LAO 2006-07 Budget Analysis: Health and Social Services

Analysis of the 2006-07 Budget Bill

Legislative Analyst's Office
February 2006

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 childís parent and a county welfare department. The California Department of Social Services 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. Seriously emotionally disturbed (SED) children are identified by the State Department of Education and are typically placed in Group Homes to facilitate a greater degree of supervision and treatment.

The Governorís budget proposes expenditures of $1.6†billion ($396†million General Fund) for the Foster Care Program in 2006-07. This represents a 3.6†percent decrease in General Fund expenditures from the current year. Most of this decrease is attributable to a one-time General Fund cost in the current year to backfill a federal fund disallowance.

Foster Family Agency Caseload Overstated

We recommend that proposed General Fund spending for Foster Care grants be reduced by $1.4†million for 2005-06 and $3.9†million for 2006-07 and that the foster care administrative funding be reduced by $220,000 in 2006-07 because the caseload projections overestimate the number of children in foster family agency homes. (Reduce Item 5180-101-001 by $3,900,000 and Reduce Item 5180-141-0001 by $220,000.)

Foster Care Caseloads. Foster care has four caseload components: foster family homes, foster family agencies (FFA), group homes (GHs), and SED children. Although we concur with the departmentís caseload forecast for the FFH, GH and SED caseloads, we believe that the estimates for the FFA caseloads are overstated, as discussed below.

FFA Caseload. The FFA caseload is made up of children who have been placed in a certified foster family home that is overseen by a FFA. Generally, these children need slightly more intensive services than children placed in a licensed foster family home. This is a more expensive placement than foster family homes but considerably less expensive than group homes. For 2005-06 and 2006-07, the department is estimating that the average monthly FFA grant will be about $1,700 per child.

Recent Caseload Trends. The FFA caseload has increased slightly in recent years, with an increase of 1.4†percent in 2003-04 and 1.3†percent in 2004-05. Contrary to this two-year trend, the department has estimated that FFA cases will increase by 3†percent in the current year and 2.6†percent in the budget year. The department was unable to provide evidence to suggest that the FFA caseload will experience a doubling of its recent growth rate. Based on recent caseload trends, we estimate that the caseload will increase by 1.5†percent in 2005-06 and 2006-07. Based on our caseload estimates, General Fund spending for FFA cases is overstated by $1.4†million General Fund in the current year and $3.9†million in the budget year. Accordingly, we recommend reducing the budget by $3.9†million in 2006-07 and recognizing savings of $1.4†million for 2005-06. We further recommend a corresponding General Fund administrative reduction of $220,000 for 2006-07.

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