Chapter 1 - Privatization in Child Support Enforcement

CHAPTER 1

PRIVATIZATION IN CHILD SUPPORT ENFORCEMENT

It is better for the public to procure at the common market whatever the market can supply: because it is by competition kept up in quality, and reduced to its minimum price.

- Thomas Jefferson

Our national child support enforcement program-funded primarily by the federal government under Title IV-D of the Social Security Act and operated by states and localities-is being transformed by two major forces. The most noticeable involves recent federal initiatives that make child support enforcement more uniform across states and which have increased the number of enforcement and collection tools available to child support officials. Indeed, the passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996-popularly known as the welfare reform act-has made child support enforcement a highly visible pillar of a new social policy designed to reduce families' dependence on public assistance.

The other force for change-the increasing use of private companies to perform key child support functions-is the subject of this guide.

PURPOSE OF THE GUIDE

This is a guide for state and local Title IV-D directors, agency heads, legislators, governor's office staff, local political leaders, and others who are responsible for overseeing the collection and distribution of child support for their citizens. It provides a practical way of thinking about the privatization of child support enforcement-that is, turning over part or all of this important government function to the private sector.

The guide, which is based on research on privatization in other areas of government and a national cross-sectional study of child support privatization efforts, provides an overview of the promises and pitfalls of this approach. It is intended to give readers information needed to answer the following questions about contracting for child support enforcement services:

Is privatization the best way to go?
If so, how do we prepare requests for proposals and contracts that get results?
How do we deal fairly and responsibly with current child support workers and managers whose jobs may be privatized?
How can we minimize the risks of privatization for service customers and taxpayers?
How can we form mutually beneficial partnerships with private contractors?

The purpose of the guide is neither to advocate nor to disparage privatization as an approach to child support enforcement, but rather to examine how it has already been implemented in various forms around the country and to present some lessons learned from this experience. The focus is primarily on the privatization of direct child support enforcement services and does not include contracting for services such as the development of statewide automated case record systems. The goal is to provide sufficient detail so that if a decision is made to contract out a service, the Title IV-D agency can develop a solid partnership with the contractor.

THE TREND TOWARD PRIVATIZATION

Privatization in child support enforcement is sometimes initiated by elected officials who advocate widespread privatization of government functions or departments. More often, however, the initiative comes from state Title IV-D agencies and local child support offices that are struggling to meet federal and state mandates to improve performance. In some cases, there are not enough staff to keep up with growing caseloads. Other times, current staff simply do not have the expertise to perform a new or highly technical function such as genetic screening. For these and other reasons, Title IV-D agencies are increasingly turning to private sector firms for help in improving program operations and performance.

A 1995 report by the U.S. General Accounting Office noted this recent increase in the number of private sector contracts for child support services. The GAO found that 20 states had already privatized one or more child support services statewide, and 18 states had privatized services at the local office level. The study also identified 21 contracts for full-service child support operations, 40 other contracts for collections and related location services, 8 contracts for locations only, and 9 contracts for payment processing services.

The GAO study, which focused only on services with a "direct relationship to the collection of child support," did not include services that traditionally are contracted out such as genetic testing, legal services, and automated systems. Nor did it count contracts awarded solely for ancillary services such as paternity acknowledgment or customer service. State and local child support agencies have entered into hundreds of contracts with private sector providers for services not covered by the GAO study.

Clearly, an era of public-private partnership in child support enforcement is already at hand. And the practice of contracting with private firms is likely to grow as states scramble to meet the ambitious schedule for change imposed by the welfare reform act.

OVERVIEW

While the history of privatization in child support enforcement is brief, some lessons are already beginning to emerge from the experience of states and localities that have taken the first steps toward developing public-private partnerships. When these lessons are combined with the privatization experiences of other units of government, they provide a rough guide for those who are weighing the decision of whether to privatize child support services.

After an introductory chapter that discusses and defines several key concepts- privatization, competitive government, and public-private partnership-the book is designed to serve as a "how to" guide with chapters organized in roughly the same sequence of steps a Title IV-D agency would follow in implementing privatization. Exhibit 1-1 provides an overview of the steps to be discussed.

Exhibit 1-1

STEPS IN DEVELOPING PUBLIC-PRIVATE PARTNERSHIPS

FOR CHILD SUPPORT ENFORCEMENT

Making the Privatization Decision

Step One: Focus on outcomes

Step Two: Identify candidates for privatization

Step Three: Consider the needs, concerns, and rights of current public employees

Step Four: Build and maintain support for your decision

Writing the RFP and Managing the Bidding Process

Step Five: Design the privatized system

Step Six: Write an RFP that promotes results through partnership

Step Seven: Manage the bidding process carefully

Preparing the Contract and Transition Plan

Step Eight: Design an outcome-based contract

Step Nine: Prepare a detailed transition plan to avoid surprises

Monitoring and Managing the Contract

Step Ten: Develop a comprehensive monitoring system

Step Eleven: Manage for results

Step Twelve: Keep competition alive

back to contents / next chapter