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Indiana Governor Signs $1.16 Billion Welfare Privatization Contract December 27, 2006

Posted by notapundit in Politics, US News.

INDIANAPOLIS (AP)–Gov. Mitch Daniels on Wednesday signed a controversial $1.16 billion contract to pay an IBM Corp.-led (IBM) team to help run programs for food stamps, Medicaid and other assistance for the needy.

The contract calls for the state to pay the team the money over 10 years to help process applications for the programs and lend technical support to the state’s Family and Social Services Administration, which now handles the work.

The decision to move forward with the plan comes after months of discussions and review and strong criticism by some Democrats, caseworkers, union representatives and advocates for the needy.

“For taxpayers, a billion dollars of savings,” Daniels said in a news release. “For recipients, better service and a better chance to escape welfare for the world of work and self-reliance. No decision we’ve made is more clearly in the public interest.”

Critics have said the state shouldn’t outsource services for the needy to a for-profit company.

They worry that Indiana might encounter some of the same problems as other states that opted for private vendors. That includes Texas, where some applicant benefits have been delayed.

The administration has defended the plan, saying it will help the state meet new federal standards for progress in moving welfare recipients into jobs, avoiding tens of millions in financial penalties. FSSA Secretary Mitch Roob also has said it would help turn a cumbersome, paper-driven system into one that is more accessible through computers.

The plan envisions improving delivery of the public safety-net benefits system received by one in six Hoosiers by making it easier to apply through the Internet and telephone call centers. It also aims to use computers to drive the process with self surveys, instead of time-consuming interviews, to ease case workers’ paperwork and reduce error and fraud.

Out of about 2,200 current FSSA employees now performing the work, about 700 would be retained by the agency. The remaining 1,500 FSSA employees were guaranteed jobs with the IBM group for two years at no less than equal pay and benefits.

Each of Indiana’s 92 counties would retain an office where people could apply in person for benefits, and all final eligibility determinations would be made by state employees.


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