Privatization initiative offers window on Kansas government
By DAVE RANNEY
By DAVE RANNEY
and MIKE SHIELDS
KHI News Service
TOPEKA -- Soon after Gov. Sam Brownback's inauguration, his then-chief of staff David Kensinger sat down for a private meeting with his recent lobbying firm partner, Matt Hickam; a Cabinet secretary, Rob Siedlecki; and a Brownback campaign contributor seeking to expand his company's business in Kansas.
The brief meeting of political insiders was held in a refurbished Kansas Statehouse vault where state bonds once were safeguarded and -- in one historic episode during the tenure of Gov. Alf Landon -- were looted by the notorious Ronald Finney, a key perpetrator of the state's greatest known political scandal.
The two-story vault now serves as a small conference room for the Capitol's second-floor governor's suites in the west wing.
The purpose of the meeting, held soon after Brownback was inaugurated in 2011, was to introduce the players and give the government contractor an opportunity to talk about his multi-state operations and the virtues of privatization as applied to child support enforcement.
Rob Wells, the contractor, is -- according to some who know him -- a smart, personable Mississippi lawyer and shrewd businessman who said he met Brownback and Lt. Gov. Jeff Colyer before they took office at an out-of-state fundraising event for Republican governors and gubernatorial candidates that included then-Mississippi Gov. Haley Barbour.
Wells said he happened to sit at the same dining table with Brownback and Colyer at the fundraising event. Child support enforcement was among the topics discussed that night. He said the governor impressed him with his apparent grasp of the subject.
"I've made it a habit of meeting governors in states where I was in business," Wells said in a recent interview. "I think it's currently in 12 states, though I've done business in four or five others, and really -- when you get down to it -- we either do business or are seeking to do business in every state. So, we deal with people at various levels all over the country."
Lobbyists who know lobbyists
Barbour then was chairman of the Republican Governor's Association, a so-called 527 or SuperPAC. It spent more than $113 million in states across the country in 2010, helping GOP gubernatorial candidates.
Barbour had a successful career as a Washington, D.C., "megalobbyist" before and after serving two terms as Mississippi's chief executive and is still sometimes described as the "godfather" of Mississippi politics.
Another person at the meeting in the Statehouse vault was lobbyist Austin Barbour, Haley Barbour's nephew, who is prominent in GOP circles in his own right having served as an adviser to Mitt Romney's presidential campaign. Austin Barbour came to the meeting with Wells, a fellow Mississippian and lobbying client.
Wells said that after meeting Brownback at the Republican governors' event, and seeing his apparent interest in child support enforcement, "I came back to Mississippi and talked to Austin ... and said I think there's a possibility that Kansas might be interested in doing something to advance its child support system, which, frankly, was awful. Austin said he knew a guy (in Kansas) named Matt Hickam."
According to filings with the Mississippi Secretary of State's Office, Wells paid Austin Barbour a $67,500 retaining fee to represent him in 2011.
Hickam said he arranged the meeting so that Wells could meet key members of the new administration even though the businessman hadn't yet hired him to be Kansas lobbyist for his company, YoungWilliams Child Support Services. According to disclosure filings, Hickam's representation of the firm began Feb. 24, 2011.
Hickam said he arranged the gathering so that Wells could meet members of the new administration, but he didn't remember much else about it.
"I remember that it happened," he said.
"As a native Kansan, I was hired to provide information about the state and I guess that was helpful to the client," Hickam said of his subsequent work for YoungWilliams, a company he continues to represent.
Unlike Mississippi, Kansas does not require lobbying clients to report the fees and costs they pay for the services.
Wells said he remembered his presentation in the vault as being more-or-less routine, in that it was similar to others he had given to officials in states across the country.
"Basically, what I was explaining was several ways of going about addressing the problem (of a poor performing child support system), one of which is privatization, which has had some wonderful results in various places," he said.
But at least one person in the meeting recalled feeling uncomfortable about it all.
"It appeared to be a meeting for the contractor to sell himself to the governor's staff. No other contractor was sitting at the table. Was that the point? It was uncomfortable in that one contractor had the ear of the governor's top staff, made the sales pitch, and no other contractors were invited or in attendance," said the person, who requested to be unnamed, citing fear of possible retribution for speaking about it.
Wells said the meeting was his first opportunity to meet Siedlecki -- then secretary of the Kansas Department of Social and Rehabilitation Services (SRS) -- and that his recollection of Kensinger from it was vague.
"I only met him once," he said.
Kensinger, who has long been Brownback's top political adviser, and Hickam had worked together as lobbying partners for almost seven years until Brownback was elected in November 2010 and Kensinger joined the governor's staff as his top aide.
In a brief email, Kensinger told KHI News Service that he could not remember the meeting in the vault.
According to some sources who say they have been questioned, Kensinger and members of the new lobbying firm that he partnered in after leaving the Governor's Office in 2012 that does not include Hickam, figure in an FBI inquiry into possible influence peddling, though the FBI will not confirm that.
Influence peddling is commonly defined as the illegal act of using one's influence in government or connections with people in authority to obtain favors or preferential treatment, usually in exchange for payment. Legal experts say the difference between influence peddling and lobbying sometimes is difficult to distinguish. When criminal charges are filed in connection with influence peddling cases, they often include counts of bribery.
Neither Kensinger nor any of his current or former lobbying partners have been charged with a crime to date.
The Statehouse vault meeting was described to KHI News Service by four people who attended it and three people who were told of it soon after it occurred. In all, more than 25 people were interviewed for this story and hundreds of pages of contracting and other documents were reviewed.
Privatization moves forward
Within several weeks of Wells' sales pitch in the vault meeting, Trisha Thomas, one of Wells' employees at YoungWilliams, was hired at SRS. The agency now is called the Department for Children and Families (DCF) as the result of Brownback's reorganization of several executive branch agencies.
Two weeks before Thomas arrived at the agency on June 16, 2011, the previous director of the child support enforcement division was fired as part of a general Brownback housecleaning aimed at putting his own people in key positions throughout the state bureaucracy.
Thomas stepped in immediately to fill that vacancy.
"She (Thomas) always wanted to be a child support director and they (administration officials) talked about plans to change the child support director. I happened to mention it to her and she applied," Wells said. "I don't know how many people they went through (considered for the job), but they picked her. She's the one I would have picked ... that woman knows everything about child support. She knows it all. It was an excellent choice by the governor or the administration or whoever makes that decision. And no, I didn't have anything to do with it."
Thomas, who continues to work as the child support enforcement director at DCF, said she didn't remember exactly how she heard about the job opening, but that she learned of it sometime in April, May or maybe as late as June and perhaps was told about it by Wells.
"Rob's a great guy who probably has a better memory than I do," she said. "I don't know if he would have emailed it or if he would have said it."
In any event, she submitted a resume, had two telephone interviews and was hired.
"It all happened kind of fast," she said.
Thomas said she thought she remembered at least three other people on the conference call interviews, including Siedlecki, Bob Corkins and Jeff Kahrs. Corkins was the agency's new chief counsel. Kahrs was chief of staff to Siedlecki.
DCF officials interviewed for this story said at least three other candidates were considered for the job and Thomas was selected based on experience and salary expectation.
Thomas has a law degree and has worked for private child support companies and state agencies. She has more than 20 years of experience in the field.
She said she took a significant cut in pay to come to Kansas but wanted to return to the Midwest, where she has family, and was eager for the new responsibilities. At DCF, she is paid $75,000 a year, according to agency officials.
"I do this job because I feel like I'm giving back," she said. "I think it's important in life to give back. Yes, I make less. Yes, I could have kept making more at probably five or 10 other companies."
Thomas said the chance to fix the state's "screwed up" child support enforcement system also appealed to her.
"I like a challenge and like to fix things. Actually, I'm still fixing it," she said.
According to Thomas and others, she soon made it apparent at the agency that she favored full, statewide privatization of the state's child support functions, portions of which had been privatized since the administration of Gov. Bill Graves, a Salina Republican who served between 1995 and 2003. Privatization of various state functions, not just at SRS, was a key element of Graves' promised goal of running a "high and tight" administration.
Thomas said she concluded that expanded privatization was the quickest way to improve Kansas' child support enforcement performance numbers, which she said were "dismal."
Wells said that also was what he had been telling Kansas officials: "The quickest (solution) would be privatization and I believe the cheapest would be privatization," he recalled telling them.
DCF spokesperson Theresa Freed said there was no formal study or analysis by the agency of the potential benefits of broader privatization.
"No," she said. "It was an informal kind of pitch, I guess; research done, based on her (Thomas') experience in other markets."
In Mississippi, as policymakers there considered 2013 legislation to expand child support privatization, legislative researchers for the Committee on Performance Evaluation and Expenditure Review (PEER) did a report. It concluded that: "Little independent research exists comparing private and public sector provision of child support enforcement services and the independent research that does exist is dated and reports mixed results."
Though major components of the Kansas system had been privatized for years, the state still ranked low in key performance measures, particularly cost effectiveness.
Thomas said that was because the privatization ushered in by the Graves administration "was set up to fail."
"Sometimes if you don't set up things right, you're not going to get the right benefit," she said.
Thomas' immediate predecessor as CSE director, Janis DeBoer, now executive director of the Kansas Area Agencies on Aging Association, said in an email to KHI News that, "Kansas' CSE program needed to improve its performance, unquestionably. Several surrounding states, including Nebraska and Iowa, were outpacing Kansas. I reached out to both states to determine if their successes might be applicable to Kansas. In addition, we conducted analysis to determine if the enforcement privatization contracts, at the time, were proving to be beneficial. Our analysis did not suggest privatization, in and of itself, would increase CSE's performance measures. Instead, reaching out to employers seemed to be a key element to Nebraska and Iowa's success stories."
A 45-page consultant's report done for DCF in November 2012 by Veritas HHS offered a list of recommendations for improving the system.
Privatization wasn't an explicit recommendation except for improving one small but important element of the state's child support enforcement system, which was handled by the Department of Labor. The agency continues to perform that function even after DCF's 2013 privatization initiative.
The consultant concluded there was some duplication of effort between the state's contractors and state CSE staff and suggested eliminating that by assigning duties exclusively to either the contractors or state staff; or, in the short term, by improving communications between the state workers and the contractors.
Thomas said her research on how to improve Kansas' performance numbers was drawn from how privatization had worked in other places, "especially in Omaha, Wyoming, Tennessee ... and North Carolina" where it was done "very well."
YoungWilliams, according to company literature, has 51 percent of the child support caseload in Wyoming, which is not fully privatized. It has the contract for services in Omaha and has contracts in Tennessee and North Carolina.
Thomas said it wasn't difficult to persuade her bosses that privatization was the best and quickest way to improve the state's performance. Kansas ranked 46th in cost effectiveness and was below or near average in the other four performance categories measured by the federal government. Those relatively weak performance numbers were compelling, she said.
"I think they trusted me. I had the knowledge. I had been around and had the expertise. If you want the fast way to get there, this is going to be it, because we're 15 to 20 years behind everybody else," she recalled telling them.
New role for chief counsel
Corkins, the new SRS chief counsel appointed by Brownback, also was keen on full privatization of the state's child support functions, according to multiple sources familiar with the agency's operations during that period.
Corkins and some other key agency officials had heard about or received a plan for statewide privatization from Wells weeks before Thomas joined the agency, sources said. Corkins, now head of the Office of Administrative Hearings at the Kansas Department of Administration, declined to be interviewed for this story, instead referring questions about his role in the privatization to DCF.
But it is clear from documents and various sources that Corkins played pivotal roles in the agency's CSE privatization initiative and the contracting process that accompanied it.
Siedlecki, according to former DCF officials, had a less conspicuous role in the CSE privatization initiative, though he was the agency's chief and the effort encompassed major policy and operational changes.
In any event, by the end of 2011, Siedlecki was gone from the Brownback Cabinet, leaving Kansas under a cloud of controversy prompted by his management and some unpopular changes, including the closing of some SRS regional offices as Brownback budget officials pushed agencies to cut costs.
Siedlecki then went to work at the Department of Children and Families in Florida and within a year played a role there in a scandal involving an agency contract awarded to a campaign donor to Gov. Rick Scott, also a conservative Republican elected in 2010.
By the time Corkins began work at SRS, he already was well known in conservative GOP circles as a "small government" ideologist and advocate for public school vouchers.
He once was the president and sole employee of the Kansas Public Policy Institute and in 2005 was hired by the Kansas board of education to be state education commissioner. His tenure at the education department, however, was brief. He was criticized, among other things, for his lack of experience working in the education field. When moderates regained voting control of the board, he was given a severance payment of $11,000 and moved on.
After Brownback took office, Corkins went back into state government, starting work at SRS on Jan. 18, 2011, the week after the governor was sworn in.
On Feb. 8, 2011, Corkins sent a memo to all SRS attorneys statewide informing them they would answer to him, including the attorneys who worked in the agency's child support enforcement division.
Historically, most of the CSE lawyers focused on child support casework. But there were a few who were tasked with writing contracts and the requests for proposals that precede contracts. All, however, had answered to the child support enforcement or CSE division director, who, according to the agency's organizational chart, was subordinate to the deputy secretary of family services.
Corkins announced in the same memo that the CSE director, not an attorney, also would answer to him.
Many CSE staff workers saw the memo as a clear signal that Corkins intended to play a large role in the agency's child support enforcement functions, unlike his predecessors in the chief counsel's post.
By March 1, 2013, DCF officials were ready to open bidding on the statewide privatization of its child support enforcement functions.
Twelve organizations submitted proposals, but only YoungWilliams offered bids for all of the state's 31 judicial districts. In 10 districts, it faced no competition.
Procurement committee selection
When procurement teams were formed to evaluate the proposals, Thomas said she chose not to serve on them "because I know too many people" among the potential bidders.
Even so, according to an email kept in state contract files, Thomas suggested the names for the teams as well as the three-person committee charged with negotiating contracts with the selected firms.
Thomas said she also provided technical input for the request for proposal as it was written, though much of it was "cut and paste" from privatization RFPs used by the states of Wyoming and Tennessee.
"Most privatization contracts all look the same except for a few little things here and there," she said.
The evaluation team scored YoungWilliams as the strongest bidder on the technical merits.
When the time came in April 2013 to negotiate the contracts, Corkins was named to the procurement negotiating committee, a move that former CSE employees said would have been unusual in earlier administrations.
The three-person teams are required to include one representative from the contracting agency, one representative from the contracts division at the Department of Administration and a third person representing the Secretary of Administration.
In the case of the statewide privatization RFP, however, there were two DCF employees on the procurement negotiating team. Greg Harris, then deputy secretary of DCF administration, was the designee for DCF and Corkins, though still chief counsel at DCF, served on the committee as the representative for the Department of Administration.
Thomas and other DCF officials said it has been routine on all CSE contracts, at least since the Brownback administration began, for the procurement negotiating committee to include two top-level DCF officials and one person from the Department of Administration.
"That's the way we've done all of them," Thomas said.
But former CSE employees said that was a change.
"All the ones I ever worked on there was someone from D of A (Department of Administration), then the CSE director (from SRS) and then an independent person from D of A, usually an officer from the architect's office, someone whose function was totally independent of CSE to be sure we were following the rules, not showing any bias," said one former state CSE employee involved with the agency's contracting who agreed to speak on condition of anonymity.
Using Corkins and Harrison, both from the DCF executive team, on the procurement committee struck the former employee and others as a significant departure from the way CSE contracts were previously handled.
"That was not the procedure when I was there, and I'm not sure why that change was made," the source said.
The privatization contracts were based on what is called a "negotiated bid" process, which allows the agency that writes the request for proposal (RFP) and the subsequent contracts considerable leeway to influence or shape the outcome at various points in the process.
"In the context of child support enforcement, the (child support) payment center, or anything else, the (CSE) division determines what's in or out of an RFP and what the contract will look like," said a lobbyist familiar with state contracting procedures. "They determine everything that should be covered or not. They develop the RFP and what's important or not. They develop the scoring systems of what's relevant and what isn't. That's all in the procurement."
The contracts were awarded to four companies or organizations: YoungWilliams; Lee Fisher, a law firm in Hays; Veritas HHS, a national company based in Denver; and the 18th Judicial District Court Trustee in Wichita.
The total value of the contracts was about $75 million over four years, not counting the options to extend.
YoungWilliams got the award for 23 of the state's 31 judicial districts, worth about $48.2 million over four years. The company gained a dozen more districts than it had under earlier contracts, including Johnson County.
The bids it submitted in each of the districts it won were lower in cost than the competitors, sometimes significantly so.
Thomas said the award decisions were based solely on cost. The bidder that submitted the lowest-cost proposal in a district won the contract.
YoungWilliams' success in winning most of the contracts drew some criticism when the awards were announced, including from Senate Minority Leader Anthony Hensley, who had earlier received complaints from state CSE workers informed they would be laid off because of the pending privatization.
"This pay-to-play kind of thing is one of the reasons people distrust politicians and the whole political process," Hensley told KHI News Service in June 2013, soon after the awards were announced.
But DCF officials said the vendor selection process was cleanly done.
"The only way there could have been any inappropriateness was if somebody had tipped off the bidder to bid low, and as far as we know that never happened," said DCF spokesperson Freed.
Privatization as policy
Brownback officials said the early results from the June 2013 privatization of child support enforcement look promising.
The federal government requires states to annually report their standings in five performance areas and in at least one of those five -- cost effectiveness ratio -- DCF officials said they anticipate reporting significant improvement. That indicator is based on the total child support dollars collected versus the cost to collect them. That number had been slowly improving since 2002 but showed marked gains in the first two quarters of 2014, according to preliminary reports prepared by the agency.
Overall, the amount of money collected quarterly has gone down or held steady. But the cost of collecting the same or fewer dollars has been less. In the privatization contracts, the state settled on a flat payment formula that officials said would assure monthly costs of the program remain steady.
Some attribute at least a portion of the reduced costs to the fact that the contractors typically don't pay as well or offer as generous a benefit package to their workers as the state. Many of the contractors' employees previously did the same or similar jobs as state employees. One of the Brownback administration's expectations of the contractors was that they offer jobs to the laid-off state CSE workers.
Others attribute the efficiency gains to a better-streamlined system and the elimination of duplicated services; state employees no longer are doing some of the things also done by contractors and vice versa.
Thomas said she believed, based on the early numbers, that the privatization initiative will cut the program's costs between $14 million and $16 million in its first year.
However, the trend line doesn't yet indicate that DCF officials are on track to achieve another goal of privatization: a projected $52 million increase in child support collections in the first three years.
Despite a lack of supporting data to date, Wells, the majority owner of YoungWilliams, said he expects the new system will meet if not exceed the projected $52 million gain in collections.
"That number is easy," he said. "I'm expecting more like $25 million to $30 million a year," he said. "I beat that already all around the country, and this is an easy one to do. And the collections will be fairly automatic because the federal wage withholding program is so automated it will work just like magic."
But several family law attorneys from across the state said they hadn't seen any benefits yet for the people they work with.
"It doesn't seem to be working out very well in Johnson County, I can tell you that," said Ron Nelson, a Lenexa attorney who serves on the Kansas Bar Association's family law committee and chairs the Johnson County Family Law Bench-Bar Committee.
"Over the years, I've received many calls from people searching for a private attorney to help them collect child support or establish a support order," Nelson said. "In the past, I've told them that they can hire me, but 'You don't want to because federal law mandates that you be able to request this service from the state and that it's to be provided at no charge.' I don't tell them that anymore because of all the complaints I've received -- and heard -- about how the process is working.
"People throughout the state are frustrated," he said. "They're frustrated because the process is taking too long and they can't get their questions answered."
Nelson said the feedback he's received from other family law attorneys working in YoungWilliams districts is that the company's collection efforts have focused on "the low-hanging fruit, the obligors who have steady jobs that don't change."
The more complicated cases, he said, now appear to linger in the system longer than they did prior to full privatization.
"If you've got an obligor who has a steady job, all you (the collection enforcer) have to do is establish paternity, obtain a child support order and send it to the employer. It (the child support payments) comes in like clockwork," Nelson said. "But if you've got somebody who's self-employed, or who doesn't have regular employment, or who's a temp worker or who moves around a lot, it requires much more involvement, much more work on the part of the contractor."
In Johnson County, he said, these cases do not appear to be getting the attention they once did.
Lawyers elsewhere made similar comments.
"Our clients have not felt any impact whatsoever in the receiving of child support funds due to privatization. None," said Bethany Roberts, a managing attorney with Kansas Legal Services in Topeka. "The number of initial filings is way behind what it was when DCF did them, and the bureaucracy is a nightmare. It's incredibly difficult to get through to a human being. You call their 800 number and you'll wait for ages, and then you'll get hung up on. It's just ridiculous."
"It's pretty much exactly the same except we have another layer of administration now," said Trish Morrical, a family law attorney in Salina, another area served by YoungWilliams. "The idea was that this would be cheaper, faster and easier, but that's just not turned out to be the case. It's turned into more paperwork and having another level of administration to deal with."
Similar reports on the privatization results were heard in areas not served by YoungWilliams.
* Staff writer Trevor Graff contributed to this report.