The bankruptcy of another state contractor renews concerns about the stability of the privatized adoption and foster care system.

Problems associated with the state’s privatization of foster care and adoption services may not be solely responsible for the demise of Lutheran Social Service in Wichita, but there seems little doubt that those problems were a major factor.

The 123-year-old social service agency announced last week that it would be going out of business. The agency, which had contracted with the state to provide adoption services, has declared bankruptcy and will liquidate its assets to try to repay the $2 million it owes its creditors. United Methodist Youthville, the largest of the state’s five adoption contractors also filed bankruptcy last year.

Lutheran Social Service was the state’s only adoption contractor when those services were moved into the private sector in 1996. In July 2000, the adoption contract was moved to Kansas Children’s Service League, but Lutheran continued to work as a subcontractor.

The Lutheran group continued to serve 240 children in about 90 foster homes, but it was forced to pull out of the contract last August when it was projected the agency would lose $300,000 each month it continued the contract.

Obviously no entity can be expected to absorb that kind of loss. The situation raises several questions. Does the state’s compensation for foster care and adoption contractors even come close to covering the actual costs of providing that care? Did Lutheran Social Service mismanage the money it was given? Are other contractors in danger of following Lutheran and Youthville into bankruptcy?

It seems clear the state still hasn’t achieved stability in its privatized adoption and foster care system. Perhaps Lutheran Social Service didn’t have the business management skills to handle such a large state contract. If so, the state shouldn’t have granted the contract.

The other alternative is that the state simply isn’t supplying enough money to fund the services its contractors are expected to supply. If that is the case, other contractors probably are headed in the same direction as Youthville and Lutheran Social Service or are squeezing services to children in order to balance their books.

The bottom line in this unfortunate story is that two long-time solid charitable agencies dedicated to serving Kansas children in need of care have been driven into extinction by their association with the state’s adoption and foster care system. To say, as a Wichita legislator told a Journal-World reporter last week, that “something’s broken” in the system seems to be a vast understatement.

Even amid the many budgetary challenges that will face our next governor, the problems in the adoption and foster care system cannot be ignored. Whether it’s a matter of money or administration or both, the problems in this system must be resolved.