State Assemblyman Mervyn M. Dymally, D-Compton, on Tuesday called for three public hearings in March to address findings that county governments and their private contractors profit off the plight of foster children.

In a series of recent Daily News reports, officials acknowledged the existence of financial incentives for children to be placed in, and remain in, the foster care system.

"(Dymally) wants to make sure the children first and foremost are getting the attention they are entitled to in a healthy and humane environment," said Kenneth Orduna, the lawmaker's chief of staff. "He also wants to ensure that tax dollars the state puts into the program are spent appropriately.

"We've read these stories where children are being abused and people are getting the state and federal dollars. The children are not getting the care that is intended for them."

Also on Tuesday, representatives of the national American Family Rights Association spoke before the Assembly Health Committee and gave lawmakers a report, calling on Gov. Arnold Schwarzenegger to order a statewide investigation and audit of the child protective and juvenile court systems.

"We're getting a very favorable response," said Dennis Hinger, executive vice president of the association. "A legislative aide to Schwarzenegger said he was extremely concerned (and) had been totally unaware of the problems going on with child protective services and promised to look into it and get results."

The reports in the Daily News disclosed estimates that up to half of the 75,000 children in the Los Angeles County child protective system and adoptive homes were needlessly placed in a system that is often more dangerous than their own homes.

State and federal laws have created incentives for placing children in the foster care system since the county receives $30,000 to $150,000 annually in state and federal funds for each child placed in the system, according to officials.

"We want nationwide case reviews and 50-80 percent of the children returned to their homes who were taken by child protective service agencies for the federal funds," Hinger said. "These agencies have received federal reimbursement due to putting these children into foster care and adoptive homes. We want the redirection of federal funding to provide services to maintain the children inside the home whenever possible."

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