The 2024‑25 Budget

Child Welfare

Introduction

California’s children and family programs include an array of services to protect children from abuse and neglect and to keep families safely together when possible. This analysis outlines the Governor’s proposed 2024-25 budget for child welfare and foster care programs under the Department of Social Services (DSS), and raises questions and issues for the Legislature to consider.

For background on child welfare and foster care programs—including information about youth/families served by the child welfare system, recent legislative initiatives/reforms, and funding background—please refer to our prior‑year analysis, The 2023-24 Budget: Analysis of Child Welfare Proposals and Implementation Updates.

Overview of Governor’s Budget Proposals

Proposed General Fund Spending for Child Welfare in 2024-25 Decreases Compared to 2023-24. As shown in Figure 1, funding for child welfare is proposed to decrease by $66 million General Fund (net increase of $153 million total funds) from the current year to the budget year. The change in total funding reflects the General Fund decrease, offset by projected increases in county and federal expenditures. The General Fund net decrease is driven primarily by:

• Expiration of one-time funding provided in 2023-24, such as $100 million for Los Angeles County child welfare stabilization and $50 million for flexible county funds to support home-based foster placements.

• Proposed reductions beginning in 2024-25 and ongoing for the Family Urgent Response System (FURS) ($30 million General Fund), housing supplement for Supervised Independent Living Placements (SILPs) ($18.8 million General Fund at full implementation), and Los Angeles County public health nurse pilot program ($8.25 million General Fund).

The General Fund net decrease is offset by:

• Augmentations for continued implementation of the Child Welfare Services-California Automated Response and Engagement System (CWS-CARES), Behavioral Health Community-Based Organized Networks of Equitable Care and Treatment (BH-CONNECT) federal Medicaid waiver project, and Continuum of Care Reform (CCR).

• Increases to projected expenditures for the Adoption Assistance Program (AAP) and Kinship Guardianship Assistance Payment (Kin-GAP) Program.

A more detailed accounting of the changes resulting in the year-over-year General Fund net decrease is laid out in Figure 2. The new child welfare proposals included in the Governor’s budget, which are described in the top segment of the figure, also are described more below.

Governor’s Budget Proposes Budget Solutions Across Child Welfare Program Areas. As shown in Figure 2, new 2024-25 proposals for child welfare programs comprise mainly budget solutions. Specifically, the proposed solutions would:

• Eliminate FURS. The Governor’s budget proposes to reduce funding for FURS by $30 million General Fund in 2024-25 and ongoing, which would fully eliminate current funding for the program. FURS provides immediate supports to current and former foster youth and their caregivers who are experiencing interpersonal conflict or other situations that risk destabilizing the placement. The program, which initially was funded as part of the 2019-20 budget package, includes a statewide hotline and in-person county mobile response units. The statewide hotline was implemented in March 2021 and counties implemented their mobile response teams in July 2021.

• Eliminate SILP Housing Rate Supplement. The budget proposal would reduce funding for the SILP housing supplement by $18.8 million General Fund in 2025-26 and ongoing, which would eliminate current funding for the rate supplement. The supplement is intended to align SILP rates with counties' Fair Market Rents. The rate supplement and necessary automation costs were funded as part of the 2023-24 budget package. The supplement has not yet been implemented; the rates currently are scheduled to be automated in 2023-24 and 2024-25, with full implementation in 2025-26.

• Eliminate Los Angeles County Public Health Nurse Pilot. The budget proposal also would reduce funding for Los Angeles County’s child welfare public health nursing pilot program by $8.25 million General Fund in 2024-25 and ongoing, which would fully eliminate current funding for the program. This program is intended to be an early intervention program through which public health nurses partner with the county child welfare agency to provide preventative services to children and families at imminent risk of entering or re-entering the child welfare system, but currently not served by other public health nurse programs (namely, the Child Welfare Public Health Nursing General Program or Health Care Program for Children in Foster Care). Although the pilot initially was funded as part of the 2019-20 state budget package, implementation was delayed due to the COVID-19 public health emergency and the program ultimately was approved by the Los Angeles County Board of Supervisors in spring 2023. The county public health department currently is staffing the program and intends to launch services in April/May 2024, and to pursue Title XIX matching funds for eligible services.

• Delay Some Bringing Families Home (BFH) Funding. The Governor’s budget proposal delays $80 million General Fund for the BFH program to 2025-26. The program received two one-time augmentations of $92.5 million General Fund in 2021-22 and 2022-23, each with three years of expenditure authority. (The program does not have ongoing funding.) BFH was established in 2016 to: reduce the number of families in the child welfare system experiencing, or at risk of experiencing, homelessness; to increase family reunification; and to prevent foster care placement. Initial program funding was $10 million General Fund appropriated in 2016-17, available over three years. In 2019-20, an additional $25 million General Fund was appropriated, also available over three years. These initial two appropriations required a dollar-for-dollar match from local recipients, while the two $92.5 million augmentations appropriated in 2021-22 and 2022-23 waive the match requirement. Proposed budget language also would extend expenditure authority and the match waiver period.

• Revert One-Time Funds for Los Angeles County Child Welfare Stabilization. We note that the Governor’s budget proposal reverts to the General Fund $100 million provided by the 2023-24 budget to Los Angeles County for child welfare program stabilization. The proposed reversion would help to address the current-year budget deficit. However, the county already has provided an invoice for the full funding amount, meaning the proposed reversion will not be feasible, necessitating that an alternative, like-amount of solutions be found elsewhere in the budget. The administration’s budget documents will reflect this update at May Revision.

Governor’s Budget Also Proposes to Reduce Funding for Foster Youth Housing Program. In addition to the reductions described above, the Governor’s budget proposes to reduce funding for the Housing Navigation and Maintenance Program (HNMP) by $13.7 million General Fund in 2024-25 and ongoing, which would eliminate funding for the program. The program received an ongoing funding augmentation as part of the 2022-23 budget package. This program is implemented by the Department of Housing and Community Development—not DSS—and therefore is not reflected in the summary figures above. The program provides grant funding to local child welfare agencies to serve current and former foster youth with securing and maintaining housing. Notably, counties have indicated they also use HNMP grants to fund federally required case management services for youth who receive various federal housing vouchers.

Figure 3 provides a high-level overview of the child welfare programs that are proposed for funding elimination or delay. The descriptions in the figure include information about who is served as well as program outcomes and expenditures, where information is available.

Overview of Administration’s Proposal for Permanent CCR Rates Structure

Background on CCR Rates. As part of implementing CCR, the state developed a new foster care maintenance payment rates structure to replace the previous age-based and group home rates structure. Under CCR, foster care rates must be based on the assessed level of need of individual youth (“level of care”), with youth requiring higher levels of behavioral health supports and other more therapeutic and intensive services receiving higher rates. Since 2017, the state has been implementing interim level of care (LOC) rates for resource families, Short-Term Residential Therapeutic Programs (STRTPs), Foster Family Agencies (FFAs), Intensive Services Foster Care (ISFC), and other specialized models of foster care. Statute specifies that the interim rates will expire December 31, 2024 and that the permanent, ongoing LOC rates structure will be established by January 1, 2025. In working toward meeting this statutory requirement, alongside the 2024-25 Governor’s budget, DSS has shared an initial concept paper outlining a new proposed framework for the permanent rates structure.

Current Rates Structure Relies on Level of Care Protocol (LOCP). The current, interim rates rely on the LOCP, which is a tool used by local child welfare staff to assess the care and supervision needs of foster children, and match those needs to a board and care rate. There are four levels of care and corresponding rates for foster youth placed with resource families: the basic rate (LOC 1), LOC 2, LOC 3, and LOC 4. If youth are assessed as having certain care needs requiring higher levels of support, they may be categorically eligible to receive the ISFC rate or rates for other specialized models of care.

Administration’s New Proposed Framework Makes Key Changes to Current Rates Structure. At a high level, the proposed structure aims to align rates to a youth’s assessed level of strengths and needs, and would not be tied to a specific placement type. To do so, the administration proposes:

• Developing Tiers. The new structure would classify children into Tiers 1, 2, 3, and 3+ (with tier three divided into two sub-tiers based on a child’s age). Children with higher-acuity needs would be classified into higher tiers, while children with relatively less-intensive needs would be classified into lower tiers. Children six years of age and older with the most intensive behavioral health and other needs would be classified as Tier 3+; this is the only tier where STRTP placements may be deemed necessary.

• Developing Rate Components. Within each tier, rates would be based on three components, aiming to reflect children’s needs in those areas. Children classified into higher tiers likely would receive higher rates across some or all of the rate components, reflecting their more intensive level of need. Although few details about the rate components are known at this time, they fall into the following high-level categories:

  • (1) Care and supervision rate, paid to the caregiver.

  • (2) Strength building and maintenance rate, with activities and services overseen by a financial management coordinator.

  • (3) Immediate needs rate, when relevant.

• Using the Child and Adolescent Needs and Strengths (CANS) Assessment to Determine the Appropriate Level of Care and Supports Needed. LOCP would no longer be used to determine rates. Under current policies, CANS assessments are completed as part of the Child and Family Team (CFT) process. Based on an initial analysis of CANS data, DSS has estimated the distribution of foster youth across the newly proposed tiers, as shown in Figure 4.

Budget Proposal Includes Initial Funds to Begin Automation. To begin making automation changes necessary to implement the new rates structure, the Governor’s budget includes $12 million General Fund in 2024-25 for the state’s new child welfare data system (CWS-CARES) and the state’s eligibility and rates system (the Statewide Automated Welfare System). This amount represents the administration’s initial estimate to begin automation; actual automation costs could be higher once the full details of the new rates structure and scope of necessary automation updates are known.

DSS Will Continue Seeking Stakeholder Feedback on New Rates Structure. In developing this initial framework for the new rates structure, DSS convened a series of stakeholder workgroups in fall 2023. DSS is holding another round of meetings with stakeholders starting in February 2024 through April 2024 to gather feedback and input on the proposed framework.

Administration Plans to Introduce Trailer Bill Language. Beyond the initial information provided by DSS through its proposed framework, many details remain to be finalized for the permanent rates structure. The administration has indicated that additional details about the rates structure will be provided as part of the 2024-25 budget cycle via trailer bill language. The timing for the proposed language is unclear.

Implementation of New Rates Likely Could Not Begin in Budget Year. The initial framework proposed by DSS does not indicate what the rates would be for each of the tiers and components. Given that this and many other details of the rates structure are yet to be finalized, alongside the time that will be needed for automation changes, it will take some time before the new rates could be implemented. The administration currently projects that the new rates structure could be implemented no earlier than 2026-27. Therefore, the Governor’s budget does not account for the actual cost of implementing the new rates in the budget year.

Comments and Considerations

Assessing Proposed Reductions and Delays. As described in our publication Overview of the Governor’s Budget, the Legislature faces difficult budget decisions this year and likely more in the future. The administration has not offered justification around why these specific child welfare program elements are proposed for reduction/delay, aside from indicating that they are part of the overall package of budget solutions necessary to address the estimated budget deficit. Notably, across the budget, there are few program areas where the Governor proposed ongoing programmatic cuts to established programs; the proposed ongoing child welfare and California Work Opportunity and Responsibility to Kids program cuts are unique in that way. At the same time, given the significant budget problem facing the state, ongoing programmatic reductions will be necessary. In addition, for any of the Governor’s proposed budget solutions that the Legislature chooses to reject, it will need to solve for that portion of the budget problem in another way. As the Legislature considers these initial options for budget solutions included in the Governor’s budget for child welfare programs, questions to consider include:

FURS:

• Funding Amount: Based on available data, counties have not been fully expending their FURS allocations. Specifically, in 2022-23 (the most recent fiscal year for which full-year data is available), General Fund expenditures for FURS were $13.4 million, representing less than half of the total budgeted for the program. In 2023-24, expenditures are trending higher but still not on track for the program to spend its full funding allocation. Could program funding be reduced without impacting intended beneficiaries while also maintaining the local FURS infrastructure?

• Implementation Challenges: Why have actual expenditures been under budget? Are there obstacles preventing the program from being more fully utilized?

• Funding Source: Given recent state focus on expanding programs and infrastructure for children and youth behavioral health, as well as state participation in various federal Medicaid demonstration projects, could other sources of funding support FURS?

• Alternative Programs: Are there other programs that could prioritize and tailor services to this population in the absence of FURS funding?

SILP Housing Rate Supplement:

• Interaction With New CCR Rates Structure: Does DSS intend to incorporate regional variation in SILP housing costs as part of the forthcoming permanent CCR rates structure? If so, then this budget solution potentially could proceed without an adverse effect on youth placed in SILPs because the issue would be addressed as part of the forthcoming overall rate reform. However, waiting to address the issue as part of the broader CCR rate reform likely would mean that implementation of new SILP rates would occur later than currently scheduled. (At the same time, given that the SILP housing supplement has not yet been implemented, youth would not be made worse off than they are currently.)

Los Angeles County Public Health Nurse Pilot:

• Potential for Additional Savings: Given the program’s delayed implementation, if the Legislature chooses to move forward with this budget solution, are there additional General Fund savings that could help address the budget problem in the current year?

• Funding Source: Given the state’s implementation of the Family First Prevention Services program and increased focus on child welfare system prevention and early intervention—including the $222 million General Fund block grants to counties to develop comprehensive prevention plans—could the public health nurse pilot be funded as part the county’s broader prevention efforts? Alternatively, are there other local funding streams that could replace state General Fund dollars for this program?

• Alternative Programs: Are there other programs that could prioritize and tailor services to this population in the absence of funding for the public health nurse early intervention pilot?

BFH Funding Delay:

• Impacts of Proposed Delay on Grantees/Beneficiaries: Would the proposed delay cause any disruption to program implementation? How quickly have counties been expending their 2021-22 and 2022-23 allocations?

• Implementation Challenges: For counties that have not been spending down their allocations as quickly, are there implementation challenges preventing them from using their full annual funding within the intended timeframe?

Many Details Yet to Be Finalized for Permanent CCR Rates Structure. Based on the administration’s proposed framework, implementing the permanent CCR rates structure will entail numerous significant changes compared to the current interim structure, because the proposed framework seems to present a fundamentally new approach to foster care rates. Conceptually, the proposed framework seems to align with stakeholder feedback that rates should not be tied to placement type but rather depend on a child’s individual needs and strengths. At the same time, many details for the permanent rates—including what the actual rates and ongoing General Fund cost will be—have yet to be finalized.

Forthcoming Trailer Bill Language Will Provide Opportunity for Legislature to Weigh In. The scope of the forthcoming trailer bill language is yet unknown. Depending on the information provided via the language, questions for the Legislature to consider to help guide its review of the proposal could include:

• Are CANS Assessments Completed Consistently? Considering CANS data would be used to assess needs—and ultimately the rate tier—for all youth under the proposed rates framework, what oversight mechanisms has DSS included to ensure that CANS assessments are completed consistently, on time, and to model fidelity? Are any protocol changes needed around the current CANS or CFT processes to facilitate the necessary oversight?

• What Is the Scope of Funded Services? Considering that the strength building and maintenance rate component and immediate needs rate component are new concepts, what is the proposed scope of services/supports/activities intended to be funded via these components? For example, is funding for foster youth activity stipends or respite care for caregivers—two areas where the state recently has provided one-time/limited-term funding augmentations—intended to be continuously funded by either of these new rate components? What types of services for youth with higher-acuity needs would be funded in the higher tiers?

• How Are Rate Amounts Determined? Stakeholder feedback provided during the workgroups convened by DSS last fall indicated that overall foster care rates needed to be higher across the board to adequately fund care, supervision, services, and other costs. How are the new rate amounts determined? In particular, how are the rates in the higher-level tiers determined? How are the administrative portions of rates for FFAs and STRTPs determined? Does the rates structure provide regional variation to account for the higher cost of housing and services in some areas of the state?

• How Do Rates Account for Non-Minor Dependents and Transitional Housing? How are non-minor dependents—and their most common placement type, SILPs—accounted for in the rates structure? How are other transitional housing programs accounted for?

• How Do Rates Account for Specialized Foster Care Models? For youth currently receiving rates aligning with specialized models of care, such as ISFC, ISFC+, Therapeutic Foster Care, and STRTPs of 1, how are these placement types and specialized rates accounted for in the rates structure?

• What Is the Total Funding? How much would it cost to implement the new rates? What is the anticipated funding mix, in terms of federal, state, and local dollars? What federal funding sources can be used for the different rate components, such as Title IV-E and Title XIX?

• What Is the Implementation Plan? How would the new rates structure be phased in and over what period of time? Does the interim rates structure need to be formally extended in statute while the new rates structure is phased in? (As noted earlier, statute specifies that the interim rates will expire December 31, 2024, and that the permanent, ongoing LOC rates structure will be established by January 1, 2025.)

• What Is the Automation Time Line? Typically, automation efforts cannot begin until the full detailed guidance is provided by the department to counties. Depending on the level of detail included in the trailer bill language, how much time would be needed for the department to develop the full detailed guidance for counties? Is the initial automation funding of $12 million General Fund included in the Governor’s budget for 2024-25 realistically going to be spent in the budget year? Could these funds be provided in a future year without causing a delay to implementation?

• How Will the Legislature Conduct Ongoing Oversight? How will implementation success be measured? What data will be collected? What are proposed legislative reporting requirements?