Catharine Curran’s address to the Board of Trustees, 12/8/17
Good morning. I would like to thank President Manning for the opportunity to speak today. I am here with my fellow Union Presidents: Jim Mullins President of our Employee Services Union, Cindy Costa of AFSCME, Frank De Freitas of the Maintainers and Chet Ovesen of IBPO. Together we represent UMass Unions United Dartmouth.
We are here today as part of the One UMass campaign and my remarks today are not specific to any one campus but are related to issues that are common across all campuses. My apologies if the title you were given gave a misimpression that we would be focusing solely on my campus. Specifically we will discuss the companion issues of Privatization and Discontinuation of service.
As a Charlton College of Business faculty member I do understand the appeal of privatization. But the assumptions that are built into the model of privatization need to be examined because if these assumptions do not hold true then privatization will in fact lead to higher costs and lower service levels. For privatization to be successful there have to be a number of private service providers who will compete against each other to win the contract. These providers have to be successful businesses with enough scale to be able to increase their business without significantly increasing their costs so those cost savings can be passed along to the public entity in the form of lower costs for equal or better service. The other assumption is that the contract offered by the public entity will be attractive to the private market providers. To be attractive the contract has to have sufficient scale and profitability. For larger campuses and larger contracts these are easy assumptions to achieve but for smaller campuses such as mine these are not givens. This can be problematic and can lead to privatization leading to lower level or service for higher costs. These efforts have to be carefully considered and examined it may in fact be that the public sector can actually deliver services better and a lower cost. Once privatized it is very difficult to move those services back to campus since often the knowledge, skills and abilities to manage and deliver these services is lost. If there is only one bidder, that opens the campus to the possibility of having increased costs at time of contract renewal.
Often included in the discussion of privatization is a claim that the displaced workers will be hired by the private contractor and thus not lose their employment. The reason Dartmouth is the best campus to examine the impact of privatization and discontinuation of service is that our local economy allows us to model the impact of the job losses on campus on our local community. Bristol County is an economically depressed part of the Commonwealth, though ranked 5th in size Bristol County is 11th of 14th in terms of median income. Related to lower median income is lower levels of educational attainment, especially for women. With 12.7% of the population of Bristol county living in poverty.
There are three major employers in our community are the school, the hospital group and the University. With the University generating $466 Million impact to the State economy, much of that local. The major drivers of economic impact are student, faculty and staff spending, construction projects and the University’s purchasing the goods and services required for its activities. The study measured that spending and its ripple effect in determining the $6.2 billion impact estimate.
Thus any loss of employment or earnings on campus has a strong impact on our local economy. We have many people on our campus who could be employed elsewhere for higher pay but choose to work on campus for the stability of that employment, as well and the environment of campus and the students. I was recently reminded by Mark Preble of the fact that we have very very low turnover on campus, even among the lower paid positions on campus because of the stability and environment. What this means for our community is that people have confidence, that confidence allows families the freedom to purchase homes, cars, travel and of course send their children to UMass. If that stability is disrupted then many families retrench and slow their spending this can have a disproportional impact on our local economy. Just as adding funds into an economy causes the multiplier effect taking funds out of an economy can cause a deflating effect. If the private firms cuts back on the number of employees and pays lower wages to those employees it does keep that can have a significant impact on our local community and can in fact lead to lower revenues for the State. Thus we solve one problem and create another. It is important to note that often the firms that bid on privatization contracts for all campuses are not MA based firms thus the greatest value jobs created through privatization are not contributing to State revenues.
What we would request is that the Board review the cost savings of the various privatization and discontinuation of service initiatives across the campuses and see if the assumptions regarding cost savings have materialized. Also look at the impact on services rendered to campus. If we only focus on cost we are missing the important consideration of value.
In 2009 there were rumors that the child development center was closing. We we’re assured that this was not true. In July an email was sent announcing the closing of the child development center. Last spring rumors began circulating that health services would be closed. We we’re not told if this was true or not. What we learned from Chancellor Johnson was that when he arrived in July there was a contract ready for his signature. This closure was a signature away. Chancellor Johnson began asking questions not just about cost savings from layoffs but intangible costs to current students and to attract future students to campus. He sought input from students, faculty, and of course ESU and the health services staff. On Tuesday the chancellor announced that this closure is not going to happen.by focusing on value and not simply cost we were able to truly understand the impact of this discontinuation of service.
If we have focused solely on cost, it may in fact be true that these privatization efforts have actually resulted in higher costs for lower service.