Fiscal Concerns Shouldn't Lead to Privatization

By Joe Kroll, NACAC executive director

In Michigan, the state Senate has proposed to contract out all licensed foster care services to private agencies to save funds. As one supporter of the move, Subcommittee Chairman Bill Hardiman (R-Kentwood), explained "We can no longer afford to simply make small cuts, slowly whittling away state services," he said in a statement. "I realize change is difficult, but it is necessary."

On the child welfare continuum, contracting represents the midpoit between public responsibility and full privatization. The private contracting of foster care services needs to be done carefully and thoughtfully and should be done only to improve outcomes for kids, not to save money. NACAC believes that private agencies should only be brought in to complement state efforts, not replace the state's fundamental responsibility to child welfare. The public agency must be properly funded to assiduously monitor and evaluate the success or failure of contracting. States, and the federal government, need to invest in protecting children and providing them with permanence.

States like Michigan may be driven to save money because they have been receiving less federal child welfare funding over the last 10 years. Michigan is one of the many states that has lost federal funding between 1998 and 2004, due in part to an outdated federal funding formula. Currently, federal foster care funding is tied to a child's birth family's income—at levels not updated since 1996.

As detailed in the report Time for Reform: Fix the Foster Care Lookback, between 1998 and 2004, 35,000 fewer foster children have been eligible for federal foster care assistance, which translates into an $1.9 billion loss to the states during this time. States are required by law to protect these children, so must tap into state funds to make up the difference. In 2006, the National Governors Association issued a statement that noted, "Congress, in consultation with states, should explore options to eliminate the outdated 'look back' provision... While recognizing that this could be a costly endeavor, Governors believe that ideally all children in care, regardless of family income or jurisdiction, should be treated equally."

It's time to eliminate the lookback to 1996, and for the federal government to support all children and youth in need for protection and permanency.