State Officials Admit Privatization Failed in Texas

Last fall, we highlighted how corrupt privatization of social services management in Texas had handed Accenture a billion dollars in revenue, even as the company's incompetence led to many families being unjustifiably denied public services.

Well, Texas Health and Human Services Commissioner Albert Hawkins has admitted that the privatization boondoggle is a failure and pulled the plug on a key part of the contract with Accenture. The $899 contract will be reduced by $356 million and ended in 2008, two years earlier than planned. More importantly, Accenture will be relegated largely to back-office data entry role for the remainder of its contract. The company will no longer be involved in the key role of determining whether Texans qualify for food stamps, Medicaid and other welfare programs. Those functions will instead return to the hands of state workers. 900 temporary employee hires in the state have been made permanent and the state has scrapped plans to cut 2,900 jobs, reducing employment by only 700 positions.

"They should have never (embarked on privatization) in the first place," said Rep. Garnet Coleman, D-Houston, a Progressive States board member, when interviewed by the Houston Chronicle. "I'm glad they woke up from whatever episode they were having." He said privatization "never saved a dime. It only paid the people who didn't need to be paid, and the people it cost were the children and their families who tried to enroll (in services)."

As the Austin Statesman noted in an editorial:

The Accenture experience has taught us important lessons that legislators should take to heart. State employees are indeed better suited for administrative functions. Another is that privatization is no guarantee that taxpayers are going to save money.

Hopefully, if Texas officials can admit that privatization of public services is usually a route to ripping off taxpayers and hurting users of government services, other state officials will learn that lesson.

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