Dream deferred: the most inspired caseworker in America's most lauded welfare agency can barely do his job

Washington Monthly, Sept, 2004 by Jason DeParle

It was late, and they were drinking, but they each had a reason to act like they were serious. Michael's reason was simple: He needed a job. In the decade since he had dropped out of Marquette University, he had driven a taxi, delivered pizzas, swabbed toilets, rushed into a marriage, had a son, and gone through a bitter divorce. He had started a landscaping business with a friend and gotten cut out just as it took off. In the two years since, Michael mostly had brooded and drank. He owed 10 months of back child support, and his girlfriend was due to give birth in a week. He needed some cash.

Jose's motives were more complex. Among the five Milwaukee agencies running W-2 (including the YWCA and Goodwill Industries), Maximus was the only national, for-profit company--a welfare agency that traded on the New York Stock Exchange! By allowing states to privatize their programs, the 1996 law set off a gold rush among such firms; one Wall Street analyst saw more than $2 billion a year up for grabs. Formidable rivals like EDS and Lockheed Martin, the aerospace giant, were fighting for the business, but with a longer record and tighter focus, Maximus was thought to have an edge. The W-2 contract was a coup. No welfare program was followed more closely, and Maximus hoped to leverage the publicity into market share nationwide. The company went public on the eve of W-2's launch, and the stake of the founder, David Mastran, soared to more than $100 million.

But behind the scenes, the Maximus program was soon in disarray. W-2 was built on the theory of "full engagement": 40 hours of weekly activity, of which 30 would involve actual work. Yet many clients waited months for assignments. Others ignored their assignments and got paid anyway. Six months after the program's start, Steve Perales, the second in charge, warned that "virtually no referrals are being made to the CSJ unit," the one that assigns community service jobs. While 1,100 clients were supposed to have assignments, just 507 had gotten them, and "only about 88 are actually participating." That is, in the country's most famous work program, only 8 percent of the clients were working. "What they were doing, I don't know," George Leutermann, the head of the program, later told me. "They were doing nothing."

One reason was the shortage of caseworkers. Under state rules, each Financial and Employment Planner," or Fep, was supposed to manage no more than 55 clients. Some Maximus Feps had more than twice as many. Ten months after the programs hunch, the state took its first quantitative look at the agencies' performance. The audit, called a 740RC report, was of interest not only as a mid-term report card, but also because it hinted at the criteria the state would use for contract renewal the following year. With Maximus using the Milwaukee program as a national exhibit, a failure to keep the contract would wreck the business plan. All the Milwaukee agencies performed poorly on the report, but Maximus did especially badly: 67 percent of its clients had no work assignments. Railing about "our dismal performance," Leutermann wrote a memo blaming subordinates for "a major setback" that "portends continued problems." But after months of refusing, he also agreed to hire more caseworkers.