Privatization of Welfare Services: A Review of the Literature. Child Support Enforcement

05/01/2002

A marked increase in privatization of child support enforcement has occurred over the past decade. While contracting for functions such as the collection of past-due support was frequent in the 1980s, states and localities have since expanded privatization to include tasks such as payment processing, paternity and order establishment, parent location, and customer service (GAO 1995). Moreover, some governments have opted to turn entire child support operations over to private contractors, who take responsibility for providing all program services. As of 1996, one or more fully privatized local offices existed in 15 states (GAO 1997a). Today, a single provider of full-service privatization, Policy Studies, Inc., operates such offices in 16 states.

Among the factors that have encouraged this movement towards privatization in child support enforcement are increased caseload size, new program mandates, and performance incentives implemented by the federal government. As child support agencies have become responsible for a growing number of clients, some have turned to private contractors to address the excess workload without adding to the government payroll (GAO 1997a). In addition, PRWORA has placed new requirements on state and local child support agencies, including the creation of technology-intensive systems to centralize state case registries and implement enforcement techniques, such as automatic income withholding. To fulfill these obligations, many government agencies have tapped the expertise of private-sector organizations. Finally, federal regulations for child support now include specific incentives, in the form of increased funding, for states to improve the efficacy and cost-efficiency of their child support enforcement STYLE="font-size: 8pt">

systems. Private contractors, who can sometimes quickly implement strategies for program improvement, offer state and local governments one possible means of accomplishing these goals.

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