June 25, 2003
More on Gregg Phillips
The Gunther Concept is still digging into Gregg Phillips' background (see this post for more). He's also still got Blogspotted links, so if this has scrolled off the top, look for the June 24 entry entitled "The Revolving Door of Gregg Phillips". Apparently, Phillips' official bio leaves out some of his recent employment history. Here's Gunther's summary of the situation:
So to sum up, Gregg Phillips was at one time the Director of Mississippi's Department of Human Services. He resigned as Director to accept a position with a firm that he had previously approved as recipient of a $875,000 contract with MDHS. At some time or another, he founds and becomes CEO of Enterject, Inc. Enterject gets a large portion of it's business by helping private companies get tax credits from federal Welfare to Work (WTW) programs, and various similar schemes that allow governments to cut welfare rolls. Phillips worked in this capacity at least until the fall of 2002. Now he is in a position where one of his primary responsibilities will be to reorganize Texas' social service sector, to make it more "efficient".
How much of this reorganization will involve granting of tax credits to companies that hire long-term welfare recipients?
How much business will Enterject, Inc. receive as a result of these changes?
Does Gregg Phillips still have any role with Enterject, Inc.?
Will he immediately start working for Enterject when he eventually leaves his current position?
Is there anyone out there who thinks this is a conflict of interest?
Why does't anyone know about this?
I think those are fair questions to ask, and it would be nice if we knew the answers to them. It is possible that this is much ado about nothing, but I'd still like to know that someone with the time and training to know what to look for has checked it out first.
Posted by Charles Kuffner on June 25, 2003 to Scandalized!
Section: Local & State
This article is: http://www.chron.com/cs/CDA/story.hts/metropolitan/1961899
June 22, 2003, 2:23PM
Man with a mission leaves some dubious
TASK IS TO OVERHAUL TEXAS SOCIAL SERVICES
By POLLY ROSS HUGHES
Copyright 2003 Houston Chronicle Austin Bureau
AUSTIN -- Death threats arrived and a brick flew through a window of his
family home, Gregg A. Phillips recalls of his first attempt to dismantle and
privatize government-run services for the needy.
The man recruited to be Texas' $144,700-a-year leader of the most sweeping
social services overhaul in modern Texas history learned some of his lessons
the hard way.
After three tumultuous years as former Mississippi Gov. Kirk Fordice's young
political choice to lead a major overhaul of that state's Department of
Human Services, the embattled executive director could no longer stand the
heat. Facing a tidal wave of opposition, he resigned in 1995.
State employees protested privatization of child support collections.
Legislators, upset by the issue and at odds with Fordice, threatened to
close the agency. Advocates for the poor called Phillips a liar, and a
Jackson Clarion-Ledger editorial cartoon portrayed him as Pinocchio.
"I had a son in second grade at the time. The final straw was when he came
home really upset one day because some of his friends had seen someone being
ugly to me on TV," he said recently from his new office at the Texas Health
and Human Services Commission.
As HHSC deputy commissioner for program services, Phillips will make key
decisions on downsizing and consolidating 12 agencies serving the blind,
deaf, nursing home residents, abused children, mentally impaired, physically
disabled and other needy Texans into only five agencies.
Phillips also will oversee the privatization of eligibility screening for
services to sick and needy Texans as part of a new state law designed to
shrink government and save $1.1 billion. Instead of the 800 Mississippi
state jobs jeopardized by privatization, Texas aims to eliminate 3,600
health and human services workers during the next two years.
"We are fortunate to have Gregg Phillips' skills and experience as we meet
the organizational and budget challenges of the next biennium," Health and
Human Services Commissioner Albert Hawkins said, noting his hire's
"conscientious approach and broad program knowledge."
Despite similarities in the missions of Texas and Mississippi in shrinking
government while promising to protect the neediest, Phillips, 41, said the
dynamics are different in key ways.
"At the time, I was fairly young and fairly immature," he said of accepting
Fordice's key job appointment a decade ago after serving as the governor's
campaign finance manager. "I'm a vastly more mature person than I was then."
Phillips, who later headed Mississippi's Republican Party, recalled
skeptical lawmakers grilling him in Mississippi about his youth and
inexperience. In retrospect, he said he thinks they had a good point.
"You know, that was really a poor decision on the governor's part to put me
into that," he said.
"There's one huge difference in all of this between my experience in
Mississippi and here in Texas," he added of his new boss, Hawkins. "I don't
want it to appear as though I'm trying to blow Albert's horn too much, but
when I was 31, I was appointed to that job in Mississippi. Both in
experience, intellect and many other ways, I was no Albert Hawkins."
Hawkins, widely regarded as a budget wizard with a depth of government
knowledge, is well liked and respected by both Republicans and Democrats. He
previously worked as a key staffer during George W. Bush's tenures as
governor and president. Phillips reports to Hawkins, who hired him; Hawkins
reports directly to Gov. Rick Perry.
The ambitious social services overhaul in Texas might take up to six years
to complete, Phillips said, predicting the most complex and challenging
tasks will be privatizing eligibility screening and splitting mental
retardation and mental health services into separate agencies.
He said he no longer believes the argument should be whether privatization
saves more money than government-run services. The focus should be to create
competition by preventing either public or private monopolies, perhaps
splitting tasks among several bidders.
Republican leaders who pushed through the changes in Texas human services
predict it will lead to greater efficiencies and better outcomes for the
needy and taxpayers. But advocates for the poor who remember Phillips' work
in Mississippi, predict his leading role could end in chaos, disaster and
perhaps squandering of tax dollars.
"He really knows his stuff," said Rep. Arlene Wohlgemuth, R-Burleson, author
of House Bill 2292, the health and human services overhaul, noting Phillips
played a critical role in drafting the new law.
She said he possessed a wealth of knowledge needed for such an ambitious
reinvention of government and if he didn't have an answer, he quickly got
"There are not very many conservatives who are all that involved in health
and human services issues. I knew he was," she added. "He had an excellent
Larry Temple, who worked for Phillips in Mississippi before landing at the
Texas Workforce Commission as the director of welfare reform, predicted a
successful future for his friend in Texas.
"He's no-nonsense, very direct, very focused, extremely loyal," Temple said.
"He's a good soldier, the kind of guy you can depend on to carry out any
mandates you're given."
Temple said Phillips is the "perfect person" to pull off changes in the
landmark legislation, but several civil rights advocates and others in
"Mr. Phillips has been identified as one of those people that can come in
and make all those drastic cuts and not feel any compunction about what he's
doing to the poor people of Texas," said Wendell Paris of Mississippi Action
for Community Education in the poverty-stricken Mississippi Delta. "If he
does in Texas what he did in Mississippi, I feel sorry for the poor people
Many recall controversial welfare-to-work policies, which reduced welfare
rolls by more than 80 percent, sometimes by putting welfare recipients to
work in poultry processing plants or casinos. Their benefit checks went to
employers to subsidize their low-wage jobs. Phillips described the approach
as "tough love," but Paris saw the impact they had in less flattering terms.
"Those Texas legislators ought to research what his history is, and they
ought to be ashamed of themselves," he said, noting the state's recruitment
of both Temple and Phillips. "They're bringing in that whole crew of these
ruthless wolves hiding in sheep's clothing."
Carol Burnett of Mississippi's Low Income Child Initiative said Phillips was
a "very controversial choice" to head Mississippi's human services
department because he was so inexperienced with the issues faced by poor
"I think his work in government is more political than it is really trying
to promote any kind of improvement over time for human services for
low-income families," she said. "I regret that type of person is the choice
to head agencies that have such incredible influence over how programs are
shaped that so influence the lives of children and families."
Warren Yoder, director of the Public Policy Center of Mississippi, said
Phillips' controversial privatization of child support collections under a
contract to Maximus Inc. was limited by the Legislature in scope.
Even so, he said the experiment was a failure, and the Legislature later
turned both child support collections and welfare-to-work training programs
back to the state.
Phillips maintains that under his watch, child support collections doubled
in two years and a literacy project for welfare clients won an international
distance learning award. Welfare recipients graduating from the reading
program told touching stories of how they hitchhiked from the Delta to
attend the classes, he said.
Phillips also said he's learned a lot since his maiden venture into health
and human services. He blames part of his public relations woes on one of
his biggest mistakes -- immediately firing his entire human services
His interest in contracting with private technology companies for government
services continued after he left Mississippi, as a senior manager at
Deloitte Consulting and as founder of Enterject, Inc.
Enterject, his résumé said, developed business ideas for using private
technology for delivering health and human services.
He worked for the Republican Party in Alabama and participated in national
and local GOP campaigns as well. However, he said if anyone harbors concerns
about his past as a political operative, they should set those fears aside.
"Yes, there is an open door," he said, inviting all sides of the social
services debate to the table. "All of our efforts, whether they be
Republican, Democrat or otherwise, have to focus on service delivery."
Section: Local & State
This article is: http://www.chron.com/cs/CDA/story.hts/metropolitan/1961899
Subject: WSJ - Miss. Mgt Problems 1995
. . . “Mississippi's Human Services Department is being investigated or reviewed by the state auditor's office, the state attorney general's office, a state legislative panel and the U.S. Department of Health and Human Services Inspector General.”
. . . Mr. Fordice and the executive director of the Department of Human Services, GREGG PHILLIPS , say the Child Care audit is a politicized version of an internal investigation launched by Mr. Phillips himself when he took office.
. . .Mr. Fordice's talk of more-sensitive government, however, appears at odds with his choice to run the Human Services' program --MR. PHILLIPS. A 34-YEAR-OLD FORMER STOCKBROKER AND POLITICAL FUND-RAISER who ran Mr. Fordice's campaign finances, Mr. Phillips had no prior human-services experience. His office is decorated with photos of Ronald Reagan and Vince Lombardi and a Dan Quayle commemorative horseshoe. Aside from a few sheets of paper, the only items on his desk during a recent visit were a cellular phone, a beeper and a pair of sunglasses. "I like to keep things simple," he says.
. . . his initial PRIVATIZATION MOVE QUICKLY BECAME A POLITICAL TRAIN WRECK. Trying to reform the state's child-support collection operation, he won partial approval from the legislature to negotiate, in 1994, a contract with MAXIMUS INC.
. . . legislature's investigative arm said the governor and the HUMAN SERVICES DEPARTMENT FAILED TO STUDY THE COSTS AND BENEFITS OF PRIVATIZING.
. . . Yet [Gregg Phillip's] two years as head of Human Services have been anything but simple. Mr. Phillips has had to cope with criticism from the social-services establishment who accuse him of failing to understand the needs of the poor. Last year, the legislature's investigative unit found him unqualified for the job; it cited inadequate experience. Legislators say he ignores their mandates. "FORDICE COULDN'T HAVE FOUND A WORSE CHOICE," SAYS REP. JAMES EVANS, A DEMOCRAT ON THE HOUSE COMMITTEE ON PUBLIC HEALTH. "IT'S BEEN CHAOS OVER THERE EVER SINCE HE STEPPED IN."
- - - - - - - - - -
MISSISSIPPI'S RECENT SLIP-UPS IN HANDLING FEDERAL AID BELIE CLAIMS OF EFFICIENCY
By Robert Frank
The Wall Street Journal
JACKSON, Miss. -- If the "CONTRACT WITH AMERICA" survives the Senate, Congress will soon start mailing out more than $30 billion a year in checks to the states -- and much of it would wind up in the hands of people such as KIRK FORDICE.
Mr. Fordice, Mississippi's first Republican governor since 1876, strongly supports the contract's plan to revamp welfare by returning programs -- and funding -- to the states. Under a bill recently passed by the U.S. House, Mississippi would get more than $300 million in block grants to spend mostly as Mr. Fordice and the Democratic-controlled state legislature choose, without federal oversight.
The idea, Mr. Fordice says, is to bring the money closer to the people. Compared with Washington, politicians in Jackson, he contends, are far more in touch, more efficient and "pure" in their efforts to cut waste and deliver services. "Just give us a chance," says Mr. Fordice, pounding his fist on a conference table in his office. "No one could mess it up worse than the federal government."
Yet Mr. Fordice's track record with welfare and existing block grants in Mississippi suggests that he is struggling with many of the same problems that bedevil federal programs. The state's DEPARTMENT OF HUMAN SERVICES, which would largely run all programs currently under federal control, has been DOGGED BY ALLEGATIONS OF FINANCIAL MISMANAGEMENT, POOR LEADERSHIP, CRUMBLING SERVICES and ballooning costs.
Last year, the agency teetered on the BRINK OF INSOLVENCY.
Mississippi has "squandered" an $8.3 million federal child-care grant on such things as personal furniture and designer salt and pepper shakers, according to a state audit. Block grants, in theory, would put funding in the hands of more responsive, grass-roots administrators.
Yet Mississippi's welfare and human-services czar is a FORMER STOCKBROKER WITHOUT PREVIOUS EXPERIENCE WITH SOCIAL PROGRAMS. And block grants, in theory, would benefit from privatization, with government operations turned over to the private sector. Yet a private contract to collect child support appears to be costing Mississippi taxpayers substantially more than the state-run program did.
Mississippi's HUMAN SERVICES DEPARTMENT is being investigated or reviewed by the state auditor's office, the state attorney general's office, a state legislative panel and the U.S. Department of Health and Human Services Inspector General. All of this, many say, may indicate that block-grant money will be managed just as wisely, or poorly, in Jackson as it is in Washington.
"As a taxpayer and guardian of the public trust, I wouldn't feel safe giving this money to us or any other state," says John Reeves, a 12-year Republican legislator who serves on the state's House Appropriations Committee. "I've seen too many years of good ol' boy politics to know they shouldn't do this without stricter controls and requirements."
Granted, Mississippi has never been a benchmark for quality government. Its history of corrupt kingpins, racial violence and poverty poses daunting problems. It was precisely because of those problems that the federal government took control of funding for social programs decades ago -- and it is why some say the programs should stay in federal hands.
In addition, because of procedural hassles and political wrangling, it is often difficult to tell, substantively, how well some of these programs are doing.
IN MISSISSIPPI, HOWEVER, SOME SIGNS ARE CLEAR.
Riding the same Republican tide that would later change the face of Congress,DANIEL KIRKWOOD FORDICE JR. took office in 1992 with an aggressive plan to sweep out decades of Democratic rule and run government like a business. A millionaire whose construction business had won hefty river-work contracts from the Army Corps of Engineers, Mr. Fordice billed himself as a "man of the people" whose ultimate goal was to shrink government and restore a sense of personal responsibility.
Yet soon after the election, the new governor, with his blunt style and explosive temper, roiled Mississippi politics. On one occasion, he threatened to call out the National Guard to fight a court-ordered tax rise designed to increase funding for black colleges. He boasted that his hometown of Vicksburg had become a success by "fleecing those Yankees who come off the boats." An avid big-game hunter who displays stuffed lions and leopards in his official residence, he now has even-bigger kills in mind: bloated state programs.
His first target: Mississippi's Department of Human Services, which employs more than 3,500 people and serves an estimated one of every four residents. To gain better control over the huge agency, he disbanded its oversight board and turned the department into a direct agency of the governor's office, making him more responsible for its successes and troubles.
His first order of business, and a key feature of block grants: privatization. By gaining the efficiencies of the private sector, he says, government can cap or even cut spending and still deliver the same services. "Once you take away the profit incentive," he explains, "people don't work hard, and they're not happy."
Yet his initial PRIVATIZATION MOVE QUICKLY BECAME A POLITICAL TRAIN WRECK. Trying to reform the state's child-support collection operation, he won partial approval from the legislature to negotiate, in 1994, a contract with MAXIMUS INC., an employee-services company in McLean, Va., to take over collections from deadbeat dads in two pilot counties. An eventual rollout statewide was planned.
The savings, however, never materialized. Adding in start-up costs of about $2.9 million and monthly payments for the first year, the state wound up paying Maximus $9.3 million for two counties -- almost twice the roughly $5.3 million that it had cost the state to run the program. State legislators, infuriated, froze the contract earlier this year in the two counties and recently cut Maximus's monthly check to $400,000 from $550,000.
Meanwhile, the legislature's investigative arm said the governor and the HUMAN SERVICES DEPARTMENT FAILED TO STUDY THE COSTS AND BENEFITS OF PRIVATIZING the service before moving ahead with the contract. Also running into criticism was a Maximus lobbyist who had previously worked as Mr. Fordice's legislative liaison.
"This was a very sweet deal," says state Sen. Rob Smith.
Besides battles over privatization, the governor has faced accusations of waste. The Mississippi auditor's office found that in 1993 the Human Services Department had mismanaged or "squandered" its entire $8.3 million federal Child Care and Development Block Grant intended to provide day care for poor children. Among the uncontested findings, contractors used state money to buy $37.50 designer salt and pepper shakers, refinish personal furniture and put $40,000 into improving a building the state didn't own. After the audit, the state attorney general and U.S. Department of Health and Human Services both launched investigations.
"This report alone is enough to show why you shouldn't hand these programs to the states without better protections," says Steve Patterson, the state auditor.
Mr. Fordice and the EXECUTIVE DIRECTOR OF THE DEPARTMENT OF HUMAN SERVICES, GREGG PHILLIPS , say the Child Care audit is a politicized version of an internal investigation launched by Mr. Phillips himself when he took office. They note staff and policy changes put in place to prevent waste and term the agency far more efficient than under previous administrations. It "was a disaster when I got here," Mr. Fordice says, adding, "All that history isn't going to be fixed in a few years."
Critics charge, too, that for all the talk of efficiency, the Fordice administration has added to the piles of paperwork that Human Services requires. Venus Williams, a day-care center director in Jackson, says that in prior administrations, her applications for funding ran five to eight pages, with an occasional "addendum A or addendum B" for clarification. Now, she says, the applications total 30 to 40 pages, "and I tell you, I think I'm up to addendum T."
Mr. Phillips says applications have indeed become longer and more complicated, to better combat fraud. "Sure we're tougher, and people are complaining," he says, "because for the first time we've got accountability."
ACCOUNTABILITY, IN FACT, IS AT THE HEART OF THE BLOCK-GRANT DEBATE and of the state's management of federal welfare money. In the past three years, Mississippi has been sanctioned repeatedly for violating federal regulations, including making errors in welfare payments or not spending money received. The state was fined $658,429 for having more errors than federal standards allow. It also paid the federal government $2 million for alleged violations in a jobs program linked to Aid to Families With Dependent Children.
Questions have also been raised about accountability in existing block-grant programs. Mr. Yoder, the Operation Shoestring official, says an advisory board set up to monitor spending and programs for a federal social-service block grant to Mississippi hasn't met in years. He adds that the board receives a budget only in the mail once a year -- after it has been approved. He says he has tried to get more specific information about funding allocations, but although he is a board member, he has been rebuffed by the Human Services Department.
"If [Mr. Fordice] doesn't care about basic standards now, he's certainly not going to care about them when they're taken away," says Mr. Patterson, the state auditor.
Mr. Fordice argues that the federal regulations imposed on the state are unrealistic -- and further prove the need to return power to the states. "What works for the people of Idaho doesn't necessarily work in Mississippi," he says.
Mr. Fordice's talk of more-sensitive government, however, appears at odds with his choice to run the Human Services' program -- MR. PHILLIPS. A 34-YEAR-OLD FORMER STOCKBROKER AND POLITICAL FUND-RAISER who ran Mr. Fordice's campaign finances, Mr. Phillips had no prior human-services experience.
His office is decorated with photos of Ronald Reagan and Vince Lombardi and a Dan Quayle commemorative horseshoe. Aside from a few sheets of paper, the only items on his desk during a recent visit were a cellular phone, a beeper and a pair of sunglasses. "I like to keep things simple," he says.
Yet his two years as head of Human Services have been anything but simple. Mr. Phillips has had to cope with criticism from the social-services establishment who accuse him of failing to understand the needs of the poor. Last year, the legislature's investigative unit found him unqualified for the job; it cited inadequate experience. Legislators say he ignores their mandates.
"FORDICE COULDN'T HAVE FOUND A WORSE CHOICE," SAYS REP. JAMES EVANS, A DEMOCRAT ON THE HOUSE COMMITTEE ON PUBLIC HEALTH. "IT'S BEEN CHAOS OVER THERE EVER SINCE HE STEPPED IN."
Messrs. Phillips and Fordice term the legislature's report politically motivated and say Mr. Phillips has succeeded in carrying out his mission: trimming the welfare rolls and state spending.
Despite all the criticism, Mr. Fordice is lobbying in Washington with House Speaker Newt Gingrich, Sen. Robert Dole and Sen. Robert Packwood to push for even greater freedoms than the ones proposed in the House bill. Although Mr. Fordice says the measures in the House bill are too restrictive, he is even more frustrated by the reaction in the Senate, which is in the early stages of debate.
"If they're going to truly block-grant us, then they should just give us the money without having to jump through all the hoops," Mr. Fordice says. "But they still refuse to believe that I know what's best for the people of Mississippi."
I work for Medicaid in Texas, I really appreciate the info you provided here. I am in a group that is in jeopardy of losing our jobs to privatization. I have heard but can't substanitiate that they are not looking at nor care about the "cost-savings" that the affect of contracting out will have on the State and Federal Gov't. Are there anymore resources you have to help us stop this from happenning?
In response to Charles Cunningham's request for more information on 'privatizing' and 'outsourcing' state employees, here is one of many articles. If you are worried about your job, you have good reason. In this depressed economy, corporations and consultants will act swiftly to get on the ground floor of Texas' health and human services consolidation/outsourcing.
It is the same old story as the continuing Pentagon-Fortune 500 model: the taxpayers front billons of dollars and assume the risks, while the private sector sucks up the profits.
Look at Jeb's Florida for one example of aggressive consolidation and outsourcing. Georgia. etc. Some states have even outsourced human service call centers to India and other countries.
WELFARE IS NO LONGER A QUESTION OF POVERTY- IT’S ABOUT THE BOTTOM LINE.
Report Released - May 8, 2001
PROSPECTING AMONG THE POOR: WELFARE PRIVATIZATION
Download Full Report
(154 kb PDF file requires free Adobe® Acrobat® Reader .)
Corporations Prospect for Gold Among the Poor
New Report on the Privatization of Welfare
Oakland, CA. Welfare reform in 1996 promised that by turning social services over to private companies, government inefficiency would be overcome and services delivered better and cheaper. Is the privatization of welfare delivering on those promises? Have private companies transformed the old system into a suite of services leading to decent-paying, long-term employment for former welfare recipients? Preliminary results are in and the news is not good, according to a new report, Prospecting Among the Poor: Welfare Privatization , released by the Applied Research Center.
Far too often, corporations such as Maximus Inc. and Lockheed Martin, who have won contracts to manage welfare-to-work incentives, training programs, and treatment for people with substance abuse problems "underbid, over promised and … didn’t deliver." Job training and support services simply aren’t there for too many of those who need them.
In order to win contracts, according to author Bill Berkowitz, "companies like Maximus and Lockheed Martin blithely spend monies from other jurisdictions to wine, dine, and pay off decision-makers."
Meanwhile, as in the case of Curtis and Associates, "staff working for private companies have neither the credentials nor the training to handle their caseloads. Consequently, clients do not receive services they need, and to which they are entitled, such as childcare and transportation subsidies and medical care."
The study uncovers the proliferation of profiteering scams and corporate failures whose costs ultimately come out of the hides of welfare recipients and taxpayers.
Berkowitz says "corporations have sometimes achieved drastic reductions in welfare rolls, but privatization has not moved recipients from the underclass to the working class." On the contrary many welfare -to-work initiatives are placing people in short-term, low-paying, dead-end jobs and contributing to creating a group of people who work hard but still can’t make ends meet.
Welfare is no longer a question of poverty- it’s about the bottom line. And it looks as if that line can barely hold, let alone lift anyone out of poverty. The line is bottoming out and leaving those most in need under the rubble.
Author Bill Berkowitz, a Senior Research Fellow with the Applied Research Center, was the co-founder of the Oakland, CA-based Data Center and a well known feature writer who has a regular column on workingforchange.com.
"The Poverty Profiteers Privatize Welfare"
News Release - May 8, 2001
PROSPECTING AMONG THE POOR: WELFARE PRIVATIZATION
by Bill Berkowitz
Even before the Personal Responsibility and Work Opportunity Act of 1996 was signed, sealed, and delivered to the states, the conservative Reason Foundation’s William Eggers and John O’Leary had lauded "AGGRESSIVE" PRIVATIZATION INITIATIVES in New York, California, New Jersey, Massachusetts, and Georgia.
New York Governor George Pataki, chair of the Privatization Task Force of the Republican Governors Association, had argued at a meeting of governors that it was time for the immediate repeal of federal barriers to privatization at the state and local levels: "Existing federal policies favor government ownership of infrastructure. We are not looking at privatization as a mandate. We just want the option to explore privatization…The federal government should aid and abet, not interfere with, our efforts."
The new law was the answer to Pataki’s prayers. It gave states unprecedented latitude to determine how the new Temporary Assistance for Needy Families (TANF) and related programs would be handled. Individual states were "liberated" free to set up their own delivery systems within broad federal requirements.
Many states, when confronted with the daunting task of rapidly implementing this "reform," chose to contract out services to nonprofit organizations and for-profit corporations.
The privatization of welfare was a triumph for many Republican as well as some Democratic governors, and for conservative national and state legislators.
Policy analysts at right-wing think tanks and policy institutes were also elated. In a 1997 speech, Lawrence W. Reed, President of the conservative Midland, Michigan-based Mackinac Center for Public Policy, touted privatization as the wave of the future:
"The superiority of [privatization]…is now approaching the status of undisputed, conventional wisdom: the private sector exacts a toll from the inefficient for their poor performance, compels the service provider or asset owner to concern himself with the wishes of customers, and spurs a dynamic, never-ending pursuit of excellence — all without any of the political baggage that haunts the public sector as elements of its very nature."
Some observers were less convinced that privatization would improve anything besides the privatizers’ bottom lines.
"This is one of the biggest corporate grabs in history," said Sandy Felder, Public Sector Coordinator for SEIU, commenting on the Personal Responsibility and Work Opportunity Reconciliation Act, signed into law by President Clinton. 3In 1997 Mark Dunlea, executive director of the Hunger Action Network of New York, predicted that "the privatization of welfare-related social services…will mean a massive handoff from government to the private sector." 4
"The federal government turned over $16 billion in TANF money to the states without setting any federal standards for privatization," says Cecilia Perry, public policy analyst for AFSCME. The early contracts in Wisconsin were particularly egregious in that they set "perverse incentives aimed at reducing caseloads and making huge profits." 5Yet in March 1997, Phillip Truluck, Executive Vice President of the Heritage Foundation, hailed then-Governor of Wisconsin Tommy Thompson (who is now President Bush’s Secretary of Health and Human Services) as "the real star of welfare reform today…whose perseverance and dedication brought about this Wisconsin miracle." 6
Private industry takeover of government programs is not a new phenomenon.
In the early 1960s Ross Perot’s Electronic Data Systems won the contract to manage the Texas Medicaid program. "For years," writes Washington Post reporter Judith Havemann, "states have been relying on business to carry out what used to be considered government work; food conglomerates manage school cafeterias and banks in many areas have taken over the collection of taxes. More recently, an entire new industry has emerged to run prisons."
Time magazine notes that passage of the welfare reform bill set off a "welfare-management goldrush."
Many corporations, large and small, are taking advantage of this modern-day "goldrush." These range from the corporate elite — such as Lockheed Martin, Andersen Consulting, "the world’s largest management and technology firm" (now renamed Accenture), 9and Ross Perot’s Electronic Data Systems — to smaller companies like the rapidly expanding Denver, Colorado-based Policy Services Inc., which has 39 privatized service locations in 16 states and bills itself as the "first company to operate a full-service child support privatized office." 10 Other prospectors include Nebraska-based Curtis & Associates and the flourishing Maximus Inc., which as of May 1999 held a "30% share of this booming privatization market in health and human services."
Despite the fact that Maximus seemed ready to mine the mother lode of privatization, the company is now fighting a growing negative image as things seem to be going haywire in a number of programs.
Gregg Phillips is now in the Texas system and is hiring the likes of Maximus and Deliotte (whom he worked for/with) and is outsourcing all of HHSC business to private industry. I don't like what he is doing if it is what I think he is doing. Is he getting kick backs? I don't know this for sure, but I find it very interesting that the companies he worked for in Mississippi are the same one's he is using in Texas.
Well, Gregg is gone in a few months, as he stated so wonderfully:
"Longfellow once wrote, 'A single conversation across the table with a wise man is better than ten years mere study of books.' Governor Perry, Albert Hawkins and legislative leadership are some of those wise people to which Longfellow referred. They have a vision for the future of service delivery to Texans to which we must all remain dedicated. Being a flag football coach and Lake Travis Cavalier football fan will be two of my new duties. I will also explore some new business opportunities later this fall after I have had an opportunity to deal with some lingering health issues."
Gregg Phillips does still have a vested interest and connection to his so called previous company he founded "Interject". Not only through his wife but his female acquintance, so called friend, now CEO of the company. Go figure!