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Editor’s Note: William Larson is a freelance writer and former social worker at the Department of Social and Health Services. In this op-ed piece, Larson challenges the notion that privatization will do anything but shift the blame.
by William W. Larson
Special to Washington State Wire
OLYMPIA, Sept. 22 – Imagine an organization with a $20 billion annual operating budget – more than twice that of the Boeing Corporation – which outsources about 70 percent of its workload and employs more than 18,000 workers.
This organization is much different than any other organization of its magnitude. It has no board of directors, only slight transparency, and very little public accountability. It is the Department of Social and Health Services, Washington’s largest state agency.
In the state that witnessed the birth of such greats as Boeing, Microsoft, Starbucks, Amazon.com, just to name a few, many Washingtonians wonder why state leaders continue to tolerate a Three Stooges operation like DSHS – especially since this agency consumes a third of the state’s annual budget and employs about a third of all state employees.
For years the Legislature has been aching to bring DSHS under control. Now there’s a plan afoot that purports to do just that – by shuffling off the functions of the Children’s Administration to private non-profit agencies. DSHS managers have adopted the buzzwords of the times – they’re “downsizing,” they’re “privatizing.” But it’s really management as usual. What they’re really doing is selling the Legislature a bill of goods, and doing their best to duck one of their primary responsibilities.
It's hard to imagine an area where privatization is less warranted, or more likely to bring disaster.
Taking the Easy Way Out
Children’s Administration, the division that is responsible for such programs as Child Protective Services and Child Welfare Services, has all the characteristics of its parent. It is unresponsive to those who fund it and to those who have been hired to oversee its operations. Its mismanagement of cases has often resulted in the injury and death of children. And its inability to provide constitutionally required care to foster children has led to court monitoring and oversight of the agency’s placement practices. To add insult to injury, the agency has settled countless lawsuits filed because of its negligent practices costing taxpayers millions.
As one disgruntled Child Welfare Services social worker puts it, “The Children’s Administration is the proverbial pig that wears lipstick and pretends it’s something it’s not. It’s high time for taxpayers to demand change.”
Lawmakers thought they had the answer last year. By July 1, 2014, they’re mandating that the division hand its functions to private contractors – the same non-profit agencies that already perform much of the agency’s work.
It’s a cure-all that can only make things worse. Other states have tried outsourcing children’s services and wound up with programs that cost more, provided fewer services and delivered worse results. The only real benefit is that the next time a child dies, those who run DSHS will be able to point the finger of blame somewhere else.
A Shell Game
Everyone seemed to love the idea. DSHS officials and private-agency managers insisted the state could obtain better service at a lower price. Those promises held plenty of appeal for legislators who were tired of bearing the brunt of public criticism when children were injured or killed. And if the state could save money in the bargain? At a time of massive budget shortfalls, that clinched the deal.
The Legislature looked at all the state jobs that would no longer be necessary if privatization of children’s services were to take place. That number was impressive – so were the savings in salaries and benefits.
The only problem was that it was sort of a shell game. Kind of a now-you-see-it, now-you-don’t proposition.
The Legislature never considered that private agencies would likely require the same number of people to do the job, perhaps even more. It never considered the fact that private agencies lack the infrastructure to handle the overwhelming burden of monitoring more than 15,000 children in care and that providing it would require extensive investment by the private agencies or the state, or both. It never considered the extensive training that will be needed to bring private agency personnel up to speed and keep them there, and it never considered that failure to address any one of these areas would create significant potential legal liability for the state.
Savings Estimates Overblown
One thing that seems sure is that when privatization takes place, the state’s spending will never be enough. The point is demonstrated by a 2009 report from the Stuart Foundation and the Washington State Coalition for Children in Care. They were looking at potential problems the non-profits might face, and you have to read between the lines. But the conclusion was that they couldn’t do the job on the kind of money that DSHS currently spends. The report said:
“Current DSHS payment rates are 15 percent to 51 percent below the nonprofit agency costs for three types of child welfare services: Facility-Based Behavioral Rehabilitation Services (BRS) (17 percent gap), Treatment Foster Care BRS (15 percent gap), and Child Placing Agency services (51 percent gap). Under the reforms identified during the 2009 Legislative Session, funding will be shifting to the area with the largest shortfall (Child Placing Agency services).”
The report noted that the non-profits typically pay their employees about 24 percent more than DSHS. And if the state expects them to make up the gap through private fund-raising, it dryly observed that charity is “an unreliable public policy approach to managing the child welfare system.”
The bottom line is that when privatization occurs, you can count on demands for the state to spend more. The plan is likely to increase direct service costs significantly.
More Overhead Costs for State
Besides paying for the direct costs of placement and the servicing of clients, DSHS will face added costs for reviewing and evaluating requests for proposals (RFPs), writing and negotiating contracts, processing change orders and amendments to contracts, monitoring and evaluating vendor performance, developing improvement plans for vendors failing to comply with the terms of contracts, dealing with disputes and processing payments. According to the National Government Finance Officers Association, these responsibilities alone can add as much as 25 percent to the cost of a contract.
In addition, privatization will increase bureaucratic monitoring, which means even more paperwork will be required by DSHS and generated by private agency contractors – a major problem. The daunting amount of mandatory paperwork already demanded by DSHS under the present system prevents social workers from spending adequate amounts of time with the clients under their watch. Increasing the amount of paperwork certainly won’t help matters.
A Core Function of Government
Privatization is one of the most popular rallying cries in state government during these times of financial crisis, but it is important to make a distinction between this plan and all the other proposals that have surfaced of late. In a democratic society, liquor stores, gambling services, print shops and banks all have their places, but not under government ownership and control. These are businesses best run by the private sector.
But government does exist to provide for the welfare of its people and to establish justice for those who are vulnerable or otherwise unable to secure it for themselves.
The Children’s Administration exists to protect those children who are victims of abuse and neglect. This is accomplished by intervention and sometimes involves the voluntary, or involuntary, removal of children from their home with the assistance of law enforcement and the courts. Often it involves the termination of parental rights and adoption. It is unthinkable for any state to abrogate its responsibilities in these areas.
Duck Responsibility, or do the Job Right?
The Children’s Administration has been a boil on the posterior of DSHS for years. Each time a child dies as a result of abuse or neglect, Children’s Administration is blamed, accepts responsibility, and responds by developing yet another new program complete with new policies and procedures and new paperwork requirements.
Privatization as originally presented to the Legislature would ostensibly rid the state of a troubled component of a troubled agency, and would shield the state from further legal liability, saving millions in the process.
But even the legal argument doesn’t work. Supervision and monitoring will continue to be the responsibility of DSHS. Under the state’s joint-and-several liability rules, the state will remain the deep pocket for anyone who wants to sue.
What is most disappointing is that in mandating privatization of children’s services, the Legislature demonstrated a real lack of understanding about the duties, responsibilities, and purposes of government – responsibilities and duties that ought not be transferred, delegated, or ignored in a free society. I can just hear a plaintiff’s lawyer make that point to a jury. The argument would be compelling.
Instead of privatization, wouldn’t it be a better idea to reform the existing system, and start by dividing DSHS into manageable units? Knock down management silos, demolish fiefdoms, and demand transparency and accountability of every agency – including the Children’s Administration. Why on earth do we need an unmanageable superagency – with an operating budget twice the size of Boeing – to deal with the social welfare needs of the people of Washington state?
Outsourcing children's services is worse than no reform at all. The millions of dollars in savings are a pipe dream. What we’ll get is an even bigger mess than the one we have today.
The people of the state of Washington deserve better than that.
Comments On This Article
I have many years of experience as a foster parent, state worker, and private agency worker. Private agency workers do NOT earn more than state social workers, but less. Generally it is noticeably less. Retirement benefits are less, too. But people work there because it is a more humane environment than state service.
We have been fighting this in court since Sept. 08; we are facing bankruptcy against the state's deep (taxpayer) pockets and unlimited resources and their false statements.
We have all the DSHS/CPS case files, including files on the parents. What we don't have is anyone willing to listen to us or to save these children from ongoing danger and abuse.