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    Privatization ... It's about profit and (your) loss!   Hurts


Privatization threatens
the quality and availability

of public services
as well as the
jobs and working conditions
of public-sector workers.

Here's why ... and what you can do.

Also on the UE Web:
Privatization Doesn't Pay!
Outsourcing, Subcontracting and Privatization

Chris Campbell had a history of mental illness and heart trouble. But what killed the 13-year-old Iowan was the more troublesome combination of privatization and managed care.

The boy’s troubles began in 1995, when the state of Iowa gave Merit Behavioral Care Corp. a $45 million annual contract for delivery of mental health services.

Merit, now part of Magellan Behavioral Health, donated generously to Republican politicians calling the shots in Iowa. Merit has featured prominently in corruption scandals in Maryland involving the governor and a high-ranking state senator and was accused of price-fixing in a suit filed by mental health professionals.

The subcontractor claims 22 percent of its state contract for administration. "$10 million could have provided a lot of services," comments UE Local 893 Pres. Dan Kelley. But Merit’s reason for existence is to make money, not provide services.

Merit refused to continue paying for Chris Campbell’s care at the Mental Health Institute, where the boy received treatment for psychiatric problems, including uncontrollable rages. Merit claimed the treatment was unnecessary and too expensive. The youth was forced into an institution for juvenile delinquents.

On Nov. 2, 1997, while in the Iowa Juvenile Home, young Campbell went into a rage. His heart gave out while under restraint.

His parents say the youngster would not have died if Merit Behavioral Care Corp. had not refused to pay for his care in a psychiatric setting.


UE members employed by the state of Iowa wonder why a private subcontractor is in a position to make any decisions at all. Local 893 has demanded an investigation into the Merit contract, to protect clients and hundreds of union-represented public-sector jobs.

"These are our clients, these are our programs and we want them to run the way they are supposed to, to help clients, not to kill them," declared Local 893 Pres. Kelley.

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Throughout the country, state, county and local government management have bought into the philosophy prevalent in private industry: subcontractors can do it cheaper. But privatization of public services and facilities threatens the quality of services as well as good public-sector jobs.

Delegates to the 63rd UE Convention were unanimous in their opinion on this management trend: No privatization of public services and facilities and thorough investigations of those politicians and corporations promoting this scam. UE backs legislative moratoriums on privatization.

UNC workers and students are facing a kind of creeping privatization. This comes as a result of a six-figure study authorized by the North Carolina General Assembly on privatization of a wide variety of services at the 16 schools that comprise the University of North Carolina system.


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At North Carolina Central, one of the state’s historic black colleges, privatization is driven by underfunding. Lack of funds from the General Assembly keeps staffing levels low and denies workers adequate supplies. (Custodial workers have bought toilet paper out of their own pockets and created soap dispensers.) The underfunding and understaffing create conditions that allow administrators to blame workers for poor quality and push for privatization.

UE Local 150 members at NC Central have taken to the streets with demonstrations against privatization. Students have held speak-outs against privatization in their dormitories, and at open-air forums workers have made their case for proper tool and staffing levels. On March 16, rank-and-file workers accompanied by Field Org. Saladin Muhammad met with the chancellor to argue for protecting workers’ jobs.


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In Montague, Mass., where Department of Public Work employees are represented by UE Local 274, workers and public are paying for the town’s decision to subcontract refuse collection. Instead of taking trash to the curbside, residents have to lug their rubbish to the nearest street corner. When trash spills, residents discover the subcontractor is less concerned than regular town employees — and it’s harder to make a complaint.

The subcontractor required the town to sell its own rubbish collection trucks, some of which were used in snow removal. Subcontracting reduced the DPW workforce, which also hampered snow removal.

A very different result was obtained in nearby Greenfield, where DPW workers are also represented by UE Local 274.

When Greenfield received $50,000 state grant for sidewalk construction, Public Works Superintendent John Bean wondered if perhaps the work couldn’t be done in-house. He got only encouragement from Chief Steward Richard Chaisson and his co-workers.


The boss worried that creating three new positions would cost too much, until Chaisson pointed out that the high-service DPW crew is at or near the top of the rates. New hires would be paid the starting rate spelled out in the contract. Would the union object if the new hires were laid off after a few months, Bean wanted to know. Why not give these people a chance to work decent, union-represented jobs for as long as possible, Chaisson and the Local 274 members replied.

The town hired three new workers — a heavy equipment operator and two laborers. The sidewalks were completed on time for the same cost per foot cited by the subcontractor in his bid. But what’s more, this past winter the additional manpower allowed the DPW to do less subcontracting and more in-house snow removal. The DPW did a better job on snow-plowing and sanding than the subcontractor — and saved the town $12,000.

UE members deliver public services.

We Have a
Right to Know!


Union members in the public sector and the community as a whole have a right to demand that privatization be subjected to close scrutiny and pubic discussion — to protect jobs, union conditions, the public and taxpayers’ interests.

Why is privatization being proposed? Is this the best or only alternative? Who benefits?

The following checklist contains some of the questions that should be raised by union members and other concerned taxpayers when confronting privatization schemes.

(Many of these questions can be put to private - sector employers considering outsourcing.)

Exactly why is privatization or contracting out being proposed?

Is the decision to privatize or contract out being made publicly, with long-term notice?


Have any alternatives been attempted, such as the replacement of the existing administration with a new management committed to improved delivery of government services?

Did the affected public employees have an opportunity to help correct the "problems" driving the move to privatize or contract out their functions?

Have the affected public employees been notified that management is considering privatizing or contracting out their jobs?


Is the decision to solicit bids on the work in question being advertised adequately? How so?

Exactly what precautions are being taken to ensure that public-sector management and administrative employees have not accepted gifts, favors or inside information from those bidding on government services?

Have management and administrative employees been directed to avoid all contact with potential bidders prior to the opening of the bidding process?


Has the bidding corporation or agency agreed to compensate their employees at a rate not less than the public workers they are displacing, so that massive "savings" are not generated from wage reductions?

Has the bidding corporation or agency agreed to offer employment to the displaced public-sector workers prior to hiring off the street?


Has the bidding corporation or agency specified and guaranteed the exact savings to taxpayers?

Is the bidding corporation or agency being charged a substantial fee for the massive administrative costs associated with the privatization or contracting out process?

Are the successful bidders being charged a substantial fee to reimburse the government agency for the costs of monitoring the contract terms and contractor performance?

What is the exact procedure for monitoring the performance of the new private contractor?

Have the bidding corporations or agencies agreed to accept all legal liability for lawsuits arising from their performance of the work in question?


Has the government agency soliciting bids on public work conducted an independent investigation into the background and track record of bidding corporations — and made this information public prior to the awarding of the contract?

Have the bidding corporations or agencies agreed to publicly disclose all of their political campaign contributions (both organizational and individual) for at least the past seven years?

Have the bidding corporations voluntarily agreed to refrain from making any political contributions to lawmakers or other political parties who may exercise direct or indirect influence over the privatization or contracting out process?


What protections for clients of government services have been built into the privatization or contracting out process?

Will the displaced public-sector workers be humiliated by being forced to train and orient their private-sector replacements?

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