Legislative Analyst's Office
Analysis of the 2003-04 Budget Bill
California's state-supervised, county-administered Child Welfare Services (CWS) program provides services to abused and neglected children, children in foster care, and their families. The CWS program provides (1) immediate social worker response to allegations of child abuse and neglect; (2) ongoing services to children and their families who have been identified as victims, or potential victims, of abuse and neglect; and (3) services to children in foster care who have been temporarily or permanently removed from their family because of abuse or neglect. The 2003-04 Governor's Budget proposes $2.1 billion from all funds and $69 million from the General Fund for CWS. This represents a decrease of 89 percent from the General Fund over current-year expenditures mostly due to the administration's proposal to include Child Welfare Services in its realignment proposal. (For a discussion of the Governor's realignment proposal, please see "Part V" of the 2003-04 Budget: Perspectives and Issues.)
We recommend that the proposed expenditures for the Child Welfare Services (CWS) program be reduced by $11 million from the General Fund because the budget does not reflect savings from its projected caseload declines. Further, we recommend that the Department of Social Services abolish the "hold harmless" method of budgeting the basic CWS workload. (Reduce Item 5180-151-0001 by $11,069,000.)
Current Budget Practice. In preparing the budget for CWS, the Department of Social Services (DSS) adjusts proposed funding upward when the caseload increases, but does not adjust funding downward when the caseload actually decreases. The practice of not adjusting the budget to reflect caseload decline is known as the "hold harmless" approach. This hold harmless method was established by DSS with the inception of the CWS Case Management System (CWS/CMS) that tracks the CWS caseload. Initial caseload data from the CWS/CMS system showed a dramatic reduction in the CWS caseload. Because of uncertainty about the accuracy of the CWS/CMS data, DSS decided to use 1997-98 pre-CWS/CMS caseload data as their base and have not allowed the number of budgeted social workers to drop below those base levels over the last five years. However, as of January 1999, DSS determined that the CWS/CMS data were "cleaned up" and reliable. Despite that determination, DSS has retained the hold harmless methodology for their CWS estimate.
Continued Decline in CWS Caseload. Since its peak in 1998-99 at approximately 198,000 cases, the CWS caseload had dropped by almost 35,000 cases, or 18 percent by the end of 2001-02. The DSS projects an additional decline of 2.2 percent in 2003-04.
No Savings From Caseload Decline. Because of the way the hold harmless provision works, the number of social workers funded for the counties remains unchanged despite workload decreases. In other words, if an individual county's caseload is declining, its number of caseworkers are held at the prior-year level. At the same time, if another county's caseload is increasing, the state provides that county with funds to hire additional caseworkers. Therefore, on a statewide basis, despite an overall caseload decline, the funding for CWS continues to grow. While DSS projects that caseloads will have declined by approximately 13 percent overall since 1998, CWS basic funding has increased by 33 percent in the same period.
Analyst's Recommendation. We recommend that the Legislature maintain Child Welfare Services case-management funding per child at its 2002-03 level. This would result in a General Fund savings of $11 million while not reducing the level of care and service provided to the children and families in the child welfare system in the budget year. (We note that this program, like all other social services programs, will not receive an inflation adjustment for higher costs of doing business in the budget year.) Further, we recommend that DSS adopt a method of budgeting future CWS that reflects the trends of the actual caseloads.
We recognize that the SB 2030 Child Welfare Services Workload Study did find that CWS caseworkers are overburdened and carrying much larger caseloads than are ideal. To address this issue, the Legislature has separately budgeted "augmentations" to CWS. Should the administration decide to move toward the updated standards outlined in the SB 2030 study, we believe that it should be done through a proposed augmentation budgeted separately from the basic workload. Further, by increasing the separate augmentation, rather than the basic funding, workload relief for caseworkers would be applied to all counties, not just those with declining caseloads.
Impact of Realignment. If our recommendation is adopted and the Legislature also adopts the administration's realignment proposal for CWS, then the amounts shown represent reductions in the amount of revenue that could be transferred to the counties.