As the country continues to recovers from the Great Recession, businesses and state and local governments are more interested than ever in cutting costs while increasing revenues. An interesting way in which this is being accomplished is by privatizing local and some state child support functions and agencies. Since the 1990s (many could argue much earlier), the federal government has discussed the privatization of some child support departments, with collections being the top of the list. According to the United States General Accounting Office or GAO (1997), states most commonly contract with the private sector for the collection of past-due support, especially those considered hard to collect.
Private collection agencies generate huge profits acting as debt collectors for government owned child support agencies. In fiscal years 1994 and 1995, contractors in nine states collected nearly $60 million and were paid about $6 million (GAO, 1997). With little to no regard of the barriers parents may face, which make child support hard to collect, the government is hiring for-profit businesses. Theses for-profit companies are contracted to work alongside and in some cases, in place of, public collectors in charge of hounding parents for money.
The private agencies must meet certain criteria legislated by the federal government in order to pursue collections. There are several requirements that must be met prior to an agency being approved to collect child support debt. The agency must be licensed and bonded and they must adhere to fee limitations when charging the hiring parent. There are more criteria that must be followed but the strict screening process does little to curb the aggressive collection tactics usually reserved for government agencies.
Private collection agencies such as SupportKids, specify that communication is the key to collecting money from non-guardians. The company explains that the most effective method is often direct negotiations with the non-custodial parent, (SupportKids). Although this approach seems a bit more civil than the usual government collection methods, SupportKids, along with many other private agencies use much harsher tactics when pursuing payments. According to the SupportKids webpage, collection tools and techniques available to their Enforcement Specialists include garnishing wages or placing liens on property or assets.
Although not free to issue arrest warrants in child support delinquency cases, private collection agencies may soon be afforded that option. The metaphoric child support privatization ping-pong ball has government officials fighting back and forth as they decide which avenue best suits the budget when enforcing child support guidelines. Several states are taking bigger steps into the privatization world expanding the role of the outsourced functions from just that of collections. In Davidson County, Tennessee, the privatization of child support enforcement went into full effect in 2013 while receiving little attention from the tens of thousands of clients.
Although two private agencies had controlled many functions of the Davidson County Child Support Agency, a new company was selected to finalize the act of complete privatization. According to John Lasker of the NashvilleScene (2013), Mississippi-based YoungWilliams won a $4 million-a-year, five-year-performance-based contract. There are no performance based statistics available to confirm the success of the privatization of all child support duties, but many public employees were not pleased with transfer of control. A court magistrate was not feeling confident about the new company stating concerns about underperformance and failing to keep the docket loaded with cases, (Lasker, 2013).
Another concern along with keeping the court full of complainants should be the transfer of authority to a non-governmental agency when dealing with court ordered child support. Recently, county child support agents in some states have been granted the authority to suspend licenses and order arrest warrants for delinquent parents. These privileges, previously handled by legal experts, were handed down to civil servants with no judicial authority to order such punishments. The employers seemed to be protected because they were government debt collectors pursuing the payment of a government debt. By privatizing these particular job functions, for-profit agencies may be given the same powers to order jail and prison sentences. It is already an overreach that private companies are permitted to attach bank accounts and garnish wages.
There may soon be no distinction between private and public debt collectors. Punishments will be the same with no protections provided for the everyday citizen. Kansas has also privatized its child support agencies even though there were accusations of contracts being awarded based on questionable selection methods. Despite the backlash, YoungWilliams was awarded yet another contract and was placed in control of the child support agencies and operations.
According to Andy Marso of The Topeka Capital Journal (2013), YoungWilliams’ CEO, Robert Wells, and his wife both gave maximum $2,000 donations to Governor Sam Brownback’s campaign in 2010 primary cycle. Although the allegations were denied, some Kansas public employees were ousted from their positions at the child support enforcement agencies. Kansas displaced some 187 Department of Child and Family (DCF) employees who worked out of state offices, (Marso, 2013). On the other hand, YoungWilliams profited greatly after being awarded the contract.
Not only did the company gain control of over 20 districts, the money gained was quite significant at a total bid of $48.2 million over five years, (Marso, 2013). Again, there has been no empirical evidence that the children of Kansas benefited substantially after the privatization of these agencies. There is, however, plenty of evidence that shows that YoungWilliams is not being forced to live in poverty. With both contracts, the company stands to earn $68.2 million thanks to low-income children and the state and federal governments.
The company Maximus, Inc is, and has been, profiting from the privatization of child support function for many years. This company, at one time, held the child support contract for Davidson County, but lost it to Policy Studies, Inc or PCI. In 2013, Maximus acquired PCI and immediately began projecting a great increase in profits. As explained by the company’s webpage (2014), the termination with PSI resulted in one-time, non-cash benefits revenue of $16.0 million and to gross an operating profit of $10.9 million. There is no mention of how the acquisition will benefit the children or families of these counties and states.
There are clear recordings of just how profitable the company has been in the past operating as a private child support collection agency. According to Lasker (2013), Maximus is a publicly traded corporation specializing in running government services and reported $1 billion in revenues in 2012. Unfortunately, the company does not provide information relating to how many children have been raised out of poverty because of its services or how the company helped combat homelessness due to collecting child support money. It is obvious, however, by the company’s own admission, that revenues increased 23.6% to $464.4 million in the 2013 fiscal year, (Maximus, Inc., 2013). The child support system is one that may have been implemented with the best intentions, but statistically, the mission has failed too many people.
That mission allegedly consists of collecting money from the non-guardian and ensuring that the best interest of children are not only met, but exceeded, in the process. Privatization will not only hinder the supposed tasks of the agencies, but the children are no better after outsourcing as they are before the transfer of duties. Certain goals of the El Paso Springs, Colorado Child Support Enforcement Agency, while operating under YoungWillians, have not been met since the outsourcing began. According to J. Adrian Stanley of the Colorado Springs Independent (2014), only 61.1% of the child support owed is paid and only 65.9% of parents who are behind on payments pay some of the debt. The target goals are 64.3 percent and 74.1 percent, respectively.
There should be a strong argument about the failure of these private companies to meet and or exceed the goals established by the federal government before the reins are handed to companies such as Maximus, Inc and YoungWillians. As the Country moves forward in the recovery from the Great Recession, it is not conducive to the lives of people that were most affected, to depend on any privatized social programs. The enforcement tools used for collecting child support are unconstitutional when the government uses them as punishments against parents. In the hands of private collection agencies, along with the legality of the practices are moral and ethical issues. There are certain laws that are in place to protect citizens from harassment by debt collectors but when government debt is handed over to private companies, those same protections are automatically in jeopardy.
Parents that are unable to afford to pay child support debt because of the extraordinary fees and interest should not be hounded by non-government agents. Powers granted to the government such as seizing property and filing for arrest warrants should not be available to a company that generates revenues from harassing as many people as possible. There needs to be reform to the child support system and the privatization of any operations should be terminated. These companies do not care about the best interest of children. Their only interest, as with any other for-profit business entity, is generating revenue, pleasing stockholders, and increasing profits.
Lasker, J. (2013, June 27). A new firm is taking over Davidson County’s privatized child support enforcement — and not a moment too soon | Cover Story | Nashville Scene. Retrieved from http://www.nashvillescene.com/nashville/a-new-firm-is-taking-over-davidson-countys-privatized-child-support-enforcement-and-not-a-moment-too-soon/Content?oid=3445605
Marso, A. (2013, June 19). Brownback donor’s company gets child support contract. Retrieved from m.cjonline.com/news/2013-06-19/brownback-donors-company-gets-child-support-contract#gsc.tab=0
Maximus, Inc. (2013, September 30). Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange act of 1934. Retrieved from http://investor.maximus.com/sites/maximus.investorhq.businesswire.com/files/report/file/MAXIMUS_AnnualReport_FY2013.pdf
Stanley, J. A. (n.d.). More support, less government | Local News | Colorado Springs Independent. Retrieved from http://www.csindy.com/coloradosprings/the-county-is-collecting-a-lot-of-child-support-using-a-private-company/Content?oid=2904171
SupportKids, Inc. (n.d.). Supportkids – How We Work. Retrieved from https://www.supportkids.com/how-we-work/
United States General Accounting Office. (1996, October). Child Support Enforcement: States’ Experience with Private Agencies’ Collection of Support Payments. Retrieved from http://www.gpo.gov/fdsys/pkg/GAOREPORTS-HEHS-97-11/html/GAOREPORTS-HEHS-97-11.htm