Press Room

For IMMEDIATE RELEASE

Tuesday, April 11, 2000

Private Contractors Don't Deliver Social Services; AFSCME report, "Safety Net for Sale" released today

ALBANY — Today the American Federation of State, County, and Municipal Employees, the largest union in the AFL-CIO with 1.3 million members, released a report proving the profit motive does not improve the delivery of social services.

In recent years, the privatization of core safety net functions — public assistance, child support enforcement and child welfare — has increased dramatically. While the stated goal of privatization has usually been to reduce costs and improve services, the result has often been quite the opposite. According to the report, the history of privatized social services is replete with cost overruns and service breakdowns.

"The report, 'Safety Net for Sale' demonstrates that the mission of serving poor children and families should not be subject to the profit motive and other influences that corrode the social safety net,"said President Gerald W. McEntee. "States and local governments should not shed services in hopes of minimizing the burden of providing high-quality public services."

According to the report private sector costs are not necessarily lower than the cost of providing the service within the governmental structure, for example:

  • New York - Citicorp. Distributing benefits via ATM cards resulted in poor service, anti-competitive behavior, a loss of state control and no savings.
  • California - Lockheed Martin. A child support enforcement automation contract was cancelled after systems failures and a looming $200-million cost overrun.
  • Illinois - State audits and a Chicago Tribune investigation turned up a broad array of abuses in many group homes. Private child welfare agencies throughout the state were wasting funds and neglecting children.
  • Florida - Lockheed Martin and Maximus. Firms were paid $4.5 million for child support collection, only collected $207,000 and ended their contracts early.

Full text of "Safety Net for Sale"

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American Federation of State, County
and Municipal Employees, AFL-CIO
1625 L Street, N.W. Washington, D.C. 20036-5687
Telephone (202) 429-1145
Fax (202) 429-1120

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