Category: welfare reform

accountability, child death, child welfare reform, foster care abuse, cps, foster care, government, reform, social services, system failure, texas, welfare reform
‘Major epidemic’ Says the BBC – UK Investigates Child Abuse in the U.S.

America’s child death shame 

Every five hours a child dies from abuse or neglect in the US.

The latest government figures show an estimated 1,770 children were killed as a result of maltreatment in 2009.

A recent congressional report concludes the real number could be nearer 2,500.  In fact, America has the worst child abuse record in the industrialized world.

Why?

The BBC’s Natalia Antelava investigates. (VIDEO)
Sixty-six children under the age of 15 die from physical abuse or neglect every week in the industrialized world. Twenty-seven of those die in the US – the highest number of any other country.
Even when populations are taken into account, Unicef research from 2001 places the US equal bottom with Mexico on child deaths from maltreatment.
In Texas, one of the states with the worst child abuse records, the Dallas Children’s Medical Center is dealing with a rising number of abused children and increasing levels of violence.
Meanwhile, the Houston Center is expanding its services to deal with the rising problem of child sex abuse.
 
(Video) 
 The doctor’s experience 
 

 
(Video)
Inside a Houston help center

Emma’s story

Emma Thompson was just four years old when she was beaten to death in 2009. Her injuries included broken ribs, a bloodied lip, widespread bruising and a fractured skull. She had also been raped.Her mother and her mother’s partner have been jailed over the abuse. But Emma’s father, Ben, believes his daughter was let down by everyone around her.

(Video) ‘Everybody missed the signs’
 

Who’s to blame?

Just like Emma Thompson, hundreds more children fall through the cracks of the child protection system. Some blame overworked investigators and inefficient management, while others say it’s the federal government’s drive to keep families together that is the problem.
But child protection officials in Texas, a state with one of the highest total number of child deaths from abuse and neglect in the US, say such cases are complicated and difficult to assess – especially when a child’s guardians are hiding what is really going on.
 
 
Model of a child from a tv ad aimed at reducing abuse
The Child Protection Challenge
 
 
 
 

How to stop it

In Washington, politicians are beginning to recognize what some now describe as a “national crisis”.A congressional hearing in July heard from experts in the field about what can be done to prevent deaths from child abuse.

A national commission is being set up to coordinate a country-wide response.Many believe home visits to new parents by qualified health professionals, preparing them for the difficulties of family life, are key to that strategy.

(video) Teaching parents to be parentsTeenagers describe the challenges of having children young

Cycle of violence

While child abuse blights the lives of victims’ families, its devastating impact is felt far beyond relatives and friends.

(Video) ‘You only know anger and violence’ 
Victim Stacey Kananen on the lasting impact of abuse 
Abused children are 74 times more likely to commit crimes against others and six times more likely to maltreat their own children, according to the Texas Association for the Protection of Children. For this reason, experts believe it is in the US government’s as well as society’s interest to ensure children are protected from abuse. 
 
Each and every citizen, they say, has a responsibility to help break this cycle of violence.
Design: Mark Bryson. Production: Franz Strasser, Bill McKenna, Lucy Rodgers and Luke Ward.

EXPERTS VIEW

Millions of children are reported as abused and neglected every year

Why is the problem of violence against children so much more acute in the US than anywhere else in the industrialized world, asks Michael Petit, President of Every Child Matters.

Over the past 10 years, more than 20,000 American children are believed to have been killed in their own homes by family members. That is nearly four times the number of US soldiers killed in Iraq and Afghanistan.

The child maltreatment death rate in the US is triple Canada’s and 11 times that of Italy. Millions of children are reported as abused and neglected every year. Why is that?

Downward spiral

Part of the answer is that teen pregnancy, high-school dropout, violent crime, imprisonment, and poverty – factors associated with abuse and neglect – are generally much higher in the US.

Michael Petit

“The sharp differences between the states raises the question of an expanded federal role” Michael Petit – Every Child Matters

Further, other rich nations have social policies that provide child care, universal health insurance, pre-school, parental leave and visiting nurses to virtually all in need.

In the US, when children are born into young families not prepared to receive them, local social safety nets may be frayed, or non-existent. As a result, they are unable to compensate for the household stress the child must endure.

In the most severe situations, there is a predictable downward spiral and a child dies. Some 75% of these children are under four, while nearly half are under one.

Geography matters a lot in determining child well-being. Take the examples of Texas and Vermont.

Texas prides itself in being a low tax, low service state. Its per capita income places it in the middle of the states, while its total tax burden – its willingness to tax itself – is near the bottom.

Vermont, in contrast, is at the other extreme. It is a high-tax, high-service state.

Mix of risks

In looking at key indicators of well-being, children from Texas are twice as likely to drop out of high school as children from Vermont. They are four times more likely to be uninsured, four times more likely to be incarcerated, and nearly twice as likely to die from abuse and neglect.

Texas spending

  • $6.25 billion (£4.01bn) spent in 2007 on direct and indirect costs dealing with after-effects of child abuse and neglect
  • $0.05 billion (£0.03bn) budgeted in 2011 for prevention and early intervention
Source: Univ of Houston, TexProtects

In Texas, a combination of elements add to the mix of risks that a child faces. These include a higher poverty rate in Texas, higher proportions of minority children, lower levels of educational attainment, and a political culture which holds a narrower view of the role of government in addressing social issues.

Texas, like many other traditionally conservative states, is likely to have a weaker response to families that need help in the first place, and be less efficient in protecting children after abuse occurs.

The sharp differences between the states raises the question of an expanded federal role.

Are children Texas children first? Or are they first American children with equal opportunity and protection?

Blame parents?

A national strategy, led by our national government, needs to be developed and implemented. For a start, the Congress should adopt legislation that would create a National Commission to End Child Abuse and Neglect Fatalities.

Woman holding a baby
Nearly half the child fatalities in 2009 were children under the age of one

And no children’s programmes should be on the chopping block, federal or state. Children did not crash the US economy. It is both shortsighted economic policy and morally wrong to make them pay the price for fixing it.

But instead as the US economy lags, child poverty soars, and states cut billions in children’s services, we are further straining America’s already weak safety net.

Inevitably, it means more children will die. The easy answer is to blame parents and already burdened child protection workers. But easy answers don’t solve complex problems.

And with millions of children injured and thousands killed, this problem is large indeed, and it deserves a large response.

Michael Petit is the president of Every Child Matters. He served as the state of Maine’s human services commissioner, and as deputy of the Child Welfare League of America.

Related Internet links: 
Justice for Children 
Every Child Matters
The BBC is not responsible for the content of external Internet sites
 Your comments (66) This entry is now closed for comments

Comment number66.

 cka1
17TH OCTOBER 2011 – 23:21

Virgil – Thank you for the full report. My guess is that DC isn’t a state and Nevada has a whole host of other religious issues that would make counting impossible. It is legal for a man to marry multiple underage wives of which he is related. Doesn’t happen in any other state, at least not legally. Wyoming and Montana barely have 100,000 children in them, so statistically not significant.

Comment number65.

 thehughes69
17TH OCTOBER 2011 – 22:51

we in the uk need to worry about staying under torie leadership any longer, sorry to knock the yanks but were starting to see steps towards private healthcare like the us where the poor are left behind and the lowering of funds into social services with money going elsewhere bit like texas ey

Comment number64.

 Karen Spears Zacharias
17TH OCTOBER 2011 – 22:48

Once again the BBC proves why it’s a news source I turn to as a journalist. Here you are doing the story that America journalists shy away from. For the past five years, I’ve been at work on a book about this issue. [Unsuitable/Broken URL removed by Moderator] I applaud Natalia Antelava & BBC for the courage in addressing this national shame.

Comment number63.

 marie
17TH OCTOBER 2011 – 22:48

contd No part of the world is free from this horror, but some parts of the world have far less abuse of children. It makes sense to discover possible reasons why this might be so; those countries with higher stats might then learn from this & be able to do so much more to protect their vulnerable children.

Comment number62.

 marie
17TH OCTOBER 2011 – 22:37

@ 56 Why on earth would anyone jeer at the spectre of child abuse, whether it takes place in the USA, UK or on the Indian subcontinent?
By comparing figures across the world & looking at factors implicated such as poverty, educational levels, aswell as care provision, steps can be taken to reduce child abuse in areas where it is high, improving the lives &mortality of children who live there.

Comment number61.

 thehughes69
17TH OCTOBER 2011 – 22:33

bit of an eye opener
think its a piece about the surprise that a country like the us has these problems were others are maybe known about

Comment number60.

 inthewakeofautism
17TH OCTOBER 2011 – 22:27

I would like to see the statistics on children killed who are living with both their Biological parents vs those with non biological parents especially people referred to as partners in the article. I think living arrangements contribute to this most heinous of acts.

Comment number59.

 thekuhl1
17TH OCTOBER 2011 – 22:10

Where is China in this report or India??

Comment number58.

 thekuhl1
17TH OCTOBER 2011 – 21:55

This comment was removed because the moderators found it broke the house rules. Explain.

Comment number57.

 HMayhan
17TH OCTOBER 2011 – 21:40

I am not saying there isn’t a problem with violence against children in the US. In fact I agree it is ridiculously commonplace. But reading this on a BBC website smacks of the pot calling the kettle black. Hardly a day goes by on the UK section of this website without news of a kid getting killed in the UK.

Comment number56.

 kcwhattrick
17TH OCTOBER 2011 – 21:24

Why is it that Europeans take tragedies such as this and use them to jeer other countries? It’s very strange and somewhat perverted behavior. A normal person would feel horror and sadness at such a thing happening to children, yet the Europeans use it more as a way of saying “Ha, knew things were better over here all along.” Really sad way of behaving.

Comment number55.

 assynt1
17TH OCTOBER 2011 – 21:06

Once you start helping these kids, you can’t stop. They will truly motivate you. I always say that they deserve not just good care, but the BEST care we can give them as a community. One more thing on perp stats. There is a type of abuse that used to be called Munchausen Syndrome by Proxy, now called Medical Child Abuse. Mothers are almost exclusively the perpetrators in that case.

Comment number54.

 tre4w
17TH OCTOBER 2011 – 20:57

as a student social worker this piece really galvanises me to get out there and make a difference in the lives of kids, although i’m going to have to get past the gut wrenching reaction it provokes in me first…

Comment number53.

 assynt1
17TH OCTOBER 2011 – 20:58

You are welcome for the info. There are certain scenarios where it is “classic” to have a male perp (unrelated male living in the household as a risk for sexual abuse). If we think about the stressors that influence abuse and neglect (poverty, single parent, lack of social support, young age) and who the primary caretakers are, it’s no wonder that moms are more common in overall numbers.

Comment number52.

 stebsb
17TH OCTOBER 2011 – 20:44

@assynt1:

Thanks for the info – although I’m not as informed on the subject as I’d like to be (and as you are obviously are!) I was surprised in what I’d read how women were more likely to be abusive than I’d thought; and I was also shocked to read how some feminists simply deny that female abuse occurs, insisting it’s virtually exclusively inflicted by men.

Comment number51.

 assynt1
17TH OCTOBER 2011 – 20:38

The perpetrators are parents 75% of the time, with mothers as the most common at 1/3, both together at 1/5 and just dads at around 1/5. This is likely because mothers tend to be caring for the kids more and so have more access. The only exception is child sexual abuse where the abusers are overwhelmingly male at 90%.

Comment number50.

 assynt1
17TH OCTOBER 2011 – 20:36

Reply to question about geneder of perp and vics. In US, overall girls and boys are victimized at the same rate. Girls are higher for sexual abuse and boys are slightly higher for physical abuse. Neglect, though, is the number one type of abuse and occurs in equal numbers of boys and girls.

Comment number49.

 Bb
17TH OCTOBER 2011 – 20:26

Parental rights far out way the children needs. I am personally aware of children placed in good foster homes, then removed and placed back with their abusive family.

The second issue is Right to life vs Right to choice, both should focus their resources on unwanted pregnancy. That would cut down on abortions and unwanted babies.

Comment number48. rich
17TH OCTOBER 2011 – 20:22

Interesting to note that the comparative numbers are given for Canada and Italy. Based on the numbers in this report Italy has 181 child homicides a year. The UK by comparison has around 60 per year

http://www.nspcc.org.uk/inform/research/statistics/child_homicide_statistics_wda48747.html – Now who was it that said that British social workers were failing?

Comment number47.

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 ChildPerson
17TH OCTOBER 2011 – 20:01

Supreme Court refused to take on any responsibility for child abuse, because, wrote Chief Rehnquist in DeShaney v. Winnebago County, 1989, “A state’s failure to protect an individual against private violence” was not a denial of the victim’s rights as the state…”played no part in their [dangers to the child]creation, nor did it do anything to render him any more vulnerable to them.” Joshua died

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cps, family, healing, social worker, system failure, welfare reform
When CPS Workers Confuse Poverty w/Neglect..They Live Forever…

A single mother has  fallen on hard times with the sudden departure of her husband. He has recently abandoned her and her son for a woman, his mistress from a love affair.

This mother is distraught & undoubtedly depressed.  She was caught off guard and was left without a job after having been a housewife for many years.

This mother went  from an affluent wife to a single poverty stricken mother. She does not know where to begin her new life, for she is still in shock from the ending of her old life.  She is, as any woman would be, terribly depressed at the failure of her marriage, but,  one thing she knows for certain is that  she has a son to care for.

She musters up the strength of will to keep going, however difficult it is . Some days seem impossible to do what she has to, but she finds the will to take care of her boy. They are very close, even moreso since finding themselves alone. They are partners against the world, each night saying prayers and assuring one another that times will get better, just have faith.

One day, her electric bill came due.  In her newfound budget, she had mistakenly overspent at the grocery store and the lights get shut off.

Her soon to be ex comes by to surprise her with divorce papers .  He announces that he is on his way out of town for a “new job somewhere “.  When she asks where, he won’t disclose any details and it angers him.

The former couple begin to argue and he remarks of the mother and child living  in the dark with candles lit and a fire in the fireplace.

When she insists that it is his fault for leaving them without warning, insisting on knowing where he’s moving for this job, he threatens to take her son with him if she doesn’t stop badgering.

The next day calls CPS and a social worker comes out, and finds the home without electricity, and removes the child into foster care. The father has already left town and isn’t readily found, and the mother falls apart.

The child never comes home again.

This mother is sustained on a finding of ‘neglectful supervision’ because she “should have known” better than to allow her electricity to get shut off .  The social worker stated in her report that the mother failed to apply for assistance before it came down to that and if she overlooks something like electricity, she is probably overlooking  other needs of the child’s.  These  activities could leave the child at serious risk of harm.That’s what the report said.

Truth is though, she is poor and suffering at a tragic time in their life.   That does not mean she neglects her child, she just needs a boost to start their new life.  Maybe some assistance.  It was the only time their electricity was cut off, she never considered it before because it never happened.

The CPS worker jumped to immediate conclusions, and should have helped the mother find ways to improve her situation, request assistance, apply for legal aid and get child support. There were many ways the problem was easily remedied.

However, poverty was mistaken for neglect, and defined “at risk ” when there’s never been any risk to the child, the problems begin with the definitions of abuse/neglect. Then, the problems end with the willingness to remove children being stronger than the desire to keep the child at home.

A CPS social worker who is unable to familiarize herself with this poor but loving family that needs a little boost in life, offer some counseling maybe, or a support group for divorcing women is the first problem that should be solved.

Why is she unable to do this?  Most likely its due to the tremendous caseload she has stacked in front of her… Perhaps she does not mean to overlook this family… but because she has so much to do, she inadvertently tosses this family into the black pit of a child welfare system’s worst side, needlessly removes the child from the home, and places him in foster care.

Even worse, the shortage of foster homes takes this child too far away to visit regularly because there were no other openings.  Later, he gets abused there and nobody finds out until too late and permanent injuries are suffered.  The mother has fallen apart and can’t seem to get the help she needs, so she is labeled overly emotional.  CPS puts her through psychiatric evaluations one after the other, until finally she has a breakdown when she learns of the abuse her son has gone through. They terminate her rights.

It happens all the time in this system.

All this Mother really needed was some food stamps and assistance on her light bill for a month or two. Maybe temporary financial aid for a down payment on a new car, so she could get some job training and go back to work. Perhaps some temporary medical care to get them both back healthy again, with a flu shot, and some counseling over her divorce. and his loss of a father figure.

Instead, this mother lost her husband, then her lights, then her child, then herself, to grief.

An overzealous social worker received a spite referral from a cheating man who spent enough money on airplane drinks to pay her electric bill twice over.  Nobody tracks him down to file false allegation charges on him.

Her son no longer wants to make his Daddy proud, or thinks of  Daddy as a hero, but instead, loses his own future in drugs and alcohol.    It starts out with a beer can and a marijuana joint he smokes but eventually turns into cocaine and petty crimes in order to buy it.

The boy is a teenager in foster care.  He’s been moved so many times from home to home, facility to facility, that now, he doesn’t care anymore.  He runs away from the home often so he can do his drugs and eventually goes to jail.

Of course by then he doesn’t have anyone to call so he does time, about a year in juvenile detention.  In that year  he gets sexually abused and in fights.  A few months after being released on his 18th birthday, he gets arrested again for stealing a car.  That sentence, he gets caught up in the prison gang life and learns to hurt people, after years he spent in foster care and juvenile detention, doing a lot of fighting.  He is very angry.  It was only a light bill past due.

He is angry at his father who divorced his mother and leaving them in a shabby apartment with no lights.

He knows his father made the phone call that destroyed their life. He knows his father so cowardly ran away with another woman, and he is angry at how that hurt them.

He is angry that he lost his mother who was his best friend. He is angry that he can’t find her, and that she was taken away from him. 

He is angry that it made her fall apart, because he knows she loved him so much.

He is angry that now she is gone, and he is angry that he is behind bars, and so he fights life, and everyone in it. 

He sits and thinks about it all the time.  He thinks about the social worker who took him away from home.

3a1ff59156e57f08

Are you a caseworker for CPS? 

Do you volunteer for CASA while you go to school?

Do you hope to be a social worker and help abused kids one day?

Do you want to be a social worker when you graduate college? 

Do you work for the advocacy center doing forensic interviews?

Is that you?

Okay, next question… do you want to live forever?

Carry on a legacy?

Make a difference in someone’s life?

Change history?

Well, here this caseworker did it without a lick of effort and didn’t even know it.  Its amazingly easy to live forever.

This way though, its what happens, when you confuse poverty with neglect.  You live forever.

Exactly what is abuse and neglect? 

Why is it so important to define these two words?

Abuse and neglect are the defined allegations used as justification for removing children from their natural homes.

They are the acts of parents that CPS has “reason to believe”  did occur which gives them the right to remove a child from the home.

The parents are then expected to jump through hoops working their (“services”) which are outlined in the “family service plan” made to “protect”  the children from the “abuse and “neglect” …  right?

Child Protection Services. CPS – Services to Protect the Children from abuse and neglect. That is why it is so important to define Abuse & Neglect.  That is why we should not confuse poverty with neglect.

Abuse is defined as the prolonged maltreatment of another; the continued misuse of something, the mishandling thereof, the ill-handling of something.

Abuse is intentional – with forethought and deliberate action – It is causing or threatening to cause physical, mental, emotional, psychological, financial or sexual harm against a person, or a person’s beloved … (pet, family member, friend, or other loved one). Abuse is not only causing harm or injury to that person but also controlling them by placing them in fear of harm or injury against  themselves or another person.

An abuser often uses fear to control or manipulate that person into acting or performing in a certain manner bending to a will not his or her own.

Definition of Child Neglect

Child neglect is the failure to provide for the shelter, safety, supervision and nutritional needs of the child. Child neglect may be physical, educational, or emotional neglect:

  • Physical neglect includes refusal of or delay in seeking health care, abandonment, expulsion from the home or refusal to allow a runaway to return home, and inadequate supervision.
  • Educational neglect includes the allowance of chronic truancy, failure to enroll a child of mandatory school age in school, and failure to attend to a special educational need.
  • Emotional neglect includes such actions as marked inattention to the child’s needs for affection, refusal of or failure to provide needed psychological care, spouse abuse in the child’s presence, and permission of drug or alcohol use by the child.

How often is poverty confused with neglect ?   Many times.

That is why the social worker’s assessment is so valuable a tool, if used properly.  But most of the time, it is not.

The assessment identifies the services that might be able to assist a family out of a tough situation that has placed the family at risk.

Perhaps the recent loss of a job has led to hard times, and the stress has caused some issues in the parenting skills of the mother or father with their children.

Assistance with applying for financial aid, unemployment benefits, housing or food, and parenting classes, could prevent the unnecessary removal of a child from the home.

Avoiding placement in foster care when the risk is low enough that needs can be met through a service plan that keeps the family in tact, is definitely best for the family unit. So why do children enter foster care? !

Children enter foster care because of abuse and/or neglect.

The majority, however, is due to neglect, which, when neglect is a stand-alone problem (not in combination with abuse), it is often the result of inadequate housing, poor child care, or insufficient food or medical care. For example – lets take a look at poverty and an example of how it can mistakenly destroy lives with the misapplied help of CPS at its worst… so this example can remain just that – an example to learn from.

Poverty is not neglect, but the two get tied together in a tragic knot.

So if you ask the grown up little boy who could have changed it all…  he’ll tell you … He will say the social worker could have made a difference.

He says it quickly and matter of fact – Ms. Too-Busy-To-Pay Attention social worker is who could have, and should have helped. But didn’t.

Its the social worker he blames – even more than he blames his  father. Why? Because she had the training, the power, and she was in the role,that  SHOULD HAVE helped them.

Instead she failed them.

He says “her decision killed my Mom and me, we’ll never recover.”

BUT – If you ask the caseworker about the same little boy…

She will stop, and pause, and shake her head before she walks away telling you she hasn’t the time to discuss a case that was “over so long ago.”  

Besides, she could not even remember which one he was – the boy without electricity.

She laughs, “How much more vague can you be?”

She will carry on as if he never existed.  That case was 0ne of many to her. Hell, she hasn’t even worked for CPS now for years – that was only a summer job she had once.

To him, though, his case, and this social worker is everything.

She is the reason he has no home, no life, no mother, no education, no wife or children.

She is the reason he is nothing, a statistic, with no goals, no dreams, no hope, no will to live.

She is the reason he is angry with an addiction to drugs.

To him, the CPS Social Worker is a face he cannot forget.

She has the name that haunts him.

She is the woman that he seethes, day in and day out.

But to the social worker, he was a number on a file she might recall if she dug it up and looked again. Maybe.

To him, she has ripped a hole in the bond between his mother & him.

She destroyed his family unit that probably will never be repaired.

Because of her, he quits school & lives on the streets.

That’s not child protection. That’s child sabotage.

the social worker now lives forever…

to that little boy …

(c) 2009 Forever May, J.Murphy

children, cps, family, foster care, General, government, law, legal, medicaid fraud, privatization, psychiatry, psychotropic medications, social services, system failure, welfare reform
Privatization

 

Privatization of Public Social Services

A Background Paper

Author(s): Demetra Smith Nightingale, Nancy M. Pindus

Other Availability: Order Online | Printer-Friendly Page

Posted to Web: October 15, 1997

Permanent Link: http://www.urban.org/url.cfm?ID=407023

This paper was prepared at the Urban Institute for U.S. Department of Labor, Office of the Assistant Secretary for Policy, under DOL Contract No. J-9-M-5-0048, #15. Opinions expressed are those of the authors and do not necessarily represent the positions of DOL, the Urban Institute or its sponsors.

The views expressed are those of the author and do not necessarily reflect those of the Urban Institute, its board, its sponsors, or other authors in the series


1. Introduction

The purposes of the paper are to provide a general overview of the extent of privatization of public services in the areas of social services, welfare, and employment; rationales for privatizing service delivery, and evidence of effectiveness or problems. Examples are included to highlight specific types of privatization and actual operational experience. The paper is not intended to be a comprehensive treatment of the overall subject of privatization, but rather a brief review of issues and experiences specifically related to the delivery of employment and training, welfare, and social

services.

The key points that are drawn from a review of the literature are:

  • There is no single definition of privatization. Privatization covers a broad range of methods and models, including contracting out for services, voucher programs, and even the sale of public assets to the private sector. But for the purposes of this paper, privatization refers to the provision of publicly-funded services and activities by non-governmental entities.
  • Privatization is not a new concept. The current rationales for privatization and their implementation strategies differ very little from earlier privatization initiatives (even as early as the 1930s). Perhaps the biggest single change in the current privatization environment in the area of social and human services is the possibility of private companies being contracted with to administer entire public-funded systems (e.g., all of welfare, all of child support, all of workforce development).
  • The real issue is not so much public vs. private–it is monopoly vs. competition. A key issue in the current trend towards what is commonly referred to as “privatization” is the introduction of competition (e.g., public-public competition, public-private competition, competition between public-private ventures, public-nonprofit competition) to increase efficiency, reduce costs, and improve quality and customer satisfaction.
  • Privatization is not inherently good or bad–the performance or effectiveness depends on implementation. The little empirical analysis comparing the effectiveness of public versus private service delivery shows no clear evidence that private service delivery is inherently more effective or less effective than public service delivery, although the public, private, and nonprofit sectors each have their own relative strengths and weaknesses. There are examples of success and failure in both sectors. Most of the research suggests that the key factor is whether there is clear accountability for results, clear criteria in contracts, and clear public objectives. The government is responsible for assuring that public services are effective, whether or not the services are publicly delivered.
  • Privatization does reduce the number of public employees if services formerly performed in the public sector are shifted to the private sector. But it is not clear that workers are necessarily worse off in terms of employment, wages, morale, or job satisfaction. There are many examples of negotiated arrangements for transferring public employees to private employment or to other public agencies. There is undoubtedly, though, a clear reduction in public employee members of unions, although some number of privatized workers may join other unions.
  • It is still too soon to know whether the most recent and highly-publicized privatization efforts will be effective or not. There are, however, many potential problem areas (e.g., profit motivation to cream and minimize costs) that, if unaddressed in the public contracts, could reduce service quality. There are many reasons for cautiously scrutinizing the process.

2. Current State of Privatization

Similar to trends in the private sector, there is some indication that public agencies are increasingly considering downsizing and outsourcing as ways to address both financial constraints and a desire to improve performance. The Government Management Reform Act of 1994 (P.L. 103-356) states:

To be successful in the future, government must, like the private sector, adopt modern management methods, utilize meaningful program performance measures, increase workforce incentives and flexibility without sacrificing accountability, provide for humane downsizing opportunities and harness computers and other technology to strengthen service delivery.

However, privatization is not a new phenomenon. Gurin (1989) notes that privatization of government social services has, in fact, increased at major watershed points in the history of social policy (the Progressive era in the late 19th century, New Deal, Great Society, and Reagan years), both at times of expansion and during contraction of government services. For example, during the 1970s, federal funding for social services increased greatly under Title XX of the Social Security Act, and for human development and employment services under the Economic Opportunity Act and the Comprehensive Employment and Training Act (CETA). Nonprofit organizations and for-profit businesses both emerged to fill the need for government contracted service providers. In contrast, during the early 1980s when federal funding for social programs was dramatically reduced, there was also some increase in contracting out services (in some locales) as one way to reduce unit costs and gain efficiencies despite reduced overall funding.

More recent interest in privatization of public social services is stimulated by both expansion and contraction of publicly funded programs. Federal funding for employment and training declined during the early 1990s, and this was one motivation for workforce development system redesign, which includes considering new ways to deliver services. At the same time, the 1996 welfare reform legislation increases the responsibility states have for redesigning their welfare systems and, at least in the short run, provides more federal funding for both income support and programs that promote employment. Privatization is one of the various welfare system redesigns that are being considered.

The recent dramatic emergence of large private corporations into the welfare field (discussed below) has raised many concerns about the appropriateness of this degree of privatization. The traditional approach to contracting in social services had been noncompetitive, quasi-grant arrangements, primarily with non-profit organizations (Hatry and Durman 1985). The increased emphasis on competition and performance contracting for the delivery of social services is consistent with private sector initiatives focusing on efficiency and customer service. Some organizations, such as the Reason Foundation, have been promoting the benefits of privatization for decades, and recently their efforts are gaining new momentum, providing technical advice and guidance to businesses and public officials on how to develop business ventures and effective public/private partnerships. In addition to welfare reform, several other recent federal initiatives also encourage more privatization, most notably in one-stop career centers and child support enforcement.

One-Stop Career Centers

The federal One-Stop Career Center initiative encourages an expanded use of vouchers and competitive selection of administrative entities (e.g., for one-stop centers). Although national regulations do not specifically endorse privatization of services, they do encourage expanded competitiveness for the selection of center administrative and service delivery agents, allowing public and nonprofit organizations as well as private for-profit companies to compete openly for one-stop service contracts.

The Massachusetts’ One-Stop Career Center Initiative is a current example of the trend toward privatization in the one-stop and workforce development area. The state plan allows private firms to compete with public agencies for contracts to manage career centers, which serve as gateways to the states’s new workforce development system. However, the initiative has run into opposition on several fronts due to competition for funds among rival employment and training agencies, high demand for services at the career centers, and concerns expressed by public employee unions (Boston Globe, 2/11/97).

Child Support Enforcement

Federal child support enforcement legislation also supports an expanded role for non-profit and private contractors. The 1986 child support legislation specifically encourages states to consider contracts with private companies for technical activities such as locating absent parents and maintaining tracking and payment systems. The Reason Foundation reports that, in 1995, there were twenty states and dozens of local governments that had privatized one or more child support services, and that five more states were planning to do so in 1996. These states contract out for activities such as location, collection, payment processing, distribution of payments, and fully privatized offices. Georgia and Virginia give full caseload responsibility to private providers.

The success of the private sector in increasing collections of child support payments is attributed to several factors: first private firms can bring technology and equipment to the tasks that governments typically cannot afford; second, private firms can expand or contract operations quickly as they are not bound by government personnel systems; and private firms use performance incentives, such as bonus pay, to increase collections per employee. (Reason Foundation pp 45-46)

A 1996 General Accounting Office Report (GAO, October 1996) found that in the fifteen states with some privatization of child support, there was a tendency to especially contract out collections of child support payment from hard to locate absent parents and parents with past-due support.1 Many contractors receive payment only if they collect, often retaining a percentage of the collection (ranging from 8 to 24 percent). In general, GAO found that both the federal and state governments benefitted financially (net) from contracts that were targeted on cases that might not otherwise be worked–in effect, the private contracting supplemented what the public agency could do. The net benefit is derived from collections on AFDC cases and from federal performance incentives attached to child support collections for both AFDC and non-AFDC collections.

Welfare Reform

Increased requirements under welfare reform, coupled with spending restrictions that limit the amount of hiring that can occur in public agencies, have led some states to more seriously consider outside service contractors for welfare service delivery functions. For example, welfare officials in Nebraska and Arizona plan to increase their use of outside contractors (both for-profit and non-profit) to deliver services such as job placement and parenting skills training. (ETR 11/27/96) Other states may make similar decisions. “Private industry buzzwords such as ‘streamlining’ and ‘cost-containment’ have spilled over to the public sector, and welfare officials are moving to share risk and cut costs.” (ETR 10/9/96)

The recent welfare reform law, The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, is the latest federal policy that contributes to the privatization trend. The 1996 law removes previous restrictions that essentially prohibited states from contracting out initial welfare (AFDC) intake and eligibility determination functions. This has apparently opened a new market for private companies. In the past, service delivery contracting in the social welfare arena was mainly for direct service delivery such as job training, job search instruction, and day care provision; and service providers were mostly non-profit, although some for-profit companies have provided job training or other employment services. Large for-profit companies were mainly involved as contractors for data systems. Intake and eligibility determination for welfare programs remained with public agencies.

Now that welfare agencies can contract out the entire welfare system, including intake and eligibility determination, large for-profit companies are moving into the welfare service delivery market (e.g., EDS, Lockeed Martin, IBM). States are also more seriously considering privatization options because of concerns over cost and the need to meet specific federal goals fairly quickly. Large companies had already gained a foothold into some of the human service agencies, primarily through health care and child support enforcement, for data systems and, more recently in child support, for service delivery functions. “Before the new welfare law, moving people from welfare to work was the domain of nonprofit organizations and three relatively small businesses (America Works, Curtis and Associates, and Maximus). Now, some large companies see a potentially multibillion-dollar industry that could run entire welfare programs for states and counties.” (Bernstein, 1996)

The three small for-profit companies referred to in the New York Times article (Bernstein, 1996) are:

  • America Works: $7 million in contracts in New York City, Albany NY and Indianapolis; provides supportive services for the first four months a welfare client is on a job. The client receives minimum wage, but the employer pays America Works a higher wage, similar to the arrangement with temporary employment agencies. In addition, the government agency pays America Works $5000 per successful placement (defined as one that lasts 4 months).
  • Curtis & Associates: $9.2 million in business last year in selected sites in 11 states, including California, New Jersey, Indiana, Vermont and Wisconsin; provides a job club model for agency clients; sells training manuals and materials.
  • Maximus, Inc.: $100 million total government contracts, much but not all in the welfare area; has contracts for child support enforcement activities in 6 states, a $10 million contract in California to recruit recipients into HMOs, and welfare-to-work contracts in selected sites in California, Massachusetts, and Virginia; has also had many contracts for data systems development in the human services area.

The most recent development, in fact, is a dramatic increase in the extent to which larger companies are seeking out welfare business on a major scale, going beyond their traditional contracts related to information systems and technology to work preparation, and now possibly including contracts for entire welfare systems including intake and eligibility determination as well as employment and social services.2 “Big companies are concentrating on lucrative contracts that require …large scale participation.” (ETR 10/9/96) The New York Times article (Bernstein, 1996) offers the following information about these “giant” private corporations now seeking welfare contracts:

  • Andersen Consulting: $4.2 billion global management and technology consulting company that is an affiliate of the big accounting firm; now has contracts in 14 states, mostly for child support and child welfare activities. Marketing a profit-sharing approach to welfare, and recently won contracts for running welfare in two Canadian provinces.
  • Electronic Data Systems: $12.4 billion information technology services company. Began with computerization of Medicaid billing and welfare reporting systems. Now has contracts in 20 states. EDS was recently awarded a new contract by the state of Texas which focusses on reengineering eligibility determination and service delivery for health and human services programs and securing a new computer system for the state.3
  • Lockheed Martin Information Management Services: a nonmilitary division of the $30 billion dollar Lockheed Martin Corporation; has child support enforcement contracts in 16 states plus the District of Columbia; also has contracts in 20 states to convert various welfare benefits to an electronic debit card system. Now launching a major new “welfare reform/self-sufficiency line of business.” (Bernstein 1996).

Wisconsin and Texas are the most prominent examples today of the privatization trend in welfare.

Wisconsin‘s latest major welfare reform effort, called W-2 (Wisconsin Works), for example, is based on market competition for delivery of services. Public, private and non-profit entities can compete for contracts to deliver the entire welfare system in specific localities. In the initial round of competition, proposals were submitted not by individual companies or agencies, but by consortia. Four (or five) consortia were formed to bid on the W-2 contracts and each consortium included at least one major private company, and public or non-profit agencies. The initial round did not produce many proposals, though, in part because of the very complex and inflexible criteria and requirements included in the state solicitation. Nonetheless, four contract consortia have been selected, and each will be responsible for the entire welfare administration in the four geographic areas within Milwaukee.

It is still unclear whether there will be a sharp increase in private companies assuming major responsibilities for work-welfare programs though, even in a state like Wisconsin. Wisconsin had, even before the latest reforms, already moved more towards privatization of welfare services, especially for work-related activities. In Milwaukee, for example, Manpower Temporaries, Inc. was, until recently, a primary contractor for administering a Welfare Job Center, delivering job placement services and coordinating services provided by other, mainly non-profit and public contractors. While the nature of the work was similar to Manpower’s traditional business, the private firm’s role has gradually shrunk in part because of the difficulty it had working with clients with serious employability barriers and collaborating with a disparate network of public and private organizations. (Employment and Training Reporter, 9/18/96)

Texas has received considerable attention recently because of its proposed privatization of the Texas Integrated Enrollment System (TIES). The TIES system was intended to integrate and streamline eligibility determination for fifteen programs, including AFDC/TANF, Food Stamps, and Medicaid. Officials in Texas emphasized that their objective was not to contract out government functions arbitrarily, but rather to improve efficiency and customer service in government through increased competition. Contracting with private, for-profit companies for Medicaid claims processing, child support payment tracking, and other information systems requirements are already accepted practices in Texas government.

The proposed privatization of TIES differed from other privatization initiatives because the eligibility determination functions to be contracted out were traditionally carried out by state employees. This change raised two concerns: the potential loss of jobs for state employees; and the appropriateness of having private rather than public employees make decisions related to program eligibility. The TIES privatization was strongly opposed by public employee unions, which launched a major public relations campaign to gain public support to oppose the state’s plan ( Houston Chronicle, April 14, 1997 ). The potentially large size (estimated at $2.8 billion over 7 years) of the TIES privatization contract attracted major private corporations such as EDS and Lockheed-Martin, each in partnership with state agencies as part of the bidders’ teams (Texas Department of Human Services [TDHS] with EDS and Texas Workforce Commission [TWC] with Lockheed-Martin).

Implementation of the contracting process for TIES was delayed for nine months pending federal approval of the state’s draft “Request for Offers.” The 1996 federal welfare reform did not prohibit non-government employees from determining eligibility for TANF, as had been the case for AFDC. However, the historic restriction still remained for other federal assistance programs, particularly Food Stamps and Medicaid, which were unaffected by the 1996 legislation. The state privatization plan, therefore, required special federal approval as an exception to policy. In May 1997, the Clinton administration ruled that privatization of Food Stamp and Medicaid eligibility was not allowable under federal law.

At about the same time as the federal administration’s decision, the Texas legislature was reshaping the TIES project. HB 2777, which was enacted in June 1997, directed the Texas Health and Human Services Commission to coordinate the TIES effort in consultation with TDHS and TWC. As a result, these state agencies have terminated their teaming arrangements with private sector vendors. Recommendations developed by TDHS in partnership with EDS during the bidding process will serve as a starting point for the reengineering efforts required in the $3.7 million 15-month contract awarded to EDS (Kinsey, 1997). Thus, Texas has turned to an incremental approach for integrating and improving eligibility systems, and will build upon lessons learned and innovations proposed during planning of the TIES procurement.

Employment and Training

Throughout the history of employment and training programs, contracting has been a common model for delivering services, often including intake and eligibility determination as well as training, job placement and other employment-related services. MDTA, CETA, YEDPA, Job Corps, and now JTPA all involve extensive contracting for service delivery–Job Corps is totally contracted, and Center operators include some small and large for-profit companies (e.g., ITT Industries; BDM International/Vinnell; ResCare, Inc.). In fact, the majority of federally-funded E&T services since the 1960s have been contracted out by the administering public agency. Most of the E&T service contractors have been non-profit or public entities (e.g., community colleges, public school districts, vocational schools, employment service). In some localities, for-profit companies have also provided services under contract (e.g., proprietary training institutions and schools, for-profit companies operating job clubs or job placement services). The best-known for-profit companies today that have contracts to provide job placement services to welfare recipients are America Works and Curtis and Associates.

Ironically, Job Corps is the only major federally-administered E&T program and the only one that is totally contracted out. It has also been found to be among the more effective programs. In part the success of Job Corps is attributed to its mix of public direction, oversight, monitoring, and clear competitive contracting with performance expectations (Gurin 1989). The government role in policy development, planning, monitoring and oversight is a critical factor in the Job Corps success. Job Corps centers can’t affect their performance measures by screening applicants (i.e., “creaming”) or by securing jobs for applicants because they have no control over this (Donahue 1989).

The Job Corps program operates through a partnership of government, labor and the private sector, at 111 Job Corps Centers in 46 states, D.C. and Puerto Rico. Private corporations and private nonprofit organizations– including Teledyne, ITT, Vinnell, Management and Training Corporation, Career Systems Development Corporation, Res-Care, and MINACT–operate 81 Job Corps centers under contracts with the U.S. Department of Labor (DOL). An additional 30 Job Corp Centers are operated by the U.S. Departments of Agriculture and Interior–called civilian conservation centers–on public lands throughout the country under interagency agreements with the U.S. DOL. A nationwide network of other public, private, nonprofit, business, and labor union subcontractors provide services for Job Corps, ranging from intake and application to occupational training, job placement and post-program support services.

Child Welfare

Child Welfare privatization of service delivery also expanded greatly in the 1970s and 1980s as caseloads of child abuse and neglect rose, budgets were increasingly constrained, and public agencies’ flexibility in staffing up was severely limited by personnel policies and state or local restrictions on spending. Agencies contract for various services from investigation to substitute care and therapeutic services. For example, in New York City, contract agencies take care of 70 percent of the city’s children in foster care (Giuliani 1996). In fact, the majority of publicly financed social services programs in New York City are delivered through contracts. These private suppliers, mostly well-established non-profit service agencies, both secular and religiously affiliated, have provided an ongoing source of political support for the city’s human service activities (Bendick 1989).


3. Models of Privatization

As the brief discussions above suggest, there is no single definition of privatization. But for the purposes of this paper, privatization refers to the provision of publicly-funded services and activities by non-governmental entities. There are also various methods by which services can be privatized, including contracts, formal agreements, vouchers, grants, subsidies, public/private partnerships, and collaborative service delivery. In general, though, the common use of the term privatization refers to formal contracting out of services by the government to the private for-profit or non-profit sector. One way to think about privatization is to consider two separate but related dimensions:

    (1) degree of market competition–ranging, for example, from open competition for all or public services, to government contracting for specific services; and (2) role of the public sector vis a vis other sectors–for example, government oversight of private services versus separate systems of services operated by government, for-profit and/or non-profit entities, versus public-private partnerships.

Market Competition. Osborne and Gaebler in Reinventing Government (1992) quote Gov. Mario Cuomo, who stated that (p. 30) “It is not government’s obligation to provide services, but to see that they’re provided.” Their conception of a reinvented government would involve broader service options, including using a competitive process for selecting deliverers of public services. “Competition will not solve all our problems. But perhaps…it holds the key that will unlock the bureaucratic gridlock that hamstrings so many public agencies,” by encouraging innovation, flexibility, efficiency and performance. This would mean ending the tradition that certain public agencies be presumptive deliverers of services. Public agencies would have to compete against each other and against non-profit and for-profit providers for a particular services market. Even within the public sector, competition can be introduced through the establishment of franchise funds which provide certain administrative services to “customers” within the public agency.

Some of the most recent examples of privatization in the welfare and workforce development area, such as in Texas, Wisconsin and Massachusetts have adopted versions of such a broad-based competitive model where public-private teams compete for contracts. In Indianapolis, public employees are required to compete against privately owned businesses for contracts to deliver all services with the exception of police, fire, and zoning operations. Initially, city employees and their union opposed the privatization initiative and feared losing their jobs. After negotiating changes to “level the playing field,” such as consulting assistance to prepare bids and streamlining the city workforce by reducing middle management, unionized employees have gone on to win 37 of the 86 contracts put out for bid by the city (Jeter 1997).

Sectoral Roles. A second dimension of the privatization concept relates to activities or functions performed by the governmental and non-governmental sectors, regardless of whether funds actually are exchanged and regardless of whether there is a formal contract or agreement. Much of the current discussion about privatization refers to for-profit businesses, but as Starr (1989) explains, there are actually four types of “private” providers: (1) personal, informal, mutual aid; (2) voluntary non-profit sector; (3) small businesses, entrepreneurial companies; and (4) corporate for-profit sector. The responsibilities and services of each may or may not result from contractual arrangements or exchange of funds.

For example, the welfare reform law of 1986 included strong language that would encourage community-based and faith-based organizations to be formal providers of services, presumably with government contracts. But underlying welfare reform’s focus on individual and family responsibility is that the informal community, charities, and neighbors are also an important source of support for persons in times of need.


4. Effectiveness and Potential of Privatization

There are strong and vocal advocates and opponents of privatization, but little empirical evidence about whether the public sector or the private sector is more effective.

Arguments For and Against Privatization

Arguments for Privatization. There are major advantages generally put forth for contracting for services with private (non-profit and for-profit) organizations, as indicated in Exhibit 1. In general, the strongest arguments for privatization of public services are:

    1. Increased flexibility resulting from a reduction of bureaucratic complexity and procedures, and 2. Reduced costs resulting from improved efficiency, especially if there is a truly competitive process with clear performance criteria.

Public decisions to privatize have in fact been motivated by a number of factors, (Hatry and Durman 1985) such as:

  • discontent with the performance of the public sector;
  • desire for more flexibility (e.g., personnel, operations, innovations);
  • desire to reduce costs; and
  • desire to “empower” service intermediaries (e.g., CBOs).

GAO (1996), for example, found that the primary reason state and local child support enforcement agencies contract out services is because of general state fiscal pressure that makes it difficult to hire more agency staff despite growing caseloads and sometimes even despite increased program funding. Motivation of public officials to privatize resulted from (1) “a desire to improve child support services,” (2) “need to serve soaring caseloads,” and (3) “inability to deploy additional staff.” (p. 6) Some states also wanted to expand child support services in areas not well-covered in the past, or to assume operations when a public agency withdrew (usually district attorney’s office). The increasing speed with which computer equipment and information systems require upgrading also provides an incentive for privatization. Equipment provided by a private contractor is not budgeted as a capital expenditure for the public agency. Contractors that provide similar equipment and software to several public agencies or state administrations can spread their costs over several projects and achieve economies of scale, which may enable them provide the service to each client at a lower cost.

Exhibit 1
Reasons for Using the Private Sector
      • Source: Adapted from Allen, et al, The Private Sector in State Service Delivery.
        Washington, D.C. The Urban Institute Press, 1989

Arguments Against Privatization. The major concerns, summarized in Exhibit 2, voiced in opposition to privatization in the social services area relate mainly to quality of service and the impact on public sector jobs. In terms of service delivery, there are concerns that the profit motive of private companies will result in a reduction in services and a propensity to “cream,” or serve those who are most easily served and most likely to succeed. Every contract has the problem of unintended adverse impacts on individuals, especially if payment is based on a fixed cost per client. The more vulnerable the client and the more involuntary the client’s participation (e.g., hospitals, prisons, child welfare), the higher the risk; but a well-structured contract can cover these issues and protect those who are to be served (Hatry 1989).

The strongest opposition to privatization comes from public employees and unions representing public employees, stemming essentially from a fear that public sector jobs will be lost. The prospect of massive layoffs of government workers is one of the barriers that “keeps governments from moving into a more catalytic mode regarding privatization,” according to Osborne and Gaebler (1992)–a fear, they note, that is “legitimate.” The federal Office of Personnel Management (OPM) recently reported that executive branch employees covered by union agreements dropped by 13 percent between 1992 and 1997. Almost all of the decline in union representation can be attributed to the government’s downsizing, particularly base closings and cutbacks at the Defense Department (Barr and McAllister 1997).

Exhibit 2
Major Arguments for Opposing Privatization
      • Source: Adapted from materials prepared by the AFL-CIO, Public Employee Department

Evidence of Effectiveness

Thus, there are strong reasons for privatization and some equally-strong concerns and fears (see Exhibit 3). Most analysts, though, concur that each sector may actually have certain relative strengths, and private sector delivery of services is not inherently better or worse than public service delivery. “Business does some things better than government, but government does some things better than business. The public sector tends to be better, for instance, at policy management, regulation, ensuring equity, preventing discrimination or exploitation, ensuring continuity and stability of services, and ensuring social cohesion… Business tends to be better at performing economic tasks, innovating, replicating successful experiments, adapting to rapid change, abandoning unsuccessful or obsolete activities, and performing complex or technical tasks. The [non-profit] sector tends to be best at performing tasks that generate little or no profit, demand compassion and commitment to individuals, require extensive trust on the part of customers or clients, need hands-on, personal attention…, and involve the enforcement of moral codes and individual responsibility for behavior.” (Osborne and Gaebler 1992)

Bendick (1989) agrees, noting that private contractors are well-suited for straightforward or specialized services such as refuse collection, processing payments, data processing, and computer systems design. But, as one moves to “more complex, undefinable long-range, and ‘subjective’ services characteristic of the social welfare field, the record of successful experience rapidly thins.” (e.g., training ex-offenders, drug addicts, mentally ill, least employable welfare recipients) (p. 15) He attributes this mainly to the “limited ability of privatized systems to tackle the most difficult cases or to pursue the most complex objectives.” (p. 16) Bendick further notes the nonprofit sector is better able than the for-profit sector to deal with complex and high risk cases, mainly because it is less motivated by profit. But nonprofit deliverers are not noticeably better or worse than the public sector (p. 18) because of high risk and/or high cost associated with complex cases.

Exhibit 3
Major Potential Advantages and Problems with Delivery of Public Services by For-Profit Companies
      • Source: Adapted from Allen, et al. The Private Sector in State Service Delivery,
        Washington, D.C.: The Urban Institute Press, 1989.

Unfortunately, there is very little empirical research on the relative effectiveness of the private sector versus the public or nonprofit sector in the delivery of services. Hatry conducted one of the few studies comparing public and private delivery of services, based on matched pairs of public and privately administered prisons as a case study. He found that while quality was somewhat higher in the private systems, cost results were mixed. He explains that research findings on the relative costs and quality of services between public and private systems may be biased in favor of private sector delivery. The primary reasons governments decide to privatize services relate to less than satisfactory performance by the public sector. In general, if there are no perceived problems with the public sector (e.g., high cost and/or low performance), there is usually little incentive for public officials to consider privatization. Furthermore, whenever there is a shift, either from the public sector to the private sector or vice versa, there is improvement. Therefore, studies that compare a newly privatized system to the pre-existing suboptimal public system will be biased in favor of privatization.

The only other study identified that compared public systems to private systems was conducted by the General Accounting Office and had similar findings. A December 1996 GAO report examined state contracting of full-service child support enforcement operations in selected local sites in 15 states. “In the three comparisons of performance we conducted, fully privatized officers performed at least as well as or, in some instances, better than public child support programs in locating noncustodial parents, establishing paternity and support orders, and collecting support owed.” However, the cost-effectiveness results were more mixed for the periods reviewed.

A separate issue concerns the impact privatization has on public employees. The most vocal opposition to privatization comes from public employee unions and their concern about the dislocation of public workers (and, presumably–although unstated–the reduction in union membership). A report by the National Commission for Employment Policy (1989) found:

  • Contracting out public services has caused a shrinkage in the rate of growth of the public sector work force since the mid-1970s.
  • Job loss in the government is generally offset by job gains in the private sector–for every 10 jobs lost in that state and local government sector due to privatization, about eight or nine new jobs were created in that same occupational field in the private sector
  • Layoffs of public employees due to privatization are uncommon; most affected workers take jobs with contractors or transition to jobs in other public agencies, usually through an agreement initiated by the government. Moving from the public sector to the private sector generally means a reduction in employee benefits, but a modest increase in wages.

While it is clear that public employee unions are unequivocally opposed to privatization, it is not as clear whether the workers themselves are opposed, in large part because employment arrangements are often part of the privatization package. (Reason, 1996) A study of privatization cases in Britain similarly found that there had been opposition from union leaders, but not necessarily union members, mainly because workers have been offered alternative and often better deals from private contractors. (Pirie, 1985)

Finally, one of the strongest messages that can be drawn from the analytic literature is that there are successes and failures in all three sectors–public, for-profit, and non-profit. “The determining factors have to do with the incentives that drive those within the system. Are they motivated to excel? Are they accountable for their results? Are they free from overly restrictive rules and regulations? Is authority decentralized enough to permit adequate flexibility? Do rewards reflect the quality of their performance?” (Osborne and Gaebler, 1992)

Hatry and Durman agree that the key to successful privatization comes from careful public administration and understanding the potential problems inherent with contracting to a profit-motivated private business. “An agency that is capable of sophisticated administration, and explicitly addresses service quality issues, can minimize the difficulties of implementing a competitive contracting process. In none of the examples [of successful cases] of competitive contracting examined did contracting agencies report deterioration of service quality. The contracting agencies were sensitive to the issue and took specific steps to prevent it. Carefully implemented competitive contracting can achieve modest cost saving or a slowing of cost increases.”

Privatization is encouraged in Reinventing Government, but Osborne and Gaebler, like other analysts, caution that “[p]rivatization is one answer, not the answer…Services can be contracted out or turned over to the private sector. But governance cannot…” (Osborne and Gaebler, 1992, p. 45) “There is no inherent reason why for-profit firms could not compete for most, if not all, social service delivery activities.” (Hatry and Durman, 1985) But the government is responsible for assuring that public services are effective, whether or not the services are publicly delivered. Public decisionmakers need to look at the long-term capacity of government agencies to monitor and the costs of monitoring. They need an objective way to assign criteria to determine appropriate cost–the public sector does not know how to determine cost and does not understand well how the concept of risk relates to the private sector’s incentives and disincentives in business ventures.


5. Conclusions

The limited empirical research comparing the effectiveness of service provision by the public and private sectors suggests a few conclusions:

  • There is no empirical evidence that the service provided by private contractors is inadequate.
  • There is some evidence from research studies that the quality of services may be higher in private service delivery systems than in public systems, but very mixed evidence on whether the private sector is more cost-efficient. However, for many reasons, the findings may be biased in favor of the private sector.
  • When public services are privatized, there is a reduction in the number of public employees, but there is not necessarily a reduction in total employment nor are workers always worse off.
  • There are success stories and examples of failure in all sectors–public, non-profit, and private. No one model is inherently “better” than another. The key factor is whether there is clear accountability for results, clear criteria for performance, and clear public objectives.

Privatization is a way to bring the advantages of competition and flexibility to the delivery of public services. These advantages include greater efficiency, increased responsiveness to the needs of customers, and encouraging innovation. These advantages are more difficult (but not impossible) to achieve within government due to restrictions on hiring public employees and budgeting issues related to capital expenditures. As Rainey (1991) points out, “The nature of public organizations, their public character, often subjects them to more external intervention and constraint. In turn, this often imposes on them greater challenges in trying to perform efficiently and effectively.”

While there is clear potential for improved efficiency, privatization also involves risk and requires careful management on the part of the public agency. The research reviewed emphasizes the importance of clear goals and accountability. Some of the highly visible problems recently encountered in large system-wide contracts probably at least partly reflect lack of accountability and performance criteria . Effectiveness tends to be very situational–it depends on the implementation of the contracting process, the contract itself, performance criteria, and ongoing monitoring.

To achieve the potential benefits of privatization, public agencies will need to clearly specify the roles of contractors, determine appropriate costs, and develop performance criteria that are tailored to the client population being addressed. Public agencies will need to consider their long-term capacity to structure and monitor privatization initiatives in order assure cost effectiveness and quality in the delivery of publicly funded social services.


References

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Barr, Stephen and Bill McAllister.. “Downsizing Cuts Federal Union Representation; More Postal Employees Covered.” The Washington Post, June 11, 1997.

Bendick, Marc. 1989. “Privatizing the Delivery of Social Welfare Service.” Privatization and the Welfare State, edited by Sheila B. Kamerman and Alfred J. Kahn. Princeton: Princeton University Press.

Bernstein, Nina. “Giant Companies Entering Race to Run State Welfare Programs.” The New York Times. Sunday September 15, 1996, section 1, page 1.

Butler, Stuart M., ed. 1985. The Privatization Option: A Strategy to Shrink the Size of Government. Washington, DC: The Heritage Foundation

Center on Public Policy Priorities, Austin Texas. Welfare Reform Working Group, April 10, 1997.

Donahue, John D. 1989. The Privatization Decision: Public Ends, Private Means. New York: Basic Books, Inc.

Giuliani, Rudolph W. 1996. Protecting the Children of New York: A Plan for the Administration for Children’s Services. December 19.

Government Management Reform Act of 1994 (S. 2170)

Grumwald, Michael. “Squabbling Erupts Over Jobs Initiative.” The Boston Globe. February 11, 1997.

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Notes

1. GAO reported that in 1996, 15 states had contracted out for full service child support collection services in one or more localities: AZ, AK, CO, GA, IA, MD, MS, NE, OH, OK, SC, TN, VA, WV, WY)

2. There is some evidence of problems with most of these (large and small) private companies (with the exception of Curtiss & Associates), including several newspaper articles chronicling various cost-overruns, delays, or poor performance. One must be cautious, however, in assuming that such problems are unique to the private sector or that they imply the private sector is ineffective. Issues of effectiveness and problems in the public and private sector are discussed in a later section.

3. Kinsey, Marcia. September 1997. Privatization. Center for Public Policy Priorities, Austin, TX.

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