City privatization issue survives key test in state Senate

With help of lobbyist, Maximus wins vote

March 07, 2002|By Michael Dresser | Michael Dresser,SUN STAFF

Legislation that would let a private company continue to run Baltimore's child-support enforcement program survived a key test yesterday as the Maryland Senate approved it as an amendment to a broader welfare reform bill.

The 29-17 vote was a victory for Maximus, the Reston, Va., company that has run the program since 1999. With million of dollars at stake, company executives and lobbyist Bruce C. Bereano have been pushing relentlessly for the measure, which would give it the opportunity to bid on a new three-year contract that would run through 2005.

The vote was a setback for the Glendening administration, which opposed continuation of the privatization experiment.

Supporters of a continued corporate role in child support collections tacked the extension onto the welfare bill to give it more protection from a veto. Yesterday's tally indicated that the privatization measure might have the 29 votes needed to override a veto in the Senate.

A separate bill, dealing only with the issue of privatization, has received preliminary approval in the House of Delegates. That legislation, which differs from the Senate version in important ways, could come to an up-or-down vote as early as today.

The Senate vote came after one of the longest and most spirited debates so far in this year's legislative session. Opponents of privatization criticized Maximus' record on customer service and overall collections in the city, while defenders praised the company for improving a system it inherited three years ago.

Sen. Nathaniel J. McFadden, chairman of the Baltimore delegation, led the attack. He cited a study by the Johns Hopkins University and Towson University showing that public employees in four "demonstration" counties - working under an innovative management structure and with monetary incentives - clearly outperformed Maximus.

"It is clear that the public [sector], given the tools, can do the job," McFadden said. "I'm not against privatization; I'm for performance."

Sen. Thomas L. Bromwell, chairman of the Finance Committee, derided the "$175,000 study," claiming that the state Human Resources Department ordered the report to justify an end to privatization.

The actual cost of the child support study was about $80,000, said Anirban Basu, director of applied economics at Towson University's RESI institute, which helped prepare the report. He said it was done under an $180,000 contract that covers other research for the Human Resources Department.

Maximus has earned $22.7 million for collecting and disbursing child support payments in Baltimore since November 1999. The company also runs the child support program in Queen Anne's County, where the bill would also extend privatization.

The company's performance in Queen Anne's has been generally problem-free, but its administration of the much larger Baltimore program has been controversial.

The company failed to meet three of four contractual benchmarks its first year - a record it blamed on a rocky transition after the previous contractor, Lockheed Martin IMS, left many files in disarray. In its second year, the company met three of four goals but fell short of the 43 percent collection target when it collected child support in only 39 percent of its current cases.

All 13 Senate Republicans supported the amendment, which was opposed by public employee unions. The Democrats split, with 16 in favor and 17 opposing the measure.

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