State Auditor Parses Through Heated Debate On Privatization Law

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An out-of-service transit bus rolls through Somerville, Mass., after massive winter storm in February 2015. (Josh Reynolds/AP)
An out-of-service transit bus rolls through Somerville, Mass., after massive winter storm in February 2015. (Josh Reynolds/AP)

Last week, we had a heated debate over a budget item that would exempt the MBTA from the state's privatization law — known as the Pacheco law — for three years. The law requires that if a state agency wants to hire a private company to deliver a service, it has to prove that it would save the state money.

We heard from Greg Sullivan, research director at the Pioneer Institute, who concluded that — because of the law — the MBTA missed out on hundreds of millions of dollars in potential savings.

"I just wrote a report with about 35 sets of data from the federal transit administration website showing that the MBTA lost $450 million. This is the most extreme union-protectionist legislation in the United States," Sullivan said.

But state Sen. Marc Pacheco, for whom the law is named, disputes that and opposes suspending the law for three years.

"I think it's a terrible idea, because within that time, the entire MBTA could be privatized — without transparency, without accountability and without verification that the taxpayer will save money. Do you think that's a good idea?" Pacheco asked.

To help sort through the big questions about whether the Pacheco law helps taxpayers, we turned to Massachusetts State Auditor Suzanne Bump, who is charged with enforcing the Pacheco law.


Suzanne Bump, Massachusetts state auditor. She tweets @MassAuditor.


Radio Boston: Budget Includes Temporary Suspension Of Privatization Law For MBTA

  • "The Pacheco Law requires state agencies to prove that outsourcing would save money, before they move forward. The new budget agreement suspends the Pacheco Law for 3 years and requires a state analysis of whether that suspension saves the state money."

Massachusetts State Auditor: Privatization Reports

  • "It is the responsibility of the State Auditor to independently determine whether the process followed by the agency meets the requirements of the law."

Governing Magazine: The Myth That Privatization Is Always The Solution

  • "While it is true that the intent of the law was to slow down outsourcing, it is not the blunt instrument depicted by its opponents. (The Pacheco law) prevents agencies from basing outsourcing decisions on political philosophy by forcing them to explore alternatives to their current models and then base their choices on costs, desired outcomes, competitive bidding and value."

Governing Magazine: When Privatization Isn't An Option

  • "Rather than a straightforward public-private cost comparison, under the Pacheco law the cost of a proposed privatization contract must be compared to what the cost would be were public employees to work "in the most cost-efficient manner." Public employees are never held accountable to perform to that standard."

This segment aired on July 16, 2015.


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