Alvarez & Marsal picks up $3.5 million for Oregon foster care system overhaul

After an eight-month project, consulting firm Alvarez & Marsal was paid $3.5 million for an engagement aimed at righting the troubled foster care system in Oregon.

In April 2019, Governor Kate Brown decided to take action following years of mounting problems at the Department of Human Services (DHS), the agency which oversees the state’s foster care system, among other areas.

State auditors had previously flagged shortages of agency workers as well as a shortage of foster homes for children. There was also the issue that some foster children were being sent to out-of-state residential facilities with little oversight. Instances of violence and abuse were alleged in a lawsuit filed in federal court over the practice.

Gov. Brown in April contracted the services of consulting firm Alvarez & Marsal, while also forming a board to oversee the company’s work. Brown engaged the services of the firm – which has particular expertise in turnaround, restructuring, and organizational transformation – to tackle the issues at the ailing foster care system, including out-of-state placements, the worker and foster home deficit, and problems with communications and records.

In the initial months of the contract, Alvarez & Marsal recommended a surge hiring to close the gap in agency workers, which was short about 700 people. The consultants also recommended enlisting the services of a private recruiter to find more foster parents.

The firm’s contract was extended three times – in May, August, and October, with its bill mounting from an initial $280,000 to $3.5 million by the time the engagement ended in late December. A team of approximately a dozen consultants worked on the overhaul, according to the Salem Reporter.

By the end of the engagement, about 60 children who had been sent to out-of-state facilities were back in Oregon, though 23 were still outside the state as of December 2019.

Meanwhile, 345 conditional hires of new caseworkers had been made, pending completed background checks.

Alvarez & Marsal said that it also worked to streamline the licensing of foster care providers, while improving the statewide hotline for reporting abuse.

Focusing on internal operations, the consultancy recommended that the foster care program institute clear roles, responsibilities, and measurable outcomes to improve its processes. The firm also recommended better collaboration with the state’s health agency.

It also said that the DHS should create a new training unit because workers currently lack effective training opportunities.

Rebecca Jones Gaston, Oregon’s new head of Child Welfare, lauded Alvarez & Marsal’s work during the eight-month project. “I think what (Alvarez & Marsal) did was bring that lens around business processes and things like that,” she said. “And were able to really quickly home in on some places where maybe existing processes were slowing down our ability to be responsive, or impacting our ability to kind of turn a ship in a nimble way.”