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Who's next on Tom Corbett's secret chopping block?

Report: Corbett administration considers privatizing
PA Department of Public Welfare

A tip leads to an interesting trail


A few weeks back I received an interesting and thought-provoking communication from an anonymous Pennsylvania state worker.

The state employee complained about secretive efforts of Gov. Tom Corbett to privatize various state agencies, including the state lottery, the state store liquor system, and the Pennsylvania turnpike.

Pennsylvania Department of Public Welfare Building Harrisburg PA

PA DPW Building, Harrisburg

Was I aware that the Corbett administration hoped to privatize far more than these three small agencies? the tipster related.

"They're talking about privatizing the Pennsylvania Department of Public Welfare," I was told.

Interested parties, the tipster continued, recently "came up from Florida to tour DPW and study the potential to privatize the department."

This communication would prove interesting for several reasons.

A look at Pennsylvania's state workforce statistics tells part of the story. The Pennsylvania Department of Public Welfare (DPW) employees more people than any other department in state government.

In 2012, DPW employed 15,931 people, according to statistics provided by the state (see graph below). The only other state agency to come close to employing this number is the Department of Corrections, with some 15,131 employees in 2012.

All told, there were 80,766 employees working for the state in 2012. So the Department of Public Welfare's complement accounts for almost one in five state workers, or 20 percent of the state work force.

By contrast, the other agencies known to be on the auction block for privatization are much smaller.

The Pennsylvania lottery, for example, only employs about 170 people, many who may lose their jobs if the management of the lottery is turned over to private enterprise. But that's small potatoes.

The Liquor Control Board, by contrast, employed 2,987 workers in 2012. The Pennsylvania Turnpike only had about 2,100 employees in 2012, including about 600 toll workers who may lose their jobs if plans proceed to automate the roadway's toll plazas.

If the Corbett administration is looking to throw as many public employees overboard as possible, DPW's almost 16,000-person workforce is a tempting target.

Pennsylvania state government workforce by agency (click image or here to enlarge). Source: Commonwealth of PA



















The whipping boy and Jerry Sandusky

There are other philosophical and management reasons why Corbett's Republican administration may wish to clip DPW's wings.

PA DPW, with its massive budget (both state and federally funded), is a perennial whipping boy in Republican political campaigns for supposed "waste, fraud and abuse."

There can be no doubt that the huge department is badly mismanaged, and is largely unaccountable.

For years, for example, PA DPW supplied kids to Jerry Sandusky and his Second Mile charity in State College. In 1998, DPW refused to properly investigate allegations that Sandusky was sexually abusing boys in his care, including foster kids provided by DPW.

There are growing calls to investigate DPW's sprawling bureaucracy for these and other offenses against kids supposedly under the department's care.

As the Sandusky case alone demonstrates, there's plenty of reasons for heads to roll at DPW, with or without privatization.


What would prove particularly interesting to me was the tidbit from my anonymous tipster that "interested parties had come up from Florida" to study the possibility of privatizing many or all of DPW's services.

Florida, I soon learned, is at the forefront of efforts to privatize social service agencies around the country.

Florida, in fact, is only one of two states (the other being Kansas) to privatize its social services in wholesale fashion.

The movement to privatize social service agencies like PA DPW certainly has plenty of growth potential. So it's worth a look at Florida's efforts to privatize social services.

Studies by diverse groups, including a public service labor union and a conservative think tank, suggest reason for serious consideration.

Under privatization, the number of Florida children in foster care, for example, has dropped from 30,000 to less than 20,000, a 33 percent reduction, according to a 2012 study by the Foundation for Government Accountability, a "free market" think tank in Naples, Florida.


The Florida model

The move to privatize social services in Florida began in the 1990s, Erin Gillespie, press secretary for the Florida Department of Children and Families, tells me.

"Our foster care system was privatized by law in 1999," Gillespie says, though it took several years to get the programs in place.

"Eighteen community-based care agencies now contract with us for things like prevention, intervention, family services, foster care, adoption, independent living, and programs for children who 'age out' of the system," Gillespie says.

"We contract with those local agencies," Gillespie explains. "They're local organizations and they're all non-profits." Among the contracting agencies, she tells me, are "the Eckerd foundations and groups like Lutheran Services."

"But we are still the department in charge," Gillespie goes on. "We still do oversight, monitoring, licensing, and child abuse investigations, and we run the state child abuse hotline.

"We also house the firm of attorneys, as well as substance abuse and mental health services."

As in most, if not all, states, she says, the "majority of our funding comes from the federal government."

In 2006, she says, Florida received what's called an "IVE Funding Waiver from the federal government. The waivers allow upfront payments so that kids won't be disrupted or moved from a foster home, for example, for minor problems like substance abuse."

All this, I told Gillespie, was quite interesting.

But what about Pennsylvania?

I explain that I'd heard that social service privatization experts perhaps had traveled from Florida to study Pennsylvania's Department of Pubic Welfare. Had someone from her department traveled to Pennsylvania, perhaps to consult? I asked.

"Our budget is so small that I doubt it," Gillespie tells me. "I would imagine that Pennsylvania officials would come here."

Well then, had someone from Pennsylvania state government visited her department? I asked.

Not that she was aware of, she said.

Gillespie told me she would contact the office of her boss, David Wilkins, the secretary of the Florida Department of Children and Families. Perhaps Wilkins' office might know of contacts with Pennsylvania officials, she suggested.


Mystery thickens

Press secretary Gillespie soon sent me an email titled, "Privatization info."

"Hi Bill," Gillespie wrote. "This is the person I was told might have visited PA. He is with one of our contracted agencies in Tampa: Ron Zychowski, Eckerd Community Alternatives."

Zychowski, it turned out, is Eckerd's chief operating officer. He's also a talented pitchman for Eckerd, I read on the firm's website.

In an April 2010 article titled "Eckerd Child Welfare Case Management Contract Award," the company website explains, “Ron Zychowski did a masterful job presenting to the (Palm Beach County, Florida) evaluation committee... He passionately communicated Eckerd’s philosophy and approach to engaging the children, families, staff and stakeholders of Palm Beach County.”

"Although Eckerd has offices and facilities in six states, we serve children and families nationwide," Eckerd's website further explains.

A map shows six states where Eckerd has offices: Florida, Iowa, Louisiana, North Carolina, Texas and Vermont.

There's obviously plenty of growth potential for private firms like Eckerd: the map also suggests the 44 states where Eckerd has yet to open offices.


"We're a national company," one of Eckerd's employees tells me when I ring the firm. "We're the leading provider of services for two judicial districts in Florida."

I finally get through to Eckerd COO Zychowski. I explain I'd been referred by Sec. Wilkins office at the Florida Department of Children and Families.

"There must be some mistake," Zychowski tells me. He's never had the pleasure of being in Harrisburg, Pennsylvania, he tells me.

"We're not doing anything in Pennsylvania," he tells me. There's a short pause.

"We are doing a little bit of work in Philadelphia," he adds. But not with the state. With the City of Philadelphia.

Philadelphia has its own large Department of Human Services which, bureaucratically at least, is distinct from the Pennsylvania Department of Public Welfare.

Even so, there's plenty of historic and financial overlap shared between the state and its largest municipal social services department. Former Gov. Ed Rendell's Secretary of Public Welfare, Estelle Richman, for example, previously worked as Director of Social Services for the City of Philadelphia. Richman now works as senior advisor to the secretary of the U.S. Department of Housing and Urban Development (HUD).

"We're not doing anything in Pennsylvania other than a very, very small consulting contract with a police district in Philadelphia," Eckerd's Zychowski tells me.

He explains that Philadelphia in fact is seeking to privatize some of its social services, which are organized, he says, around 20-some police districts.

"Within one of the police districts a small provider has in interest in that, and we're working with them." he explains. "The City of Philadelphia has an RFP (request for proposals) out for that." The Philadelphia RFP is due in the coming weeks, he explains.

Zychowski is a pleasant, able and engaging sort of executive. He speaks of improving outcomes for the kids under his firm's care.

Peter Drucker

Peter Drucker: Managing for Results

(The term "outcomes" is part of the lexicon of results-based reporting standards, which, at least the theory goes, can be used to readily compare the results and effectiveness of social service agencies. Results management was championed by management and privatization guru Peter Drucker throughout his long career, as in his 1964 book Managing for Results. Drucker's techniques have since been applied to U.S. social service agencies by quasi-private/government groups like Community Action, which itself was founded in the early 1960s by President John F. Kennedy and his brother-in-law, Sargent Shriver.)


Social services privatization: Wave of the future?

Expect more privatization of social services in the United States, Zychowski tells me.

"Yes, it's the wave of the future, but its shape and form and function are going to very from state to state," Zychowski adds.

He points out that the two states that already have largely privatized their social services -- Florida and Kansas -- "have very, very different models."

The basic idea, he says, is "to put the service delivery in the hands of the private sector." Firms like his, he says, "are better service providers than the public sector."

"The power behind community-based care is the engagement of the community and the ownership of the community in need of help and assistance," he says.

"As long as the state continues to do this, you're going to have people who have no understanding of what's going on in their community," he adds.

Zychowski tells me that when he goes out to speak before community groups, he tells people, "Did you know that by the time I finish this fifteen minute conversation, fifteen children will be abused?"

We have a pleasant chat for a few minutes. I explain to him some of the problems now surrounding the troubled Pennsylvania Department of Public Welfare. Sandusky. Second Mile. Foster kids betrayed by an unresponsive state bureaucracy.

Not long after I hang up, I get the news that Gov. Tom Corbett's Secretary of Public Welfare, Gary Alexander, has just resigned, "to spend more time with his family," a press release says.

I call Sec. Alexander's office to speak with him about his resignation, and to ask about social services privatization efforts in Pennsylvania.

A receptionist tells me outgoing Sec. Alexander is not available, and refers me to the press office.

I'm still waiting for a return call from the 16,000-person strong Pennsylvania Department of Public Welfare.


to be continued ...


--Bill Keisling

posted February 24, 2013




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