When the federal welfare system was reformed in 1996, Congress gave States the option to contract out administration of their welfare programs to private entities. Moreover, after enactment of the welfare reform, welfare recipients are expected to work to receive benefits. This means that front-line welfare office workers must engage in intensive interpersonal counseling rather than simply confirm objective eligibility criteria and dispense checks. This results in vastly increased discretion for these front-line workers. When privatization is layered over this discretionary scheme, issues of accountability to program beneficiaries becomes significant. For over thirty years, it has been a tenet of public benefits law that due process protections attach to the government’s delivery of benefits. Yet when private entities deliver the same benefits, constitutional protections may fall by the wayside. This article explores the implications of welfare privatization on welfare beneficiaries’ procedural rights. It explains how the Supreme Court’s current state action doctrine may well insulate private welfare providers and their state contracting partners from constitutional claims. Accordingly, the Article also explores other potential federal and state bases for enforcing accountability in welfare programs in privatized jurisdictions, ranging from statutory to contractual to equitable claims. The Article concludes that the procedural rights of welfare recipients after welfare reform are greatly diminished.
Democracy, shared prosperity, and the common good
In the Public Interest is a comprehensive research and policy center on privatization and responsible contracting.