Updating Special Education Out-of-Home Care Funding

Updating Special Education Out-of-Home Care Funding Summary Legislature Established Out-of-Home Care Work Group and Required Report. In the Supplemental Report of the 2020-21 Budget Act, the Legislature tasked our office with convening a work group and providing recommendations for updating the special education Out-of-Home Care formula by March 1, 2021. Since 2004-05, the state has provided these funds to schools to cover costs associated with special education services for foster youth and some children with developmental disabilities who are unable to live with a custodial parent. Due to reforms to phase out long-term congregate care placements for foster youth, the Out-of-Home Care rate structure was effectively rendered obsolete, and funding has been frozen since 2016-17. This report provides background on the issues, describes the assessment and recommendations of the work group, and includes our office’s comments for the Legislature as it considers updating the formula. Work Group Recommends Near- and Long-Term Approaches. The work group developed a set of near- and long-term recommendations to update the formula. In the near term, the work group recommends the Legislature replace the formula rates for foster youth with a two-tiered model—providing one rate for all foster youth and another rate for short-term congregate care placements. This approach reflects the recent changes to the child welfare system and could be implemented without significant challenges. In the long term, the work group recommends the Legislature explore an Out-of-Home Care formula based on the comprehensive assessment—known as the Child and Adolescent Needs and Strengths (CANS)—used to assess levels of need for each foster youth. Work group members thought this approach would best encourage interagency collaboration and capture variations in foster youth needs and costs across the state. Several Steps Before State Could Implement a CANS-Based Funding Model. Although the work group identified various strengths of a CANS-based formula, this approach is also likely to face implementation challenges and take many years to implement. Notably, data from the CANS assessment is not yet automated and centralized, and the time line for automation is uncertain. A CANS-based model could also create new fiscal incentives, especially if education representatives—whose funding levels would be determined by the assessment—were directly involved in the assessment process. This could result in foster youth being identified as having higher levels of need than otherwise. In developing and evaluating a CANS-based funding model, the Legislature will want to consider the extent to which the model creates fiscal incentives to change behavior. GABRIEL PETEK LEGISLATIVE ANALYST FEBRUARY 2021 analysis full gutter AN LAO REPORT Introduction Out-of-Home Care Funding Out-of-Home Care Funding Formula Created Out-of-Home Care Includes Placements to Address Variation in Special Education Costs for Foster Youth. California’s child welfare for Certain Students. Since 2004-05, the state has system serves to protect the state’s children provided some special education funding through from abuse and neglect, often by providing the Out-of-Home Care program to schools. This temporary out-of-home placements for children funding was intended to cover costs associated who cannot safely remain in their home. Most of with providing educational services to foster youth these placements are with resource families— and some children with developmental disabilities noncustodial relatives and nonrelative foster who are unable to live with a custodial parent for a families approved to provide care to foster youth. variety of reasons. Children in these out-of-home Foster youth also can be placed in congregate placements qualify for special education at higher care, which includes group homes and Short-Term rates than other children, often requiring additional Residential Therapeutic Programs (STRTPs). education services and supports. Children with the Congregate care is considered the most restrictive most intensive and likely costly needs are served and least family-like setting. These settings provide by congregate care facilities, which are unevenly 24-hour care and supervision to foster youth with distributed throughout the state. The Out-of-Home the highest levels of needs, including those with Care funding formula accounts for the variation in significant emotional or behavioral challenges. (See these placements across the state. the box on the next page for more detail on the Special Education Out-of-Home Care Funding terms we use in this report to refer to types of child Has Been Frozen Since 2016-17. Recent changes placements.) As of October 1, 2020, the state had to the child welfare system, including a reduced 60,045 foster youth in out-of-home placements. Of reliance on long-term congregate care, created this total, 40,831 youth were placed with a resource a need to revise the Out-of-Home Care formula family; 2,295 youth were placed in a congregate for foster youth. In anticipation of such a change, care setting; and the remaining were placed in the state has kept Out-of-Home Care funding other settings, such as transitional housing for allocations for foster youth at 2016-17 levels in older foster youth preparing for independent living. recent years. DSS oversees the state’s child welfare system, but most services are provided by county child welfare Legislature Established Out-of-Home departments. Care Work Group and Required Report. The Legislature tasked our office with convening a work Children With Developmental Disabilities group and providing recommendations for updating Can Also Receive Out-of-Home Care. Separate the Out-of-Home Care formula by March 1, from foster youth, some children with significant 2021. As required by the Supplemental Report intellectual or developmental disabilities are of the 2020-21 Budget Act, the group included also placed in out-of-home care, specifically representatives from fiscal and policy committees congregate care. These placements can occur if of the Legislature, the Department of Finance, the a child requires substantially more care than their California Department of Education (CDE), the family can provide in the home. Such children California Department of Social Services (DSS), often require significant medical support and may and the California Department of Developmental have severe or profound disabilities. Out-of-home Services (DDS). The group met seven times over placements provide 24-hour care for these children the course of fall 2020. This report provides and include community care facilities, intermediate background on Out-of-Home Care funding and care facilities, and skilled nursing facilities. DDS is Continuum of Care Reform (CCR), the assessment responsible for designing and coordinating services and recommendations of the work group, and our for individuals with developmental disabilities. As office’s comments for the Legislature as it considers of April 1, 2020, the state had 1,564 children with implementing the recommendations. developmental disabilities placed in congregate care settings. 2 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Terms Related to Child Placement Out-of-Home Placement. Placements for children who are unable to live with a custodial parent for a variety of reasons. For the purposes of this report, out-of-home placements include foster youth placed with a resource family or in a congregate care facility, as well as children with developmental disabilities placed in congregate care. Congregate Care. A placement setting licensed by the state to provide 24-hour care and supervision to children. Congregate settings include group homes, Short-Term Residential Therapeutic Programs (STRTPs), community care facilities, intermediate care facilities, and skilled nursing facilities. STRTPs. As one type of congregate care, STRTPs are intended to provide exclusively short-term, intensive treatment and other services facilitating youth’s transition to a family setting as quickly and successfully as possible. Resource Family. Noncustodial relatives and nonrelative foster families approved by the county child welfare agency to provide care to foster youth. Out-of-Home Placements Are More Likely to are comparable across the state. The state Receive Special Education. Special education allocates most special education funding to Special is instruction designed to meet the unique needs Education Local Plan Areas (SELPAs), which are of each student identified with a disability that regional consortia formed to coordinate special affects their ability to learn. Nearly all children with education services and funding. State law requires developmental disabilities in out-of-home care school districts, charter schools, and county offices qualify for special education. Among foster youth, of education to participate in a SELPA, with large the estimated share of students with disabilities districts typically acting as their own SELPA. In (30.4 percent) was more than twice that of all other 2020-21, the state provided $3.2 billion to SELPAs children in California (12.7 percent) in 2018-19. The in AB 602 base funding. traumatic childhood experiences that cause a youth Out-of-Home Placements Are Not to come in contact with the child welfare system Evenly Distributed Throughout the State. may also result in behavioral and social-emotional Figure 1 on the next page shows how distributions challenges that qualify them for special education of out-of-home placements compare with that of all services. Although specific data are not available, students across the state. Although many counties anecdotal evidence suggests that special have somewhat proportional shares of out-of-home education rates are higher for foster youth placed placements relative to the number of students in congregate care than those placed with resource they serve, a small number of counties have families. larger differences between the two populations. State Primarily Funds Special Education Los Angeles and San Bernardino Counties have Based on Overall Student Attendance. Most disproportionately higher shares of out-of-home state special education funding is allocated care placements, while San Diego and Orange through a base rate formula commonly called Counties have disproportionately lower shares. “AB 602” (after its enacting legislation in 1997). Variations are also seen at the SELPA level. For The formula distributes funding based on total instance, we estimate one SELPA served an student attendance rather than a more direct average of 300 foster youth in congregate care in measure of special education costs, such as 2019-20, while 55 SELPAs serve none as they have the number of students qualifying for special no such facilities within their boundaries. education. This approach assumes the underlying identification rates and costs for special education www.lao.ca.gov 3 analysis full gutter AN LAO REPORT Figure 1 Out-of-Home Care Placements Differ Across State Comparing Shares of Statewide Out-of-Home Care Placements and K-12 Student Attendance, 2019-20 Out-of-Home Care Placements Lower by 7% to 2% Lower by 2% to 0.5% Lower by 0% to 0.5% Higher by 0% to 0.5% Higher by 0.5% to 2% Higher by 2% to 7% Darker shades of red indicate that a county has higher shares of the state's out-of-home care placements than K-12 students. 4 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Education Costs for Out-of-Home Placements not collect data on the cost of providing special Are Also Not Evenly Distributed. When a child education services for students in out-of-home is placed into congregate care by a noneducation placements. Special education administrators agency, such as the county child welfare report, however, that the cost of providing such department, the responsibility to provide and services is often greater than the amount of funding fund education for the child generally falls on provided by the state. the local school district. (One minor exception is Continuum of Care Reform when a child is placed in a facility within another school district’s catchment area but continues CCR Aims to Eliminate Group Homes and to attend their original school of origin.) Because Promote Home-Based Family Placements. congregate care facilities are not evenly distributed Beginning in 2012, the Legislature passed a across the state, the cost of educating children series of legislation implementing CCR. This living in congregate care also unevenly falls on legislative package makes fundamental changes school districts where these facilities are located. to the way the state cares for youth in the Furthermore, education costs for these children can child welfare system. CCR aims to achieve a be costly given the significant needs these children number of complementary goals, including: have exhibited to warrant higher levels of care. (1) ending long-term congregate care placements, State Provides Special Education Funding (2) increasing reliance on resource family for Out-of-Home Placements. Recognizing placements, (3) improving access to supportive that the special education base formula could services regardless of a child’s foster care not account for the uneven distribution and placement, and (4) utilizing universal child and costs for out-of-home placements, the state family assessments to improve placement and implemented the Out-of-Home Care program services. in 2004-05. This program provides additional Short-Term Therapeutic Programs Replace special education funding to each SELPA based Group Homes. Compared with resource family on three components: (1) counts of foster youth placements, long-term group home placements placed with foster families, (2) bed capacity of are associated with elevated rates of reentry into group homes, and (3) counts of children with developmental disabilities placed in out-of-home Figure 2 care. To determine the level of funding for each Out-of-Home Care Rates Are Based on SELPA, the formula uses a child’s placement as a Group Home Classifications proxy for the cost of providing educational services. As shown in Figure 2, the rates are based on the 2019-20 severity level of group homes assigned by DSS Group Home Other Out-of-Home ranging from level 1 to level 14, with level 14 group Rate Placement Placements homes serving children with the most severe and $644 Level 1 Foster Family Home costly needs. The formula sets rates for other 785 Level 2 out-of-home placements based on corresponding 1,845 Level 3 group home severity levels. For example, the 2,121 Level 4 rates for students in foster family placements are 2,399 Level 5 2,675 Level 6 similar to those of lower level group homes, while 2,953 Level 7 the rate for skilled nursing facilities corresponds 3,228 Level 8 Community Care Facility to the highest level group home. Out-of-Home 7,012 Level 9 Care funding, however, is not required to be 7,566 Level 10 spent on children in out-of-home care. Funds 12,175 Level 11 Intermediate Care Facility can be spent on any special education activity. 17,341 Level 12 The 2020-21 budget provided $142 million for 18,448 Level 13 the Out-of-Home Care program. The state does 25,828 Level 14 Skilled Nursing Facility www.lao.ca.gov 5 analysis full gutter AN LAO REPORT foster care, lower educational achievement, and uses a rating scale to indicate levels of need and higher rates of involvement in the juvenile justice service in various areas of a child’s life, including system. Furthermore, congregate care placements school, work, home, and social relationships. The are costly compared to placements with resource tool is currently used only to inform the placement families. Given these concerns about group and care decisions of the CFT. homes, a key goal of CCR is to end group homes Implementation of CANS Continues. In as a placement option for foster youth. Under 2019, counties began using CANS assessments CCR, more foster youth with higher needs are as part of the CFT process. As of fall 2020, now placed with resource families with additional counties are using slightly different versions of the services, whereas previously they would have been CANS assessments and are in different stages of placed in a higher level group home. For youth who automating the assessment process. For instance, cannot safely and stably be placed with resource in May 2020, nearly 18,000 CANS assessments families, child welfare agencies can place the had been completed in an automated system, child in STRTPs. As previously discussed, these but our understanding is that more assessments placements provide a similar level of supervision had been completed in paper form. Exactly how as group homes, but with expanded services many assessments have been completed in total, and supports. STRTPs are intended to provide however, is unclear. exclusively short-term, intensive treatment and Changes Due to CCR Affect Out-of-Home other services facilitating youth’s transition to Care Formula. Because CCR eliminated group placement with a resource family as quickly and homes, the Out-of-Home Care rate structure successfully as possible. The deadline for group based on group home severity level was effectively homes to convert to STRTPs was the end of rendered obsolete. In recent years, the state has December 2020. continued to provide Out-of-Home Care funding, Child and Adolescent Needs and Strengths but counts of foster youth and bed capacity for (CANS) Tool Used to Inform Decisions. To group homes have been frozen at 2016-17 levels increase child and family involvement in decisions for each SELPA. In other words, for the past relating to foster youth’s care, CCR mandates several years, Out-of-Home Care funding has not the use of child and family “teaming” in the case accounted for changes in foster youth counts in planning and service delivery process. The child each SELPA, the placement of more foster youth and family team (CFT) may include, as deemed with resource families, or the replacement of group appropriate by the social worker, the affected child, homes with STRTPs. As more time passes, the custodial and noncustodial parents, extended family disconnect between Out-of-Home Care funding members, the county caseworker, representatives and where foster youth and STRTPs are located from the child’s out-of-home placement, the child’s continues to grow larger. For instance, although mental health clinician, and other persons with a 2,382 foster youth were placed in congregate care connection to the child. The CFT is required to as of July 1, 2020, the Out-of-Home Care formula meet at least once every six months to discuss provides funding for 7,103 group home beds and agree on the child’s placement and service (based on 2016-17 levels). In contrast to foster plan. CCR requires foster youth to receive a youth, the counts for children with developmental comprehensive assessment upon entering foster disabilities in out-of-home care continues to be care to improve placement decisions and ensure updated in the Out-of-Home Care program. access to necessary supportive services. In late 2017, DSS chose the CANS tool as the state’s Work Group Assessment functional assessment tool to be used within the Assessment Hones in on a Handful of Key CFT process. The CANS assessment intends to Considerations. This section highlights the key help the CFT organize information, communicate priorities and considerations that emerged from clearly, and reach consensus on the child’s the work group discussions on updating the placement and service plan. The CANS assessment Out-of-Home Care formula. This section is not 6 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT intended as a comprehensive account of everything allocate funding based on different proxies for the discussed in the work group, nor is it intended to needs and costs of foster youth with disabilities. be an exhaustive list. Instead, this section reflects CANS-Based Model May Encourage our view of the most significant elements of the Interagency Collaboration and Provide a work group’s deliberations. Reasonable Proxy for Level of Need. The work Work Group Developed Six Guiding Principles group also discussed the possibility of using for A New Formula. As seen in Figure 3, the the CANS assessment as the basis of a new work group developed six key principles to use in model. The CANS assessment includes questions evaluating options for a new Out-of-Home Care regarding behavior, achievement, and attendance formula. These principles were developed after a in school, as well as the level of support provided review of the historical context of special education by the school. This information could be used to funding, meetings with various stakeholders, capture variation in the levels of need for foster and discussion among work group members. youth and determine funding for SELPAs according After deciding on the guiding principles, the work to these needs. An Out-of-Home Care formula group considered various options for updating based on the CANS assessment also could Out-of-Home Care funding and used these increase interagency collaboration by encouraging principles to evaluate each option. education representatives to be involved in the CFT Variation in Costs Best Addressed Through process, CANS assessment, and decision-making Separate Program. One option the work group concerning foster youth. Currently, teachers or considered was eliminating the Out-of-Home other education representatives are not required Care program and shifting funding into the special to be involved in answering the education-related education base formula (slightly increasing questions on the CANS assessment or participate per-student rates for all SELPAs). This approach in the CFT. As explained in the box on the next addresses several of the work group’s guiding page, interagency collaboration was one of several principles, including making special education challenges broadly affecting education for foster funding simpler and easier to understand. The work youth that the work group discussed. group ultimately concluded, however, that keeping A CANS-Based Model Is Not Currently Out-of-Home Care funding as a separate program Feasible. Despite the potential strengths of a would better account for SELPA-level differences in CANS-based model, the CANS assessment is foster youth needs and costs over time. The work still being implemented and standardized across group then considered other options that would the state. As previously mentioned, counties are in various stages of incorporating the CANS Figure 3 Six Guiding Principles for Updating the Out-of-Home Care Formula 9 Interagency Collaboration. Encourage interagency collaboration between social services and education on decisions affecting foster youth to improve outcomes. 9 Accounting for Cost Variations. Account for differences in serving foster youth across the state, providing more funding to Special Education Local Plan Areas serving students with more educational needs. 9 Understandable Formula. Be easy to understand, simple, and straightforward. 9 Reliable Data. Use reliable, easily updated data sources currently collected by the state. 9 No Inappropriate Fiscal Incentives. Avoid financial incentive to identify students or select certain placements to increase funding. 9 Foster Youth Specific Issues. Address major challenges related to frequent placement changes for foster youth, including completing the assessment process for special education and recognizing upfront costs with each schooling change. www.lao.ca.gov 7 analysis full gutter AN LAO REPORT assessment into the CFT process and being the CANS assessment are sufficient to evaluate able to enter the CANS assessments into an a child’s educational needs or if the assessment automated system. A CANS-based model would should be modified to include additional questions require reliable and easily updated data, which specific to education. is not currently feasible without every county Funding Based on Foster Youth Counts uploading CANS data into a centralized statewide Would Address Some Variation in Costs. The data system. The state currently has no specific work group also considered a model that would time line for when the CANS assessment would provide Out-of-Home Care funding to SELPAs be fully automated, although DSS shared with based on one flat rate per foster youth. This model the work group a strong commitment to reach would (1) account for differences in foster youth full automation within the next several years. enrollment by SELPAs, (2) be easy to understand, The work group also discussed whether the (3) use reliable and easily updated data, and education-related questions currently included in (4) avoid any inappropriate fiscal incentives. Other Issues Related to Education for Foster Youth Work Group Process Revealed Other Educational Challenges for Foster Youth. Through conversations with various stakeholders, the work group discussed other issues related to foster youth and education. Although these issues fell beyond the group’s charge to update the Out-of-Home Care formula, we detail two issues below for further legislative consideration. Foster Youth Would Benefit From More Interagency Collaboration. During our meetings this fall, work group members involved in K-12 education attributed the obsolete Out-of-Home Care funding formula to an initial lack of collaboration between the education and foster care systems. Primarily, education stakeholders attributed the disconnect between special education funding for foster youth and the state’s foster care system to a lack of participation of education stakeholders in the development of Continuum of Care Reform. The work group found interagency collaboration to be highly important in improving foster youth outcomes and sought to encourage such collaboration through its work. Members expressed interest in encouraging a stronger role for education on the child and family team to help ensure that educational issues are taken into consideration during placement decisions. Members also expressed interest in examining and streamlining potentially duplicative processes related to child welfare and special education to relieve demands on families. High Foster Youth Mobility Creates Challenges Qualifying for Special Education. The work group also discussed concerns that frequent placement changes prevent some foster youth from accessing special education. Although federal law under the Individuals with Disabilities Education Act establishes clear time lines for evaluating eligibility for special education services, a foster youth may change placements and be moved to another school district before they are able to complete an evaluation and receive an individualized education program (IEP) specifying the supports and services the school district will provide. The youth would then need to restart the process at the new district to be evaluated for special education. Stakeholders we spoke to indicated that many foster youth without an IEP—especially those placed in a Short-Term Residential Therapeutic Program—would likely benefit from special education given their high level of social-emotional needs, but these youth may not have completed the process to qualify for special education due to frequent changes in placement and schooling. Additional delays may occur when the individual legally responsible for making decisions regarding the child’s education is difficult to reach or unfamiliar with the education system. 8 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT In contrast to the CANS-based approach and No Concerns With Funding for Children its longer implementation time frame, a new With Developmental Disabilities. The work flat-rate model could be implemented in the near group also reviewed the funding for children with term without requiring additional data or major developmental disabilities placed in out-of-home implementation challenges. Although this model care. In contrast to the foster youth portion of accounts for differences in foster youth enrollment, the formula, counts and funding for children with it does not account for variations in the needs of developmental disabilities continue to be updated foster youth across SELPAs. The flat-rate model for each SELPA. As previously mentioned, the also does not include any component that would school district where the congregate care facility encourage interagency collaboration. is located is responsible for providing education. Funding Based on Foster Youth Counts The work group found that the current formula and STRTP Placements Would Provide More appropriately allocates funding to the SELPA of the Funding for SELPAs With Higher Costs. In school district responsible for providing education addition to a model based on a flat rate to for children in these settings. Stakeholders fund foster youth, the work group considered a expressed no concerns with how funding was “two-tiered” alternative that set one funding rate allocated under this component of the formula. for foster youth and a separate rate based on The work group decided the rates for children the number of STRTP placements. Similar to the with developmental disabilities in out-of-home current Out-of-Home Care formula, this model care should remain as they are under the current captures some degree of variation in needs and formula. costs by using the type of foster youth placement Work Group Recommendations as a proxy for education cost. Because state law restricts use of STRTPs to youth that cannot In the Near Term, Update Formula With One safely and stably be placed with resource families, Rate for All Foster Youth and One for STRTP children in these placements tend to have Placements. The work group developed a set of significant emotional and behavioral challenges near- and long-term recommendations. In the near that require more costly educational services. term, the work group recommends the Legislature During stakeholder meetings with the work group, replace the Out-of-Home Care rates for foster both SELPA administrators and STRTP providers youth with a two-tiered model providing one rate mentioned many foster youth placed in STRTPs for all foster youth and another rate for STRTP are qualified to receive special education or would placements. (Foster youth placed in STRTPs would greatly benefit from special education. generate funding from both rates.) The work group Allocating Funding to SELPAs Based on thought this two-tiered model aligned with the STRTP Location Appropriate in Most Instances. approach of the current Out-of-Home Care formula, One issue the work group discussed was the was easy to understand, could be implemented case in which a foster youth is placed in an and updated without significant challenges, and out-of-county STRTP but continues to receive accounted for some variation in cost. The work education from the school of origin in another group also developed recommendations for SELPA. In this case, funding would be allocated some specific components of the formula. For to the SELPA where the STRTP is located, not the example, the work group recommends expanding SELPA providing educational services. The work the definition for foster youth funded under the group ultimately decided not to make modifications updated Out-of-Home Care formula to align with to address this issue. SELPA administrators we other definitions used for education funding. The spoke to indicated that this scenario occurs rarely recommendations are shown in Figure 4 on the and, when it does occur, SELPAs or school districts next page. can make arrangements to claim back costs for In the Future, Explore a CANS-Based Formula providing education. as Proxy for Educational Need. In the long term, the work group recommends the Legislature www.lao.ca.gov 9 analysis full gutter AN LAO REPORT explore a CANS-based Out-of-Home Care formula. group was not able to address, and discuss issues Work group members thought using inputs from the for the Legislature to consider for implementing a CANS assessment to allocate funding would best CANS-based formula. encourage interagency collaboration and capture Near-Term Approach Conceptually Aligns variations in foster youth needs and costs across With Current Formula. In our discussions with the state. Work group members also wanted the special education stakeholders, few had concerns current CANS assessment to be evaluated from with the Out-of-Home Care formula prior to an education perspective and, if necessary, further the changes under CCR that made the formula modified to appropriately serve as the basis of an obsolete. Of the options considered by the work education funding formula. Many members noted group, the two-tiered model most closely resembles how exploring a CANS-based formula would be the current formula, with rates updated to reflect consistent with recent, larger state policy shifts placement options now available under CCR. Given to encourage interagency collaboration and the lack of concern with the previous formula and better alignment across different areas of state the benefits of accounting for variation in costs government. across the state, we consider the two-tiered model to be a reasonable update of the Out-of-Home LAO Comments Care formula. One notable difference between the Comments Provide Additional Considerations current model and the two-tiered model is how for the Legislature. In this section, we provide congregate care placements are funded. Whereas comments on the two models recommended by the current model provides funding based on the work group, offer options for issues the work bed capacity, the work group recommends using Figure 4 Specific Work Group Recommendations for Near-Term Approach Near-Term Approach Formula Component Current Funding Formula Recommendation Rationale Foster Youth Definition Foster Families and Group Expanded Definition. Expand Aligns with other foster youth Homes. Funds only foster definition to include foster definitions used in education youth placed with foster families youth who (1) are placed with a funding. Also includes voluntary or group homes. noncustodial parent or relative placements since these (2) are voluntarily placed in out- children are likely to have a of-home care, and (3) remain in disability diagnosis. the family home while receiving voluntary family services. Foster Youth Count Census Day Count. Captures Cumulative Enrollment. Use Captures frequent changes in foster youth enrollment on one cumulative enrollment instead schooling of these students and day in the school year. of a point-in-time count. provides for any associated Cumulative enrollment captures one-time upfront costs. enrollment of foster youth throughout the school year. STRTP Count Bed Count. Funds group homes Average Daily Population. Provides a more precise and based on number of beds. Use STRTP average daily appropriate measure of the population rather than bed number of foster youth served count. The average daily in STRTPs throughout a year. population represents an average occupancy rate over the year. Charter SELPA Funding Not Funded. Excludes charter- Expanded Funding. Include Appropriately funds charter only SELPAs. charter-only SELPAs. schools for serving foster youth. STRTP = Short-Term Residential Therapeutic Program and SELPA = Special Education Local Plan Area. 10 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT the average daily population of foster youth in first year by providing 25 percent of funding under STRTPs. During work group discussions, a concern the new formula and 75 percent under the old was raised that differentiating funding based on formula, then in the second year increase the share placement could create fiscal incentives for children of funding from the new formula to 75 percent. to be placed in more restrictive settings. Placement Under this approach, the state could phase in decisions, however, are made by county child implementation over a three-year period without welfare departments and the CFT, not the SELPAs providing any additional funding. receiving Out-of-Home Care funding. Assuming Several Steps Before State Could Implement placement decisions for foster youth continue to a CANS-Based Funding Model. Although the be made outside of education, we do not have work group identified various strengths of a concerns that the formula would encourage more CANS-based formula, this approach is also likely restrictive placements. to face implementation challenges and take many Legislature Could Use DSS Foster Placement years to implement. Notably, the standardization Rates as Basis for Setting Near-Term and automation of CANS data has an uncertain Out-of-Home Care Rates. One key detail not time line. Furthermore, centralized, automated resolved in the work group was the specific CANS data is only a prerequisite to implementing per-student rates to set for the two-tiered model. a CANS-based model—the underlying formulas Because the state does not require SELPAs to track would still need to be developed. In addition student-level expenditures, the cost of providing to having a centralized and automated system, special education services to foster youth is implementing the work group recommendations unknown. Given the lack of education expenditure would require evaluating whether the current CANS data, the Legislature could consider using the DSS assessment should be modified to better capture a foster care payment rate structure as the basis child’s educational needs. This process likely would for determining the Out-of-Home Care funding require stakeholder engagement and feedback prior rates for STRTP placements and foster youth. This to taking specific action to modify the assessment. approach assumes the difference in rates DSS pays If the Legislature is interested in enacting changes for STRTP placements relative to other foster care to improve interagency collaboration at the county placements is similar to the difference in education level, the state also would need to (1) develop costs based on placement. Starting July 2020, the additional policies and guidance related to the monthly foster care rate for STRTP placements is role of education agencies in the CFT and CANS $14,035 per child, while the monthly foster care assessment and (2) align the CFT process with the rate for resource family placements ranges between assessment process for receiving special education $1,000 and $6,388, depending on a youth’s level of services. support needs. Assuming total Out-of-Home Care Consider Fiscal Incentives Created by funding remains the same in 2021-22, we estimate a CANS-Based Formula. In developing and the state could provide an annual rate of $14,035 evaluating a CANS-based funding model, the for STRTP placements and $1,450 for foster youth. Legislature will want to consider the extent to If the Legislature is interested in setting rates more which the model creates fiscal incentives to change directly aligned with education costs, it could behavior. For instance, if education representatives fund a study or require CDE to conduct a survey were to become required participants of the CFT to assess whether the DSS rates are reasonable and CANS assessment process, they would proxies for special education costs. have a role in decisions that directly affect how Consider Phasing in Formula Over Several much funding they receive for foster youth. This Years. Because some SELPAs will see decreases in could result in foster youth being identified as funding under the new formula, the Legislature may having higher levels of need than otherwise. want to consider phasing in the new formula over When these concerns were discussed in the time to ensure a smooth transition. For example, work group, members believed the CFT to be a the state could slowly ramp up the transition in the consensus-driven process that would prevent www.lao.ca.gov 11 analysis full gutter AN LAO REPORT unilateral decision-making. Members also and SELPA representatives, to (1) evaluate and mentioned that identifying a child as having a higher potentially modify the CANS assessment for level of need also creates expectations to provide education purposes, (2) determine the appropriate higher levels of services, which should counteract role for education in CFT to improve outcomes for any adverse fiscal incentives. children placed out of home, and (3) develop a new Consider Setting Specific Milestones for Out-of-Home Care model using CANS assessment Process of Exploring a CANS-Based Approach. data that aligns with guiding principles set forth by If the Legislature is interested in exploring a the work group. CANS-based Out-of-Home Care formula in Conclusion the future, we recommend it lay out specific milestones for this process. Prior to developing The Out-of-Home Care formula is outdated and a formula, however, the Legislature would want no longer reflects where foster youth are located or to determine when CANS implementation has the state’s current child welfare system. Throughout progressed sufficiently to begin actively exploring fall 2020, the Out-of-Home Care work group met a new model. The work group discussed two with key stakeholders and leveraged the expertise options for identifying this initial milestone. Under across members to ultimately recommend a the first option, the Legislature could require DSS two-tiered model to update the current formula for to provide more detailed updates on the status the near term. The two-tiered model includes one of CANS standardization and automation for the rate to fund foster youth and another rate for higher purposes of modifying the Out-of-Home Care cost STRTP placements. This approach captures formula. (Existing supplemental reporting language some variation in education costs for foster youth already requires DSS to provide quarterly updates with disabilities, while being easy to understand on CANS.) Alternatively, DSS leadership could and feasible to update. In the long term, the work monitor CANS implementation as part of their group recommended the Legislature explore a ongoing interagency work to coordinate timely CANS-based formula, after the CANS assessment care for foster youth and report to the Legislature is fully implemented. A CANS-based model would when they believe a CANS-based model can incentivize interagency collaboration and better be explored. We believe either of these options capture variations in foster youth needs and costs. would be reasonable approaches to take. Upon However, as we note in this report, a CANS-based reaching this initial milestone, the Legislature model may also encounter implementation could then convene a new Out-of-Home Care challenges and introduce new fiscal incentives, work group, including county welfare department which warrant further consideration. LAO PUBLICATIONS This report was prepared by Amy Li, and reviewed by Edgar Cabral and Anthony Simbol. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 12 LEGISLATIVE ANALYST’S OFFICE