The Impact of Privatization on Foster Care Permanency Outcomes

Background and Purpose: In the United States, at any given time, there are nearly 400,000 children in foster care due to maltreatment or for reasons such as parental incarceration, parental death or voluntary relinquishment. Privatization of foster care case management services have sought to achieve cost-savings while simultaneously incentivizing particular outcomes (e.g. decreasing residential services and increasing placement with relatives). Although privatization began in the early 1990’s, there has been very little evaluation of outcomes outside of assessing cost savings. This study seeks to determine if there is an association between privatization of foster care case management services and time to permanency for foster youth when accounting for state and county variations and controlling for socio-demographic factors.

Methods: This study used data from Adoption and Foster Care Analysis and Reporting System (AFCARS) foster files from 2008-2014 supplemented with policy information available through the Child Welfare Gateway and state websites to assess whether youth permanency outcomes varied according to privatization of services. A cohort of youth entering care in 2008 from 4 privatized states were matched with a cohort of youth from public states (n=52,569). Two-level (individuals nested in counties; individuals nested in states) and three-level multi-level models (individuals nested in counties and subsequently nested in states) were developed to assess the impact of county and state differences on permanency outcomes.

Results: Youth served by privatized systems remain in care longer (b=265.47, t=2.69, p<.001) in the three-level models. Gender is not associated with time to permanency, but youth identified as multi-racial remain in care 53 days fewer than youth with an unknown race (b=-53.10, t=-3.17, p<.0001). The number of placements a youth in foster care has is associated with an increase in the time to permanency with each additional placement increasing time to permanency by over 91 days (b=91.75, t=22.78, p<.0001).  Of the physical and mental health variables included in the models, only the diagnosis of a disability is associated with an increase in time to permanency (b=59.62, t=2.78, p<.001), with youth   who have been diagnosed with a disability taking over 59 days longer to achieve permanency in comparison to youth with no diagnosed disability.  

Conclusion and Implications:  Although there is little literature on permanency outcomes with which to compare findings regarding the impact of privatization, the increased length of stay and lower likelihood of positive exit are consistent with the more established cost analyses that suggest that privatization does not typically lead to cost savings.  Race/ethnic categories were rarely statistically significant and never practically large. This is interesting given literature that suggests that African American children tend to spend longer in care. The findings regarding having a disability and spending more time in care were not unexpected based on prior research, however it is less clear why there were not similar findings for youth with a mental health or physical health issue. States continue to contemplate privatization of child welfare services; these findings suggest that further investigation into the relationship between privatization and permanency outcomes is indicated.