Daniels Intent On Awarding Welfare Contract To Roob's Former Employer

Notwithstanding all the criticsm his administration has faced for selecting a final group of vendors with whom to negotiate a $1 billion contract to administer the state's welfare programs, one of whom is the former employer of FSSA Secretary Mitch Roob and has encountered numerous problems with similar contracts in other states, Gov. Daniels remains intent on outsourcing these services. The Evansville Courier-Press quotes Daniels as saying on Friday, "We have dedicated employees, but our welfare system is slow, cumbersome, inaccurate, inconsistent and conducive to waste and fraud." Daniels added, "It continually fails recipients and taxpayers alike and must be changed."

A report Daniels cites in support of the privatization move found the following problems:

• 35 percent of Medicaid long-term care applications approved by the agency contained errors.
• A backlog of people waiting to learn if they were eligible for disability because the applications were not processed within the allotted 90-day period.
• Indiana's welfare caseload decreased by only 6 percent over the last decade, while other states had an average reduction of 58 percent.
• At least 15 of the agency's employees have been arrested for fraud since 2003, with the average fraud case costing taxpayers $50,000.
• Lack of consistency occurs, with 107 welfare offices statewide determining and verifying eligibility in 107 ways.

Daniels and FSSA officials believe a privately-run system would have fewer errors, process cases more quickly, improve access to benefits and move more persons from welfare to work. If the privatization plan is approved, as many as 1,700 agency employees could lose their jobs.

The problem with the report Daniels' relies upon in support of this privatization initiative is that it did not include a cost-benefit analysis which would demonstrate that private companies could operate the system more efficiently. One of their arguments against the current system is that the state's rate of moving people from welfare to work is much lower than other states. Ironically, Indiana has relied on private vendors in the past to administer welfare-to-work programs mandated by former President Clinton's welfare-to-work program. If the private vendors had successfully done the job the taxpayers paid them to do, Indiana should have realized a much greater reduction in those dependent on welfare. It's hard to understand how the administration can place the entire blame on agency employees under these circumstances.

The administation also overlooks the fact that many of the agency workers who are responsible for administering these programs are being paid by the state slightly more than poverty-level wages themselves. That no doubt contributes to a higher rate of errors and fraud than is desirable. Ironically, Mitch Roob seems to agree. In an unrelated article in today's Star about how much government employees are paid, Roob laments, "We've got folks who are running $80 million programs getting paid $40,000 a year."

Also, the computer systems these employees rely upon to perform their tasks are the very systems some of the vendors who now seek to take away their jobs were paid to develop for the state in the first instance. If those systems are inadequate to perform the tasks, don't these private vendors bear some responsibility for the problems with the current system? Wasn't it the failure of one such system that resulted in more than 10,000 Medicaid clients being denied service when it was rolled out earlier this year under Roob's management?

Unfortunately, the hell-bent determination of Daniels to privatize these services seems to be based on good old-fashioned political graft. The Associated Press' Ken Kuzmer reports that ACS, Roob's former employer and major vendor participating in the privatization deal, has lavished campaign contributions on Daniels--$12,500 in just the past 3 years. ACS' most recent contribution to Daniels was made weeks after it sat down with the agency to begin discussing the bidding process for the contract it now expects to be awarded. Daniels declined to comment on the contributions Kuzmer reports.

As first reported by Advance Indiana, Kuzmer notes that Roob went to work for ACS in 2001 after the company he co-founded with former Indianapolis Mayor Steve Goldsmith, Netgov, went bankrupt and was taken over by ACS. Goldsmith is still affiliated with ACS. Roob left ACS at the end of 2004 to join the Daniels' administration as FSSA Secretary. Roob also refused to comment to Kuzmer.