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Children's Services Act spending rebounds; private special-education placements remain main cost driver
Summary
Office of Children's Services staff told the subcommittee that CSA spending and caseloads are rising again after pandemic declines, driven largely by private special-education placements and foster-care residential needs; the office urged monitoring and possible containment options.
Scott Rainier of the Office of Children's Services briefed the Joint Subcommittee for Health and Human Resources Oversight on trends in the Children's Services Act (CSA), saying state and local expenditures and the number of youth served have begun rebounding after pandemic-era declines.
Rainier said CSA is a "state supervised, locally administered" program that is mostly funded with state general funds and local matches; he said federal dollars in the CSA budget are limited and that for most services the state must provide sufficient funding for approved demand. He told the panel CSA is largely nondiscretionary and that roughly two-thirds of CSA funds come from the state while about one-third is local share; local match percentages vary by jurisdiction.
The presentation included several quantitative details. Rainier said the program served roughly 16,000 youth and families and that preliminary data for FY25 showed an expenditure increase of about 13% over FY24. He said private special-education placements represent about 30% of youth served but account for about 45% of CSA spending because private special-education placements are costly. Residential treatment is a small share of youth but a larger share of spending because of high per-child costs.
Rainier and members discussed drivers of growth. He cited increases in private day special education, community-based services, group homes for youth in foster care and rate increases tied to market conditions and Medicaid benchmarks. He explained that foster-care-related costs are largely determined by local department of social services placement decisions and that a suspension and reinitiation of certain Family First Prevention Services Act draws had shifted some federal funding responsibilities. Rainier said that if DSS completes required accreditations and requirements, federal title IV-E draws could be reinitiated, which would reduce local and state CSA burden for those placements.
The office noted the General Assembly capped rate increases for private special-education placements at 5% in FY26; Rainier said that cap addresses rate growth but does not reduce demand-driven cost increases. He also said CSA has a relatively small non-sufficient set-aside (about $14 million) that is not fully utilized and is not the major driver of spending.
Several legislators asked what localities are doing to reduce referrals to expensive private placements; Rainier said some school divisions have invested in in-school supports and that regional public special-education programs are a lower-cost alternative. He also told members CSA would provide follow-up materials showing expenditure trends and the effect of the 5% cap.
Rainier concluded by offering potential containment options for committee consideration, including unit or lifetime limits on services and maximizing federal funding avenues for qualified residential treatment where appropriate. Lawmakers requested additional data and trend breakdowns by locality and service type.
