Privatizing Child Welfare Gets Painful

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The move to privatize child welfare services, which some states have pursued as a cornerstone of reform, has become painful for just about everyone involved in Nebraska.

Under a plan that began in 2008, the state Department of Health and Human Services (HHS) has been shifting some services and coordination duties to contractors, and last week it announced plans to shift more – even as many youth advocates, state workers and public officials are declaring the reform a diaster and calling for a halt.

“This reform … has resulted in turmoil for hundreds of children and families, state and private agency employees, and community-based agencies in our state,” declared Nebraska Appleseed, a nonprofit public interest law firm that counts child welfare among its missions.

HHS remains undaunted. “Any time you go through a reform, people are nervous,” Todd Reckling, the department’s director of children and family services, said in an interview Thursday. But “this notion that the sky is falling is not true.”

The Nebraska experience bears watching for privatization fans and skeptics alike.

The state announced its Out-Of-Home Care Reform initiative in 2008 with the same objectives as other states that have turned to privatization: Improve services for youths, families and providers in part by streamlining bureaucracy. Last fall, the state contracted with five “lead agencies” to deliver and subcontract out various services in specific regions, including foster family recruitment, transportation, referrals, home studies and visitation arrangements.

State workers still carry out duties mandated by law, including initial intake, assessments and investigations, and working with courts to determine the placement of children. (HHS says it serves about 6,300 state wards.) The arrangement looks similar to those in Florida and Kansas, which privatized all child welfare services except for investigations.

Some youth advocates were wary from the start. Voices for Children in Nebraska questioned in last year whether HHS would pay the contractors enough to sufficiently carry out the services, executive director Kathy Bigsby Moore said Thursday.

Sure enough, last spring one of the contractors (Cedars Youth Services) dropped out and another (Visinet, the only for-profit among the lead agencies) went bankrupt. Both said the state didn’t pay enough money and did not pay on time. (That development is briefly explained here.) The state split those two contracts among the remaining three providers.

Problems have persisted. Among the developments this fall:

* A state legislative hearing about the reforms turned into a gripe-fest by subcontractors and foster parents who said they haven’t been paid by the state contractors. One company sent an overdue bill for $365,000.

* In mid-October, one of three remaining lead agencies, Boys and Girls Home, terminated its contract with HHS, saying it could not carry out the tasks. Its cases have been divided among the private contractor and HHS.

* Criticism from advocates grew. Voices for Children issued a statement saying the struggles revealed “a child welfare system in trouble.” Nebraska Appleseed Director Rebecca Gould wrote, “The state must seriously re-evaluate whether this privatization makes sense for Nebraska.”

* The State Foster Care Review Board sent a letter last week to the head of HHS outlining myriad problems, including insufficient staffing, payment delays, “documentation issues” and trouble accessing services – many of which privatization was supposed to alleviate. The board’s six recommendations include a review to “analyze the failures” of reform and a temporary halt to new reforms.

The state has forged ahead anyway. HHS announced last week that it will give more responsibilities and money to the two remaining contractors (KVC Behavioral HealthCare and the Nebraska Families Collaborative). Details are being worked out, but basically the changes fine-tune what the state put in place last year.

Reckling said Thursday that despite initial efforts to specify the different responsibilities of the state and private providers under the contracts, in practice “it was still not clear.” The new process will go further in attempting to remove confusion and duplication of effort between the state and the contractors, moving even more responsibilities to the latter.

One objective is making the contractors the primary point-of-contact for families. “It was at times confusing to families to be connecting with a case manager from the state and a service coordinator from the lead contractor,” Reckling said.

That change might make families happy, but not state workers. HHS says the latest changes will cost the jobs of some of its 450 children and family service specialists.

Why not call a time out in order to re-assess the system?

“This is a dynamic process,” Reckling said. “We believe that by reacting quickly and making those adjustments as necessary, we can continue to build a successful model. It takes time. Three to five years is going to be applicable.”

Moore thinks moving ahead is wrongheaded, because “I don’t see evidence that he does know what all the problems are. …. There is no evidence that I’ve seen that this effort is any more sustainable today than it has been for the past year.”

Moore said she is not against the privatization theory, but has not seen a privatization process in any state work well enough to serve as a model.

Complaints about insufficient funding and services have plagued such initiatives elsewhere. This report evaluates the efforts in Florida and Kansas, which have had bumpy rides but where child welfare officials believe services have improved. This week, Florida chose a new agency to manage child welfare in two counties where the abuse rates are reportedly among the highest in the nation.