Two nonprofits have dropped out of Philly’s child welfare system. The disruption will cost the city $66M.

Two organizations that provided child welfare casework for half of Philadelphia have declined to renew their contracts with the city, a significant disruption that the city now says could cost taxpayers about $66 million and affect several hundred families.

The Department of Human Services outsources the task of checking in on kids in foster care and kinship care to a network of nonprofit providers, called “community umbrella agencies” or CUAs, covering 10 geographic areas in the city. The privatized system was created a decade ago in the wake of the grisly starvation death of 14-year-old Danieal Kelly while under DHS supervision.

Turning Points for Children managed four of the 10 regions until deciding in late 2022 to leave the program. Tabor Community Partners, which had one of the regions, in Northwest Philadelphia, is now transitioning out of the CUA network as well after informing the city in January that it will not be renewing their agreement.

The tumult has revealed a new wrinkle in the yearslong debate about the effectiveness of the CUA system: insurance costs.

Child protective work is complicated, and costly lawsuits against government agencies and nonprofit providers are common. Insurance to cover litigation costs has been increasing, and the city is trying to strike a balance between discouraging practices that can lead to abuse and ensuring that its contracted providers can stay in business.

Tabor last year agreed to pay $11 million to settle a lawsuit in a case involving an infant who suffered near-fatal and life-altering brain injuries while under the organization’s supervision. Tabor was accused of failing to make weekly visits to the child’s home, document required health information, or communicate with doctors.

In 2021, Turning Points paid $6 million after being accused of improperly allowing three sisters to be returned to their sexually abusive father.

DHS Commissioner Kimberly Ali said that Turning Points left the CUA program because the city would not agree to help protect its bottom line even, she said, in cases where the organizations was found to be negligent. The city and state have increased support to the nonprofits to help with rising insurance premiums, Ali said, but Turning Points’ request went too far.

“What the provider wanted the city to do was pay to indemnify them for their own negligence, and that is what the city was not going to do,” Ali told Council.

A Turning Points representative declined to comment.

Tabor did not respond to requests for comment. Ali said they explained their departure to the city as “a business decision.”

Former DHS Commissioner Cynthia Figueroa, who now heads JEVS Human Services, said the question of financial liability is a problem “that dates back all the way from the inception” of the CUA system.

State law caps the amount of money government agencies can be obligated to pay out in civil cases, but no such protections exist for nonprofits like Turning Points.

“Insuring this work is very difficult, and the indemnification issue is a real issue for the CUAs,” Figueroa said

The departure of “two CUAs — one of which had four regions — is a disruption for the several hundred families involved,” Figueroa said. “There are new systems, new faces, new players. Any time there is transition of a system, it’s a disruption.”

Ali said the city isn’t considering abandoning the CUA program, which is called Improving Outcomes for Children, and noted the progress it has made since a rocky rollout around 2014. The purpose of breaking up child welfare case management into 10 geographic regions, she said, was to build trust with the kids and families under city supervision by leaning on local nonprofits that would hire residents in the communities they serve, rather than DHS social workers.

Now, DHS employees investigate accusations of abuse, and if abuse is found or a child needs to be removed from their household, the city relies on CUA providers to manage casework for those families.

“The decision was made because we did not have a presence with community, so we lacked the engagement of communities,” Ali said.

The city has tapped four other nonprofit providers to replace Turning Points’ role in the network, and it is currently reviewing bids from organizations hoping to take over for Tabor, Ali told City Council last week. The city is striving to reduce disruption for families in the child welfare system, Ali said, by having the new providers hire employees from their predecessors.

But the transition is proving costly for the city, with DHS planning to spend $66 million over two years to build capacity for the new providers on top of the $110 million per year it spends on regular payments for CUA contracts.

The Philadelphia providers formed a coalition to lobby the city and state to change the system so that CUAs have more financial protection. Mustafa Rashed, a Philadelphia lobbyist who represents the providers group, said it is becoming increasingly infeasible for CUAs to operate without being indemnified — as the city was for its social workers before the privatization of the system.

“It is a serious crisis that’s coming because if the agencies can’t get insurance coverage, they can’t provide the coverage,” Rashed said.

The providers replacing Turning Points’ work include two new providers and two that are expanding from other areas of the city.

The Asociación Puertorriqueños en Marcha, which provided child welfare services in part of eastern North Philadelphia, including Kensington, will now also cover the Logan and Olney areas. Bethanna, which served Center City and South Philly, now also works in much of West Philadelphia.

The new providers are Concilio, or the Council of Spanish Speaking Organizations of Philadelphia, which covers the Lower Northeast; and the Greater Philadelphia Community Alliance, which has taken on Southwest Philadelphia.

City Councilmember Cindy Bass, a longtime critic of the city’s decision to privatize DHS’ case management work, said the fact that two CUAs dropped out of the program for financial reasons represents “a glaring problem.”

Bass, however, isn’t entirely sympathetic to the providers, which she said likely couldn’t afford to continue due to legal costs “based on the conduct of some of their employees and some of the things that were allowed to happen to a very, very vulnerable population.”