Public Employee Press

As privatization fails
It's time to Insource

HENRY GARRIDO
Executive Director, District Council 37, AFSCME, AFL-CIO

FOR DECADES, advocates for privatization have peddled the myth that corporations are better run, more efficient and can therefore better manage public works.

This fantasy has found favor among right-wing, 'trickle-down' policymakers who essentially believe that corporate profits benefit all of us, despite the fact that wages have remained stagnant for decades and income inequality has become, in President Obama words, "the defining issue of our time."

The privatization mythology gained ground in the 1990s, when "reinventing government" was in vogue and more and more city and state managers agreed to outsource public services to private companies. But municipalities are now increasingly turning to insourcing as privatization is marred by cost overruns and corruption.

Example after example of mismanagement by private companies has shown the folly of trying to serve the public and reap profits at the same time.

Privatization's poor track record

These days, more policy makers across the country are viewing privatization with skepticism after experience has shown hoped-for costs savings don't materialize 52 percent of the time, according to one study, and the quality of work suffers 61 percent of the time.

Some examples compiled by the International City/Country Management Association:

• Evansville, Ind., saved an estimated $15 million over five years by ending its contract with a private operator in 2010 to run its sewer and water system;
• Atlanta canceled its contract with a private company to run its water because of poor management and poor service;
• The San Diego United School District saved $1 million a year by insourcing its school bus services in 2012: and
• The San Diego Community College District has saved $900,000 a year by bringing information technology work in-house.

Because of this lousy track record, lawmakers in 2014 introduced insourcing legislation in 15 states, according to In the Public Interest, which monitors privatization.

Here in New York, an outsourced project to increase payroll efficiency has become the poster child of how badly private corporations handle public work. The CityTime scandal resulted in an $800 million theft and consultants going to jail on corruption charges.

We are encouraged by the de Blasio administration's willingness to hear our argument in favor of insourcing rather than blindly following the practice of the former administration, which was ideologically driven to farm out the work of public employees.

A major victory was the Dept. of Parks and Recreation's decision to take over the city's $66 million Flushing Meadows Corona Park pool complex.

The decision came after a four-year campaign by the union, with the support of Lifeguard Supervisors Local President Peter Stein, to expose a private contractor's hazardous practices and inefficiencies. In the end, the campaign led to 80 unionized jobs in the public sector.

The debate goes on, but as the facts become clear so, too, does an inevitable conclusion:

In-sourcing the work makes best sense as public policy.