Natural Disasters as Education Market Opportunities

Puerto Rico’s Former Secretary of Education Julia Keleher is being investigated on political corruption charges that she steered over $13 million in government contracts intended for the island’s education system. Keleher, was appointed in 2017, and has been criticized for promoting the expansion of charter schools and the closure of hundreds of public schools as a response to the devastation wrought by Hurricane Maria. The charges include that she gave preferential treatment to associates in what was supposed to be an open and fair bidding process and that in several instances she sought kickbacks.

Companies who benefit financially from government education contracts may see opportunity in natural disaster. Natural disasters can disrupt the regular school system because of physical damage to schools, disruption of electricity, and basic services such as transportation. Contractors may be sought by the government to provide emergency education services. The chaos in the wake of natural disaster creates political windows of opportunity—including windows to push through legislation to benefit the education industry. In 2018, Puerto Rico passed legislation to expand charter schools and create a new voucher program. The Former Secretary argued that in the context of disaster, major school reform became more urgent.

There is little doubt that this sort of bribery in public contracting is a serious problem. It typically either increases the cost to the government of procuring goods and services or reduces the benefits that it receives in exchange for the resources under its control. It may also induce officials to award contracts to the firm willing to pay the highest bribe as opposed to the best firm for the job. Bribery can also cause harm by trampling on existing law and policies, for example affirmative action.

Corruption in government contracting harms government, taxpayers, and those originally intended to benefit from government services. In the case of bribery, it can increase the costs to government of procuring the services. It can reduce the quality of service when government officials award a contract to the highest bidder, even though there might be a company that can do the job better and also charges less. The harm caused by illegal contracting for students affected by natural disaster is particularly egregious because students already are suffering from dislocation and trauma.

The media reaction to the PR contracting scandal seems to focus largely to date on wrong-doing of former Secretary Keleher. To prevent a similar situation when the next natural disaster shutters U.S. schools, we need a legal system and laws that punish (and follows through on punishment) for companies that corruptly obtain government contracts. These are companies that accept bribery or pay bribes in order to get a contract—and break existing laws frequently having to do with open contracting process that awards contract to lowest bidder.

What kind of restitution do Puerto Rico’s students, teachers, and families deserve if the allegations against Keleher and associates are upheld? Where is the S13 million or plus targeted by taxpayers for PR schools NOW? Given the serious effects of bribes that potentially denied relief to students, what is fair in terms of restitution? Holding government officials accountable is important, but it is of course only a minor step toward addressing the root of larger problem in our system: holding corporations accountable in use and misuse of government funds. The framing of natural disaster as opportunity is one element of the new normal, private companies access to public school student data is another.

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