Privatization in Practice: Case Studies of Contracting for TANF Case Management. Selecting Sites

03/01/2003

The six sites were selected purposively for their potential to provide information about the challenges of privatizing TANF case management and the lessons learned from addressing those challenges. Sites were included in the study only if they contract out at least the following core case management services: assessments, development of an employment plan, referrals, and monitoring of client participation. Some states or localities with considerable experience in TANF privatization, such as New York City, were not included because they have not privatized all these specific case management services.

The sites were not selected to be representative of states and localities that have privatized TANF case management. In fact, the study sites over-represent sites that privatized early, privatized a substantial proportion of TANF case management, and have performance-based contracts.

Three main criteria were used in selecting the sites: (1) experience in contracting out TANF case management, (2) diversity in sites, and (3) other specific features of the sites that make them particularly informative to study.

To ensure that the case studies would be informative, all the study sites have a relatively long history of contracting out TANF case management, have experienced several procurement cycles, and/or have privatized all, or a substantial proportion of, TANF case management services. As shown in Table I.1, four study sites privatized just after welfare reform, and have now nearly five years of experience. Lower Rio Grande Valley privatized relatively late but has experienced three procurement rounds.

Very few states or localities privatize all TANF case management and processing functions, including eligibility determination. However, those sites that do are particularly informative because of the scope of their experience. Of the three sites known to contract out TANF eligibility determination  Maricopa County, Arizona; Palm Beach County, Florida; and Wisconsin  two were selected for study sites. Maricopa County was not selected because it is the focus of another in-depth study (Kornfeld 2002; Peck and Porcari 2002). TANF case management in the other four sites selected for this study is divided between the public and private agencies, with the private agencies conducting employment-related case management, including assessments, developing an employment plan, referrals, placement and retention support, and monitoring compliance with the employment plan. In San Diego County and Wisconsin, TANF case management was privatized in only certain geographic areas; a public agency conducted all TANF case management and processing functions in the other areas. In Hennepin County, TANF clients could choose between private, state, or county agencies for employment-related case management.

Table I.1.
Site Experiences with Privatization of TANF Case Management
Site Year Privatization Occurred Number of Procurements Types of Case Management and Processing Privatized(a)
Delaware 1997 3 Employment-related case management
Hennepin County 1997 2 Employment-related case management
Lower Rio Grande Valley 1999 3 Employment-related case management
Palm Beach County 1997 2 All, including TANF eligibility determination(b)
San Diego County(c) 1998 1 Employment-related case management
Wisconsin(c) 1997 3 All, including TANF eligibility determination
a More information on the types of case management privatized in each site is provided in Table II.1
b TANF eligibility determination was privatized in July 2001
c Privatization occurred in only some regions of San Diego County and Wisconsin

The sites were chosen so that they vary across four dimensions:

  1. Type of Public Agencies Responsible for TANF. Prior to welfare reform, welfare services were administered by the state or by counties, with state oversight. The shift to a work-oriented program prompted some states to move the administration of cash assistance to the workforce development system. The study sites include examples of state, county, and workforce development system administration of TANF. TANF is administered by the state in two study sites, by the county in two sites, and by local workforce development boards in the remaining two sites (Table I.2).
  2. Types of Contractors. Three types of contractors  for-profit organizations, local affiliates of national nonprofit organizations, and local nonprofit organizations  operate in the study sites (Table I.2). For-profit contractors are used in five of the six sites. Two nationally operated for-profit organizations  MAXIMUS and Affiliated Computer Services (ACS)  each provide TANF case management in three or four study sites. Faith-based organizations provide some TANF case management as prime contractors in Delaware and Hennepin County and as subcontractors in Wisconsin. They may be either local affiliates of national nonprofit organizations, such as Catholic Charities, or small community-based organizations.
  3. Types of Contracts. Contracts fall into four major types: cost-reimbursement, pure pay-for-performance, fixed price, and hybrid  a cost-reimbursement or fixed price contract with some payment based on performance. The study sites include examples of all four types (Table I.2).
  4. Region of Country and Urban/Rural Composition. The sites vary by region of the country: Delaware in the Northeast, Palm Beach County in the Southeast, Hennepin County and Wisconsin in the Midwest, Lower Rio Grande Valley in the Southwest, and San Diego County in the West. All the sites include urban areas. Three sites  Delaware, Lower Rio Grande Valley, and Wisconsin  include rural areas.

Special characteristics of the sites also contributed to their selection. For example, in San Diego County and Wisconsin, TANF case management is provided by private agencies in some areas and public agencies in others. In Hennepin County, clients are given a choice of case management providers.

Table I.2.
Variation Across Sites in TANF Administration, Contractor Type, and Contract Type(a)
Site Entity Responsible for TANF Administration Type of Contractors Type of Contracts
Delaware State For-profit (MAXIMUS)
Local affiliate of national nonprofit (Salvation Army) Local nonprofits
Community colleges
Pure pay-for-performance
Hennepin County County and City of Minneapolis Local affiliate of national nonprofit (Lutheran Social Services)
Local nonprofits
State agency
Cost-reimbursement
Lower Rio Grande Valley State, Local Workforce Development Boards Joint venture between a for-profit (ACS) and a regional nonprofit Hybrid of cost-reimbursement and pay-for-performance
Palm Beach County State, Local Workforce Development Boards For-profit (ACS) Two contracts, one pure pay-for-performance, the other fixed price
San Diego County County For-profits (ACS, MAXIMUS) Local affiliate of national nonprofit (Catholic Charities) Hybrid of fixed price and pay-for-performance
Wisconsin State For-profits (MAXIMUS, ACS) Local and regional nonprofits County agencies

Tribal agency

Hybrid of cost-reimbursement and pay-for-performance
ACS: Affiliated Computer Services
a More information on the contractor type by site is provided in Table II.4. More information on contract type by site is provided in Table IV.2.

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