Union stands in solidarity with family of slain Michael Brown

Joe Hansen, international president of the United Food and Commercial Workers (UFCW), issued a statement in support of the family of Michael Brown, a young African-American killed by a police officer in Ferguson, Missouri.

Brown’s mother, Leslie McSpadden is a member of UFCW Local 88.

“We stand in solidarity with our sister Leslie McSpadden and join her call for a fair investigation and justice under the law,” said Hansen.

Hansen also said that systemic problems such as “abject poverty, the lack of good jobs, and the lack of diversity in the halls of power” are to blame for the days of public rage that followed Brown’s death.

In a related development, a report by a group that provides legal services to the poor in the St. Louis metropolitan area said that the legal system in Ferguson, a St. Louis suburb, engages in illegal and harmful practices that targets African-Americans and helps perpetuate poverty.

Hansen is his statement said that society needs to address the problems that led to Brown’s death and its aftermath.

“We need to address these challenges head on–and (the labor movement) has a role to play by offering workers the opportunity for a better life,” said Hansen.

CWA also issued a statement on Brown’s death and the protests that followed.

“CWA activists are supporting protest actions and voter registration drives and exploring how the labor movement can better engage in the fight for racial equality,” reads the CWA statement.

CWA also said that at one time Ferguson was a thriving community, but that has changed.

Ferguson was hit hard by the foreclosure crisis and during the last two decades good paying manufacturing and service jobs have been shipped abroad.

As result, the unemployment rate in Ferguson is 14.3 percent, twice as high as the unemployment rate in St. Louis (6.4 percent) and Missouri (6.6 percent).

For young African-American men in Ferguson, the unemployment rate is 47 percent.

Social services in Ferguson, whose population is 67 percent African-American, have also been reduced by state budget cutters.

According to ArchCity Defenders, a group whose members “represent indigents on a pro bono basis in both criminal and civil legal issues,” the legal system in Ferguson has contributed to the problem.

ArchCity recently published a report examining the Municipal Courts in the suburbs of St. Louis.

According to the report, Ferguson is one of three St. Louis suburbs where ArchCity’s clients “are jailed for the inability to pay fines.” These instances of incarceration lead to lost jobs and housing, which in turn makes it more difficult for those arrested to climb out of poverty.

The report goes on to say that fines and court costs are a major source of revenue for the City of Ferguson. They totaled $2,635,400 in 2013 and were the city’s second biggest revenue source.

The threat of incarceration for the non-payment of fines, according to the report, ensures that this revenue stream continues to flow at maximum force.

The report also says that African-Americans appear to be the target of racial profiling in Ferguson. Eighty-six percent of vehicle stops in Ferguson involved African-American motorists, while African-American comprise just 67 percent of Ferguson’s population.

Out of all those stopped, searches took place for 12.1 percent of African-Americans and 6.9 percent of whites.

However, searches resulting in found contraband occurred 34 percent of the time for whites and 21.7 percent for African-Americans.

The ArchCity report says that these practices have created animosity toward and distrust of the local legal system among African-American residents of Ferguson.

Private vendor cost State of Texas millions; feds hold agency accountable

An investigation by the US Department of Health and Human Services’ Inspector General revealed that a private firm managing a state Medicaid program cut corners when processing pre-authorization requests by dentists seeking to fit Medicaid patients with braces.

As a result, the Medicaid program likely spent hundreds of millions of dollars on fraudulent or improper Medicaid claims.

The investigation also found that the Texas Health and Human Services Commission (HHSC), which oversees the Medicaid program, failed to ensure that the company followed Medicaid guidelines, which allow for Medicaid payments only when the braces are a medical necessity.

According to the Inspector General, Xerox, which until May managed the program that processes Medicaid claims for the state, used clerks designated as dental specialists in place of registered dental assistants and technicians to determine whether most of the pre-authorization requests were a medical necessity.

The Inspector General’s report said that, the clerks “simply examined the paper work (required from the dentist) for a bar code indicating that the submitted request included the required diagnostics, but they never took the diagnostics out of the packaging for examination unless the HLD Index (an index used for measuring the imperfect positioning of teeth) was less the 26.”

These clerks were supposed to have doctors and dentist who they could use as resources to help them determine medical necessity, but Xerox didn’t provide any.

All determination of medical necessity were supposed to be reviewed by a licensed dentist or the Xerox dental director, but Xerox didn’t hire any licensed dentists to review  determinations and the dental director, according to the report, made final determination of medical necessity on only 10 (percent) to 20 percent of prior authorization requests “and he did so without using Medicaid criteria.”

Even though Xerox’s contract with HHSC states that the company must hire a sufficient number of medically knowledgable personnel to process requests, Xerox chose to assign most of the work to clerical staff.

When asked by the Inspector General to justify its position, representatives of Xerox said that the contract did not sufficiently define the term “medically knowledgable.”

The Inspector General began delving into the Texas Medicaid dental program after noticing a substantial growth in the amount that the program was paying for orthodontic services (fitting patients with braces). In 2003, Texas Medicaid paid $6.5 million for orthodontic services. In 2010, it paid $220.5 million, or more than 3000 percent above what was paid in 2003.

Over the same period, Medicaid enrollment increased only 33 percent.

Because of the hefty increase in payments, the Inspector General suspected that fraud, waste, or abuse might be involved.

While the Inspector General was finalizing the report on Texas’ Medicaid dental program, HHSC in May fired Xerox, and the Texas Office of the Attorney General filed suit against the company.

According to the Dallas Morning News, the Office of Attorney’s suit, blamed Xerox for “an unprecedented loss of Medicaid funds to predatory and unscrupulous dental providers.” The suit goes on to say that Xerox has cost the state hundreds of millions of dollars.

According to an HHSC media release explaining why Xerox was fired, the company approved thousands of requests for braces that didn’t meet Medicaid guidelines.

However, the Inspector General said that the firing of Xerox was an action that was too little and too late and that HHSC did not properly oversee the work of Xerox.

“Although (Xerox) failed to properly use the prior-authorization process to determine the medical necessity of orthodontic services, the State agency is ultimately responsible for contract compliance,” said the Inspector General’s report.

In responding to the Inspector General’s findings, HHSC took exception to the conclusion that it did not properly oversee the contractors work.

According to HHSC, it shouldn’t be held accountable because it, “reasonably relied upon Xerox’s assurances regarding its compliance with HHSC policies.”

” When HHSC questioned Xerox’s administration of the Program as part of its monitoring process, Xerox made repeated written and oral assurances that it was complying with HHSC’s approved policies and procedures to determine medical necessity,” wrote Dr. Kyle Janek, HHSC’s executive commissioner in his response to the Inpector General’s findings. “HHSC trusted Xerox’s representations regarding its management of the Program.”

Judge rules against Mercedes-Benz in Alabama

An administrative law judge with the National Labor Relations Board has ruled that Mercedes-Benz U.S. International illegally restricted workers at its Vance, Alabama factory from distributing union literature and talking about the union..

Mercedes workers have been working with the UAW to form a union and filed unfair labor practices charges with the NLRB after plant management limited the time and spaces where union workers could talk about the union or distribute union information.

The workers and their union argued that no such restrictions were placed on people who were talking about other topics or soliciting for other causes.

Judge Keltner Locke agreed with the union.

The judge, however, said that the company had not tried to intimidate two union supporters as charged by the union and that its illegal actions did not appear to be intentional. The company’s public relations team seized upon this aspect of the ruling to claim that Mercedes did not violate its neutrality pledge to workers seeking to form a union.

The UAW responded that the company’s claim to neutrality was disingenuous.

“It is clear that (Mercedes) has acted with hostility and in direct contempt of its neutrality policy in its dealing with pro-union workers at its Alabama plant,” said Gary Casteel, UAW’s secretary treasurer. “It’s deplorable that Mercedes was found in violation of US law and then publicly claimed it as a victory and an example of its neutral pledge.”

According to Mercedes’ policy, the company

Recognizes the right of workers to organize themselves in labor unions. We safeguard this right at our facilities, even in countries that do not protect the freedom of association. More than 95 percent of the non-management employees in Germany and more than 80 percent of those worldwide are covered by collective bargaining agreements.

But union supporters say that Mercedes management in Vance has been far from neutral since the workers began talking about a union.

“We always hear the company stating that they’re neutral, but every team member in that plant knows it simply isn’t true,” said Mercedes employee Rodney Bowens. “If team members aren’t intimidated, then why are they always telling me, ‘I want a union, but I don’t want anybody to know about it.’ The company has created a climate of fear to prevent us from forming a union. In this case they broke federal law to do it, but there are countless other examples of where they use scare tactics to stop people from speaking up about it.”

The judge ruled that Mercedes illegally restricted union supporters from talking about the union in team centers and the factory’s atrium.

There are 20 team centers located throughout the plant. Workers meet in team centers when the shift begins to get their assignments. The centers are also places where workers take breaks, eat meals, and gather before and after their shifts.

David Gilbert, a pro-union Mercedes worker, was told by company representatives that he couldn’t distribute union flyers while he was off duty to other off duty workers while the assembly line was moving.

Gilbert pointed out that other workers solicit for other non-work causes in team centers while the assembly line is moving and that the company was being selective when it chose to enforce its policies about discussing non-work matters on the job.

Gilbert and Clark Garner, another pro-union worker, were also passing out union information before work in the plant’s atrium, a large high-ceiling, enclosed plaza that workers walk through to get to work.

Company representatives told the two that they couldn’t pass out union information in the atrium but later relented. The company continues to insist that the atrium is a work area, but judge Locke disagreed.

Locke said that the area is a mixed-use area, which makes it a proper venue for passing out union information and talking about the union.

Jeremy Kimbrell, a pro-union Mercedes worker, said that Mercedes has made it difficult for workers to talk about the union, so the judge’s decision that definitively identifies two plant spaces as mixed-use areas is a big boost for the organizing campaign.

“If the company would let us address why we want a union during one of our All-Team meetings, we’d do it then,” said Kimbrell. “But they won’t. So instead we have to come early and leave late from work and find times to talk with our co-workers about what we’re trying to do in forming a union. There’s hardly any time to do that. That’s why this team center and atrium issue is a big deal and why the company tried to stop us from being able to exercise our federal rights in them. It’s really one of the only places in the plant where we have a chance to talk with each other off-the-clock.”

LA votes to end bad bank deal

A coalition of labor and community groups scored a major victory when the Los Angeles City Council voted unanimously to renegotiate an interests rate swaps deal with Mellon Bank New York and Dexia, a Belgian financial services firm.

The deal has cost the city millions of dollars that the coalition said could be used to restore neighborhood services that were cut due to budget constraints caused by the recession and its aftermath.

David Sirota, writing for the International Business Times, reports that Mellon and other Wall Street banks have engaged in deceptive marketing by concealing the high risks associated with interest rate swaps.

The swap deal with Los Angeles brokered by Mellon and Dexia in 2006 was supposed to protect the city from paying high interest rates on public works bonds, but the city is currently paying higher than market interest rates and millions of dollars a year in fees to Mellon and Dexia.

Fix LA, a coalition of unions and community groups, has built a grassroots campaign to get the city to renegotiate the terms of this deal and use the money saved to restore city services to pre-recession levels.

“LA spends more than twice as much on bad bank deals than we do on our streets,” said Tim Butcher, a city employee who testified in favor of renegotiating the swap deal. “We’re asking the City Council to please get the money back so we can do our jobs.”

Butcher is a member of SEIU Local 721, one of the six city worker unions that formed the Coalition of Los Angeles City Unions (CLACU)  to negotiate a collective bargaining agreement that covers 20,000 diverse city workers.

City workers have been working under the terms of an agreement that expired on June 30.

The biggest obstacle to reaching an agreement has been a tight city budget burdened by nearly  $300 million in yearly fees paid to Wall Street banks for deals like the Mellon and Dexia swap.

Last spring, CLACU  began working with community groups to find money that would make a fair collective bargaining agreement possible.

As a result of this work, Fix LA was formed.

CLACU bargaining proposals, which the coalition calls Bargaining to Fix LA, reflect the concerns of Fix LA, which include using local, fairly paid labor to repair the city’s dilapidated streets, fix sewage overflows and other neighborhood problems, improve the environment, add park space, and fund child care and after school programs and other initiatives that will make Los Angeles a better place to live.

Fix LA issued a report saying that money being used to pay excessive fees to Wall Street banks could be better used to improve city services. The report focused on one deal in particular–the interest rate swap deal engineered by Mellon and Dexia.

According to the the report, the city is paying Mellon and Dexia $4.8 million in fees for the deal that was supposed lock in low interest rates but hasn’t.

The report goes on to say that the city will have to continue paying these fees until 2028 unless a way can be found to get out of the deal. If the city is unable to do so, it will cost Los Angeles an additional $65.8 million.

Mellon and Dexia won’t let Los Angeles out of the deal unless the city agrees to pay a $24.7 million termination fee.

The City Council voted to renegotiate the terms of the deal in such a way that allows the city to terminated the swap deal without paying termination fees.

The City Council is justifying its position by claiming that the banks hid the risky nature of the swaps.

David Sirota reports that there is substantial evidence showing that the sellers of interest rate swaps including Mellon and Dexia knowingly misrepresented these risks.

“More often than not, local governments do not know they are getting a bad deal,” said former Goldman Sachs Vice President Walter Tuberville, who was quoted by Sirota.  Tuberville goes on to say that mispricing and the excessive risks associated with these deals are usually intentionally hidden from customers.

By voting to renegotiate the Mellon and Dexia swap deal, the City Council made Los Angeles the largest city to join a growing list of local governments that are challenging “ballooning Wall Street levies that accompany similar interest rate swap deals throughout the nation,” writes Sirota.

“SEIU Local 721 and our partners in the Fix LA coalition applaud the brave and principled stand taken by Councilmembers Paul Koretz, Gil Cedillo, and Bob Blumenfield and the rest of the LA City Council,” said a statement by the union on its webpage. “We will continue to strongly support the LA City Council as they take swift and decisive action to reverse these bad bank deals.”

Memphis Kellogg workers return to work after nine-month lockout

Workers returned to work at Kellogg Company in Memphis after being locked out for nine months. A federal judge issued an injunction ending the lockout and requiring Kellogg to return to the bargaining table and bargain in good faith.

Judge Samuel H. Hays of the Western District of Tennessee issued the injunction after finding that “there is reasonable cause to believe that Kellogg has engaged in unfair labor practices.”

Attorneys for the National Labor Relations Board petitioned the court for the injunction after the NLRB’s General Counsel in March found that Kellogg had committed unfair labor practices.

“A federal judge agreed entirely and unequivocally with the union and the National Labor Relations Board,” said David B. Durkee, president of the Bakery, Confectionery, Tobacco Workers, and Grain Millers (BCTGM), the locked out workers’ union.

The NLRB sought the injunction against Kellogg, the cereal manufacturer, after the five-member National Labor Relations Board headquartered in Washington DC unanimously authorized its attorney to seek the injunction.

According to the BCTGM, the board’s decision to seek an injunction is highly unusual. “Out of the tens of thousands of unfair labor practice charges filed in 2013, the Board sought pre-trial injunctions in only 40 cases,” said a media release from BCTGM.

Durkee in an earlier message to members said that the board’s action would not have been possible without a 2013 mass mobilization of union workers to end a Senate filibuster by Republicans to prevent the appointment of a new National Labor Relations Board.

The mobilization known as “Give Me Five” generated grassroots pressure on the Senate to change the rules that allowed a small minority of Senators to prevent the President from appointing new members to the NLRB.

The filibuster paralyzed the NLRB and prevented it from ruling on matters similar to the Kellogg lockout.

“What the labor movement accomplished in the spring of 2013 with our highly successful “Give Me Five” campaign and what that effort is yielding today for our members will stand as a lasting testament to the power of grassroots labor mobilization,” said Durkee.

The ordeal of the locked out workers began last year when Kellogg at its Memphis plant informed BCTGM Local 252G that the company wanted to open negotiations on a local Supplemental Agreement that was set to expire in October 2013.

The Memphis plant is one of four Kellogg plants whose workers belong to BCTGM. A Master Agreement covers wages, benefits, and other matters for all four plants. But each plant has a Supplemental Agreement that covers local issues.

When Kellogg came to the bargaining table, its proposals shocked BCTGM negotiators.

The company proposed that all new hires be classified as casual workers, who would be paid $6 an hour less than regular employees and have no health care or pension benefits. Subsequently, the company clarified its position to the union and said that if a regular employee was laid off and then rehired, the employee would be classified as a casual worker.

The company also wanted to eliminate a cap on the number of casual workers that could be employed at one time. The current agreement limits the number of casuals to 30 percent of the workforce.

The company wanted eventually to end regular employment and make all work at its Memphis plant casual work.

The union’s position was that redefining casual work was a matter to be negotiated when bargaining over the Master Agreement began.

The company responded that the union could either accept the company’s proposal or union members would be locked out.

When the union refused, the company locked out 225 workers on October 22, 2013.

As a result, Kellogg workers in Memphis went nine months without a paycheck or health insurance.

“Memphis families have endured foreclosure notices on their homes, repossession of vehicles, delayed medical procedures, depleted savings, children taken out of schools, children with disabilities whose parents are desperately trying to cobble together ongoing care by whatever means possible, the hounding of bill collectors, and the toll on family relationships that surpasses any monetary worth,” said Kevin Bradshaw, Local 252G president during the lockout.

Kellogg argued that its concession demands were necessary because the company needed to lower labor costs to stay competitive.

But while Kellogg was telling workers that it was facing hard times, it gave the company’s CEO John Bryant a 21 percent raise, boosting his yearly salary to $8 million.

Kellogg has reluctantly agreed to return the laid off workers to their jobs and to resume bargaining with the union.

However, the company could be facing more problems. One hundred twenty of the locked out workers have filed complaints with the US Equal Employment Opportunity Commission. The complaints say that Kellogg’s lockout of its mostly African-American workforce at the Memphis plant was racially motivated.

Bradshaw said that the union and the workers would pursue their claims against the company.

“Locked out, but not beaten, mistreated but unbending, disillusioned by this company’s disgusting reward for faithful service, but not disheartened,” said Bradshaw at a July 31 media conference announcing the EEOC complaints.

Germany may reject trade deal because of investor protection clause

Germany has told its European Union partners and Canada that a trade pact being negotiated by Canada and the EU should delete the investor protection clause currently in a draft of the treaty. Failure to do so, reports Reuters, may cause Germany to reject the treaty, known as the Canada-EU Comprehensive Economic and Trade Agreement, or CETA.

If the investor protection clause is omitted or if Germany rejects the treaty, the Transatlantic Trade and Investment Partnership (TIPP) treaty being negotiated by the US and the EU could be in trouble.

Negotiations on CETA are in the final stages, but recently the German government has expressed doubt about the necessity of the investor protection clause in the treaty.

The treaty’s clause on investor protection, known formally as Investor-State Dispute Resolution Settlement (ISDS), allows corporations to pursue claims against governments for governmental actions that might harm future profits.

ISDS claims are resolved by an arbitration panel convened either at the World Bank’s International Center for Settlement of Investment Disputes (ICSID) or the United Nations Commission on International Trade Law (UNCITRAL).

According to Consumer International, “These two entities operate with similar rules and procedures, which exclude the public while providing investors with a sympathetic ear. Consumers have no standing, no capacity to intervene. Cases are heard by three private-sector attorneys, unaccountable to any electorate.”

The German government’s reluctance to agree to a treaty containing an ISDS stems from an multi-billion euro investor protection claim brought against the German government by Vattenfall, a Swedish energy company.

Vattenfall in 2012 filed a request for arbitration with ICSID seeking 3.7 billion euros in compensation after German Chancellor Angela Merkel announced that Germany would phase out its nuclear power plants.

Chancellor Merkel announcement came after she made public statements that nuclear energy was no longer a viable energy option for Germany because of the dangers exposed by the Fukushima nuclear plant tragedy in Japan.

Vattenfall is seeking compensation under the terms of the Energy Charter Treaty, an international trade and investment agreement specific to energy production.

The Energy Charter Treaty contains an ISDS clause as do most other multi-lateral and bi-lateral trade agreements, including NAFTA and all other recent trade pacts negotiated by the US.

As the number of treaties containing an ISDS clause has increased, so have the number of claims by multi-national corporations seeking protection from government laws and actions that might harm corporate profits.

Today there are about 500 ISDS claims pending resolution.

According to a paper presented at the July 2014 Australian Supreme and Federal Courts Judges’ Conference, “most of the claims were brought against States by investors from developed countries but mainly by investors from the European Union and United States.”

The Australian paper focuses on the repercussions that a claim filed by Phillip Morris of Asia might have on the Australian court system.

Phillip Morris filed its claim after the Australian High Court upheld the country’s Tobacco Plain Packaging Act.

Phillip Morris claimed that the court’s decision to uphold the law amounted to an illegal seizure of the company’s intellectual property rights. The claim is still pending.

Other claims pending include a suit by Veolia, a French company, against Egypt for raising the country’s minimum wage and a suit by the pharmaceutical company Eli Lilly against Canada.

Eli Lilly is seeking $500 million in damages from the Canadian government because a Canadian court shortened the number of years that an Eli Lilly drug could be protected by patent laws.

The suit against Germany by Vattenfall has raised German public ire against investor protection clauses because the suit so clearly contrasts private interest against public interest.

Should Vattenfall’s claim succeed, the German government and the public in general would be punished for seeking to pursue a safer energy policy.

At this point, the German government’s position is that the investor protection clause should be deleted from CETA. If it is not, however, the German government will have to decide whether to accept or reject CETA, which must be approved by all EU members before it is adopted.

The Transatlantic Trade and Investment Partnership (TIPP), a similar pact being negotiated by the US and the EU, also contains an investor protection clause, and if the clause is omitted from CETA or if Germany rejects CETA because of the clause, it’s questionable whether TIPP could survive with its investor clause intact.

Company quits Texas Foster Care Redesign project

Another Texas privatization project has failed to produce the results touted by free market boosters and private contractors.

Providence Service Corporation, a self-described “national leader in the management and provision of the highest-quality human social service,” announced on August 1 that it was quitting its job as manager of the Foster Care Redesign project in West Texas.

Providence CEO Mike Fidgen said that the company was quitting because the redesign program needed to be “more adequately funded.”

To put it less delicately, Providence quit because it couldn’t make enough money.

Texas lawmakers in 2011 authorized Foster Care Redesign under the assumption that private companies like Providence could improve the state’s troubled foster care program and lower costs.

Providence was the West Texas Single Source Continuum Contractor that was to oversee and coordinate services among private foster care placement agencies in West Texas, an expansive region that covers 60 counties. The region is mostly rural but includes some mid-sized cities such as Abilene, Midland, Odessa, San Angelo, and Wichita Falls.

Providence in 2013 signed a five-year, $30 million contract to manage the region’s Foster Care Redesign. Fifteen months into the project, DFPS has already paid Providence $8.3 million. According to Myko Gedutis, assistant organizing coordinator for the Texas State Employees Union CWA Local 6186 (TSEU), Providence is already $2 million over budget.

“The news (that Providence is quitting because of the lack of funding) confirms it’s time to stop expanding privatization and start adequately funding child protection,” said Ashley Harris a policy expert for Texans Care for Children, a child welfare advocacy group. “(The state needs to begin) reducing caseloads for overwhelmed (Child Protective Services) staff and establishing basic safety and training standards for foster parents.”

Prior to Province’s withdrawal, the Texas Department of Family and Protective Services (DFPS), which oversees state child protective services, notified Providence that its shortcomings that needed to be corrected.

According to a media statement issued by DFPS, the company

  • Missed performance goals such as keeping siblings together and placing children close to home,
  • Failed to develop staff and an adequate network of foster care providers, and
  • Was unable “to develop a full array of service to better serve children.”

“Providence walking away from the contract after one year clearly answers the question about whether a for-profit agency can provide quality services with the same inadequate funding provided by the Legislature,” said Gedutis. “Providence’s attempt at placing children closer to their own communities, and improving outcomes and services, all with the same inadequate budget, didn’t work.”

Members of TSEU who work for DFPS have for some time tried to convince lawmakers that there are no shortcuts to providing quality care for abused children.

And in Texas, the problem of child abuse is critical. Between 2008 and 2012, 237 children a year died from abuse or neglect, nearly 100 more than in California (148) and nearly 140 more than in New York (99).

During state fiscal year 2013, eight children died in foster care.

But state leaders have chosen to address this crisis on the cheap.

For example, lawmakers have failed to provide funding to keep child protective caseloads manageable. The national standard for child protective caseloads is 17 cases per worker. The average Texas caseload is 28.

State caseworker pay is also low. According to the State Auditor’s Office, the average base pay for a state child protective caseworker, a job that requires a four-year bachelors degree, ranges  from $34,656 a year to $40,560 a year.

Low pay and high caseloads have led to a high turnover rate. The State Auditor reports that the DFPS caseworker turnover rate for 2012 was 26.1 percent. The high turnover rate affects the quality of work.

Instead of addressing these funding problems, the state has turned to private agencies to deal with the child abuse crisis.

In the last decade, the number of private agencies providing foster care services has increased to 350. Some of these agencies are run by for-profit companies and some by non-profit companies.

Whatever their status, generating revenue remains their main focus, said TSEU member Erica Harris to special legislative committee hearing in April. The focus on revenue causes many private agencies to cut corners.

Harris, a caseworker who worked for a private agency and now works for DFPS, told lawmakers that she was troubled and eventually quit after she learned that her private agency allowed unqualified people to serve as foster parents, doctored paperwork to make it look as if they were meeting goals, inadequately trained foster parents, and did not properly supervise foster parents.

“The root of many of these problems with the private agency stemmed from the agency being responsible for maintaining a foster care system while having to watch their own bottom line,” said Harris in her testimony.

While Providence’s failure to remain on the job is a setback for the privatization of foster care, it also is another in a growing list of Texas privatization initiatives that failed to meet expectations, including:

  • An $899 million contract with Accenture to privatize state health and human services, which was canceled in 2007,
  • An $863 million contract with IBM to consolidate state agency data centers, which was canceled in 2010,
  • A $210 contract with Accenture to update the state’s child support computer system, whose cost increased by $64 million after the company failed to meet the original deadline for implementation, and
  • A multi-million Medicaid claims contract with Xerox, which was canceled in May after Xerox, “allegedly erroneously doled out for medically unnecessary Medicaid claims,” reports the Texas Tribune. Xerox’s error cost the state hundreds of millions of dollars.

Gedutis said that foster care in Texas needs to be redesigned, but, like the other failed privatization efforts, the failure of Providence to complete its job shows that privatization is not the way to improve state services.

“Instead of contracting with more private agencies and getting the same results, efforts to improve the foster care system need to address inadequate funding, accountability, oversight of private agencies, and dangerously high caseloads,” said Gedutis. “TSEU members will continue to fight to improve our agency and the services we provide to vulnerable Texans, and to oppose privatization experiments that continue to fail.”