Who’s getting rich off child support?
(Hint: It’s not the moms)
BY ANNA WOLFE | DEC. 29, 2020
Editor’s note: This story is part two in a series examining Mississippi’s child support enforcement program. Read the other stories here.
In 2019, kids in Mississippi’s child support program got an average of about $900.
The same year, Gov. Tate Reeves’ campaign received $25,000 from the wealthy private government contractor who runs the public service.
Mississippi hired local attorney Rob Wells’ company, YoungWilliams, in 2016 to operate the state’s entire child support enforcement program, a federally-funded service that helps mostly single moms secure money from their child’s father.
Now, after Mississippi’s welfare agency cancelled two recent bids to reissue the contract — instead extending the YoungWilliams agreement to the tune of $58 million — one former employee is blowing a whistle about the entire procurement process.
“Me and the other people who worked in the program with integrity all agreed that this was shady and this was inside dealing and this was profiteering off of what should be a social service,” said New Albany attorney Rutledge McMillin, a former YoungWilliams child support attorney who also previously served in a state level Mississippi Department of Human Services’ position. “And we all hated it. We all thought it was corrupt.”
The state welfare agency solicited bids to renew the child support contract twice in 2019, but cancelled both of the procurements after it scored the proposals. In both cases, YoungWilliams received fewer points than their industry rival, Maximus, according to scoring sheets Mississippi Today obtained through a public records request.
Former director of Human Services John Davis ushered in the first statewide contract with YoungWilliams. Davis currently faces embezzlement charges in an alleged fraud scheme that centers on the outsourcing of a different public service.
Davis has pleaded not guilty, while current agency officials have tried to distance themselves from his administration.
“My hunch is … instead of awarding the contract to the best bid, they just cancelled it,” McMillin said.
An agency spokesperson said the cancellations were due to poor timing and a significant overhaul of the agency amid an ongoing State Auditor’s Office and FBI investigation.
Wells, a prolific campaign donor, started his Jackson-based company in the 1990s to increase the efficiency of social services. He’s since built a $100 million a year corporation through this government contracting across 17 states.
While virtually no participants are getting rich off the child support service, the program has been lucrative for Wells. And the CEO has used his success to place a foot on the scale in several political races.
In the 2019 Mississippi gubernatorial race, which took place the year YoungWilliams’ first statewide child support contract in Mississippi was set to expire, Wells dumped at least $130,000 into competing campaigns.
He gave $75,000 to Republican Reeves over three years and $55,000 to his Democratic opponent, former Mississippi Attorney General Jim Hood, according to reports compiled by the National Institute on Money in Politics’ Follow The Money.
In addition, YoungWilliams is represented by high powered lobbyist Austin Barbour, the nephew of former Gov. Haley Barbour, who has charged the company a $45,000 fee most years.
In Mississippi, the welfare agency is an office under the governor and any legal services contracts, such as the child support contract, must be approved by the state attorney general’s office. Wells is a longtime Hood supporter and even hired on Hood’s nephew as a legal director at the company.
Wells also donated $5,000 and $500 in 2019 to then-attorney general candidates Republican Lynn Fitch, who won, and Democrat Jennifer Riley-Collins, respectively.
The businessman has a simple explanation for his extraordinary support in the 2019 election: “I like contributing to schools; I like contributing to certain charities; and I like contributing to people that run for public office that are extremely competent, very smart and very dedicated.”
Wells had also donated several thousand to former Gov. Phil Bryant over the years, including $6,000 in 2009.
Wells declined to share his salary as CEO of the company or its Mississippi contract profit margin, which he said is a complicated equation in which you’d have to consider the company’s overall operation across several states. For example, he said YoungWilliams has taken on some public programs at a loss.
Wells is Reeves’ second largest individual donor ever, according to Follow The Money. Wells has donated $117,500 to the candidate since 2011, when Reeves first ran for Lieutenant Governor, the most powerful position in the Legislature, a job the politician held for the following eight years.
When asked how Wells’ donations over the years had played into the contracts he’s received from the state, Wells said they had nothing to do with each other.
“Nobody’s ever promised me anything,” he said. “I’ve never asked for anything.”
Mississippi state law allows for unlimited donations from individuals in statewide political races, unlike 39 states which cap donations at various annual amounts — all far under $75,000.
A 2014 report by the Center for Media and Democracy also questioned Wells’ contribution of $2,000, the state maximum, to Kansas Gov. Sam Brownback shortly before the state outsourced the bulk of its child support enforcement program to YoungWilliams.
“While YoungWilliams boasted that it landed the contract because of its ‘innovative service delivery structure,’ there might be more to it than that,” the report said, referencing backroom meetings Barbour arranged between the company and the governor.
The child support enforcement contract serves many functions. It provides legal support to separated parents, especially low-income families, so they don’t have to hire a private attorney to secure court orders that spell out how much the noncustodial parent must pay to support their child each month.
The contractor also establishes paternity for children born out of wedlock and enforces support orders by extracting money, usually through wage garnishment and tax return intercepts, from noncustodial parents.
Mississippi’s misunderstood child support enforcement program, in which about half of children and one-fourth of the state’s overall population participate, is notoriously troubled, partly due to its underfunding.
The Mississippi Department of Human Services had attempted different iterations of privatizing components of the program since the 1990s under Gov. Kirk Fordice, but by 2013, officials were considering outsourcing all case management and enforcement.
A bill to allow for this privatization narrowly passed in the Legislature that year, despite warnings from lawmakers like former longtime chairman of the House Public Health Committee and undertaker Steve Holland: “It’s a greased pig already. Somebody on high knows who’s going to get this business. In the funeral business, we’d call this a prearranged funeral. That stinks. I don’t care who the governor is, it stinks.”
In 2015, the agency issued a bid — a process it says it’s not actually required to perform — for a pilot program in which a private company would operate the entirety of the child support offices in 17 of the state’s 82 counties.
YoungWilliams won the contract against just one other competitor, Maximus, because its proposal estimated a significantly lower cost, an agency spokesperson said. State workers in those county offices were given the option to become YoungWilliams employees and the pilot began.
A year later, McMillin said he watched as Davis, the former welfare department director, hastily privatized the entire public service statewide shortly after taking the helm of the agency.
Davis is now facing embezzlement charges, to which he’s pleaded not guilty, within a case that centers on the agency’s privatization of another social program, the Temporary Assistance for Needy Families Program or TANF.
The two programs are closely related. The state actually intercepts child support payments for families on welfare, first paying itself back for any cash assistance it provided the family.
During the 2016 legislative session, lawmakers were notably focused on the welfare agency, but not because of the child support program.
Instead, to deal with a massive federal lawsuit that began in 2004 and alleged the state had failed to protect children in their foster care system, the Legislature worked on a bill to separate child protection services from the Mississippi Department of Human Services into its own agency.
To accomplish this, the bill also exempted all Human Services employees from protections under the personnel board, which McMillin said had been a barrier in past agency attempts to privatize.
“When the Legislature exempted DHS from those rules, it made full privatization possible because there were no longer any state service employees,” said McMillin, who at the time was working a stint at the Mississippi State Personnel Board, where his job was to track legislation that dealt with the board.
The month it took effect, Human Services issued a bid for the statewide child support contract.
“He (Davis) rushed out an RFP and nobody other than YoungWilliams knew about it or had an opportunity to put together a bid,” McMillin said. “So it was decided beforehand that YoungWilliams was going to get this contract, which I don’t think is the way government procurement is supposed to operate.”
Davis’ attorney, Merrida Coxwell, refuted that assertion, saying by text that privatizing the child support program “was a topic that began well before John Davis became the Executive Director.”
Before the department issued the bid, consultants told agency leaders that the initial pilot supplied no evidence that the services had improved under YoungWilliams, according to emails and documents Mississippi Today obtained through a public records request.
Compared to state-run offices, YoungWilliams performed better in just one of four metrics — cases with support orders, an area in which the state severely lacked and where YoungWilliams placed much of its emphasis. The private offices also cost more than half a million more to operate than the state offices, the report said.
But the agency moved forward anyway.
YoungWilliams indeed was the only company to respond to the July 2016 request for proposals and officials inked the contract in October 2016, agency officials confirmed. “Other national vendors had lost interest in the state outsourcing because of the limited (finite) budget and one vendor (Young Williams) was willing to cut the cost per case well below the national average,” Coxwell told Mississippi Today by text.
Davis described the new contract to then-Gov. Phil Bryant in a memo that month, saying, “MDHS, with your support, entered into a contract with YoungWilliams” to operate all county offices.
“During the YoungWilliams pilot program for 17 counties in Southwest Mississippi, it was proven successful both with results and with saving Mississippi tax dollars,” Davis said, contradicting the report the agency commissioned to determine the company’s performance.
YoungWilliams has since closed roughly three-fourths of the physical child support offices statewide as it has centralized case management.
“Whether you think privatization of a government service is a good thing or not, I think the way that YoungWilliams got the contract is shady,” McMillin said. “I think that there was a determination in the Republican political circles to privatize child support and give the contract to Rob Wells. And I think John Davis saw the opportunity … He knew he had free rein. He knew various contract review boards were not going to be breathing down his neck.”
In the following years, YoungWilliams created a new child support enforcement infrastructure for the state, helping to improve program performance in some metrics.
The agency, under Davis, issued a new Request for Proposals for the contract in June of 2019. YoungWilliams had scored better for its project plan, records show, but because Maximus’ price was much lower, it won more overall points. When that happened, the agency cancelled the bid in August of 2019 and simply extended the contract with YoungWilliams. Former director Christopher Freeze had taken over during that time after Davis’ July 2019 retirement.
The same thing happened, scoring sheets show, during another RFP the agency issued in November of 2019 under Freeze and cancelled last February under the interim director Jacob Black. YoungWilliams received a second year-long extension in September under the agency’s new director Bob Anderson.
By the end of September 2021, the state will have paid YoungWilliams $153 million over six years to operate the child support program.
Because of the change in leadership and the departure of top officials of the child support program in recent months, communications director Danny Blanton said the agency retains little knowledge about the past procurements.
Blanton did say that the agency cancelled the first bid in August of 2019 because it did not build in enough time for a potential transition period before the contract’s October 1 effective date. He said it cancelled the second bid so it wouldn’t be tying the hands of the agency’s new incoming leadership. That procurement was in process when the State Auditor’s Office arrested former agency officials in early February.
Wells told Mississippi Today that he was not aware his company had scored fewer points, had nothing to do with the cancellation and that he never donated to politicians while any procurement was taking place.
In early December, the department issued a new Request for Proposals for the contract, which is set to begin in October of 2021, with relatively little fanfare.
Child support privatization hasn’t been a huge conversation in Mississippi in recent years, but it remains on the radars of some officials.
“I’m not against people having government contracts,” said Rep. John Hines, D-Greenville, who filed an unsuccessful bill in 2020 to end the child support contract and bring the program back in-house. “I’m not against that, but I am against people making more money off the system than the people receiving assistance.”
Carol Burnett, director of the Mississippi Low-Income Child Care Initiative and former director of the Office of Youth and Children for the state’s welfare agency, watched for years as officials fought over privatization — which she said is typically an excuse to pass public dollars to a well-connected contractor.
“(Child support) is just a service that has been in those kinds of fights and used for contracting purposes,” Burnett said, “so this new round is like a new chapter in the same old story.”