Comparing Welfare Service Delivery Among Public, Nonprofit and For-Profit Work Agencies

Abstract

Since passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in 1996, there has been a proliferation of contracting for welfare services, specifically around Temporary Assistance for Needy Families (TANF) and related benefits and services such as child care. The services most commonly contracted include those around the work or employment function, such as training, education, job placement, and support services to promote job entry or retention.

The purpose of this article is to examine differences in the quality of service provision among public, nonprofit, and for-profit auspices in the delivery of work-based welfare reform services. The findings show that there are some differences in welfare programs across the three sectors. The significance of this issue relates to the critical question of whether social needs can be best met through competitive outsourcing.

Keywords:

• TANF
• welfare-to-work
• PRWORA
• contracting
• service delivery

Notes

3. Ibid.

4. Hasenfeld, Y., Powell, L. E. (2004). The role of non-profit agencies in the provision of welfare-to-work services. Administration in Social Work, 28(3/4), 91–110; Unruh, J K., Hodgkin, D. The role of contract design in privatization of child welfare services: The Kansas experience. (2004). Children & Youth Services Review, 26(8), 771–783; Alexander, J. (1999). Implications of welfare reform: Do nonprofit survival strategies threaten civil society? Nonprofit & Voluntary Sector Quarterly 8, 452–475; Lipsky, M., Smith, S. R. (1989–90). Nonprofit organizations, government, and the welfare state. Political Science Quarterly 1989–90, 104 (4), 625–648.

5. A good deal of research has sought to compare the quality of performance across public, nonprofits, and for-profit sectors in a number policy arenas. For example, a number of studies examine the comparative performance of private, for-profit and nonprofit U.S. health care providers. See, for example, Ruchlin, H., Pointer, D., & Cannedy, L. A comparison of for-profit investor-owned chain and nonprofit hospitals. Inquiry 1973, 10(4):13–23; Gray, B. H., & McNerney, W. J. For-Profit enterprise in health care: The Institute of Medicine study. New England Journal of Medicine 1986, 314, 1523–28; Davis, M. A. On nursing home quality: A review and analysis. Medical Care Review 1991, 48(2), 129–166; Frank, R. G., & Salkever, D.S. Nonprofit organizations in the health sector. Journal of Economic Perspectives 1994, 8(4), 129–144; Sloan, F. A. Commercialism in Nonprofit Hospitals. Journal of Policy Analysis and Management, 1998, 17(2):234–252. The findings generally show mixed results across the different sectors. Some studies found no differences in the quality of care between nonprofit and private, for-profit health care providers (see, for example, Palmer, R. H., Reilly, M., & Reilly, C. Individual and institutional variables which may serve as indicators of quality of medical care. Medical Care, 1979, 17(7), 693–717. Other studies, however, offer evidence that nonprofit health care providers consistently outperformed private, for-profit providers (see, for example, Rosenau, P. V., & Linder, S. H. Two decades of research comparing for-profit and nonprofit health provider performance in the United States. Social Science Quarterly 2003, 84(2), 219–241. Because the present study focuses on welfare services, the literature review concentrates on agencies delivering welfare services.

9. Kamerman & Kahn, op. cit. While some states (e.g., Wisconsin, Florida, and Arizona) have contracted certain case management functions such as eligibility determination to private, for-profit firms, the disbursement of the cash assistance must generally be made by a public agency. For example, in Palm Beach County, Florida, the for-profit contractor, Affiliated Computer Services, Inc., is responsible for all case management and processing functions, including TANF eligibility determination; but the Florida Department of Children and Families makes the benefit payments. Notwithstanding, the disbursement of funds is based on how the private sector firm's employees process welfare applicants or clients for benefits. By law, only public or government employees can determine eligibility for food stamps and Medicaid.

10. Comparisons have also been made in other policy domains, including health care and prisons. See, for example, Eldenburg, L., & Krishnan, R. Public versus private governance: A study of incentives and operational performance. Journal of Accounting & Economics 2003, 35(3), 377–404; Rosenau, P. V. Performance evaluations of for-profit and nonprofit U.S. hospitals since 1980. Nonprofit Management & Leadership 2003, 13(4), 401–423. Also see Rainey, H. G. Public agencies and private firms: Incentive structure, goals, and individual roles. Administration and Society 2003, 15(2), 207–242.

11. Unruh & Hodgkin, op. cit.

12. Ibid., p. 779.

15. “Families First” is Michigan's families' preservation program, created in 1988 in response to growing incidents of child abuse. The program was created as an alternative to such traditional protective services as foster care.

17. Kamerman & Kahn, op. cit.

19. See Kamerman & Kahn, op. cit.

20. Hasenfeld & Powell, op. cit. Smith & Lipsky, op. cit.

21. The Welfare-to-Work (WtW) Grants Program was authorized under the Balanced Budget Act of 1997. It represents federal funds specifically earmarked for work-related activities for welfare clients. The separate WtW funding was intended to help states and localities meet the welfare reform goals set by PRWORA.

22. Hasenfeld & Powell, op. cit.

23. Ibid., p. 108.

25. But see Rix, M. Community legal centres in Australia under a new public management regime. Australian Journal of Public Administration 2004, 63(3), 33–42, who argues that the reinvention movement and more specifically the New Public Management (NPM) assumes public and private firms can be measured by the same standards or measures. Rix (p. 33) points out that “An assumption that the public and private sectors are not inherently dissimilar, and can therefore be managed in much the same way including having their efficiency and effectiveness measured against the same performance criteria, is central to the NPM.”

26. Salamon, op. cit. p. 36.

27. Ibid., p. 37.

28. The local sites ultimately included are: Bibb, Northwest & Southwest Fulton counties(Georgia); Dallas (Masters & Grand Prairie) and Denton counties(Texas); Wayne (Detroit), Hillsdale, Macomb counties (Michigan), and Albany, Suffolk counties (New York). Because Albany County New York did not provide employment services through an outside agency, our final sample of employment agencies includes 10 sites, with a total of 11 employment agencies.

29. Brodkin, E. Z. Requiem for welfare. Dissent 2003, 50(1), 29–36; Riccucci, N. M. (2005). How management matters: Street-Level bureaucrats and welfare reform. Washington, D.C.: Georgetown University Press.