AUSTIN (Dallas Morning News) — Texas officials have worked for years to change how they manage contractors who care for abused and neglected children. But the effort continues to sputter. Providence Service Corp. of Texas, a for-profit company, recently said it wanted out of a five-year, $150 million contract that made it the sole firm charged with buying and coordinating foster care-related services in a wide swath of West Texas.
Its exit rekindled a debate simmering in Texas since the mid-1990s of whether state protective services officials can hand off administrative duties in a region to one company and then aggressively monitor how it performs.
The goal is to keep children closer to their communities by making it the sole contractor's job to develop a better mix and geographical distribution of foster families, group homes and psychiatric facilities. Children won't bounce from placement to placement as often if they maintain ties to relatives and friends, state officials argue. And they want to remove financial incentives for providers to move slowly in helping children heal and either return to their families or be adopted.
But child advocates also argue over whether Texas can improve care of already traumatized children by tinkering with procurement structures and incentives, even as the Legislature resists spending more. And all the turmoil comes as the state deals with an alarming spike in suspicious deaths of foster children.
The Department of Family and Protective Services admits it whiffed in the first two regions where it tried to launch "foster care redesign" — South Texas and near West Texas. Skeptics also recall an earlier flub in South Texas, where the state pushed to outsource case management duties previously performed by Child Protective Services workers. That venture ran aground in 2006.
Officials say they've learned from the miscues and stress that the current effort doesn't privatize management of children's cases. They also say they expect a smoother transition in their next staging area — Fort Worth and several counties to the city's south and west.
A national expert, though, said adequate funding remains a concern.
"Was there a sufficient allocation of resources for the work being transferred? That's an important question to get right," said Fred Wulczyn, senior research fellow at the University of Chicago's Chapin Hall, which has a contract with Texas to assess how children fare under redesign.
Wulczyn said he agrees with department leaders that early bumps don't discredit the new approach. A revamp of foster care procurement probably will take several years to fine-tune, requiring patience, he said.
The tricky effort poses potentially agonizing headaches for protective services chief John Specia, who inherited the project from his predecessor. Specia must both police and woo the state's largest private child-placing agencies — the only ones with sufficient resources to step up as a region-wide contractor. But some of them have had child placements suspended and other rebukes for violating regulations.
Specia also must contend with a Republican-controlled Legislature, which almost surely won't devote more money to the project. Some child advocates razz him for not even asking.
And Specia, a former San Antonio family court judge, has other big worries: Last year, seven children in traditional foster homes died from abuse and neglect, up from two the previous year. Earlier this month, key GOP lawmakers embraced a consultant's report that slams CPS administrators for hindering rather than helping front-line workers. Workers spend just 26 percent of their time with kids and families, the report said.
Other privatization efforts in Texas have had troubles, too. Among the outsourcing pushes that wound up disrupting services and not saving money as expected were Accenture's call centers, which were supposed to streamline public assistance applications by the poor; IBM's contract to consolidate state agencies' server farms; and letting Xerox and its subcontractor decide whether children on Medicaid need braces.
Southern Methodist University political scientist Cal Jillson, who has studied state privatization efforts, says the foster care experiment fits a larger pattern of moving too quickly, lowballing costs and not riding herd on vendors.
Such projects stumble "almost every time, when the profit motivation leads to too few people delivering the service for it to be credibly done," especially in sensitive social services programs such as child protection, he said.
Several advocates for children, and even some care providers, say Specia should cancel plans to take redesign to more regions. They recommend waiting for several years' worth of data about children's safety and well-being from the Fort Worth expansion before going any further.
"Slow it down," said foster care contractor Rebecca Allen, president of the Texas Association of Child Placing Agencies.
Katherine Barillas of One Voice Texas, who wrote a doctoral dissertation on Texas' past attempts to expand use of private companies in foster care, said the department didn't do its homework before inking its deal with Providence.
"Nobody should have been acting surprised, like, ‘Whoa, this is costing us too much money,' " she said. "That was not a secret."
The department lacks credibility in enforcing contracts, Barillas said.
"If you have a state that can't run its contracts well and has trouble having resources to serve children and families … how are they then going to hold a single [regional] contractor accountable?" she asked. "They can't sell responsibility for these children like water rights are sold off in Brazil."
Specia and Kaysie Reinhardt, the department's point person on the effort, said they've acted responsibly. No state has attempted precisely what Texas is proposing, they said.
But Texas copied some features of a performance-based approach to contracting that have worked in Tennessee, Reinhardt said. If children assigned to a vendor do well and leave paid foster care more quickly — either returning to their families or being adopted — state savings are shared with the vendor, she said. The vendor must spend the money on kids, she said.
In the first five years, Tennessee officials "were able to leverage $20 million to reinvest for service improvement," Reinhardt said.
While Tennessee didn't use a regional top-contractor, Kansas, Florida and Nebraska did. Each of those states, though, have encountered major difficulties with expanded outsourcing. Lead agencies went bust, children's placements were disrupted and, in Nebraska, lawmakers ultimately shifted duties back to state workers.
Specia said Texas avoided such pitfalls by keeping a CPS worker in charge of a child's case management. The worker writes a detailed plan prescribing what therapies and services a child needs and appears in court to advise judges on a child's placement and long-range prospects.
"We didn't privatize the way Kansas or Florida did," Specia said. "It's a very, very different model — a much more limited model."
Some critics call the system redesign a sop to providers, who long have complained of low payments from the state and of being shut out from working with children's families — access they say they need to do a better job.
In redesign, a region's uber-contractor has to accept all children and coordinates purchase of their services. Ultimately, private agencies will be able to work with families.
The department and, more important, lawmakers haven't been inclined recently, though, to revisit case management outsourcing — or to go a step further and let private company workers take the places of CPS workers in court.
As for money, Specia responded, "It's a legislative decision whether more money is put in this."
Nancy Holman, head of the Texas Alliance of Child and Family Services, an influential group of providers, told House lawmakers this summer that state payments cover only 85 percent of child-placing agencies' expenses. The companies raise the rest through fund drives, she said.
In West Texas, money was a problem, Providence executive Mike Fidgeon said in an email.
"That's certainly an issue we believe the Legislature may want to study," he said.
He said his company and the state made erroneous assumptions and faced major barriers, such as "lack of a robust network of foster families in the expansive 60-county West Texas service territory." Children had greater needs than expected, and the state made changes to its own computer system on the eve of rollout, complicating Providence's task, Fidgeon said.
Reinhardt acknowledged the department "had some challenges initially with the IT part."
Specia, though, said Providence inappropriately kept children in expensive shelters and failed at a key task — recruiting more foster parents.
Looking ahead, Specia said redesign needs at least two more regional tests, beyond Fort Worth. He wouldn't say which of his 16 proposed regions are on deck. He noted that the plan's financial carrots for better performance haven't been tested. If the plan were rolled out statewide, the department's contracts unit, which currently keeps an eye on 300 contractors, could focus on just 16, he said.
"The current system is broken," he said. "I can get more control of it if it's decentralized, in a smaller number of contractors."
Follow Robert T. Garrett on Twitter at @RobertTGarrett.
Expanding foster care privatization in fits and starts:
2001: The state abandons PACE after lead vendor Lena Pope Home Inc. says it has lost $3 million.
2005: Lawmakers overhaul CPS after a series of horrific child deaths in homes already under active investigation by state workers. A new law requires case management for foster children to be privatized in one regional pilot program by 2007 and statewide, by 2011.
2006: Protective services officials choose Providence Service Corp., rather than a San Antonio nonprofit, to serve as an "independent administrator" that will develop a provider network and assume case management duties in Bexar and 27 nearby counties. San Antonio lawmakers protest and the state postpones action, effectively killing the pilot program.
2007: A new law scraps the earlier timetable. Lawmakers require the Department of Family and Protective Services instead to start a pilot in which 5 percent of children coming into CPS custody will have vendors manage their cases.
2009: The department says outsourced case management would require more money. Lawmakers repeal the requirement.
2010: The state, private child-placing agencies and child advocates agree on a new approach that involves a regional über-contractor but no privatization of case management.
2011: Lawmakers codify the "foster care redesign" plan as law. The plan calls for a super vendor to hire other providers in a region and eventually to receive financial rewards for healing children and moving them through foster care to adoption or family reunification more quickly. An experiment is to start in two regions, one urban and one rural.
2012: The protective-services department awards the urban super vendor contract to Lutheran Social Services of the South Inc. Officials later rescind it, though, citing serious regulatory violations by Lutheran at some of its branch offices around state.
2013: Two companies, Providence and Abilene-based New Horizons, bid to be the top contractor in rural West Texas. Providence wins, and the state begins assigning it foster children. The department revives the urban effort Tarrant County and six counties to its south and west, selecting locally based ACH Child and Family Services Inc. over Lutheran.
April 15, 2014: Child advocates tell a House panel that Providence is $2 million in the red. Department chief John Specia confirms to The Dallas Morning News that the company wants more money.
July 31: Providence opts out of its contract. It urges the Legislature to reconsider a requirement that redesign cost no more than the previous system. The company says it couldn't make "cost neutrality" work in the West Texas region's "unique conditions."
Aug. 1: Specia, ignoring pleas that he wait for results from the ACH Child rollout in greater Fort Worth, vows to press ahead in two more regions.
SOURCES: Texas Department of Family and Protective Services; Dallas Morning News research