Future of PrivatizationCase In Point of Privatizing

By: Anthony Joseph HernandezGrand Canyon University: ADM-614 Economics for Public Administrators

Professor Lisa BrowningJune 11, 2014

DefinitionsPublic Sector-jobs that are perform by employees employed by government agencies.

*Local*School Districts*Special Districts- Utilities, Regional Transit, River Authority*County*State*Federal

Private Sector-jobs are those employed by companies for profit, that are non-government jobs

*Hospitality Industry*Transportation*Food Service Industry*Banking and Finance*Stores*Tele-Communications: Telephone, Internet, Cellular Service

Public vs Private

Public sector purpose is to provide employees that are paid directly by government agencies.Government is in the business of providing basic services such as defense, transportation, education, public health, safety, protection and other basic services. The first line of government that citizens always sees is police, fire, EMS and public works.

Private sector purpose is to provide products, services and goods to consumers or the general public. Private business is any company that stands to make a profit such as Wal-Mart, Walgreen, K-Mart and many others.

Corrections

• Many citizens do not believe that many government services have been privatized to this day.

• Many of these private prison companies own private security and private intelligence companies.

• A prime example of private prisons that are operating at the county, state and federal levels are managed by private prison corporations. The following are private prison Companies:

• Geo-Correctional Corporation

• American Correctional Corporation

Intelligence

• Even the intelligence community has a private sector of providing intelligence gathering, research, profling and analysis for business corporations and governments worldwide.

• There are many private corporation that are in the intelligence business such as:

• Rand Corporation

• Linet Corporation

• Global Incident.com

• Adecco Corporation

• Stratfor Global Intelligence

Security

• When many citizens walk into government buildings from local to federal levels, there are private security working as a security force and as a law enforcement function.

• Private security companies are being contracted by government agencies at all levels to help supplement the police forces to help reduce cost and enlarge their personal power.

• Because of limited budgets, more local agencies that using these contract security and are considered public safety officers with the same rights and privileges while at the job site.

• Many of these security companies own private prisons and private intelligence companies that are in the business to support corporations and governments worldwide. The following are some of the private security companies:

• Allied-Barton Security Services

• U.S. Security Associates

• Wackenhut Corporation

• Universal Protection Services

Private Authority is Now Government Authority

• These corporations in security, corrections and intelligence have corporate and government contracts worldwide.

• The line between private sector and public sector is no longer seamless and will continue to grow to help organizations to be able to function in a public safety capacity.

• There border line between private sector and public sector is disappearing and becoming one entity to reduce duplication and cost.

• The manner of doing business is the joint venture of private sector and public sector working as one team.

• More corporations are taking on more responsibility of providing basic services for citizens and more technical services for government.

Takeover

• A prime example of a public sector takeover is when the U.S. Government decided to take control and operate the national passenger rail service for the nation.

• Amtrak became a government corporation that happens to be owned by the federal government.

• Amtrak is not funded by the national budget, but is earmarked by a separate budget.

• Amtrak is the only passenger rail service, which the U.S. Government will not allow to fail.

• Amtrak is operated by the federal government, just like the United States Postal Service, which is another federal own corporation.

• If more key industries fail, it is possible the federal government will take ownership and operate them as federal corporations.

Federalism

• The line between the public correctional facilities and private correctional facilities seam to be the same identity because both follow the same laws, regulations, policies in receiving the same funding.

• The environment between public sector and private sector is now seamless in its operations.

• The more jurisdictions that are having financial issues, the more privatization will occur and federalism will meld public sector and private sector as one corporation.

• Private sector companies are now providing the same functions and duties as regular public sector employees.

• The trend of reduce jurisdiction budgets will advance more private sector contracts to provide service to government agencies at all levels.

Disproportionate Cost Share

• Disproportionate cost shares occur for the following reasons:

• Not understanding program requirements

• Lack of documentation

• Documentation not being turned in on time

• Not meeting cost share requirements

• Not complying with audit requirements

• Spending funding that is not in the original grant proposal

Ultimate Cost Allocations

• The problems with allocation cost, is that when leaders want a project or to further fund a project, the true cost is not fully explored. An example of this cost allocation issues, is the California Prison System where 13 billion dollars is being spent to house and take care of inmates. Only 9 billion is being spent on public education. The issue is that a state can allocate a budget to operate under normal circumstances. When a large scale emergency like the California fires where inmates have to be moved or used to help fight those fires; additional money needs to be allocated beyond the normal budget cost.

• Emergency and disasters do occur and are costly, there is no way to predict budgets or prepare budget accounts. The fires in California is an example how ultimate cost allocation budgets need to be raised to pays for such emergency and disasters. California prison system had to pay to move inmates from harm of those deadly fires, while other inmates were used to fight the wildfire.

• Cost allocation will always change when an emergency or disaster does occur.

• Regular budgets, emergency and disaster cost always have to be paid by the tax payers.

Long-Term Sustainability

• The problem where worlds collided is when administrators were trying to support the public interest and still save many tax dollars. Many leaders do fail to conduct any feasibility studies or proper studies to justify their actions, in changing direction or making policy changes that will comply with regulatory and compliance authority. An example of such issues was the Georgia State Youth Authority, where the administrator saw the facility in Augusta that had a high turnover rate of juvenile officers, suicides and agency not able to compliant with regulations. Mr. Martinez decided to use an emergency power clause to justify the implementation of privatizing the facility to correct the facility issues.

• Privatization is here to stay, because governments have to find a balance to provide basic services and maintain budget lines.

Reference

• Clarke, P. (1989). Creating a Prisons Market. Economic Affairs, 9(2), 20. • http://library.gcu.edu:2048/login?url=http://search.ebscohost.com.library.gcu.edu:2048/login.aspx?direct

=true&db=bth&AN=5923463&site=ehost-live&scope=site • REINKE, S. J. (2006). WHEN WORLDS COLLIDE. Public Performance & Management Review, 29(4), 497-509. • http://library.gcu.edu:2048/login?url=http://

search.ebscohost.com.library.gcu.edu:2048/login.aspx?direct=true&db=bth&AN=22173061&site=ehost-live&scope=site

• http://mobile.reuters.com/article/idUSBREA3RIEW20140428?irpc=932