Capital News Service

of the Michigan State University School of Journalism

Higher costs seen in move to private foster care services

By RACHEL IOVAN
Capital News Service

LANSING – Management of foster care services in Michigan are increasingly going private, but an analysis for the Ottawa County Commission suggests that the trend would cause a sharp increase in costs for the county.

The county study shows that state-provided foster care services cost $174,590, while purchasing care from private agencies cost $297,087 in 2009-10 and that means purchasing services from private foster agencies care cost $122,497 more than if the state had provided them directly.

The analysis was based on a caseload of 18 children for each worker.

However, Janet Reynolds, executive director of the Michigan Federation for Children and Families, says that the Ottawa County report omits significant costs.

She said an accurate study must be done by an organization that doesn’t have a stake in the outcome, or the results may be skewed.

The federation is a nonprofit advocacy group that works on issues involving private foster care agencies, children and families.

Reynolds said she can’t see where the county’s claimed cost differential comes from because private employees who recently graduated from college generally earn $8,000 to 10,000 less than state foster-care caseworkers.

A disclaimer on the study said the state Department of Human Services (DHS) did not endorse the Ottawa County findings because a state-level analysis with more cost factors would be needed.

DHS did not dispute the study either, said Mel Haga, executive director of the Michigan County Social Services Association.

Loren Snippe, the director of the Ottawa County Department of Human Services (DHS), said he conducted the study partly because Michigan’s foster care caseload per worker is mandated to drop to 15. That will require DHS to either hire more staff or purchase services from private agencies.

He said he is unaware of any similar studies by the state or other counties.

The reduced caseload results from a 2008 settlement of a lawsuit against the state by Children’s Rights, an advocacy group.

There are 15,369 children in foster care in Michigan. Private agencies manage 45 percent of those cases and 55 percent are through DHS. Gov. Jennifer Granholm has ordered a reversal of that ratio next year for budget reasons.

Snippe said Michigan foster care caseworkers are working to meet the new requirement and can legally handle 20 cases right now. He said that some DHS employees were handling more than 30 cases each before the settlement.

Snippe said it takes 10 workers to handle 200 foster kids when the maximum cases per worker are 20. Once the caseload is lowered to 15, the county must hire more workers to manage the same number of children, and his study shows that the state could save money if the cases are handled internally instead of contracting out to private agencies.

According to Haga of the Social Services Association, when jobs move to the private sector, it may appear that the state is becoming more efficient with fewer public employees on the payroll. However, the state must still pay for and provide the same services.

The association represents DHS county administrators and board members.

Snippe said, “I’m concerned that the state is going to purchase more services instead of providing them directly through DHS, even though there’s a huge cost difference.”

The public perception is that private agencies cost less because salaries are lower, but he said his study doesn’t support that.

Susan Grettenberger, program director of social work at Central Michigan University, said that the Ottawa County study may have left out administrative costs, which could explain the gap.

“There’s clearly a difference in cost between private and public services, but nothing I could think of would explain such a large discrepancy,” said Grettenberger.

The federation’s Reynolds said foster care management is continuing to go the way of adoption services, with nearly all adoptions going through private agencies and with DHS in a regulatory role.

“It would be the most cost-effective for the state to do what it’s best at and for the private agencies to do what they’re best at,” said Reynolds.

She said private and state agencies should work together to get the best results for foster children.

Asked about the accuracy the study, Snippe acknowledged that the numbers aren’t as precise as they could’ve been.

“The goal was not to get perfect numbers, but to draw attention to the issue,” said Snippe, “somebody in Lansing ought to sit down and look thoroughly at the numbers before making big changes.”

© 2010, Capital News Service, Michigan State University School of Journalism. Not to be reproduced without permission.

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Filed under: Social Policy

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