Kansas' bold experiment in child welfare
Program to hand over its caseload to businesses runs into financial problems.
It was billed as the grand experiment in privatizing child welfare.Skip to next paragraph
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Kansas would bid out adoption, foster care, and other services to private companies. They'd be paid a lump sum for each child. It was up to them to figure out how to deal with the caseload.
But somewhere between idea and implementation, things went wrong.
Without question, there have been significant advances. Among other things, Kansas has leveled the imbalance in services between poorly served rural areas and better-served cities, and adoptions are up 81 percent.
Yet the much-anticipated revolution in child welfare never occurred. Instead of creating a managed care system similar to a health-maintenance organization, the changes yielded only a semi-privatized system. Moreover, with one of the original private contractors now teetering on the edge of bankruptcy, the state has taken a step back from some of its boldest reforms.
As the presidential candidates begin to debate in earnest privatizing more social services, Kansas is a cautionary tale about the limits of privatization. It raises question about whether some social responsibilities - such as the welfare of children - sit uneasily on private shoulders.
"Kansas was everybody's poster boy for managed care," says Alfred Kahn, professor emeritus at Columbia University in New York and co-author of a forthcoming report on privatization. "And they have nothing to show for it yet that anybody should copy."
A lump sum
Kansas' managed-care plan was set up on the innovative idea that each child in the adoption system came with roughly $13,500 in funding. The state would pay the private agency caring for the child half that amount when the child entered the system, another 25 percent when they were placed with adoptive parents, and the final 25 percent when the adoption became legal.
The goal was to provide a monetary incentive for the agency to find homes for children as soon as possible.
And the new system has made progress.
In addition to the leveling of urban and rural services and the improved adoption rate, the program is moving children back to their original families or adoptive parents more quickly. The state is also offering more services to more children than ever, and it is collecting far better data so it can hold contractors accountable to its new goals for child placement.
"The system was so significantly underfunded in Kansas," says Joyce Allegrucci, assistant secretary for children and family policy at the state's Department of Social and Rehabilitation Services in Topeka. "We have significantly more resources for children in this state than ever before."
But recently, burgeoning problems have overshadowed the successes. Unable to move some hard-to-adopt children into new homes, the agency that has run Kansas' adoption program, Lutheran Social Services, has piled up huge debts.
Another challenge: the new process in 1996 was so different from the old system that no one knew how much it would cost, so monetary figures were just officials' best estimates.
As the costs became clearer, the state gave out more money - foster care funding alone has jumped nearly 17 percent since the new program took effect four years ago. But the increases haven't been enough to slow Lutheran Social Services' losses.
Late last month, Lutheran Social Services of Kansas and Oklahoma told its subcontractors it had only $7.3 million to pay off some $9.8 million in debt. It has offered to pay its subcontractors 74 cents on the dollar.