The Role of Intermediaries in Linking TANF Recipients with Jobs: Defining the Roles and Responsibilities of Intermediaries

12/31/1969


The Role of Intermediaries in Linking TANF Recipients with Jobs

Chapter II:
Defining the Roles and Responsibilities of Intermediaries in a Work-Based Assistance System

[ Main Page of Report ]

Contents

Regardless of whether a state's welfare program is state or county administered,

local welfare offices always have had significant control over how to structure

the delivery of employment services for welfare recipients.  While some

local welfare offices provided these services in-house prior to the

implementation of TANF, others forged close relationships with the JTPA system,

collaborated with the local community college, or contracted with community-based

organizations.  In order to provide services in a timely manner to the

expanded pool of recipients required to work or participate in work-related

activities, most communities have had to develop new or expanded service

delivery systems.  The shift from a human capital development to a

work-first approach to serving welfare recipients also has required them

to reorient their service delivery systems toward job search and placement

rather than participation in longer-term education and training programs.

Within a work-based assistance system, a broad range of tasks must be performed

to provide families with cash assistance and to help them make the transition

to self-sufficiency.  The primary employment-related services provided

to most TANF recipients are case management and job search and placement

assistance.  Secondary employment-related services, provided on a more

limited basis, include work experience, education, training, supported work,

job retention, and advancement programs.  In deciding how to use

intermediaries to provide these services, local welfare offices or their

designee face three key decisions:

  1. How much responsibility to transfer to intermediaries

  2. Whether to transfer responsibility to a single intermediary or multiple

    intermediaries

  3. How and how much to reimburse intermediaries for the services they provide

Using these three key decisions as our framework, in this chapter, we examine

the choices the local sites made regarding how to use intermediaries to help

welfare recipients make the transition to employment.  A summary of

our key findings is presented in Table II.1.

Table II.1:
Definging the Roles and Responsibilities of Intermediaries

How Much Responsibility to Transfer to Intermediaries

  • Nearly all of the sites transfer some employment-related responsibilities

    to intermediaries.

  • The primary responsibilities transferred to intermediaries most often are

    job-search and placement assistance, although a substantial number of communities

    also transfer responsibility for case management.

  • Some welfare offices that transfer significant responsibility for providing

    primary employment services to intermediaries continue to provide these services

    for at least some portion of the TANF caseload.  Some welfare offices,

    however, have no responsibility for providing employment-related services

    to TANF recipients.

  • When secondary employment-related services are provided, they are almost

    always provided by intermediaries, however, in most sites, these programs

    are still in the early stages of development.

  • The local sites' decisions regarding how much responsibility to transfer

    to intermediaries were influenced by their current and potential administrative

    capacity, previous experience with intermediaries, TANF administrative structure,

    caseload size, and legislative mandates.

Use of a Single Intermediary or Multiple Intermediaries

  • Most of the urban sites, but only a few of the rural sites transferred

    employment-related responsibilities to multiple intermediaries.

  • When responsibility for providing employment services was transferred to

    multiple intermediaries, sites relied on a variety of strategies to assign

    clients to a specific intermediary.

  • Caseload size, the amount of responsibility transferred to intermediaries

    and the decision to use one or multiple intermediaries all influence the

    number of TANF clients any one intermediary will serve.

Reimbursing Intermediaries for the Services They Provide

  • Most intermediaries are reimbursed for their services through a cost

    reimbursement rather than a pay-for-performance arrangement.  In an

    attempt to combine the benefits of these two payment systems, several of

    the sites have developed cost reimbursement payment systems that include

    performance bonuses or incentives.

  • The sites that reimburse intermediaries through a pay-for-performance system

    structure their reimbursements very differently, with some placing far greater

    emphasis on placement and/or retention than others.

  • Regardless of the way in which intermediaries are reimbursed for their services,

    there is considerable variation in the amount intermediaries are paid for

    the services they provide.  This variation exists between the sites

    and between intermediaries within some of the sites.

Go to Contents

How Much Responsibility to Transfer to Intermediaries

The amount of responsibility the local sites transferred to intermediaries

ranged from full responsibility for all employment-related services to no

responsibility (see Table II.2).  Of the 20 study

sites, 18 transfer some responsibility for providing employment-related services

to intermediaries.  The two sites that do not transfer any responsibility

to intermediaries are both rural sites that provide all employment-related

services in-house or rely on existing resources in the community.  Decisions

regarding how much responsibility to transfer to intermediaries not only

define the role intermediaries play in linking welfare recipients with jobs

but also the extent to which the welfare office plays a role in helping welfare

recipients to find and/or maintain employment.  Several key patterns

emerge regarding how much responsibility the local sites transferred to

intermediaries:

1.  The employment-related responsibilities transferred to intermediaries most often are job search and placement assistance, although a substantial number of communities also transfer responsibility for case management.

Intermediaries provide job search and placement assistance in all of the

sites that transfer some work-related responsibilities to intermediaries. 

In 12 of these (seven urban and five rural), intermediaries have responsibility

for providing case management for the majority of the TANF caseload that

is required to look for work; in three of the urban sites welfare office

staff also provide case management, but for a relatively small portion of

the overall caseload.

Given the emphasis on shifting the focus of the welfare office from determining

eligibility to helping TANF recipients make the transition to unsubsidized

paid employment, it is noteworthy that so many of the sites, especially in

the urban areas, transferred primary responsibility for providing case management

services to intermediaries.  Cleveland is the only urban site where

former eligibility staff have been retrained to function as "self-sufficiency

coaches," assuming responsibility for eligibility and case management. 

The other urban sites that provide case management have separate staff, usually

working in a separate unit, who have responsibility for this function. 

When case management responsibilities are transferred, the intermediary is

responsible not only for linking TANF recipients with jobs but also for working

with the recipients to develop self-sufficiency plans and linking them with

the resources they need to achieve the goals outlined in their plans.

Table II.2
Allocation of Employment-Related Responsibilities Between The Welfare Office and Intermediaries

 

Responsibility Transferred to Intermediaries

Responsibility Retained by the Welfare Office

# of Primary Intermed.

Method of Assignment

Eligibility

Case Mgmt

Job Search

Secondary Services

Eligibility

Case Mgmt

Job Search

Secondary Services

Urban Sites (TANF Caseload)

San Diego, CA (38,000)

 

P

P

P

P

S

S

S

3

Geographic

Cleveland, OH (33,000)

 

 

P

P

P

P

 

S

9

Discretion

Phoenix, AZ (15,219)

S

S

S

S

P

P

P

P

1

Geographic

San Antonio, TX (13,598)

 

P

P

P

P

 

 

 

1

 

St. Paul, MN (9,300)

 

P

P

P

P

S

S

S

7

Discretion

Hartford, CT (5,800)

 

P

P

P

P

 

 

 

3

Discretion

Richmond, VA (4,539)

 

 

S

S

P

P

P

P

1

 

Omaha, NE (3,500)

 

P

P

S

P

S

 

 

2

Discretion

Little Rock, AK (2,168)

 

P

P

P

P

P

 

 

7

Geographic

Jacksonville, FL (3,984)

 

P

P

P

P

 

 

 

1

 

Rural Sites

New London, CT (2,400)

 

P

P

P

P

 

 

 

3

Functional

Olmsted, MN (807)

 

P

P

P

P

 

 

S

2

Functional

Wise, VA (757)

 

 

 

 

P

P

P

P

0

 

Scotts Bluff, NE (600)

 

 

S

S

P

P

P

 

1

 

Napa, CA (590)

 

P

P

P

P

P

 

 

1

Functional

Yavapai, AZ (582)

 

 

 

 

P

P

P

P

0

 

Jefferson, AK (329)

 

 

 

S

P

P

P

P

0

 

Suwannee, FL ( 311)

 

P

P

P

P

 

 

 

1

 

Columbiana, OH (200)

 

 

S

S

P

P

P

P

1

 

Uvalde, TX (200)

 

P

P

P

P

 

 

 

1

 

Notes:

P = Primary Responsibility; S = Secondary Responsibility

2.  Some welfare offices that transfer significant responsibility for providing primary employment services to intermediaries continue to provide these services for at least some portion of the TANF caseload.  Some welfare offices, however, have no responsibility for providing employment-related services to TANF recipients.

Many welfare offices developed some capacity for providing employment-related

services to welfare recipients through their implementation of the JOBS

program.  Several of the sites have continued to rely on this expertise

to provide employment-related services to at least a portion of the TANF

caseload (see Table II.2).  For example, in Maricopa

County (Phoenix), full responsibility for TANF implementation was transferred

to an intermediary in only part of the county; in the remainder of the county,

former JOBS staff provide case management services and operate a semi-structured

job search assistance program for all TANF recipients required to find

employment.  In St. Paul and San Diego, welfare office staff provide

case management and job search and placement services to a portion of the

TANF caseload; the remainder of the caseload receives these services from

an intermediary.  In Richmond, welfare office staff provide case management

services for all TANF clients and job search and placement services are provided

in-house for some clients and by intermediaries for others.  In Omaha,

welfare office staff refer all clients to intermediaries for job search and

placement services but provide case management in-house for almost half the

caseload.  In many of the sites, job ready clients are referred to a

resource room located at the welfare office to look for employment on their

own.

Due to their smaller size, the rural welfare offices have maintained more

responsibility for providing primary employment-related services to TANF

recipients.  For example, in Wise County, welfare staff provide case

management, job search assistance and placement and develop and monitor

recipients' participation in work experience placements.  When appropriate,

welfare office staff refer TANF clients to existing employment or training

programs in the community.  Even in Columbiana and Scottsbluff, where

intermediaries are used to provide primary employment services to some TANF

recipients, welfare staff provide job search and placement assistance to

the majority of the TANF caseload.  As its caseload declines, TANF staff

in Columbiana are taking on more responsibility for helping clients find

employment, reducing the number of clients served by Columbiana's primary

intermediary.

Welfare offices in three of the ten states (Connecticut, Florida, and Texas)

have no responsibility for providing employment-related services to TANF

recipients.  In Connecticut and Texas, full responsibility for providing

employment-related services has been transferred to the workforce development

system.  In Florida, local WAGES coalitions decide who will provide

employment services to TANF recipients.  Some local WAGES coalitions

rely on the local community college to provide these service while others

have used a competitive bidding process to select one or more intermediaries

to provide them.

3.  When secondary employment-related services are provided, they are almost always provided by intermediaries, however, in most sites, these programs are still in the early stages of development.

Although some secondary services are provided in all of these sites, they

do not reach large numbers of recipients and are in the very early stages

of development.  When secondary employment services are provided they

almost always are provided by intermediaries, usually using funds from the

Welfare-to-Work program.  Unlike primary employment services that include

similar elements across all of the sites, secondary services vary

considerably.  In some sites the only secondary service provided is

work experience; in others, short-term training or programs to promote job

retention and advancement are emphasized.  Work experience programs

and intensive case management and outreach for sanctioned families are the

only secondary employment programs that are sometimes provided by welfare

office staff.

Using Intermediaries to Help the Hard-to-Employ Find Employment

Cleveland (Cuyahoga County) stands apart from the other study sites in both

its approach and the comprehensive nature of the secondary employment services

it provides to TANF recipients.  In late 1998, Cleveland issued a request

for proposals to identify intermediaries who could provide employment services

to TANF recipients who are deemed "hard-to-employ."  Through this process,

Cleveland now has 19 intermediaries who will provide specialized job search

and supportive services for ex-offenders, recipients with chronic barriers

to employment such as substance abuse or mental health and "intermittent"

workers who can find, but do not retain employment.

All of these services are being funded with TANF funds, making it possible

for the welfare office to set and, if necessary, redefine the eligibility

criteria for receipt of these more specialized services.  The expectation

is that TANF recipients referred to these more specialized intermediaries

will receive more intensive services than recipients who receive regular

job search and placement assistance; follow-up services may be provided for

some participants for as long as 18 months.  The intermediaries that

will provide these services are primarily local nonprofit organizations,

including several that specialize in providing supportive and/or employment

services to hard-to-employ populations outside of the TANF system.

4.  The local sites' decisions regarding how much responsibility to transfer to intermediaries were influenced by their current and potential administrative capacity, their previous experience with intermediaries, the TANF administrative structure, caseload size, and legislative mandates.

Even though the local sites are operating in a range of policy environments,

these policies seemed to have little, if any, influence on the decisions

the local sites made regarding how much responsibility to transfer to

intermediaries.  Instead, the factors that most affected their decisions

focused primarily on administrative considerations, including whether the

local site had or could hire sufficient staff to provide services in-house

and their previous experience working with intermediaries or their perceptions

of the advantages of doing so.

Limited Administrative Capacity.  Lack of administrative

capacity significantly influenced several local offices' decisions regarding

how much responsibility to transfer to intermediaries.  For example,

San Diego estimated that they would need 433 additional staff to provide

employment services to the portion of their TANF caseload that was mandated

to find employment.  Operating in an environment where there is considerable

support for privatizing government operations, county officials enthusiastically

embraced the decision to transfer significant responsibility to intermediaries

rather than add this number of additional staff to the county's payroll. 

In Omaha, where the welfare office is under a statewide hiring freeze, the

decision to transfer significant responsibility to intermediaries was viewed

as a necessity, rather than the optimum service delivery arrangement.

History.  Previous experience with intermediaries played

a much greater role in the decision to use intermediaries in some of the

local sites.  For example, having used intermediaries to provide case

management and employment-related services under the JOBS program, Ramsey

County (St. Paul) was able to build on established relationships with providers

in the community to expand its capacity for providing employment-related

services to TANF recipients.  Napa, operating one of the oldest one

stop centers in the country, already had a comprehensive, well-functioning

collaborative service system in place on which they could build.  New

London chose to design a service delivery system that would take into account

the strengths of the organizations already providing employment-related services

in the community.

Administrative Structure.  In the sites where the welfare

office retained administrative responsibility for TANF employment programs,

responsibility for providing employment-related services was usually shared

between the welfare office and intermediaries.  However, when administrative

responsibility for TANF employment programs was transferred to the workforce

development system, all responsibility for providing employment services

was transferred to intermediaries, leaving the welfare system with no

employment-related responsibilities.

Caseload Size.  The urban sites were more likely to

transfer responsibility to intermediaries than the rural sites.  However,

within the urban sites, caseload size did not seem to be the primary determinant

of how much responsibility to transfer to intermediaries.  For example,

the three sites with the largest TANF caseloads made very different decisions

regarding how much responsibility to transfer to intermediaries.  One

of the largest sites transferred responsibility for case management and job

search and placement assistance to intermediaries for two-thirds of its TANF

caseload.  A second transferred responsibility for job search and placement

assistance but not case management for its entire TANF caseload.  A

third currently provides all primary employment services in-house for the

majority of its TANF caseload.

Legislative Mandates.  The legislatures in three of

the states enacted legislation to encourage greater use of intermediaries. 

The Arizona legislature mandated that full responsibility for operation of

the TANF program (including eligibility determination) in a portion of Maricopa

County (including part of Phoenix) be transferred to the private sector. 

If the intermediary selected to operate the TANF program meets its performance

goals, the legislature's long-range plan is to transfer statewide operation

of the TANF program to the intermediary.  The legislatures in Arkansas

and Florida mandated the creation of new administrative structures to increase

the role of the private sector in the implementation of TANF.  In Arkansas,

the state Transitional Employment Board (TEB) and local Transitional Employment

Assistance (TEA) coalitions have responsibility for planning and coordinating

the delivery of employment-related services for TANF recipients.  In

Florida, this responsibility rests with the state Work and Gain Economic

Self-Sufficiency (WAGES) Board and the local WAGES coalitions.

Go to Contents

Use of a Single Intermediary or Multiple Intermediaries

In the study sites, the roles and responsibilities of intermediaries have

been further defined by the decisions the localities made regarding whether

to transfer responsibility to a single intermediary or multiple

intermediaries.  In the urban sites, these decisions primarily affected

the number of clients intermediaries would serve and how clients are assigned

to a particular intermediary.  In the few rural sites that chose to

use multiple intermediaries these decisions influenced the range and/or type

of services each intermediary would provide.  Key findings regarding

the use of a single intermediary or multiple intermediaries are presented

below.

1.  Most of the urban sites, but only a few of the rural sites, transferred primary employment-related responsibilities to multiple intermediaries.  When secondary services were provided, in most of the urban sites and some of the rural sites, they are almost always provided by multiple intermediaries.

Seven of the 10 urban sites and three of the rural sites transferred

responsibility for providing primary employment services to multiple

intermediaries (see Table II.2).  Given their larger

caseload size, it is not surprising that the use of multiple intermediaries

is more common in the urban areas than in the rural areas.  However,

the size of the caseload in the urban sites did not appear to be the main

factor that determined how many intermediaries were given responsibility

for linking welfare recipients with jobs.  One of the largest urban

sites transferred responsibility for primary employment services to nine

intermediaries, the most of any of the sites.  Two additional urban

sites, one medium-sized and one small, transferred responsibility to seven

intermediaries.  The remaining sites transferred responsibility to only

two or three intermediaries.

The larger sites that transferred responsibility for primary employment services

to multiple intermediaries also transferred responsibility for secondary

services to multiple intermediaries, although they tended to transfer

responsibility for these more specialized services to a larger number of

intermediaries.  The two largest sites, San Diego and Cleveland, transferred

responsibility for secondary employment services to 19 and 24 intermediaries,

respectively.  Intermediaries that provide secondary services often

have more flexibility to define the services they will provide than

intermediaries that provide primary employment services.  Consequently,

in contrast to primary employment services, the secondary services provided

by multiple intermediaries are not necessarily part of a continuum of services

nor are they comparable to one another.

Creating "Managed Competition" Among Multiple Intermediaries

To compare the performance of difference types of intermediaries, San Diego

County officials decided to divide the county into six service delivery

areas.  Their plan was to have the County operate TANF employment programs

in two of the six regions and to attract non-profit and for-profit organizations

to operate the other four.  Intermediaries were permitted to bid to

operate all four districts, however, the County planned to award no more

than two districts to a single intermediary.  This restriction was made

to ensure continuing competition and to encourage a diversity of approaches

to providing employment services to TANF recipients.

Lockheed Martin and Maximus, both for-profit companies and Catholic Charities,

a non-profit, were selected to act as intermediaries in the four regions. 

(Lockheed Martin operates the TANF employment program in two of the

regions.)  Each of the intermediaries and the County are all subject

to the same performance outcome measures.  During an eight-month start-up

period, the intermediaries were paid on a cost-reimbursement basis; now,

they are reimbursed on a pay-for-performance basis.  Over time, the

County plans to use the information it collects on the intermediaries'

performance to determine whether one type of organization (i.e., for-profit,

non-profit or public) does a better job of placing TANF recipients in

employment.  If so, the County may decide to turn over full operation

of its TANF programs to that sector.

2.  In the urban areas, when responsibility for providing primary employment services was transferred to multiple intermediaries, each intermediary provided the same services to a portion of the TANF caseload.  However, in the rural sites, multiple intermediaries were more specialized, providing employment services to specific subgroups of the TANF caseload or a narrowly defined set of employment services to all TANF clients.

When the local sites transferred responsibility for providing employment

services to multiple intermediaries, they had to develop a strategy for

allocating TANF clients and/or responsibilities to individual

intermediaries.  In some sites, TANF clients are referred to intermediaries

based on where they live.  In others, they are referred through a

centralized referral process or based on specific criteria.  In some

sites, the decision regarding which intermediary a client should be referred

to is left up to individual welfare eligibility staff.  Given their

smaller caseload size and smaller number of intermediaries, the referral

process is usually far less complex in the rural sites than in the urban

sites.  The various strategies used to assign TANF clients to intermediaries

are discussed below.

Location.  In three of the 10 urban sites, TANF recipients

are referred to an intermediary based on where they live.  In San Diego,

the county is divided into six regions.  In four of the six regions,

an intermediary acts as the "gatekeeper" for all employment services. 

(The welfare office performs this function in the remaining regions.) 

The intermediary can choose to provide all services themselves, can subcontract

with other intermediaries to provide services or can refer clients to existing

services in the community (including those providing secondary services through

the WtW program).  Little Rock uses a more targeted neighborhood

approach.  When the system is fully operational, clients will be referred

to a "Family Development Center" in their neighborhood for employment

services.  TANF staff will be co-located in the centers to provide easy

access to all public benefits.  St. Paul and Cleveland are also in the

process of developing neighborhood-based service delivery models.

Centralized process.  In Cleveland and Hartford, clients

are referred to intermediaries through a centralized process.  In Cleveland,

the process is managed by welfare office staff while in Hartford it is managed

by the workforce development system.  This centralized referral process

is designed to ensure that all intermediaries receive equal consideration

when client referrals are made.

Staff discretion.  In St. Paul, welfare eligibility

staff have primary responsibility for deciding to which intermediary a TANF

client should be referred.  They make their decisions based on client

choice and their knowledge about the intermediary and how well they can meet

the clients' needs.

Functional specialization.  In the rural areas, sites

that use multiple intermediaries refer clients to intermediaries in a more

specialized manner.  New London, for example, uses one intermediary

to conduct assessments, a second intermediary to provide case management

and job search assistance, and a third intermediary to place TANF recipients

in employment.  This process makes the intermediaries more interdependent

than in most of the other sites, making communication that much more

critical.  In Olmsted, clients are referred to one of three intermediaries

based on their language needs or disability status.  Napa uses a one-stop

collaborative model of service delivery with various service components delivered

by members of the one-stop.

3.  Caseload size, the amount of responsibility transferred to intermediaries and the decision whether to use one or multiple intermediaries influence the number of TANF clients any one intermediary will serve and the kinds of organizations that will act as intermediaries.

The decisions the local sites made regarding how much responsibility to transfer

to intermediaries and whether to transfer this responsibility to one intermediary

or multiple intermediaries defines the scope and scale of services provided

by individual intermediaries.  These decisions, in turn, influence the

kind of organizations that act as intermediaries.  For-profit organizations

are most likely to act as intermediaries in the sites that require intermediaries

to provide a broad range of services and serve large numbers of clients. 

Sites that define the responsibility of intermediaries more narrowly or use

multiple intermediaries to provide a broader range of services make it possible

for a broader range of organizations to act as intermediaries.  The

use of intermediaries in San Diego and Cleveland illustrates how this plays

out in practice.

San Diego and Cleveland, with TANF caseloads of 38,000 and 33,000 respectively,

both allocate responsibility to multiple intermediaries.  To function

as an intermediary in San Diego an organization had to have the capacity

to provide comprehensive employment services for at least 1,000 TANF

recipients.  San Diego selected three intermediaries, two for-profit

and one non-profit to provide employment services in four of its six regions

(one for-profit provides services in two regions).  To function as an

intermediary in Cleveland an organization had to be able to provide job search

and placement assistance to an unspecified number of TANF clients. 

Among the nine intermediaries selected to provide primary employment services,

seven are non-profit and two are for-profit organizations.  These

intermediaries will provide employment services to as few as 25 and as many

as 700 TANF recipients.

On average, the TANF intermediaries included in this study expect to serve

370 TANF clients, but the range of clients served is wide, with the smallest

intermediary expecting to serve only 20 recipients and the largest expecting

to serve 4,000 (see Table II.3.)  On average, for-profit

organizations expect to serve the largest numbers of clients.  Forty

percent of the for-profit intermediaries in the study sites expect to serve

more than 500 clients, compared to only 10 percent of the non-profit

organizations.  Because they are more likely than other types of

organizations to serve large number of clients, for profits are projected

to serve 40 percent of the total TANF caseload in the study sites, even though

they account for only 15 percent of the intermediaries.

Table II.3
Number of TANF Clients To Be Served by
Various Categories of Intermediaries
(Primary and Secondary)

 

Minimum

Maximum

Average

Total

20

4,000

370

Location

  • Urban

  • Rural

20

40

4,000

900

390

270

Type of Organization

  • Non-Profit

  • For-Profit

  • Educational

  • Public/Quasi­Public

20

50

60

50

2,000

4,000

900

1490

240

985

200

475

Go to Contents

Reimbursing Intermediaries for the Services They Provide

In addition to making critical decisions about how much responsibility to

transfer to intermediaries and how to structure the delivery of services

at the local level, local welfare offices or their designee must also decide

how and how much to reimburse intermediaries for the services they

provide.  The most common payment structures are cost reimbursement

where organizations are paid for the costs they incur or pay-for-performance

where organizations are paid based on their accomplishments.  Key findings

regarding the use of different payment structures are summarized below.

1.  Most intermediaries are reimbursed for their services through a cost reimbursement rather than a pay-for-performance arrangement.  In an attempt to combine the benefits of these two payment systems, several of the sites have developed cost reimbursement payment systems that include performance bonuses or incentives.

The shift to a work-based assistance system and greater emphasis on program

outcomes has encouraged administrators of TANF employment programs to reconsider

how they should reimburse intermediaries for the services they provide. 

The experiences of the study sites suggests that while a number of localities

have shifted to performance-based payment arrangements, many still reimburse

intermediaries on a cost-reimbursement basis.  Some localities combine

the two, reimbursing the intermediary for part of their costs through a cost

reimbursement mechanism and the remainder through a performance incentive

structure (see Table II.4.)  Many of the local sites

that rely on cost-reimbursement payment mechanisms include performance criteria

in their cost reimbursement contracts and evaluate the success of their

intermediaries against these criteria.

Table II.4
Type of Payment Arrangements TANF Intermediaries

Site

Payment Arrangement

Arizona

Phoenix

Cost reimbursement with performance incentives

Yavapai County

na

Arkansas

Little Rock

Cost reimbursement

Jefferson County

Cost reimbursement

California

San Diego

Cost reimbursement; shifting to pay-for-performance

Napa County

Cost reimbursement

Connecticut

Hartford

Pay-for-performance; shifting to cost reimbursement

New London County

Cost reimbursement for case management and assessment

Pay-for-performance for job placement

Florida

Jacksonville

Pay-for-performance

Suwannee County

Cost reimbursement

Minnesota

St. Paul

Cost reimbursement

Olmsted County

Cost reimbursement

Nebraska

Omaha

Cost reimbursement with performance incentives

Scottsbluff County

Cost reimbursement with performance incentives

Ohio

Cleveland

Pay-for-performance (job search and placement)

Partial cost reimbursement; partial pay-for-performance (specialized)

Cost reimbursement (training)

Columbiana County

Pay-for-performance (job search and placement)

Cost reimbursement (training)

Texas

San Antonio

Cost reimbursement

Uvalde County

Cost reimbursement

Virginia

Richmond

Cost reimbursement

Wise County

na

Critics of pay-for-performance reimbursement mechanisms argue that this payment

structure encourages program operators to "cream," that is, to provide services

to job-seekers who are the most likely to succeed rather than to those most

in need of assistance.  Critics of cost-reimbursement payment systems

argue that program operators get paid even if the services they provide do

not produce results, wasting taxpayers' money and reducing incentives to

meet high performance standards.

It is too soon to know whether the way in which intermediaries are reimbursed

for their services or the amount they are paid influence program outcomes. 

Welfare offices or other relevant administrative entities that reimburse

intermediaries on a cost basis believe they can demand high levels of performance

from intermediaries as long as clear program goals are established and

performance is monitored on an ongoing basis.  Those that reimburse

intermediaries based on performance believe that pay-for-performance systems

play a critical role in emphasizing the importance of placing recipients

in jobs, not just engaging them in employment preparation activities. 

All agree that administering a pay-for-performance reimbursement system is

much more complicated than administering a cost-reimbursement system.

2.  The sites that reimburse intermediaries through a pay-for-performance system structure their reimbursements very differently, with some placing far greater emphasis on placement or retention than others.

The sites that have implemented pay-for-performance systems have structured

their payment mechanisms very differently.  The sites differ in the

points at which they paid intermediaries (e.g., enrollment, placement and/or

retention) and how they allocate the total payment among the various payment

points.  For example, Cleveland pays its intermediaries that provide

job search and job placement services at two points:  30-day job retention

(50 percent) and 90-day job retention (50 percent).  Hartford pays its

intermediaries that provide the same services at three points:  enrollment

(60 percent), placement (20 percent), and 90-day retention (20 percent). 

The First Coast Workforce Development Board (Jacksonville FL) also pays its

intermediary at three points, but concentrates more of its payment on job

placement:  enrollment (30 percent), placement (60 percent) and 90-day

job retention (10 percent).

Acknowledging that its specialized intermediaries who provide services to

hard-to-employ populations face different challenges and have different goals,

Cleveland uses a combined cost reimbursement and pay-for-performance system

to reimburse these intermediaries.  They receive 36 percent of their

contract in monthly installments to cover ongoing operating expenses; the

remaining 64 percent is paid based on performance.  To encourage longer-term

involvement with clients, intermediaries providing services to ex-offenders

or holding "managed care" contracts to provide services to recipients with

mental health, substance abuse or other chronic barriers to employment receive

40 percent of the pay-for-performance portion of their reimbursement 30 days

after placement, 30 percent 90 days after placement and 30 percent 180 days

after placement.  To encourage greater emphasis on helping recipients

sustain employment, the payment for intermediaries providing services to

intermittent workers is structured to provide less reimbursement for job

placement and more for job retention; 10 percent of the pay-for-performance

portion of their reimbursement is received 30 days after placement; 40 percent

90 days after placement and 50 percent 180 days after placement.

3.  Regardless of the way in which intermediaries are reimbursed for their services, there is wide variation in the amount intermediaries are paid for the services they provide.  This variation exists between the sites and between intermediaries within some of the sites.

The local sites have made different decisions about how much responsibility

to allocate to intermediaries.  They also have made different decisions

about how much to reimburse intermediaries for the services they provide,

resulting in considerable variation in the amount intermediaries are paid. 

In the eight study sites where we were able to obtain comparable reimbursement

data, intermediaries were paid as little as $355 and as much as $6250 per

recipient served.  (See Table II.5).  Some,

but not all, of this variation reflects differences in the services

intermediaries provide.  On average, intermediaries that provide only

job search and placement assistance are reimbursed $1,320 per person while

intermediaries that provide specialized employment services are reimbursed

an average of $2970 per person.

Table II.5
Reimbursement per Person for Employment Services Provided
by Primary and Secondary Intermediaries

Type of Site

Method of Reimbursement

Minimum

Maximum

Average

Four Urban sites with multiple intermediaries

Site #1 (Comprehensive Servicesa)

Site #2 (Job Search and Placement)

Site #3 (Comprehensive Services)

Site #4 (Job Search and Placement)

Cost

Performance

Cost

Performance

$1,900

1,100

935

580

$3,055

3,995

1,135

2,520

$2,360

2,130

1,045

2,090

Type of organizationb

Nonprofit

For-profit

Educational

Public

na

580

635

355

1,000

6,250

4,640

4,775

5,000

1,785

2,390

2,660

1,680

Type of Services Provided (TANF)b

Job search and placement

Comprehensive servicesa

Training

Specialized (Hard-to-Employ)

na

400

930

355

1,010

5,000

3,055

6,250

5,000

1,320

1,825

2,605

2,970

Welfare-to-Work

 

745

4,745

3,685

Notes:

a  Comprehensive service includes case management

and job search and placement assistance.

b  Based on data from eight sites: San Diego,

CA; Napa County, CA; Hartford, CT; St. Paul, MN; Olmsted, MN; Cleveland,

OH; Columbiana County, OH and Richmond VA.

Comparisons across four of the urban sites that used multiple intermediaries

to provide primary TANF employment services suggest that there is considerable

variation within and between the sites in how much intermediaries are reimbursed,

even when they provide similar

services.(1)  The average per-person

reimbursement across the four sites ranges from $1,045 to $2,360.  The

sites with the highest and lowest average reimbursement provide comprehensive

services  job search and placement assistance and case

management  to TANF clients, suggesting that differences in the

range of responsibility transferred to the intermediaries do not fully account

for the difference in the amount they are reimbursed for the services they

provide.  In three of the four sites, the minimum and maximum payment

amounts vary dramatically even though the intermediaries have responsibility

for providing the same services.  In one site, the highest-paid intermediary

is paid almost four times the lowest paid intermediary.  In sites where

payments are comparable across intermediaries, program administrators negotiate

a similar price with intermediaries regardless of how much they indicate

it will cost to provide services.  In sites where there is considerable

variation, program administrators accept the price set by intermediaries

in their response to the agency's request for bids to provide services.

Go to Contents


Footnotes

1.  The reimbursements in the sites that have

pay-for-performance arrangements in place are adjusted to reflect the

intermediaries placement and retention goals.  Thus, the actual

reimbursement paid per client is higher than what is reported here.


Where to?

Top of Page
Contents of This Section
Table of Contents of Report
Executive Summary
Introduction
Defining the Roles and Responsibilities of Intermediaries
Implementation of the Intermediary Function
Lessons Learned and Next Steps
Appendix A:  Site Descriptions
Appendix B:  Examples of Organizations Functioning as Intermediaries
Appendix C:  Number of Intermediaries by Type of Organization

Home Pages:
Human Services Policy (HSP)
Assistant Secretary for Planning and Evaluation (ASPE)
U.S. Department of Health and Human Services (HHS)

Last updated 06/02/00