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A Report Prepared for the

Legislative Finance Committee


Sandy Whitney
Senior Fiscal Analyst
September 28, 1992


DEC .'.1992


1515 E. 6th AVE.

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Foster Care Caseloads

The number of children receiving foster care services increased from
2,390 in fiscal 1985 to 3,310 in Hscal 1992, or 38 percent during the period.
The number of children in foster care at fiscal year end increased even more
significantly. At the end of fiscal 1992, 1,849 chUdren were receiving foster
care services compared to 1,027 chUdren receiving services at the end of fiscal
1985~an 80 percent increase during the period. Foster care caseloads levels
result from the numbers of children entering the system and the amount of
time each child spends in the system. Although the number of children
entering the system increased during the period (from 1,796 in fiscal 1985 to
2,188 in fiscal 1992), available data do not suggest that the average length of
stay for all children has increased. However, the data do suggest that the
number of children remaining in the foster care system for four years or more
is increasing.

Foster Care Services

Services provided through the foster care program range from family
foster care (the least restrictive, least expensive service) to in-state and out-of-
state residential care (the most expensive, most restrictive service). In between
these services are group homes and shelter care services.

While group homes and shelter care services have remained constant
since fiscal 1985 as a percentage of total services provided, there has been a


shift of services from family foster care to residential services, which are much
more restrictive and expensive. In Fiscal 1985, 74 percent of all service days
were provided in a family setting, while 14 percent of total days were
provided in a residential setting. In fiscal 1992, 71 percent of the service
days were provided in a family setting, while the number of days provided in
residential settings had increased to 17 percent of the total.

Available data does not suggest any clear reasons for this shift in the
foster care service mix, but there may be at least one contributing factor.
In fiscal 1991, the year medicaid coverage was first available for residential
psychiatric treatment, use of these services began to increase significantly.
Because the medicaid program is an "entitlement" program, the inclusion of
residential psychiatric treatment as a medicaid service may have contributed to
increased utilization of the service, both in and out-of-state. If a foster care
child is medicaid-eligible and residential psychiatric treatment is deemed
medically necessary, the child is entitled to the treatment and the state is
obligated to pay for the treatment. Residential treatment was funded primarily
by general fund through fiscal 1990, but when this service became a medicaid
service, the state general fund had to bear only 28 percent of the cost of
providing the service.

Caseload Profiles

Foster care case loads were analyzed according to age, race, length of
stay in the system, and reasons for entering the system.


Ages of children entering sy«rfpni . From Hscal 1985 through fiscal 1991, the
number of children under five years of age and adolescents above the age of
14 have declined slightly as a percentage of total children entering the foster
care system. Children under five comprised 26 percent of the children
entering the system m fiscal 1985, whUe in fiscal 1991 this group accounted
for 25 percent of the total. The number of adolescents above the age of 14
entering the system declined from 36 percent of the total in fiscal 1985 to 32
percent of the total in fiscal 1991. The number of children between the ages
of five and 14 entering the system increased from 38 percent of the total in
fiscal 1985 to 41 percent of the total in fiscal 1991.

Race of children entering svstem - Since fiscal 1985, a change has occurred
in the racial make-up of children entering the foster care system. In fiscal
1985, 78 percent of the total children entering the system were Caucasian and
15 percent of the total were Native Americans. In fiscal 1991, the number
of Caucasian children entering the system had decreased to 71 percent of the
total, while Native American children comprised 20 percent of the total. The

1991 legislature appropriated funds for an anticipated increase in Native
American children in the 1993 biennium, but data for the first half of fiscal

1992 indicates that no further increase has occurred.

Length of stav in the svstem - Although available data does not suggest that
the aggregate, average length of stay in the foster care system has increased
since fiscal 1985, certain data do suggest that the group of "long-term"
children may be increasing as a percentage of total children in the system.

A "snapshot" analysis of children in the foster care system at the end of fiscal
1989 and fiscal 1991 was performed to determine how long each child had
been in the system. At the end of fiscal 1989, 12 percent of the total
number of children in the system had been in the system more than four
years. At the end of fiscal 1991, the number of children who had been in
the system longer than four years had increased to 21 percent of the total.
During the same period, the number of children who had been in the system
less than one year declined from 41 percent of the total to 39 percent of the

Reasons for entering system - The reasons an individual child is placed out-of-
home in the foster system include child neglect, child abuse, sexual abuse and
behavioral problems. An individual child may be placed out-of-home for one
or a combination of reasons. The reasons most frequently recorded for out-of-
home placement are child neglect and behavioral problems. Since 1985, the
most significant change in the reasons recorded for out-of-home placement is
a 55 percent increase in child neglect as a contributing factor.

Foster Care Expenditures

Total foster care expenditures increased from $6.1 million in fiscal 1985
to $16.6 million in fiscal 1992, an increase of 173 percent during the period.
Expenditures for family foster care increased by 78 percent during the period,
while in-state and out-of-state residential treatment costs increased by 264
percent. Residential treatment costs increased much more rapidly than did

other costs during the period, causing the foster care expenditure mix to
change significantly. In fiscal 1985, expenditures for in-state and out-of-state
residential treatment accounted for 38 percent of total foster care expenditures,
while family foster care expenditures comprised 42 percent of total expenditures.
However, in fiscal 1992, residential treatment costs comprised 51 percent of
total foster care expenditures and family foster care costs had decreased to 28
percent of total expenditures.

Daily service costs - Family foster care is not only the least expensive service
provided m the foster care program ($12.06 average daily cost in fiscal 1992),
but the 19.5 percent increase in average daily costs since fiscal 1985 is less
than any other service category. The average daily cost of in-state ($88.05 in
fiscal 1992) and out-of-state ($111.35 in fiscal 1992) residential services increased
109 and 78 percent respectively from fiscal 1985 through fiscal 1992.

Funding mix - State special revenue (consisting of non-assumed county, parental
and other contributions) and federal funds declined from 42 percent to 35
percent of total foster care funding from fiscal 1985 to 1992, while state
general fund increased from 58 to 65 percent of the total during the same
period. General fund expenditures for foster care increased by 206 percent
from fiscal 1985 through fiscal 1992.


In fiscal 1988, the Department of Family Services (DFS) began the
Prevention, In-Home, Post-Placement Services (PIPPS) program. The program

goals are: 1) to avoid out-of-home placements of children at risk of such
placements, 2) move children from more restrictive to less restrictive settings,
and 3) to reduce the need for moving children from less restrictive to more
restrictive settings. Available data indicate that children receiving PIPPS
services actually receive more placements per child than do children who are
not provided PIPPS services. Because some of these placements may be lateral
(moving from one setting to another setting at the same level of restrictiveness)
or moving from a more restrictive to less restrictive setting, the number of
placements per PIPPS child may not be an accurate measure of the success
or failure of the program.

Available data do suggest that children receiving PIPPS and out-of-home
services re-enter the foster care system after leaving it as often as foster care
children who have not received PIPPS. Although this would seem to indicate
that the program is not as successful as it could be, the detailed information
needed to draw such a cr ision is not available.

The department susp^ icd the PIPPS program for the last two months
of fiscal 1992 to help conserve general fund. (The program is funded entirely
with general fund.)


state and federal statutes regulate the provision of foster care in foster
family homes, in shelter and group homes, and in residential treatment. These
laws define delinquent youth, youth in need of supervision, and youth in need
of protective services. In addition, they address procedures for investigation,
family intervention, and temporary and permanent placement. The Department
of Family Services (DFS) is the agency charged with providing a continuum
of services, including foster care, to needy youth.

The 1989 and 1991 legislatures expressed their intent that a continuum
of services, including home-based services, foster care, and psychiatric treatment,
should be available to Montana children. However, based on available
information, they could not determine that aU chUdren in need of services were
receiving appropriate services or that the necessary services were avaUable.
Therefore, House Bill 100 and House BiU 2, passed during the 1989 and 1991
legislative sessions respectively, required DFS to plan for a continuum of care
in Montana. In addition. House Bill 304, passed by the 1989 legislature,
established a medicaid program for psychiatric residential treatment for chUdren.
A report issued by the Legislative Fiscal Analyst (LFA) in April, 1990 provided
a historical care and expenditure summary and a demographic analysis of
Montana's foster care system during the period fiscal 1985 through 1989. This
report provides a similar analysis for the period fiscal 1990 through 1992.

House Bill 100

In House Bill 100, the 1989 legislature directed DFS to develop a plan
to: 1) stabilize the rate system for existing child care providers; 2) quantify
the number of children served, unserved, or underserved; and 3) complete the
continuum of care necessary to address the needs of children in the custody
of DFS by developing or enhancing programs in prevention of child abuse and
neglect, family-based services, and intermediate and intensive levels of service.
To stabilize the rate system, the 1989 legislature approved a program expansion
of nearly $3.3 million for the 1991 biennium ($2,976,522 general fund, $310,726
federal funds) to fund 85 percent of a model provider rate system in fiscal
1990 and 100 percent of the model rate in fiscal 1991.

The DFS response to House Bill 100 identified children who were served
and underserved, but it stated that data for unserved children not in contact
with DFS are generally unavailable due to severe limitations in the current
DFS management information system and limited DFS staff available for
research. Underservice may be partially attributable to the imposition of an
informal "one-in, one-out" policy, generally in the fourth quarter of each fiscal
year and the suspension of the special services programs, including PIPPS,
from April to July, 1992. The "one-in, one-out" policy and suspension of
special services are both budget management tools that reduce service levels.

DFS did identify additional resources that management believed necessary
to provide a continuum of care for Montana's children, including: 1) a
management information system; 2) 108 FTE social workers, 32 FTE

supervisors, and 10 FTE family resource specialists; 3) in-home family support
services; and 4) additional out-of-home services, including therapeutic foster care
and group homes. For the 1993 biennium, the 1991 legislature (in regular
and special sessions) subsequently appropriated general and federal funds of
$652,143 for a management information system, nearly $550,000 for 8.0
additional FTE social workers, and nearly $1.5 million for an expanded
continuum of care.

House Bill 2

The 1991 legislature approved House Bill 2 language deHning the
continuum of service as including but not limited to family-based services,
foster care, therapeutic foster care, group care, residential treatment, and
psychiatric hospitalization for youth. The language required DFS to present
a continuum of services plan to the Legislative Finance Committee (LFC)
during calendar year 1991. The goal of that plan was to develop a
comprehensive child welfare service system by July 1, 1993. The DFS
response, presented in November, 1991, proposed implementing the plan during
fiscal 1992. That implementation was accomplished as follows:

1) internal reorganization - the new program structure was completed
before fiscal year end 1992;

2) family-based services in all regions - completed in January, 1992 with
service to 76 families in fiscal 1992;

3) two therapeutic foster care programs - contracts negotiated in
January, 1992 with Western Montana Mental Health Center in Kalispell
and AWARE, Inc. in Butte - three children placed in June, 1992;

4) three group homes for dually diagnosed youth - three four-bed group
homes in Butte occupied by 12 children in fiscal 1992;

5) targeted case management for seriously mentally ill children - to be
implemented in Missoula and Helena - no children seryed by August,

6) management information system - completion expected December, 1994.
The goal of the continuum of care is to proyide appropriate seryices to

Montana children, including in-state seryices for children who had been placed
out of state. This goal has been partially met through the deyelopment of
therapeutic foster care programs and group homes for dually diagnosed youth.
Howeyer, as discussed later in this report, the number of children placed out
of state continues to increase. In addition, while the costs of comparable in-
state and out-of-state seryices haye increased at approximately the same rate,
the mix of out-of-state seryices changed between fiscal 1989 and 1992 to
include more expensiye, intensiye specialized services not available in Montana.

Psychiatric Inpatient Hospital Treatment

Until the 1993 biennium, psychiatric inpatient hospitalization for
emotionally disturbed, medicaid-eligible children was provided entirely by the
Department of Social and Rehabilitation Services (SRS) through the medicaid
program. However, the legislature transferred over $5 million general fund for
the 1993 biennium from SRS to DFS for in-patient hospital psychiatric
treatment. These funds, included in the DFS foster care budget in House Bill
2, provide the general fund match for both children in the custody of DFS
and other medicaid-eligible children who are hospitalized in facilities such as

the Rivendell or Shodair hospitals. Historically, in-patient hospital psychiatric
treatment has not been included as part of the foster care program. Neither
the general fund appropriated to DFS nor the federal medicaid match
appropriated to SRS for in-patient hospital psychiatric treatment is included in
this report.

Psychiatric Residential Treatment

In House Bill 2, the 1991 legislature appropriated general fund of nearly
$2.8 million to DFS to fund a residential treatment continuum. Of that
amount, $1.3 million was specifically for medicaid psychiatric residential
treatment services in the 1993 biennium. These funds are matched by federal
funds appropriated to SRS and are used to serve all medicaid-eligible children
who are placed at facilities such as Yellowstone Treatment Center in Billings.
(A pilot program was enacted by the 1989 legislature in House Bill 304 and
continued by the 1991 legislature in House BiU 977). This program was
partially implemented in fiscal 1991 and fully implemented in fiscal 1992.
These services are less intensive and less expensive than hospitalization.

Both the psychiatric inpatient hospital and residential treatment programs
are "entitlement" programs, i.e., once recipients meet federal and state criteria,
they are entitled to these benefits. The general fund medicaid match
appropriated to DFS for these services must also be used to fund treatment
for children not in the custody of DFS who are admitted to these facilities by

Foster Care Report

Foster care is provided through in-home services, family foster care,
shelter care, group homes, and in-state and out-of-state residential treatment
facilities such as the Intermountain Children's Home or Yellowstone Treatment
Center. The April, 1990 LFA report provided foster care trends, demographic
data, and expenditure and funding information from fiscal 1985 through fiscal
1989. The following report updates this information using data provided by
DFS and analyzed by LFA staff. The report discusses data from fiscal 1985
through fiscal 1992 and emphasizes trends from fiscal 1989 through fiscal 1992.

Terms used in the following updated report are consistent with those
used in 1990 LFA report. For example: 1) the term, "cUent" is used to
denote a duplicated yearly count of children by type of facility because many
foster care children are served in. more than one type of facility during the
year; 2) the term, "children," refers to unduplicated numbers of children
entering foster care, served during each year, or in care at fiscal year end;
3) "rV-E funds" are those federal funds available for the care of eligible
dependent children; and 4) "FV-B funds" are federal block grant funds used
for foster care and social worker activities.

The 1990 LFA report raised issues concerning the levels of federal IV-E
funds, parental contributions, and county funding. The Legislative Fmance
Committee (LFC) requested that DFS report on how it could increase
collections of IV-E federal funds and parental contributions, but it took no
action on the issue of county funding. The DFS response to the LFC's

request, submitted on September 30, 1990, estimated that with two additional
administrative FTE it could: 1) increase parental contributions by $55,000 in
fiscal 1992 and $110,000 in fiscal 1993; 2) increase federal IV-E administrative
funds by approximately $220,000 each year; and 3) increase the federal IV-E
participation rate to approxunately 26.6 percent for a $330,000 increase in
federal foster care funding in fiscal 1992. The FTE and funding increases
were included in the 1993 biennial budget approved by the 1991 legislature.
This report analyzes the preliminary fiscal 1992 collections data provided by
the department.

Special services, called "Prevention, In-Home, Post- Placement Services"
(PIPPS), were implemented by the department in fiscal 1988. Fiscal 1988 and
preliminary fiscal 1989 data were included in the 1990 LFA report. This
report analyzes the PDPPS program from fiscal 1988 through the first half of
fiscal 1992.


This report summarizes and updates the April, 1990 LFA report entitled
"Foster Care" and highlights foster care and expenditure issues that have
developed since April, 1990. Fiscal 1992 comparisons come from preliminary
data available as of June 30, 1992, unless otherwise noted. Reference tables
in Appendix A provide detailed foster care information. All fiscal 1991 and
1992 data have been adjusted to exclude non-DFS medicaid-eligible children who
are in residential treatment and to include all medicaid costs paid through SRS

for DFS medicaid-eligible children in residential treatment. In addition, special
services costs for developmentally disabled children have been excluded.

Continuing Foster Care Trends

The adjacent graph shows that
reports to DFS of child abuse and
neglect increased approximately 10
percent from fiscal 1985 through
fiscal 1991, while the number of
children involved in the reported
incidents increased by 49 percent in

the same period (Table 1). However, the percentage of children in reported

incidents who actually enter foster care decreased from 24.5 percent in fiscal

1985 to an estimated 20.8 percent m fiscal 1991 (Table 2). Fiscal 1992

reported incidents were not available at the time this report was written.
As shown in the adjacent

graph, the number of children served

m each fiscal year continues to

increase more rapidly than the

number of children entering foster

care. As a result, the number of

children in care at fiscal year end

increased by over 80 percent from 1,027 in fiscal 1985 to 1,849 in fiscal 1992

(Tables 3 and 4).


Numbers of Children

Fiscal 1985-Fijcal 1992

(FY*! CUUfta StmUR ItUmtf)

198S 19M 19*7 19M 19M 1990 1991 1992

Percentage of Children in Foster Care

rUcal Ymt KU 1M9 u4 1991

FYS 19t9
1,43« ChiUrca


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Online LibrarySandy (Sandra Lode) WhitneyFoster care : a report (Volume 1992) → online text (page 1 of 3)