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2002 January - February

Privatizing Better

Representing Nonprofit Service Providers Contracting with the Government

By Peter Manzo

Public interest advocates and nonprofit organizations that contract to deliver government services share a common interest in ensuring that the nonprofit organizations can deliver the services effectively and sustain themselves as important community resources. Government contracts expose nonprofit organizations to significant risks. Public interest advocates can help nonprofit organizations negotiate contract terms that keep the risk at reasonable levels and bolster the nonprofit organizations' ability to meet the needs of the low-income people who are the contract's beneficiaries.

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Privatization and the Need for Creative Partnering

By Arthur H. Bryant & Michael J. Quirk

Strategic partnerships among legal services attorneys, other public interest attorneys, members of the private bar, and federal and state government agencies hold promise in securing the best outcome for clients. Several such partnerships have been successful in the creative use of the resources each party brings. Privatization makes such partnerships even more important, as harm to clients may give rise to tort or contract causes of action in addition to constitutional or statutory claims, and different laws and immunity defenses may apply to individual and institutional defendants.

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Public Health and Private Profit

A Witch's Brew

By Manjusha P. Kulkarni, Susan Fendell & Erica R. Berry

Analysis of privatization in three settings—administration of eligibility and initial appeals in California's State Children's Health Insurance Program, mental health managed care in Massachusetts' Medicaid program, and the conversion of public hospitals into private entities—highlights several ways privatization can undermine access to health services, the quality of services, the fairness of dispute-resolution processes, and accountability for public funds. Advocates can take steps to protect health services for the poor in a privatized delivery system.

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Casting Aside the Constitution

The Trend Toward Government Funding of Religious Social Service Providers

By Alex J. Luchenitser

Government funding of "faith-based" social service programs—supported by the Bush administration—is gaining support in Congress. However, the current "charitable choice" legislation conflicts with the equal protection clause, free exercise clause, and establishment clause of the First Amendment of the U.S. Constitution. Nonetheless, government officials and religious organizations can take a number of steps in order to avoid constitutional pitfalls.

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Freedom of Information Act Access to Documents of Private Contractors Doing the Public's Business

By Greg Bass & Harry Hammitt

Federal and state open-record laws can be useful tools for accessing records of contractors performing traditional government functions as a result of the trend toward privatization of government services. Litigators can use the Freedom of Information Act as a tool to obtain government records from private contractors fulfilling government functions.

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The Impact of Privatization on Litigation

By Steve Hitov & Gill Deford

Because programs affecting people in poverty are increasingly being contracted out to the private sector, litigation on behalf of those programs' beneficiaries is becoming more complex and demanding. Advocates for the poor, the elderly, and those with disabilities should become familiar with three areas in which privatization is likely to affect legal services litigation: third-party-beneficiary contract actions, state action, and increased complexity caused by private defendants participating in the litigation.

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Will the "Free Market" Solve the Affordable Housing Crisis?

By Peter W. Salsich Jr.

The privatization movement has affected government housing programs primarily through a reduction in direct government financial support for housing production. As a result, for many low-income people, the search for affordable and decent housing has become harder, not easier. The private housing market by itself cannot improve housing conditions and choices for low-income people. However, in partnership with the public and nonprofit sectors, the private market can play a meaningful role in solving the affordable housing crisis.

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Uncharted Terrain

The Intersection of Privatization and Welfare

By Henry A. Freedman, Mary R. Mannix, Marc Cohan & Rebecca Scharf

One of the many ways in which welfare reform radically transformed cash assistance for low-income families was to transfer responsibility for many program functions from government to private agencies, both for-profit and nonprofit. This shift is the subject of intense, ongoing debate and has received minimal evaluation, but private agencies will be major players for the foreseeable future. To represent clients effectively, advocates must adapt to this changed landscape. Because little law is established, the opportunity is great to contribute to the development of new legal doctrine.

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Privatized Welfare and the Nondelegation Doctrine

By Dru Stevenson

Many state welfare agencies have begun to contract with private, for-profit corporations to administer various welfare programs. Privatized eligibility determinations for public benefits have created a system fraught with financial incentive for those reviewing applications. The nondelegation doctrine, which places constitutional limits on the extent to which the branches of government may delegate their vested authority to others, may be used as a tool to check the biases inherent in a system where the government turns over its welfare eligibility decisions to profit-seeking corporations.

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Privatization of TANF in Florida

A Cautionary Tale

By Cindy Huddleston & Valory Greenfield

The Florida legislature yielded to the private sector not only service delivery of Temporary Assistance for Needy Families but also sweeping policy-making authority over work-related welfare issues. Although nontraditional entities administering governmental social service programs usually are bound by the same procedural protections as the government, those entities frequently misunderstand their due process obligations or dispute altogether the applicability of constitutional and administrative procedure act protections. If Florida's experience is indicative of a new trend in privatization, advocates must be ready to preserve the procedural protections that state agencies historically have provided to welfare recipients.

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Wisconsin Works—for Private Contractors, That Is

By Karyn Rotker, Jane Ahlstrom & Fran Bernstein

During the first two years of Wisconsin's implementation of Wisconsin Works, the state's Temporary Assistance for Needy Families program, private contractors in Milwaukee County alone pocketed more than $26 million in profits. These contractors gave themselves and their staffs huge taxpayer-funded bonuses, while cutting caseloads dramatically and imposing harsh sanctions on clients. Not surprisingly, the program has not helped significant numbers of people rise out of poverty.

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Language Matters

Designing State and County Contracts for Services Under Temporary Assistance for Needy Families

By Eileen P. Sweeney, Barbara L. Bezdek, Sharon Parrott, Carol W. Medaris & Cary LaCheen

As they implement welfare reform, states have entered into contracts with private organizations, both for-profit and nonprofit, to provide services families need to move from welfare to work. In many instances the states have not developed the contracts with sufficient care to help cash-aid recipients move successfully into work or with any understanding of the civil rights of people with disabilities. But efforts are under way to improve the language and design of welfare-to-work service contracts (in, e.g., Baltimore, Md., Washington, D.C., and Wisconsin) and to consider the applicability to such contracts of the Americans with Disabilities Act and Section 504 of the Rehabilitation Act.

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Going Private—the Future of Social Welfare Policy?

By Matthew Diller

An analysis of three accounts of privatization shows that the implications of privatization vary according to context and are complex. President Bush's Faith-Based and Community Organization Initiative is considered against this backdrop. Because privatization of government programs may transform the social welfare system, poverty lawyers need to develop approaches for holding private entities accountable for policies and individual decisions.

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