Archive for Monday, December 9, 2002

Privatization effort praised despite mistakes

December 9, 2002


States thinking about privatizing their child welfare services ought to take a long, careful look at what went on in Kansas six years ago.

âÂÂA great deal can be learned from the approach that Kansas took - a lot of pain can be avoided, and some very positive lessons can be picked up as well,â said Madelyn Freundlich, policy director at ChildrenâÂÂs Rights Inc., a New York-based, nonprofit advocacy group.

ChildrenâÂÂs Rights recently completed a national study of state and local governmentsâ efforts to privatize their child welfare programs.

Kansas, according to the study, made many mistakes but, in the end, comes away with one of the nationâÂÂs best systems for collecting data and measuring the systemâÂÂs successes and shortcomings.

âÂÂNowadays, a lot of states and some of the more urban counties are looking at some form of privatization,â Freundlich said. âÂÂBut Kansas is the pioneer.âÂÂ

Kansas privatized its family preservation, foster care and adoption services, border to border, in 1996-7. No other state - before or since - embraced privatization so thoroughly.

Mistakes were made, the report concluded:

l State officials tried to do too much, too fast, creating a thicket of communication breakdowns, tensions between key players and staff shortages.

Switching to the privatized system took three months. It should have taken at least six, the study found.

l Contractors lost millions of dollars because theyâÂÂd based their bids on faulty data and because no one really knew how to predict the new systemâÂÂs costs.

United Methodist Youthville, one of the stateâÂÂs five foster-care contractors, filed bankruptcy last year after depleting its $16 million endowment.

Lutheran Social Services, once the stateâÂÂs sole adoption contractors, announced in 2000 that it was $2.5 million in debt. ItâÂÂs since gone out of business.

l No one bothered to include judges and foster parents in the discussions about how the privatized system would work. Consequently, both groups were slow to embrace the changes, creating delays and mistrust.

l The idea of tying contractor payments to each childâÂÂs success in moving through the system created disastrous cash-flow problems for the contractors. The model was scrapped when the contracts were renegotiated in 2000.

âÂÂThe key lesson to be learned from the Kansas experience is that these things canâÂÂt happen overnight,â Freundlich said.

Florida, she said, is privatizing its troubled child welfare system.

âÂÂBut theyâÂÂre taking a much slower, region-by-region approach - and the judges are very much involved - because they saw what happened in Kansas,â Freundlich said.

Pitfall avoided

Kansas avoided a huge mistake, Freundlich said, when then-Department of Social and Rehabilitation Services Secretary Rochelle Chronister repeatedly warned legislators that privatization would not save money.

âÂÂThat was a very wise thing to do,â Freundlich said.

At the onset of privatization, SRS was spending $63.6 million a year on foster care and adoption. This year, the department expects to spend $126 million. Family preservation services werenâÂÂt available statewide before 1997.

âÂÂThere are communities out there that Ãi¿½" looking at this from a distance Ãi¿½" believe theyâÂÂre going to save money by privatizing,â Freundlich said. âÂÂBut from a child welfare perspective, thatâÂÂs not likely to happen. In fact, in all probability it going to end up costing more because when you privatize, you build quality standards into the contracts that werenâÂÂt there before. But if you want quality, youâÂÂre going to have to pay for it.âÂÂ

Freundlich praised Kansasâ system for the way it collects data and for the outcomes used to measure contractorsâ performances.

âÂÂWe were quite impressed,â she said. âÂÂVery few states have been collecting as much data for as long as Kansas has. In fact, one of the reasons so many researchers spend so much time looking at Kansas is because thereâÂÂs so much data there.âÂÂ

Little stir

ChildrenâÂÂs Rights plans to present the results of its study Ãi¿½" titled âÂÂPrivatization of Child Welfare Services: Challenges and Successesâ Ãi¿½" at several national conferences next year.

But at SRS, the studyâÂÂs findings havenâÂÂt caused much of a stir.

âÂÂAbout the mistakes, weâÂÂve admitted several times that we weâÂÂre too aggressive, that judges and foster parents should have been brought in to the discussions earlier than they were and that we should have had better data going in,â said Marilyn Jacobson, director of child welfare at SRS since January.

Also, she said, no one at SRS was interviewed by ChildrenâÂÂs Rights. Instead, most of the information was gleaned from earlier studies, newspaper articles and interviews with critics of the new system.

âÂÂI didnâÂÂt see much that was new or revolutionary,â Jacobson said.

Too often, she said, researchers focus on the new systemâÂÂs struggles and overlook its accomplishments. A sampling:

l In 1996, the year before adoption services were privatized, SRS workers completed 292 adoptions. Between 1997 and 2002, the stateâÂÂs adoption contractors have, on average, completed 530 a year.

l In 1996, foster parents were paid $10.12 a day for each child in their care. Now theyâÂÂre paid between $18 and $20 a day.

l Two years ago, one-third of the children in foster care were in group homes or institution-type settings. Today, the number is down to 15 percent.

l When foster care was turned over to the contractors in 1997, there were 4,674 children in out-of-home placements. Earlier this week, there were 3,057.

In Region 2, an eight-county area that includes Douglas, Franklin and Jefferson counties, the number of children in foster care today is down 44 percent.

âÂÂWe started out with 778 children in out-of-home placements, and now weâÂÂre down to 417,â said Sherry Love, president of the permanency division at Kaw Valley Center, the regionâÂÂs foster care contractor.

âÂÂAnd when we took over, 33 percent of the children in the contract had been in foster care three or more years; now itâÂÂs 5 percent,â Love said.

Despite these apparent successes in moving children through the system, both Love and Jacobson say there are still more problems than answers.

âÂÂFor starters, I think the systemâÂÂs successes in keeping kids out of foster care is great,â Love said. âÂÂBut I also think it means that those who make it in have come from some of the most difficult situations.âÂÂ

Jacobson said the system still suffers from a dearth of minority foster parents, and contractorsâ success in moving children through the system remains sporadic.

And, she said, too many children in foster care are being put through too many moves.

âÂÂThe question I get all the time is âÂÂ'When is the system going to be fixed?âÂÂâ Jacobson said. âÂÂI tell people I donâÂÂt think itâÂÂll ever be fixed because thereâÂÂs always going to be the need to get better. ThatâÂÂs not going to go away.âÂÂ

Dearth of ideas

For its study, ChildrenâÂÂs Rights interviewed Gray Brunk, executive director at the advocacy group Kansas Action for Children.

He said he thinks the stateâÂÂs privatization movement has stalled.

âÂÂWeâÂÂre at kind of a plateau right now,â Brunk said. âÂÂThere are some things Ãi¿½" many things, perhaps Ãi¿½" that are better now than they were six years ago, but IâÂÂm not seeing many big ideas on how we take things to the next level.

âÂÂAnd with the budget being the way it is, I doubt weâÂÂll see many big ideas coming out of SRS,â he said.

Earlier this week, SRS announced it was cutting payments to its family preservation and adoption contractors by 2.5 percent. Foster care payments were cut 5 percent.

Brunk welcomed the ChildrenâÂÂs Rights report.

âÂÂA lot of people are looking at privatizing,â Brunk said. âÂÂAnd what this study says is, âÂÂ'OK, but donâÂÂt make the same mistakes Kansas did.âÂÂ

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