The 2021-22 Budget

The 2021-22 May Revision—Child Welfare Budget Proposals

The Governor’s May Revision includes several proposals related to child welfare, including some updates to proposals included in the January Governor’s budget as well as some new proposals. This post provides an overview of the major May Revision proposals for child welfare in addition to our initial analysis and comments on these proposals. We note that these comments reflect our understanding of the May Revision proposals as of June 1, 2021.

For program background, please refer to our previous analysis of child welfare proposals at the time of the 2021‑22 Governor’s Budget.

Total Child Welfare Spending

May Revision Includes General Fund Net Increase of Around $435 Million From 2020‑21 to 2021‑22. Figure 1 summarizes total child welfare spending, showing year-over-year growth as well as changes from the January Governor’s budget proposal to the May Revision.

Significant One-Time and Limited-Term Funding—Along With Modest New Ongoing Costs—Proposed in 2021‑22. The year-over-year General Fund net increase reflects the inclusion of several new, relatively large items, such as funding for Parts I and IV of the Family First Prevention Services Act (FFPSA) and supplemental funds for Bringing Families Home. Additionally, some augmentations continue from 2020‑21 into 2021‑22 but then end, such as pandemic supports and temporary federal funds. Figure 2 summarizes these changes.

Pandemic Support Within Child Welfare

Some Augmentations to Address Coronavirus Disease 2019 (COVID-19) Proposed to Continue in 2021‑22. Figure 3 summarizes General Fund augmentations for pandemic response within child welfare since the beginning of the pandemic.

LAO Comments

Legislature May Wish to Provide Direct Support for Foster Caregivers. We raised in our analysis of the January Governor’s budget proposals for child welfare that a potential gap in the state’s pandemic response within child welfare and foster care programs was that no funding has been provided for temporary direct support for resource families and/or Short Term Residential Therapeutic Programs (STRTPs). Such support could be provided through supplemental monthly rate payments and could assist caregivers and providers with the higher costs of providing foster care during the pandemic (like for food and utilities), and help mitigate other adverse economic impacts caregivers and providers may be facing. Therefore, we continue to flag that the Legislature may wish to provide monthly rate supplements or other direct assistance to all foster care providers as part of the state’s overall COVID-19 fiscal relief efforts in child welfare.

FFPSA

May Revision Maintains Funding to Implement FFPSA Part IV. The May Revision proposes about $32 million General Fund in 2021‑22 to begin implementation of the new federally required elements related to congregate care placements under Part IV of FFPSA. (Refer to our January analysis for more background and information on FFPSA.) This amount is similar to the funding proposed by the Governor’s budget.

Administration Proposes Updated TBL for FFPSA Part IV. The administration also has introduced updated trailer bill language (TBL) to guide its planned implementation of the new federal requirements. We understand that the Department of Social Services (DSS) held a series of meetings with individual stakeholders (including, for example, the County Welfare Directors Association, Children Now, and Alliance for Children’s Rights) to discuss feedback and concerns for the earlier draft of the language, which had been proposed in February. We are still in the process of working with stakeholders to fully understand whether the revised language addresses their initial concerns and where gaps remain. We note that the state must come into compliance with FFPSA Part IV by October 1, 2021, or risk losing Title IV-E funding for congregate care placements. We are continuing to review the extensive updated TBL and will continue our efforts to coordinate with the administration, stakeholders, and legislative staff as the state moves toward finalizing the language.

Updated TBL Continues to Express State’s Intent to Opt Into FFPSA Part I. The TBL also includes language expressing the state’s intent to opt into FFPSA Part I, which will allow the state to begin claiming Title IV-E dollars for eligible prevention services once in compliance with Part IV. The updated language—in line with the previous version—allows counties the option of (but does not require) implementing prevention services, meaning counties would need to provide the required matching funds using their realignment revenues or other county sources to be able to claim additional federal Title IV-E dollars on an ongoing basis.

May Revision Includes New Proposal for General Fund Resources to Help Counties Prepare to Launch New Prevention Services Under FFPSA Part I. A major change from the Governor’s budget to the May Revision is the new proposal for $122.4 million General Fund one-time resources to assist counties in 2021‑22 with developing their prevention plans and preparing to meet federal requirements under FFPSA Part I, should they wish to opt in.

Separate Federal Funding Proposal Would Provide Counties With More Flexible Assistance for Prevention Services. In addition to the May Revision proposal for one-time General Fund resources to help counties prepare to opt into FFPSA Part I, the May Revision also includes $50 million federal funding (using the state’s flexible American Rescue Plan Act funding) to supplement activities under the state’s Child Abuse Prevention Program. The supplemental funds would provide a one-time augmentation to the state’s regular federal allocation for various child abuse prevention programs. The state’s regular federal allocation in 2021‑22 is around $15 million.

LAO Comments

Recommend Legislature Consider the Trade-Offs of More Flexible General Fund Resources for Prevention Services. We note that one issue that has been raised is for the Legislature to consider allowing counties to implement more flexible prevention services using any General Fund investment (rather than tying state funding for prevention services explicitly to FFPSA Part I). If the funding is tied to FFPSA Part I, then counties would be able to use this funding only for the limited set of activities for mental health, substance abuse, and in-home parenting skills that are rated as “supported” or “well-supported” in the federal Clearinghouse—further limited to the subset of activities included in the state’s federally approved Prevention Plan. Stakeholders have raised concerns that the relatively limited list of allowable activities may not be effective for all communities, particularly Black, Native American, and Hispanic communities that are disproportionately represented in the foster care system. Allowing more flexible uses of any General Fund resources would mean counties could use funds for such things as direct supports to families, as well as for promising programs that are not currently rated by the federal Clearinghouse.

However, if counties implement prevention services beyond the scope of FFPSA Part I, they will not be able to claim federal Title IV-E matching funds for those activities, meaning the total investment in prevention services may be less. That said, even if given flexibilities, counties could always still choose to implement FFPSA Part I-eligible activities, and there would be some fiscal incentive for them to do so.

Recommend Building in Oversight of Prevention Services. Along with any General Fund augmentation to prevention services, we recommend the Legislature consider any specific data points or overall reporting requirements that would facilitate the Legislature’s oversight of counties’ prevention activities. For example, the Legislature may want to require reporting to track the degree to which prevention services improve outcomes for children and families, reduce entries (and re-entries) into foster care, and in particular reduce child removal among communities who are disproportionately involved with the child welfare and foster care systems (including Black, Native American, Hispanic, and/or LGBTQ youth). We understand that the administration is proposing a process for reviewing counties’ overall prevention plans (including plans for activities eligible for Title IV-E funding under FFPSA Part I, as well as other prevention services). We agree it is a good idea to build in this initial oversight mechanism and would encourage the Legislature to specify any Legislative priorities be incorporated in this approval process—as well as into ongoing reporting requirements. Furthermore, we note that Legislative oversight would be all the more important if funds have more flexible uses.

Continuum of Care Reform (CCR)

CCR Costs Lower at May Revision Than Governor’s Budget. As summarized by Figure 4, the nonfederal portion of CCR costs included in the May Revision is about $26 million lower than budgeted in January. This net decrease primarily reflects lower estimates for Home-Based Family Care rates, which have been adjusted to reflect updated projections based on more recent actual cost data.

Proposed Change to Statutory Language for Placement Prior to Approval (PPA) Results in Increased Costs for That Component . Current statute dictates that the maximum duration for foster care payments for emergency caregivers who have not yet completed the Resource Family Approval (RFA) process will decrease, dropping from 120 days (or 365 days for a good cause extension) in 2020‑21 to 90 days (without an option for extension) in 2021‑22. However, because average RFA processing time continues to exceed 90 days, the May Revision includes funding and accompanying TBL to continue the 2020‑21 provisions for one additional year, through June 30, 2022.

LAO Comments

Consider Ongoing Statutory Change for PPA. As we noted in our January analysis, the Legislature may wish to consider changing statute to allow emergency placement caregivers to receive foster care payments for up to 365 days (if application delays occur beyond their control) on an ongoing basis, rather than removing any option for a good cause extension after June 30, 2022 as the administration has proposed. As of the fourth quarter of 2020, the median RFA processing times for emergency caregivers with placement prior to approval was 135 days.

Ongoing Questions Around Fiscal Responsibility for RFA. We note that counties and the administration continue to have differing views about fiscal responsibility for RFA. This issue likely cannot be addressed fully prior to June 15. As a result, for 2021‑22, the Legislature may wish to consider providing some General Fund resources to counties to address the continued RFA backlog (that is, applications not completed within 90 days) that has persisted since full implementation of RFA began. As of the fourth quarter of 2020, the median RFA application processing time was 138 days. We note that funding for the RFA backlog had been provided through 2019‑20, but phased out in 2020‑21. In 2019‑20, the amount budgeted for RFA backlog included $4.7 million General Fund.

Placements and Services for Youth With Complex Needs

One-Time Funds for Returning Youth Placed in Out-of-State Group Homes. In December 2020, the Legislature authorized $5.2 million General Fund emergency funding for DSS to facilitate the repatriation of over 100 foster youth who had been placed in out-of-state group homes. (For background on this issue, refer to this DSS webpage.) In conjunction with intensive technical assistance for counties, DSS provided rate flexibilities and tailored placement options (such as “STRTPs of one”) for these youth, some of whom have complex behavioral health care needs that cannot be met by existing placement types.

One-Time and Ongoing Augmentation for Youth With Complex Needs. To continue providing flexible and tailored placements and services for these recently returned youth, as well as for other foster youth who may otherwise be placed out of state, the May Revision proposes nearly $40 million General Fund in 2021‑22, including around $15 million General Fund ongoing, for assistance to counties for serving youth with complex needs.

LAO Comments

Legislature May Wish to Formalize Its Intent Around Future Out-of-State Placements. While the May Revision proposes some ongoing funding to serve youth with complex care needs within California, the administration has not proposed language around the future use of out-of-state congregate care placements. (We note that the out-of-state facilities from where youth returned in 2020‑21 have been decertified by DSS, but that does not prevent future placements at other certified facilities.) As such, the Legislature may wish to clarify its intent in statute for the future use of out-of-state placements. For example, if the Legislature’s intent is to prohibit use of out-of-state placements for youth with complex behavioral health needs (while allowing out-of-state placements for youth who experienced the commercial sexual exploitation of children or under other particular circumstances), then the Legislature could specify this policy in TBL.

Ensure Any Limitation on Out-of-State Placements Is Accompanied by Analysis of In-State Needs. Further, if the Legislature’s intent is to prohibit or limit out-of-state placements for youth with complex behavioral health needs, then we recommend the Legislature ensure that DSS/Department of Health Care Services/Department of Developmental Services/other relevant departments analyze the existing gaps in available placement types and services, and identify what system changes would be needed to place all foster youth with complex care needs safely in state. Anecdotally, we understand DSS will be reviewing why the recently returned youth were initially placed out of state, with the aim of informing analysis of existing gaps in services and placement for youth with complex needs. We note that some relevant progress toward similar analysis has been made since the implementation of Chapter 815, Statutes of 2018 (AB 2083, Cooley). Specifically, the Children and Youth System of Care State Technical Assistance Team was established as a result of the legislation and tasked with identifying gaps in placement types, services, and other issues around options for foster youth who have experienced severe trauma. The team issued a report in October 2020 with recommendations to the Legislature, available online here.

Child Welfare Program Suspensions

May Revision Does Not Propose Child Welfare Program Suspensions. The May Revision does not propose new suspension language for 2021‑22 for child welfare programs (or other human services programs), which had been included in the January Governor’s budget. Previous suspension language in 2019‑20 and 2020‑21 had impacted the Family Urgent Response System, supplemental funds for the Emergency Child Care Bridge Program, rate increases for foster family agency social workers, and the Los Angeles County Public Health Nurse Pilot Program.

LAO Comments

Agree With Removal of Suspension Language. We agree that it makes sense to eliminate all suspension proposals, and this is in line with our office’s recommendation in an analysis of the overall suspension proposals included in the January Governor’s budget. In that analysis, we also noted that—because many of the programs previously subject to suspension language are recently created programs—the Legislature could take a look at reporting and oversight to ensure programmatic design aligns with its policy objectives and that the programs are resulting in the intended outcomes.