Policymakers reject expanded foster care privatization

LANSING — Under threat of a gubernatorial veto, legislators passed a Department of Human Services budget in October that excluded a plan to use more performance-based contracting for foster care services. The idea had been proposed as a way to improve services while cutting costs.

When a child is placed in foster care, a DHS field office worker determines whether to use a privately organized foster care service, like Lutheran Child and Family Services of Michigan, or one of the state’s registered foster families. Foster families face the same oversight requirements and regulations regardless of whether they are affiliated with public or private agencies.

There are currently almost 19,000 children in foster care, of which only 36 percent go to licensed foster care establishments. Of those, almost 60 percent are supervised by private agencies, according to DHS.

However, under the new budget private foster care providers will now be funded to assist unlicensed foster homes in becoming licensed. When a child is placed in foster care, Human Services tries to find one of the child’s relatives to take care of the child. This is a foster care arrangement, although the home is not licensed.

Also, part of the DHS budget included lowering the number of children at the W.J. Maxey juvenile justice facility in Whitmore Lake by 80. It currently costs $550 a day to house an offender at Maxey, compared to about $225 to $250 a day through private community-based agencies. The move is expected to save the state $1.7 million.

Human Services will also phase in a single rate of compensation for foster care providers.

The Mackinac Center has followed Human Services privatization in Michigan and elsewhere for nearly 20 years and in 1993 published the report, "Child Foster Care In Michigan: A Privatization Success Story," available at www.mackinac.org/255, which discussed the state use of private foster care going back to 1981. More recently, MPR senior managing editor Michael D. LaFaive published the essay "Relying on Private Agencies Has Track Record of Saving Money" in the Oct. 31, 2007, edition of The Detroit News and reprinted on p. 8.

References: "Senate approves Department of Human Services budget" Sen. Bill Hardiman Press Release, Oct. 31, 2007. www.senate.michigan.gov/gop/readarticle.asp?id=889&District=29