Friday, October 09, 2009

Targeting a Walker Privatization Scheme

Whenever we talk about government services and programs, inevitably we hear proposals that suggest privatizing them. It is often assumed that privatization of government programs and services is always more cost effective. Although such proposals may fit the strict ideologies of some people they often don't deliver a better solution economically or otherwise. One of the biggest cheerleaders for blind privatization in our state is Milwaukee County Executive Scott Walker. Every year it seems to be a major part of his plans regardless of the actual subject. So let's focus on a couple Milwaukee County examples that clearly show that privatization is not always the silver bullet that some may believe it is.

Almost every year Scott Walker proposes to privatize the Targeted Case Management (TCM)program at the Behavioral Health Division (BHD). That program pairs up a person living with serious mental illness with a case manager that helps them fully and properly function in the community. As I have stated many times before, I have a relative that has been part of this program from the beginning and it has truly been a major factor in their successful treatment. In addition to TCM, Walker has proposed privatizing the Community Support Program (CSP). When he proposed this last year, I wrote about how his plan to privatize these programs would cost more not less. The same is true this year.

I believe that there are moral and quality related arguments that could be made here as well as threats of clients going without much needed services but right now I will only focus on the economic impact of Walker's proposed privatization.

There are at least 7 potential private vendors that provide services similar to TCM at an average cost of $2,656.55 per client. The cost per client that is allotted for this program in Walker's 2010 budget proposal is $1,781.41. The actual cost to privatize this service would be 49% more per client than Walker's numbers imply. A more dramatic difference is revealed when you examine the cost per client for CSP services. The average cost per client for the private companies is $4,252.12. Walker has allotted only $2,342.67 per client in his proposed budget for that program. The actual average cost per client by the private companies is nearly 82% more than what Walker allots in his 2010 proposed budget!

Currently there are 240 clients in Milwaukee County's TCM program and 365 in the CSP. If you multiply those numbers by the average privatized cost per client, you get a total cost of $903,227.00 to privatize TCM and $1,552,016.50 to privatize CSP. Walker has allotted only $427,538.00 (TCM) and $855,076.00 (CSP) for those programs. Those large gaps are not going to close themselves. Not only will they quickly eat up any alleged savings ($593,390)but they will go well beyond that and end up costing Milwaukee County more to privatize these services (at least $579,239 more).

A perfect example of this is the already privatized security services at the BHD. Although privatization is supposed to deliver savings and efficiency, those security costs were over budget by $527,961.13 in 2008 and are going to be over budget again at the end of this year. The numbers show that we can look forward to more of the expensive same if Walker gets what he wants.

If Scott Walker wants to target TCM again this year that is his business, but don't try to play the public for suckers by pretending that the privatization will somehow save money. The fact is when you get behind the rhetoric and the narrow ideology and actually look at the numbers, it is the Walker privatization scheme that should be getting targeted right now.


Unknown said...

Your link on the private vendors doesn't work.

Cory Liebmann said...

it works for me, so i'm not sure why you can't get it. i will try to figure it out.

i used to link to docs using a different tool but it isn't available anymore. this time i tried using google docs and sharing "with everyone" by creating a link. perhaps something went wrong along the way.