Foster‑care rate overhaul delayed? Subcommittee questions administration’s trigger language and seeks help for foster family agencies

The Assembly Subcommittee examined proposals affecting child welfare services, focusing on the permanent foster‑care tiered rate structure and short‑term operational items. Jennifer Troia of the Department of Social Services told the panel the state is transitioning from an interim rate system toward a “tiered rate structure” intended to match funding to children's needs; implementation is projected for July 1, 2027, subject to readiness and automation.

The May Revision includes provisional (trigger) language: the Department of Finance would determine in spring 2027 whether sufficient general fund exists to implement the tiered rate structure on the scheduled July 1, 2027, date. The administration said preparatory work — automation, county readiness, training and fidelity activities — should continue so the state is ready if the trigger is met.

The Legislative Analyst's Office recommended the Legislature should not cede that future policy decision to a Department of Finance trigger and noted that the trigger could produce inefficient spending if preparatory work proceeds but the policy is not approved later. LAO suggested alternatives such as phasing in elements of the rate structure rather than an all‑or‑nothing trigger.

DSS requested positions to support first‑phase implementation (six permanent, three limited‑term) and explained higher‑acuity children would receive additional supports under the permanent structure, while foster family agencies (FFAs) could receive higher administrative payments tied to a child’s tier rather than to placement type. DSS said the administration included $27.4 million in 2025–26 for automation, county administration and state operations to support the transition; DOF characterized the trigger as a way to manage out‑year cost risk.

Lawmakers also discussed a short‑term insurance crisis for foster family agencies. DSS reported 10 FFAs had closed due to rising insurance costs. Advocates recommended a short‑term bridge of roughly $42 million over two years (DSS noted an earlier ask near $47 million, subsequently reduced to about $42.2 million) to help agencies cover premiums until the tiered rate structure becomes operational; the Governor’s May Revision does not include that bridge appropriation. Legislators asked for options and for a more detailed plan to avoid losing placement capacity.

Other May Revision technical items discussed included aligning the Foster Family Home and Small Family Home Insurance Fund (FISH) appropriation with claims, a revised CANS/CFT fidelity and training request (about $2.9 million total funds), and provisional language to augment prior CWS CARES automation funds. LAO urged the Legislature to retain its role in the timing and scope of implementation decisions and to consider phased alternatives if budget constraints prevent full implementation in 2027.

No final budget actions were taken; members asked DSS and DOF for follow‑up on the tiered rate trigger, the short‑term FFA insurance bridge request, and implementation timelines for automation and training.