Foster-kid cash lure may fade
Governor wants to alter system
By Troy Anderson
Staff Writer
LA Daily News

Monday, February 16, 2004 - Gov. Arnold Schwarzenegger has called for an overhaul of California's foster-care system to end financial incentives that critics say encourage county officials and their contractors to make money off children in their care.

Schwarzenegger's call for reforms comes as the Los Angeles County Board of Supervisors is set to vote today on a similar proposal to radically change the fiscal structure of the county child-protective system, placing an unprecedented focus on providing services to help keep troubled families together.

The governor's proposal comes after recent Daily News stories reporting that some officials' estimate that as many as half the 75,000 children in the county's foster-care and adoptive homes were needlessly placed in a system that is often more dangerous than the homes from which the children were taken.

Some officials and critics say state and federal laws create financial incentives for taking children from their parents because county government receives $30,000 to $150,000 annually in state and federal funds for each child placed in foster care.

"We're calling for significant reforms in the program because we believe it's pretty clear that when the state failed 12 out of 14 outcome measures when the feds reviewed the foster-care system, you've got issues with the way the program is managed," said state Department of Finance spokesman H.D. Palmer.

In a joint written statement, the state's Little Hoover Commission has described the foster-care system as a "public calamity."

Century City attorney Linda Wallace Pate, who has won a number of lawsuits aimed at reforming the system, said the governor's plan is a "courageous effort."

"It's scandalous that the California foster-care system has been reduced to a 'kids for cash' system driven by perverse financial incentives," Pate said. "It's contrary to common sense that children are removed from their parents for little or no reason 80 percent of the time and placed in a system where they are more likely to be abused, all to service this sacred-cash-cow foster-care system."

Last month the 75,000-member American Family Rights Association called on Schwarzenegger to order a statewide investigation and audit of the child-protection and juvenile court systems. The group says the system has needlessly placed thousands of children in foster care to draw down state and federal revenues.

Fred Baker, a former Glendale resident and group-home owner, said he would like to see an audit determine whether any funds are missing from the Department of Children and Family Services budget and whether county employees needlessly placed children in foster care to boost their budget.

Baker won a $459,940 judgment against county government in 2002 after a jury found that county officials closed five of his group homes in Lancaster and South Los Angeles in 1996 without offering him a chance to appeal.

Baker said county officials closed his facilities in retaliation after he went to authorities in 1995 and told them children were placed needlessly in foster care to obtain state and federal funds.

Schwarzenegger's proposals, which his administration estimates would save $20 million in fiscal year 2004-05 and more in subsequent years, calls for performance-based contracts that would require private agencies, as a condition of payment, to measure up on desired outcomes under federal and state guidelines to improve the care of children.

Since Illinois switched to such contracts in the late 1990s, the number of children in foster care in that state has dropped by 50 percent. Half of the private agencies were unable to meet the goals and were forced to close.

Schwarzenegger also proposes to pursue a waiver from the federal government so that much of the money now used to pay for foster care could be spent on programs to keep children with their birth parents.

The county supervisors' vote today would authorize child-welfare officials to negotiate with the federal government for the first waiver in the state to allow the county Department of Children and Family Services to use $250 million of its $1.4 billion budget on services to help prevent the placement of children in foster care.

The national nonprofit Pew Commission on Children in Foster Care expects to release a report in late spring on how Congress could reform federal child-welfare financing and strengthen court oversight of child-welfare cases.

"Every problem in child welfare cannot be attributed to federal financing or to the courts, but many have roots there," Pew Commission Chairman Bill Frenzel said. "Federal dollars flow relatively easily to pay for foster care for poor children, but they are much less available for other services that may avoid the need for foster care or shorten the time a child must stay in care."

Jim Mayer, executive director of the state's Little Hoover Commission, which has released three largely unheeded reports in the past decade calling for major reforms in the system, said Schwarzenegger's plan could save the state substantial amounts of money.

But Mayer stressed that the governor needs to heed the commission's recommendation to place one person in charge of fixing the system and establish civilian oversight panels in the counties.

"Nobody is in charge here," Mayer said. "That's been the consistent theme of our analysis.

"These two pieces -- some very clear lines of authority and accountability at the state and local levels, and effective public oversight -- will be the key ingredients to sustaining reform." 

Troy Anderson, (213) 974-8985 troy.anderson@dailynews.com