Private provider to operate Child Support
Published 10:24 am Saturday, January 23, 2010
In just over five months, county managers with three local government offices will write in a new line item within their respective 2010-11 budgets.
Effective July 1, all counties in North Carolina face the task of handling Child Support Enforcement. Currently, the state picks-up the tab for the operation of 17 Child Support agencies that serve 28 counties throughout North Carolina as well as the Cherokee Reservation. Three local counties are in that mix – Bertie, Gates and Hertford.
The child support cases in Bertie and Herford counties are currently handled by a state-paid staff that operates out of an office in Ahoskie. Gates County is served by the Albemarle Child Support office (one that also covers Camden, Pasquotank and Perquimans counties) in Elizabeth City.
Without state money fueling those programs, local government officials were sent scrambling to find a way to continue this mandated public service. The state opted to ax the funds that supported the program in 28 counties in an effort to reduce its overall budget.
That decision left county managers Loria Williams (Hertford), Zee Lamb (Bertie) and Toby Chappell (Gates) looking for ways to fill the void. All studied the possibility of letting the program be absorbed by their respective Department of Social Services (DSS). They found that idea as financially unfeasible. That led the trio to form a partnership, one that solicited bids from private firms to handle child support enforcement.
“We have been without a DSS director throughout this entire process as we wrangled over a decision to either handle this in-house or privatize this service,” Williams said.
“We figure it would cost about twice as much bringing it in house,” Lamb noted. “It appears that we’re leaning towards a regional consortium that will employ the use of a private firm to handle this. If we do go that route and find that things are not working as well as expected, we can go into this service ourselves.”
Now joined by Chowan County and Perquimans County, the regional group solicited bids from private providers. Four were received, two of which – Young-Williams and PSI – were the leading candidates due to their lower proposals.
The costs incurred by each county are measured per capita and on the number of child support cases.
In the case of Bertie and Hertford counties, Lamb and Williams said they were looking at budgeting around $400,000 each in the program. However, the federal funds and incentives linked to child support significantly lowers that cost.
“The firm selected to handle this service will be paid a contractual amount,” Williams said. “We then receive on the revenue side the federal funds/incentives, which lowers our costs.”
Williams said she was looking at a net cost of $83,000 annually to operate this program.
“If we had chosen to take this program in-house, we would be looking at roughly $183,000 annually,” she said.
Lamb was seeing near-identical costs in Bertie County. He said operating the program in-house would cost between $150,000 and $180,000 annually.
“It appears it’s in the best interest of Bertie County to contract this service with a private provider,” Lamb stated. “Of a $400,000 investment, we can recoup 66 percent of that on the revenue side plus another 15 percent netted through federal incentives, thus creating $320,000 in revenue. That leaves us with a net cost of $80,000.”
Another point in the bargaining effort with Young-Williams and PSI was keeping the Ahoskie office open and, if all possible, having those private firms offer jobs to the existing state-paid staff.
“We are working to make this transition to a private provider service as seamless as possible,” Williams said. “We have received a guarantee that the child support office will remain open in Ahoskie; however, there is no guarantee that it will remain in its current location (South Everett Street, sharing a building with the District Attorney’s office).”
According to the negotiations with both Young-Williams and PSI, Lamb said both firms have expressed their intent to retain the current staff at the Ahoskie office.
Additionally, the firm awarded the contract has promised to open an office in Edenton.
Due to having the smallest population among the coalition and the least number of child support cases, Chappell said Gates County’s net costs are in the $20,000 range. He added they would budget roughly $100,000 more than that cost, but the revenue/incentives will cover all but about $17,000 to $20,000.
Chappell explained that the federal revenue comes from the Department of Health and Human Services. He added that the federal incentives award funding is based on how well the current child support system is operating within key areas of service.
Without the regional consortium or the presence of a private entity, Gates County would be forced to operate child support services through its Department of Social Services. Under that scenario, the county would have to provide office space, salaries, benefits, training, supervision, supplies, equipment, travel and attorney fees to operate a stand-alone program. That program would also need support from the Gates County Sheriff’s Office.
Of the two low bidders, Young-Williams (based in Jackson, Mississippi) currently provides child support services in New Hanover, Beaufort and Lenoir counties. PSI (a Denver, Colorado firm) also lists current clients in North Carolina, operating in Onslow, Polk and Buncombe counties.