Government Contracts
Jul. 20, 2002
Jurists OK County's Social-Services Contracting
LOS ANGELES - San Diego County's practice of paying private contractors to provide two-thirds of its welfare-to-work social services programs is not illegal, the 4th District Court of Appeal said Wednesday, reversing a trial court finding that had threatened county programs across the state.
Earlier, the San Diego Superior Court had ruled that the county's social service contracts with outside providers, worth up to $30 million for their full length, violated a California Welfare and Institutions Code preventing counties from handing off case management services.
The ruling put at risk other large counties such as Los Angeles and Orange, which also outsource their welfare-to-work programs, known in California as CalWorks.
On appeal, however, San Diego argued it was allowed to assign some welfare services to contractors under state law, so long as county civil service employees continued to make "discretionary" decisions like determining who was eligible for benefits. The 4th District agreed.
"After reviewing applicable authority and persuasive direction from the [Department of Social Services], we conclude that the County did not violate either state or federal law by contracting out these functions to private entities," Justice Gilbert Nares wrote.
The original suit was brought by two civil services employees and two CalWorks program enrollees. Giles v. Horn, D037419/D037873 (Cal App. 4th Dist. July 17, 2002).
"This was an issue of first impression, and it has statewide effect because there are other counties that contract these services," said Judith McDonough, San Diego senior deputy county counsel.
McDonough said San Diego County started outsourcing its welfare services after a 1996 federal welfare reform act that tripled the county's welfare-to-work rolls.
San Diego has CalWorks contracts with social services providers like Maximus Inc. and Catholic Charities, which provide job training, placement and support services to people enrolled in the program. McDonough said the practice of contracting out the services saves the county $13 million over the full length of its four contracts, which could run as long as Dec. 31, 2004.
Plaintiffs did not walk away empty-handed. The appellate court also reversed a part of the trial court's decision that said the county violated its charter by neglecting to make an official determination that the agreements would save money.
Since the initial set of contracts at issue had expired, it didn't matter whether the county had made them according to charter rules, the court held.
But the court sent the county back to a San Diego Superior Court judge to demonstrate that it did the math on whether the outsourcing of its latest set of welfare-to-work contracts is cheaper.
"[The opinion] has a much broader ramification in terms of the county's duty with regard to all outsourcing - that they have to make a real, not a phony, determination of the economy and efficiency," said Thomas Tosdal of Tosdal Levine Smith & Steiner, attorney for one of the plaintiffs.
Katherine Gaidos
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