Eye on Augusta: Maine DHHS Finalizing Plans to Privatize Welfare Program
“Another strategy to kick more struggling families to the curb”
Thursday, September 15, 2016 11:17 AM
The LePage administration is in the process of inking a $62.5 million deal with a New York City-based nonprofit to take over a state program that provides job placements and training for low-income parents who get cash assistance through the Temporary Assistance for Needy Families (TANF) program. In a statement, Department of Health and Human Services Commissioner Mary Mayhew argues that privatizing the Additional Support for People in Retraining and Employment (ASPIRE) program will ensure that it is “more effectively and efficiently” managed.
“Since Paul LePage became governor and Mary Mayhew took the reins at DHHS, Maine has experienced the highest growth in the percentage of children who live in extreme poverty of any state in the country.” — Rep. Drew Gattine (D-Westrbrook)
However, critics of the plan worry that the plan will further erode the safety net. They point out that the company Fedcap Rehabilitation Services has been the target of at least a dozen lawsuits in the past three years and has paid over $400,000 in settlements for workplace discrimination as well as disability and wage complaints, according to the Associated Press. The pending deal will likely result in the elimination of 81 positions at the DHHS, according to MSEA-SEIU Local 1989, the union that represents state employees.
Nearly 4,800 low-income households, which include about 8,000 children, receive TANF support in Maine. TANF recipients considered “able bodied” are required to enroll in ASPIRE, which provides assistance, job training and education to help them pursue work opportunities. About 2,800 TANF recipients are enrolled in ASPIRE.
In its proposal to Maine DHHS, Fedcap states that in the last three years it has achieved more than 14,300 job placements for welfare recipients who are homeless, have barriers to work or have incarceration histories. The company also claims that it helped Nebraska increase its TANF work participation rate from 23 to 51 percent in one year. Under its proposal, the company would subcontract with a network of nonprofits throughout the state, but the program would be managed through a central office in Portland.
The Work Participation Problem
The LePage administration announced its intent to outsource ASPIRE last January after the federal Administration of Children and Families notified the state that it would have to pay a $1.16 million penalty for failing to meet the federally mandated work participation rates for TANF recipients for a number of years during the depths of the recession. The administration noted that the feds have also threatened to impose $29 million in penalties for failing to meet the requirements dating back to 2007. However, low-income advocates express doubt that the state will ever have to pay a penalty and a DHHS spokesman would not confirm whether the state ever paid the $1.16 fine. The federal government has also repeatedly threatened Maine DHHS with fines due to its poor administration of the Supplemental Nutrition Assistance Program, but the LePage administration has ignored its letters and has not been sanctioned.
In a statement back in January, DHHS Commissioner Mary Mayhew argued that a private company would ensure that services would be “intensely focused on moving TANF/ASPIRE families toward self-sufficiency and out of poverty.”
“Despite repeated failures by the Legislature to address this problem with law changes, we are moving forward with this reform,” said Mayhew. “The $29 million in looming federal penalties can no longer be ignored, and our clients must be provided with the best service available to help them get back to work. The Department looks forward to the positive changes coming to the program and what it means for TANF/ASPIRE families working toward a life of independence.”
The TANF work participation rates, which were established under President Bill Clinton’s 1996 welfare reform law, mandate that two-parent recipient households take part in work-related activities for at least 30 hours per week, while single parents must participate for 20 hours per week. The law mandates that the state must meet a 50-percent work participation rate for all families and a 90-percent participation rate for two-parent households. However, during the recession, only six states met the 50 percent benchmark and no states met the two-parent threshold. Eventually Maine was able to meet requirements in 2014.
Christine Hastedt, of the low-income advocacy group Maine Equal Justice Partners, argues that the state could prevent federal sanctions by continuing to make progress in its corrective action plans and following the model of other states. One way, she says, is to identify places where the state is already spending money on low-income families and count that amount to receive credit from the feds as part of TANF “maintenance of effort” requirements. She noted that some of these programs may include treatment for mental illness and substance abuse, which are often barriers to employment.
“We could pull them out of the TANF participation rate calculation by serving them with state dollars that we’re not counting as maintenance of effort,” said Hastedt. “That could have been done in Maine without appropriating additional money.”
But while other states have managed to avoid penalties by using this strategy, the LePage administration has opted to boost work participation rates by proposing legislation to force TANF recipients into the job market by eliminating the “good cause” exemptions, which allow them to forego the work participation requirements if they have a good reason, such as a disability, caring for a disabled child, bad weather or lack of child care or transportation. The governor also tried to reduce the amount of time TANF recipients could spend in college while collecting benefits, but both efforts were blocked by Democrats in the Legislature.
“The heart of it lies in their ideological commitment to this ‘work first’ philosophy, where you throw people into the labor market sink or swim, regardless of whether they’re able to do that successfully at that point,” said Hastedt, “and regardless of whether they’re going to come back and be off and on this roller coaster for the rest of their lives.”
The Fedcap Proposal
Meanwhile, Democrats, low-income advocates and the union representing DHHS employees blasted the ASPIRE privatization proposal as an attempt to further erode the safety net.
Hastedt said the Fedcap contract appeared to limit the number of opportunities for TANF recipients to receive education and training services that would make them more employable. She also noted that administrative costs were significantly greater than for the state-administered program. Fedcap’s administrative overhead is about 11 percent, according to the information provided by the company.
“I worry that it’s going to cost more and … we want to see every penny going into buying childcare, transportation and education and training,” said Hastedt. “We’d much rather see more money going toward that than to administrative salaries.”
Ramona Welton, the president of MSEA-SEIU Local 1989, noted that the ASPIRE workers are currently employed at DHHS centers around the state, but Fedcap Rehabilitation Services would subcontract to nonprofits to provide benefits. She argued that many of the employees have several years of experience and have connections to the community and knowledge about the resources available.
“We don’t support shifting control to out-of-state entities,” she said. “If you want to revive the economy or support and strengthen the economy in the state of Maine, you create jobs and you use Maine companies to do the work. We’re concerned about the citizens of the state of Maine being able to get services in a timely fashion.”
Welton added that TANF and ASPIRE are currently under one roof, which allows recipients to access both services at the same time, but the proposed contract would house ASPIRE in separate offices. She noted that many TANF recipients don’t have cars and they have to ask for rides to the DHHS office, so the the proposal will likely put up yet another hurdle to receiving benefits.
“That’s not making it any easier,” said Welton. “That’s not giving a leg-up because this is what this program is about. It is a leg-up program. These individuals who participate in it do the work, they go to work and go to school because it’s the goal at the end that they’re looking for.”
A Spotty Record of DHHS Privatization Schemes
The Fedcap deal is part of an ambitious plan by the LePage administration to outsource as many DHHS programs to private companies as it can. Back in April, DHHS spokeswoman Samantha Edwards told The Free Press that the Department was on track to release 100 to 125 request for proposals (RFPs), compared to an average of 30 to 35 by the previous Democratic administration.
“Government is not in the business of creating jobs,” Le-Page told WVOM radio on Tuesday. “The private sector is in the business of creating jobs. The private sector creates jobs, they pay taxes, and our responsibility as elected officials is to provide the most efficient, effective government at the lowest possible cost to the citizens of the state of Maine and that’s what we’re trying to do.”
However, critics like the MSEA-SEIU note that a number of the LePage administration’s previous privatization schemes have been disastrous. In the summer of 2013, DHHS contracted with Connecticut-based Coordinated Transportation Solutions to take over the coordination of rides for elderly and disabled people on MaineCare. However, after the company’s faulty brokering system left thousands of people across the state stranded, the state ended the contract five months later. It was later revealed that DHHS failed to secure performance bonds to protect the state from financial liability. And in the end CTS cost the state $5.4 million more than the previous system, according to the Portland Press Herald.
Around the same time, DHHS signed a $925,000 no-bid contract with controversial conservative consultant Gary Alexander to produce five reports to study the financial feasibility of accepting millions of dollars in federal Medicaid money as well as to come up with recommendations for reforming Maine’s social safety net. At the time, independent analysts, including former State Economist Charles Colgan, found multiple instances where Alexander used erroneous information in the reports to inflate how much expanding Medicaid to 70,000 low-income Mainers would cost. After Alexander missed several deadlines and liberal activist Mike Tipping revealed evidence of rampant plagiarism in his reports, DHHS finally canceled the contract. Alexander was still paid nearly $500,000.
Last spring, Maine DHHS attempted to put Meals on Wheels, which provides services to homebound Mainers, out to a competitive bidding process, but reversed its decision two weeks later after a public outcry.
Poverty Continues to Rise
Meanwhile, after years of cutbacks to safety net programs, Maine is now in the top 10 states for “food insecurity” (meaning hunger in government-speak). Currently about 15.8 percent of Maine households are food insecure, right behind Mississippi, Alabama, Kentucky, Louisiana, Arkansas, North Carolina, Ohio and Oregon, according to the most recent USDA numbers. One in four Maine children suffer from hunger, according to national nonprofit Feeding America.
At the same time, Maine ranked 10th in the nation for its amount of unspent TANF money, according to an analysis by the Bangor Daily News. As the newspaper reported in June, the state amassed $110 million surplus in federal TANF funds due to the number of low-income families it has booted from the program over the past five years. The BDN alleged that the state used at least $7.8 million of the money “in ways that run afoul of federal law.” Nearly half of the money was reportedly used to provide services to seniors and people with disabilities as part of an effort to, in the words of Commissioner Mayhew, “reprioritize.”
“Since Paul LePage became governor and Mary Mayhew took the reins at DHHS, Maine has experienced the highest growth in the percentage of children who live in extreme poverty of any state in the country,” wrote Rep. Drew Gattine (D-Westbrook), co-chair of the House Health and Human Services Committee, in a statement. Time and time again we have seen the LePage administration promote policy designed to deprive poor kids of the support they need to be successful. Outsourcing the ASPIRE program is simply another strategy to kick more struggling families to the curb.”