Maryland DHS Defends Foster-care rate reform as analysts warn of shortfalls and data gaps

At a Feb. 26 Health and Social Services Subcommittee hearing in Annapolis, the Department of Human Services (DHS) defended a newly implemented foster‑care provider rate structure and data improvements while staff from the Department of Legislative Services (DLS) urged the committee to adopt budget restrictions and additional reporting to address projected shortfalls and gaps in federally reported child welfare data.

DLS presented an analysis saying the Social Services Administration operating allowance for fiscal 2026 increases by $11,800,000 (1.5%) to $791,200,000 and identified a proposed deficiency of $47,300,000 (including $18,500,000 in general funds and $28,500,000 in federal funds) largely tied to foster‑care shortfalls. A DLS analyst told the subcommittee that DLS estimates purchased‑institution annual costs will reach about $170,000,000 in fiscal 2026 — roughly $50,000,000 higher than fiscal 2024 — and recommended several committee actions, including adopting budget bill language to withhold funds pending submission of missing management‑for‑results (MFR) data and a 5% rate reduction for institutional providers in fiscal 2026 to save an estimated $8.5 million.

Carnitra White, principal deputy secretary of the Department of Human Services, said the department does not concur with DLS’s recommended rate reduction and emphasized that October 1, 2024, rate reform is a central strategy for reducing out‑of‑state placements, hospital overstays and hotel placements. "Rate reform is a key factor in assisting us in addressing these systemic issues in our…