Privatization pays off for millionaire CEOs
There are some people being paid with public dollars who are making a lot of money despite doing very little for the public good – but if you want to find them, don’t look to the frontline public service workers who guard prisons, protect abused children, teach students and support the elderly.
In reality, the people bleeding taxpayers dry are the millionaire CEOs of companies that take over public services with the promise of savings and efficiency, only to leave behind a trail of waste, incompetence and fraud. A new report from the Center for Media and Democracy (CMD) shines a spotlight on these CEOs, labeling them “America’s Highest Paid Government Workers.”
Near the top of the list is George Zoley, CEO of GEO Group, one of America’s largest for-profit prison firms. The company gets 86 percent of its revenue from public dollars - $22 million of which went to Zoley over four years.
Zoley and GEO haven’t done much to earn that money. The report notes that “the company’s cost-cutting strategies lead to a vicious cycle where lower wages and benefits for workers, high employee turnover, insufficient training, and under-staffing results in poor oversight and mistreatment of detained persons, increased violence and riots.”
The report also highlights Richard Montoni, CEO of Maximus – a firm that until recently had a contract with the state of Illinois to take over Medicaid eligibility redetermination work that had been performed by public employees.
That contract is now coming to an end thanks to a grievance filed by AFSCME that resulted in an independent arbitrator finding the state’s agreement with Maximus violated the union’s collective bargaining agreement. The arbitration process exposed Maximus’ high error rate and found the state would waste $18 million a year by using Maximus instead of hiring bargaining-unit employees.
Maximus’ bad track record isn’t unique to Illinois – the CMD report notes that “Maximus has a history of improper billing.” The state of Wisconsin “may be on the hook for tens of millions” due to improper Medicaid billing procedures recommended by Maximus. In 2007, Maximus “agreed to pay $30 million to settle a criminal investigation regarding falsified Medicaid claims.”
Despite this damage and waste of taxpayer dollars, Montoni received $19 million in compensation over four years.
These are only two examples in the CMD report, but they’re illustrative of the perils of handing over programs meant to serve the public over to companies whose top priority is generating a profit for shareholders.