A new firm is taking over Davidson County’s privatized child support enforcement — and not a moment too soon 

Child's Pay

Child's Pay
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Illustration: Pete Ryan

On July 1, with no public fanfare, a handoff will take place that will affect children and families across Davidson County. It concerns the Davidson County Child Support Enforcement Office, a social service agency many Nashvillians probably do not know exists. Yet for tens of thousands of Metro Nashville children, it means the difference between financial health and hardship.

This little-known agency tracks down non-custodial parents (i.e., those who don't have custody of their children) and makes them appear in Davidson County Juvenile Court. There a judge can order them to pay the custodial parent a court-determined amount of financial support until the child is 18 — or face prison time, among other penalties.

Out of the 42,000 current Metro Nashville cases, slightly more than 50 percent of non-custodial parents pay consistently. That sobering statistic stands roughly the same across Tennessee, according to state records. The news is no better across the country. Nationwide, as of fiscal year 2009, the amount of unpaid child support had grown to more than $107 billion.

For the state's children of broken homes, and the single parents raising them, the only thing greater than the need for such an agency is the need for it to run smoothly. Unbeknownst to most Davidson County residents, that agency — and others like it across the state — was long ago privatized.

For the past 20 years, two private firms have controlled the Davidson County Child Support Enforcement Office. A third is about to take over after winning the $4 million-a-year, five-year performance-based contract earlier this year. Officials contacted by the Scene, both on the record and on condition of anonymity, express high hopes for the new firm, Mississippi-based YoungWilliams, which assumes control on July 1.

But those same officials say the track record of the previous two companies that ran the agency — Maximus, headquartered in Reston, Va., and Policy Studies Inc., which Maximus purchased in 2012 — shows why privatization remains a problematic solution to government bureaucracy. Neither company lived up to its promised potential, says Davidson County Juvenile Court Magistrate Scott Rosenberg.

"Honestly, I've been concerned over the years about every company's performance that has come through here," Rosenberg tells the Scene.

For a magistrate like Rosenberg, those concerns come down to underperformance — failing to keep the docket loaded with cases. For parents, complaints involve how promptly payments are distributed and how diligently the overseers pursue those who are late.

Some critics even claim that federal dollars meant to spur child-support enforcement only exacerbate the problem. Why should a company work harder to collect, they argue, when the government offers money to address the problem of low collection rates? Doing the job well, theoretically, could put the company out of a job.

Those are some of the issues facing the agency as YoungWilliams prepares to assume control. For critics of Maximus in particular, July 1 cannot come soon enough.

The importance of implementing a thorough, aggressive child support enforcement program became apparent over the past 20 years, based mostly on what some call the "new normal" regarding nuclear families — that the number of children born out of wedlock has climbed steadily since the 1970s.

According to a paper by Jacqueline Kirby at Ohio State University, the number of single-parent families in 1970 with children under the age of 18 was 3.8 million. By 1990, the number had nearly tripled to 9.7 million.

Those numbers make a good case in general for privatizing child support collection, a Hamilton County, Tenn., official told the Scene on condition of anonymity. The number of single-parent families is in flux and rising, the official said, and the private sector can hire employees to handle them faster than the government. Also, the official added, a private firm can run the program more efficiently and allow the county to "throw more resources at the judicial side of things." 

Back in 1992, Metro Nashville had no say whether its child support enforcement office would be privatized. That decision came down from the state's Department of Human Services, which oversees every child support program in Tennessee and makes the decision to privatize and award contracts.

According to Susan Niland, director of communication for the Office of the Davidson County District Attorney General, the decision to privatize 21 years ago wasn't made because of poor performance on the part of the agency. Nevertheless, Niland says, the county decided that it would not contest DHS' decision to privatize Davidson County.

The first corporation the DHS chose to run Davidson County's child support enforcement program was Maximus. A publicly traded global corporation specializing in running government services, Maximus reported $1 billion in revenue for 2012. It lost the Davidson County contract in 1997 to Policy Studies Inc., which Tennessee had made the first private company ever awarded a contract to handle child support back in 1991. PSI ran the program until 2012, at which point Maximus acquired the company that year and took over once again.

According to the state DHS, Maximus and other private child support enforcement firms have saved Tennessee taxpayers tens of millions of dollars. Contacted by the Scene, the DHS could not provide an exact figure as to how much Davidson County has saved in 20 years of privatization.

But in Hamilton County, Maximus has saved Chattanooga taxpayers $10 million since 2001. In Shelby County, Maximus collected $16 in 2012 for every $1 spent of Memphis taxpayers' money. When the Shelby County government last ran the program, in 2008, it collected only $7 for every $1 spent.

The company has accomplished this savings, at least in some cases, by firing salaried government workers and replacing them with temporary workers paid a lower wage. Davidson County was not one of those cases, according to Niland. She tells the Scene that when it took over in 1992, "Maximus took all of the county employees as part of the arrangement, and many stayed with them for years."

That stands in contrast, however, to what happened in Memphis in 2009. After the DHS allowed Maximus to take over Shelby County's child support collection, the firm handed nearly 200 county employees a pink slip. Within the very building that housed Memphis' new child support office, which Maximus chose as its new local headquarters, a Randstand temp agency office was established.

Neither the state nor Maximus would comment on the company's use of temporary employees. To those seeking to trim government costs, such moves are seen as a brutal but needed move toward efficiency. Others claim Maximus forced out veteran employees with passion for their jobs and institutional knowledge, only to replace them with less-skilled temps.

Whichever the case, the company's service draws harsh comments from veteran Juvenile Court personnel. "Their internal service was horrible," said one Juvenile Court official contacted by the Scene who spoke on condition of anonymity, while another reached by phone mentioned the company's "very poor performance over the years, not good at all."

"We have three full-time magistrates ready to hear cases, and our dockets have never been completely full [under Maximus]," Magistrate Rosenberg says. "I know what I see in court, and as far as the court process goes, we were being underutilized. [Maximus'] production rate of getting cases through the system was not good. The organization as a whole was underperforming."

It's not just local county employees who disparage the private firm. Across Tennessee, where the DHS has privatized 20-plus counties — including those encompassing Knoxville, Chattanooga and Memphis, each also handled of late by Maximus — thousands of parents are fed up with for-profit corporations running a program whose main responsibility is the welfare of children.

Michelle Baker, a single parent from Chattanooga, has inspired an online uprising against Maximus and other child support enforcement firms across the state. Baker has penned a blog since 2009 (found at mothercluckerblogger.blogspot.com), and her rants and investigations have logged more than 30,000 views.

"When you have a private company coming in and taking over, it becomes a business," Baker says. "It is no longer a public service that assists the public. They're going to be more concerned about making money and trading their stocks. They're more concerned about the almighty dollar. They've turned [child support] into a money-making industry."

Baker, a custodial parent, says she knows firsthand what other parents have experienced with Maximus. In 2006, Baker wanted her daughter's father to accept responsibility for her upbringing, so they went to family court to determine child support.

The judge ruled that the father, who was employed with benefits, was a year behind in child support. He was ordered to pay nearly $7,000 in arrears and provide health insurance. He paid the arrears, but never provided health insurance.

"I contacted Maximus many times to ask them to enforce the insurance issue, but Maximus told me there was 'nothing they could do for me,' " Baker says. She was confused as to why they wouldn't just enforce the order, so she turned to the DHS for help.

"They sent me a letter saying I would have to contact Maximus about my complaints, since they have jurisdiction over child support collections for my county, and that they could not assist me with anything child-support related," she says. "In 2007, I was forced to go on Medicaid since Maximus and the state refused to enforce the order, which stated the non-custodial parent was responsible for providing insurance."

Earlier this year, Baker received a letter from DHS informing her that both the Hamilton County Juvenile Court and Maximus had made a "mistake." DHS said Maximus had not deliberately denied health coverage, but the corporation had misinterpreted the court order, believing it was her responsibility to provide coverage for her daughter.

Baker says she loathed going on Medicaid, but had no choice but to accept what the system offered her.

"All of us who are forced to deal with Maximus child support are, in my eyes, at the mercy of a giant corporation and local governments that are clearly working together to make a profit from child-support collections," she says. "Politicians on a local level do not want to suffer the heat from an underperforming juvenile court system, and Maximus is more than happy to collect their millions, underperform and not give a crap about child-support collections."

Baker says hundreds of sympathetic parents have written posts on her blog in frustration. Many even signed a national petition online in protest of Maximus intended for President Barack Obama.

That heat has also been felt by the DHS, which logged 894 statewide complaints against Maximus from July 2009 to September 2012. When Maximus ran the Davidson County office in 2012, after its purchase of PSI, it logged 36 complaints from May 1 to Dec. 31.

Complaints heard by the state include lack of professionalism on the part of Maximus employees, lost or late child-support payments, and administrative gaffes on the part of Maximus employees that have cost the jobs of non-custodial parents.

"The department takes all complaints very seriously," said DHS spokeswoman Valisa Thompson. "Complaints received about any vendor or partner who is providing services on behalf of the department are investigated fully by the department."

As well they should be. The financial stakes for these private firms are high, Baker says, as huge sums of money are being exchanged. Besides the state funding to run the program, consider the amount regularly paid between non-custodial parent and custodial parent. For fiscal year 2012, the DHS says the state helped facilitate $602 million in payments.

Indeed, the state's DHS offers the custodial parent the option of receiving the non-custodial's payment in a prepaid Visa Card. And just like any banking card, Visa charges fees such as overdraft penalties and ATM charges.

Just how much money Maximus has made off Tennessee taxpayers is a mystery, as the company refuses to divulge whether they've made a profit off their child support enforcement contracts. Lisa Miles, a spokeswoman for Maximus' Investor Relations, tells the Scene, "We are unable to disclose financial information by project."

Another Maximus spokeswoman, Sally Anderson, who is outsourced by the company and works for Hall Strategies in Nashville, was forwarded specific questions regarding whether the wage and benefits of their Davidson County employees are consistent with what Tennessee government child support personnel earn. But Anderson would not speak specifically about wages paid for by state taxpayers.

"In addition to supporting custodial parents to obtain the child support ordered, Maximus focuses on addressing barriers that non-custodial parents face in paying their obligations," Anderson said. "This child-centric approach has been shown to lead to longer-term consistent child support payments as well as creating less divisiveness between the child's parents."

Many non-custodial parents, however — mostly fathers — claim Maximus and other privatized child-support enforcement agencies use heavy-handed tactics toward them. Tony Gottlieb, a single father from Nashville who once directed DAD of Tennessee, a group that seeks to empower divorced fathers as equal partners in parenting, says that financially marginalized or unemployed fathers become easy targets for Maximus and other private firms. The firms are desperate to meet government-mandated performance metrics or lose out on lucrative contracts, he says.

Gottlieb, who is mainly on the sidelines these days regarding the issue, says he's heard that the "ridiculous unemployment" problem in Memphis has forced the "poor non-custodial parent" into a corner — and that toward those parents, Maximus is relentless.

"It's deteriorated to the point where they're taking guys to the county lockup in buses now and they haven't solved anything," Gottlieb says, since nearly half of all Shelby County non-custodial parents are not consistently paying child support.

The situation there has drawn the attention of state Rep. G.A. Hardaway (D-Memphis), an opponent of privatized child-support collection. "I get more complaints on Maximus than any other issue dealing with family services and juvenile justice," the lawmaker told Memphis' Fox affiliate WHBQ-Channel 13 in a February news story. Particularly galling to Hardaway, and Shelby County's low-income non-custodial parents, is Project Drive, a Maximus-run program that seizes driver's licenses for non-payment but will reinstate them — for a $750 fee.

The lawmaker went on to lambaste Maximus' "cozy relationships and the revolving door that existed between government, state government, the administration within the DHS, and the corporate executives with Maximus."

One person the Scene hoped could address Hardaway's "revolving door" comments is David Sanchez, current director of the DHS' Division of Child Support. But Sanchez did not respond to multiple interview requests. The state, however, did confirm that Sanchez had another employer as recently as 2011.

"Mr. Sanchez was previously employed by Maximus," DHS spokeswoman Devin Stone tells the Scene. "He is a subject-matter expert in child support services with over 21 years' experience in states across the nation."

Praising Sanchez, Magistrate Rosenberg says he "has worked really hard to get [Tennessee's] numbers up." According to the DHS, for fiscal year 2012, the state collected $7.31 in child support and passed it along to the custodial parent for every $1 spent in taxpayer's money. That ranks Tennessee sixth highest out of the 50 states.

Many proponents back the privatization of child support enforcement agencies, and the Scene attempted to speak to several of these organizations. But the groups contacted, which included the National Child Support Enforcement Association (representing both public and private employees) and the Office of Child Support Enforcement (of the federal government), declined to address why privatizing child support enforcement is the right move for both child and taxpayer.

But one entity maintains an unshakable belief in the power of privatized social service. In 2004, Maximus was hired by Metro Nashville to study and improve city social service programs such as Nutrition Services and Homemaker Services. In its final report, Maximus recommended to city officials that these services should be handed off to a private firm. What the report didn't mention was that Maximus was just such a firm.

Sensing something was amiss, Service Employees International Union Local 205 did some checking into Maximus. The union concluded the company was acting as much more than a "consultant," says SEIU Local 205 spokesman Mark Naccarato.

"Maximus ended up not getting any contracts in Nashville and lost credibility because they were not forthcoming about their role as provider of services," Naccarato says. "The Maximus report also gave us the momentum we needed to pass anti-privatization legislation in 2005, which is still on the books." The legislation — actually an ordinance amending a Metropolitan Code of Law relating to privatization — requires providing employment opportunity for displaced Metro employees, among other obligations.

But the tide of privatized social service continues to roll. This summer, the state of Kansas is preparing to privatize every one of its child support enforcement agencies. The trend that apparently began in 1991 with PSI in Tennessee is gaining momentum.

Carolyn Heinrich, director of the Center for Health and Social Policy at the University of Texas, is an expert on federal efforts to increase child support collections. She says the jury is still out on whether privatized child support enforcement agencies serve a community and its children better than government-run agencies. But in the case of Maximus and its poor performance and high number of complaints, she said it is the state's responsibility to make the right decision on which firm to use.

"Maximus probably hooked [Tennessee's DHS] with, 'We're going to save you money,' " Heinrich says. "This is when the state has to be prudent and ask, 'How are you going to save us money?' The state has to get out there and see what they do. And during negotiations, if the private firm says they're going to lay off this many people and hire temps, this should make the state take pause and ask, 'Is this going to work for us?' "

Within a matter of days, Mississippi-based YoungWilliams will take over for Maximus. The Scene tried to speak with YoungWilliams on several occasions but was told by a YoungWilliams representative a stipulation of the contract with Tennessee's DHS is not to talk with any media about the contract or their work for Davidson County.

Nonetheless, Magistrate Rosenberg traveled to Knoxville several times to personally research YoungWilliams, which currently holds Knox County's child support enforcement contract. He's confident YoungWilliams will run the Davidson County child support enforcement agency better than Maximus did.

"I have a lot of hope for YoungWilliams," he said, "and the reason is I am very familiar with how YoungWilliams runs their contract in Knoxville." YoungWilliams claims the company strictly works for child support enforcement agencies only, and is superior to other private firms because everything it does is designed to improve child support enforcement.

Rosenberg has worked for Juvenile Court since 1998 and thus has worked with a private child support enforcement firm for his entire stay. And even though he doesn't throw much support behind privatization, he doesn't endorse letting Metro Nashville's child support enforcement program revert entirely back to government control.

"I'm not sure all the citizens of Nashville are best served by [any government agency] being completely privatized," says Rosenberg. "There needs to be a combination of both. As a private company, they're not as accountable to the taxpayers of Nashville. If it was run by the county, and there's a problem, you call the mayor's office and something is going to happen.

"If the government was to utilize privatization but run certain ethics of the program and still maintain control over it, that would be a much better model, but I don't know if anyone has ever tried that."

Maybe not. But after 20 years of privatized child support enforcement of drastically uneven quality, perhaps Nashville is learning what it doesn't want.

Portions of this article previously appeared in the Chattanooga Pulse.

Email editor@nashvillescene.com.

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