California’s payments to foster-care providers are too low, court rules

California’s compensation to foster-care providers is so low that it violates a federal child-welfare law, an appeals court ruled Monday.

In a case brought by group home administrators caring for about 9,500 wards of the state with special needs, the U.S. 9th Circuit Court of Appeals deemed the state’s payments of 80% or less of the actual cost of care illegal and insufficient.

The case was brought last year by California Alliance of Child and Family Services, which operates more than 100 homes across the state for children who have been deemed unsuitable for foster family placements.

A parallel case was brought last year by foster family advocates who raised an alarm about the declining numbers of families willing to take children because the state doesn’t fully compensate them for the care and services it demands, like food, shelter, education and transportation.

The foster families’ suit on behalf of about 75,000 foster children won a similar judgment in U.S. District Court 14 months ago, and the state Department of Social Services’ appeal of that ruling has been on hold with the 9th Circuit pending the decision in the group homes’ case.

“I hope this is the biggest win for foster kids ever. I hope it says that the state really does have to pay for the care of these kids, that it can’t cheap out,” said Carroll Schroeder, executive director of the Sacramento-based alliance.

Bob Fellmeth, director of the Children’s Advocacy Institute at the University of San Diego law school, argued the foster families’ case before the court and said Monday’s decision in the group homes’ case “bodes rather well for us.”

“If they’re enforcing it with group homes, they have to enforce it with us,” Fellmeth said, adding that foster parents receive 60% of costs, about $500 a month.

“They have to dig into their pensions, they have to go into their own kids’ college funds or give the kids back,” he said.

Fellmeth said the number of children placed with families fell statewide, from 16,000 in 2001 to about 5,000 today, as costs rose and fewer families were willing to take children.

“That means there are fewer adoptions, siblings are not kept together, and more kids are put in group homes at a higher cost,” he said. “It makes no sense.”

The foster care home alliance lawsuit brought against the state Department of Social Services alleged that the state violated the federal Child Welfare Act. The suit was dismissed last year by U.S. District Judge Marilyn Hall Patel, who said the state was in substantial compliance.

“We disagree,” the 9th Circuit three-judge panel ruled. “The natural meaning of ‘cover the cost’ is to pay in full, not in part.”

The case now goes back to Patel to decide how the state should remedy its failure to comply with the Child Welfare Act’s requirements of states that receive federal matching funds for its programs, said William F. Abrams, the East Palo Alto lawyer who represented the alliance.

In the foster family organization’s lawsuit brought about the same time last year as the group home challenge to the state compensation system, U.S. District Judge William Alsup ruled in favor of the child-care providers, whose compensation of $446 to $627 per month, depending on a child’s age, falls short of the actual cost of care by as much as 40%.

The office of Atty. Gen. Jerry Brown referred inquiries about Monday’s ruling to the Department of Social Services.

“We are in receipt of the 9th Circuit Court decision and are in the process of reviewing it and making decisions about next steps,” said Lizelda Lopez, a spokeswoman for the Department of Social Services.

carol.williams@latimes.com

Times staff writer Molly Hennessy-Fiske contributed to this report.