As in other areas of the country, New York experienced an unprecedented growth in its foster care population during the last half of the 1980s. Poverty, lack of education, AIDS, and the effects of crack-cocaine were some of the primary causes for new cases entering the system. Growth was also due to an increase in the length of time children remained in foster care. Between 1986 and 1990, the number of children in foster care in New York State rose from 27,000 to 65,000 (an increase of 140 percent), placing stress on the foster care system. This surge in the foster care population brought a renewed sense of urgency to the ongoing debates within child welfare regarding the role, availability, and effectiveness of program, and about funding for foster care and preventive services. There was concern that not enough service emphasis was being placed on the "back end of the system," those children remaining in foster care.
In response to these needs, the New York State DSS began the HomeRebuilders Demonstration Project, a 3-year collaborative effort among the state, the City of New York CWA, and six voluntary (private) child care agencies. The project was scheduled to run from July 1993 to June 1996. However, the project ended in December 1995, 6 months early.
The demonstration tested an alternative to the per diem method of agency reimbursement. This alternative was tested because some critics of the child welfare system argued that the per diem reimbursement mechanism slowed the discharge of children. Under the HomeRebuilders program, agencies were paid a flat amount of money, or capitation payment, instead of being paid for each day in care. The state calculated a 3-year projection of care day utilization based on each agency's historic care day usage. Agencies could spend the money on a combination of placement and social services, depending on the needs of the child and his or her family. The capitation-like payment was designed to give the agencies flexibility and still maintain accountability for quality service delivery. This funding scheme could also stimulate agency investments in services that could lead to early discharge from placement, resulting in fewer days spent in care. In particular, the funding strategy was designed to allow agencies to increase their aftercare services.
It was hypothesized that the change in the payment system would achieve earlier permanency for children through intensified discharge planning and aftercare services. If the program was successful, children in the HomeRebuilders program would spend less time in foster care than a comparable group of children not in the program. A goal of reducing time in care by 10 percent was set. Besides reducing care days it was also expected that participants would experience a reduced rate of reentry when compared with historical patterns and a suitable comparison group.
The funding for the HomeRebuilders program was based on a 3-year projection of care day utilization. Funds were frontloaded, that is, money that would have been spent in the second and third years of the project was moved to the first year so that discharge planning and aftercare services could be intensified in years 1 and 2. Funding also included a feature that permitted agencies to carry cash deficits or cash surpluses from one year to the next during the 3-year period.
The HomeRebuilders demonstration was intended to be cost-neutral for agencies, the city, and the state in regard to foster care payments for children. Funding for the comparison group used the traditional per diem mechanism, a payment for each day in care. Agencies were paid by the city, based on rates calculated by the state. A capitation rate was determined for the 3-year demonstration project based on a 3-year history of care day usage by the subpopulation in each agency. An allocation strategy was agreed upon to pay agencies up to 43 percent in the first year, 34 percent in the second year, and the balance in the third year.
Title IV-E of the Social Security Act provides for federal participation in the costs of foster care room and board and associated training and administrative costs. These funds may not be used for services to promote reunification or other outcomes. During the planning of HomeRebuilders, New York State officials worked with Congress to develop legislation that would authorize use of Title IV-E funds for the HomeRebuilders project. This legislation (included in the Urban Aid Bill) was passed by both houses but vetoed by President George Bush in November 1992. Despite this setback, the state determined to move forward, and the city and participating agencies were assured the project would proceed.
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