Federal Court Orders State to Cover More Foster Care Costs

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Foster care group homes in California are about to get a 30 percent increase in reimbursements from the state, thanks in part to the writers of the Concise Oxford English Dictionary.

After consulting that and other language sources, a federal court sided with providers in a dispute with the state over what a federal law means when it says states must “cover” foster care services at group facilities.

 The California Department of Social Services (DSS) argued that covering most of the costs – which it has been doing for several years – is enough to comply with the federal Child Welfare Act. In a recent decision, the U.S. Ninth Circuit Court of Appeals said it’s not.

The alliance of providers that filed the lawsuit said the ruling “means that kids who need the level of care provided by group homes will finally receive the funding for care they need and deserve.” The DSS, referring to the fiscal crisis that is forcing California to slash service, said the ruling “would have a significant impact on the general fund at a time when we can ill afford this additional expense.”

At issue is language in the federal Child Welfare Act (enacted in 1980), which requires states that accept funding under the act “cover the cost” of “foster care maintenance payments,” including food, clothing, shelter, school supplies, “reasonable travel to the child’s home for visitation” and administrative overhead.

California uses the Rate Classification Level system to calculate the costs of operating various types of group homes, making adjustments for inflation. (“Group homes” in this case refers to an array of institutions, including residential treatment centers, but not foster parents who take children into their own homes.)

The California Alliance of Child and Family Services filed a lawsuit in 2006 arguing that the rates have not, in fact, kept up with the rising costs of the goods and services covered by the act. Many of the alliance’s 100-plus members provide residential and other foster care services.

As salaries at the providers failed to keep up with market rates, agencies had more and more trouble competing for well-qualified staff, said Carroll Schroeder, executive director of the alliance. “They were running deficits. They had cut back to the bones. The kids were [complaining about the group homes] suck. The folks who provided the services were saying this is awful. The counties who placed the kids said we’re not satisfied with this, either.”

During the lawsuit, the state said it covers about 80 percent of current costs covered by the act, and that that’s enough to comply. In 2008, the United States District Court for the Northern District of California agreed.

The alliance appealed to the Ninth Circuit Court of Appeals, which overturned that ruling in December, citing the act, the cost calculation system and two dictionaries. “The natural meaning of ‘cover the cost’ is to pay in full, not in part,” the court said. The court issued an final judgment last week laying out the new payment requirements.

Those requirements would boost payments by more than 30 percent. For a year, that would amount to $242 million, with $77 million from the state and the rest from counties and the federal government.

In his blog, Richard Wexler of the National Coalition for Child Protection Reform called the decision “a triumph of group home greed over children’s need. … While the group home industry plays lip service to alternatives” to removing children from their homes, “they scarf up all the money that would make them possible.”

The DSS has not announced whether it will appeal.

Contact: The Alliance (916) 449-2273, www.cacfs.org.