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  • House Hearing, 105TH Congress - Social Services Privatization: The Benefits and Challenges To Child Support en - Forcement Programs

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    Congressional Hearing Held: 1997-11-04

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    HOUSE HEARING, 105TH CONGRESS - SOCIAL SERVICES PRIVATIZATION: THE BENEFITS AND CHALLENGES TO CHILD SUPPORT EN- FORCEMENT PROGRAMS

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    Congressional Hearing Held: 1997-11-04

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    House Hearing, 105TH Congress - Social Services Privatization: The Benefits and Challenges To Child Support en - Forcement Programs

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    Congressional Hearing Held: 1997-11-04

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    SOCIAL SERVICES PRIVATIZATION: THE BENEFTIS AND CHALLENGES TO CHILD SUPPORT EN. FORCEMENT PROGRAMS HEARING BEFORE THE SUBCOMMITTEE ON HUMAN RESOURCES OF THE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTH CONGRESS FIRST SESSION NOVEMBER 4, 1997 Serial No. 105-117 Printed for the use of the Committee on Government Reform and Oversight ae U.S. GOVERNMENT PRINTING OFFICE 48-604 WASHINGTON : 1998 For sale by the U.S. Govemment Printing Office ‘Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 ISBN 0-16-057120-0 2 COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT DAN BURTON, Indiana, Chairman BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California J. DENNIS HASTERT, Illinois TOM LANTOS, California CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jx., West Virginia CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York CHRISTOPHER COX, California PAUL E. KANJORSKI, Pennsylvania ILEANA ROS-LEHTINEN, Florida GARY A. CONDIT, California JOHN M. McHUGH, New York CAROLYN B. MALONEY, New York STEPHEN HORN, California THOMAS M. BARRETT, Wisconsin JOHN L. MICA, Florida ELEANOR HOLMES NORTON, Washington, THOMAS M. DAVIS, Virginia DC DAVID M. MCINTOSH, Indiana CHAKA PATTAH, Pennsylvania MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland JOE SCARBOROUGH, Florida DENNIS J. KUCINICH, Ohio JOHN B. SHADEGG, ‘Arizona ROD R. BLAGOJEVICH, Mlinois STEVEN C. LATOURETTE, Ohio DANNY K. DAVIS, Ilinoi MARSHALL “MARK” SANFORD, South JOHN F. TIERNEY, Massachusetts Carolina JIM TURNER, Texas JOHN E. SUNUNU, New Hampshire THOMAS H. ALLEN, Maine PETE SESSIONS, Texas HAROLD E. FORD, Jr., Tennessee MICHAEL PAPPAS, New Jersey — VINCE SNOWBARGER, Kansas BERNARD SANDERS, Vermont BOB BARR, Georgia (Independent) ROB PORTMAN, Ohio KevIn BINGER, Staff Director DawteL R. MOLL, Deputy Staff Director WILLIAM MoscHELLA, Deputy Counsel and Parliamentarian duprth McCoy, Chief Clerk Put. ScHILIRO, Minority Staff Director SUBCOMMITTEE ON HUMAN RESOURCES. CHRISTOPHER SHAYS, Connecticut, Chairman VINCE SNOWBARGER, Kansas EDOLPHUS TOWNS, New York BENJAMIN A. GILMAN, New York DENNIS J. KUCINICH, Ohio DAVID M. McINTOSH, Indiana THOMAS H. ALLEN, Maine MARK E. SOUDER, Indiana TOM LANTOS, California ‘MICHAEL PAPPAS, New Jersey BERNARD SANDERS, Vermont (Ind.) STEVEN SCHIFF, New Mexico THOMAS M. BARRETT, Wisconsin EX OFFICIO DAN BURTON, Indiana HENRY A. WAXMAN, California LAWRENCE J. HALLORAN, Staff Director and Counsel ANNE MARIE FINLEY, Professional Staff Member R. JARED CARPENTER, Clerk CHERRI BRANSON, Minority Counsel Karen LiGHTPOOr, Minority Professional Staff Member ap CONTENTS Hearing held on November 4, 1997 Statement of: Bilirakis, Hon. Michael, a Representative in Congress from the State of Flori 7 Jensen, Geraldine, president, Association for Children for Enforcement of Support; and Charles ‘Trom, director, Child Support Division, Ven- tura County, CA Melis, Robert "M.,""vice president, "Policy "Studies "ine; "Bard “D. Shollenberger, director of Government Relations, Lockheed Martin IMS; David A. Hogan, president, Child Support Enforcement Division, Maximus; and Peter J. Genova, senior , Child Support Pro- grams, GC Services Nadel, Mark V., Associate Director, U.S. General Accounting Office, ac- companied by David P. Bixler, Assistant Director, Accounting Office Letters, stat etc., sul for the record by: Michael, a Representative in Congress from the State Bilirakis, Hon. of Florida: Letter dated November 3, 1997 Prepared statement of Genova, Peter J., senior prepared statement of Hogan, David A. president, [aximus, prepared statement of Jensen, Geraldine, president, Associat of Support, prepared statement of .. Kucinich, Hon. Dennis K., a Represent 140 69 32 4 17 124 a 143 Prepared statement of Lantos, Hon. Tom, a Represe fornia, prepared statement of .. Melia, M,, vice president, , at , Us Information concerning debt collection Information concerning liability Information concerning marketing Prepared statement of Shaye, Hon, Christopher, of Connecticut, prepared Shollenberger, Bard tin IMS, prepared statement of. Towns, Hon. Edolphus, a Representative in of New York, prepared statement of Trom, Charles, director, Child Support Division, prepared statement of. an SOCIAL SERVICES PRIVATIZATION: THE BEN- EFITS AND CHALLENGES TO CHILD SUP- PORT ENFORCEMENT PROGRAMS TUESDAY, NOVEMBER 4, 1997 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HUMAN RESOURCES, COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT, Washington, DC. The subcommittee met, pursuant to notice, at 2:08 p.m., in room 2247, Rayburn House fice Building, Hon. Christopher Shays (chairman of the subcommittee) presiding. Present: Representatives Shays, Snowbarger, Pappas, Towns, Barrett, Kucinich, Allen, and Waxman. Staff present: Lawrence J. Halloran, staff director and counsel; Anne Marie Finley, professional staff member; R. Jared Carpenter, clerk; Cherri Branson, minority counsel; Karen Lightfoot, minority professional staff member, and Ellen Rayner, minority chief clerk. ae Suays. The Subcommittee on Human Resources will come to order. We welcome our witnesses and guests to this hearing and also welcome the ranking member of the full committee. This is the first of a number of hearings the subcommittee plans to hold on the im- plementation and implications of last year’s welfare reform law. In the months ahead, we will discuss the fundamental changes under- way in critical human service programs, including child welfare, job training, and child support enforcement. And meeting our jurisdic- tional charge to monitor intergovernmental relations, we will look carefully at the new responsibilities and greater flexibility given States in moving people from welfare to work. In preparation for these hearings, we asked the General Account- ing Office, the GAO, to study one tool increasingly employed by States and localities to meet social service program goals—privat- ization. Defined as involving the private sector to varying degrees in the performance of governmental function, privatization of social service delivery is a growing, but not well-understood, phenomena. So we asked GAO to focus on three key questions: One, what is the recent history of State and local government efforts to privatize federally funded social service? Two, what are the key issues sur- rounding State and local privatized services? Three, what are the Federal policy implications of State and local social service privat- ization? The answers released by GAO today provide an important per- spective on the promises and pitfalls of contracting for the private @ 2 performance of public activities. According to the study, program officials are motivated by, “increasing public demand for public services and a belief that contractors can provide higher quality services more cost effectively than can public agencies.” Yet, the re- port cautions that an absence of robust competition, a lack of, expe- rience specifying contract results, or a failure to monitor perform- ance can undermine privatization benefits and damage program quality. Since Federal efforts to improve child support enforcement began in 1975, billions of dollars have been spent helping States locate absent parents, establish paternity, obtain State court orders, and collect payments. Yet in 1996, families received only 21 percent or $11.7 billion of the $56.3 billion owed in current and past-due sup- port. To improve those figures and to fulfill the fundamental premise of welfare reform—personal responsibility—Congress has put in place an extensive program of incentives and program stand- ards. Most recently, the House passed a bill to tie Federal CSE payments more closely to State program performance. Today we will discuss another proposal to strengthen child support enforce- ment: H.R. 399, a bill to deny Federal finance assistance to anyone who is not meeting his or her court-ordered obligation. To meet the challenges of welfare reform, CSE programs are also looking to long-established debt collection practices in the private sector to streamline operations and instill performance-based in- centives. Efforts to contract for the performance of some of or all aspects of CSE programs have met with some success, and GAO re- ports State and local government officials expect the growth of so- cial service privatization to continue. Our witnesses today will describe their work to improve both the efficiency and effectiveness of child support enforcement through competition and other market forces. But privatization is no pana- cea. Perverse incentives and unintended consequences can appear when privatization becomes the end, not the means to achieving government’s basic mission to serve. Our final panel of witnesses today offers cautionary testimony on the perils of privatization gone too far. In a future hearing, we will hear from the Department of Health and Human Services’ Office of Child Support Enforcement, as well as State and local CSE offi- cials, on their approaches to the extraordinary growth of privatiza- tion. When he signed the welfare bill, President Clinton observed, “The current welfare system is fundamentally broken, and this may be our last best chance to get it straight.” In this hearing, and in the coming months, we will ask whether Federal and State pol- icymakers are making the most of that chance. ‘We welcome all our witnesses to this hearing, the beginning of our examination of welfare reform and social service delivery in an era of smaller government, and we look forward to their testimony. Now it’s my privilege to welcome the ranking member of the full committee, Mr. Waxman. Nice to have you here. [The prepared statement of Hon. Christopher Shays follows:] eae Congress of the United States Eee House of Representatives: al COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT aS 2157 Ravourm House Orne Buxowa SUBCOMMITTEE ON HUMAN RESOURCES. ‘Omtophr Shaye, Comorian ao 8.392 Rey Balding Mad: groc@ma house. gow Statement of Rep. Christopher Shays November 4, 1997 ‘This is the frst of number of hearings the Subcommitee plans to hold on the implementation and implications of last year's welfare reform law. In the months ahead, we will discuss the fundamental changes underway in critical human service programs, including child ‘welfare, job training, and child support enforcement. And, meeting our jurisdictional charge to ‘monitor intergovernmental relationships, we will look carefully at the new responsibilities, and ‘greater flexibility, given states in moving people from welfare to work. In preparation for these hearings, we asked the General Accounting Office (GAO) to study one tool increasingly employed by states and localities to meet social service program goals -- privatization. Defined as involving the private sector to varying degrees in the performance of a governmental function, privatization of social service delivery isa growing but ‘ot well understood phenomenon So we asked GAO to focus om three key questions: (1) What is the event history of state and local government efforts to privatize federally funded social service? (2) What are the key issues surrounding state and local privatized services? (3) What are the federal policy ‘implications of state and local social service privatization? The answers, released by GAO today, provide an important perspective on the promises and pitfalls of contracting for the private performance of public activities. According to the study, program officials are motivated by “increasing public demand for public services and a belief that contractors can provide higher-quality services more cost-effectively than can public agencies." Yet the report cautions that any absence of robust competition, a lack of experience specifying contract results ora failure to monitor performance, can undermine privatization benefits and damage program quality. Statement of Rep. Christopher Shays November 4, 1997 Page? Since federal efforts to improve child support enforcement began in 1975, billions of dollars have been spent helping states locate absent parents, establish paternity, obtain state court orders, and collect payments. Yet in 1996, families received only 21 percent, or 11.7 ofthe $56.3 billion owed in current and past due support. To improve those figures, and to fulfill the fundamental premise of welfare reform — personal responsibility ~ Congres has put in place an extensive program of incentives and program standards. Most recently, tbe House passed a bill ote federal CSE payments more closely to state program performance. Today, we will discuss another proposal to strengthen child support enforcement, H.R. 399, a bill to deny federal financial assistance to anyone who is ‘not meeting his or her court-ordered obligation To mect the challenges of welfare reform, CSE programs are also looking to long. established debt collection practices in the private sector to streamline operations and instill performance based incentives. Efforts to contract forthe performance of some or all aspects of CCSE programs have met with some success, and GAO reports state and local goverament officials expect the growth of socal service privatization to continue. Our witnesses today will

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