In 1996-97, Kansas became the first state in the nation to fully privatize its adoption, foster care, and family preservation services.

Kansas’s Department of Social and Rehabilitation Services (SRS), previously the state’s largest provider of adoption and foster care services, now is strictly a purchaser of services and contract monitor with respect to child welfare services.

In all three areas — family preservation, foster care, and adoption — the private contractors are paid a one-time, lump-sum rate per child. As with managed health care plans, the rate is "capitated." Previously, providers were paid on a fee-for-service basis. This provided little incentive to move a child quickly out of foster care, because the contractor would be out the monthly state payments for that child. The result was "foster care drift": kids floated through the system because there were no structural incentives to move them out of it.

In contrast, each contractor’s fiscal soundness will now be linked directly to preventing such drift. For example, Lutheran Social Services, the lead adoption agency in a 13-agency private consortium, receives $13,500 for each child. Out of the $13,500 lump-sum payment, the agency must pay for foster care and counseling services for as long as the child remains in foster care. Thus, if the agency fails to place the child in less than one year, it will lose money. If the new adoptive home fails, the consortium must place her again—but with no additional state money.

All the contracts also are outcome-based. For adoption, the contractor must meet five key outcome measures in order to have the contract renewed. One is shortening the length of time between foster care and adoption. Previously, the state was placing only one-fourth of the children in homes within six months of being freed for adoption. State officials want the private consortium to increase this rate to 70 percent within 180 days and 90 percent within a year.

While a major challenge, the non-profits are confident that over time they will vastly improve on the state’s performance. "In the future, the kids who need to be adopted will be younger, will have spent less time in out-of-home care and will have fewer problems as a result," Joan Wagnon, the director of Kansas Families for Kids, told the Kansas City Star.

Early results are encouraging. Inquiries from potential adoptive parents have tripled in five months while the number of adoptions has risen by one-third.

In the first seven months of the family preservation privatization, 91 percent of families served have remained intact, meaning that children did not require an out-of-home placement. This is substantially higher than the 80 percent outcome goal.

Virginia Rodman, a consultant with Lutheran Social Services, is convinced privatization represents the future of foster care and adoption in America. "The national trend is certainly in the direction of privatization," says Rodman. "It may be different models than in Kansas but some kind of privatization is definitely coming to child welfare."

Sarasota County also turned over its problem-plagued foster care and adoption programs to a group of private, non-profit agencies in 1995. In addition to foster care and adoption, the coalition, led by the Sarasota YMCA, provides services for abused, troubled, and drug- and alcohol-addicted children.

Having the human services department purchase and monitor the services but no longer deliver them is expected to increase accountability. "[Previously] it [was] like the fox guarding the hen house. There’s not a whole lot of accountability like that," explains state Senator John McKay (R-Bradenton).

The privatization push comes partly in response to a 1996 state law that encouraged the state human services department to contract out services to community-based agencies. The Sarasota pilot project is one of five in the state launched in 1997.