Privatization in Practice: Case Studies of Contracting for TANF Case Management

The privatization of welfare services has increased significantly and expanded into new services since passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) gave states additional flexibility to design and operate their Temporary Assistance for Needy Families (TANF) programs. Despite its increasing popularity, privatizing welfare services poses significant challenges to the state and local government agencies that are responsible for contracting out. This project describes the key decisions and activities undertaken in privatizing TANF case management and documents the lessons learned in six study sites from their experiences in privatizing TANF case management. Key topics include (1) the why, what, and to whom of privatizing TANF case management; (2) ensuring a fair, effective, and competitive procurement process; (3) designing contract performance measures and payment structures; (4) monitoring TANF contractors to ensure accountability; (5) addressing the challenges of service provision under privatization; and (6) some key lessons learned by public welfare agencies as they took on new responsibilities in privatizing TANF case management. Study sites contracted with a variety of organizations, including both for-profits and non-profits (including faith-based organizations), and used a variety of contract types, including pure pay-for-performance, cost-reimbursement, fixed price, and hybrid contracts.