Issues / Legislation » Privatization / Outsourcing

Child Welfare And Privatization: Trends And Considerations

Child welfare covers a spectrum of services including the identification of neglect and abuse, prevention of neglect and abuse, removal of children suspected to have been abused or neglected from their homes, family preservation and reunification, foster care, independent living programs for children aging out of foster care, termination of parental rights, and adoption.

Historically, states have always contracted out some of these services to non-profit agencies.

A new trend for child welfare service provision is the "managing" of child welfare services by public and private agencies and/or the "contracting out" of entire segments of child welfare to one vendor. A majority of states are either planning or currently implementing one or more initiatives that include privatization of certain management functions or the use of managed care approaches to the management, financing/contracting or delivery of some or all child welfare services. There is wide diversity among states demonstrating that there is no single, universally accepted managed care or privatization model.

Service areas covered by the current or proposed initiatives vary, but most include all forms of out of home care, including kinship care. Many states are looking to reduce the costs of deep-end services (i.e., services for children with very severe needs). Child protective services investigations continue to be carved out and retained by the state or county. And, a very few plans call for the integration of mental health services for children and their families.

There is great variability in the scope of initiatives and timetables for implementation of managed care or other privatization models. Kansas, for example, privatized the management and service delivery of all child welfare services (except for child protective services) with a timetable for implementation of 90 days. Other states, such as Florida, are moving more deliberately and using pilot programs to test various changes before moving to a statewide system.

More and more states are using Title IV-E waivers to give the state agency the flexibility to use federal dollars to develop new programs and reduce the rate of growth in deep end services. Ohio is launching ProtectOhio, a five year waiver demonstration project. Federal and state foster care funds will be combined with county funds and participating counties will receive a set amount per client or "capitated rate" each month. Participating counties may serve as the managed care entity or contract out, sharing risks with contract agencies.

Issues To Consider If Your Child Welfare Agency Is Moving Toward Privatization And/Or Managed Care


  • Clarify why the child welfare agency is considering privatization of traditionally public functions. Hold the agency accountable for clearly articulating these reasons.

  • Insist that providers under managed care and/or privatization contracts are responsible for meeting defined goals. Contract negotiations should hinge on the providers’ past and current performance in achieving positive outcomes for children and families.

  • Define the interface between the public and private agencies for those children in state custody. If there is no reduction in responsibilities to the custodial agency in such areas as third party reviews, judicial reviews, and case management, it will be difficult to recognize a more efficient delivery system in the private sector.

  • Address safety issues if the private sector will be delivering family preservation, in-home services and foster care decisions related to the return home. In public systems, decisions which involve safety often involve input from the child protective services ("CPS") staff. As CPS remains public, what is the most expeditious way of ensuring safety in ongoing casework decisions made in the private sector?

  • Consider the impact of a redefined role for the public agency under managed care and the need for different skills than those currently desired for casework practice. If oversight, quality assurance and program analysis are the functions associated with the public agency, will adequate training of staff occur to ensure competency in the performance of these functions?

  • Take into consideration staff morale during any transition process. Staff should be brought into the process at the outset and informed how their positions and functions will be affected under privatization or managed care.

The Impact Of Contracting Out On Children, Families And Services

Although there has been inadequate performance and cost measurements to effectively measure outcomes for children and families receiving services in the public versus the private human services’ sectors, state studies, testimonies by public officials and advocates, and anecdotal evidence reveal the following impacts.


  1. Private agencies will reduce services and/or cut corners on service quality by hiring inexperienced, transient personnel at low wages, and offer part-time or temporary jobs with no benefits. These actions can result in extremely high turnover rates causing a lack of stability for children.

  3. Training, knowledge, and skill are crucial components in working with children and families in vulnerable circumstances. Part-time or temporary human services staff who have not undergone adequate training can make harmful decisions for children and families.

  5. The increase in private vendors has made it difficult to impossible for the public sector to monitor compliance with such areas as minimum staffing levels, caseloads and quality.

  7. Private agencies generally do not take on the most difficult cases, leaving these cases to the public sector. This "creaming" allows private agencies to generate more positive outcomes leading to the renegotiation of their contracts.

  9. Under contracting out agreements, the administrative costs in the public sector continue to build. This is due to the additional layer of bureaucracy created to oversee the competitive bidding process, administer the contracts and monitor results.

  11. Frequently a contractor will "low-ball" or underbid to receive a new contract in anticipation of raising its rates once it becomes established.

  13. Fair competition for contracts may be the exception than the rule. In some cases, once a private agency has the contract and acquired the expertise, training and equipment required to do the job, the agency is usually retained under contract, even if it performs poorly, since it is very costly for the human services’ agency to switch to another contract and start from ground zero.

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