Privatizing Child Support Enforcement
Originally published: October 22, 2014 | Revised and updated
Kenya N. Rahmaan
As the country continues recovering from the lingering
effects of the Great Recession, businesses and state and local governments remain deeply interested in cutting costs while increasing revenues. One notable strategy gaining traction is the privatization of local and some state child support enforcement functions. Since the 1990s — and arguably earlier — the federal government has debated handing off child support departments to the private sector, with debt collection consistently topping the list of candidates. According to the United States General Accounting Office (GAO, 1997), states most commonly contracted with private companies for the collection of past-due support, particularly for hard-to-collect cases. In fiscal years 1994 and 1995, private contractors in nine states collected nearly $60 million in child support and were paid approximately $6 million for doing so. With little regard for the systemic barriers parents may face — unemployment, poverty, illness — the government has increasingly turned to for-profit businesses to pursue parents for payment.
Private agencies must meet certain criteria established by federal law before they are permitted to pursue collections. These requirements include licensure, bonding, and adherence to fee limitations when charging the hiring parent. However, this screening process does little to curb the aggressive collection tactics that have come to define the industry. Companies like SupportKids publicly emphasize communication and direct negotiation with non-custodial parents as their primary approach. While this sounds civil, SupportKids and similar firms also employ harsher tools when negotiations fail — including wage garnishment and property liens. Though private agencies cannot currently issue arrest warrants in child support delinquency cases, legislative proposals in some states would grant them that authority, raising serious constitutional questions. https://youtu.be/GD80U3K_Tgc
Several states have expanded privatization well beyond collections, outsourcing entire child support enforcement operations. Davidson County, Tennessee, completed full privatization of its child support agency in 2013, drawing little public attention despite affecting tens of thousands of clients. After two private agencies had previously shared control of many county functions, Mississippi-based YoungWilliams won a new $4 million-a-year, five-year performance-based contract (Lasker, 2013). No public performance statistics were released to confirm whether full privatization improved outcomes for families, and many public employees displaced in the transition expressed significant concern.
A Davidson County court magistrate raised concerns about the new company’s performance, specifically citing underperformance and a failure to keep the court docket adequately loaded with cases (Lasker, 2013). Beyond operational concerns, a deeper legal issue looms: the transfer of quasi-judicial authority to non-governmental actors. In recent years, county child support agents in some states have been granted powers previously reserved for the judiciary — including the ability to suspend licenses and issue arrest warrants for delinquent parents. These are serious punishments with life-altering consequences. When those same enforcement powers are handed to for-profit companies, the constitutional protections ordinarily afforded to citizens may no longer apply in the same way. It is already an overreach that private companies can attach bank accounts and garnish wages. Extending arrest and incarceration authority to for-profit debt collectors would represent a fundamental erosion of civil liberties.
Kansas pursued a similar path, though the process was tainted by questions about how contracts were awarded. Despite significant backlash over alleged political donations influencing the selection, YoungWilliams was awarded the Kansas child support contract as well. According to Marso (2013), YoungWilliams’ CEO Robert Wells and his wife each made maximum $2,000 donations to Governor Sam Brownback’s 2010 primary campaign — allegations the company denied. As a result of the contract, approximately 187 Kansas Department of Child and Family (DCF) employees were displaced from their positions. Meanwhile, YoungWilliams gained control of more than 20 districts and secured a contract valued at $48.2 million over five years. Combined with the Davidson County contract, the company stood to earn $68.2 million, with no demonstrated evidence that children in either state were meaningfully better off as a result.
Maximus, Inc. has also profited substantially from child support privatization for many years. The company previously held the Davidson County contract before losing it to Policy Studies, Inc. (PCI). In 2013, Maximus acquired PCI and immediately began projecting significant profit increases. According to the company’s own filings, the termination of the PCI arrangement generated a one-time, non-cash revenue benefit of $16.0 million and an operating profit of $10.9 million (Maximus, Inc., 2013). The company reported $1 billion in total revenues in 2012 and disclosed that revenues grew 23.6% to $464.4 million in fiscal year 2013. Nowhere in these disclosures does Maximus quantify how many children were lifted out of poverty, how many families were stabilized, or whether child welfare improved under its management. https://thechildsupporthustle.com/civil-servants-ruling-on-child-support-issues/
The child support system was implemented with the stated goal of collecting financial support from non-custodial parents in the best interests of children. But the data suggest privatization is failing that mission. In Colorado Springs, Colorado, the child support enforcement agency — operating under YoungWilliams — fell short of its federally established benchmarks. According to Stanley (2014), only 61.1% of owed child support was being collected, against a target of 64.3%, and just 65.9% of parents behind on payments made any payment at all, against a target of 74.1%. These performance gaps should prompt serious scrutiny before more states entrust child welfare to companies whose primary obligation is to shareholders, not children.
The privatization of child support enforcement is not a cost-cutting success story — it is a troubling transfer of public authority to private interests, at the expense of vulnerable families. The coercive tools used to collect child support are constitutionally suspect even when wielded by government agents; in the hands of for-profit companies driven by revenue targets, they become far more dangerous. Federal and state debt collection protections that shield citizens from harassment exist precisely because collectors have inherent conflicts of interest. When government debt is handed to private firms, those protections are weakened or eliminated entirely. Reform is urgently needed: performance standards must be enforced, privatization contracts must be subject to rigorous transparency requirements, and the extension of arrest and property seizure authority to for-profit agencies must be prohibited. The children these agencies are supposed to serve deserve a system that prioritizes their well-being — not one that treats their poverty as a profit opportunity.
References
Lasker, J. (2013, June 27). A new firm is taking over Davidson County’s privatized child support enforcement — and not a moment too soon. Nashville Scene. 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. The Topeka Capital-Journal. http://m.cjonline.com/news/2013-06-19/brownback-donors-company-gets-child-support-contract
Maximus, Inc. (2013, September 30). Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. http://investor.maximus.com/sites/maximus.investorhq.businesswire.com/files/report/file/MAXIMUS_AnnualReport_FY2013.pdf
Stanley, J. A. (2014). More support, less government. Colorado Springs Independent. 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.). How we work. https://www.supportkids.com/how-we-work/
United States General Accounting Office. (1997, October). Child support enforcement: States’ experience with private agencies’ collection of support payments (GAO/HEHS-97-11). https://www.gpo.gov/fdsys/pkg/GAOREPORTS-HEHS-97-11/html/GAOREPORTS-HEHS-97-11.htm
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