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A state court ruling that the Family and Social Services Administration broke the law when it hired a private company to operate and then shut down the Fort Wayne Developmental Center seems meaningless, given that the center is now closed.
It’s not meaningless. The ruling signals a blatant disregard for a state statute intended to ensure Indiana’s business is done in public. By skipping the process of competitive bids in hiring Liberty Healthcare, FSSA officials were able to avoid advertising the scope of the work and alerting the public to their intentions. There’s no way to know whether the center’s closing – which this page supported because of serious and repeated problems in its management – could have been handled better, but taxpayers deserve a process that allows more input and oversight of state services, particularly when they involve a vulnerable population.
Instead, the administration seemed determined to make an end run around the public bidding process and push the closing forward. It even offered financial incentives for Liberty to close the center as quickly as possible, reducing its $4.2 million “closure fee” by $52,000 a day if it wasn’t closed by Sept. 30 of this year. In addition, Liberty’s monthly management fee was reduced from $500,000 a month to $400,000 a month, effective last January, and the company risked losing that amount if the center was still open by October. Public scrutiny in a competitive bidding process might have altered those financial incentives and done more to ensure the safe and successful transition of developmental center residents into the community.
The lawsuit, filed by former center employee Anita Stuller and AFSCME Council 62, the union that represented staff members, threatened to delay the effort, but Allen Superior Judge Nancy Eshcoff Boyer denied the preliminary injunction sought by the plaintiffs. She also ruled that FSSA was not required to put the contract out for bid because it fell under a statute specific to purchasing services. The plaintiffs argued that FSSA should have followed a public-private agreement statute requiring proposals for all operator agreements, which are “between an operator and the governmental body for the operation, maintenance, repair or management of a public facility.”
Last week’s ruling, by the Indiana Court of Appeals, reversed Boyer’s decision, finding that the state’s contract with Liberty was, indeed, an operating agreement. Again, the center is closed and the state can’t be required to start over.
More evidence of FSSA’s disregard for the rules comes this week, in a warning from the federal food stamp program. Indiana’s new privatized welfare program violates federal rules, according to the Midwest administrator for the U.S. Food and Nutrition Service. In spite of requirements for state employees to meet with clients applying for benefits, FSSA has allowed employees of the Dallas-based Affiliated Computer Services Inc. to process the applications. The company has a 10-year, $1.6 billion contract with the state.
Gov. Mitch Daniels’ administration took care to request the attorney general’s position on his authority to suspend sales tax on gasoline, a measure he did not want to take. The administration should exercise the same diligence in approaching policies it supports. The appellate court’s unanimous decision and the warning from the federal food stamp program are cautionary tales as Daniels’ privatization efforts continue.
