Cozy Ties

In the battle to privatize welfare services in Texas, corporate bidders have enlisted some inside help

"We feel that a corporation whose chief motive is profit won't be hiring the people with the right skills, and won't pay well enough to attract people who are trained enough to know what welfare recipients need and what they can get," says the TSEU's McCray. Her union represents some 5,000 public workers who could lose their jobs to private firms. "We envision people getting $7 an hour with few benefits and no training, under pressure to push through as many people as possible and give out as few benefits as possible."

Meanwhile, state Representative Hirschi worries that for-profit firms may leave rural and special needs clients out in the cold: "There's some concern that these for-profit companies would tend to skim those that are most easily employable," says the Wichita Falls legislator, "and would be less interested in taking care of special needs clients, who we worry would fall through the cracks."

Not so, retorts Health and Human Services' Stuart, who insists there is "absolutely no financial incentive" for corporations to reduce benefits or deny recipients. But he can't document exactly how the state will ensure this -- details of the program are being kept confidential. Stuart concedes, however, that "efficiency" innovations will involve layoffs: "The majority of the savings are in personnel."

Promoters say TIES is a benign efficiency measure that will improve access and reduce duplicative paperwork. But the project's expansiveness -- simultaneously integrating and privatizing cash assistance, food stamps and Medicaid programs -- may be its downfall. In its rejection of the current TIES plan two months ago, the Clinton administration cited federal laws requiring that food stamps and Medicaid be handled by public "merit system" employees. Several Republican congressmen from Texas -- including Bill Archer, Dick Armey and Larry Combest -- are now lobbying the House Agriculture Committee in an attempt to privatize food stamp programs.

The Clinton administration was careful to leave an opening for future TIES approval. After all, Clinton's 1996 welfare reform law enables -- some say encourages -- privatization of cash assistance programs (now called "Temporary Assistance for Needy Families," or TANF). In their May letter to McKinney, federal authorities said that "with respect to the administration of TANF, [Texas] can use non-public employees without limitation."

Following the federal rejection of TIES and mounting opposition in Washington and Austin, the Legislature revamped the program in its recently completed session -- retaining its goals while changing its ways. The new law creates a TIES legislative oversight committee, which, along with the Legislative Budget Board, will participate in the design and approval of the new program -- loosening somewhat the Council on Competitive Government's once-tight grip on decision-making about welfare reform.

"We were not looking for a wholesale outsourcing of the entire social services system in Texas without legislative approval," says state Representative Garnet Coleman, a Houston Democrat who co-sponsored the House version of the bill. Coleman says the new law was an attempt to bring "balance" to the process and to address the "appearance" of favoritism by the Bush administration toward Lockheed IMS.

Yet the future scope of TIES under the new law remains uncertain -- and subject to varying interpretations as long-standing opponents gird themselves for the latest battle in Texas's welfare war. Those opposed to privatization say this June's reforms -- including an explicit requirement of federal approval for any new program -- will likely diminish TIES. But backers of the original plan insist the law enables TIES to expand, not shrink.

Unions and public-interest groups hope the law will downsize the corporate outsourcing efforts. In particular, they cite the measure's stipulation that TIES planners give priority to computer-system changes, saying that such a provision shifts the emphasis away from the sweeping privatization of human services contemplated previously.

Levy and others also praise the law for requiring strict cost-benefit analysis of privatization and for ensuring that quality of service be weighed along with cost-cutting. "Before, the only real consideration was money -- the contractors making it and the state saving it," says Levy.

Yet despite the new priority on computer acquisitions and oversight, the bill still allows the state to fully privatize its welfare eligibility review system. Stuart says the new and improved TIES retains its original goal: "to streamline and integrate the system. The bill leaves open-ended the question of privatization." Rather than paring down TIES, Stuart says, officials are "looking at broadening the scope to include service delivery." Stuart downplays the outsourcing issue, insisting, "The goal has never been privatization. It's really just a tool, one of the methods to get there. The goal was never, 'Let's see how much we can contract out.' "

Equally disturbing to critics is the shroud of secrecy surrounding TIES -- a problem they say is inherent to privatization.

"There is an enormous amount of misinformation that results in recipients being disqualified," says Bruce Bower, staff attorney with the Texas Legal Services Center in Austin. "This will be exacerbated by private corporations. Rather than state officials accepting responsibility, they'll say it's the contractor's problem, it's not our doing."

Indeed, the companies held their plans close to the vest. And federal and state agencies refused to provide details of the soon-to-be-privatized programs, claiming this would ruin the competitive bidding process.

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