Madison – In a deal that preserves millions of dollars in federal aid to Wisconsin, Gov. Scott Walker’s administration will drop hundreds of private contractor employees who work for the state’s food assistance program and hire scores of public workers as replacements.
The agreement comes after federal officials had threatened in recent months to withhold some money for the state’s FoodShare program because of what they said were improper privatization efforts that were started by the administration of Democratic Gov. Jim Doyle and initially intensified by the administration of Walker, a Republican.
“We didn’t create this mess but we sure are getting it fixed,” Kitty Rhoades, deputy health services secretary for the state, said of the agreement with the federal Food and Nutrition Service. “It’s a good workable solution.”
If the state fails to keep up with the schedule to replace the private contractors, the federal government could still cut money that it sends the state to administer the FoodShare program, which replaced food stamps in Wisconsin. In 2010, the state received $20.5 million in federal money for administrative costs for FoodShare and another $2.3 million in one-time federal stimulus money.
A spokesman for the U.S. Department of Agriculture had no immediate comment. But in a Thursday letter to state Health Services Secretary Dennis Smith, Ollice Holden, a Midwest administrator for the USDA’s Food and Nutrition Service, said the state would need to double the speed of its transition away from contract workers who help to run the FoodShare program.
The state had proposed in July cutting its number of vendor staff – now at 425 – by 20% by Dec. 1. It will instead cut them by 40% by that date. That’s a sharp change in direction from Walker administration plans put forward earlier this year, which had called for increasing the use of private contractors.
In all, the state will have to cut the number of vendor staff to 106 by March 2012, a reduction of 319 workers. In all, 64,000 FoodShare cases will be transferred away from contractor staff by March 2012, and the state must also put forward a plan by Oct. 31 of this year to deal with the remaining 35,000 vendor cases.
Rhoades said that the state was in the process of hiring 90 more workers for its Milwaukee office by the end of 2011 and would eventually hire even more workers as the agency restructures several assistance programs.
Privatization criticized
The news drew praise from Sherrie Tussler, executive director of Hunger Task Force Milwaukee and a past critic of the state’s privatization efforts. Tussler has said privatization has contributed to longer waiting times for applicants, mistakes and lost benefits.
“We wish the Department of Health Services well in their efforts to dismantle privatization and return FoodShare to the public entitlement that the law mandates. We stand ready to help them,” Tussler said in an email.
Earlier this month, Tussler provided a copy of a letter from the state received by a FoodShare client that gave as a help line a number for DirectTV, the satellite television service. Friday, Health Services spokeswoman Stephanie Smiley said the number had been mistyped and that the letters had gone out to some of the 120 clients for a single caseworker.
“It’s been corrected,” Smiley said.
The agreement resolves one point of tension between the state and federal government, though others remain. Earlier this year, for instance, Food and Nutrition Service officials said that state officials didn’t inform them about their discovery last fall of the alleged theft of at least $290,000 in federal FoodShare benefits by Milwaukee County workers.
FoodShare in Wisconsin has more than 800,000 participants and distributes more than $1 billion a year to help low-income residents buy food. The program is largely funded by the federal government but has been administered by the state and counties, with counties largely doing the work of interviewing applicants to see if they qualify for FoodShare and state health programs such as BadgerCare Plus.
In one major exception to that intake system, however, the Enrollment Services Center begun during the Doyle administration handles enrollment statewide for childless adults seeking FoodShare or health care benefits. That center uses private contractor Hewlett-Packard.
According to the Food and Nutrition Service, under federal rules, only civil servants – public employees – can have direct contact with applicants for and participants in FoodShare. Contractors can do other tasks such as data entry and document scanning.
Federal officials have raised concerns about the extensive use of contractors to run public benefits programs, pointing to past problems with privatization deals in other states such as Indiana and Texas.
The potential loss in federal funds would have come from those used for the administration of the program, not the benefits to poor participants. It would leave Wisconsin officials with little choice but to use additional state taxpayer money to keep the program running and ensure priorities, such as providing timely help to the needy and detecting fraud.
U.S. Rep. Gwen Moore (D-Milwaukee) praised the agreement between state and federal officials, saying, “Similar privatization plans in other states have failed, and we don’t need to repeat those mistakes.”
In his original 2011-’13 budget plan, Walker had proposed saving tens of millions of dollars by taking away from counties the work of enrolling participants in FoodShare and BadgerCare Plus health coverage for the poor. Walker’s proposal had called for having the state take over these functions and handing many of them over to a private contractor – an arrangement that federal officials rejected.
Lawmakers changed Walker’s budget to leave the functions in the hands of counties but organize them into larger groups called consortia to deliver the services. Rhoades said the state was working closely with counties to implement those plans.
“With the new system, we believe we’ll still be coming in with savings,” Rhoades said.
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AT A GLANCE
FoodShare in Wisconsin has more than 800,000 participants and distributes more than $1 billion a year to help low-income residents buy food.
The program is largely funded by the federal government but has been administered by the state and counties, with counties largely doing the work of interviewing applicants to see if they qualify for FoodShare and state health programs such as BadgerCare Plus.