Wednesday, September 29, 2010

Who Could Have Imagined?

The privatizing of government functions has always struck me as foolish and dangerous in a democracy. We had plenty of evidence of that in the role of Blackwater/Xe in Iraq in which the private contractor and supplier of mercenaries to the war effort engaged in behavior contrary to the laws of military engagement while providing "security" for both the State Department and Defense Department. The theory behind this kind of privatization is that business can operate more efficiently (and therefor more cheaply) than government. Unfortunately, such contracts rarely provide the kind of oversight that does indeed reflect a cost savings to the taxpayer.

It's not just the federal government which has engaged in this kind of foolishness. Local governments, prompted by the push for better education, have turned over some public schools to private companies and then washed their hands of any involvement in the schools. At least one school district has now seen just how dangerous that can be.

Minnesota's alternative education schools need tough new rules and training programs to protect against conflicts of interest and other financial improprieties, State Auditor Rebecca Otto said Monday.

The auditor's report details allegations that the former president of an alternative learning center that had multimillion-dollar contracts with Minneapolis and Richfield public schools used his position to funnel almost $3 million to his own management firm. Otto said the board of directors for the Center for Training and Careers Inc. exercised inadequate oversight.

As a result, investigators found, Louis D. Gonzales shifted the money to his company, Little Feathers Group, between April 2003 and September 2007. ...

Otto's report arrives amid rising skepticism of management and financial practices at a range of nontraditional education providers, from charter schools to schools for dropouts.

Despite serving almost 150,000 full- or part-time students, the state's 300-plus taxpayer-funded alternative programs operate with little monitoring, and their finances face much less scrutiny than those of school districts and charter schools, she said. Alternative learning centers operate outside the conventional school system, and are designed to serve students who have been expelled or otherwise have trouble succeeding in conventional classrooms.

When the Legislature convenes in January, Otto said, she plans to recommend that lawmakers consider requiring school districts to oversee alternative education programs' finances, file management agreements and audited financial statements with the state Department of Education, and require conflict-of-interest rules and property lease restrictions.
[Emphasis added]

Instead of saving money, the state's poor decision cost local districts a whole bunch more as yet another "businessman" found a way to increase his personal bottom line. But more is at issue here than simply a scam artist finding a way to milk the system. While no rational person would dispute the need for government programs to be as efficient and cost-effective as possible, the purpose of government is totally different than that of business. Governments are supposed to serve the public welfare. Businesses are supposed to make money, a benefit which goes only to the owners of the businesses, and not to the public at large.

Turning over one of the most important government functions to private contractors is a recipe for disaster, both for the government and for the citizens that government is supposed to serve. This is one experiment which had failure written all over it right from the start.

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Blogger Dirk Gently said...

absolutely. and the same holds for healthcare, which should be a public service. this notion that government can't do anything is poison spread by corporatists looking to make a buck. with incredible buying power unlimited credit, no profit requirement, and no 7 figure salaries out bonuses to pay, it makes sense that the fed can do things at less cost than anyone.

so i had this argument with someone who said name one government agency that wasn't a waste of money. i named about 20 and his argument changed to "they weren't doing what they were set up for and were over budget and wasteful." i narrowed it down and asked how that was true of the interstate highway system or national parks, asking if he even knew what their budgets were or how a for-profit company could do better, so he dropped that line and went blustering about some other talking point he'd heard.

see, the problem is that thinking is too hard. if we really are a govt of the people, the people would rather farm it out because they are lazy and dumb.

6:12 AM  

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