1. Innovative Financing of Out-of-Home Placements July 24, 2002 Governor’s Action Group for Safe Children Work Group #3

2. Focus of Innovative Financing The efficient use of funds to support a full and seamless continuum of placements, services, and supports. Increasing the flexibility of resources so that funds are readily available to support the needs of the child and easily follow the child throughout the continuum of placements. Maximizing all fund sources available to support the child. Better use of funds to purchase services that have positive outcomes for children.

3. Benchmarking How does Georgia Compare to Other States in Spending for Placements?

4. It is not possible to make consistent comparisons between states due to:  Differences in state laws, agency and program structures, program location, program definitions, expenditure tracking, reporting requirements and data quality.  Different philosophies regarding the placement of children.  Very limited data available by state on placement outcomes. Without outcome data it is impossible to know what types of results each state is purchasing with its dollars.

5. How does Georgia Compare to Other States in Spending for Placements? A recent study by the Nelson E. Rockefeller institute examined trends in state spending on social services since the implementation of welfare reform in 1996. Study focused on spending trends in California, Wisconsin, Missouri, and Georgia between 1995 and 1999. Findings:  Total spending for social services has declined as a percent of each state’s total budget.  At the same time, total spending on child welfare services (includes out-of-home placements and juvenile justice) increased dramatically in all four states.  Spending for child welfares services in Georgia increased $45 million or 30.6% between 1995 and 1999.

6. FINDINGS

7. Finding #1 The state has invested considerable funding into out-of-home placements for children. Between FY 1996 and FY 2001, total expenditures increased by $188,361,187 or 88%.  Total expenditures increased from $212,998,856 in FY 1996 to $401,360,043 in FY 2001.

8. Finding #2 The Division of Mental Health, Developmental Disabilities, and Addictive Diseases spent over $69 million to provide outpatient services to children and adolescents in FY 2001. The Department of Education spent over $64 million to operate a network of 24 psycho- educational schools in FY 2001. While these services can support children in out- of-home placements there is no data available to show how many children in placements actually received mental health outpatient care or psycho- educational services.

9. There is inconsistent access to educational services and funding across agencies and placements.  For example, under current state regulation a child in certain DFCS or DJJ residential placements that operate on-site schools cannot access DOE funding until after 60 days in that same placement.  It is then up to the residential placement provider to coordinate with the local school district for funding to support provider educational services after 60 days. Not all school districts are willing to fund provider educational services.  DHR and DJJ will reimburse residential providers who operate on-site schools but only at a percentage of cost. Finding #3

10. Finding #4 State agencies that place children in out- of-home settings use different definitions and terms to describe children, their eligibility and the type of placement further confusing an already complicated system.

11. Finding #5 The current system of funding for out-of- home placements cannot support a full and seamless continuum of placements, services and supports.  Due to the restrictive and/or categorical nature of most financial resources and agency responsibilities, funding cannot follow a child as they move through the current continuum of placements in Georgia.

12. Finding #6 The state, with the cooperation of public and private providers of placements, has made progress in monitoring and measuring the effectiveness of placements and treatment services. However, the state does not consistently track and measure a child’s progress while in an out-of-home placement.

13. Finding #7 The current system of purchasing residential placements is inefficient and costly to both the state and providers and does not focus on the needs of children or the goals of providers and the state.

14. Finding #8 The state’s current financial and programmatic information systems are fragmented and incomplete and do not support opportunities to more efficiently and effectively target resources for children needing placement services.

15. RECOMMENDATIONS

16. Recommendations Based on the following premises:  Funding must be focused on the needs of the child.  Funding must be consistently available to the child regardless of the agency responsible for the child.  Agencies must use consistent placement criteria and definitions.  State agencies should leverage all available federal resources to the maximum extent possible.  Funding decisions should be performance-based to ensure that the state is purchasing positive outcomes for the child.

17. Recommendation #1 The state should proceed with the development of a level of care system to finance placements based on the needs of the child. Requires: √ Funding √ Staffing √ Data System Improvements √ Policy/Administrative Changes

18. What is Level of Care? In cooperation with providers, DFCS and DJJ have been working to create a Level of Care (LOC) Service System that purchases placement services for a child based on the child’s needs. LOC is a system of 6 levels of placement for children that range from basic family foster care to intensive residential care with 24-hour treatment, supervision and medical care. All levels of care provide individualized treatment and support services based upon an individual written services plan that identifies for each child the treatment goals and needed services.

19. What is Level of Care? Within the levels of care there are a variety of treatment options and settings to meet each child’s unique needs for treatment and support. Each child is to be served in the least restrictive, most family-centered and community-based setting that meets his or her treatment needs and ensures the safety of the child, the family and the Community. Each child is monitored during their placement and their needs are periodically re- determined.

20. Why Level? This new system will allow the state to better identify needs, project expenditures and track results. It provides a common language for describing children’s service and treatment needs. This brings some consistency in placements across agencies – in this case DFCS and DJJ. A number of other states use a Level of Care Service System: Texas, Kentucky, South Carolina and Arizona.

21. Why have rates assigned to levels? It evens the playing field among providers by assigning payment to a child rather than to a facility or program. The state can budget more accurately once it knows the distribution of its children among levels. Note: A strong information system is critical to this process. It allows tracking of child specific data, level specific data, provider performance and converts that data into reports that can be shared in a meaningful way to identify system needs and child outcomes.

22. Recommendation #2 The state should begin using “performance-based” contracts in the delivery of placement services for children.  Provides clearly defined deliverables, including outcomes, and rewards providers for positive outcomes for children.  By developing contracts that reward providers for positive outcomes, rather than reimbursing them by caseload count, the state can improve its placement performance. High performing providers will be referred new cases while poor performing providers face the possibility of losing state business.  Requires: √ Data System Improvements √ Policy/Administrative Changes

23. Recommendation #3 State Agencies should continue their efforts to maximize federal resources and should be allowed to keep these resources.  Savings should be reinvested to preserve the out-of-home placement system’s infrastructure, to address unmet needs and to institute prevention and early intervention initiatives.  Support of DJJ’s efforts to transition from punitive programs to rehabilitative programs will allow the agency to maximize federal funds and will result in better outcomes for children.

24. Recommendation #4 State and local agencies should work together to identify opportunities to blend funding and to increase funding flexibility. “Strategies to create more flexible funding can be key to developing comprehensive community support systems and paying for an array of needed services when one funding stream cannot do the job alone.” Cheryl D. Hayes, “Thinking Broadly: Financing Strategies for Comprehensive Child and Family Initiatives” The Finance Project, March 2002. Requires: √ Possible Policy/Administrative Changes √ Possible Data System Changes

25. Recommendation #5 Develop a consensus on desired outcomes and results, identify data measures and design accountability systems. Requires: √ Possible Policy/Administrative Changes √ Possible Data System Changes

26. Recommendation #6 The state should publish a Children’s Out-of-Home Placement Budget so that the accountability of government programs and expenditures for children can be monitored and presented annually to policy makers and the public. Requires: √ Staffing √ Funding √ Data System Improvements

27. Possible Recommendation #7 The state must develop an effective data system to maintain and track programmatic and financial information on children in its custody. Requires: √ Funding √ Possible Policy/Administrative Changes √ Possible Data System changes

28. Innovative Financing of Out-of-Home Placements July 24, 2002 Governor’s Action Group for Safe Children Work Group #3