State Innovations in Child Welfare Financing. Illinois: Foster Care Performance Contracting


The overall goal of this initiative was to redirect resources from maintaining children in the system to a focus on gaining permanency for children. Its objectives were to provide the resources necessary to improve permanency outcomes for children, hold the system more accountable, improve the quality of care, and create incentives to perform in the best interest of children and families. When the initiative was implemented, a top priority was addressing a large and growing permanency backlog. It was implemented for Cook County relative care in July 1997, and expanded in July 1998 to all traditional foster care statewide. The budget for FY99 was about $334 million, including $192 million for case management and $141 million for maintenance payments; this represents about one-fourth of Illinois' child welfare budget.

The initiative accomplishes the objectives by linking provider reimbursements to performance. Agencies are no longer guaranteed a caseload but are expected to manage their cases by balancing the cases flowing in with those flowing out; if the standards are not met, caseloads will increase but the level of payment remains steady. Agencies that move more than the contracted number of children (24 percent of their caseload) into permanent living arrangements do not experience a reduction in case management payments, and they may receive a bonus above the standard payment. Each placement that results in a "pay-out" will be replaced with another referral. However, agencies that do not achieve their contracted performance standards may lose up to 33 percent of their contract because they will not continue to receive referrals. The initiative includes new investments in reunification services, permanency capacity, subsidized guardianship, emergency care, recruitment, counseling, and case assignment.

The target population is all children in relative care and traditional foster care statewide. Approximately 23,000 children (over 70 percent of Illinois' substitute care population) were expected to be served in 2000 through the performance contracts. The initiative excludes children in specialized foster care, independent living programs, and residential placements. Services provided include case management, family preservation and support services, family foster care, kinship care, adoption, and respite care.

Monitoring teams review the agencies' performance and provide feedback for continuous quality improvement. Benchmarks measure the quality of care provided to children and families. The performance standards negotiated with providers are substantially higher than the previous average, and agencies that fail to achieve the standards set under the contract risk having their intake placed on hold. Throughout the year aggregate permanency performance data (managed by Chapin Hall) are shared with all providers and each agency is ranked from high to low; agencies can reconcile their numbers if they believe the numbers are not accurate.

Under performance contracting, payments to providers are made in two parts: maintenance payments, which are passed through to foster parents and relatives caring for children, and administrative payments, which provide for services to the child, the child's family, the foster family/relative caregiver, and administration costs. The monthly administrative payments provide for case management; a permanency worker, recruitment worker, and education liaison for each team, counseling and therapy; and emergency care. Agencies also receive lump-sum payments for reunification/aftercare, and traditional (non-relative) foster care agencies receive additional resources for the recruitment and training of foster parents and the provision of emergency foster care. Administrative payment rates are based on expected caseload ratios (22.5 cases per caseworker), with differential expectations of intake, permanency outcomes, and non-permanency outcomes depending on whether the agency is in or outside of Cook County and whether the case is relative or traditional foster care. The current effective monthly rate for traditional foster care administrative payments is $569 per child; for relative foster care, administrative payments range from $600 to $714 per child, depending on the agency's previous performance. Maintenance payments range from $361 to $445, depending on age of child. The difference between the administrative payment level and the actual caseload represents the fiscal incentive/disincentive of the initiative.

An important result of the initiative has been a dramatic reduction in caseload, from over 51,000 children in care to less than 30,000 in three years. In Cook County, caseworker relative care caseloads declined from 25 to 22 within existing spending levels. A byproduct of this trend was that there were not enough referrals to meet the contracted intake obligations of performance contracts, especially in downstate Illinois. The state responded by transferring cases from "lower performing" cases to the rest of the system, which is not viewed as a long-term solution to the systemic problem of "intake-dependency."

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