Privatizing Foster Care

Privatizing foster care hurts children, families, state agency employees, and child welfare systems when done with haste, to save money, to “save” a state agency, and for other wrong reasons. In fact, even when all the preparations are thorough and the funding is sound, privatizing child welfare is a difficult endeavor to do well. And some states, struggle in their attempts for far too long, continuing harms to children.

Recently, after a 12-year attempt to develop a sound privatized foster care system, Nebraska’s Governor signed a law ending privatized foster care in that state. This ended one of the nation’s longest efforts to offload a state’s essential child welfare duties onto private providers. (See Nebraska lawmakers pass bill that ends privatization of child welfare.)

States privatize foster care for several reasons – some better than others. Congressional studies, research literature, and real-life examples of for-profit organizations cutting foster care corners, and non-profits being insufficiently resourced for success, are available in the news media to support that child welfare privatization is a risky business even in the wealthiest states.

Louisiana is far from wealthy.

Members of Louisiana’s Senate Health and Welfare Committee and the Department of Children and Family Services (DCFS) administration broached the topic of privatizing home development services to release staff for more critical work. This conversation took place during the first in a series of public meetings to review the performance and operations of Louisiana’s DCFS. From a review of the literature, the following findings seem important for states to consider when the matter of privatizing child welfare looks appealing.

Privatization gives states an excuse for service failures. When privatized foster care systems fail children, state governments and state agencies avoid culpability with a simple argument: “we are disappointed in the company we hired and will find another.” For a real-world example, in Eckerd Connects loses child welfare contract in Pinellas, Pasco, one reads, “The secretary’s decision was backed by Florida Senate President Wilton Simpson, who said they’ve long been frustrated by the performance of Eckerd Connects.”

Privatization is not an instant solution. Private foster care systems take years to create. Other than offering states an easily identifiable scapegoat for continued deficits in a child welfare system, privatizing may offer no benefit children and families. Privatizing foster care does not magically recruit more employees into child welfare work. Private foster care is not necessarily better than public foster care. Outsourcing foster care does not automagically strengthen a child welfare system.

Public child welfare system failures give states an excuse to privatize child welfare. The desire for profit drives corporations to promote the practice to politicians. The classic example of this is Florida’s privatization when its state system panicked in response to that state’s 1999 Kayla McKean Child Protection Act. Kayla died after multiple abuse reports to the Florida Department of Children and Families failed to protect the child. Florida’s foster care population increased by 400 percent in some counties after the law’s passage. A “foster care panic” ensued after state caseworkers learned they could be prosecuted for failing to remove a child who was later abused. DCF case workers began frantically removing children from their homes. The result was a system failure that Florida tried to resolve by privatizing foster care.

Privatization increases costs, and states that have privatized foster care without increasing funding have created foster care failures. In addition to increased costs, privatization contracts generally guarantee profit margins, 2%, for example. (In Louisiana, which has underfunded DCFS by $4.8 billion since the legislature’s 2007 baseline, no potential contractor should expect that contracting with DCFS will be a profitable endeavor. Louisiana’s child welfare and behavioral health systems are currently supplemented throughout the state with the charitable dollars of nonprofit provider organizations.)

Of course, it goes without saying that for-profit corporations seek to suck profits from every possible source. But morally, in child welfare and foster care, profits are absolutely funds that would be better spent on children. (Some states that sought to limit the misdirection of child welfare funds from services for children to corporate profits, either intentionally or inadvertently allowed the non-profit organizations contracted to provide services subcontract with for-profit companies.)

The transition from state agency to privatized child welfare is costly in terms of cash and harm. Lack of competition in a state makes a single-provider system roughly equivalent to the child welfare department. This creates a private child welfare system that simply duplicates the state agency it is replacing. However, the privatized system adds additional annual costs to the state, is likely to be established through state contracts that are “without teeth” (as we say in Louisiana about privatization agreements), and the system damage done to an already weak child welfare system causes further harm to children. (It should be noted that it is rare for a state to privatize child welfare services when the state is doing them well.) In short, literature provides many examples of the harms that occur during the transition from state agency to private provider.

News Articles about Privatizing Foster Care

Date	News Report
01/16/2019	Lawmakers eager to improve DCF oversight by Tim Carpenter, The Topeka Capital Journal Senate Minority Leader Anthony Hensley, D-Topeka, said the state made a mistake decades ago by privatizing foster care. It undermined accountability by putting distance between children and elected officials responsible for public policy, he said.
05/31/2023	Across Texas, a slow and sputtered rollout of foster care privatization. by Sneha Day, The Texas Tribune Desperate for a fix, Texas lawmakers in 2017 ordered an overhaul of foster care services, kicking most of the state’s responsibilities of monitoring abused and neglected children to contractors. Lawmakers were assured that outsourcing management of foster care services would fix the state’s troubled child welfare agency. But the rollout of the new model, set to be completed by 2029, has been complicated by setbacks.
03/25/2021	Privatization of foster care has been a disaster for children, by Robert Fellmeth, Price Professor of Public Interest Law at the University of San Diego School of Law, and Sandy Santana, executive director of Children’s Rights, a national advocacy organization that investigates, exposes and combats violations of the rights of children across the country. TheHill.com Twenty-eight states allow some degree of for-profit contracting of foster care services. The private companies that make money off foster children would have us believe that they are providing quality service at affordable rates — as is often the selling point of privatization made to the general public. But evidence has shown that some of these for-profit services are rife with mismanagement and abuse.
06/15/2018	Does Privatized Foster Care Put Kids at Risk? by Mimi Kirk, Bloomberg.com These private agencies are usually nonprofit, making MENTOR, as a for-profit corporation, an extreme example of privatization. Yet nonprofits can subcontract their work to for-profit companies; in states that forbid for-profit entities from administering foster care, MENTOR used this loophole as a workaround. And even in more straightforward nonprofit arrangements, privatization has negatively impacted children.
07/10/2017	Foster Care Privatization can Lead to Abuse, Fulton Winner Finds by Mandi Eatough, BYU College of Family, Home, and Social Sciences Through her studies, Fulton Conference Political Science winner Mandi Eatough found by privatizing foster care, these children do have an increased risk of neglect or abuse. She said: “It’s much easier to think about policy and government work in terms of whether it’s “good government” or “good for the economy.” However, I believe it’s far more important to consider these policies based on the impact they have on our lives. I hope that legislators and foster care workers alike will consider the implications of the foster care system on the children in it.
12/18/2013	Special Report: Private foster care system, intended to save children, endangers some: Those living in private agencies’ homes are a third more likely to endure physical, emotional or sexual abuse, a Times analysis found. by Garrett Therolf, Los Angeles Times California began a modest experiment 27 years ago, privatizing a portion of foster care in the belief that it would better serve children and be less expensive. Lawmakers decided to enlist local charities to help recruit and supervise foster parents. Today, the state’s private foster family system — the largest in the nation — has become more expensive and more dangerous than the government-run homes it has largely replaced.

Published Reports about Privatizing Foster Care

December 2014. An Assessment of Child Welfare Privatization in Nebraska: Final Report. 115 pages. Prepared for the Legislative Council by Hornby Zeller Associates, Inc.

Interesting development. In April 2022, Nebraska’s Legislature ended private foster care in that state due to a history of failures.
In 2009, Nebraska launched the effort to privatize its child welfare system. However, just a few years later, all but one of the providers were unable to fulfill their contracts. The one remaining contract was for Douglas and Sarpy Counties, which include metropolitan Omaha. In 2019, the Lincoln-based nonprofit Nebraska Appleseed sued the state and two nonprofits to halt the use of private foster care there.
Earlier this month, the organization’s leader celebrated the new law.
“LB 1173 recognizes Nebraska’s tumultuous and harmful history with privatization and that children and human services should never be for profit,” Nebraska Appleseed Child Welfare Director Sarah Helvey said in a statement. “This legislation brings a monumental and positive shift in our child welfare system, providing more equality, services, and protections.”
Nebraska Governor Signs Law to End Private Foster Care. Jeremy Loudenback, The Imprint. 04/26/2022

05/16/2023.
Too slowly, Florida gets tougher on human trafficking | Editorial – Sun Sentinel Editorial Board

The reports laid bare a failed system in which a deadly and illicit child sex trade flourishes, in part by allowing hotels to escape responsibility for thousands of violations of a weak state anti-trafficking law. The series showed how a privatized foster care system sometimes lures adolescent kids into an evil world of trafficking, rather than rescuing them from troubled or dangerous homes.

October 30, 2017. “Practice Points – Youth in Privatized Foster Care: What You as an Advocate Need to Know“, American Bar Association.

October 2017. AN EXAMINATION OF FOSTER CARE IN THE UNITED STATES AND THE USE OF PRIVATIZATION. 623 pages. Prepared by the Staff of the Committee on Finance, United States Senate. Orrin G. Hatch, Chairman; Ron Wyden, Ranking Member; 115th Congress, 1st Session.

February 2018. Privatization in Child Welfare: Information compiled by the National Conference of State Legislatures (NCSL).

June 28, 2019. Kentucky House Bill 1 Study Group: Privatization of Child Welfare Services – Recommendations. Prepared by Chapin Hall at the University of Chicago and submitted to the Kentucky Governor, the Interim Joint Committees on Appropriations and Revenue and Health and Welfare and Family Services, and the Child Welfare Oversight and Advisory Committee pursuant to Kentucky Revised Statute (KRS) 620.345(5)

Policy Study 271: Child-welfare Reform and the Role of Privatization. Lisa Snell. Child Welfare Reform.

August 21, 2012. Privatization fails: Nebraska tries again to reform child welfare – Center for Public Integrity by Kevin O’Hanlon, The Center for Public Integrity

Privatization is the change of public or government services to a private enterprise — a company or non-profit. The shift of public services to the private sector has been under review for the last 20-plus years, stemming from an assumption that private companies can help governments save or make money by doing jobs better or more efficiently. But as the Nebraska exercise showed, privatization isn’t a magic solution in and of itself.
Across the board, lawmakers, foster parents and child advocates now say Nebraska’s privatization effort failed because it was ill-conceived, rushed, and inadequately funded. They also say often the caseworkers hired by the private companies had caseloads that were too heavy and in many cases did not have enough training to deal with the complexities of the welfare system.