Privatizing TANF services does not relieve welfare agencies of their responsibilities to taxpayers in addition to developing and implementing local policy, they continue to be accountable for offering high-quality and effective services, complying with program rules, and using public funds efficiently. Private contractors that provide services on behalf of a public agency must, therefore, be held to similar standards. Contracts that specify clearly providers expected performance are one important way to ensure this accountability. Monitoring contractors activities to make certain that they meet their obligations is equally important.
Independent auditors have highlighted deficiencies in the monitoring conducted by many public agencies. In a review of single audit reports, the GAO found significant problems with tracking of TANF fiscal and program activities in 15 states during 1999 and 2000 and noted potential problems in over a quarter of states (2002). State auditors in at least two study sites also exposed inadequacies in agencies monitoring of contractors. In Delaware, examiners found insufficient documentation to confirm some outcomes under a pay-for-performance contract (State of Delaware Office of Auditor of Accounts 2001). Wisconsin auditors discovered that contractors were billing for inappropriate costs (Wisconsin Legislative Audit Bureau 2001).
This chapter discusses strategies for and considerations involved in monitoring TANF contractors. Section A describes typical monitoring methods and outlines those used in the study sites. Section B addresses the division of responsibilities among the public and private agencies and other organizations involved in monitoring. The actions agencies take to correct identified problems are described in Section C. Section D examines the burdens monitoring places on both agencies and contractors.
Types and Methods of Monitoring
Public welfare agencies need to verify that contractors meet standards in three basic areas: (1) the quality and effectiveness of services, (2) compliance with program policy, and (3) proper invoicing and financial controls. Monitoring each of these areas requires different methods including collecting performance data, reviewing case documents and sanction decisions, conducting customer satisfaction surveys, visiting contractor offices, examining supporting documentation for invoices, and performing financial audits. Table V.1 presents a summary of the methods commonly used to monitor contractors.
Monitoring Types, Purposes, And Methods
|Service quality and effectiveness
||To determine whether contractors fulfill program goals
||Automatic and manual collection of performance data
Review of case documents
Customer satisfaction surveys
Visits to contractor sites
|Compliance with program policies
||To determine whether contractors deliver services in accordance with policy
||Automatic collection of case processing data
Review of case documents
Review of sanctions
Visits to contractor sites
||To determine whether contractors bill for services accurately and manage funds adequately
||Review of supporting documentation for invoices
To some extent, the monitoring methods a public agency uses depend on the types of contracts it has with service providers. Public agencies using pure pay-for-performance contracts must give more attention to the documentation of performance outcomes (as they directly affect payment), while those relying on cost-reimbursement contracts must put more emphasis on verifying that contractors are spending funds properly. Agencies in the study sites make use of all three types of monitoring described here.
Who Performs Monitoring?
Public agencies do not have sole responsibility for monitoring contractors. Other organizations take part through formal relationships with the agency or on their own initiative. These include the contractors themselves, professional auditors, and advocates for public assistance recipients.
Using Monitoring to Improve Services
Monitoring has the greatest value when public agencies and other organizations not only gather and verify information on contractor services but use it to facilitate improvements. This is a two-part process, incorporating (1) reporting the information collected through monitoring and (2) working with contractors to address deficiencies.
Balancing the Benefit and Burden of Monitoring
Public agencies must weigh the benefits of monitoring against its costs. Consistent and thorough monitoring is vital in privatized welfare programs, but it requires considerable resources. In study sites with particularly exhaustive monitoring, public and private staff devote much time to gathering and reporting information. Employees of contractors in San Diego county, for example, stated that they spend considerable time on paperwork and data entry related to the countys monitoring requirements. Monitoring also involves specialized expertise. This expertise can be obtained by training internal staff or hiring outside experts, but both alternatives are likely to be time-consuming or expensive.