Child Welfare Privatization Update

Subsection of Annual Privatization Report 2013: State Government Privatization

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In 2012 the number of U.S. children in foster care dropped for the sixth straight year, falling to about 400,000 compared to more than 520,000 a decade ago, according to the federal Department of Health and Human Services.1 The latest figures show there were 400,540 children in foster care as of September 30, down from 406,412 a year earlier and from approximately 523,000 in 2002. Privatization has continued to play a role in reducing the number of children who enter the foster care system.

Child Welfare Privatization in the States

In 2012 several states continued to implement privatized child welfare efforts. For a comprehensive implementation guide for state advocates of child welfare privatization, policymakers can review an October 2012 policy brief by the State Policy Advocacy and Reform Center, Privatization of Child Welfare Services: A Guide for State Advocates which provides an overview of child welfare privatization and how advocates can be involved in efforts to privatize child welfare services.2

Florida: Florida privatized its foster care system a decade ago, contracting out casework and other services, which has contributed to a dip in the number of children in care. Its foster care numbers dropped from about 29,000 in 2006 to under 20,000 for the 2011 fiscal year. Florida’s privatization has also led to innovative caseworker practices.3 Private providers collaborated with the state to develop a new computer system to better track the children in foster care and the actions taken by case workers on any child’s case. Case workers ensure that children are seen every 30 days as mandated by state law. If the 30-day deadline passes, a supervisor and others are notified. In October 2012, 99 percent of children in both in-home and out-of-home care were seen within 30 days. When case managers in private agencies make their monthly visits, they take a picture of the child with their mobile device which has a GPS time, date and location stamp. This information is then uploaded to the system where the photos are stored. Access to this system is shared by staff, supervisors, judiciary and law enforcement. An independent study of our nation’s child welfare systems ranked Florida’s as the fourth best in the country. In the Foundation for Government Accountability’s first “Right For Kids Ranking”-the first such ranking comparing states’ child welfare performance-Florida scored high on reducing the overall foster care population, reducing abuse in foster care, rapid response to child abuse inquiries, and finding permanent homes for children.4

Kansas: Since 1996, Kansas has been one of only a few states to privatize the majority of its child welfare services. In January 2013 the Kansas Department for Children and Families (DCF) Secretary Phyllis Gilmore announced that the department had signed eight new contracts for reintegration, foster care and adoption services, and for family preservation services.5 These contracts are scheduled to go into effect July 1, 2013. “This has proven to be an effective, successful way to serve children and families while demonstrating a model of collaboration between private business and state government,” Secretary Phyllis Gilmore said.6 “These new contracts follow that tradition by continuing to partner with the private sector to improve our child welfare practices while using our resources more effectively and efficiently.”7 In FY 2012, more than 5,000 children a month were served by private providers of reintegration, foster care and adoption services. Family preservation services helped 2,613 families. The new providers awarded the contracts have created ongoing efficiencies allowing approximately 175 more families to be served each year.

Kentucky: In January 2013 the Kentucky Senate Health and Welfare Committee considered the challenges facing the state’s child welfare system. Sen. Julie Denton, R-Louisville, said she expects to file legislation pressing for changes in the handling of child abuse and neglect cases when the session reconvenes in February 2013.8 One recommendation, Denton said, will be to privatize foster care in Kentucky. Denton said child protective services would continue to investigate cases, but would not have to provide foster care services.

Nebraska: In 2012 Nebraska continued to work through a number of difficulties with its partially privatized child welfare system. In 2009, the state began contracting with private companies and nonprofits to provide child welfare and juvenile justice services after national indices showed that Nebraska removed too many children from their homes. However, after huge cost overruns and financial instability among the child welfare contractors, Nebraska mostly abandoned its privatization effort in 2012. Instead, the legislature passed a series of reforms that included:

  • The establishment of a Children’s Commission, as well as an Inspector General for child welfare;
  • A requirement of greater transparency and reporting on child welfare spending, with a separate child welfare budget, financial benchmarks, and a strategic plan;
  • A plan for a statewide, automated child welfare online information system;
  • Higher payments for foster parents, licensing reforms, and a requirement that the state Department of Health and Human Services apply for a federal foster care demonstration project waiver, which would allow greater financial flexibility; and
  • Bringing most privatized case management back under Department of Health and Human Services’ control, subject to new caseload standards.9

By March 2012, four of the five original contractors had ended or lost their contracts, and the state had resumed responsibility for all cases outside of the Omaha area. In Omaha the Nebraska Families Collaborative (NFC) manages all cases in the metropolitan area (40 percent of the state’s child welfare cases) and is the last remaining contractor in the privatization effort. The Health and Human Services Committee will decide by April 2013 whether to continue the privatization contract with the NFC.

The NFC does seem to be making some positive changes in Nebraska’s child welfare system. Between March and October 2012 there was a 5 percent drop in the number of state wards in Nebraska’s child welfare system, resulting in a 12-year low. Thus the NFC network is responsible for more than 60 percent of the reduction in cases statewide.10 As Dan Daly, a vice president of Boys Town in Nebraska, explained in the Omaha World-Herald, “It’s no accident that NFC is the remaining lead agency. From the start, NFC had the infrastructure, staffing, funding and business model-and a committed network of local child care providers with experience and expertise in child and family care-to make system reform a success.”11

For a detailed description of the privatization missteps and future improvements necessary to make Nebraska a privatization success, see the February 2012 study by Reason Foundation and the Platte Institute, Next Steps for Child Welfare Reform in Nebraska.12

Oklahoma: Oklahoma is moving ahead with a plan to privatize aspects of foster care and improve the welfare of children in state custody. Lawmakers passed five bills in 2012 that changed the organization, leadership, operation and transparency of the Department of Human Services. Many of the changes resulted from a settlement agreement to a class-action lawsuit against the state filed on behalf of ill-served foster care children in Oklahoma. The legislation requires the Department of Human Services to privatize all types of community-based out-of-home placement, including traditional foster care, kinship care, emergency foster care, contract foster care, and therapeutic foster care, on or before July 1, 2013.

Pennsylvania: In 2012 the Pennsylvania Department of Human Services (DHS) unveiled a program in Philadelphia called “Improving Outcomes for Children”, which puts neighborhood-based contractors in charge of managing foster care cases.13 DHS has since announced the first two groups that will get contracts as “community umbrella agencies.” Beginning in early 2013, NorthEast Treatment Centers will be paid approximately $15 million, and Asociación Puertorriqueños en Marcha will get approximately $10 million to manage abuse and neglect cases in parts of North Philadelphia, according to the Philadelphia Inquirer. The reorganization will make them the sole case managers for the 4,095 children in foster care and the 949 families receiving at-home help.

DHS staff will monitor contractors and organize and lead meetings that families, private caseworkers, and others must attend. The public agency will train the private groups, which will also provide services to children and families. DHS remains legally responsible for children in its system and for investigating abuse and neglect reports. In Philadelphia, the privatization planning took three years and involved 150 experts. The rollout will happen over the next four years.

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1 Associated Press, “Number of U.S. Children in Foster Care Drops for Sixth Straight Year,” July 31, 2012.

2 Madeline Freundlich and Charlotte McCullough, Privatization of Child Welfare Services: A Guide for State Advocates, Washington DC: State Policy Advocacy and Reform Center, October 2012. (accessed January 28, 2012.)

3 “Public/Private Partnerships and Technology make Children in Florida Safer,” The News-Press (Fort Myers, Florida), December 17, 2012.

4 Foundation for Government Accountability, 2012 Right for Kids Ranking, (accessed January 29, 2012.)

5 “Foster Care, Adoption Providers Announced,” Cherokee County News-Advocate, January 8, 2013.

6 Ibid.

7 Ibid.

8 Jessie Halladay, “Senate Panel Hears Criticism of Child Protection Agency,” The Courier-Journal, January 10, 2013.

9 Kevin O’Hanlon, “State to Lose more than $3 Million for Failed Child Welfare Privatization,” Lincoln Journal Star, August 31, 2012.

10 Dan Daly, “State’s Reform Improvements Show Privatization Working,” Omaha World-Herald, October 27, 2012.

11 Ibid.

12 Lisa Snell, Next Steps for Child Welfare Reform in Nebraska, Platte Institute for Economic Research, February 2012, (accessed January 28, 2012.)

13 Carolyn Davis, “DHS Change will Emphasize Private Oversight,” Philadelphia Inquirer, August 7, 2012.