Private foster care adds profit to mix of helping children

Private foster care adds profit to mix of helping children

By Kathleen Chapman

Palm Beach Post Staff Writer

Monday, November 28, 2005

Compassion is meeting capitalism as big companies move into the
business of caring for children and the poor in Florida.

Since the state privatized its foster-care system, it has been at the
vanguard of a national trend in outsourcing social services once
monopolized by government and charities.

Providence Service Corp., an Arizona for-profit corporation traded on
the Nasdaq, now cares for 2,000 abused or neglected children in Palm
Beach County and the Treasure Coast.

The company operates here under the name of a subsidiary, Family
Preservation Services of Florida Inc., and has amassed millions in
state contracts. In Southwest Florida, a nonprofit agency managed by
Providence oversees the region's network of services for children in
state care.

Providence does the work once handled by the Department of Children
and Families, finding homes for the state's foster children and
helping them toward adoption or reunion with their biological
families. Social workers, once eligible for state pensions and union
membership, now have stock options and 401(k)s.

Providence runs programs for children, welfare recipients, juvenile
offenders and struggling families in 24 states and the District of
Columbia. Company leaders say they are improving on state-run social
services while making a modest profit.

But some critics are uneasy about the company's involvement in Florida
foster care. They worry that shareholders will demand higher earnings,
forcing Providence to make cuts in programs for the most vulnerable
children.

Others don't understand how any contractor can make much money in the
difficult field of social work. Nonprofit agencies in some parts of
the state are struggling to break even, they say.

"If you can make a profit on anything we are doing, then that means we
are doing something wrong," said Evelyn Lynn, R-Ormond Beach, a member
of the Senate Committee on Children and Families. "Because it's not
going to the children."

Others, even some who have reservations about for-profit companies,
say Providence should be judged by its performance.

"One thing is clear," said Andrea Moore, executive director of the
statewide advocacy group Florida's Children First. "Things couldn't
continue the way that they were. Because they were only getting
worse."

Providence founder and CEO Fletcher McCusker said he hopes to gain
business in Florida wherever invited. Company President Boyd Dover
moved to Clearwater in 2004 to oversee operations and expansion here.

This summer, Dover stepped in to lead the Treasure Coast's foster-care
agency United for Families, after its first leader resigned.

Last fiscal year, the Providence subsidiary Family Preservation
Services made $1.3 million in profits — about 7 percent of $19.2
million in revenue on state foster care contracts in Palm Beach
County, the Treasure Coast, Gainesville and Southwest Florida.

The company also has a management agreement with Camelot Community
Care Inc., a nonprofit agency that handles $42.8 million in contracts
all statewide.

Providence takes a fixed fee or 10 percent of Camelot's revenue to
provide management services including human resources, accounting and
tech support. Providence took in $3.9 million in management fees from
Camelot last year in Florida, and kept $142,000 in profit.

Camelot's biggest contract is in Southwest Florida, where it earns
$23.2 million a year to oversee programs for abused and neglected
children. Camelot subcontracts more than $3 million to Family
Preservation Services to provide therapeutic foster families, work
with families who have lost their children and manage children's cases
in Collier, Hendry and Glades counties.

Critics say that the company is essentially awarding contracts to
itself, creating conflicts of interest and freezing out other
qualified agencies.

McCusker dismisses that criticism as sour grapes from contractors that
didn't win state business. The contracts were competitively bid, he
said, and the head of Southwest Florida's foster-care initiative
reports to a local board.

According to DCF statistics, the agency in Southwest Florida performed
at or above most state measures of child safety and well-being in the
last year.

McCusker says his company makes money by slashing overhead, not by
skimping. His biggest concern in founding the company, he said, was
how investors would respond.

"Wall Street loves profit. They love improvement in profits," McCusker
said. "But most private companies have been flashes in the pan. They
enjoyed a year or so of success, but then state governments start
terminating their contracts because in my opinion they just get
greedy. We are trying to educate Wall Street that this is and will be
a low-margin business. We are not going to make 15 percent profit."

Slashing corporate costs

McCusker and Dover met nearly four decades ago while working at a
nonprofit agency for foster children and single mothers. McCusker went
on to found a health-care company; Dover was appointed to lead
Arizona's health and child-welfare agencies.

Both eventually worked for Youth Services International, the publicly
owned juvenile justice company that McCusker says made 20 percent to
25 percent profit in its heyday.

In 1997, McCusker started Providence with $50,000 and $500,000 in
loans from family and friends.

Providence won state contracts to provide therapy and case management
to children with behavior problems and families on welfare or
struggling with mental illness or drug abuse, and acquired similar
companies all over the country.

The company went public in 2003 and reported $97 million in annual
revenue for 2004. Providence expects to take in at least $137 million
this year.

Many of Providence's predecessors made their money off state contracts
in part by dumping state pension plans and slashing or freezing wages
for workers. A recent study requested by Florida legislators found
that for-profit contractors pay workers who guard and mentor juvenile
offenders about $18,000 a year, $2,000 less than nonprofit
contractors.

"If you look at other for-profit companies," McCusker said, "you will
find there is an undercurrent of greed, and outrageous executive
compensation."

But he said that Providence will not cut caseworker salaries or
programs for children. Like most social service agencies, he said,
Providence relies on a young, enthusiastic workforce. The company pays
caseworkers an average $32,000 to $35,000 a year, comparable to state
workers and local nonprofits.

The company makes its money by lowering overhead and "blowing up the
corporate office," McCusker said. Its main office in Tucson has seven
executives and three support employees.

McCusker makes $250,000 a year, and owns 5 percent of the company.

Door opens to for-profits

When Gov. Jeb Bush introduced his plan to privatize foster care, he
pitched it as a way to involve local communities. He touted a model
program in Sarasota, where local nonprofits banded together to provide
better care for foster children. He called it "community-based care."

The regional agencies that oversee foster care services must be
nonprofits to receive federal money. But when legislators privatized
foster care statewide, they left the door open to for-profit companies
as subcontractors. And as counties faced deadlines to privatize, they
found there were not many local nonprofits able to back large start-up
costs, or risk large losses.

Providence, which registered to do business here in 1998, had plenty
of capital. It offered hundreds of thousands of loans to fledgling
foster-care agencies.

Robert Barker, who founded Child and Family Connections, the private
nonprofit foster care agency for Palm Beach County, said he initially
had a bias toward nonprofit agencies. But when nonprofits such as
Girls and Boys Town declined to take on big financial risks, he turned
to Family Preservation Services.

The company gave Palm Beach County's foster-care agency a $125,000
loan and a line of credit.

Child and Family Connections paid back the loan and secured its own
line of credit. Family Preservation Services still contracts to
provide case managers for about half of the 2,000 Palm Beach County
children in state care.

Leaders in the Treasure Coast, Fort Myers and Gainesville made similar
decisions. And the effort that was touted as a way to give more
control to local communities brought in board members and caseworkers
who report to corporate headquarters in other states.

Family Preservation's local employees are dedicated and professional,
Barker said, and the company is held to high standards.

The company's contract in Palm Beach County requires one caseworker
for every 19 children, and imposes fines if key positions are vacant
for more than 30 days.

Profits make some uneasy

In an era where corporations are taking over charter schools,
hospitals, juvenile lockups and psychiatric programs, some say it is
inevitable that the care of the state's vulnerable children would fall
to a for-profit company.

But some find it distasteful that a company would be allowed to profit
on the care of foster children.

Nonprofits have overhead and administrative expenses too, said Palm
Beach County United Way President Scott Badesch, but their primary
responsibility is to the community, not to shareholders.

"I just kind of get in knot in my stomach when I think that we don't
have enough money to serve kids and somebody is making a profit,"
Badesch said. "Let's not make profits off the kids in this society."

Others said the company should be measured by results.

"I have no problem with a for-profit, if they do a good job and are
accountable for the public dollars that are being spent," said Nan
Rich, D-Sunrise, a member of the Senate Committee on Children and
Families.
http://www.palmbeachpost.com/search/...ence_1128.html
Defend your civil liberties! Get information at http://www.aclu.org, become a member at http://www.aclu.org/join and get active at http://www.aclu.org/action.
We cannot defend freedom abroad by deserting it at home.

I've been warning about this since 1994 or 95 in state offices in three
states.

And, here in these newsgroups for about four years.

One: a cps staff person doing foster care oversight is subject to
working directly in the office where the responsible workers and their
supervisors, and both of their managers can SEE his or her work
product.

Contracting puts yet another layer on top of the point of service
delivery...isolating it even more from the decision makers and top
adminstration.

Two: it's far less expensive, even with state employees that receive
high quality benefits packages (and not all do...that's for sure) and
union contract negotiation, to have CPS empoyees do this work.

Three: There is an incentive to keep the child in care longer, and a
profit motive that is very REAL as opposed to the delusional fabricated
one that some in these newsgroups create about CPS workers.

I lost my battle with the states I lobbied over this. Let's see if
Florida wakes up.

And let's see of the scumbags in this ng that promote such bs as this
ever get honest and moral again....though I doubt it.

Kane


wexwimpy wrote:
Private foster care adds profit to mix of helping children

By Kathleen Chapman

Palm Beach Post Staff Writer

Monday, November 28, 2005

Compassion is meeting capitalism as big companies move into the
business of caring for children and the poor in Florida.

Since the state privatized its foster-care system, it has been at the
vanguard of a national trend in outsourcing social services once
monopolized by government and charities.

Providence Service Corp., an Arizona for-profit corporation traded on
the Nasdaq, now cares for 2,000 abused or neglected children in Palm
Beach County and the Treasure Coast.

The company operates here under the name of a subsidiary, Family
Preservation Services of Florida Inc., and has amassed millions in
state contracts. In Southwest Florida, a nonprofit agency managed by
Providence oversees the region's network of services for children in
state care.

Providence does the work once handled by the Department of Children
and Families, finding homes for the state's foster children and
helping them toward adoption or reunion with their biological
families. Social workers, once eligible for state pensions and union
membership, now have stock options and 401(k)s.

Providence runs programs for children, welfare recipients, juvenile
offenders and struggling families in 24 states and the District of
Columbia. Company leaders say they are improving on state-run social
services while making a modest profit.

But some critics are uneasy about the company's involvement in Florida
foster care. They worry that shareholders will demand higher earnings,
forcing Providence to make cuts in programs for the most vulnerable
children.

......snipt for brevity...............

wow..what a concept....

That's really already been done. Group homes are private orginizations
and supplied readily with "clientele". One that I worked for, well
hell...the director and his wife go to Europe every year, own 8 houses,
their kids go to private schools. Seems business ain't too bad...

Mistchf wrote:
wow..what a concept....

That's really already been done. Group homes are private orginizations
and supplied readily with "clientele". One that I worked for, well
hell...the director and his wife go to Europe every year, own 8 houses,
their kids go to private schools. Seems business ain't too bad...

Gosh the ones I know, that do not have other income, are run mostly by
old retired military types on a pension..... PENSION ..... and the wife
is old enough to also be on SS from any former employment and still
they have trouble affording to pay for a few days of respite
coverage...and they DO have to pay for their own.

You know for a fact that couple didn't have other income, right? And
can document it?

Come on. I expect YOU of all people here to be honest.

I know a number of attorneys that spotted profit in providing group
homes for CMI's (chronically mentally ill) folks that were shifted from
the state hospitals to the community with meds and subsidies (and SSI)
and set up companies with many such group settings, with college kids
mostly as attendents. I turned down a chance to manage a string of
them.

Were they need though. Yes, of course they were.

I noticed the attorneys still had other income though. I hear they
haven't had any staying power as income sources, what with the true
exspences. Most were finally sold off to folks not as smart as the
attorneys.

And we STILL need them.

I wonder, smirk if we need those group homes?

What was your experience. Did the kids need to return "home?"

(and before you answer, recall that I worked for some time in a
treatment setting with adolescents in a mental health environment --
group home).

0:-

Mistchf writes:

wow..what a concept....

That's really already been done. Group homes are private orginizations
and supplied readily with "clientele". One that I worked for, well
hell...the director and his wife go to Europe every year, own 8 houses,
their kids go to private schools. Seems business ain't too bad...

Hi, Mistchf!

Yes, group homes are run by private organizations intent on collecting the
relatively high fees -- upwards of $155 per day per foster child (Krebs &
Pitcoff, 2003). Many of these group homes are part of chains run by large
corporations. Regardless of whether the private organizations operate under
for-profit or not-for-profit structures, tales of personal profiteering like
you mention are rampant.

Ronald Taylor wrote in his book, "The Kid Business," about some California
group-home directors that pulled off what you are talking about.
"Several nonprofit corporations operating child-care facilities were found
to be legally skimming large amounts of government money through lease-back
arrangements. Operators not only owned the land and leased it to the
nonprofit corporation; they often paid themselves handsome salaries and had
the free use of homes, cars and credit cards.

"The level of care and treatment in far too many of these group homes was
minimal at best, because the money was being skimmed off for personal gain"
(Thoma, 2001).


Ira Schwartz comments in his book, "Kids Raised by the Government," that
despite nationwide efforts to reform the overcrowded and abusive foster care
system, state childwelfare agencies insist on holding on to their
questionable ties with huge, multi-state corporations that run foster care
group homes (Schwarz, et al. 2001).

As the result of class action suits brought on behalf of foster children,
foster care systems have been taken over by the federal courts in 27
jurisdictions across the land. Federal courts have faced major resistance
by the group home operators in trying to impliment reform of the foster care
systems put into receivership. In Washington, D.C., the federal court
finally issued a restraining order and order to comply against the child
protective agency to reform the operation of group homes (GAO, 2000).

Part of the overriding problem is the subculture in group homes. Foster
children learn that attention in the overcrowded institutional setting is
given those children who fabricate the most dramatic maltreatment by their
families (Krebs & Pitcoff, 2003). Those that act out emotional disturbance
get the cookies. Lawyers charged with advocating in foster children's
behalf noted that while much effort by group home staff is given to having
children recount past dysfunctions of their family, almost no effort is made
to help the children develop skills for their futures.

Institutional rules and bureaucratic restrictions in the group homes often
hamper foster childrens independent efforts to prepare for the future.
"An example of this phenomenon is the story of Diana, a bright and
personable nine-teen-year-old in the Youth Advocacy program who wanted to be
an attorney. She obtained what she thought was the perfect ªrst job, working
in the accounting department of a law ªrm in midtown Manhattan, in order to
save money for college. However, because of the obligations of her job,
Diana was unavailable during the day to meet with the group home's staff and
social workers whenever they might call, and she was unable to attend the
weekly sessions where group home residents aired their complaints about one
another. In the eyes of the group-home staff, Diana had become a problem.

"As punishment for her absences because of work, Diana's visits with her
family were suspended and one day she came home from work to ªnd all of her
belongings packed into garbage bags. The supervisor told her she was placed
on "serious house restriction," required her to wear pajamas throughout the
day, and allowed her to change clothes only at the discretion of staff. The
supervisor also instructed her to quit her job. When Diana protested, the
supervisor told her she could either follow the rules or sign herself out of
foster care. Diana walked out of the group home without a place to go, and
with her college dreams suddenly severely hindered." (Krebs & Pitcoff,
2003).

Interested in the bottom line, many private organizations that operate group
homes and "treatment centers" will hire workers with undergraduate degrees
to do clinical work with children and teens. They often misrepresent their
credentials. Attendants at these facilities are usually grossly underpaid
and are often college students with little training.

The child welfare system reacts out of a "bed available" basis in assigning
foster children to housing. In an overcrowded, abusive foster care system,
children need to be screened into categories to qualify for various levels
of funding. If the only bed available belongs to a group home who is
certified for level 2 foster kids, then suddenly the child is labeled with
the problems that would qualify him for this more expensive level of care.
The corporations that own these chains of group homes are willing players in
the game.

"Some children are labeled "dependent" or "neglected" and are placed under
the jurisdiction of the Department of Social Services, other children are
labeled "delinquent" and are under the Juvenile Court or Probation
Department, still others are given a psychiatric label and sent to the
Department of Mental Health, explained Mark Soler, Executive Director of the
Youth Law Center, to a Congressional Subcommittee (Thoma, 2002).

"Among the conditions the Youth Law Center identified were children in an
Arizona juvenile detention center tied hand and foot to their beds; a
Washington State facility in which two children were held for days at a time
in a cell with only 25 square feet of floor space; children hogtied in State
juvenile training schools in Florida -- wrists handcuffed, ankles
handcuffed, then placed stomach down on the floor, and wrists and ankles
joined together behind their backs.

"In the training school in Oregon children were put in filthy,
roach-infested isolation cells for weeks at a time. In the Idaho training
school, children were punished by being put in strait jackets, and being
hung, upside down, by their ankles (Thoma, 2002)."

"Children continue to be assigned labels arbitrarily, and often on a
bed-available basis.

"A recent South Carolina audit reveals that a percentage of foster care
wards have been labeled as in need of therapeutic placements because of a
shortage of conventional foster homes (Thoma, 2002).

Efforts to reform the child welfare system continue throughout the country.
Child and family advocates need to develop tactics to convince policymakers
to break up the alliance state child protective agencies stubbornly insist
on maintaing with private organizations running foster group homes.

Mistchf, I appreciate your contributions to this forum and the opportunity
to discuss these issues with you. You have added a lot of much-needed
wisdom to this discussion group. Your observations about problems in the
present system are helpful in designing reform efforts that will produce the
solution.

What are your thoughts about what can be done to reform the system that
rewards the owners of foster group homes, Mistchf?



SOURCES:

Krebs, Betsy & Pitcoff, Paul (2003). Reversing the failure of the foster
care system. Harvard Women's Law Journal, Vol. 27, pp 358-366. Available
at the Jim Casey Youth Foundation website.
http://www.jimcaseyyouth.org/docs/re...he_failure.pdf

Berliner, Uri (1994). Mining riches from troubled kids," San Diego
Union-Tribune, June 5, 1994. Available at
http://www.liftingtheveil.org/fosref09.htm#6

Thoma, Rick (2002). A critical look at the foster care system: The group
homes. Lifting The Veil. Available online at: http://tinyurl.com/d7n64

Government Accounting Office, (2000). Testimony before the Subcommitte on
the District of Columbia, Committee on Government Reform, House of
Representatives. Foster ca Status of the District of Columbia's Child
Welfare System Reform Efforts. Washington, D.C.: Author. Available online
at: http://www.gao.gov/archive/2000/he00109t.pdf