Adapted with permission, from the Virginia Competition Council's Competition Watch. For more information, call (804) 786-0240.

On June 26, 1997, the Virginia Department of Social Services released a report, "Privatization Study of the Division of Child Support Enforcement." The report summarizes and evaluates the full-service and collection privatization initiatives of the Division of child Support Enforcement, which awarded a contract to Lockheed Martin IMS in January 1994 to establish and operate two full-service child support enforcement offices. The privatized offices began operating in May 1994. The study compared the two privatize offices with two state-operated urban offices whose caseloads most closely match the caseloads of the privatized offices.

Using various performance measures, the study found:

• The privatized offices collected $1,147,817 more than the state-operated offices in FY 1996.
  
  
• In FY 1996 the privatized offices increased total collections by 26 percent over FY 1995, while the state-operated offices increased theirs by 10 percent.
  
  
• Based on the collections per obligated case, the privatized offices outperformed the state offices by 2 percent in FY 1995 and 7.3 percent in FY 1996.
  
  
• The privatized offices located more individuals owing child support in FY 1995, but the state-operated offices exceeded the privatized offices in FY 1996, increasing their -success rate while the privatized office's success rates fell.

The study states that in analyzing the costs and benefits, all major-costs of the offices were utilized. The cost-benefit ratio is expressed in terms of dollars collected for every dollar spent. The cost-benefit ratios in FY 95 were private-$5.62; state-$4.70. The privatized offices were distinctly more cost effective than the state-operated offices, collecting more child support for every dollar spent than the state-operated offices. The study concludes that privatization officer service child support offices is a viable alternative that should continue to be used on a pilot basis in order to continue to evaluate its value for wider implementation.