Policy Study

Blueprint for the Privatization of Child Welfare Services

Executive Summary

The time has come to take a critical look at the role of privatized services in foster care and adoption. Over the last several decades, government has come to control all facets of child welfare services to the exclusion-and sometimes outright preclusion-of private-sector involvement. The result has been a steady growth of organizational and bureaucratic complexity.

America’s child welfare system is cumbersome, inefficient, and costly. Paperwork and protocol often overshadow the best interests of children. State and federal policy-makers all too often hear horror stories from their constituents about children trapped in a multi-billion dollar failure.

Children in foster care often spend months and even years waiting for the chance to be reunited with their families or adopted into a permanent home. Other children are sent back precipitously to abusive homes only to return again to foster care after another incident of abuse.

Three states have already taken the lead to help unfortunate children trapped within this system. Their innovative projects are proving more effective and, thus, more humane than the traditional system as a whole. Three states, in particular, demonstrate how private initiatives can be the key to improving child welfare.

The three states highlighted in this study exemplify the kind of innovative practices that lead to real change are Michigan, Texas, and Kansas. Each is utilizing the private sector’s efficiency, expertise, and connection to the community in order to improve the lives of thousands of children in state custody.

In Michigan, the Department of Social Services has contracted out adoption to private agencies since the late 1980s. Private agencies account for about two-thirds of all adoptions in that state-and in 1996 adoptions were up 19 percent over the prior year. More importantly, a striking 60 percent were “older children,” those children all too often labeled “unadoptable” by state agencies.

Texas has made use of the private sector’s expertise in information technology (IT) by contracting with a private company to upgrade its child protective services’ management information system dramatically. This initiative transformed Texas from a state that just a few years ago kept foster children’s records on three-byfive cards to a leader in child welfare IT, freeing up social workers from filling out forms to helping children in need. We estimate that the state will save $102.6 million over the next three years. Privatizing information technology also results in better services and fewer lost cases.

Kansas has privatized three major components of child welfare: family preservation services, foster care, and adoption. While such a move has been the center of heated debate, private contractors have exceeded expectations in finding permanent homes for foster children and, in fact, provided superior services in all three categories. In the first year, Kansas saw a 44 percent increase in the number of finalized adoptions. Inquiries from families wanting to be adoptive parents have tripled since privatization.

Studying the states independently, our research has found that the factors most closely associated with success are:

  • Outcome Orientation. Agencies receiving contracts are held accountable for outcomes. These outcomes are measurable and are focused on the needs of children. If contracts are to be renewed, private agencies must maintain outcomes predetermined by state administrators.
  • Competition. There must be competitive bidding among qualifying agencies.
  • Rewards for Good Performance. Incentives must be in place. States must develop incentives aligned with measurable goals.
  • An Outside Monitor/Independent Evaluator. In order to develop a system of fair assessment, states must hire private contract monitors and independent evaluators to assess the effectiveness of contractor achievements in quantitative and qualitative terms. No organizations should be excluded from the process: charities, faith-based organizations, and businesses must all demonstrate innovation and cost-control if they receive state contracts.

There’s no sense in reinventing the wheel. The following three case studies present a starting point for discussion, legislation, and-most importantly-action in other states.