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CHAPTER 5

GAINING SUPPORT FOR THE DECISION

Have you fifty friends?-it is not enough.-Have you one enemy?-it is too much.

- Italian Proverb

Privatization will be the biggest dogfight of the next ten years.

- Charles A. Baker
Secretary of Administration and Finance
State of Massachusetts

Privatization of government services and functions is rarely an easy sell. The opposition includes more than just the public managers, workers, unions, politicians, and service recipients discussed previously. It also includes current government contractors (for-profit and nonprofit) who benefit from no-bid contracts, legislators and local officials who want to retain oversight of pet programs, and members of the general public who believe that some service delivery functions must always remain in the public sector. A decision to privatize will not become final until the objections and concerns of all these groups have been addressed-the sooner, the better.

Some opponents-perhaps adhering to Yogi Berra's theory that, "It ain't over till it's over"-continue to fight privatization long after an initial decision has been made. Consider these examples:

• Union leaders lobbied hard to kill a bill privatizing child support enforcement in Baltimore. When this failed, they succeeded in getting the bill amended to protect workers' jobs and benefits, and later sued unsuccessfully in state court to have the enacted legislation overturned.
  
• A public school district in Utah had to consider canceling its contract with a private bus company that did not deliver students to school on time, due in part to many instances in which unknown persons tampered with the buses' fuel and electrical systems.
  
• Public managers in human services have been suspected at times of sabotaging privatized operations-for instance, by failing to refer a sufficient number of cases to be worked by a contractor.
  
• After Massachusetts' Republican Governor privatized a number of public programs, the Democrat-controlled legislature passed stringent laws protecting public jobs-effectively hobbling further privatization initiatives.
  
• Citizen groups in some communities have succeeded in getting privatized schools and other programs returned to the public sector by pressuring or deposing local elected officials.
  

Those who press ahead with privatizing a function without considering the potential for resistance may sooner or later find their plans reversed. To avoid this fate, proponents of privatization must do two things:

1. Be sensitive to the needs, concerns, and rights of current public employees. Involve them in the decision process from the beginning-or, at least, keep them fully informed of the progress. If public employees' jobs are to be privatized, make several options available to ease their transition to the privatized system. Alternatively, consider them as potential bidders.

2. Begin early to build and maintain support for the privatization decision.

Clearly communicate the goals of privatization to all stakeholders. Meet with those who oppose the change and try to strike common ground. Organize support.

The cooperation of public workers is critical to successful privatization of child support enforcement. This is true whether privatization means contracting for some ancillary service that the Title IV-D agency has never performed before or involves turning over all local operations to a private firm. In the first instance, a contract's success or failure often hinges on the degree of rapport established between the contractor and the staff in the child support agency. In the case of full-service privatization, contractors looking for experienced child support workers usually draw more than half of their staff from the ranks of those whose jobs have been privatized. These contractors need people who are committed to seeing the privatized operation succeed.

In order to gain current workers' cooperation-if not their absolute support-when privatizing child support enforcement services, public officials need to:

• Keep workers informed about any deliberations and decisions regarding privatization;
  
• Try to obtain workers' "buy-in" by explaining privatization and demonstrating its advantages to them, their customers, and the taxpayer;
  
• Involve public workers in the privatization decision process to the extent possible;
  
• Ensure fair treatment for workers whose jobs are privatized.
  

Keeping Public Employees Informed

A common regret expressed by Title IV-D directors in our interviews was that they had not done a better job of keeping staff informed about an impending decision to privatize services. By leaving workers in the dark, they allowed rumors to replace reasoned debate and occasionally created a climate of distrust that remained long after the privatization decision was made.

Some child support staff told of hearing rumors and gossip about possible privatization as long as two years before the actual decision was announced. They described the period in which they didn't know what would happen next as a time of "high anxiety" and "acute fear of the unknown." Morale sank and work performance suffered. In other cases, workers said they first learned that a service was going to be privatized when they read about it in the newspaper or were told that a request for proposals had already been issued. They described their reactions to the news as a mixture of shock, anger, and disbelief.

In most instances of full-service privatization, initial reactions to rumored or actual privatization plans soon gave way to active resistance. Workers and their union representatives contacted sympathetic legislators and any other allies they could muster in an effort to avert or reverse a decision to privatize. While these tactics usually failed to change the outcome, public employees often succeeded in getting provisions inserted in the enabling legislation or the request for proposals that protected their interests. The most stringent mandates compelled contractors to hire all current employees at present wage and benefit levels, allowed workers to carry over accumulated leave, and prevented contractors from dismissing workers during the contract period except for misconduct or demonstrably poor performance. One state child support agency was even required to take back any workers who chose to return to state service for up to five years following privatization. Such restrictions have been criticized as defeating the whole purpose of privatization.

At a minimum, then, public employees whose jobs may be directly or indirectly affected by privatization should be kept informed right from the start in an effort to dispel false rumors and promote cooperation. Title IV-D directors recommended that information sharing continue all the way through the procurement and start-up periods. This includes scheduling meetings between the contractor and current staff as soon as possible after the contract award. Such proactive information sharing helps prevent emotional distress, keeps morale and performance up, and leads to a smoother transition.

For example, when Virginia privatized two new child support offices, child support officials held regular meetings with staff-initially to discuss their questions or fears, and later to provide the latest information on procurement and transition. The statewide staff newsletter included frequent updates on privatization and helped diminish fears of staff in other regions that their offices would also be privatized. In Nebraska, public employees from affected child support agencies were invited to send representatives to watch the bid evaluation process, which helped assure them that the selection process was fair and that their rights were protected.

Involving Workers in the Decision and Getting Buy-in

Information sharing helps, but is usually not enough to ensure a successful transition to a privatized system. Public employees will be much more supportive of privatization if they have a hand in the decision and can see how it will benefit them and their customers. At the very least, public employees should always be represented in any advisory group on privatization. They should be told why privatization is being considered-that is, what are the political, organizational, and workload pressures for privatizing-and what the potential benefits will be.

Other strategies for getting employee buy-in differ somewhat depending on the type of service being privatized:

Technical or supportive services

For highly technical and supportive services, the decision to privatize is usually a common-sense judgment based on the comparative abilities of the public and private sectors to provide a given service at a reasonable cost. As such, the decision is a natural extension of the Title IV-D agency's strategic planning process in which all levels of staff are normally involved. In some cases, such as information technology and genetic testing, government simply cannot match the private sector, and everyone can agree on this. The critical question in regard to supportive or ancillary services is, "Is this something our staff should really spend their time doing?" Line staff will be quite willing to help identify which of these types of services to privatize.

New services

Here again, the decision should flow from a group strategic planning process that includes child support staff. A rule of thumb for making the make-or-buy decision in both business and government is that the organization should concentrate on what it does best and contract with others to do the rest. Staff will seldom object to privatizing a new service if they see that it is not central to the core functions of the agency. Also, if there are restrictions on the size of government, staff can be involved in the strategic process of deciding which current services to privatize so that new functions can be added.

Oversubscribed services

Sometimes a Title IV-D agency considers contracting out such traditional child support functions as locations, collections, and establishment because there is a greater demand for service than public employees can handle. The strategy for getting employee buy-in in these instances-recommended by agency directors and private contractors alike-is to demonstrate to staff how contracting out portions of the caseload can help them do a better overall job of serving customers and meeting agency objectives.

For example, the 1996 GAO study of child support collections found that states predominantly privatized collections of past-due support because child support staff rarely had time to work these cases. Contracting out this part of the workload allows staff to concentrate on paternity and order establishment, functions that state officials believe the workers are more adept at handling than collections. Officials in Michigan marketed the idea of contracting for collections by stressing that it was a "complementary service" designed to ease the staff workload. They also guaranteed that no current employees would be displaced as a result of collections contracting.

Another tack is to keep all eyes on the overall goal-for example, increased collections-by establishing specific targets that can only be met through joint efforts of the public and private sectors. It is important, however, that both sectors share the credit or blame for the overall results. Since using a private contractor to assist with oversubscribed services almost always improves performance, this is a win-win proposition for both parties. Arguments for boosting the performance of child support offices by partially privatizing caseloads will soon be heard more frequently as Title IV-D agencies become increasingly accountable for improved outcomes under welfare reform.

Core services

Obviously the most difficult proposition for public employees to accept is that the most basic functions of child support enforcement-indeed, their very jobs-might be turned over to a private firm. Because it would constitute a conflict of interest, workers cannot be directly involved in making this decision. Decisions of this magnitude are made at the highest political levels by legislators, governors, county commissioners, and judges. Public employees can-and often do-influence these decisions, but increasingly the vote is for privatization.

In dealing with public employees on the issue of privatizing core services, the objective for child support officials is not so much to get staff buy-in (some veteran Title IV-D directors claim it can never happen) as it is to reduce opposition. This does not mean eliminating all opposition-some of it is well founded and necessary to ensure that all issues are dealt with fairly-it means simply reducing the type of unremitting, counterproductive opposition that prevents privatization from working as it should. The recommended strategy is fourfold:

1. Show employees the "big picture." Let them see all the economic, political, and caseload pressures that are causing core services to be privatized.

2. Focus on the bottom line. The Title IV-D agency's mission is not to provide public jobs, but to ensure that customers receive high-quality, effective services at the best price to the taxpayer. Stress how contracting will improve customer service and outcomes.

3. Emphasize the potential benefits of working in the private sector. Since private contractors do most of their hiring from among those whose jobs have been privatized, public employees should be told the potential benefits of working in the private sector. They can weigh these arguments against the case for seeking to remain in the public workforce. (See Exhibit 5-1.)

4. Anticipate employees' concerns and deal with them promptly. Don't wait for unions, legislators, lawyers, or private contractors to dictate to the Title IV-D agency how current employees will be treated under privatization. In collaboration with employees, create a plan containing several reasonable options for ensuring fair treatment for current employees. Then market the plan to decision makers.

Experienced child support enforcement staff are valuable assets in any setting-public or private. Their dedication to the public has been demonstrated through years of government service. The staff's knowledge of child support laws and regulations, their experience with the service population, and the relationships they have developed with partnering public agencies make them valuable commodities. Even in child support offices that are privatized due to poor performance, staff usually are not seen as the source of the problem. As Inge Fryklund (1995) observes about public employees in general:

Remember that the organization's current structural failings are management's fault, not labor's. . . [But] it is usually labor that pays for the sins of management. Labor, not management, gets privatized out of a job.

WORKING FOR A PRIVATE CONTRACTOR:
OPPORTUNITY VS. SECURITY

Advantages

Child support workers are usually told that working for a private company offers the following advantages over public service:

• increased income through performance bonuses and incentive pay,
• more opportunity for promotion and advancement,
• greater flexibility to get the job done right,
• a more responsive management structure,
• more and better service for customers, and
• greater job satisfaction and a sense of accomplishment.
  

Disadvantages

The counter arguments are that public employees who move to a private firm will:

• often give up more in benefits (holiday and other leave, vested pension funds, health coverage, etc.) than they gain in pay,
• lose the privileges of seniority (parking, promotion preferences, the ability to bump others during layoffs, etc.)
• have to adapt to a completely different organizational culture, and
• be vulnerable to dismissal without cause or recourse.
  

The choice for workers often boils down to "opportunity vs. security." Senior workers opt more often for the security of a public sector job, while younger workers many times are convinced that privatization is the way to go.

Fortunately, in the area of child support enforcement, very few employees have been "privatized out of a job." Every time a child support office has been privatized, the contractor has hired nearly all of the current staff who wanted jobs-even when not required to do so. This does not mean, however, that the transfer of employees to the private sector has always gone smoothly or that employees have always felt they were treated fairly. In some instances, staff were placed in a sink-or-swim situation in which their public jobs disappeared and they were not even assured of getting an interview with the private contractor. Others who were guaranteed jobs with a new contractor sometimes felt they were placed in a take-it-or-leave-it position with no other options.

As shown in Figure 5-1, Title IV-D agencies can take a number of steps to ease the transition to privatization and protect workers from becoming unemployed. These steps, which may be taken in combination with one another, are discussed briefly below. Further details on most methods can be found in the Reason Foundation monograph, Privatization and Public Employees: Guidelines for Fair Treatment (O'Leary and Eggers, 1993).

Human resource planning and assistance

If the Title IV-D agency does nothing else to structure the transition for its employees, it should at least have its human resources department prepare and distribute information to affected employees describing their rights regarding compensation for accumulated vacation and sick leave, access to retirement funds, continuation of health coverage, and transferability of benefits and perks should they go to work in another public agency or department. This information should be shared with employees as soon as possible after the privatization decision is made, preferably in a group setting in which employees can ask questions of personnel specialists. The Maryland child support enforcement administration, for example, held a series of such meetings with staff in Baltimore which helped reduce confusion and anxiety and enabled staff to plan realistically for their futures.

Corporations that outsource production and city governments that privatize services often go further and offer an array of personnel services to help employees handle displacement and transition issues. For example, in the privatization of a District of Columbia nursing home, a center was created to help employees cope with stress, retrain and place employees with the new provider or elsewhere, and assist employees in evaluating early retirement and other options (Watt and Rubin, 1995). Some jurisdictions set aside as much as 5 percent of the cost savings from privatization for these types of services. O'Leary and Eggers recommend that agencies actively involve their human resource departments from the beginning when devising privatization strategies. Public managers working in cooperation with human resources personnel, employees, and their unions should develop a human resources plan for reducing the impact of privatization on employees. It is recommended that the plan take a long-term view and anticipate which services will still be provided by the agency in five to ten years and which ones will be contracted out. The plan can incorporate a number of the following strategies.

Figure 5-1

Adapted from O'Leary and Eggers (1993)

Working within the attrition rate

Extensive privatization can be achieved without layoffs by working within the natural rate of worker attrition (retirements, job changes, etc.) to gradually phase in competitive contracting. San Diego used this method to privatize 60 percent of its bus routes over a ten-year period. Workers on a route that was to be privatized in a given year could transfer to other publicly operated routes where there were job openings due to attrition. Often governments adopt a policy guaranteeing that affected workers will be able to transfer to vacant jobs for which they are qualified in other departments or agencies. In this way, they can use the attrition rate of the entire government to help speed up the privatization of a particular function and avoid layoffs.

Los Angeles County uses a variation of the attrition rate strategy to reduce the number of employees affected by privatization (Dixon, 1992). When a department decides to privatize a service, it imposes an immediate hiring freeze to naturally shrink the size of the work force. The county hires contract employees to perform key functions until the service is fully privatized. The contracted workers are aware that their public-sector positions are temporary, but they also realize they are gaining skills and experience that would make them desirable as employees to a private contractor. Maryland used a similar strategy when it privatized child support services in Baltimore, but it also required the winning bidder to hire the contract workers as well.

Early retirement and other incentives

Another strategy for avoiding layoffs is to entice public workers to leave government employment by offering them early retirement incentives. These may be in the form of getting full retirement benefits at a younger-than-normal age or receiving a one-time retirement bonus. Early retirement speeds the attrition rate, which allows functions and services to be privatized more quickly. Related strategies include:

Severance pay or buy-out-Under this option, workers displaced by privatization receive a significant lump-sum payment. When British Airways was privatized in 1987, many employees used their severance pay to start businesses. Officials in Douglas County, Nebraska, tried this approach with child support staff, but it didn't work because staff didn't see it as an attractive offer. In order to receive payment, county workers had to accept the buy-out offer and leave county service before a contractor was selected. Yet, if they remained on the payroll, the contractor was required to hire them. No one selected the buy-out option.

One-time bonus-Public employees receive a one-time cash bonus for implementing privatization or relocating to another department.

The costs of any of these incentives would need to be recouped from savings in future service delivery costs.

First consideration by private contractors

A common strategy for reducing the impact on current employees is to encourage or require a contractor to offer first consideration for employment openings to qualified public workers. Private contractors are usually happy to have access to an experienced labor pool and often will hire many former public workers without being required to do so.

In child support enforcement, a number of variations on this strategy have been tried. Private contractors in Wyoming were required to interview current staff, but were not obligated to hire them. Legislation enabling privatization in Maryland required the contractor to hire all current staff, including contract workers. Tennessee did not require contractors to interview or hire public employees, but those who were offered jobs were given 30 days to make a decision. This gave workers the opportunity to seek better offers elsewhere and not feel that they had to "take it or leave it."

Portability and equality of benefits and wages

Frequently, as a means of resolving political objections to privatization and to protect current workers, public officials require the contractor to match public-sector wages and benefits. O'Leary and Eggers caution against heavy-handed use of this approach because it decreases the contractor's flexibility to perform the function in the most cost-effective manner and reduces government's opportunity to realize savings through privatization. A less burdensome approach, they suggest, is to require contractors to guarantee public employees jobs at their current compensation, but allow future employees to be hired at market wages.

In privatizing child support services, states and localities have tried the whole gamut of options-from requiring the contractor to provide the same wages and benefits as the public sector, to not placing any demands on the contractor. El Paso County, Colorado, took the middle ground by requiring the contractor to offer comparable pay and benefits to all current employees for the first year of privatization. Thereafter, compensation could be performance based. Generally, the more highly unionized the local labor force, the more likely it is that wage and benefit levels will be prescribed for the contractor.

Yet another alternative is to consider a contractor's offer to current employees as part of the contract award decision. Los Angeles County awards bonus points to bidders who include public employee accommodation plans in their proposals. The plans might provide options not normally available to public employees such as profit sharing or company stock options. This allows the contractors flexibility in designing the compensation package, yet makes fair treatment of current employees one of the criteria for choosing a contractor.

In developing the human resources plan for carrying over wages and benefits, the Title IV-D agency and the contractor will need to resolve a number of issues related to fairness. Why, for example, should former public employees be paid more or have better benefits than their coworkers? Should contract workers be treated the same as regular public employees during the transfer? Should they also be guaranteed jobs? Should public employees start with no accumulated sick leave or personal leave? What about a public employee who is on extended sick leave at the time of transfer? Does the contractor have to hold a position open for that person, and for how long? Although these issues are usually resolved during the contract negotiation process, it is wise for the Title IV-D agency to consider them well in advance of the negotiations and to be prepared to offer and respond to suggested compromises. In Nebraska, for example, the leave issue was resolved when a contractor allowed public employees to start work with one week of leave already accumulated.

Finally, there is the issue of pension benefits. Retirement benefits usually represent a large percentage of public employees' benefit packages. The prospect of forfeiting benefits causes many public employees to resist privatization and to stay in government rather than go with a private contractor. O'Leary and Eggers recommend that public officials promote pension fund portability. Possible options they suggest include allowing the transfer of pension credits to the private contractor's pension program, rolling over vested retirement credit into an individual retirement account, and giving displaced public workers annuities equal to their invested credit that could be cashed out upon retirement.

Options for return to government service

One strategy for reducing the emotional stress of privatization on employees-and which can serve to protect the interests of the Title IV-D agency as well-is to clearly define terms under which employees who go to work for the private contractor can return to government service. One of the most advantageous arrangements for current employees was negotiated for state child support staff in Douglas County, Nebraska. Workers there were given a five-year leave of absence, during which they could return to state employment at any time by applying for available jobs as "insiders." They received cash for unused vacation time upon leaving state service, but their sick leave was frozen to be available to them should they return to the state. If they were forced to take extended medical leave while with the contractor, it was treated as leave from the state.

The advantages of such an arrangement for state employees is obvious: they can try working for the private contractor, but if it doesn't work out, they have plenty of time to find another job with the state. Also, they don't have to worry about falling seriously ill shortly after the move and losing their jobs. The contractor may also benefit because disgruntled former public employees can leave if they need to, and good workers who fall ill can recuperate and return to work without expense to the company. The potential advantage of this arrangement to the state is that, should the contractor's business fail, or if the state is forced to terminate the contract for cause, it has an experienced workforce available that can probably be enticed to return to state service.

"Leaving the back door unlocked" like this is advisable when privatization is being pilot tested, as is sometimes the case in child support enforcement. It is unfair to privatize current employees out of a job if there is a strong possibility that the public agency may resume service delivery at the end of a one- to three-year pilot.

Employee ownership

Another possibility suggested by O'Leary and Eggers is to give public employees a positive stake in privatization by allowing them to take their departments private. As has already happened in many private businesses, employees could purchase public services through Employee Stock Ownership Plans (ESOPs) and operate them as private enterprises. Employee buyouts of government enterprises and services have been successfully completed in Britain and British Columbia and are now being widely employed in Eastern Europe and Russia. In the United States, the federal Office of Management and Budget recently privatized one of its departments in this way.

Governments can assist employee buyouts in a number of ways. For instance, the new employee-owned firms could be allowed to use government facilities and equipment for a fixed time period. This temporarily postpones the financial obstacle of immediately having to purchase expensive machines or buildings. Other forms of assistance to encourage employee buyouts include guarantee of first-round contract, one-time loans, and debt write-offs (Eggers, 1993).

Candidates for employee ownership in child support enforcement include the locate and legal representation functions. In addition, some small child support offices in rural areas might be privatized in this way.

Letting public departments bid on contracts

As described in Chapter 2, one option available to public managers is to promote public-private competition. Seader (1995) tallies the success that public departments in large cities have had in winning contracts. In the last 15 years, public departments in Phoenix have won 22 of 56 contracts for which they competed. The contracts included billing services, refuse collection, street repair, data entry, senior housing management, and public defender. Savings are estimated at $27 million with no layoffs of public workers. Indianapolis is the rising star of competitive government. Since 1991, the city has let over 50 contracts, resulting in 25-40 percent cost savings per contract and a total savings of $28 million. Indianapolis public agencies won contracts in areas such as vehicle maintenance, garbage collection, street and sewer maintenance, and animal control. Other cities adopting the competitive government approach include Philadelphia, Charlotte, Chicago, Milwaukee, and San Mateo, California.

Cities that have allowed departments to bid on contracts have found that initially public workers are at a disadvantage in a competitive environment-not because they lack the skills to get the job done, but because they are not used to operating as a business. Public managers and employees usually need fairly extensive training or assistance in cost accounting, proposal writing, and business management and operations before they can become competitive. In Phoenix, public units typically went through several rounds of proposals before they developed these skills and began winning contracts. A Title IV-D agency considering letting local child support units bid on contracts should plan to commit sufficient resources for this type of training.

Long before the privatization decision is made, public officials need to have a strategy for building support for privatization. The strategy should include elements for communicating the purpose of privatization, addressing public misunderstandings, countering misinformation spread by opponents, gaining the support of important public and private leaders, and winning support-or at least reducing opposition-from groups affected by the change.

Elements of a Communications Strategy

The National Governors' Association suggests developing a public relations and media strategy to build public support for privatization:

An important principle in any communications strategy is to keep the message simple. . . State leaders need to stress that privatization introduces into government services aspects of the private marketplace, such as competition and the press for improvement, that reduce costs while maintaining or improving quality. This is a good government principle that is familiar to the public-the vendor providing the best value gets the business. (NGA, 1993)

Governor William F. Weld's campaign to introduce privatization in Massachusetts state government provides a model for initiating a communications strategy. Early in his administration, he met with his cabinet secretaries and top government officials in a "privatization summit." Weld communicated his commitment to privatization and his expectation for the unwavering support of all agency heads and their staffs. His message was simple: privatization is not about public versus private-it is about monopoly versus competition.

Weld also looked well beyond the executive branch to gain support. He convened meetings with all interested parties, including key legislators, business leaders, public employee representatives, mid-level government managers, and civil service professionals to explain the goals and means of his privatization program.

In 1993, the Commonwealth of Massachusetts published a privatization guide that includes a chapter on "Answering the Critics." In this publication, the Weld administration addressed point-by-point the arguments raised against the governor's privatization plan. The counter arguments include statistics on the initiative's early successes, poll results showing public support for the initiative, and explanations of how the concerns of public employees and service recipients were addressed.

The Reason Foundation (Eggers, 1993a) recommends establishing an advisory commission composed of representatives from the various groups that privatization may affect. Such a group can help identify opportunities for private sector involvement in government services, influence policy directions, and improve the likelihood that privatization can proceed smoothly.

Another strategy recommended by both the Reason Foundation and the National Governors' Association is the formation of private-sector coalitions to actively promote the privatization effort. NGA notes that a well-known private sector executive may be more effective than agency staff in conveying the message of privatization to the media and expounding its merits to the public.

Building Support for Privatization in Child Support Enforcement

Usually when child support enforcement services are privatized, there is no coordinated plan for building and maintaining support for the decision. Here is the typical sequence of events: Proponents and opponents argue the merits of privatization. A decision is made. The parties continue to argue. The Title IV-D agency spends precious time and resources justifying the decision and preparing ad hoc progress reports instead of directing all its energy toward making privatization work.

If the Title IV-D agency has gone through the exhaustive decision-making process described in Chapter 4 and determined that privatization is the best option, it should also spend some time developing a strategy to achieve widespread support for the decision. The plan should be designed to build consensus by addressing the needs and concerns of the following stakeholders:

Legislators and other elected officials

Support from state and local elected officials-particularly legislators-is essential to the success of any privatization effort. Key supporters should be identified and kept informed so they can continue to champion and defend the decision. If the program works well, it is a feather in their cap-something they can point to with pride at election time. If problems develop, they should be briefed on the situation promptly and thoroughly. Elected officials hate being surprised by bad news. They need to know the nature of the problem, the cause, and what is being done to correct it. With these facts in hand, they can help convince others to stay the course and let the privatization effort continue.

Opponents or less supportive officials should be advised about the benefits of privatization. They should also be assured that complete legislative oversight will be retained, government workers will not become unemployed, constituents will be better served, and they will be able to terminate the contract at will. Doubting legislators often prefer the use of pilot privatization programs that permit legislative review before complete roll-out. In these cases, an independent agency, such as a state university or government inspector general, should evaluate the pilot program and report to the legislature (Mastran, 1996).

Agency management

One state Title IV-D director, when asked to identify the biggest opponent of privatizing a local office, replied, "I am. But I still want to give it a fair chance." This honest response underscores how important it is to gain the support of agency management when privatizing child support services. This director, if he chose, could easily undermine the privatization initiative in dozens of hard-to-detect ways. Yet, even though the privatization decision was made over his objections, he was committed to seeing it through.

When privatizing a service, the goal of seeking support from agency management (which includes child support directors, agency heads and deputies, and program managers) is to either gain their complete support for this action or at least convince them to "give it a fair chance." Ideally, these individuals were involved in the strategic planning process for the Title IV-D agency as well as in the decision-making process that led to privatization. In that case, they should already be convinced that privatization is a reasonable alternative to current operations. If they were not involved in planning and decision making, they will need to see the cost analysis and other evidence that supports contracting out. Again, they should be able to see how using a private company to deliver services will help the agency get better results and directly benefit customers. To ensure continued support, public managers should be recognized and given credit along with the private contractor for any improvements in performance and outcomes for the programs they oversee.

Partnering agencies

Nearly every child support enforcement function involves working closely with other local, state, or federal agencies. In instances where the partnering agency will switch from working with Title IV-D staff to working with a contractor, staff in this agency will need to be assured that the contractor will respect their needs and work cooperatively in the best interest of their mutual customers. If there have been ongoing problems between the Title IV-D agency and another agency, privatization may be heartily welcomed.

Partnering agencies will be more supportive if:

• they are involved in the decision-making process (usually as part of the privatization advisory committee);
  
• they are allowed to comment on the proposed privatization design and/or the request for proposals;
  
• and they can meet with the contractor as soon as possible after contract award to engage in cross-training and begin developing a working relationship.
  

Both the Delaware and New Jersey child support enforcement administrations successfully used this process to get hospitals, bureaus of vital statistics, and other partners to support their privatized paternity acknowledgment programs. Privatization went smoothly in both states as a result.

Sometimes one or more functions performed by a partnering agency will also be privatized, as is often the case with full-scale privatization of local child support services. An affected agency will usually oppose privatization in an effort to protect its jobs and turf and to ensure quality and continuity of service to its customers. Sometimes, however, it can be convinced to support the privatization decision if this frees up workers for other important tasks. A district attorney's office, for example, may be willing to turn over legal representation to private attorneys if child support enforcement is not a high priority for the office. Alternatively, a public agency might be allowed to bid against private companies for the right to provide its current services to the Title IV-D agency-or, it could even partner with a private company in offering a bid on a full-service contract.

When Wyoming sought to improve child support services in its nine judicial districts, it got public sector buy-in for privatization by giving counties-its local partners-the "right of first refusal." Counties in a district could either form a joint powers district to administer child support enforcement or accept full-service privatization. Four districts remained publicly operated and five were privatized.

To maintain support for privatization after program implementation, the Title IV-D agency will have to ensure that, if differences or problems arise between the public and private partners, all sides will be involved in resolving the issues. This should be done in joint sessions led by Title IV-D authorities in which the focus is on improving service quality and customer outcomes-not on assigning blame.

Current contractors

Current contractors who may stand to gain under expanded privatization are enthusiastic allies who will extol the virtues of further privatization at every opportunity. While the Title IV-D agency should welcome such support for its decision, it should also make clear to everyone that incumbent firms are not guaranteed the right to provide soon-to-be privatized services. They will have to compete just like anyone else for future contracts.

On the other hand, private firms and nonprofit agencies already working for the Title IV-D agency will strongly oppose the privatization decision if it threatens their current contracts. For instance, the Maryland child support enforcement administration had to terminate a successful collections contract with a national firm when it was instructed to initiate full-service privatization in Baltimore. In cases like this, it is impossible for the agency to gain support from the current contractor. The best it can do is ensure that the contractor is treated fairly and receives full compensation for work performed.

Opposition from nonprofit organizations that have benefited from non-competitive contracts in the past may be tempered somewhat if they are allowed to bid on future contracts. They may even have a competitive advantage because they do not need to make a profit and already have experience working with Title IV-D customers and staff. An alternative is to encourage private bidders to subcontract part of the workload to non-profit agencies, particularly minority- or women-run enterprises.

Government employee unions

Title IV-D directors report that the greatest organized source of opposition to privatization comes from employee unions. The AFL-CIO even has a regularly updated handbook on strategies to combat privatization: The Human Costs of Contracting Out-A Survival Guide for Public Employees.

But David Osborne (1996) notes that unions may not always oppose privatization, particularly in cases where public units are allowed to compete with private firms to provide services. He cites several examples from Indianapolis. In one instance, the mayor negotiated a deal in which a waste water contractor was required to recognize the American Federation of State, County, and Municipal Employees (AFSCME) as the official bargaining unit for city employees it hired. In addition, he adopted an unwritten no-layoff policy for union members. They were either hired by the contractor, transferred to other city jobs, or retrained and placed in private sector jobs. Some city departments must compete with private firms to deliver services, but if they keep costs below their bid price, employees in these units are allowed to share 10 to 25 percent of the savings. Osborne reports, "the combination of competition, a no lay-off policy for union members, and gainsharing has turned union behavior upside down. Union members now suggest outsourcing when it will save money."

Customers and advocates

The customers of the child support enforcement system and child support advocacy groups also can be quite vocal in their opposition to privatization. Some fear that when child support operations are turned over to private firms the profit motive will override the public good that should result from the Title IV-D program. They are often concerned that contractors will resort to "creaming"-working only the easiest or most lucrative cases-or that contractors will focus exclusively on collections to the detriment of other important areas such as paternity establishment. Non-custodial parents in particular are concerned that their right to privacy may be jeopardized if private firms that serve as collection agencies for other businesses have access to their child support records. To help allay these fears, staff from the Title IV-D agency must inform customers and advocates about the safeguards regarding privacy and level of effort that are built into privatization contracts.

Finally, the best public relations tool for privatization is improved performance. If customers can see a difference in the service they receive, they will become strong advocates for maintaining privatized services. As a local director from Michigan put it, "A thorough effort on the part of the contractor carries a positive message to the payee; it shows that you are doing everything possible to help collect what is owed." If quarterly outcome reports, performance evaluations, customer satisfaction surveys, and decreases in customer complaints show that services have improved while under private contract, share these results with customers. Child support advocacy groups and taxpayer groups are other audiences for this type of information, since they also can be helpful in winning or maintaining support for the privatization decision.

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