State and local government agencies attempting to outsource a public service would have to demonstrate genuine cost savings and meet new standards, under legislation that moved to the floor of the Minnesota Senate Wednesday.
"Privatization proponents make all these claims," said Sen. Scott Dibble, DFL-Minneapolis, chief author of the legislation. "Then prove it."
Privatization often has a huge impact on a community and on workers, but government agencies rarely look at the whole picture or give the same scrutiny to outside contractors that they give to their own operations, said Kristen Beckman, legislative director for SEIU's Minnesota State Council.
"This does not prohibit outsourcing in any way," she told the Senate State and Local Government Operations Committee. "But it does require accountability for public services."
A school district that thinks it will save money by outsourcing its bus service, for instance, would have to close its garage, fire its workers and sell its fleet, Beckman said. "If there's going to be that kind of upheaval, let's put your money where your mouth is. There should be a substantial savings."
Requiring due diligence
Dibble's bill (SF796) requires proof that outsourcing a public service would save taxpayers at least 15 percent. "The goal is to safeguard public dollars," Dibble said. "It introduces accountability and awareness of how public dollars are being spent."
The legislation imposes other requirements, as well. Paul Larsen, the state's lead labor negotiator, said the requirements are almost impossible to comply with, would lead to numerous court challenges and impact the ability of government agencies to subcontract even short-term projects.
But Mark McAfee, of AFSCME Council 5, the state's largest public-employee union, called the requirements a simple matter of due diligence by public agencies. The provisions include requirements that:
? Agencies explain why they are outsourcing and why they can't provide the service with current or additional public employees.
? Agencies estimate the costs of transitioning to the private contractor, including the costs of unemployment benefits for workers thrown out of their jobs by privatization.
? Companies applying to take over a public service provide wages and benefits equal to the average wages and benefits provided to the public employees being replaced.
? Private contractors disclose, among other things, their employment practices; any record of violating health, safety, labor or other laws; and recent political contributions. "Public agencies have to disclose that information," Beckman said. "All we're asking is that a for-profit company has to disclose the same things."
? Private contractors not use any of the public money they receive to fight employee attempts to unionize.
Dibble's bill is based on a Massachusetts law that has been in existence for 12 years. A 2004 study concluded that the law allowed outsourcing that saves taxpayers more than $1.2 million a year, but also prevented $73 million worth what it calls "bad privatization decisions."
Is the tradeoff worth it?
Dibble and Beckman said privatization often results in replacing public jobs that provide good wages, health insurance, a pension and other benefits with private jobs that don't.
Anne Varberg, a school bus driver for First Student Transportation, testified that she now pays nearly one-fourth of her paycheck for health insurance. The company offers a lower-cost plan, she says, but that plan is essentially worthless to her, because it rejected every claim she ever filed. She also pointed out that some drivers rely on food shelves and other public assistance to get by.
Meanwhile, First Student, which has bus contracts with numerous metro school districts, reported a profit of $114 million last year, she said, though it paid only $1.4 million in taxes.
Peggy King, a member of SEIU Local 284 who drove buses in the Elk River school district for 17 years, testified that she must depend on Minnesota Care since the district privatized its transportation services in 2002, firing her and 15 other workers.
Local 284 and the Elk River district remain in a protracted court battle over the privatization decision, which the district claimed would save $2 million, but which Local 284 says actually has cost the district $400,000 more.
Dibble's bill passed the State and Local Government Operations on voice vote. The House version (HF808) has not had a hearing.
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State and local government agencies attempting to outsource a public service would have to demonstrate genuine cost savings and meet new standards, under legislation that moved to the floor of the Minnesota Senate Wednesday.
“Privatization proponents make all these claims,” said Sen. Scott Dibble, DFL-Minneapolis, chief author of the legislation. “Then prove it.”
Privatization often has a huge impact on a community and on workers, but government agencies rarely look at the whole picture or give the same scrutiny to outside contractors that they give to their own operations, said Kristen Beckman, legislative director for SEIU’s Minnesota State Council.
“This does not prohibit outsourcing in any way,” she told the Senate State and Local Government Operations Committee. “But it does require accountability for public services.”
A school district that thinks it will save money by outsourcing its bus service, for instance, would have to close its garage, fire its workers and sell its fleet, Beckman said. “If there’s going to be that kind of upheaval, let’s put your money where your mouth is. There should be a substantial savings.”
Requiring due diligence
Dibble’s bill (SF796) requires proof that outsourcing a public service would save taxpayers at least 15 percent. “The goal is to safeguard public dollars,” Dibble said. “It introduces accountability and awareness of how public dollars are being spent.”
The legislation imposes other requirements, as well. Paul Larsen, the state’s lead labor negotiator, said the requirements are almost impossible to comply with, would lead to numerous court challenges and impact the ability of government agencies to subcontract even short-term projects.
But Mark McAfee, of AFSCME Council 5, the state’s largest public-employee union, called the requirements a simple matter of due diligence by public agencies. The provisions include requirements that:
? Agencies explain why they are outsourcing and why they can’t provide the service with current or additional public employees.
? Agencies estimate the costs of transitioning to the private contractor, including the costs of unemployment benefits for workers thrown out of their jobs by privatization.
? Companies applying to take over a public service provide wages and benefits equal to the average wages and benefits provided to the public employees being replaced.
? Private contractors disclose, among other things, their employment practices; any record of violating health, safety, labor or other laws; and recent political contributions. “Public agencies have to disclose that information,” Beckman said. “All we’re asking is that a for-profit company has to disclose the same things.”
? Private contractors not use any of the public money they receive to fight employee attempts to unionize.
Dibble’s bill is based on a Massachusetts law that has been in existence for 12 years. A 2004 study concluded that the law allowed outsourcing that saves taxpayers more than $1.2 million a year, but also prevented $73 million worth what it calls “bad privatization decisions.”
Is the tradeoff worth it?
Dibble and Beckman said privatization often results in replacing public jobs that provide good wages, health insurance, a pension and other benefits with private jobs that don’t.
Anne Varberg, a school bus driver for First Student Transportation, testified that she now pays nearly one-fourth of her paycheck for health insurance. The company offers a lower-cost plan, she says, but that plan is essentially worthless to her, because it rejected every claim she ever filed. She also pointed out that some drivers rely on food shelves and other public assistance to get by.
Meanwhile, First Student, which has bus contracts with numerous metro school districts, reported a profit of $114 million last year, she said, though it paid only $1.4 million in taxes.
Peggy King, a member of SEIU Local 284 who drove buses in the Elk River school district for 17 years, testified that she must depend on Minnesota Care since the district privatized its transportation services in 2002, firing her and 15 other workers.
Local 284 and the Elk River district remain in a protracted court battle over the privatization decision, which the district claimed would save $2 million, but which Local 284 says actually has cost the district $400,000 more.
Dibble’s bill passed the State and Local Government Operations on voice vote. The House version (HF808) has not had a hearing.