Against the Tide

By Elizabeth Scheinberg

Ken and Clair Mazik opened Au Clair during the national crisis that led to the de-institutionalization of thousands of mentally ill or developmentally impaired children and adults. How they bucked the trend has much to do with a for-profit lobby that both gained influence over legislators and quietly orchestrated a massive national policy change.

On May 4, 1997, the New York Times ran this headline "Deletion of Word in Welfare Bill Opens Foster Care to Big Business," written by Nina Bernstein. Bernstein alleged that Mazik played an integral role in opening a new funding stream, a legal way to dip into another government-funded bucket previously reserved for non-profit programs serving foster children. At the time, this was the holy grail of care reimbursements. Due diligence would have served our legislators well.

"...a closer look at Au Clair reveals a deeply troubled history, and a closer look at the little-noticed change engineered by its founder, Kenneth M. Mazik, shows that it sharply alters Government policy on care for the poorest children.

The change opened the way for for-profit orphanages to compete for the billions of dollars that the government spends each year to support poor children who are taken away from homes judged unfit. It comes at a time when many experts predict that welfare changes will push thousands of children from their homes and into the care of the state.
Historically, only foster families or nonprofit institutions, mostly charity-based, were eligible for this money. It is now the last unlimited pool available for poor children. - Nina Bernstein

In 1992, Mazik had an awakening of sorts. A team of investigators from New York arrived at the Gingerbread House to inspect the school and residences. The investigators found "deplorable conditions and maltreatment of children at Au Clair." (Bernstein) New York responded by removing all of their students from the Mazik's care.

Just two years later, in 1994, the City of Philadelphia informed Mazik and Au Clair that it could terminate its $3.7 million contract for the 31 children in Au Clair's care if the facility did not become non-profit. Mazik wasn't interested in changing his school to comport with Philadelphia's request. True to form, he pushed back and sent his Vice President Brian Murphy to Washington D.C. where Murphy lobbied for two years for a change in regulations that he termed an "uncontroversial matter of equity." Murphy is credited with the deletion of one word, "non-profit" in a lengthy 400 page reauthorization of the welfare bill.

Welfare reform was a hot topic in 1997 with former President Clinton vetoing the first two versions that made their way to his desk. The third version was a compromise that protected the federal foster care entitlements. A consensus of politicians agreed to leave the existing support in place and carry the current language into the new reform bill. However, one legislator went astray. According to Murphy, he convinced Senator John B. Breaux, a Louisiana Democrat with a seat on the finance committee to delete that one little word, "non-profit," from the bill. (Bernstein)

The Change went fairly unnoticed by the legislature that approved the welfare reform bill. Nor did it catch the eye of President Clinton who finally signed the bi-partisan legislation into law.

It all appeared innocuous, institutions like the ones Mazik ran had always been able to claim other federal funds for the children and adults for whom they cared. Their lobbyists called this change a levelling the playing field between non-profits and for-profits. But, the federal foster funds were the honey pot for for-profits. At the time, Mark E. Courtney, a University of Wisconsin scholar at the Institute for Research on Poverty opined that that public agencies did not "have their act together well enough to hand over a huge chunk of money to people who have an incentive to maximize profits at the expense of the children" in their care (Bernstein.)

Bernstein's assessment of a profit-driven welfare system was based on Au Clair's record of care:

Over the years, Mr. Mazik has been accused of mistreating children in his care and of evading meaningful government oversight, even as his company expanded to care for 130 disturbed children from 24 states -- at sites in Bear and Middleton, Del., and Mount Dora, Fla. -- at yearly rates of more than $140,000 for each child. - Bernstein

Bernstein drew crucial and critical conclusions from that deletion of one little word:

A push for profit could compromise the care of the children within the facility

Chronic weakness in state regulations could be manipulated by profit-seeking entities lobbying for loopholes and influence

Revelation that one person essentially and "quietly engineered...without scrutiny" a massive shift of national policy

Her worst predictions would proved true...