Summary: Even though governments have for decades privatized a broad range of government social services, interest in privatization has been renewed because of its potential as a means of coping with limited public resources. Moreover, recent changes in federal welfare legislation have focused on privatizing, or contracting out, social services in particular. Four social programs affected by this legislation--child care, child welfare, child support enforcement, and new block grants to assist needy families--constitute a large share of the nation's welfare system. Debate has focused on whether privatization improves services and boosts efficiency and on what the appropriate role of the federal government should be. Yet little is known about the extent and the policy implications of privatizing these social services. This report addresses the following three questions: (1) What is the recent history of efforts by state and local governments to privatize federally funded social services? (2) What are the key issues surrounding privatization of state and local social services? (3) What are the federal policy implications of privatizing state and local social services? (See GAO/HEHS-98-6, Oct. 1997).
