Privatization in Practice: Case Studies of Contracting for TANF Case Management. Appendix A: Site Descriptions


State of Delaware

Date of Site Visit: March 12-15, 2002

Local Context

Delaware is home to 796,000 people, according to Census estimates from 2001. Most of the population--over 60 percent--lives in New Castle County, which includes the city of Wilmington. The state's other two counties, Kent and Sussex, are more rural. Relatively low rates of unemployment (4 percent in March 2002) and poverty (9 percent in 1999) reflect Delaware's strong economy, which is bolstered by the presence of commercial banks, pharmaceutical manufacturers, and business services providers. Average wages are higher in New Castle than in Kent and Sussex counties.

Welfare Administration and Key Policies

Delaware began reforming its welfare system in 1995, with substantial changes to policies and services made under a federal waiver of AFDC rules. The current TANF program, known as Delaware's A Better Chance (DABC), is administered directly by the state. Four state agencies collaborate in policy and program development: the Division of Social Services (DSS) in the Department of Health and Human Services, the Department of Labor (DOL), the Department of Economic Development, and the Department of Transportation. DOL manages the state's contracts with DABC employment service providers.

The current lifetime limit for DABC cash benefits is 36 months. Under Delaware's "work for your welfare" policy, DABC participants must meet a weekly requirement for work activity hours, based on the size of the cash grant and food stamp allotment. For every required work hour not completed, a participant's grant decreases by $6.15 (the state's minimum hourly wage).

TANF clients who are not exempt from work requirements are automatically referred to the Employment Connections program. This program uses a rapid-attachment model to move clients into unsubsidized employment or work activity assignments, and provides job retention support for 90 days. Once clients achieve 90 days of employment, they enroll in the Keep a Job program, which offers support for job retention and advancement for up to 12 months, even after leaving TANF.

TANF Caseload

Delaware's statewide caseload numbered 5,884 in March 2002. Work-mandatory cases, which are referred to contractors who provide employment services, make up about one third of the total caseload.

Case Management Service Delivery

DSS and contractors share case management duties for work-mandatory DABC clients. DSS workers conduct intake, determine eligibility and benefits for TANF, food stamps, and child care, and develop a contract for mutual responsibility with clients. Clients who are required to work are automatically referred to a contractor for the Employment Connections program. DSS workers monitor clients' compliance with DABC requirements related to family functioning--child immunizations, for example--and meet with clients periodically to re-certify eligibility. At any time, clients may contact DSS workers to address sanctions and eligibility for child care or other supportive services.

Contractors operate the Employment Connections and Keep a Job programs. Case workers in these programs offer more intensive case management than those under DSS. Their duties include performing assessments, developing employment plans, offering job search assistance, making service referrals to other agencies, and authorizing vouchers or other payments to help remove barriers to work. Their caseloads are smaller than those of DSS workers, and they tend to meet with clients more frequently, including at home and other places outside the office.

DSS and contractor staff members are not colocated. DSS staff work at agency offices throughout the state. The Employment Connections and Keep a Job programs operate from offices maintained by contractors.

Contracting History

DOL has contracted out employment programs since the 1980s but did not begin contracting for DABC employment services until 1997. The department has conducted three procurement rounds for DABC services: in 1997, 1999, and 2001.

Current Contractors

The state awards contracts for the Employment Connections and Keep a Job programs by county. MAXIMUS (a for-profit company) operates Employment Connections in New Castle County, and Delaware Technical and Community College (a public educational institution) operates the program in Kent and Sussex Counties. Three contractors run Keep a Job programs in New Castle County: MAXIMUS, the Salvation Army (a faith-based nonprofit social services agency), and the Ministry of Caring (a faith-based community organization). Children and Families First (a nonprofit social services agency) operates Keep a Job in Kent and Sussex counties. None of the contractors uses subcontractors for TANF case management.

The total value of Employment Connections and Keep A Job contracts is approximately $4.2 million for one year, including supportive service payments to participants.

Key Contract Characteristics

Employment Connections. Contracts are pure pay-for-performance. Employment Connections contractors earn per-client payments for each of three milestones. (Dollar amounts indicate range of payments across contractors. Payment amounts differ due to variation in contractor budgets.) The milestones include:

  • Enrollment ($394 to $454)
  • 30 days employment ($582 to $684)
  • 90 days employment ($887 to $1,146)

Bonus payments of up to seven percent of the contract value are available for each percentage point a contractor's performance is above the minimum standard for 90-day retention and below the maximum standard for part-time placements.

Keep a Job. Contractors earn per-client payments for up to five milestones:

  • 30 days employment ($265 to $489)
  • 90 days employment ($244 to $451)
  • 180 days employment ($509 to $940)
  • 270 days employment ($509 to $940)
  • 360 days employment ($522 to $762)

Bonus payments of up to 7 percent of the contract value are available for each percentage point a contractor's performance is above a minimum standard for 180 days of employment and below a maximum standard for part-time employment.

Contracts for both programs cover one year, with the option to renew for an additional year.

Key Performance Measures

Employment Connections contracts specify five performance targets (some differ by county in order to accommodate disparities in local caseload characteristics and economic conditions):

  • Referred clients who enroll (72-79 percent)
  • Enrolled clients who are placed in jobs (65 percent)
  • Enrolled clients who are employed after 90 days (42-60 percent)
  • Employed clients who have full time jobs after 90 days (70 percent)
  • Clients who transition successfully to Keep a Job providers (50 percent)

Keep a Job contracts also include five performance targets:

  • Referred clients who enroll (80 percent)
  • Enrolled clients who maintain continuous employment for 90 days (92 percent)
  • Enrolled clients who maintain continuous employment for 180 days (77 percent)
  • Enrolled clients who maintain continuous employment for 12 months (55-59 percent)
  • Enrolled clients who maintain full-time continuous employment for the next 180 days (80 percent)

Hennepin County, Minnesota

Date of Site Visit: July 10-13, 2002

Local Context

Hennepin County, the home of Minneapolis and its suburbs, had a population of about 1,116,000 in 2000. The local economy is fairly strong, with a demand for professional and service sector employees. The unemployment rate was 4 percent in August 2002, according to the Bureau of Labor Statistics. The poverty rate was 8 percent in 1999. The county's population is 80 percent white, but a substantial proportion--about 10 percent--is foreign-born. Southeast Asians and Somalis are two of the major immigrant groups.

Welfare Administration and Key Policies

Minnesota's new welfare system, the Minnesota Family Investment Program (MFIP), began as a pilot program in three counties, including Hennepin, in 1994, and expanded statewide in 1998. It is state-supervised and county-administered, with counties deciding whether to privatize employment services.

Hennepin County and the city of Minneapolis administer MFIP in partnership, with two county agencies--the Department of Training and Employment Assistance (TEA) and the Economic Assistance Department (EAD)--and the Minneapolis Employment and Training Program (METP) sharing responsibility. EAD determines clients' eligibility, while TEA and METP oversee employment-related assistance. At the time of the site visit, 21 Employment Service Providers (ESPs) provided employment and training services and employment case management. Twenty of the ESPs held contracts with TEA; 19 were non-profit organizations and one was a state agency. In addition, one county agency served as an ESP. MFIP clients are classified as either Tier I (in need of traditional job readiness assistance) or Tier II (on assistance for more than 18 months, not in school and unemployed, and in need of more intensive services). ESPs may serve only Tier I or both Tier I and II clients. They may also differ in the types of services they provide, such as bilingual case management or special training programs.

MFIP combines cash assistance, food stamps, and the state's Family General Assistance program into a single program with one monthly payment split between cash assistance and food assistance. Although not strictly a work-first program, MFIP emphasizes quick entry into the workforce through such activities as career workshops and job search classes. The program is generous relative to programs in other states, providing up to $532 per month in cash assistance for a family of three. Clients do not become ineligible for cash benefits until their total income reaches 120 percent of the poverty level. Applicants may also receive emergency diversion payments instead of enrolling in MFIP.

The current lifetime limit for cash benefits is 60 months, but clients can "stop the clock" by discontinuing the cash assistance portion of their grants while still receiving food assistance. Single parents with children age six or older must complete 30 to 35 hours per week of work activities; those with children under six must complete 20 to 25 hours per week. The County is required to offer participants a choice of at least two employment assistance providers.

TANF Caseload

There were about 8,200 TANF recipients subject to time limits in Hennepin County in February 2002, 75 percent of whom lived in Minneapolis.

Case Management Service Delivery

County EAD workers share case management responsibility with ESP job counselors, although the latter are considered the primary case workers. EAD intake workers collect information to determine eligibility and help clients apply for medical assistance. They provide clients with information about the types of ESPs and their services, after which clients select their top three choices among those with available slots. (More than half of the ESPs lacked available slots at the time of the site visit). If eligible for assistance, clients are assigned to an EAD financial worker who provides more detailed information about MFIP and the role of ESPs, and information on program requirements and available services.

After clients are assigned to one of their ESP choices, a job counselor contacts them to conduct orientation and assessment and develop a job search support plan. If clients cannot find work, they undergo a follow-up assessment and develop an employment plan. ESPs provide a range of training, employment, and support services, including subsidized employment and referrals to child care and transportation assistance. Job counselors may see clients daily until they find work.

Most EAD staff are located in downtown Minneapolis, while the 21 ESP agencies are located in 34 sites around Hennepin County. At five sites, however, EAD financial workers are colocated with ESP staff.

Contracting History

Hennepin County and Minneapolis conducted two rounds of procurement for employment services, one in 1997 and one in 2000. The county TEA holds the contracts, but it has released the RFP jointly with METP, and both entities administer and oversee the contracts.

Current Contractors

The 21 current service providers include 19 nonprofits--both local organizations and affiliates of national organizations--one state agency, and one county agency. The nonprofits include faith-based organizations such as Lutheran Social Services. The ESPs also include coalitions of smaller organizations. All 21 providers serve Tier I clients, six service providers serve both Tier I and Tier II clients. Most ESPs do not use subcontractors.

The total value of ESP contracts in Hennepin County is $14,422,050 for the 2002-2003 program year.

Key Contract Characteristics

The agency uses cost-reimbursement contracts, with caps. ESPs are assigned a certain number of slots and receive a maximum of $1,825 for each enrolled Tier I client or $4,000 for each Tier II client. Contracts are the same among the ESPs, except for the number of allocated slots and the budget. They are issued for a one-year term with up to two year-long extensions.

Key Performance Measures

Current performance measures and targets include:

  • Referred clients enrolled or sanctioned within 90 days of referral (100 percent)
  • Clients meeting the federal participation requirement of 30 hours work activities per week (58 percent)
  • Clients employed plus clients who leave MFIP due to unsubsidized employment (rises from 48 percent for the first quarter to 66 percent for the fourth quarter)
  • Average wage of employed clients ($8.50 per hour)
  • Average wage of clients who leave MFIP due to unsubsidized employment ($9.75 per hour)
  • Clients employed 90 days (80 percent)
  • Clients employed 180 days (70 percent)

Performance is reported and monitored quarterly.

Lower Rio Grande Valley Workforce Development Board, Texas

Date of Site Visit: April 8-11, 2002

Local Context

At the time of the site visit, the Lower Rio Grande Valley Workforce Development region covered two Texas counties, Hidalgo and Willacy, located near the United States-Mexico border (in September 2002, Starr County was added). Nearly 90 percent of the area's 590,000 inhabitants are Hispanic. Hidalgo County includes several medium-sized cities--McAllen, Edinburg, and Mission--while Willacy is entirely rural. Poverty and unemployment rates are very high in the two counties. More than one-third of the population is poor, according to 1999 estimates, and the unemployment rate was about 14В percent in April 2002. Cross-border trade helps fuel the local economy, which centers on the health and social services, retail, and agriculture sectors. State and local government agencies are major employers; the stability and relatively high pay of these jobs makes them especially attractive to local residents.

Welfare Administration and Key Policies

The Texas Department of Human Services (TDHS) and the Texas Workforce Commission (TWC) jointly administer the state's TANF program, Texas Works. TDHS has responsibility for determining program eligibility and disbursing cash, food stamps, and Medicaid benefits. TWC and 28 regional workforce development boards, such as Lower Rio Grande Valley, run the employment and training component of Texas Works, called Choices, and child care programs for TANF recipients. The local workforce development boards maintain substantial control over Choices but contract out management of the one-stop service delivery centers. The Lower Rio Grande Valley Workforce Development Board (also known as Workforce Solutions) manages the contracts for one-stops in Hidalgo and Willacy counties.

Texas has a tiered system of time limits for Choices. Limits range from 12 to 24 to 36 months, depending on clients' education and work experience. Once they reach the deadlines, adults may not reapply for benefits for five years (although their children may continue to receive benefits). The lifetime limit for receipt of cash assistance is five years. Texas is considered a "low-benefit" state; the maximum monthly TANF benefit for a family of three ($201) was less than half the national median in 2000.

Texas Works/Choices follows a work-first philosophy. As a condition of assistance, single parents must participate in 30 hours of work activities per week, and two-parent families must participate in 35 hours (55 hours if they receive child care subsidies). Before their eligibility is certified, applicants must attend an orientation at a local one-stop center to learn of available job-search resources.

TANF Caseload

The TANF caseload in the Lower Rio Grande Valley Workforce Development Area was approximately 13,600 in April 2002. Choices cases, wherein work was mandatory, represented about one quarter of this total.

Case Management Service Delivery

Clients begin the TANF application process at a TDHS office, where they provide information necessary to determine program eligibility and prepare a personal responsibility agreement with an advisor. Clients required to work are referred to a contractor-run one-stop center for an orientation. Each client then meets with a Choices case manager--a contractor employee--to develop an individual employment plan.

During assessments, Choices case managers identify clients' skills and help establish short- and long-term goals. They then assign clients to job search and readiness activities, generally limited to six weeks per year. Clients who do not find employment or have low skills may be referred to work experience positions, subsidized employment, or other temporary activities.

Choices case managers are required to meet weekly with clients during the job search process. Once clients enter employment or training, case managers maintain regular contact to provide follow-up assistance such as support services and referrals. TDHS staff generally see clients much less frequently (every three to six months) to re-certify benefits or assist clients who have received sanction notices.

TDHS staff and contractor employees are not colocated. TDHS staff work at agency offices; contractor employees work in one of the area's seven one-stop centers. In one location, the TDHS office and one-stop center are next door to each other.

Contracting History

The Lower Rio Grande Valley Workforce Development Board conducted its first procurement for one-stop management in November 1999. A second procurement occurred in August 2000 after the board determined it needed to expand the scope of services covered by the contract. Partly because of contention over the previous selection process, the board carried out a third procurement in December 2001.

Current Contractors

The Valley Partnership, a joint venture between Affiliated Computer Services, Inc. (a national for-profit) and the Texas Migrant Council (a regional nonprofit), holds a contract that extends through August 2002. The contract covers the management and services of seven one stop-centers, including responsibility for Choices, Food Stamp Employment and Training, Welfare-to-Work, and Workforce Investment Act programs for adults and youth.

The contract value is $30,676,277 for eight months, including funds for client training and supportive services (which account for about three-quarters of the total amount). The total operational budget is about $7 million; operational costs for Choices alone are about $1.8 million.

Key Contract Characteristics

The workforce board awarded Valley Partnership a cost-reimbursement contract with performance-based profit and incentive payments. The contractor earns a profit payment upon meeting performance standards set by the state. Bonus payments of one and two percent are available for meeting performance targets that exceed the state standards.

Performance Measures

The contract includes five Choices performance measures established by the Texas Workforce Commission:

  • Eligible clients served (39 percent)
  • Clients who enter employment (52 percent)
  • Two-parent families who meet participation requirements (24.25 percent)
  • Single-parent families who meet participation requirements (24.25 percent)
  • Number of cases that meet participation requirements (1,314)

The Lower Rio Grande Valley workforce board apportioned profit and bonus payments according to the emphasis it believed the Valley Partnership should place on each measure. The contractor can earn 10 percent of each payment for meeting the target for eligible clients served, 40 percent for the client employment target, 25 percent for the two-parent participation target, and 25 percent for the single-parent participation target. The contract does not allocate any payment for achieving the target number of cases that meet participation requirements.

Palm Beach County Workforce Development Board, Florida

Date of Site Visit: May 14-16, 2002

Local Context

Palm Beach County covers 2,000 square miles from the eastern coast to the interior of Florida. About 1.2 million people live in the county, most in the coastal areas. Although the majority of residents are white, 14 percent are African-American and 12 percent Latino. The county includes some of the wealthiest cities in Florida, and its median family income is higher than that of the state as a whole. The cost of living is also well above average. Major industries include business services, health care, and tourism. About one in ten Palm Beach County residents lives in poverty; unemployment was just over 5 percent in May 2002.

Welfare Administration and Key Policies

Florida's Department of Children and Families (DCF) administers the TANF program, but responsibility for its employment component, the Welfare Transition Program (WTP), lies with the workforce development system. Workforce Florida, Inc. (a nonprofit corporation supervised by the state's Agency for Workforce Innovation) establishes statewide policy for the WTP. Twenty-four regional workforce development boards implement the program locally.

Florida has a lifetime limit of 48 months on cash assistance, with a maximum for most recipients of 24 months in any 60-month period. Clients in the WTP must participate in work activities between 30 and 40 hours per week.

In most areas of the state, DCF holds responsibility for determining TANF eligibility. It began contracting out this task in Palm Beach County under a pilot project in 2001. At the time of the site visit, DCF continued to determine eligibility for Medicaid and food stamps.

TANF Caseload

A total of 2,605 TANF recipients lived in Palm Beach County in May 2002, of whom 917 were WTP participants.

Case Management Service Delivery

Clients apply for assistance in person at one of the county's five one-stop centers, which are staffed by contractor employees. Contractor career counselors at the centers determine eligibility for cash assistance and collect information necessary for DCF staff to establish Medicaid and food stamp eligibility. Counselors also explain the WTP to clients, who must find employment and develop an Individual Responsibility Plan specifying the steps they will take to become self-sufficient. After this meeting, clients attend a face-to-face "mini interview" with DCF staff members, who complete and verify information needed for food stamps and Medicaid applications.

After their applications are approved, clients attend an orientation and meet with WTP Account Executives, who review work histories and initial assessments, explore job interests, discuss budgets, and make referrals to employment and training activities. WTP Account Executives provide ongoing case management, supervising job search activities and facilitating access to support services. When necessary, they will recommend sanctions, which are imposed by career counselors.

DCF staff members continue to administer food stamp and Medicaid benefits, re-determining eligibility periodically and changing amounts when necessary. When clients have questions about the programs, the contractor refers them to DCF.

Contracting History

The Palm Beach County Workforce Development Board became operational in 1996 and awarded its first contract for direct services provision in 1997 to Lockheed Martin IMS, now Affiliated Computer Services (ACS). In a subsequent procurement, the board expanded the scope of its RFP to include management of one-stop centers. Lockheed Martin IMS won this contract in 2000. In 2001, the Workforce Development Board, under a contract with the Department of Children and Families, assumed responsibility for TANF eligibility determination. The board then subcontracted this function out to Lockheed Martin IMS.

Current Contractor

ACS (a national for-profit) holds a contract for one-stop center operation and another for TANF eligibility determination. ACS subcontracts to Gulfstream Goodwill Industries (the local affiliate of a national nonprofit) to conduct client assessments and the Center for Information and Crisis Services (a community-based organization) to provide emergency assistance to clients.

Key Contract Characteristics

Payment structures in the two contracts differ: the one-stop operation contract is pure pay-for-performance, while the TANF eligibility determination contract is fixed price.

The total value of the one-stop operation contract, which includes the WTP and other programs, is $6.4 million over one year. Maximum payment for the WTP is $3.4 million. The one-year TANF eligibility determination contract is worth an additional $727,124.

The contract for one-stop operation indicates per-client pay points for each program offered at the centers. Six targets and payment amounts are specified for the WTP:

  • Completion of an individual service strategy, assessment, and countable work activity (825 clients at $1,100 each)
  • Employment (775 clients at $1,400 each)
  • 90-day job retention (430 clients at $1,500 each)
  • 180-day job retention (360 clients at $1,050 each)
  • 365-day job retention (255 clients at $350 each)
  • Completion of vocational education or training (300 clients at $200 each)

In addition, the contract includes per-client bonuses for:

  • $350 for each placement that meets or exceeds $7.15 per hour, based on 35 hours per week
  • $400 for each placement above 200 percent of the poverty level
  • $300 per client who completes a specified job search curriculum and creates a work readiness plan

Quarterly bonuses are also paid:

  • $7,500 for an employer satisfaction rate of 80 percent or above, or $12,000 for 90 percent or above
  • $7,500 for a jobseeker satisfaction rate of 80 percent or above, or $12,000 for 90 percent or above
  • High performance on state WTP standards for employment, wage rate, and welfare return rate: $2,500 per standard if ranking is in the top half of all workforce boards, $5,000 per standard if ranking is in the top quarter, or $7,000 per standard if ranking is first

Performance Measures

The workforce board evaluates performance related to one-stop center operation using the pay points and incentive provisions described above.

Performance measures for TANF eligibility determination focus on timeliness, accuracy, and customer satisfaction. They include:

  • Applications processed within 30 days (98 percent)
  • Cash assistance benefits determined accurately (93.9 percent)
  • Accurate referrals to WTP within one day (98 percent)
  • WTP sanctions executed within 10 calendar days (98 percent)
  • Client complaints addressed and replied to within 30 calendar days (100 percent)
  • Clients satisfied with services (90 percent)
  • Information gathered during prescreening delivered to DCF within three working days and on the same day as TANF cash benefits authorization (100 percent)

San Diego County, California

Date of Site Visit: May 28-31, 2002

Local Context

Covering an area about the size of Connecticut, San Diego County is the fourth largest county in the country. Its borders encompass a major city and rural areas, including desert and agricultural regions. The county is also home to several universities, a naval base, and well-known tourist attractions. Of its nearly 3 million inhabitants, more than 25 percent are Latino, due in part to immigration across the county's border with Mexico. Asians and African-Americans make up about 9 percent and 6 percent of the population, respectively.

While San Diego's economy at one time relied heavily on the military, it has diversified in recent years to include technology, biomedicine, tourism, and international trade. For this reason, the area has weathered economic fluctuations well, and demand for workers remains high. (The local unemployment rate was 4 percent in May 2002, well below the statewide average of 6 percent.) The county's poverty rate, 12 percent in 1999, is below the statewide figure but higher than the national average, and low-income families face challenges such as insufficient affordable housing and a high cost of living.

Welfare Administration and Key Policies

California established its TANF program in August 1997, later than many other states. The program, known as California Work Opportunity and Responsibility to Kids (CalWORKs), is state-supervised and county-administered. The state established a basic service model and sets eligibility and benefit policies, but counties retain control over employment service delivery, including the decision to contract this out.

California's lifetime limit for cash assistance is 60 months. However, unless they meet exemption criteria, clients must work in order to receive benefits after reaching an interim time limit of 18 or 24 months, depending on when they began receiving assistance. Single parents are required to participate in program activities for 32 hours per week, and adults in two-parent families must meet a combined 35-hour work requirement per week. (Counties have some flexibility in establishing participation requirements.)

In San Diego County, the Health and Human Services Agency (HHSA) has responsibility for establishing CalWORKs policy and implementing the program. The agency runs a number of other initiatives, working with a budget of about $1.6 billion and a staff of 6,000. As part of its administrative strategy, HHSA divides the county into six geographic regions, each of which operates with some independence.

The county awarded contracts for CalWORKs case management by region--privatizing employment services in four regions and reserving two for HHSA. Its original contracting plan divided the four privatized regions equally between for-profit and nonprofit organizations, but during the selection process, three regions were awarded to for-profit organizations and one to a nonprofit organization. Using its mix of public, for-profit, and nonprofit service providers, the county intends to compare the effectiveness of each type over time. The RAND Corporation is conducting an evaluation for this purpose.

TANF Caseload

San Diego County's CalWORKs caseload was just over 27,000 in May 2002, according to state reports. Child-only cases accounted for over one third of this total. About 6,800 cases were work-mandatory.

Case Management Service Delivery

When applying for assistance, clients make initial contact with county employees. An intake and assessment worker at one of 11 family resource centers (or other community locations such as public health clinics) screens applicants for eligibility and possible diversion, if appropriate. Clients who continue the application process then complete a standardized personal responsibility agreement. The intake worker determines initial eligibility for CalWORKs and other programs. Eligible clients' cases are then transferred to county eligibility technicians for ongoing maintenance.

New or returning CalWORKs participants are automatically referred to the employment case management provider in their region--which may be a contractor or the county. Providers use letters and other outreach methods to notify clients about orientation sessions. Once they have completed orientation, clients meet with employment case managers (ECMs) who continue the assessment process and help clients access child care assistance and complete welfare-to-work plans specifying the activities they will undertake. The case manager also determines whether a client must work immediately or is eligible to participate in full-time education.

Most clients participate in a four-week job club. Those who do not find employment within this period undertake an in-depth assessment and may be referred to alternate activities, such as training, mental health services, substance abuse treatment, or domestic violence counseling. Once clients achieve employment, they continue to meet regularly with ECMs for supportive services. They meet directly with eligibility technicians less frequently, mainly to confirm qualifications for continued program participation.

When employment case managers feel a sanction for nonparticipation is necessary, they must forward their recommendation to a central county worker for approval. This ensures that requests from different providers are evaluated according to consistent standards. Eligibility technicians implement those sanctions deemed appropriate.

Eligibility technicians and employment case managers are not always colocated. In regions where the county provides employment services, employment and eligibility staff members generally work in the same facilities. County and contractor staff members share a building in one privatized region, but in the other three, colocation occurs only intermittently--when a county or contractor employee is out-stationed--or not at all.

Contracting History

The county conducted one procurement for employment case management providers in the spring of 1998. Contracts awarded in that competition have been renewed several times; those in effect at the time of the site visit are set to expire in June 2003.

Current Contractors

Three contractors provide employment case management in San Diego County: Affiliated Computer Services (ACS) in the East and North Inland regions, Catholic Charities in the North Central region, and MAXIMUS in the South region.

Key Contract Characteristics

The contract has changed in structure twice since it was signed. During the first 11 months of the contract period, the county paid contractors on a cost-reimbursement basis. Contracts transitioned to a pure pay-for-performance structure in August 1999. Contracts were revised again in January 2001 to include a fixed "core payment," with the remaining payment tied to performance.

The "core payment" equals 15 to 25 percent of contractors' proposed budgets. Each contractor chose the percentage it would receive as a core payment, within the range established by the county.

Under the revised payment structure, contractors' earnings are linked to their performance on three measures: the share of participants who (1) find employment, (2) retain jobs for 180 days, and (3) exit assistance due to employment. Targets are set for each performance measure. The payment a contractor receives is determined by the proportion of each target that the contractor actually achieves. This proportion is multiplied by the maximum monthly payment set for each performance measure. A contractor that achieves half of the employment target, for example, receives half of the maximum payment for that measure. At the time of the site visit, contractors' maximum monthly payments for each performance measure were between $26,074 and $73,119.

Contracts also provide for incentive payments, awarded twice a year. Contractors earn the incentives by exceeding the three performance targets. The size of the incentive payment depends on the amount that a contractor's overall performance during the previous six months exceeds the targets.

Performance Measures

The county monitors contractor performance on 12 measures. The current measures and their targets (in parentheses) are:

  • Clients who complete appraisals (85 percent)
  • Clients who complete an assessment (90 percent of those who complete appraisals)
  • Clients who sign a welfare to work plan (71 percent of those who complete assessments)
  • Clients who engage in job search activities (85 percent of those referred to job search)
  • One-parent assistance units who meet participation requirement of 32 hours per week (60 percent)
  • Two-parent assistance units who meet participation requirement of 35 hours per week (75 percent)
  • Engagement in employment (goal changes quarterly, rising from 44 to 50 percent)
  • Clients entering employment who attain 30 days job retention (70 percent)
  • Clients entering employment who attain 90 days job retention (65 percent)
  • Clients who attain 180 days employment (1.5 percent of all clients)
  • Annual increase in average hourly wage of employed clients (2 percent)
  • Monthly exits from cash assistance due to employment (3.5 percent of active participants)

State of Wisconsin

Date of Site Visit: May 28-31, 2002

Local Context

The state of Wisconsin has a population of about 5.4 million, 932,000 of whom live in Milwaukee County, according to 2001 Census estimates. The state is a mix of urban, suburban, and rural areas. The county is more ethnically diverse than the state as a whole: the former is about 66 percent white and 26 percent black, while the latter is about 89 percent white and 6 percent black. The service and manufacturing sectors are the predominant employers in the county. In August 2002, the unemployment rate in the Milwaukee area was about 6 percent, according to the Bureau of Labor Statistics. The 1999 poverty rate was 9 percent in the state and 15 percent in Milwaukee County.

Welfare Administration and Key Policies

Wisconsin has been a leader in welfare reform efforts. The state began welfare reform planning in 1993 and in 1997 replaced AFDC with Wisconsin Works (W-2), a work-oriented program. The Division of Workforce Solutions (DWS) within the state Department of Workforce Development (DWD) administers W-2 through contracts with counties and private agencies. These agencies conduct TANF eligibility determination and other case management functions. The state Department of Health and Family Services (DHFS) determines eligibility for food stamps and Medicaid. W-2 is administered in 79 regions, including six regions within the county of Milwaukee.

The W-2 program consists of four work placement tiers leading to permanent unsubsidized employment: Transitional Jobs (W-2T), Community Service Jobs (CSJ), Trial Jobs, and Unsubsidized Employment. Clients in all tiers receive case management services but only those in transitional and community service jobs may receive cash grants. The state has placed a two-year time limit on transitional and community service job placements, and a five-year lifetime limit on cash assistance. Clients may request an unlimited number of 3 to 6 month extensions. They may be sanctioned $5.15 per hour of participation they miss without "good cause"; their W-2 case managers determine when sanctions are warranted.

TANF Caseload

State caseloads decreased by 84 percent between 1993 and 2000, one of the greatest declines in the nation. Since March 2001, however, caseloads have increased. Between March 2001 and March 2002, caseloads increased by 13 percent from about 11,000 to 12,500. About 76 percent of the cases in March 2002 were in Milwaukee County.

Case Management Service Delivery

W-2 services are provided at job centers operated in collaboration with other agencies administering employment and training programs and related services.

There is some variation in case flow by contractor but it generally follows the same steps. Applicants first see a receptionist at the W-2 agency who refers them to a Resource Specialist. These staff provide information about W-2 and other available programs and resources to which appropriate applicants may be "diverted." If applicants remain interested in W-2 and appear to be eligible, they are referred to a Financial and Employment Planner (FEP).

FEPs meet with clients within five days of application, and conduct intake interviews that include assessments of their education, work experience, personal circumstances, housing, and other possible barriers to employment, as well as verification of their eligibility. FEPs determine the appropriate tier for the client and develop her employment plans. At intake, clients are also referred to a county Economic Support Specialist (ESS), who assists with applications for food stamps, Medicaid, and child care subsidies.

FEPs meet with clients once a month, or more frequently if they face significant barriers to employment or are approaching their time limit. FEPs are responsible for monitoring clients' progress, referring them to services, and helping them resolve work barriers. They also monitor clients' program participation and determine sanctions. W-2 agencies subcontract many functions, including, in some cases, the sanction process.

In the six Milwaukee regions, FEPs are contractor staff, and ESSs are county employees. FEP and ESS staff are usually colocated at the job centers.

Contracting History

The state began contracting for administration of W-2 in September 1997 and has had three contracts, extending from 1997 through 1999, 2000 through 2001, and 2002 through 2003. From the start, the "right of first selection"--essentially a sole source procurement process--was granted to counties that achieved certain performance levels, although not all have chosen to bid. W-2 program operations in 11 counties were competitively bid. The county of Milwaukee did not win the right of first selection in the original round of contracting and did not compete for the contract. In other regions of the state, county agencies have competed successfully against private organizations to run W-2.

Current Contractors

Across the state's 79 W-2 regions, programs are run by 64 entities, including 53 counties, one consortium of five counties, one tribal organization, six nonprofit organizations, and three for-profit companies. The for-profits are MAXIMUS, ACS, and the Kaiser Group. In Milwaukee County, MAXIMUS and the nonprofits UMOS, YW Works, and Opportunities Industrialization Center of Greater Milwaukee, Inc., (OIC) currently hold contracts.

Many of the state's W-2 contractors use subcontractors. According to one estimate, about 13 percent of contract expenditures were for subcontractors. In Milwaukee, all contract agencies use subcontractors for services such as assessments and home visits.

The value of W-2 contracts in Milwaukee is $188,624,098 for 2002-2003. This total includes cash assistance benefits paid to clients.

Key Contract Characteristics

W-2 operates under cost-reimbursement contracts with performance-based bonuses paid at the end of the two-year term. The agency provides contractors with advance payments to cover start-up costs.

Key Performance Measures

Contract performance measures determine bonuses and the right of first selection. The current contracts contain 13 required and three optional measures. Contractors must reach a base level in all 13 measures to achieve right of first selection. They receive restricted bonuses (which must be reinvested in purposes consistent with TANF) for reaching intermediate performance levels, and unrestricted bonuses for the highest performance levels. The optional measures may be substituted for unmet required standards. In the most recent contract, all but seven contractors reached the base level and most reached the highest level.

The required measures and base compliance levels are:

  • Clients served by the agency who enter employment (35 percent)
  • Employed clients who attain 30-day job retention (75 percent) and 180-day job retention (50 percent)
  • Clients engaged in appropriate activities for required number of hours (80 percent)
  • Clients without high school diplomas who are engaged in basic education activities (80 percent)
  • Clients who enter and complete an educational activity (35 percent)
  • Clients with earnings gains (50 percent with any monthly gain)
  • Average caseload size of no more than 55 cash cases and 125 total cases (meets requirement all eight quarters)
  • W-2 staff meeting training requirements (90 percent)
  • Clients who receive appropriate assessment (80 percent)
  • Extension requests processed in a timely manner (85 percent) and entered into data system (95 percent)
  • Customer satisfaction (average score of 6.5 on 10-point scale for 10 different items)
  • Financial management (must submit timely audit reports)
  • Contract compliance (must comply with contract and have no corrective action plans)

Optional measures include:

  • Subcontracts with faith-based organizations
  • Availability of a Supplemental Security Income advocate
  • Availability of health insurance benefits for employed clients

Seven measures that do not affect payments include:

  • Average wage at placement
  • Percentage of participants in W-2 components to address barriers to employment (e.g., mental health counseling)
  • Levels of work program participants in Children First, Welfare to Work, and Workforce Attachment and Advancement
  • Receipt of in-work supports, such as the Earned Income Tax Credit (EITC), child care subsidies, food stamps, medical assistance, and child support
  • Earnings measured using Unemployment Insurance data
  • Percentage of new W-2 participants receiving cash payments who previously received W-2 cash
  • Activities and employment of 18 and 19 year olds

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