By Daniel Alesch, Ph.D.
This is a case study of privatized general relief administration. The privatization program, which may be the first of its kind in the United States, was undertaken by the Brown County, Wisconsin, government. It contracted with a private, nonprofit organization to administer the general relief program in a unique public-private relationship. The effort resulted in special benefits for the people of Brown County.
Brown County’s privatized general relief program is more cost-effective than the programs it replaced. Administrative costs were cut almost in half the first year following privatization and have been reduced still further. Approximately 70 percent of the savings in administrative costs can be attributed to greater efficiency; the remaining 30 percent is attributed to the state-mandated program changes.
Benefit levels for individual recipients increased, but total benefit payments declined following privatization. Part of the reduction in total payments is because a work requirement reduced program participation, but substantial savings resulted from ensuring that recipients did not receive benefits beyond their eligibility.
Program quality did not suffer, but rather was enhanced, as a consequence of privatization. The privatized County program has more clearly defined rules and more uniform eligibility determination and payment levels than the programs it replaced. Recordkeeping for individual client cases is simpler and more uniform. Program paternalism has been reduced: the County’s privately administered program places more responsibility on the program participant to make appropriate choices.
Some argue that the County’s program has lost its flexibility and that the program is not an advocate for the poor. Others find these features a virtue, arguing that previous programs in the County were sometimes arbitrary and capricious.
The Brown County model might best be characterized as quasi-privatization. The relationship that has developed features a tradition of trust, confidence, and respect between the County Social Services Department and the nonprofit administrative organization; clear distinctions between administration and policy making; and a commitment by the nonprofit organization to return its earnings to the community. The nonprofit organization actually ran efficiently enough over the full range of programs it administers to enable it to use its resources to build new housing for physically handicapped persons requiring live-in attendants. The organization also bought several houses no longer fit for occupancy and razed them to remove them from the housing market.
The Brown County program suggests a model that can be replicated in other jurisdictions for a variety of programs. The model features a nonprofit organization committed to community service, contracts for the nonprofit organization to administer a variety of programs, collaborative relationships between local government agencies and the nonprofit organization, and dedication on the part of local government and the nonprofit organization to cost-effective program administration.
The Brown County model has produced substantial savings while retaining political responsiveness and responsibility. Privatization has allowed local government to initiate new programs without adding staff or providing space. Private organizations can adjust staffs and work assignments to meet current needs, providing County programs with continuity, efficiency, and consistent quality.
