sending Work Next Door
MOLALLA, Ore.—This town of 8,000 residents has found a way to trim its troubled budget: outsource city-hall jobs to a nearby county government. In 2008, Molalla spent $507,973 on employee salaries and other expenses to handle its building permits, inspections and other construction red tape. In the fiscal year ended June 2012, it spent less than $150,000 for that work. Molalla did it by finding a subcontractor, much as some corporations contract out to specialists the task of making their products. The town is paying Clackamas County to take care of the construction-related work. So far, town residents aren’t complaining. The Wall Street Journal ($)

For-Profit College At Risk Of Losing Accreditation And Access To Federal Student Aid
In just seven years, Ashford University has grown to be one of the nation’s largest for-profit colleges, morphing from a 300-student Catholic school in Iowa into a massive online institution serving more than 90,000. Ashford’s explosive growth was a product of shortcomings in the collegiate accreditation system, according to critics: A California corporation purchased an accredited, near-bankrupt Iowa college in 2005 and used it as a platform to access hundreds of millions of dollars in federal student aid. Now Ashford is at risk of losing its accreditation, a scenario that would jeopardize the school’s ability to tap into federal student loans and grants — the source of more than 85 percent of its revenues. In the week since Ashford’s parent company announced that a regional consortium of colleges had denied the school’s bid for new accreditation, the company’s stock has plummeted more than 50 percent. The review team with the Western Association of Schools & Colleges found that Ashford was not investing enough in its academic programs, devoting significantly more resources toward new-student recruitment than educating its current students. The report found the school suffered from an “under-allocation” of faculty and staff, leaving the school unable to adequately promote student success. Although Ashford’s student population is much larger than major state universities such as Ohio State and the University of Texas, it has only a few dozen full-time faculty members. Huffington Post

NJ: Focus on Halfway Houses at a State Senate Hearing
Legislators said Thursday that the state should consider posting corrections officers inside privately run halfway houses, a move that would significantly increase New Jersey’s oversight of the troubled facilities. Many of the state’s halfway houses are the size of prisons, but have little of the security, relying upon low-wage workers with little training instead of professional officers. Proposals to increase staffing and security were discussed at a State Senate hearing, where lawmakers pressed halfway house operators and senior state officials about escapes, drug use and violence in the facilities.
Legislators said they were disturbed that the halfway house network had arisen with minimal oversight and regulation…Community Education Centers, the company that dominates the halfway house system and has recently come under fire, sought to bolster support by packing the room with staff members and former inmates. Gary M. Lanigan, the corrections commissioner, acknowledged problems with the halfway houses, saying, “There have been horrific acts that have happened.” The New York Times

IN: Daniels: State Will Appeal IBM Ruling
The State of Indiana has to pay IBM $52 million for terminating a contract with the company to overhaul the state’s welfare system.  IBM was hired in 2006 to improve Indiana’s welfare system through privatization. However, the system’s improvement worsened and in 2009 the state cancelled the $437 million contract.  IBM had been seeking $113 million for the cancelled contract. The state countersued to regain $150 million of the contract amount. In issuing the ruling Wednesday, Marion County Judge David Dreyer determined the state owed IBM $12.5 million for equipment, in addition to $40 million he had previously ordered the state to pay. Dreyer said neither side deserved to win and that taxpayers were the losers in the case.  Daniels said Indiana had the nation’s worst welfare system eight years ago, and now has its most timely, accurate, cost effective, and fraud free system ever…Meanwhile, Democrats say the botch welfare privatization should serve as a lesson. EagleCountyonline

MI: State is taking bids to privatize prison health care
The State of Michigan has called for bids in what could be the largest privatization of state government services in Michigan history. Proposals are due Aug. 29 for a massive deal to provide medical services — physical and mental — to all 43,000 inmates held in Michigan prisons. Services include wound care, treatment of heart disease and diabetes, dental care, optometry and sex offender treatment.
The contract could replace the work of 1,300 state employees, Department of Corrections spokesman Russ Marlan said Thursday. Prison medical and mental health services cost the state $306 million in 2011, and the state wants to test the waters through competitive bidding to determine how much or whether it can reduce that, he said. The three-year deal, if it proceeds, could easily eclipse the state’s 1995 sale of its workers compensation insurer, the Michigan Accident Fund, for $255 million. Though privatization initiatives of various types can be difficult to compare, that deal, under former Republican Gov. John Engler, is sometimes cited as the largest to date by the state…Michigan’s track record on privatization has been spotty. Because many of the jobs in the current deal involve health care professionals with marketable skills, such as nurses, critics say the state won’t be able to save as much on pay and benefits as it might in other cases…Roland Zullo, a research scientist at the Institute for Research on Labor, Employment, and the Economy at the University of Michigan, said the complex contract — the request for proposals has 134 pages, plus 30 appendices — will be difficult and costly to monitor. “Even if the state outsources this, the state still remains liable for what happens to those prisoners,” Zullo said.  Detroit Free Press