featured graphic for California State Legislative Analyst's Office during COVID-19

Updating special education out-of-home care funding

The Legislative Analyst’s Office has just published the following report:

Updating Special Education Out-of-Home Care Funding

In the Supplemental Report of the 2020‑21 Budget Act, the Legislature tasked our office with convening a work group and providing recommendations for updating the special education Out-of-Home Care formula by March 1, 2021. Since 2004‑05, the state has provided these funds to schools to cover high costs associated with special education services for foster youth and some children with developmental disabilities who are unable to live with a custodial parent. Due to reforms to phase out long-term congregate care placements for foster youth, the Out-of-Home Care rate structure was effectively rendered obsolete, and funding has been frozen since 2016-17.

This report provides background on the issues, describes the assessment and recommendations of the work group, and includes our office’s comments for the Legislature as it considers updating the formula.

The work group developed a set of near- and long-term recommendations to update the formula. In the near term, the work group recommends the Legislature replace the formula rates for foster youth with a two-tiered model—providing one rate for all foster youth and another rate for short-term congregate care placements. This approach reflects the changes to the child welfare system and could be implemented without significant challenges. In the long term, the work group recommends the Legislature explore an Out-of-Home Care formula based on the comprehensive assessment—known as the Child and Adolescent Needs and Strengths (CANS)—used to assess levels of need for each foster youth. Work group members thought this approach would best encourage interagency collaboration and capture variations in foster youth needs and costs across the state.

Our office notes that the long-term recommendation to use a CANS-based funding model is likely to face implementation challenges and take many years to implement. Notably, data from the CANS assessment is not yet automated and centralized. A CANS-based model could also create new fiscal incentives, especially if education representatives—whose funding levels would be determined by the assessment—were directly involved in the assessment process. This could result in foster youth being identified as having higher levels of need than otherwise. In developing and evaluating a CANS-based funding model, the Legislature will want to consider the extent to which the model creates fiscal incentives to change behavior.

This report is available using the following link: https://lao.ca.gov/Publications/Report/4386?utm_source=laowww&utm_medium=email&utm_campaign=4386

This article was released by the Legislative Analyst’s Office.