March 3, 2011
Indiana Governor Mitch Daniels' privatization initiatives are being described as models for Wisconsin Governor, Scott Walker's program to dismantle public institutions. But Indiana’s track record is a better model for failed privatization and how states can spend more, get trapped in expensive lawsuits and provide lower quality service to Indiana residents.
In December 2006, Indiana signed a 10-year, $1.16 billion contract with an IBM-led consortium to provide eligibility review and claim processing for public assistance programs. Immediately following the privatization, clients and applicants reported long waits, lost files, slow approvals, and were incorrectly denied access to food stamps and Medicaid. Many eligible families lost critical safety net services. The state paid the contractor an additional $180 million to fix the problems, to no avail. In October 2009, Indiana announced the cancellation of the 10-year contract.
An Indianapolis Star Editorial summed it up: “Too many Hoosiers need help, especially amid a deep recession, for the state to accept mediocre results from a well-compensated contractor.”
Even the contract to represent the state in their law suit against IBM for the failed contract is expensive and riddled with conflicts of interests. Indiana's human services agency signed a $5.25 million contract with a private law firm, Barnes and Thornburg, that including the brother of a key aide to Gov. Mitch Daniels, to represent the state. An e-mail from the State Attorney General’s office to the Associated Press stated that "hiring this firm was a specific request of the Governor's Office."
The Florida DMV recently canceled a contract with an online traffic school, National Safety Commission (NSC,) a public sounding, but entirely private company.
Seven years ago, Florida outsourced driving tests so first time drivers could take the written test online paying $19.95 under the honor system. But more students taking the test online were failing compared to those taking the tests in-person for free at the DMV office. DMV officials suspected the teenagers were cheating or getting help and weren’t learning the basics of safe driving.
It’s no wonder. The Company’s website advertises the benefits for young drivers:
"You don't want to spend hours studying every detail of every page of the driver's license handbook," "You won't have to."
"It's like having the answers BEFORE you take the DMV exam!".
According to Palm Beach Post Columnist, Frank Cerabino, NSC CEO, Ken Underwood donated to Rick Scott's gubernatorial campaign, and “is banking on the new governor to go against the safety concerns of his own highway safety department when it comes to reinstating the private money-making online option for the driver test.”
"I've talked to his deputy chief of staff and he will absolutely reinstate it," Underwood said.
21 of 27 guards laid off a year ago in an abortive privatization move are back on the job after a court ruling in January reversed the Walker’s outsourcing of Milwaukee Courthouse security, saying Walker's emergency justification for it fell short.
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