Monday, November 7, 2011

Privatization Backfire

Nebraska's privatization of child welfare services has given us an example of when privatization can go awry. In 2009 Nebraska began contracting with private agencies that would provide services for families in the child welfare and juvenile justice systems. Two years later three of the five agencies that Nebraska was working with have either lost or dropped their contracts with the central issues being financial and managerial. The Nebraska Legislature's Performance audit Committee has said that the state's officials made a "critical error" by privatizing without first doing any sort of complex cost-benefit analyses. The Department of Health and Human Services also said that there was "some truth" to this allegation that no real analysis was performed. The general opinion seems to be that the state simply moved too fast to privatize without first analyzing the potential financial issues that could arise.

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