Budget Cuts Put More Group Homes at Risk

As part of the state budget, a 10% cut in reimbursement rates for care of children in nonprofit group homes was approved. This cut was enacted by the state legislature and is not part of the Governor’s controversial line-item vetoes; it is set to go into effect October 1st. Carroll Schroeder, Executive Director of CACFS, said, "With this cut … agencies will be forced to choose between seriously downsizing, closing their programs entirely, or providing substandard care for their kids."

Last Friday, the Alliance (of which Sunny Hills is a member) filed suit in federal court to prevent the state from enacting the cut. Several lawsuits have been filed in recent weeks to challenge cuts made in the state budget in response to California's fiscal crisis. Since the rate cut means that California would pay just 68 cents for every dollar it costs to care for foster children in group homes, the basis for the lawsuit is the state’s failure to pay appropriate rates, or rates that adequately reimburse the costs of providing care in private nonprofit foster care group homes. Since federal law requires that states “cover the cost” of children’s care in order to obtain federal foster care matching funds, the rate cut is allegedly a violation of federal foster care laws.

California’s group home rate system was originally implemented in 1990. It was based on the cost of providing care and supervision at that time. However, in the nineteen intervening years, there have been only four increases to the reimbursement rate the state pays out, despite exponential increases in the costs of care. Coupled with this long history of no increase in payment, the 10% reduction approved by the governor would drop reimbursement rates to just 68% of their original value. This means that while spending more than ever to provide basic care, group homes are being reimbursed far less than at any time in the past twenty years.

If the 10% cut is implemented in October, up to one-third of the state’s group home capacity could be lost, affecting over 2,000 youth. Forty-one of the California Alliance’s present and former member agencies have closed or seriously cut back their group home programs since 2001, due in large part to the inadequacy of reimbursement rates. Many of you are familiar with this endemic problem, as we saw the impacts of it on our own programs with the closing of the Sunny Hills Residential Treatment Program and the Children’s Garden Group Homes. Youth in group homes typically have the most challenging circumstances of any foster youth. Their needs are extraordinarily complex to require that level of placement, and they are at even higher risk than other foster children for homelessness, jail, and hospitalization. While many of these young people can thrive in adequate settings, such as those provided by our own BAYC Group Home program, their needs are generally too complex to be met in traditional foster family placements.

California is in a fiscal crisis and we are all working hard to help bring our great state back to a balanced budget; however, cutting funding for the most defenseless of our state’s already at-risk foster population is not the answer. As their support infrastructure is strained state wide, it is especially critical that housing and treatment needs of these extremely vulnerable young people be met, not severed.

For more information, please visit the Alliance online.