Subscribe
Jobs
Cars
Real Estate
Apts
Classifieds
Shop
On his third day in office, Gov. Mitch Daniels told reporters his administration would conduct an inventory of state assets and consider holding a “very large garage sale.” He slapped his first big “for sale or lease” tag on the Indiana Toll Road.
Sales, leases, contracts and proposals have followed ever since. Welfare services, prison contracts, the Hoosier Lottery – you name it, it has most likely been appraised and considered for outsourcing or an outright sale.
If privatization wasn’t a campaign issue in 2004, rest assured it will be in 2008. Jill Long Thompson, a candidate for the Democratic nomination for governor, has directed some of her first attacks on the governor’s privatization efforts:
“It is nothing more than a quick fix in which a handful of out-of-state and foreign investors are getting a better deal than the public is getting in return,” she said in announcing her candidacy. “We know that with another four years, this administration would push to sell off additional Indiana resources and assets, such as public parks and roads.”
While his challengers will use privatization to criticize Daniels, the governor is likely to offer a different spin, according to Robert Schmuhl, professor of American Studies at the University of Notre Dame.
“Privatization will definitely be an issue in the governor’s re-election campaign, and he’ll probably make it a centerpiece of what he’s accomplished,” he wrote in an e-mail. “There’s lingering anger over the Toll Road lease in the northern part of the state, but it’s doubtful whether it will be decisively influential on the outcome of the race.”
If Hoosiers can expect privatization to be a major issue, it’s worthwhile to take note of where it’s working and where it’s not. Here’s a look at a few of the areas where the administration has turned to the marketplace in search of efficiencies.
The deal
:
A 75-year agreement to lease the Indiana Toll Road to a Spanish-Australian consortium.
The partners
:
Indiana Department of Transportation and that consortium, Cintra-Maquarie.
Payoff
:
$3.8 billion, plus more than $200 million in interest earned so far.
The bottom line
:
On the plus side, a major infusion of cash for road improvements and new construction. The Daniels administration calls Major Moves a “$12 billion fully funded 10-year transportation program.”
On the downside, the operations switch didn’t happen painlessly. Toll Road workers were displaced. Installation of electronic tolling caused traffic jams, and the Toll Road operator initially refused to extend a discount to Illinois motorists with an electronic transponder. Some truckers continue to use other routes to avoid the Toll Road because of 55 percent increases in truck tolls.
In the end, it might take the full 75 years for Hoosiers to determine who got the best deal. But the Toll Road payout didn’t change any minds when it came to the governor’s proposal for a public-private partnership in building the Indiana Commerce Connector, an outer-beltway to relieve congestion on Interstate 465 around Indianapolis.
“It was politicized to the point that it wasn’t viable,” said Sen. Tom Wyss, a Fort Wayne Republican and chairman of the transportation and veterans affairs committee. “You had the ability to build a road that was funded by someone else, and it (would have) alleviated so many of the problems in Indianapolis. It would have been an unbelievable traffic reliever.”
The deal
:
Long-term lease of the Hoosier Lottery to a private operator.
The partners
:
The State Lottery Commission and two undisclosed companies
Payoff:
$2 billion upfront, $200 million a year to operate and collect all profits. The money was to be used for life sciences research and college scholarships for students who agree to stay in Indiana after graduation.
The bottom line
:
No deal. Inexplicably, lawmakers decided that a state agency that already contracts extensively with the private sector – printing, advertising, sales – was off-limits for further privatization.
The deal
:
Outsourcing of operations at the New Castle Correctional Facility.
The partners
:
Indiana Department of Correction and GEO Group, a Florida-based company formerly known as Wackenhut Corrections.
Cost
:
Up to $53 million to GEO for operation and management of the New Castle prison for a four-year contract, with three two-year extensions.
The bottom line
:
Not a success. To fill the 2,416 beds and maximize profits, prison officials worked out a deal with Arizona to transfer inmates. Just a month after the first Arizona prisoners arrived, a riot broke out at the New Castle prison. Two guards and eight prisoners were injured. GEO’s inexperienced guards were blamed for the uprising. The governor said last month that no more inmates would be transferred.
The deal
:
Outsourcing of eligibility services for public assistance programs, including food stamps, Temporary Assistance for Needy Families, or TANF, and Medicaid.
The partners
:
The state’s Family and Social Services Administration and the Hoosier Coalition for Self-Sufficiency, a for-profit consortium led by IBM and Dallas-based Affiliated Computer Services Inc.
Cost
:
$1.16 billion for a 10-year contract. The governor says the contract will save $500 million in administrative costs over that period and with elimination of errors and fraud, “savings will probably exceed $1 billion.”
The bottom line
:
Still to be determined, but there are already problems. The U.S. Department of Agriculture charged in July that contrary to federal food-stamp regulations, state employees weren’t interviewing some welfare applicants. Since fall 2006, the consortium had handled the process. More than 1,500 FSSA employees became consortium workers in March.
Beginning Oct. 22, a 12-county region that includes Wabash County becomes a testing ground for another phase of the IBM program. A call center has been set up in a former middle school in Marion to process welfare applications. FSSA has not released a timeline for carrying out the automated telephone and Web application system statewide. “We’re going to do it right, not fast,” Zach Main, director of the Division of Family Resources, said last month.
Client advocates are skeptical. They point to problems in Texas, where an $899 million deal with Accenture, a Bermuda-based company, was canceled in March after thousands of eligible Texans were denied enrollment in social service programs.
The deal
:
Privatization of auto title and license plate registrations
The partners
:
Indiana Bureau of Motor Vehicles, auto dealers and the Los-Angeles-based Computerized Vehicle Registration GP.
Cost/payoff
:
No cost to the state – dealers pay a per-transaction fee to CVR.
The bottom line
:
After two years of turmoil at the BMV, including a botched computer conversion that brought some operations to a halt, services are finally improving, and the dealer title services are one reason for it. Trier Ford Lincoln Mercury Inc. in Columbia City is one of 14 dealerships in the state participating in the pilot program. Brad Nelson, the company’s finance manager, said the dealership has been participating in the pilot project since the middle of July.
“By and large it’s going OK,” he said. “We’re primarily focusing on plates and registrations that we sell through the dealership. … We leave the complicated stuff to the bureau.”
