Scaling the Pyramid

Psychologist Abraham Maslow's Hierarchy of Needs theory states that basic physiological requirements (e.g., food and water) must be met before safety necessities (shelter, employment, and the like) can be realized. The hierarchy ascends a pyramid of importance to those needs encompassing belonging, community, esteem, and ultimately self-actualization – a highly functioning state of well-being.

City Council members apparently dusted off their Psych 101 textbooks in the last sixth months, and, for the first time in more than a decade, a long-simmering revamp of the process awarding the city's social service contracts – more than 60 separate funding agreements inked by some 57 firms, nonprofits, and interlocal agencies to deliver basic services to Austin's neediest citizens – has finally cleared the dais and is being prepped to be rebid by providers. The city contracts can be both life source and leverage for social service organizations, and they help supply food, housing, substance abuse treatment, education, job training, and more to Austin's neediest citizens.

In principle, as with other omnibus city efforts like the Austin Comprehensive Plan, the city's commitment to these programs is as much a moral question as it is a policy decision – a statement of the city's priorities and a recognition of the limits of realistic government assistance. The first step of the years-long discussion, lengthily and often contentiously played out in council's Public Health and Human Services Committee, has reached a conclusion, but the next steps – including rebidding the contracts, transitioning between existing and new providers, and weighing the priorities that dictate who those providers will be – are just beginning.

Bidding Adieu

Here's one indicator of the habitual manner in which the city has awarded contracts in recent years: No one I spoke with at City Hall knew precisely when the current crop of contracts was first awarded.

"They did a contracting process back in the Nineties. Nobody really has too much detail about it," laughs Randi Shade, chair of the City Council committee in which the new contracting process was banged out. "The way it works right now, each year since I've been on council, we've just renewed the same exact portfolio of contracts. We haven't changed it." The result, she said, has essentially been a crop of "three-year contracts that lasted for practically decades."

While social service contract funds are limited within the General Fund budget and demand on the city has grown as federal and especially state dollars lag in response to growth – and, more recently, the recession – they represent no small cost to the city. More than $18 million in funding is available in the fiscal year 2011 budget. That's comparable to the budgets of the Neighborhood Housing and Community Development Office ($17.6 million), the Transportation Department ($15.8 million), or the municipal court ($15 million). However, larger contracts for emergency shelters (the Austin Resource Center for the Homeless and the Salvation Army) are renewed separately from the ostensibly competitive general contracting process, along with a few other health-related contracts, bid separately to preserve additional funds from the feds and elsewhere (as for AIDS and sickle cell anemia services). Once those contracts are spoken for, it still leaves more than $13 million in available funding – money the city is looking to spend more intelligently.

Reformers argue that the entrenched system has produced only middling results, with the assured renewal of existing contracts preventing service providers not already in the pipeline from earning a turn and locking existing providers into a specific service area despite evolving needs. And a lack of quantifiable return on investment, aside from the basic metrics gauged by the Health and Human Ser­vices Department, has also displeased council members. Although every member we asked expressed nothing but admiration for the agencies currently contracting with the city ("There's not an organization out there that's probably not providing valuable service," Shade says), the current contracting system seems to foster complacency – or in rare instances, worse. Just in the last three years, child care providers Family Connections received $2.3 million worth of city funds, before former director Louanne Aponte skipped town to Venezuela in the wake of serious embezzlement charges – although in fairness, changes in the city's contract procedures would probably not have prevented that hidden fraud.

Yet even absent such a grave infraction, Shade says, the current system is broken. "Again, it's not that there's any organization I or my colleagues are picking on that shouldn't be funded. ... But how do you call it contracting for services when you don't have any kind of competitive bidding process?"

Contracts or Grants?

Once the determination to rebid the approximately $13 million in annual contracts was established, what would be the guiding principles – values, really – in awarding new ones? That was the question that consumed the Public Health and Human Services Committee for most of the summer, during a series of work sessions featuring at times conflicting opinions from Shade, Laura Morrison, and Mike Martinez.

Holding public meetings at all was the cause of some controversy; the committee's June 30 session didn't air live on the city's Channel 6, in order to create a less guarded atmosphere for feedback. That it did, with the meeting serving as a sounding board for the committee members' complaints about the contracting process. Martinez lamented a "sense of entitlement" among some nameless organizations, describing their attitude as "once I'm in the queue, I'm good. They're not gonna mess with me. I'm gonna get my funding next year and next year and next year." Shade vented that the process had seemingly "become a grants program instead of a contracting services program" and that a city decision as relatively innocuous as replacing a neighborhood pool with a splash pad has a more robust cost/benefits analysis than council's social service contracting choices. "We just don't seem to do that in this area."

Asked at that meeting to prioritize the services the city should focus its spending on, Shade emphasized basic needs. Martinez proposed work-force development as intrinsic to the city's "long-term sustainability and economic viability." Morrison initially seemed focused primarily on the process itself, advocating the input of other agencies and saying, "I don't think we can change things in a vacuum."

The committee ultimately settled on five broad areas, drawn from principles listed in order of importance in the Health and Human Services section of the 1979 comprehensive plan: safety net/infrastructure services; a transition out of poverty; problem prevention; universal support services; and enrichment (see "Rethinking Social Services: Five Priorities"). "It's just a different way to identify our priorities," says Morrison, who expressed the most public concern about setting the direction of the contracts, especially in regard to departure from the existing comprehensive plan.

Aside from prioritizing service areas, another way to increase return on investment in the bidding process is by making it, well, an actual bidding process. The committee recommendations, adopted by council on Sept. 30, call for contracts addressing one or more of the five goals to be three-year contracts, with two one-year renewal options, instead of being automatically reapproved – long enough "so you can get off the ground and have some continuity," says Shade, "but at the same time, set a finite date" for the city to gauge performance.

"It will open it up, and we'll be able to take in all sorts of different ideas," says Morrison. "The request for proposals is also going to be looked at in terms of how cost effective the services are and the leveraging opportunities they bring – theoretically, the idea is to open all that up to all organizations that are doing great work."

Planning Transitions

Compared to the existing awards process, years-long and laissez-faire, the new process installs a tight deadline for potential service providers to respond to the city's request for proposals. The RFP hit the streets Monday, Oct. 11, with responses due January 2011. The Public Health and Human Services Committee, then the entire council, will review responses in the spring, with the new contracts scheduled to begin in October 2011.

Deadlines and hard dates have informed the entire process from the beginning. The agreement to issue the new RFP occurred just weeks after adoption of the FY 2011 budget (and thereby the final renewal of social service contracts under the old system), in order to give the city and the contractors ample time for transition should existing providers not make the future funding cut.

Despite buy-in on the process thus far from several social service groups, the pending change also has some providers nervous. "If this scoring process creates massive turnover in the current contractors, I have some concern about the potential for a period of upheaval," says Suki Steinhauser, CEO of Communities in Schools – Central Texas (a dropout prevention program and current city contractor) and president-elect of One Voice Central Texas, a consortium of nearly 30 agencies addressing human service needs. ("We're not about puppies or paintings or parks, but people," Stein­hauser says.) "We're open to it, but of course such a major undertaking is fraught with a little bit of danger that there's no major interruption of services for people in need. We want to make sure that the transition is smooth, if there is indeed massive change in the contracts. ... They're not giving you an extra long period to apply – but there's a long transition period."

Indeed, the potential transition between providers old and new has been closely scrutinized. While that plan is still in the works, council is devoting nearly as much time to transition as to awarding of the new contracts; a transition plan is tentatively scheduled to be adopted next May, well before the new round of contracts starts.

"I've been very clear that, whatever I support, there is a smooth transition," says Morri­son. "I'm particularly concerned about organizations that get a large percentage of their budget from the city, especially if they may fall towards the lower priority areas – they do good work, and they're serving a need in the community. If there's a big shift and they're potentially left hanging, I want to make sure that there's some way that they're not just gonna be left hanging."

Who's Left Hanging?

Concurrent with the question of a transitioning plan is whether the new criteria for awarding contracts – the five areas culled from the comp plan – represents a paradigm shift that may exclude several existing providers. "I think people are thinking that there will be a shift of funding and services into the area of basic needs," says Steinhauser, "so potentially there may be prevention work that isn't funded and can't be undertaken. So that's a possibility – that the impact of this process could be seen later down the road, if we end up investing less in prevention."

When council voted to approve the new process, several speakers from Capital IDEA and Austin Interfaith asked that $1-million-plus annual funding for Capital IDEA be preserved; since Capital IDEA's educational and work-force services don't fall squarely within the purview of the primary "safety net" priority, the speakers feared the group might be in for a funding cut.

"We do not in any way oppose the concept of ratings or competitive biddings," Capital IDEA Chair Mark Melliar-Smith told the council. "In fact, I feel comfortable enough about our programs that we can match anything that others might produce. But I am a little concerned that our long-term training programs, when matched with other desperately needed short-term programs, may end up with a loss of this important program, which attacks the root causes of the poverty, not just treating the symptoms."

Martinez told the speakers he believes "some of the fears that I've heard I believe are unfounded, and I hope that bears [out] to be true," and noted that, regardless of how applicants score, "we as a council retain the ability and the right to adjust the overall ending outcome. If we feel like it's not the appropriate mix for the needs of the citizens of Austin, we as a council will retain the authority to make some adjustments if necessary."

But Martinez's assurance touched on perhaps the largest unresolved issue in the process: how much impact the initial scoring matrix will have in awarding contracts and whether some funding should be set aside for each of the five categories. A program can score a maximum of 10 points in each of the five areas, but each score is then multiplied by a smaller number according to the ranking of the priority areas themselves. For example, a total of 60 points is possible on the first priority, "safety net/infrastructure services" (10 x 6), but only 30 points are possible on the last priority, "enrichment" (10 x 3).

The matrix also raises the question of whether council should commit to funding in all five of the priority areas. "Once you've got them evaluated, how do you decide which services are going to be funded?" asks Morri­son. "Is it just the top scoring ones – you just start at the top and keep funding until you get down and you're out of money?"

While no hard spending targets have been set within each of the categories, as Martinez noted, council retains discretion to make funding decisions apart from any numerical score. Morrison also points out that the adopted recommendations contain "a general statement that all five priorities would be funded," which may provide some degree of comfort as the city undertakes the long overdue overhaul.

Politics Lurking

With the needs of ordinary citizens rolling steadily downhill from federal to state to city government, it's more important than ever that local dollars get stretched to do the most good. What's surprising is that the process has taken so long. The pains of transitioning from the existing system have certainly come into play, as has the challenge of building an inclusive process for change. And the purely political challenge bears noting, as many nonprofits are staffed with ranks of politically minded volunteers and are led by boards composed of well-connected, influential Austinites.

"Instead of ... a process that was on auto­pilot, this is going to be a competitive, myriad-faceted process, and that is something that I believe is essential with limited dollars," said Mayor Lee Leffingwell who, as previous chair of council's Public Health and Human Services Committee, has long recognized the need for a shake-up. Speaking at the passage of the new contracting guidelines, he said: "We don't have enough dollars to fund every project that makes an application. So obviously it makes sense that you have to fund the ones that are the most effective, that are doing the most good, and that's what this process will do, I believe."

Now that the city has set its priorities, we'll soon see if it can act on them.