LAO 2003-04 Budget Analysis: Health and Social Services

Legislative Analyst's Office

Analysis of the 2003-04 Budget Bill


Foster Care

Foster care is an entitlement program funded by federal, state, and local governments. Children are eligible for foster care grants if they are living with a foster care provider under a court order or a voluntary agreement between the child's parent and a county welfare department. The California Department of Social Services (DSS) provides oversight for the county-administered foster care system. County welfare departments make decisions regarding the health and safety of children and have the discretion to place children in one of the following: (1) a foster family home, (2) a foster family agency home, or (3) a group home.

The 2003-04 Governor's Budget proposes expenditures totaling $1.7 billion from all funds for foster care payments. Due to foster care's inclusion in the proposed realignment, there are no General Fund dollars budgeted for 2003-04. This constitutes a decrease of $447 million, or 100 percent, compared to 2002-03. (For a discussion of the Governor's realignment proposal, please see "Part V" of The 2003-04 Budget: Perspectives and Issues.)

The caseload in 2003-04 is estimated to be approximately 75,432, a decrease of 1.3 percent compared to the current year. This decrease is the net effect of children residing in foster family homes exiting from foster care to the Kinship Guardianship Assistance Program, which is part of the California Work Opportunity and Responsibility to Kids program, partially offset by an increasing number of children in group homes and foster family agencies.

California Fails Foster Care Program Performance Assessment

New federal performance reviews of state child welfare services and foster care programs were conducted in California for the first time in the fall of 2002. California failed to meet any of the seven safety, permanency, and well-being outcomes measured by the federal government. The state also failed five of the seven "systemic factors" that measure the quality of services provided to children and families. At this point, the state is in the process of preparing a program improvement plan to avoid financial penalties. Failure to make progress toward reaching the federal measures could eventually result in reduced federal funding. We recommend that the Department of Social Services report at the budget hearings on the status of their program improvement plan.

Federal Government Has Reviewed 28 States Under Its New System. The federal Adoption and Safe Families Act (AFSA) of 1997 made the most sweeping changes to state child welfare services (CWS) and foster care programs since 1980. The principles of AFSA were to achieve child safety, permanency, and well-being. One significant requirement was that the federal Department of Health and Human Services develop a set of outcome measures and overhaul the state performance review processes in the CWS and foster care programs. Toward that end, the federal government developed the Child and Family Service Reviews (CFSR), which it has been conducting for the last two years. The reviews include seven measures for safety, well-being, and permanency. They also cover seven systemic measures that examine training for foster parents and caseworkers, the status of the statewide data system, the quality assurance process, and the state's case review system.

Results of First Two Rounds of CFSRs. Of the 28 states reviewed in 2001 and 2002, none have "passed" all components evaluated during the reviews. California, along with nine other states, failed all seven safety, well-being, and permanency outcomes. Of the seven systemic measures, California is the only state that has failed more than four. Figure 1 outlines the results for the six largest states that the federal government has reviewed to date.

What Happens Now That California Has Not Met the Federal Review Standards? The federal government has acknowledged that it has intentionally set high standards for its reviews. The expectation is not that states will be able to pass their initial review but that all states will begin improving and moving toward the national standards that have been set. The ultimate goal is that all states will eventually attain and surpass the national standards.

Through Program Improvement Plans California Can Avoid Federal Penalties. While the new federal review process establishes fiscal penalties, states will not be immediately assessed a penalty upon failing the review. Before the assessment of a penalty, states will have the opportunity to submit program improvement plans (PIPs) designed to move them toward meeting the federal outcome measures. Each state has 90 days in which to submit a plan following the release of its final federal report. With a goal of continued quality improvement, states whose performances remain below the national standard in subsequent reviews will be required to establish new benchmarks of improvement, moving those states closer toward the attainment of the national standard. As long as states continue to meet their agreed upon benchmarks, the penalties will be held in abeyance.

Figure 1

Children and Family Services Reviews Results in Six of the Largest States

 

Seven Measures of Safety, Well-Being, and Permanency

Seven Systemic Measures

 

Passed

Failed

Passed

Failed

California

0

7

2

5

Georgia

0

7

4

3

Florida

1

6

5

2

Pennsylvania

1

6

6

1

Texas

1

6

7

0

New York

2

5

4

3

Since California has failed to meet the national standards on the seven performance indicators and five of the seven systemic factors, it could face fiscal penalties in future years. At the time this analysis was prepared, DSS was unable to provide information on the nature and timing of the state's PIP. Nevertheless, we assume that the PIP will provide a satisfactory plan for improvement that will move California closer to the national standards. As long as the state continues to make progress toward the ultimate goal, it is unlikely that any fiscal penalties will be incurred. Even though we are not anticipating any penalties, we expect that there may be costs associated with the PIP in 2003-04.

Legislature Needs More Information. In order to facilitate legislative oversight of this program, we recommend that DSS report at the budget hearings on the status of California's PIP, any additional costs associated with improving California's performance, and how funding for PIP activities will be addressed in the Governor's realignment proposal.


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