Privatizing in the Dark: The Pitfalls of Privatization & Why Budget Disclosure is Needed

[Download a copy of the report in PDF format here.]

Periodically, we hear elected leaders promoting what seems like a free lunch: hand-over control of government services or government assets to private industry and services will improve at a lower cost. Like most promises of a free lunch, privatization of government services also known as "contracting out" or "public-private partnerships" has rarely delivered on its promises, with most studies showing little gain and often substantial losses for the public.

Some privatization failures are spectacular flameouts but others are quieter and happen out of the public eye. One of the largest problems is that states systematically fail to collect reliable data on the benefits of costs of privatization and don't generally even track what percentage of their state budgets are going to contracting out services, a theme highlighted in a new report by the Progressive States Network:

Privatizing in the Dark:
The Pitfalls of Privatization & Why Budget Disclosure is Needed

The report emphasizes that what is especially missing is state data that allows state leaders and researchers to compare the degree of privatization in similar sectors among different states to assess best practices in providing public services. The limited data available should encourage states to enact laws creating greater transparency over how much of their state budgets go to outside contractors and for which programs.

In our report, we use the imperfect data available to briefly survey the broad trends in state privatization and highlight the problems many opponents see in that process. The report also uses available multi-state data to note some of the comparative information we do have about state privatization programs.