Nebraska's troubled effort to privatize its child welfare services could cost the state $3.2 million in federal money.

The Nebraska Department of Health and Human Services was told Thursday that it would lose the funding because of problems with agreements that the state signed with private contractors.

The privatization effort began in 2009, but floundered amid criticism that it was poorly planned and executed. The U.S. Department of Health and Human Services said the state's child services division failed to get federal approval before it signed the agreements, and didn't properly document its payments to the contractors.

Thomas Pristow, who took over the child services division this year, is acknowledging the problems. He says he hopes to negotiate with federal officials to lower the cost to the state.