LINCOLN — State lawmakers investigating the privatization of child welfare services got some pessimistic reports Tuesday.
First, there were surveys showing that judges, attorneys and others working on child welfare and juvenile court cases don't expect the privatization initiative to succeed.
Next, there was an analysis from the Legislative Fiscal Office questioning whether the money appropriated for child welfare will be sufficient in the current two-year budget.
The analysis concluded it would require "significant changes" for the state's two private contractors to manage with the money provided for in their contracts.
The payments would be adequate only if there is a 15 percent reduction in the number of children in the child welfare system, the analysis said.
But State Health and Human Services officials and representatives of both private contractors — the Kansas-based KVC and the Omaha-based Nebraska Families Collaborative — told legislative fiscal staffers they are confident about being able to reduce the number of children in care without denying needed services.
State Sen. Kathy Campbell of Lincoln, who is leading the legislative investigation of the state's rocky road toward privatization, is not as sure.
"That makes me really nervous," she said, about having the budget rely on major changes in how the state and agency bureaucracies handle children.
Campbell noted that both of the private contractors have set limits on the amount of money they are willing to lose on the contracts.
KVC has put about $14 million of its money into Nebraska services and has made it clear that will be the limit of its support, she said.
The collaborative has put in about $7.5 million and has said it would be willing to contribute up to $2 million more.
Campbell said that leaves the state with some difficult questions if the number of children in the system does not drop.
"What does that mean?" she asked. "If we stay with privatization, do we put more money in?"
During the fiscal year that ended June 30, the state paid contractors 50 percent more than planned and overspent its budget by $30.5 million.
Officials with Health and Human Services made three unplanned infusions of money. They got the funds from reducing the number of state caseworkers, drawing on unexpected federal stimulus money and taking unspent balances in other public assistance programs.
But the fiscal analysis concluded that the state has less flexibility to supplement the contracted amounts this year.
Campbell said she also was interested in the gloomy outlook about privatization expressed by people involved with the juvenile court system.
On average, those surveyed disagreed with a statement that "privatization, as currently structured, will eventually succeed."
The Nebraska Appleseed Center for Law in the Public Interest surveyed guardians ad litem and other attorneys. The Nebraska Court Improvement Project surveyed judges and members of local teams that work on improving juvenile court processes.
According to the surveys, attorneys and the local team members, on average, say child safety, well-being and permanency have worsened under privatization.
Judges, on average, said those measures had stayed the same or worsened.
All three surveys found differences between respondents in areas of the state served by private contractors and those areas where the state has resumed full responsibility for child welfare.
The state originally contracted with five private agencies to provide all services for children and families in the child welfare and juvenile justice systems.
Since then, three of the five agencies have lost or dropped their contracts. KVC handles all cases in southeast Nebraska and one-third of those in the Omaha area. The collaborative handles the rest of the Omaha cases.
Separate surveys of foster parents and biological parents were done by the State Ombudsman's Office.
Both groups reported their top concerns were turnover among caseworkers, poor communication and lack of respect from caseworkers.
Ombudsman Marshall Lux told the lawmakers that both groups rated the private contractors a little better than HHS on most measures.
"I don't know whether the emphasis should be on the word 'better' or the word 'little,'" he told the senators.
A spokeswoman for HHS said officials have not had a chance to study the surveys and could not comment.
The legislative investigation began in June and is expected to wrap up in December.
So far, it has included five public hearings across the state and a scathing report from State Auditor Mike Foley. A report from the Legislature's Performance Audit Committee is expected next month.
Contact the writer:
402-473-9583, martha.stoddard@owh.com
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