October 7, 2011 

In 2009, a decision was made and an initiative launched by the Heineman Administration to privatize to a considerable extent Nebraska’s child-welfare services, which encompass foster care and interaction with the juvenile-justice system.

The thought was, apparently, that it would be cost-effective, fiscally prudent, and better all the way around for state government to contract with private-sector firms and businesses for a lot of service-delivery and management.

The reform initiative was given the positive, encouraging title, "Families Matter."

Undoubtedly, state government is motivated by, and committed to, a desire to be responsive to the welfare of vulnerable children and hurting families. That had better be true, for the sake of the common good. But the challenges of responsibly and effectively implementing privatization have proved to be whopping.

Perhaps not unexpectedly, this reform initiative, which gradually and ultimately would result in complete privatization of child-welfare services, has encountered some problems. The transitions from government to private sector have not had smooth sailing. Quite likely, the seas of change have been a whole lot more turbulent than those steering and manning the ship anticipated. As evidence, consider these examples of news and editorial headlines from September just past:

"Foley blasts HHS in audit." "Audit slams state’s management of millions in child welfare funds." "Troubling set of problems." "Key agency taking more fire." "More changes demanded following DHHS audit."

And there’s more: "Why didn’t HHS share highly critical audit with Governor Heineman?" "Heineman’s likely hot over administration’s screw up in child welfare services." "Governor offers no excuses for child welfare reform snags." "Child welfare caseloads still heavy; private contractors have same staffing problems that plagued HHS." "Time to end the confusion; time to fix child welfare system."

The audit given attention generated a 152-page report by the State Auditor of Public Accounts, Mike Foley. He presented the report Sept. 7, at a public hearing conducted by the Legislature’s Health and Human Services Committee. It created some big waves.

The audit found serious fault with the Nebraska Department of Health and Human Services (DHHS) with regard to fiscal management, control and accountability as related to child-welfare services. The report cited particular issues of escalating costs—up 27 percent between 2009 and 2011—lack of documentation, lost records, overpayments, a "lackadaisical approach" to scrutinizing subcontractors (assuming such scrutiny is a responsibility under contract) and lack of cooperation with the audit itself.

More than one news outlet referred to the audit report and/or the Auditor’s comments as "scathing."

Since the privatization initiative was launched in 2009, three of the original five contractors have gone out of business or quit. Regarding one of those contractors, the Auditor’s report concludes that the contractor was overpaid under its services contracts with DHHS by more than $1.8 million. Then DHHS entered into a settlement agreement that cost the State an additional $2 million. And then, DHHS somehow overpaid the settlement agreement by $127,472.

Among other findings: contractors failed to meet contractual benchmarks in terms of services provided and, in another instance, according to the audit report, service-providing employees of a subcontractor were paid between $10.50 and $13 per hour, but the contractor was reimbursed by DHHS at $47 per hour.

The Auditor’s work examined management, not quality of services. The latter context, as well as the overall situation, is being investigated by the Legislature’s Health and Human Services Committee. Look for some form of oversight legislation when the Unicameral convenes a new session in January upcoming.

One of the foremost problems encountered by contractors for child-welfare services—and it isn’t any different when the State is the services provider—is the two-pronged problem of caseloads that are too high and worker turnover. When caseloads exceed sound standards, that’s threatening effectiveness, if not asking for trouble.

In an odd way, this situation is sort of like the situation with Husker football. It’s not time to abandon the ship, but it is time to learn from mistakes, build upon bad experiences and move forward, meeting the challenges and getting better.

In the case of child-welfare, any greater jeopardy, instability or declining outcomes for children are unacceptable. The priority is unmistakable.

And finally... in another realm, from sharp-as-a-tack, George Mason University Law Professor, Helen Alvare: "If you want to give new meaning to the word ‘outsider’ in Washington (D.C.) today, identify yourself prominently as a conscientious objector to birth control as a tool in the ‘war against unintended pregnancy.’ A giant federal health care bureaucracy becomes your enemy. So does one of its closest collaborators, the self-described champion of all things female, the Planned Parenthood Federation of America."