The 2024-25 California Spending Plan

Human Services

Child Welfare

California’s child welfare services system serves to strengthen families and protect the state’s children from abuse and neglect, including by providing temporary foster care placements for children who cannot safely remain in their home and services to safely reunify children with their families. This post describes budgeted expenditures included in the 2024-25 spending plan for child welfare services. In addition, the post provides a high-level overview of budget language related to the permanent foster care rates structure, which is required by statute and currently slated to begin rolling out in 2027-28.

Budgeted Expenditures

Budgeted Child Welfare Spending Decreases by $95 Million General Fund in 2024-25. Total child welfare local assistance spending for 2024-25 is budgeted at $961 million General Fund ($9.9 billion total funds), including the Approved Relative Caregiver program, Kinship Guardianship Assistance Payment program, Adoption Assistance Program, foster care payments, continued implementation of Continuum of Care Reform (CCR), child welfare automation projects, extended foster care programs for non-minor dependents (NMDs) and programs for former foster youth, and other special programs—all implemented by the Department of Social Services (DSS). A summary of year-over-year changes in child welfare local assistance budgeted expenditures is shown in Figure 1.

General Fund Decrease Reflects Expiration of Temporary Funds and New Budget Solutions. As shown in Figure 1, General Fund budgeted for 2024-25 represents a net decrease of $95 million compared to 2023-24. The decrease is primarily driven 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.

• Budget solutions, including:

• Housing supplement for Supervised Independent Living Placements (SILPs) elimination ($18.8 million General Fund ongoing reduction).

• Los Angeles County public health nurse pilot program elimination ($8.25 million General Fund ongoing reduction).

• Bringing Families Home delay ($80 million General Fund shifted from 2023-24 to 2025-26 [$40 million] and 2026-27 [$40 million]).

• One-time reduction of unspent Emergency Child Care Bridge funds from 2023-24 ($35 million reverts to General Fund and $12 million shifts to 2024-25).

These General Fund solutions are partially offset by spending growth in some other program areas as well as new augmentations, as described in the next paragraphs.

Budget Includes Some New Augmentations… The 2024-25 spending plan for child welfare also includes some new spending. Most notably, $4.4 million General Fund ($6.9 million total funds) is included in 2024-25 to begin automation changes necessary to implement the permanent foster care rate structure. This new rate structure is described more below.

…And Anticipated Program Growth. Additionally, the 2024-25 spending plan includes expenditure increases for certain child welfare program elements that typically increase from year to year. For example, expenditures for the home-based family care rate—namely the monthly care and supervision payments made to foster caregivers and for kinship and adoptive placements—are budgeted to increase by around $40 million General Fund ($70 million total funds) in 2024-25, mostly due to the annual cost-of-living adjustment (COLA).

Some Previously Proposed Solutions Not Included in Spending Plan. A number of other child welfare budget solutions were proposed as part of the Governor’s January and May budgets, but ultimately were not adopted as part of the final budget package. These include the proposed elimination of caregiver approval funding for counties ($50 million General Fund ongoing) and Family Urgent Response System funding ($30 million General Fund ongoing).

Tiered Rate Structure

Background on CCR Rates. As part of implementing CCR, the state developed a new foster care maintenance payment rate structure to replace the previous age-based and group home rate structure. Under CCR, foster care rates must be based on the assessed level of need of individual youth (“level of care,” or LOC), 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 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. Previously, statute specified that the interim rates would expire December 31, 2024 and that the permanent, ongoing LOC rate structure would be established by January 1, 2025.The 2024-25 spending plan amends and adds substantial new statutory language establishing the permanent rate structure and extending the interim rates period until permanent rates can be implemented (Chapter 46 of 2024 [AB 161, Committee on Budget]). Over the next few years, DSS will work toward implementation—in terms of developing detailed program guidance and taking other necessary steps to prepare for the new structure—with the new rates slated to begin rolling out to youth and caregivers in 2027-28.

While Interim Rates Rely 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.

…Permanent Rates Instead Will Use Integrated Practice Child and Adolescent Needs and Strengths (IP-CANS) Assessment to Determine Appropriate Level of Care. For the new permanent rates, LOCP will no longer be used to determine rates. Rather, language specifies that IP-CANS assessments will be the tool used to inform rates. (Under current policies, CANS assessments are completed as part of the Child and Family Team [CFT] process.) While the CANS itself is not a rate-setting tool, DSS contracted the University of Kentucky Center for Innovation in Population Health to analyze California’s CANS data and design a model to classify foster youth into rate tiers based on shared needs and strengths. Specifically, based on the model, children may be assessed as:

• Tier 1, for youth with relatively low assessed levels of need and higher assessed levels of strengths. Tier 1 also will apply to all NMDs placed in SILPs.

• Tier 2, for youth with some immediate needs to develop or bolster strengths.

• Tier 3, for youth with high levels of need.

• Tier 3+, for older youth with high levels of need, which may necessitate STRTP placement.

The model will need to be automated into the child welfare data system in order for social workers to be able to input CANS data and determine a child’s tier.

Permanent Rates Will Vary Based on Tier. Youth will receive different rates depending on their assessed tier, regardless of the type of placement they are in. This separation of rates from placement type is a key change of the new structure compared to the current interim rates, which are based on the type of setting where a youth is placed (among some other factors). For example, current rates include a specific rate for youth placed in STRTPs, which is significantly higher than the highest LOC for youth placed with resource families. Under the new structure, by contrast, youth with the highest assessed levels of need would receive more funding for care, supervision, and services regardless of whether they were placed in an STRTP or with a resource family. A summary of the tiered rates is included in Figure 2 below.

Permanent Structure Adds Two New Programs and Corresponding Tiered Rates. In addition to providing monthly payments to caregivers for care and supervision of foster youth, budget language establishing the permanent rates structure creates two new foster care programs, each with corresponding tiered rates. These programs are:

• Strengths Building and Child and Family Determination Program. This program will afford foster youth a monthly allocation to participate in activities, such as sports or academic enrichment. A youth’s individual budget will depend on their assessed tier (as shown in Figure 2 below). The youth will work with their caregiver and others through the CFT process to identify specific activities, and a Financial Management Coordinator (to be contracted by DSS) will facilitate the process of paying for the activities, procuring any necessary goods, and implementing any other allowable uses of the funds. The funds are intended to be flexible and allow the youth and caregiver to determine the best uses of the funds based on the youth’s individual needs. For youth who exit foster care, unspent strengths building dollars can continue to be spent down through the next fiscal year, providing youth some continued financial support for their activities after exit. (For NMDs placed in SILPs, an amount equivalent to the strengths building dollars Tier 1 rate will be provided directly to the youth as part of their SILP payment, allowing NMDs to use these funds as needed to help facilitate their transition to independent adulthood.)

• Immediate Needs Program. For youth who are assessed as Tier 2 or 3/3+, these youth by definition have immediate needs—such as requiring behavioral health or therapeutic services, including those not otherwise covered by Medi-Cal. The immediate needs program is intended to address those needs by providing dedicated funding for youth to access required services and supports, regardless of where a youth is placed. (NMDs placed in SILPs are not eligible for immediate needs funding.) To implement this new funding component, DSS will establish model standards (modeled after California Wraparound Standards) for each tier, along with contract requirements for counties to contract with service providers such as FFAs, STRTPs, county Mental Health Plans, and community-based organizations. Counties will be required to develop plans demonstrating how they will comply with the standards for the immediate needs program, and DSS will review and approve the plans. The contracted service providers also will be responsible for creating plans for each individual youth that specify how the youth’s immediate needs allocation will be spent. According to budget language, once the immediate needs program has implemented, a portion of a youth’s immediate needs dollars will be used as the non-federal share of Medi-Cal covered High-Fidelity Wraparound services (as implemented in line with guidance to be issued by DSS and the Department of Health Care Services).

Tiered rates for these programs are shown in Figure 2.

New Rates Slated to Begin Implementing in 2027. Budget language specifies that the permanent rate structure will become operative July 1, 2027, or when DSS notifies the Legislature that the California Statewide Automated Welfare System can perform the necessary automation to implement the new structure, whichever is later. (Until that time, the current interim rates will remain in place.) Prior to implementation, DSS also will need to undertake other significant efforts in preparing to administer the new rate structure. For example, the department will need to develop detailed program implementation guidance, along with model standards and contracts, for the new strengths building and immediate needs components.

Budget Language Requires Administration to Issue Progress Reports to Legislature. To facilitate the Legislature’s oversight of implementation of the permanent rate structure, budget language includes a number of reporting requirements, including:

• By April 30, 2025, DSS shall provide an initial update on the preparations for and progress toward full implementation. For example, the update will include trend data on CANS and CFT timeliness, and progress around developing guidelines and standards for the immediate needs and strengths building programs.

• Beginning October 2025, and on a quarterly basis thereafter until the implementation of the Tiered Rate Structure, DSS shall provide continued updates on preparations for and progress toward full implementation.

• By January 10, 2026, DSS shall provide an analysis of: the identified needs of foster youth care in Tiers 2, 3, and 3+; services necessary to address those needs; and a cost analysis of those services.

• Beginning October 2027, DSS shall provide quarterly updates on implementation progress. (After 18 months of implementation, updates shall be provided on a biannual basis.) These updates will include, for example, data around changes in distribution of foster youth across tiers, timeliness of IP-CANS completion, and information about the utilization of strengths building and immediate needs funding.

Cost Impact Estimated to Be Around $900 Million Augmentation at Full Implementation. As noted, implementation of the Tiered Rate Structure is slated to begin in 2027, and will roll out for new and existing foster placements over a few years. Currently, the administration estimates that at full implementation (in 2029-30), the new structure will cost an additional $710 million General Fund ($890 million total funds) annually—this amount represents an augmentation above what rates would have cost had the interim structure remained in place. Actual costs will depend on the number of foster placements, the distribution of youth assessed into the various tiers, the cost of services, and other factors. Additionally, care and supervision rates, as well as the administrative portion of rates for service providers, will receive annual COLAs. More immediate costs prior to implementation include initial automation costs, currently budgeted for around $14 million General Fund in 2024-25 and 2025-26.