LINCOLN — Top Nebraska officials plan to change course on child welfare after the state's experiment in privatization suffered a major blow Tuesday.
The Kansas-based KVC announced that the company will stop managing child welfare cases as of Feb. 29.
The announcement leaves the state with only one private contractor, meaning that state workers will once again be responsible for ensuring the safety and well-being of the majority of abused and neglected Nebraska children.
But, in a key difference from past practice, State Department of Health and Human Services officials plan to hire enough workers to keep caseloads at manageable levels.
“We are a different HHS department as a result of the things we have learned” from privatization, said Scot Adams, interim director of children and family services. “This helps move the entire state forward.”
HHS officials will ask for a $19 million increase in child welfare funding next year to reduce caseloads to an average of one worker for every 16 children. The average had been one worker for every 23 children.
They also will seek legislative approval to tap nearly $20 million of unused funds in other programs for the child welfare system this year.
About $4 million of this year's funding would go to pay the remaining contractor, the Omaha-based Nebraska Families Collaborative, for higher-than-expected costs.
Adams said ending the contract with KVC was a “mutually agreed upon decision.”
The two parted ways over money.
KVC had sought contract changes that would have increased the state's costs by well over the $19 million figure, HHS officials said.
“We were unable to reach an agreement as DHHS could not meet the projected expenses of our partnership and KVC could no longer continue to invest its own dollars in this effort,” said KVC President Sandra Gasca-Gonzalez. “We are saddened that we cannot continue as a lead agency in this important initiative.”
KVC officials previously said they had lost $14 million on their contract with Nebraska.
The company threatened last fall to drop its contract at the end of December but agreed to continue after the state provided an additional $1.8 million and promised to negotiate on the case rates.
Gasca-Gonzalez said the company will continue to provide foster care services and will maintain offices in Lincoln and Papillion.
KVC currently has the bulk of responsibility for ensuring the safety and well-being of nearly 4,700 children and their families across 19 counties.
The company manages all cases in southeast Nebraska, including Lincoln, and one-third of the cases in the Omaha area.
Tuesday's development means that state workers will be responsible for at least 6,300 children, out of the statewide total of nearly 10,200 state wards, siblings of wards and children receiving services without court involvement.
Kerry Winterer, CEO of the state agency, said HHS officials are talking with the Nebraska Families Collaborative about the possibility of its taking over the 1,500 KVC cases in the Omaha area. The move would make the collaborative responsible for all children in the area.
Adams said the state has no plans to seek a new contractor to take over in the southeast area.
The focus will instead be on stabilizing the child welfare system, he said. “Our main objective is that the services continue to be provided with minimal disruption to children, families and staff and that providers get paid.”
Adams said the state will seek to hire the majority of KVC employees, possibly as many as 370 case managers, supervisors and case aides. They will be temporary employees while the state goes through its regular hiring process.
In addition, HHS will work directly with KVC's subcontractors to arrange for services to continue. KVC will pay those providers for services through Feb. 29.
State Sen. Gwen Howard of Omaha, a former child welfare caseworker, praised the department's move to reduce caseloads.
“It's high time they addressed what really is the core issue,” she said. “It's long, long overdue.”
The Legislature's Health and Human Services Committee proposed a bill to reduce caseloads gradually. The measure was one of several that emerged from the committee's months-long investigation into the child welfare privatization effort.
Sen. Kathy Campbell of Lincoln, the committee's chairwoman, said she was glad HHS is willing to tackle the issue all at once.
Caseload standards are critical, said Carolyn Rooker, executive director of Voices for Children of Nebraska. She said smaller caseloads encourage workers to stay on the job and provide stability for families.
“What matters to the child is that their case manager has adequate time to meet with them and address their needs,” she said.
The same bill that would reduce caseloads also calls for returning case management duties to the state.
Gov. Dave Heineman has opposed the proposal, calling the idea a “return to the failed policies of the past.”
His office referred a request for comment Tuesday to HHS officials.
Adams said Tuesday that returning the KVC cases to the state is not going backward because so many things have changed in the past eight months.
But he remained opposed to Legislative Bill 961, which would mandate that the state handle all case management duties. He said the bill would make it impossible for the collaborative to continue with its contract.
Rooker and Sarah Helvey of the Nebraska Appleseed Center for Law in the Public Interest expressed concern about the rapid transition of case management from KVC to the state.
Adams said, however, that a quick switch has the advantage of getting any disruptions over with sooner and preventing the loss of KVC caseworkers. He also said the state has had experience with similar transitions.
Nebraska's privatization effort has been rocked by one blow after another since being launched in November 2009.
Three of the five original private contractors lost or dropped their contracts in the first year.
Winterer praised KVC's participation in the initiative.
“They stepped up to a challenge that could not have been fully known at the time and performed well at substantial cost to their organization,” he said.
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