Privatization in Practice: Case Studies of Contracting for TANF Case Management. Managing the Transition to Privatized Services

03/01/2003

In all the study sites, the transition to privatized services was accompanied by changes in the overall philosophy of the welfare programs, as it coincided with or closely followed the passage of welfare reform. Major changes occurred not only in service delivery, but also in the types of services provided.

In most sites, the transition to privatization led to some confusion among staff and clients and the typical hiccups that occur with any major change in program or service delivery. For example, advocacy groups in some sites claimed that clients were unsure of where to go for services. It is difficult, however, to ascertain how much of this was due to the policy changes resulting from welfare reform and how much was due to privatization.

The privatization of new services designed to augment the public agencys capacity typically went more smoothly than the privatization of functions that were previously performed by public agency staff. In Palm Beach County, for example, privatization of employment case management was less problematic than the later privatization of TANF eligibility determination. Typical difficulties included the need to get contractor staff up to speed quickly on program rules. Sites recommended a longer transition period to give public agency staff enough time to fully train contractor staff.

Despite public employees fears, large layoffs of public agency staff did not occur in any site. In Delaware and Hennepin County, this was largely because the functions performed by the public agency remained generally unchanged after privatization; only new functions were privatized. In San Diego, there were no layoffs because the county moved case workers affected by the privatization to positions in other parts of the county and some public case workers left voluntarily. In the other sites, public agency positions were eliminated  the Texas Department of Human Services eliminated about 25 staff positions in Lower Rio Grande Valley after restructuring its welfare program, and 100 county staff positions were eliminated in Milwaukee after March 1996. The elimination of these staff positions did not lead to large layoffs, however. This was partly because private agencies hired some public agency employees. In Palm Beach County, for example, ACS offered employment to all the countys eligibility workers at risk of losing their jobs. In addition, the public agencies provided other positions for staff in other parts of their agencies. They also refrained from hiring new workers, allowing their workforce to naturally fall as a result of staff quitting or retiring.

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