Confusing the Issue

Earlier in my academic career, I did research into what Americans erroneously call “privatization”—outsourcing government functions to for-profit and nonprofit organizations. (True privatization would require government to divest itself of that activity. Through outsourcing and grant-making, government essentially “hires” an outside entity to do the work, but still pays the bills and retains responsibility for providing the service.)


Outsourcing raises constitutional issues, because only government can violate the Bill of Rights, and outsourcing makes it difficult to tell when government has acted. Recent headlines remind us that blurring the lines between public and private raises other thorny issues as well. The mess at FSSA is one recent reminder that contracting can create as many problems as it can solve.


Outsourcing is a tool. Sometimes it is the appropriate tool, sometimes it isn’t. Government agencies aren’t alone in losing control over contractors or grantees; the practice of outsourcing mortgage processing contributed significantly to the current banking crisis.


One truly bizarre result of the increasingly complicated relationship between the public and private sectors was the recent invalidation of the mayoral election in Terre Haute. Duke Bennett had defeated former Mayor Kevin Burke, and Burke sued, alleging that Bennett was ineligible to hold the office.


Bennett was employed as Director of Operations at Hamilton Center, a nonprofit established primarily for the purpose of providing behavioral health services. In 2007, the Center also opened a Head Start program, supported partly by a grant from HHS. The grant was $861,631,of which $125,789 was for Head Start’s proportionate share of overhead (security, maintenance, liability insurance, etc.)


Burke sued to have Bennett declared ineligible under a law that applied the Hatch Act to Head Start Grant recipients, and provided that such recipients should be “treated as a local government agency funded through Federal grants or loans.”

Bennett was responsible for providing and managing some of those overhead services, not simply for the Head Start program, but for all programs the Center operated. The Court found that $2,041—or 1.84% of Bennett’s salary and benefits for 2006-2007—came from the federal grant.


The court also found that “the violation was not willful or intentional,” that the issue hadn’t been raised during any of Bennett’s three prior election bids, and that his role with Head Start was essentially non-existent. Nevertheless, the Court held that Bennett was effectively a government employee, and thus prohibited from running for office.


There are many things we could say about the insanity of this result—all negative. The ruling has already encouraged other losing candidates to sue, and promises to create electoral uncertainty across Indiana.


The Hatch Act was intended to prevent abuses of power, not to limit the pool of people willing to engage in the political process. Indeed, in smaller communities, where overlapping civic commitments are the norm, that will almost certainly be the result.


If we continue down this path, we may end by transforming every recipient of a government grant, however minimal or accidental, into a government employee.