Quick Hit Ellyn Fortino Wednesday February 19th, 2014, 6:22pm

New Report Sheds Light On America's Top Paid 'Government Workers'

Contrary to what some may believe, America's top paid government workers are not public employees, argues a new report from the progressive watchdog group Center for Media and Democracy (CMD).

"America's highest paid government workers are not your local teachers, social workers or corrections officers," said CMD's Executive Director Lisa Graves. "Rather, America's highest paid government workers are the corporate executives who profit from reckless privatization deals across the country."

In the “Exposed: America’s Highest Paid Government Workers” report, CMD identifies six CEOs who "worked hard to privatize public services and who use taxpayer dollars to enrich themselves with outlandish salaries and benefits."

After reviewing shareholder lawsuits, criminal investigations, U.S. Securities and Exchange Commission sanctions and court settlements, CMD found that the six CEOs highlighted in the report collectively raked in more than $100 million in compensation largely funded by taxpayers over the past several years. 

One of the CEOs dubbed America's highest paid "caseworker" is from a firm that has been met with recent opposition in Illinois.

Richard Montoni of Maximus Inc., which operates government services for poor and vulnerable residents, hauled in $16 million in CEO compensation funded in part by taxpayers between 2008 and 2012, according to CMD.

The state of Illinois hired Maximus to remove ineligible individuals from the Medicaid rolls as part of the state’s 2012 Medicaid reform legislation, the SMART Act. The two-year agreement with Maximus was pegged at $77 million. Last June, an arbitrator ruled that the Maximus contract must end because it violates the state’s contract with AFSCME.

In mid-December, the state agreed to drop its contract with Maximus and hire public workers to do the Medicaid review. Maximus will reportedly stop its Medicaid work for the state on April 30. Activists had also been calling for an end to the Maximus contract, because they claimed it had led to unjust Medicaid disqualifications. 

The report noted that Maximus got into trouble last year in Wisconsin over improper billing for a state mental health program. Also, Maximus allegedly took part in falsifying Medicaid claims some years back for services that the District of Columbia's Child And Family Services Agency provided to foster care children. In 2007, Maximus agreed to pay more than $30 million to settle the Medicaid fraud case with the federal government. 

According to CMD, America's top paid "teacher" is Ron Packard, founder and former CEO of Virginia-based K12 Inc., a publicly held for-profit online education company that sells cyber schooling to states. 

Packard resigned as K12's CEO in January, but he still serves on the company's board of directors. While he was CEO, Packard made more than $19 million in compensation between 2009 and 2013, according to the report.

In 2013, K12 pulled in $848.2 million in profits, with $730.8 million of the earnings coming from its “managed public schools." That means more than 86 percent of K12's profits were the result of taxpayer funds being "siphoned away from traditional schools and sent to cyber schools," the report reads.

In the 2010-2011 school year, about 28 percent of K12's schools met Adequate Yearly Progress, compared to 52 percent of public schools in the nation as a whole, according to a 2012 report from the National Education Policy Center.

In Illinois last year, K12 and its partner Virtual Learning Solutions tried to bring an online charter school to 18 suburban school districts. The local school boards, however, rejected the proposals.

Sabrina Joy Stevens, executive director of the education advocacy group Integrity in Education, said the CMD report "details the abysmal results K12 Inc. has achieved for it's exorbitant price tag."

She also stressed that a number of the nation's public school teachers earn minimal salaries, yet Packard and other corporate CEOs have "literally taken millions in compensation directly from taxpayers." Even though Packard is no longer K12's CEO, Stevens said there is "no reason to believe K12's next CEO won't produce the same results for similar compensation."

The chief executive CMD labeled as America's highest paid "road worker" is Nicholas Moore. He is the CEO of the Australian-based global financial services provider Macquarie Group Limited, which currently operates the Chicago Skyway tollroad with another firm. Macquarie also runs Indiana's Toll Road and the Dulles Greenway in Virginia. The firm has come under fire specifically in Virginia for hiking toll costs.

According to the report, American taxpayers and toll users helped bankroll $8.8 million in compensation for Moore in fiscal year 2013 alone. During the same year, the firm's top executives collectively earned an estimated $53 million in compensation. All told, Macquarie reported $6.7 billion in revenue in the fiscal year ending March 31, 2013. 

Earning the title of the nation's top paid "corrections officer" is George Zoley, chief executive officer of the GEO Group. The Florida-based company describes itself on its website as the "world's leading provider of correctional, detention, and community reentry services."

Zoley collected $22 million in compensation between 2008 and 2012, the report found. The firm overall made more than $1.4 billion in revenue in 2012, and CMD estimates that 86 percent of the profits came directly from taxpayers.

The GEO Group often adds "lock up quotas" or other provisions in private prison contracts that require states to keep correctional facilities full, meaning taxpayers are left footing the bill for empty beds, the report noted.

Also on CMD's list is David Steiner, CEO of Texas-based Waste Management Inc., the largest waste collection corporation in North America. Between 2006 to 2012, Steiner collected a hefty $46 million in compensation.

Overall, Waste Management made $13.65 billion in total operating revenue in 2012. According to CMD's estimate, 50 percent of the firm's profits came directly from taxpayers.

Rounding off the "government worker" list is Jeffry Sterba, president and CEO of the New Jersey-based American Water Works Company, the largest publicly traded U.S. water and wastewater utility firm.

Sterba became the company's CEO in 2010 and plans to step down from his post in May. In the three years he has been CEO, Sterba earned more than $8 million in compensation.

American Water made a total of $2.9 billion in operating revenue in 2012. And according to CMD, an estimated 89 percent of that revenue came from taxpayers.

The report added that American Water "has been a major force behind the privatization of water services and has come under fire from communities across the country for charging high rates and providing poor services."

Shar Habibi, research and policy director at In the Public Interest, a nonpartisan organization focused on promoting responsible contracting, said there is nothing inherently wrong with businesses making a profit on privatized public services.

"But not when that profit comes at the expense of public health and safety," she stressed. "Not when taxpayers suddenly realize they no longer have control over their own schools, roads or water systems. Not when the heads of these corporations make salaries that are literally 200 times what a dedicated public service worker makes."

Graves pointed out that an average member of AFSCME, the nation's largest public services employees union, earns $45,000 a year and receives an annual pension of $19,000 in retirement.

"American taxpayers are right to be outraged over paying lavish salaries and platinum health and retirement benefits for corporate CEOs who make millions by taking over public services and cutting corners to maximize their profits," Graves said. "CMD hopes this report puts a face on those CEO 'government workers' so that taxpayers can hold them accountable."


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