Profiting from Public Dollars: How ALEC and Its Members Promote Privatization of Government Services and Assets

For years, corporations have joined the American Legislative Exchange Council (ALEC) for the opportunity to develop legislation that diverts public dollars into their corporate coffers. A new report by In the Public Interest, “Profiting from Public Dollars: How ALEC and Its Members Promote Privatization of Government Services and Assets,” exposes ALEC’s extensive privatization agenda. The report details how private prison corporations, online education companies, health care corporations, and major industry players pay large membership fees to ALEC in exchange for valuable and unfettered access to state legislators. Corporations are able to work with ALEC lawmakers to craft bills that allow private control of public functions, and guarantee a steady stream of tax dollars to enhance profits.

Corporate and legislative ALEC members work together to jointly develop pro-privatization model bills, and then legislators introduce and push these bills in their state legislatures. These bills make it easier to create virtual public schools, encourage states to privatize vital health programs that help vulnerable populations, force state governments to sell public prisons to prison corporations, and help other industries take control of public assets and services.

In 2011 and 2012, ALEC model bills that sought to privatize core public functions were introduced in states across the country, including Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Maine, Maryland, Massachusetts, Montana, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, and Utah. Many ALEC bills fail their first time, but examples of success expose their real goal: enhancing corporate pocketbooks with lucrative government contracts.

• Virtual Public Schools: The K-12 online learning industry is profitable – estimates predict that this market will grow by 43% between 2010 and 2015, with revenues expected to reach $24.4 billion. K12 Inc. and Connections Academy, companies that have both served as corporate chairs of ALEC’s education task force, used ALEC to move legislation authorizing virtual public schools. In 2011, HB 1030/SB 874, which is almost an exact copy of ALEC’s Virtual Public School Act, passed in Tennessee. Shortly after, K12 Inc. won a no-bid contract from Union County School District to create the Tennessee Virtual School Academy.
• Private Prisons: In 2011, Ohio passed HB 153, which contains similar provisions as ALEC’s Private Correctional Facilities Act. Specifically, HB 153 allows corporations to purchase state correctional facilities, which was one of the defining features of the ALEC model bill. Shortly after this bill passed, Ohio became the first state to actually sell a correctional facility to a private company. The Lake Erie Correctional Institution was sold to Corrections Corporation of America (CCA), a long-time corporate member of ALEC.

It’s evident that corporations use ALEC and its vast network of state lawmakers to push for privatization. By increasing the number of government functions that are contracted out, these corporations can grow their profits with taxpayer dollars. And the effects of this ALEC-sponsored legislation are clear – we stand to lose control over public services and assets and, ultimately, we risk a weakened democracy.

The new study underlines how corporations use ALEC to promote private interests and goals that trump the public interest. For a complete list of ALEC model legislation, please visit www.ALECexposed.org. To download a copy of In The Public Interest’s report, “Profiting from Public Dollars,” and learn more about ALEC’s privatization agenda in the past and what we can expect to see in upcoming legislative sessions, click here.