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Watchdog blasts welfare agency over child support contract

Watchdog blasts welfare agency over child support contract

Less than a year after Mississippi Today published its investigation into the state’s privatized child support enforcement program — exposing its lackluster performance and the political influence of the contractor who runs the program — a state watchdog group is raising concerns about the contract.

The state has paid Ridgeland-based law firm YoungWilliams $153 million over the last six years to operate the plagued program, through which the state forces single moms to sue their child’s father in order to qualify for public assistance.

A report released Wednesday critiqued the state welfare agency for entering the contract with YoungWilliams after early studies showed privatization to be less effective. It also questioned whether YoungWilliams received preferential treatment and criticized the contract for not containing any performance requirements.

This month, YoungWilliams secured another $135 million contract to run the program for another five years.

“We asked them to sign a year contract so we could take a look at this, because we spend more but we’re not getting more,” said Rep. Becky Currie, R-Brookhaven, a member of the state’s watchdog committee. “So we just wanted to have more time to look at this contract to see if it was best for the state and they signed it anyway.”

The law firm’s CEO, Rob Wells, is Gov. Tate Reeves’ second largest individual campaign donor ever, Mississippi Today first reported. Wells gave the candidate $75,000 during the three years before Reeves’ 2019 election.

Wells did not respond to request for comment by publication time Wednesday.

Recently, lawmakers from the Joint Legislative Committee on Performance Evaluation and Expenditure Review, the legislative watchdog group known as PEER, requested a study of the state’s child support program, which falls under the embattled Mississippi Department of Human Services.

The state’s child support program is a massive service that provides legal assistance, case management and debt collections and in some cases pursues punishment against noncustodial parents who don’t comply with their court orders. The system also helps identify a child’s parent, often facilitating paternity tests.

The program touches nearly 800,000 parents and kids in the state. Mississippi has the highest case rate of any state, according to a Mississippi Today analysis, partly because the state requires families to enter the system when they apply for most public assistance, and Mississippi has a large low-income population.

The new report offers a history of the state’s efforts to privatize the child support program, which began in the 1990s. The researchers found that in the early 2000s, the state agency returned to administering child support services in-house. From 2009-2010, the state tried and failed to conduct enforcement services and a call center through YoungWilliams. An audit at the time identified several cost and performance problems. From 2011-2015, the state brought enforcement functions back to the agency but continued to contract out the call center.

During that time, in 2013, a bill to allow for full privatization of the program narrowly passed in the Legislature, despite warnings from lawmakers like former longtime chairman of the House Public Health Committee and undertaker Steve Holland: “It’s a greased pig already,” he said on the House floor. “Somebody on high knows who’s going to get this business. In the funeral business, we’d call this a prearranged funeral. That stinks.”

The PEER report references emails suggesting that in 2014, Gov. Phil Bryant directed the state agency to begin a pilot program in 17 counties to test the effectiveness of full privatization of the child support enforcement program. The agency selected YoungWilliams over just one other vendor, Maximus. But when they sent the contract to the Personal Service Contract Review Board for approval, the board would not approve, citing several deficiencies, such as the fact that the contract planned to increase YoungWilliams’ spending authority each year at the same time as the company planned to decrease its staff.

So the state agency reconfigured the 2015 contract so it would be labeled a “legal services contract,” which do not have to be approved by the board, ignoring its recommendation not to enter the contract.

After a year, the agency hired a consultant to assess the performance and found that compared to state-run offices, YoungWilliams performed worse in almost every metric. The private offices also cost more than half a million more to operate than the state offices, the consultant’s report said. But the state moved forward anyway.

As Mississippi Today first reported, 2016 is when a shift occurred.

That year, lawmakers passed a bill with the goal of separating child protection services from the Mississippi Department of Human Services into its own agency, hoping the split would help the state better manage its foster care system, the subject of a federal lawsuit. But the bill also exempted all Human Services employees from protections under the personnel board, which “allowed MDHS to terminate its employees so that a contractor could hire them,” PEER said.

The same month the law took effect, the agency issued a bid for the statewide child support contract. YoungWilliams was the only company to respond and the state awarded the firm the contract.

Then-Mississippi Department of Human Services Director John Davis “rushed out an RFP and nobody other than YoungWilliams knew about it or had an opportunity to put together a bid,” attorney Rutledge McMillin, a former YoungWilliams and high-level MDHS employee, told Mississippi Today last year. “So it was decided beforehand that YoungWilliams was going to get this contract, which I don’t think is the way government procurement is supposed to operate.”

Currie said lawmakers wanted to examine the privatization of child support to see how state agencies reacted after being exempted from the personnel board.

“As a legislator, I feel horrible,” Currie said. “I voted to end these jobs for people and I don’t know that they have better pay or benefits but I do know they don’t have state retirement. And this was supposed to be the best thing since sliced bread and here we are, five years later, and it costs more and we’re not bringing it anything else. It is about the same results.”

According to Mississippi Today’s investigation, Mississippi Department of Human Services issued a new Request for Proposals for the child support contract in June of 2019. When another contractor, Maximus, won more overall points during the procurement, the agency cancelled the bid in August of 2019 and simply extended the contract with YoungWilliams.

The same thing happened, scoring sheets show, during another RFP the agency issued in November of 2019 and cancelled in February of 2020. YoungWilliams received another year-long extension to the original 2016 contract in September of 2020.

PEER examined these cancellations and found that the first RFP was cancelled, according to former employees, “because child support enforcement staff wished to strengthen the performance measures in the RFP.” The next RFP contained more substantial performance benchmarks, but the initial “absence of the benchmarks was due to a lack of proper planning in MDHS’s writing of the contract.” The former employees said the agency cancelled the second RFP because the agency leadership was in flux following the retirement of then-director John Davis, who is awaiting trial within the state’s largest public embezzlement scheme.

“Despite the rationale” for cancelling the bids, PEER wrote, “MDHS’s extension of the YoungWilliams contract — after cancelling both RFPs upon which Maximus scored higher — also gave the impression of preferential treatment toward the incumbent vendor.”

The agency issued the latest RFP in December of 2020 and scoring sheets recently obtained by Mississippi Today show YoungWilliams outperformed the only other respondent, a personal injury and family law firm in Jackson called Malouf & Malouf, who had little experience in these kinds of large government contracts. Maximus did not respond to the RFP.

The agency had wanted to split the contract between two vendors in order to encourage competition, but Malouf & Malouf didn’t meet the minimum qualification. Without another viable proposal, YoungWilliams won the entire award.

Mississippi Department of Human Services announced its intent to award the contract to YoungWilliams in February.

At a Sept. 24, 2021, legislative budget hearing, MDHS Director Bob Anderson discussed the state’s privatized child support program and announced the new $135 million contract with YoungWilliams.

“It’s money well spent because for every dollar we spend, we collect $12 in child support,” Anderson said.

That’s mostly because once the court order is in the system, YoungWilliams can garnish wages and intercept tax refunds from non-custodial automatically. Mississippi’s collection rate isn’t actually all that glowing — it collects and disperses at about the same rate as it did a decade ago — but the state’s high cost efficiency ratio comes from the low amount of money it spends per case and the squeeze the contractor places on its caseworkers.

The office collects and disburses 55{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} of the money currently ordered to custodial parents in the program compared to 66{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} nationwide. The number of full-time employees handling these cases has dropped 18{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} from 515 in 2015 to 423 in 2020.

Meanwhile, Currie said, “People are still waiting. Where’s the money? The parent that’s paying the child support says, ‘I’ve paid it,’ but the parent that should be getting it isn’t getting it. If it was running perfectly, maybe it would be worth the cost. But right now, to me, it’s not worth the cost.”

Some metrics, though, have significantly improved under YoungWilliams. The state has significantly increased the percentage of child support cases with actual support orders from the court, which is the first step in getting money from the non-custodial parent. YoungWilliams has made great strides to modernize the child support collection and case management system, but the company developed and still owns the software, so the state could lose out on the technology and the years of data modeling if it ends the contract.

“We’re in such a catch-22,” Currie said.

Up until now, the state’s contract with YoungWilliams hasn’t actually required the firm to meet any specific metrics, officials said.

“There were no performance measures to speak of in the previous contract,” Anderson told lawmakers.

PEER reiterated this, writing in its report that the contract was “insufficient to hold YoungWilliams accountable for its performance.”

Anderson said that the child support division negotiated a new contract with YoungWilliams over the summer and they met with the state personnel board in September.

“We have put some strong performance measures in there. We’ve also put liquidated damages in the contract for the first time so that if they don’t perform up to the performance measures, we can assess liquidated damages,” Anderson said. “And they (YoungWilliams) will tell you, they’re not happy. We’re the first state that’s ever had a child support contract with anybody that has liquidated damages provisions in it. But we just felt like to be proper stewards of the state’s money, that we should have some teeth in that contract.”

On Sept. 15, Mississippi Today submitted a public records request to the welfare agency for emails from Anderson referencing child support and YoungWilliams, and emails between the agency and YoungWilliams CEO Rob Wells, in addition to several other requests.

Mississippi Today paid the IT department to pull the records, but the agency has not yet turned them over to the news organization.

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