Tennessee’s Blueprint on How to Oppose Corporate Power

January 2, 2018

In late fall of 2017, chancellors at four University of Tennessee (UT) system schools took bold action prioritizing the job security and voice of local constituents by rightly rejecting a state-level outsourcing contract to privatize the management of state facilities. The benefactor of the proposed deal—which was pushed heavily by Republican Governor Bill Haslam—was Jones Lang LaSalle (JLL), a company in which Haslam disclosed having a personal financial stake. State universities represented a whopping 72 percent of Tennessee’s plan, led by the governor, to privatize the management of all existing state facilities. This victory serves as a wake-up call for communities across the country that are concerned about the public good being auctioned off in backroom deals: there is a way forward to stop them.

Despite the massive ramifications of the plan—including the more than 3,000 public workers whose jobs were on the line—the dealmaking process with JLL was shrouded in secrecy. During negotiations, Governor Haslam failed to engage his constituents; few measures were taken to secure public approval. Even the input of Tennessee’s state legislators was summarily dismissed. The process itself was only uncovered because of the vigilance and organizing of the United Campus Workers (UCW)—a student, staff, and faculty union—and other community partners.

Two bills (Senate Bill 0851 and Senate Bill 1047) were introduced to provide legislative oversight for any efforts to outsource state jobs, resources, and assets. Governor Haslam announced his opposition to both. Additionally, more than half of the legislature signed a letter urging the governor to postpone the outsourcing plan.

None of this should come as any surprise. Privatization advocates and outsourcing firms have, for decades, relied on a lack of public awareness and growing distrust in government to turn public goods into private profiteering rackets. In the process, they’ve successfully curtailed the public’s ability to negotiate and retain control over the goods and services that are “essential to enabling human success and wellbeing,” including education, health care, and transportation. Clearly, Governor Haslam was aware that privatization schemes are most effective when devoid of public input and scrutiny.

But organizers in Tennessee, led by UCW, ensured that the plan received remarkable public opposition at every stage of the process. Multiple statewide and campus-wide petitions against the outsourcing proposal were created, garnering thousands of signatures. During a public comment period, over 1,600 residents submitted criticism of the plan, with only one comment in favor.

At UT’s flagship campus, University of Tennessee Knoxville (UTK), multiple groups, including the Faculty Senate, Student Government Association, Campus Events Board, and student newspaper, all spoke out in opposition to the proposal. UCW organized rallies, forums, and phone banking events in protest. And, in a letter to UTK Chancellor Beverly Davenport, 22 Knoxville area businesses urged her to opt out of the plan.

The success of the two-year-long, statewide organizing campaign led by UCW ought to serve as a blueprint for how to challenge privatization—a process that threatens our prospects for equitable basic services, stable livelihoods, and an effective democratic system.

First, it’s crucial to debunk the governor’s unsubstantiated claims that fueled his push to privatize. In his response to the chancellor’s decision, Governor Haslam argued that the plan was part of his administration’s efforts to work with universities “to keep tuition and other fees low for our students and families.” While Haslam has certainly made notable strides in expanding the affordability of higher education for Tennessee families, especially through The Tennessee Promise program, he appears, in this case, to misrepresent the causes behind rising tuition at state universities. Even more troubling is that his financial stake in the company that stood to be awarded contracts suggests he may have had ulterior motives for this misrepresentation.

Budgetary strains for universities across Tennessee are a direct result of declining state support, rather than an inability to rein in reckless spending on facilities management. IPEDS data on the University of Tennessee Knoxville, Chattanooga, and Martin campuses, for example, demonstrate this rather clearly. At each of these three schools, state appropriations represents a far smaller percentage of total revenues today than they did 10 years ago.

At UT Martin, which had the largest decline of the three, state appropriations accounted for 39.2 percent of total operating and non-operating revenues at the university in 2003, but only 25.1 percent of these revenues in 2014-15 (the most recent data available). Comparable numbers for Chattanooga and Knoxville are 35.6 percent to 21.8 percent and 29.5 percent to 24.5 percent, respectively.

At Knoxville, the decline in these revenues has been made up by student tuition where 22 percent of the University’s revenues are from tuition compared to 12 percent ten years ago. Across the state’s public colleges and universities, per student funding by state sources today is down 18 percent from 2008 levels. If Haslam is truly interested in lowering the costs of higher education for students in Tennessee, he ought to focus less of his energy on ensuring private gains and more on increasing state support.

Even with this victory, the fight against the privatization plan is not yet over. Multiple Tennessee schools, including the University of Memphis, Tennessee Tech, Middle Tennessee State University, and Tennessee State University, as well as community colleges across the state, are still in the process of opting in or out of the privatization plan. In making a decision, they ought to consider the case of UTK. Until 2012, part of the university’s Facilities Services were outsourced in an effort to save money.

But, following the 2012 recommendation of a task force charged with improving the university’s ranking as a top public research institution, those services were reinstituted in-house. The estimated cost of this move was approximately $750,000 more per year, but university administrators decided that the results—better training, career opportunities, and benefits for workers—were worth the cost.

Ultimately, because the practices of the private stakeholders were wasteful and Facilities Services workers were more productive and required less oversight, insourcing did not result in the anticipated price increases. No wonder then that the vice chancellor for Facilities Services at UT called Haslam’s outsourcing plan a “disaster for our students.” Similarly, at the state level, where JLL currently manages the facilities of the state capitol building, outsourcing has resulted in low-quality services and irregular reporting.

In making their decision, the universities also ought to consider the impact of their decision on the community. The outsourcing of formerly public functions often sets in place a “race to the bottom,” in which reduced wages and benefits for workers creates a downward spiral that jeopardizes public wellbeing.

For example, a 2015 case study conducted at Tennessee Technical University (TTU) found that after privatizing custodial services, TTU fired its local custodial staff and cut pay for future workers. In the end, the university only saved around $100,000—directly at the expense of its lowest paid workers.

Although Haslam continues to tout the cost saving potential of the deal, JLL’s own assessment concluded that the University of Tennessee at Chattanooga would have had to pay an additional $263,217 a year to manage its facilities if it were to sign on to the outsourcing contract. Universities also ought to be wary of JLL’s tendency to overestimate potential cost savings.

While the decision to reject privatization made by UT’s four chancellors represents an important moment in the fight to regain public control over public goods, the fight continues. At Roosevelt, through our Re: Public project, we stand for collective action that ensures our public systems remain in collective hands. Moving forward, we hope that the governor will not only abandon any remaining efforts at statewide privatization, but, equally, advocate for expanded accessibility and affordability of public higher education institutions in Tennessee.