Report flags executive wages for government contractors
The CEOs of some private firms that have taken over government functions are earning as much as $8 million a year, according to a new report titled, “Exposed: America’s Highest Paid Government Workers.”
The report, published by the Center for Media and Democracy, said American taxpayers have paid nearly $120 million in personal compensation to a handful of corporate CEOs running the nation’s public services.
For example, George Zoley, dubbed the “highest paid corrections officer,” is the CEO of The GEO Group Inc., an international detention/corrections firm headquartered in Florida. It owns nearly 50 adult and juvenile facilities in the United States. Most are in the south and southwest, with six in southern California, six in Florida, and 11 in Texas.
“Since its founding nearly 30 years ago, GEO Group profited from federal and state policies that led to a dramatic rise in incarceration and detention in the United States — an increase of more than 500 percent during the past three decades,” the report states. “In recent years, with crime rates dropping and sentencing reform spreading, GEO Group found a new way to keep its profits high: many of its contracts contain bed guarantees or ‘lock up quotas’ that require the state keep prisons full, and put taxpayers on the hook for empty beds.”
According to a different Center for Media and Democracy report, the company also owns two political action committees, which annually contribute hundreds of thousands of dollars to the Florida Republican Party, the National Republican Party, and their candidates. In the last decade, GEO Group (formerly known as Wackenhut) has faced and settled several lawsuits involving abuse, neglect, cover-ups, and mismanagement leading to inmate deaths. Despite this, the company routinely makes more than $1 billion each year in revenue from local governments (and thus, taxpayers).
The other five CEOs highlighted in the report are: David Steiner of Waste Management; Ron Packard of K12 Inc. (which runs virtual public charter schools and other online education programs); Richard Montoni of Maximus Inc. (which administrates federal human resources and health care programs such as Medicaid); Nicholas Moore of financial firm, Macquarie (which operates several major highways and toll roads); and Jeffry Sterba of American Water.
Between 2006 and 2012, Steiner earned more than $45 million in personal compensation; tax payers paid approximately half of the company’s $13.65 billion profit in 2012 alone. Packard made more than $19 million from 2009 to 2013, with $730.8 million in revenue from public schools. Montoni earned $19 million in personal compensation from 2009 to 2013, with his business earning $1.1 billion in revenue in 2012. Moore’s compensation last year was $8.8 million, with $6.7 billion in company revenue. In his three years at American Water, Sterba has earned more than $8.3 million — last year, the company received approximately 89 percent of its $2.9 billion profit from the municipalities it serves.
“These and other ‘government workers’ who head big firms in the fields of education, corrections, waste management, water treatment, transportation and even social services make billions off of taxpayers, but muddy accountability, and cut corners when it comes to public health and safety,” states the report. “Given these astronomical salaries, and evidence of higher prices, poor service and at times outright malfeasance, taxpayers have every right to be concerned whether their outsourced dollars are spent efficiently and effectively.”
These companies also tend to offer their employees lower wages and fewer benefits, compared to public workers doing the same job. Often, municipalities sign contracts with these companies that either do not make provisions for existing public workers, or make arrangements that result in layoffs and/or pay cuts.
According to the Bureau of Labor Statistics, 15 percent of the nation’s 6.7 million public administration workers are black.
Most municipalities use some level of public-private collaboration to carry out public services; common examples of privatized public services include electricity, gas and health care. Property, sales and state income taxes pay for these services, and when a private company is hired to provide them, that private company is paid with tax funds.
The report also addresses the risks of privatization without careful planning, oversight or accountability.
In addition to disclosing the dollar amounts, the report highlights the companies’ relevant shareholder lawsuits, criminal investigations, U.S. Securities and Exchange Commission sanctions, and court settlements. Each firm headed by these top six earners has been sued, or investigated and penalized in the recent past, for harmful business practices and/or federal crimes in relation to providing public services.
The report is part of a larger project called “Outsourcing America Exposed,” which aims to raise awareness about public service privatization, and how it “hinders transparency and shortchanges taxpayers.”
“Business is in business to make a profit; there is nothing inherently wrong with that,” says Shar Habibi, the research and policy director at In The Public Interest, a research organization focused on privatization, and one of Center for Media Democracy’s partners in this project. “But not when that profit comes at the expense of public health and safety. Not when taxpayers suddenly realize they no longer have control over their own schools, roads, or water systems. And not when the heads of these corporations make salaries that are literally 200 times what a dedicated public service worker makes.”
New American Media