Privatizing Government Services in the Era of ALEC and The Great Recession – Section 1, Introduction

PRIVATIZING GOVERNMENT SERVICES IN THE ERA OF ALEC AND THE GREAT RECESSION

by Ellen Dannin 1

I. INTRODUCTION

In Max Barry’s 2003 novel, Jennifer Government,2 there is no public sector:  The world is run by American corporations; there are no taxes; employees take the last names of the companies they work for; the Police and the NRA are publicly traded security firms; the government can only investigate crimes it can bill for.

Hack Nike is a Merchandising Officer who discovers an all-new way to sell sneakers. Buy Mitsui is a stockbroker with a death-wish. Billy NRA is finding out that life in a private army isn’t all snappy uniforms and code names. And Jennifer Government, a legendary agent with a barcode tattoo, is a consumer watchdog with a gun.3

Events in 2010 through 2012 suggest that Jennifer Government might accurately predict our national trajectory. During that period, a number of states, including states with a long history of public-sector collective bargaining—Alaska, Arizona, Colorado, Florida, Idaho, Indiana, Iowa, Kansas, Massachusetts, Michigan, Nebraska, New Hampshire, New Mexico, Nevada, Ohio, Oklahoma, Tennessee, Washington, and Wisconsin—limited or proposed eliminating or limiting public-sector collective bargaining rights.4 A 2010 “Quinnipiac University poll found that three-fourths of [Connecticut] state voters supported a wage freeze for state workers, and 61% favored layoffs.”5 Public anger also developed in New Jersey as a result of the state’s failure to properly
fund public employee pension benefits by $53.9 billion. Ironically, that anger led to demands that public employee rights to pensions be cut or eliminated on the grounds that public employees were grossly overpaid.6 However careful studies, such as those by Rutgers professor Jeffrey Keefe,7 found that public employees were actually paid less than comparable private sector employees, with a larger percentage of their compensation taken in the form of higher benefits, especially
pensions and health care. In other words, attacks on public employee pensions and health care put the payment of their deferred wages at risk.

Driving these attacks on public employees was ideology, along with the real problem of large revenue shortfalls in fiscal years 2009 through 2011,8 high unemployment, and wage cuts for those still employed, which made funding public employee benefits a daunting task. In addition, shortfalls in many states were caused by lost tax revenues and costs associated with years of persistently

High unemployment and the effects of state Taxpayer Bill of Rights (TABOR) amendments.9 All of these factors combined to create an escalation of hostility towards public-sector employees.

On March 11, 2010, newly elected New Jersey Governor Chris Christie responded to the state’s financial crisis by issuing an executive order creating a privatization task force—popularly known as the “Zimmer Commission.”10 The executive order’s list of reasons for creating the task force included being “hindered by legal impediments, many of which were needlessly self-imposed by
the prior administration”; agreeing to “an unreasonable ‘memorandum of agreement’ (‘MOA’) that purports to prevent the State from taking common sense management approaches to achieve personnel efficiencies in the near term”; “delaying previously negotiated wage increases until after the end of the prior administration has resulted in the State having reduced flexibility to manage
its workforce and effectively increased the costs that will be associated with achieving near-term savings by ensuring rounds of litigation in order to preserve basic managerial prerogatives with respect to the size and composition of the State workforce”; and needlessly limiting the flexibility needed “to manage its wage and salary payments and the size of its workforce … while simultaneously preventing meaningful managerial control of the State workforce.”11

To address these problems, Governor Christie’s executive order charged the Zimmer privatization task force to focus “on a number of critical issues,including: (a) which government functions are or may be appropriate for privatization; (b) current legal and practical impediments to privatization; [and] (c) ensuring that the scope and quality of services is not inappropriately diminished.”12

In just a few months, public employment issues moved from invisibility to hotly contested battles that drew tens of thousands of protesters to state capitals. The early 2011 protests in Wisconsin, Ohio, and elsewhere13 dramatized conflicts over the value of public employees—in particular teachers—and of public services and infrastructure. Through 2011, privatization increasingly became headline news as state after state announced plans to “balance their budgets by
contracting out or auctioning off public infrastructure and government services.”14 Often privatization was bundled with other changes to government workers’ benefits, pay, civil-service protections, collective bargaining rights, and union representation.15

Other states followed New Jersey in creating privatization commissions through legislation or executive orders, including Virginia, Maryland, Arizona, Kansas, Oregon, Illinois, South Carolina, and Pennsylvania.16 The language used to create the privatization commissions was very similar, suggesting that they had a common origin.17 The reason for the similarity in the language became clear when the operations of a powerful but little-known organization—the American Legislative Exchange Council (ALEC)—were released to the public.18

ALEC drafts legislation on a wide range of issues.19 In addition to addressing privatization and eliminating teacher tenure, ALEC model legislation would criminalize acts such as a failure to produce identification proving citizenship. This article examines a sample of ALEC’s bills dealing with teachers, the privatization of education (excluding higher education), and public sector
collective bargaining.

Next up:  Section II. THE AMERICAN LEGISLATIVE EXCHANGE COUNCIL (ALEC)

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FOOTNOTES:

1. Fannie Weiss Distinguished Faculty Scholar and Professor of Law, Penn State Dickinson
School of Law. I would like to thank Nancy Van Meter, Preston Green, and Joseph Slater.
2. MAX BARRY, JENNIFER GOVERNMENT (2003).
3. Max Barry, Jennifer Government, JENNIFER GOV’T BLOG,
http://maxbarry.com/jennifergovernment/ (last updated May 5, 2010).
4. See, e.g., H.R. 4625, 96th Leg., 2011 Reg. Sess. (Mich. 2011); H.R. 4626, 96th Leg., 2011
Reg. Sess. (Mich. 2011); H.R. 4627, 96th Leg., 2011 Reg. Sess. (Mich. 2011). See also Jennifer
Epstein, Idaho OKs Bill Limiting Bargaining, POLITICO (Mar. 8, 2011, 5:08 PM EST),
http://www.politico.com/news/stories/0311/50892.html; Kyle Feldscher, Gov. Rick Snyder Signs
Major Changes to Teacher Tenure into Law, ANNARBOR.COM (July 19, 2011, 5:45 PM),
http://annarbor.com/news/gov-rick-snyder-signs-major-changes-to-teacher-tenure-into-law/; Ed
Mendel, Outsource Jobs: New Way to Cut Pension Costs?, CALPENSIONS (June 13, 2011, 7:22
AM), http://calpensions.com/2011/06/13/outsource-jobs-new-way-to-cut-pension-costs/; Labor
News, WINSTON & STRAWN LLP (Apr. 2011), http://www.winston.com/siteFiles/
Publications/April2011_Labor_Newsv2.html#State; Mary Wisniewski, Factbox: Several States
Beyond Wisconsin Mull Union Limits, REUTERS (Mar. 10, 2011, 7:37 PM EST), http://www.reuters.com/article/2011/03/11/us-usa-unions-states-idUSTRE7295QI20110311?feedT
ype=RSS&virtualBrandChannel=11563.
5. Conor Dougherty, Cash-Poor Cities Take on Unions, WALL ST. J., Apr. 1, 2010, available
at http://lapd.com/news/headlines/cash-poor_cities_take_on_unions/#.
6. Michael Powell, Public Workers Facing Outrage in Budget Crisis, N.Y. TIMES, Jan. 2,
2011, at A1, available at http://www.nytimes.com/2011/01/02/business/02showdown.html?_
r=3&hp=&pagewanted=all.
7. Sylvia A. Allegretto & Jeffrey Keefe, The Truth about Public Employees in California,
INST. FOR RES. ON LAB. & EMP. 1, 2 (Oct. 2010), http://www.employmentpolicy.org/
sites/www.employmentpolicy.org/files/truth_public_employees.pdf; Jeffrey H. Keefe, Are
Wisconsin Public Employees Over-Compensated?, ECON. POL’Y INST. 1, 2 (Feb. 2011),
http://www.employmentpolicy.org/sites/www.employmentpolicy.org/files/wisconsin.pdf; Jeffrey
Keefe, Debunking the Myth of the Overcompensated Public Employee: The Evidence, ECON. POL’Y INST. 1, 2 (Sept. 15, 2010), http://www.employmentpolicy.org/siteswww.employmentpolicy.org/files/Debunking%20the%20Myth.pdf; Jeffrey H. Keefe, Are N.J. Public Employees Overpaid?, ECON. POL’Y INST. 1, 2 (July 30, 2010),  http://www.employmentpolicy.org/sites/www.employmentpolicy.org/files/NJ%20Public%20Employee%20Comp.pdf.
8. Elizabeth McNichol, Phil Oliff, & Nicholas Johnson, States Continue to Feel Recession’s
Impact, CENTER ON BUDGET & POL’Y PRIORITIES (June 17, 2011), http://www.cbpp.org/cms/?fa=view&id=711; Mary Jo Pitzl, Worries Increase Along with Arizona’s Debt, ARIZ. REPUBLIC (June 9, 2010, 12:00 AM), http://www.azcentral.com/arizonarepublic/news/articles/2010/06/09/20100609arizona-debt-increases.html.

9. Iris J. Lav & Erica Williams, A Formula for Decline: Lessons from Colorado for States Considering TABOR, CENTER FOR BUDGET & POL’Y PRIORITIES (Mar. 15, 2010),
http://www.cbpp.org/files/10-19-05sfp.pdf.

10. Exec. Order No. 17 (N.J. Mar. 11, 2010), available at http://www.nj.gov/infobank/circular/eocc17.pdf; Press Release, State of New Jersey, Governor Christie Creates Task Force to Develop a Comprehensive Approach to Workforce Privatization (Mar. 11, 2010), http://www.state.nj.us/governor/news/news/552010/approved/20100311b.html.

11. Exec. Order No. 17.

12. Id.

13. Monica Davey & Steven Greenhouse, Angry Demonstrations in Wisconsin as Cuts Loom,N.Y. TIMES, Feb. 17, 2011, at A1, available at http://www.nytimes.com/2011/02/17/us/17wisconsin.html.

14. Cash-Strapped Governments: Privatization and the Great Recession, STATECOLLEGE.COM,
http://www.statecollege.com/calendar/detail.php?id=25144 (last visited Mar. 14, 2012).

15. Beau Hodai, Publicopoly: ALEC & The Bid to Make Private All That Is Public, DBA
PRESS (July 2011), http://dbapress.com/wp-content/uploads/2011/07/DBA-Press-Publicopoly.pdf.

16. Tim Stuhldreher, Judge Privatization Panel on Results, Supporters Say, CENT. PA. BUS. J.
(Oct. 14, 2011, 3:00 AM), http://www.centralpennbusiness.com/article/20111014/
FRONTPAGE/111019888/Judge-privatization-panel-on-results-supporters-say. On January 21,
2011, Arizona Governor Jan Brewer issued Executive Order 2010-04, establishing a Commission on Privatization and Efficiency (COPE), which was superseded by Executive Order 2010-10,
issued on May 25, 2011, available at http://azmemory.lib.az.us/cdm4/item_viewer.php?
CISOROOT=/execorders&CISOPTR=694&CISOBOX=1&REC=9. Six months later, on July 21,
2011, Governor Brewer’s COPE Commission issued its privatization recommendations, which are
available at http://www.azcope.gov/FinalreportJuly2011.pdf.

17. H.B. 1331, 2010 Reg. Sess. (Va. 2010); H.B. 2194, 2011 Leg., 2011 Reg. Sess. (Kan.
2011); S.B. 1466, 49th Leg., 1st Reg. Sess. (Ariz. 2009); H.B. 4161, 96th Gen. Assemb., Reg. Sess.(Ill. 2009); S.B. 984, 188th Gen. Assemb., Reg. Sess. (S.C. 2009). See also Salvador Rizzo, Someof Christie’s Biggest Bills Match Model Legislation from D.C. Group Called ALEC, NJ.COM (Apr. 1, 2012, 6:00 AM), http://www.nj.com/news/index.ssf/2012/04/alec_model_bills_used_in_nj_
la.html.

18. ALEC, http://www.alec.org/ (last visited Mar. 5, 2012); Fresh Air: Who’s Really Writing
States’ Legislation? (NPR radio broadcast July 21, 2011), http://www.npr.org/2011/07/21/
138537515/how-alec-shapes-state-politics-behind-the-scenes. See also Mary Bottari, ALEC Bills in
Wisconsin, PRWATCH, CENTER FOR MEDIA & DEMOCRACY, (July 14, 2011, 8:07 AM),
http://www.prwatch.org/news/2011/07/10880/alec-bills-wisconsin.

19. Lisa Graves, Bosma and Daniels Push “Right to Work” Amid Controversies over
Financial Backers, PRWatch, CENTER FOR MEDIA & DEMOCRACY (Jan. 10, 2012, 9:44 AM),
http://www.prwatch.org/news/2012/01/11229/bosma-and-daniels-push-right-work-amid-controvers
ies-over-financial-backers; Lisa Graves, Indiana Workers Stand against the ALEC Agenda and the
Anti-Labor Bill Called the “Right to Work” (for Less), PRWatch, CENTER FOR MEDIA & DEMOCRACY (Jan. 5, 2012, 9:20 AM), http://www.prwatch.org/news/2012/01/11215/
indiana-workers-stand-push-anti-labor-laws-called-right-work-less-and-alec-agenda.