by Kate Childs-Graham | July 30, 2012
In 2006, corporate-backed politicians within Indiana’s Family and Social Services Administration (FSSA) pushed through plans to privatize the state’s welfare system. Mitch Roob, then-FSSA secretary, took the money and ran, awarding a $1.6 billion contract to IBM without conducting a cost-benefit analysis. The reason soon became apparent.
But, like so many stories of privatization, Roob forged ahead because of his relationship with the private sector, not the needs of the public sector. Affiliated Computer Systems, Roob’s new employer, stood to gain the most from the contract while the state’s most vulnerable citizens lost the most. In the process, more than 1500 caseworkers lost their jobs as a result of the privatization efforts, all of them were state employees and many were AFSCME members.
The privatization of the welfare system was by all accounts a colossal failure. Replacing county caseworkers with an automated call-center created yet another obstacle for low-income families to receive services they desperately needed, and horror stories began to pile up. For instance, the new system was unable to process, in a timely manner, the applications for the Healthy Indiana Plan, which provides health coverage for low-income families with no insurance.
State officials asked IBM and ACS to fix the problems, but when ACS failed to deliver, Governor Daniels was finally forced to admit his failure and fire IBM in 2009.
This month, Judge David Dreyer of Marion Superior Court ruled on the case IBM brought against the state for breach of contract, saying, "Neither party deserves to win this case. This story represents a 'perfect storm' of misguided government policy and overzealous corporate ambition.”
Dreyer ordered the state to pay IBM additional $12 million for breach of contract, adding that “Indiana's taxpayers are left as apparent losers."
Governor Mitch Daniels has stated his intent to appeal the decision… all on the public’s dime.