Plans to put Tennessee’s real estate and government operations in the hands of private business are much further along than Gov. Bill Haslam would like people to think.

A master of downplaying big issues, Haslam says he’s simply looking for ways to make government run more efficiently and save money.

But with a 75-page report surfacing and the media obtaining a raft of emails about the need to “build momentum” and “compress” the timeline for privatization, state lawmakers are taking a jaded approach to the governor’s efforts to de-emphasize all things outsourcing.

As a result, when the General Assembly reconvenes in 2016, Haslam is likely to run into bipartisan roadblocks for turning more buildings and jobs over to private entities.

State Sen. Bill Ketron, a Murfreesboro Republican who co-chairs the Fiscal Review Committee, points out the governor previously said nothing was in writing. But with this comprehensive report circulating, he notes, “it’s one step after another, so we’re going to have to monitor this very closely.”

“We’ll see very quickly once we get back into session what his plan’s going to do and how he’s going to try to bring it without approval from the different committees,” Ketron says. “I think we need to be involved in this. It affects too many people.”

Though officials call proposed cost cutting “just a bunch of estimations,” a report to the governor called Strategies for Efficiency in Real Estate Management purports to save $183.9 million a year, including $94.5 million through facilities management outsourcing or giving government work to private companies and $53.9 million through energy management.

More than $116 million annually would come through the University of Tennessee system and Tennessee Board of Regents, affecting institutions such as Middle Tennessee State University, Tennessee State University, Austin Peay and the University of Memphis.

The report points to successful outsourcing work in higher education such as maintenance, pest control, air filters, floors, window cleaning, waste collection, grounds/landscaping and construction. It also notes, however, some outsourced operations were brought back in-house because of poor performance.

Outsourcing opponents, such as United Campus Workers, point toward custodial services work at the University of Tennessee as an example of failed outsourcing. And the governor himself faced off in an argument with a former worker after a recent transportation summit in Murfreesboro.

In what turned into a bit of a finger-pointing match, Anne Barnett challenged the governor on private contracts, saying she disagreed with “trying to make money on the backs of the lowest-wage workers” in state government.

Haslam responded, “The people that work for JLL (Jones Lang Lasalle) are making more than they did when they worked for the state.”

Barnett, who said she worked in custodial services before it was privatized, questioned his response and asked the governor if they are receiving pensions and other benefits.

“Their benefits are better,” the governor retorted, adding the state would send her the information.

“Well, how are we saving money then?” she asked.

After the spat at the Embassy Suites Hotel, Barnett points out the custodial service was “so terrible” under the private company UT wound up taking it over again after the contract expired.

“You would think the governor would learn from that mistake at UT, which was only hundreds of jobs. But he’s trying to take away thousands of people’s jobs,” she says.

Seeking information

State Rep. John Ray Clemmons and Sen. Lee Harris, both Democrats, are traveling Tennessee to gather information from state employees about the impact of outsourcing.

“If there’s something to be solved that would provide a factual basis or foundation for what’s being attempted, then we want to know about it. But if it’s not, then we want to know about that, too,” says Clemmons, a first-term representative from Nashville.

As the governor denies having any “bias” toward privatization of government services, his team of staff and contractors is studying scenarios and crunching numbers dealing with everything from the operation of prisons and parks to universities and state office buildings.

The team includes three part-time consultants being paid a combined annual rate of $612,000, according to the Associated Press.

“It has a clear timeline. It’s pretty eye-opening,” Clemmons says. “They say, Oh, that’s just a working document. … The proof is there. They’re sizing this thing up, and the reality is they don’t need a lot of legislative action on this.

“They can do it, and if we didn’t raise the issue and if it doesn’t get talked about, it’s just going to go right on by.”

The report

The draft of the governor’s Strategies for Efficiency in Real Estate Management, first reported by television station WTVF in Nashville, puts together estimates based on outsourcing the management of all state facilities to “a single vendor.”

Chicago-based Jones Lang Lasalle is managing a portion of state property already – in spite of a 2013 Comptroller’s audit showing it benefits from recommendations to the Department of General Services.

The Chattanooga Times Free Press reports the company made commissions totaling $3.35 million on private office leases, which is separate from its five-year facilities management contract.

General Services officials say Jones Lang Lasalle is spending less than the state on facilities management, roughly $12.9 million into the first two years of a five-year contract, mainly by focusing on preventative maintenance.

However, those figures are based on what the state might have spent, not what it did spend, critics note.

According to the recently revealed report, the 15-year total cost reduction for outsourcing facilities management comes in at $1.4 billion.

“Densification” of state work space would save $155 million over 15 years, putting more people into existing space or have them working from home or even hotels.

Eliminating vacant, functionally obsolete and expensive-to-maintain assets would save yet another $114.8 million over 15 years.

“Decommissioning of certain ‘bad’ owned buildings will reduce the State’s real estate footprint and associated costs,” the report states. Decommissioning will defer maintenance expenses and help the state avoid high operating costs, but the state could continue operating through “densification, increased utilization and workplace strategies.”

On the down side, dumping buildings that eat up dollars could run into public opposition, in addition to the expense of handling hazardous materials and demolition, as the state runs the risk of not having enough space to replace those “bad” buildings.

Here’s another red flag.

Paid $1 million to study state office buildings, Jones Lang Lasalle recommended the Cordell Hull State Office Building be demolished. A firestorm of complaints put an end to that idea, so the governor paid a different company $96,000 for another study, which concluded renovating the building would be cheaper than replacing it or leasing space.

Demolishing older state university buildings would face similar challenges, in addition to leaving some important disciplines short of space, especially specialized programs, the report states.

In a section dealing with the University of Tennessee, the report states: “Consideration of no net new square footage strategies can encourage densification,” and “Existing space can be reconfigured for more efficient use.”

It points out academic space in non-specialized areas can be “cross-utilized” while science and lab buildings are designed for flexibility and different uses.

But the report also contends reducing higher education office space through telecommuting and temporary offices could hurt the governor’s Drive to 55 program, an initiative to put degrees or certificates in the hands of 55 percent of Tennesseans in 10 years.

Graduation rates could suffer because “data indicates student success is correlated with level of student engagement with faculty and staff members,” the report states.

Make no mistake, while private business might be able to thrive in such virtual arenas, students need to become engrossed in a culture of learning, seeing their professors, talking to them and sharing ideas with other students. Those situations are hard to replace with email and video.

Official talk

Emails obtained by the media reveal General Services Commissioner Bob Oglesby saying the effort “is expected to be an enterprise-wide game-changer program,” and he further states “we need to build momentum and realize savings” during the final term of Haslam, who’s entering the second year of his second four-year term.

The commissioner further says “compressing the schedule is important” and points out some commissioners don’t understand the timing or intent for centralizing their real estate management so outsourcing facilities management can be effective.

Oglesby discusses the need for state officials to understand the Jones Lang Lasalle contract to expand outsourcing.

Still another email from one of the team members offers this premise: “The State ideally wants to have the private sector provide all of these services with as little involvement by the State as necessary (in its public sector role).”

An email also states the job impact number of 1,500 reported by Andy Sher of the Chattanooga Times Free Press “was not in our messaging.” Sher recently reported the governor’s administration used the real estate report during a trip to New York to discuss Tennessee’s bond rating with financial agencies.

Following revelations about the real estate plan, the governor’s point man on outsourcing, Terry Cowles, is telling other officials not to discuss privatization in state emails, an effort to stop premature or incorrect information from being released.

His statements brought a rebuke from state Sen. Jeff Yarbro (D-Nashville), who likened it to circumventing Tennessee’s Open Records Act. State Sen. Sara Kyle (D-Memphis) is critical of meetings to advise the real estate management team being closed to the public.

Ketron, likewise, says he was “taken aback” by comments from Gov. Haslam urging state officials not to send each other email about the real estate and outsourcing plan.

“I thought that was kind of unusual for him to make that statement. I don’t know who he was referring to or who he was irritated at,” Ketron says. “I’ve always been about transparency, so I don’t really agree with that comment.”

Ketron, an MTSU graduate and university booster, says he isn’t nearly as concerned about privatizing maintenance of state office buildings in Nashville as he is college facilities. He says he’s set to meet with MTSU’s union employees.

“When we start getting into the college campuses, like at UT and the Board of Regents … I think it’s going to be a long, hard look. They’ve got to be able to prove to us that they can do it cheaper as far as outsourcing is concerned,” Ketron says, adding he sees no shortcomings on MTSU campus operations.

Clemmons says government has “core functions” statewide, and in many communities it is the main employer, whether at a state prison or in state offices.

“Once they start outsourcing these things and these jobs start getting cut, we’re going to have a whole lot of other problems on our hands in a whole lot of other areas. It’s just one of the issues that needs some real light shined on it because it has far-reaching effects, and they don’t want to talk about it,” Clemmons says.

“I just don’t see it as a partisan issue. I think it’s a real big problem in the long run, and the short term for these guys who are going to lose their jobs.”

Sam Stockard can be reached at [email protected].