The Wall Street Journal today published a blistering attack on Elizabeth Warren’s Stop Wall Street Looting Act. Once again, Senator Warren is seeking to “punish success.”
Private-equity firms invest in businesses they see as undervalued or underperforming if they believe they can add value. [...] The objective is to create a stronger, more profitable and more efficient company that the owners can sell at a profit.
The Palo Alto-based PE Firm Altamont Capital Partners owns Alabama-based Sequel Youth and Family Services, which operates facilities for vulnerable youth. Many states that are unable to — or unwilling to — provide services for troubled youth contract with Sequel to provide for them in their facilities — usually out-of-state. The farther away these kids are sent, the harder it becomes for anyone back home — especially the state officials serving as their legal guardians — to hear their voices or track their basic safety and well being.
This model- contracting with states to take their troubled, often traumatized kids, off their hands — has been very profitable for Sequel and its Private Equity Owner.
Oregon Public Broadcasting has done a terrific job of investigating what happened to kids from Oregon who were entrusted to the care of Sequel. The report is very disturbing to read — and don’t forget, this is just one state. Sequel currently contracts with 19 states. I’ll just provide a few excerpts:
At another Sequel campus, three adults held a teenage girl from Oregon on the ground by her feet, arms and stomach while she struggled to breathe. That was on the first day she arrived and after she had refused to hand over a photograph of her deceased brother. When police investigated the incident, the officer asked what the protocol was for restraining children. The staffer told the police officer children were restrained until they were cooperative and staff had control. The teen spent more than a year in that facility and was told by staff she was there because “no one cared about her.”
[...]Later, police would report they heard from residents and staff that the violence started after a Sequel employee called a group of female residents “thirsty hoes,” “bitches” and “sluts.” The male staff member was also reportedly hitting female residents and pulled one around by her hair, according to police reports based on testimony by children at Red Rock.
[...]Disability Rights Washington is federally mandated to protect and advocate for individuals with disabilities. Federal law gives its team the ability to access more records than the public can.
They used that power to study Clarinda (Sequel’s flagship facility in Iowa). Their conclusion: Foster children were being abused, repeatedly, in a prison-like setting.
And make no mistake. The business of warehousing and abusing kids is very profitable — at state taxpayer’s expense.
The state calculated it spent on average $10,718 per month, per child on out-of-state facilities. At the height, the state had 88 foster youth placed out of state at once, including 78 in Sequel facilities. The state estimated it spent about $13 million in 2018 and 2019 when children were out of state.
Gelser, the state senator, thinks the total amount Oregon spent is likely even higher.
“Oregon is not only paying out-of-state providers more money than it pays in-state providers, it purchases fewer services with that money and holds the providers to lower standards than in-state providers,” Gelser said.
Taxpayers did pay a higher price for Sequel beds than options closer to home. When children are placed in state, Oregon can use federal Medicaid money to cover some of the costs. But Oregon didn’t tap federal money to cover out of state facilities.
The bombastic Wall Street Journal piece does point out something that perplexes me.
approximately 60% of private-equity investors are employee pension funds, foundations and university endowments. Pension funds alone have at least $149 billion invested with private equity, and would lose as much as $3.4 billion annually if they had to switch to lower-yield investments.
Do faculty and staff of universities, or state employees, realize that their retirements are being funded in part by mistreating youth?