Privatized welfare's poor results

Publication Date: 
8/4/2009
Indianapolis Star Editorial

Amid rising costs and frequent complaints about Indiana's efforts to privatize its welfare system, the General Assembly must thoroughly review not only the financial aspects of the state's contracts with IBM Corp. but also how the new operation has been administered.

The Associated Press, in a story published in The Star on Monday, revealed that the state will pay IBM $180 million more than originally planned -- only two years into the original 10-year, $1.16 billion contract. The additional funding represents a 15-percent increase in the cost of the contract, signed by Gov. Mitch Daniels in 2006.

At the time, the chief selling points for privatizing the administration of welfare benefits were improving service and saving money. It doesn't appear to have delivered on either count.

Welfare recipients -- Indiana's elderly, disabled, sick and poor -- and the advocates who represent them have complained from the start that the new system is too cumbersome, too impersonal and often too slow to meet their needs.

State leaders initially rejected those complaints, arguing that the new automated operations would in time greatly improve the system's efficiency. The evidence is overwhelming, however, that the changes have yet to pay off.

Finally last month, the Family and Social Services Administration's new secretary, Anne Murphy, acknowledged that the program isn't working. She put IBM on notice: Fix the deficiencies by fall or risk losing the contract.
In the interim, however, the state has shoveled more money to IBM, both to take on additional tasks and to try to fix problems with the existing services.

Legislative leaders have charged the bipartisan State Budget Committee with reviewing the IMB contract. Just as they did last week with university administrators, committee members need to grill the Daniels administration on the costs and benefits of the privatization effort.

The governor often has said that he inherited one of the worst social services agencies in the nation when first elected in 2004. He's right on that count. That fact, however, doesn't excuse poor execution now either by the state or by IBM.

Too many Hoosiers need help, especially amid a deep recession, for the state to accept mediocre results from a well-compensated contractor.

The Daniels team must demand results. The General Assembly must ensure that they're delivered.