Privatizing state, local, and federal services has been a tradition in the United States for many years (Hayes, 1994). Privatization occurs when government sectors transfer partial or full responsibility for a variety of public services to the private sector (Bendick, 1985). By using grants, purchase-of-service contracts, and reimbursement mechanisms, a complex partnership was developed between governments and private, nonprofit agencies to deliver a wide range of human services (Abramovitz, 1986; Gilbert, 1986; Salamon, 1993).
The purpose of the study was to determine whether public housing developments operated by private sector, for-profit property managers were perceived as providing higher levels of social support than those operated by traditional public housing managers. This was done through comparative assessments regarding the availability of, utilization of, and resident satisfaction with social services.
The U.S. Department of Housing and Urban Development (HUD), which provides operating revenues for public housing nationwide, has been severely criticized for years because of management ineffectiveness and substandard performance (National Housing Task Force, 1988). The public housing system is widely perceived as being a colossal failure, with problems that include substandard construction, physical deterioration, social disorganization, epidemic levels of drug abuse and drug trafficking, violent crime, and vandalism. The consensus view is that addressing these widespread problems requires major changes in how public housing is operated (Hula, 1991).
The sheer numbers of people who live in public housing communities and their sociodemographic characteristics make privatization policies a salient issue. Approximately 3 million people live in public housing projects nationwide. Almost 70 percent of them are members of ethnic minority groups, 48 percent of whom are African Americans and 18 percent, Hispanics. Seventy-six percent of the families in public housing have female heads of household with no spouse present. Almost 75 percent of public housing residents have annual household incomes of less than $10,000, and 23 percent have incomes of less than $5,000. The proportional age distribution for public housing households is ages 25 to 44 (36 percent), age 62 or older (33 percent), ages 45 to 61 (20 percent), and under age 25 (11 percent) (HUD, 1999).
The social services issue is vital with respect to public housing, because over time these communities have become concentrated in isolated and deteriorated urban environments. These neighborhoods generally have minimal access to basic social services such as job training, health care, mental health treatment, child care, youth development, or family support (Mulroy, 1995; Wilson, 1996). The social isolation that characterizes these public housing settings also plays a causal role in perpetuating the impoverished state of many or most of the people who live there (Wilson, 1987).
An important distinction here is the difference between privatization of physical and commercial services in contrast to privatization of protective and human services. Most attempts at research with public housing have focused on physical and commercial services rather than health and human services (Savas, 1987) and have been methodologically flawed (Granville Corporation, 1983; Meehan, 1988; Miller, Dickinson, & Greenstein, 1984).
The general assumption regarding privatization is that the profit motive translates into improved management and cost savings (Van Horn, 1991). The public housing demographic profile, however, makes it imperative that private sector managers do not neglect the vital issue of social services availability in their quest to increase efficiency.
In the 1980s the Reagan administration ushered in an ideological shift toward a different type of privatization …