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LINCOLN - Inadequate payments from the state have forced two private agencies within a week to drop out of Nebraska's effort to overhaul child welfare services by privatizing them.
Child advocacy groups Friday called the development “cause for great concern” and a sign that the state should rethink the changes it launched less than six months ago.
“Nebraskans are beginning to see the struggles of a child welfare system in trouble,” said Kathy Moore, executive director of Voices for Children of Nebraska.
Yet the state's top child welfare administrator said Friday that he remains committed to the overhaul process and is “happy with the way things are going.”
“We're in this for the long haul,” said Todd Reckling, children and family services director for the State Department of Health and Human Services.
State officials signed contracts last fall with five private agencies to care for children and families involved with the state's child welfare and juvenile justice systems. The agencies were to provide a full range of services, both in-home and out-of-home.
The agencies also were to coordinate services, a job formerly handled by state child welfare workers. State employees were to continue as case managers, working in cooperation with the private agencies.
As of Friday, three of the five contracting agencies remained.
State officials terminated contracts Thursday with Visinet to serve the Omaha area and southeast Nebraska.
The action came after the Omaha-based agency filed for Chapter 11 bankruptcy. State employees will resume service coordination for the agency's cases temporarily.
Visinet Executive Director Michael Wehling said losses from the state contract led to the bankruptcy filing.
He said the losses were at a level that the agency would have been unable to sustain for the 90-day notice period required under the contract.
“The cost of providing services was more than the state was paying,” Wehling said.
A week earlier, Cedars Youth Services of Lincoln announced it would pull out of its contract to serve southeast Nebraska as of June 30 because of inadequate state reimbursement.
Cedars President and CEO Jim Blue estimated the agency would have lost more than $5.5 million over the course of its 20-month contract.
Key lawmakers called the pullout of the two agencies “concerning.”
“It's something we need to pay attention to,” said State Sen. Tim Gay of Papillion, chairman of the Health and Human Services Committee.
Gay said he plans to call HHS administrators before the committee next week to provide answers about the privatization effort.
He said lawmakers need to know what will happen if any other agencies drop out and whether the overhaul effort will affect next year's budget.
Gay said he already advised Kerry Winterer, the department CEO, to get straightforward answers from Reckling about whether the changes can work.
Reckling “ultimately is responsible” for going ahead with the privatization statewide, despite advice from many sides to try a pilot project first, Gay said.
Sen. Gwen Howard of Omaha, a former child welfare worker, was among those who recommended a slower approach. She said she warned Reckling last summer about potential problems with the privatization plans.
“I saw this coming months and months ago,” she said. “Actually, this has folded faster than I expected.”
Sen. Tony Fulton of Lincoln, who introduced a bill in 2008 to privatize child welfare, said the developments suggest Nebraska's child welfare system has deeper structural problems.
The bill failed to advance, but HHS officials undertook the changes on their own.
State officials have said they hoped the overhaul would make the best use of both private and public sector expertise and encourage agencies to get children home sooner.
About 70 percent of state wards in Nebraska typically are in out-of-home placements. HHS officials have said they want to reverse the percentages and have about 70 percent served at home.
Agencies were expected to lose money on the contracts initially but to break even or make money as they began serving a larger proportion of children in their own homes.
Winterer defended the overhaul effort Friday. He said the three remaining agencies are committed to the process and will work with HHS to take on the cases previously handled by Visinet and Cedars.
“This whole child welfare reform is very much a work in progress,” Winterer said. “Our intention is to work on this and learn as time goes on from these experiences. We believe this is the right approach.”
Contact the writer:
402-473-9583, martha.stoddard@owh.com
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