Privitization, style over substance

From the Diane Ravitch blog,

As the movement to privatize public schools grows stronger, we should pay attention to the costs of privatization.

Those who push for privatization also claim that private business operates more efficiently than government and will thus save taxpayers’ dollars.

If only it were true.

The latest example in the privatization sage was a story in the New York Times of June 6 about what has happened to the cost of privatized special education for preschool children in New York City. The cost, now at $1 billion for 25,000 children of ages 3 and 4, has doubled in the past six years. It is far more than is paid for the same services in other cities and states.

New York City now spends about $40,000 per child in the program. Says the article, “Massachusetts, whose program is considered “resource-rich” by experts in the field, spends less than $10,000 a child.”

Oversight by the city and state has been lax, and efforts to tighten regulation in Albany has been blocked by the industry’s lobbyists.

The private contractors, who have their tuition rates set by the state, have become an influential lobbying force in Albany, where they have regularly rallied parents of disabled children to protest spending curbs in the program.

Auditors’ reports have found that:

Some contractors have billed the program for jewelry, expensive clothing, vacations to Mexico and spa trips to the Canyon Ranch resort, The Times found in a review of a decade’s worth of education, financial and court records. Others have hired relatives at inflated salaries or for no-show jobs, or funneled public money into expensive rents paid by their preschools to entities they control personally.

New York is the only state that has turned this program over to private contractors, many of which operate for-profit. Typically, the same firms evaluate the children and then provide services to them. 83% of the firms that conducted the evaluation also provided the services needed. Critics believe, not without reason, that the companies have a finanical incentive to over-identify children’s needs to inflate their bottom line.

When services are privatized, there will inevitably be operators who overbill for their services and pad the books and their profits. Lax oversight enables fraud. In the case of this program, oversight is very lax indeed: Regulators rely on contractors’ own accountants to vouch for billing. City and state officials conduct audits infrequently, and when they do, the results often languish on the shelves of the State Education Department. Some audits have not been given final approval and released until years after the contractors being audited went out of business.

Thus, the growing cost does not mean that children are getting more services they need, but that private firms are getting more profits at the expense of the children they supposedly serve.

A spokesman for New York City’s Department of Education defended the program and said that although it was expensive, it works.

As this article shows, it certainly works for the private contractors, who use the children and their parents to prevent appropriate and necessary oversight.

http://dianeravitch.net/2012/06/07/the-high-cost-of-privatizing-special-education/